Federal Reserve Bulletin, 1978-07

JULY 1978 FEDERAL RESERVE BULLETIN The Recent Behavior of Inflation Working Capital of Nonfinancial Corporations 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 7 □ VOLUME 64 □ JULY 1978 FEDERAL RESERVE BULLETIN Board of Governors of the Federal Reserve System Washington, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman ° Stephen H. Axilrod □ John M. Denkler Janet O. Hart □ James L. Kichline n 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 521 The Recent Behavior of Inflation 542 Governor J. Charles Partee states that the Board of Governors continues to support Prices accelerated rapidly in the first half extension of the direct borrowing authority of 1978, reflecting a variety of factors that of the U.S. Treasury, before the Subcom­ contributed to an inflationary momentum. mittee on Domestic Monetary Policy of the Committee on Banking, Finance and 531 Staff Economic Studies Urban Affairs, U.S. House of Repre­ “The Behavior of Member Bank Required sentatives, June 27, 1978. Reserve Ratios and the Effects of Board 543 Chairman Miller states that although eco­ Action, 1968-77” discusses the reasons nomic activity shows healthy growth, the for the decline during the 1970’s of the price situation has worsened and inflation ratio of required reserves to deposits at threatens continued economic expansion, member banks. in the midyear review of the economy Analysis in “Foothold Acquisitions and before the Joint Economic Committee of Bank Market Structure” shows no sys­ the Congress, June 29, 1978. tematic relationship between foothold ac­ 548 Chairman Miller presents the views of the quisitions and changes in bank market Board on the continuing expansion of the structure. economy and reduced unemployment, but 533 W orking Capital of N onfinancial states that inflation and budget deficits are worrisome, before the Committee on the Corporations Budget, U.S. House of Representatives, The Board of Governors and the Federal July 13, 1978. Trade Commission have developed a new tabulation of working capital of nonfinan­ 552 Governor Partee, on behalf of the Board, cial corporations to replace a similar series recommends prompt passage of a bill to expand the type of collateral eligible to that has been discontinued by the Securi­ secure Federal Reserve notes and also a ties and Exchange Commission. bill to expand the number of Class C 538 Statem ents to Congress directors of Reserve Banks from three to six, before the Subcommittee on Domestic Chairman G. William Miller comments on Monetary Policy of the Committee on two main areas in which changes should Banking, Finance and Urban Affairs, U.S. be made to the International Banking Act House of Representatives, July 14, 1978. of 1978, a bill that would provide a Fed­ eral presence in the regulation and super­ 556 Record of Policy Actions of the vision of the operations of foreign banks Federal Open M arket Committee in the United States, before the Subcom­ mittee on Financial Institutions of the At the meeting on May 16, 1978, the Committee on Banking, Housing and Committee decided that the ranges of tol­ Urban Affairs, U.S. Senate, June 21, erance for the annual rates of growth in 1978. M-l and M-2 over the May-June period Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

should be 3 to 8 and 4 to 9 per cent, statements through the mail under certain respectively. It was understood that in circumstances. assessing the behavior of these aggregates The Federal regulatory agencies for banks, the Manager should continue to give ap­ thrift institutions, and credit unions have proximately equal weight to the behavior proposed guidelines for the enforcement of M-l and M-2. of the Equal Credit Opportunity Act, In the judgment of the Committee such Regulation B, and the Fair Housing Act. growth rates were likely to be associated The Federal regulators of banks and sav­ with a weekly-average Federal funds rate ings and loan associations have proposed slightly above the current level of l lA to regulations to implement the Community 73/s per cent. The members agreed that if Reinvestment Act. The Board has pro­ growth rates of the aggregates over the posed a change in Regulation Y concern­ 2-month period appeared to be deviating ing publication of notice by bank holding significantly from the midpoints of the companies of their intention to begin non­ indicated ranges, the operational objective bank activities. for the weekly-average Federal funds rate should be modified in an orderly fashion Changes in Board staff. within a range of 7V4 to 73A per cent. Changes in some tables in the International Statistics section of the B ulletin. 567 Law Departm ent Four State banks were admitted to mem­ Various regulatory amendments and inter­ bership in the Federal Reserve System. pretations, bank holding company and bank merger orders, and pending cases. 614 Industrial Production 605 Announcem ents Output increased an estimated 0.3 per cent The Board has sent to the Congress a plan in June. to provide for greater competitive equality among financial institutions and to reduce the burden of membership in the System. Al Financial and Business The Board has approved an increase in the Statistics discount rate to 7lA per cent. A3 Domestic Financial Statistics A46 Domestic Nonfinancial Statistics An amendment to Regulation O makes it A54 International Statistics clear that an executive officer may not become indebted to a member bank under A70 Board of Governors and Staff a bank credit-card, check-credit, or similar plan on terms more favorable than those A72 Open Market Committee and offered to the general public. Staff; Advisory Councils The Board has revised its Regulations Re­ A73 Federal Reserve Banks, Branches, and Offices lating to Branches of Federal Reserve Banks with regard to the qualifications of A74 Federal Reserve Board branch directors. (See Law Department.) Publications An amendment to Regulation T permits A76 Index to Statistical Tables any broker or dealer subject to the regula­ A78 Map of Federal Reserve System tion to make a subordinated capital loan to another broker or dealer. Inside Back Cover: An interpretation of Regulations G and U Guide to Tabular Presentation permits lenders to accept “purpose” and Statistical Releases Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Recent Behavior of Inflation Lawrence E. DeMilner of the Wages, Prices, Consumer price index and Productivity Section, Division of Research 6-month percentage change and Statistics, prepared this article. ALL ITEMS ALL ITEMS LESS cmn a wn trwporiV The rate of inflation accelerated substantially in the first half of 1978. This step-up was led by large increases in prices for food, particularly meats. But a number of other factors contributed to upward pressure on prices. Most prominent I o I_i__I _I_I __I__I _ among these inflationary forces were a drop in 1976 ’78 1976 ’78 the exchange rate of the dollar, a considerable Changes are from December to June and June to December. increase in labor costs, and severe weather. 1978 HI is change from December to May at an annual rate. Some of the factors, like the weather, are tem­ Seasonally adjusted annual rates, Dept, of Labor data. porary. All, however, contribute to the momen­ tum of underlying inflation by triggering larger energy, consumer prices rose at a generally wage increases and subsequently higher pro­ stable rate, averaging 6 to 6V2 per cent, during duction costs. When several of these influences 1976 and 1977. Although these prices have converge in time as they did in early 1978, the tended to rise somewhat faster in the first half effect on inflation is particularly severe and of the year than in the second half, so far during difficult to remedy. 1978 they have risen at a rate of more than 8Y2 This year’s rapid price acceleration—to an per cent—faster than in any comparable period annual rate of more than 10 per cent—is in large since the beginning of the recent recovery. part a consequence of an increase in food prices Contributing to this acceleration of the underly­ of nearly 20 per cent, a pattern that parallels ing inflation rate have been higher mortgage a similar burst of price increases in the first half costs and automobile prices, and a more rapid of 1977. At that time the consumer price index increase in rent. In addition, producers are being reached a rate of increase of nearly 9 per cent, confronted with higher long-run costs as a result led by increases in food prices of 13 per cent. Also in the first half of 1977 energy prices Consumer prices advanced at double-digit rates as a result of the Percentage change, seasonally adjusted annual rates severely cold winter and a price increase for AH items crude oil by the Organization of Petroleum Period All items Food Energy less food items1 and energy Exporting Countries (OPEC). In the second half 12 months ending— of 1977 prices in both categories slowed to a 1975—Dec............ 7.0 6.5 11.6 6.7 1976—Dec......................... 4.8 .6 6.9 6.1 rate of increase of only 3 per cent, holding down 1977—Dec......................... 6.8 3.0 7.2 6.4 the over-all rise of consumer prices to a pace 6 months ending— 1976—June ..................... 4.9 .1 4.7 6.7 of less than 5 per cent. Dec......................... 4.8 .9 9.2 5.4 197?—June ..................... 8.9 13.4 11.4 7.7 Recent price behavior takes on a somewhat Dec......................... 4.7 3.0 3.1 5.2 1978—May2 .................... 10.2 18.6 7.4 8.6 different appearance if food and energy items 1 Includes gas and electricity, gasoline, fuel oil, coal, and bottled are excluded—one way of indicating an under­ gas, not seasonally adjusted. 2 Change from December to May at an annual rate. lying rate of inflation. Except for food and Note.—Dept, of Labor data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

522 Federal Reserve Bulletin □ July 1978 of legislated increases in payroll taxes to finance Labor costs-Nonfarm business social security and unemployment insurance Percentage change, Q4 to 1 benefits and a substantial increase in the mini­ - Unit labor costs mum wage that became effective at the begin­ — Compensation ning of the year. 15 10 MAJOR INFLUENCES ON PRICE BEHAVIOR 5 H Changes in the price level from one year to the next are in general influenced most directly by 1975 1976 1977 ’78 labor costs—wages and additional employer Data for 1978 is change from 1977 Q4 to 1978 Ql at an annual costs for payroll taxes and fringe benefits— rate, seasonally adjusted, from Dept, of Labor. other input costs, and the growth of produc­ tivity. In addition, major, but often temporary, adjustments in their wage rates either through impacts on the rate of inflation have been created some type of cost-of-living escalator or by large by unexpected events such as the weather and catch-up wage increases when contracts are by certain Government policies. renegotiated. The sensitivity of wages to high If labor costs had followed their typical cy­ rates of past inflation has meant substantial wage clical pattern, significant progress against infla­ increases during recent years despite historically tion would have been expected since in the past high rates of unemployment. For example, increases in wage rates appeared to have been average hourly earnings rose 63A per cent in moderated by the existence of high unemploy­ 1976 when the unemployment rate was 7% per ment. In addition, economic recovery usually cent. The following year, with joblessness at has been accompanied by strong cyclical gains a still-high 7 per cent, the wage increase accel­ in productivity, which have dampened the effect erated to 7% per cent. of rising compensation. In addition, wage rates for a portion of the Actual improvement in slowing the current labor force have been increased through man­ inflation, however, has been meager. Price in­ dated changes in the minimum wage law. This creases did moderate significantly from the increase, when combined with recent legislation double-digit rates of 1973 and 1974—in part boosting payroll taxes, has led to growth in because of a substantial slowing of price rises for energy and food from the virtually unprece­ dented pace of those earlier years. Nevertheless, Wages and consumer prices headway against inflation has stopped well short Percentage of that of other cyclical recoveries in the post­ 12 war period, due in large part to the persistently high rate of increase of unit labor costs. In the nonfarm business sector the rate of increase in 8 these costs was about 5% per cent in both 1976 and 1977, well above the postwar average of 3V2 per cent. 4 Success in curbing the rapid rise in unit labor costs that feeds inflation has been difficult to 0 achieve because of the momentum of past infla­ tion and the reciprocal relationship between CPI is a 12-month moving average; hourly earnings index is wages and prices. Many workers apparently change from Q4 to Q4 except 1978, which is 1977 Q4 to 1978 Q2 at annual rates. Plotted mid-period. Seasonally ad­ have been able to match the rises in prices with justed, Dept, of Labor data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Recent Behavior of Inflation 523 Productivity have reflected not only legislation that regulates the rate of change of domestic crude oil prices Ratio scale, 1967=100 and the ceiling for gasoline prices but also NONFARM BUSINESS SECTOR actions by the Federal Energy Regulatory Com­ mission that determine the rates that can be charged for natural gas sold across State lines. 1948-73 trend Numerous Government actions outside these areas also affect production costs and selling prices. Reference prices for steel imports and the wide range of environmental and safety regulations are just a few examples. t I t i i i i t t i t t i i t i i ii ii i i i tt it i i ’75 ’78 Prices in recent years have also been pro­ foundly influenced by a number of unexpected Seasonally adjusted, Dept, of Labor data. shocks that have caused abrupt price move­ employee compensation in recent years that is ments. The unusually cold winter of 1977, for greatly in excess of productivity gains. As an example, spurred the demand for heating oil, illustration, in the first quarter of 1978 compen­ much of which had to be imported at higher sation per hour in the nonfarm business sector prices. That same cold weather reduced spring registered a rise from the previous quarter of vegetable and citrus crops, sending prices of more than 13 per cent at an annual rate; the such produce soaring; a few months later, how­ minimum wage and payroll taxes are each esti­ ever, these price deviations were largely re­ mated to have contributed 2 percentage points versed. Again, in the spring of 1978, excessive to that first-quarter increase. rainfall in California ruined the lettuce crop and The slowing of productivity gains over the caused large advances in those prices. past few years has contributed to the persistent Another unpredictable influence on prices has rise in unit labor costs. The behavior of produc­ been the price for crude oil in world markets, tivity followed the normal cyclical pattern of where the United States obtains more than tworapid increases during the first 2 years of the fifths of its supply. This price has been effec­ recent recovery, with an annual rate of increase tively under the control of OPEC. Also, a wide­ of 4.2 per cent; since then the growth rate has spread impact on prices of internationally traded eased substantially to about 1 per cent. Given goods is now being felt as a result of the the very large decline in productivity associated unexpectedly large depreciation of the foreign with the last recession, this recent slowing has exchange value of the dollar. prevented the economy from regaining the trend level that preceded the last recession. Among Trade-weigh ted exchange value of dollar the explanations that have been advanced for this development are the impact of the higher May 1970 parities=100 relative price of energy and the impact of the inflation rate on the after-tax profitability of investment. Government policies affecting prices go beyond the recent adjustment in the minimum wage and higher payroll taxes. Farm policy and energy price regulation are two other major areas of involvement. For example, grain re­ serve programs, acreage set-asides, and sugar and dairy price supports all have adversely af­ fected consumer food prices in recent years. In Index of weighted-average exchange value of U.S. dollar against currencies of other G-10 countries plus Switzerland. addition, recent fluctuations in energy prices Weights are 1972 global trade of each of the 10 countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

524 Federal Reserve Bulletin □ July 1978 Even though these shocks may be tempo­ Food prices rary—followed by stability at a new price level 3-month percentage change or reversed after a while—their effects can con­ tinue for some time. The process of wage ad­ Farm products justment tends to translate at least part of these price changes into higher labor costs, which then can set off another round of price changes. A SURVEY OF RECENT PRICE DEVELOPMENTS Food Prices The food sector is a good illustration of how unanticipated shocks, Government policy, and rising labor costs can interact to push up prices. Prices for farm products are quite sensitive to supply disturbances and have fluctuated widely over the past few years. But even when prices of food at the farm level have been falling, retail prices have often kept rising because of in­ Plotted on middle month. Seasonally adjusted annual rates, creasing costs of marketing and processing. Dept, of Labor data. Moreover, in the past 2 years a number of Government agricultural policies have signifi­ by a widening of the spread between farm and cantly affected the behavior of food prices, retail prices. The increases in processing and following several years during which price sup­ distribution costs that caused this widening were port levels were below market-clearing prices. in large part due to higher labor costs. In addi­ In 1976 over-all consumer prices for food tion, prices of restaurant food posted a 6 per rose only slightly, as a substantial expansion of cent increase for the year under pressure from production kept pace with a large rise in per rising labor and other costs. capita food consumption. The favorable harvest In the first half of 1977 food price develop­ in 1975 reduced animal feed prices and stimu­ ments became less favorable for consumers. lated meat production. This greater production Along with further increases for coffee and fish, lowered meat prices so much that ranchers ex­ meat prices turned up as beef production began perienced a profit squeeze and further acceler­ to contract cyclically and pork supplies were ated slaughter rates in 1976. Widespread adversely affected by the severely cold winter. droughts also contributed to a sell-off of cattle Even more drastic impacts from the weather herds. As a result meat prices fell throughout were observed in the output of fruits and vege­ most of 1976, and at the end of the year they tables, whose prices rose at an annual rate of were down more than 10 per cent from a year 43 per cent between January and April. earlier. Partially offsetting the effect on con­ In the second half of 1977, production of the sumer prices of this bountiful meat supply was weather-affected items bounced back, and prices a 10 per cent increase in prices for fish. In declined significantly during the summer for addition, over-all food prices were boosted by fresh fruits and vegetables. Pork prices also a rise in coffee prices, which jumped 50 per cent turned down in the second half, and egg prices as a result of the severe freeze in Brazil in 1975. trended lower. As a result, double-digit in­ Although food prices at the farm level de­ creases in food prices in the first half gave way clined 4 per cent during 1976, the impact on to a 3 per cent annual rate over the remainder prices at the grocery store was largely offset of 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Recent Behavior of Inflation 525 In 1977 Government policies again became In the beginning of 1976, the Federal Gov­ a significant factor determining the behavior of ernment removed the $2 import fee on crude food prices. With prices at the farm level drop­ petroleum imports and required a sharp rollback ping and farm costs rising, legislators sought in the price of “newly discovered” domestic to head off potential financial difficulties for crude oil. These actions caused retail gasoline farmers by raising price supports for a number prices to decline substantially for the first 4 of farm products. The Food and Agriculture Act months of the year. However, a series of factors of 1977 lifted floor prices for wheat and feed reversed these declines by the end of summer. grains. Administration actions—such as acreage Gradual deregulation of crude oil prices under retirement programs—added further support to the Energy Policy and Conservation Act and a grain prices. The 1977 act also provided for declining share of low-priced “old” crude oil sugar prices to be supported at levels well above raised refiners’ costs. Also, rising demand ap­ world prices, and it authorized continuing peri­ parently led to somewhat higher profit margins odic adjustments in price supports for dairy at refiners.. As a result, gasoline prices at the products. Strong pressure on the Congress and end of 1976 were 2Vi per cent above those a the administration for still further upward ad­ year earlier. These same factors plus the cost justments in farm prices continued into 1978. of imported petroleum products also dominated While Government actions were supporting the behavior of fuel oil prices during most of higher prices for some farm products, in late 1976. 1977 and the first half of 1978 prices for other Another OPEC price hike marked the be­ food items were rising because of market forces ginning of 1977, although it was mitigated by and further exogenous supply shocks. Tighten­ the two-tier price situation for imported crude ing supplies and strong consumer demand lifted oil, which prevailed until midyear. The initial meat prices, and by the second quarter of 1978 impact also was limited by large stocks that had beef prices were rising at a record pace. Another been built up in anticipation of the price in­ harsh winter disrupted supplies of farm prod­ crease. In addition, by late spring of 1977 ucts, and in California widespread flooding refiners, responding to the extraordinary demand damaged vegetable crops. In addition, an in­ for heating oil during the cold weather, had crease in the minimum wage in January spurred accumulated sizable stocks of gasoline as a the upward drift in labor costs, in particular in byproduct. These large supplies were responsi­ the restaurant industry where wages historically ble for holding average gasoline prices nearly have been relatively low. About the only good level from the spring until late fall. Fuel oil news for consumers in the first half of 1978 was prices, on the other hand, soared because of the a decline in coffee prices, as Brazilian produc­ demand induced by the cold weather, rising at tion recovered from the 1975 freeze. Retail energy prices 3-month percentage change Energy Prices In recent years the price of crude oil has had 30 / VEnergy commodities a considerable impact not only on energy prices 20 but also indirectly on the over-all inflation rate. Movements in oil prices have reflected the more 10 aggressive pricing strategy by OPEC since 1973 + 0 and changes in the Federal regulations affecting petroleum product prices. Like the pattern of Vy Natural gas and electricity 10 food prices, the behavior of petroleum product 1975 1976 1977 ’78 prices served to hold down the over-all inflation rate during 1976 but to aggravate it during most Energy commodities include gasoline, motor oil, coolant, etc., and fuel oil, coal, and bottled gas. Plotted on middle month. of 1977. Annual rates, Dept, of Labor data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

526 Federal Reserve Bulletin □ July 1978 an annual rate of 20 to 25 per cent from late Price of finished goods, 1976 to the spring of 1977. Although the rate selected nonfood items of increase subsided steadily thereafter and Percentage change, seasonally adjusted annual rates prices stabilized by the end of 1977, the increase 6 months ending— in fuel oil prices during the year amounted to Item 1975 1976 1977 1978 more than 10 per cent. June] Dec. June |Dec. June | Dec. June1 Natural gas rates, meanwhile, advanced at a Producer price index: Consumer durable goods. 4.8 5.7 3.6 4.1 6.9 6.3 12.4 rapid pace throughout 1976. Strong demands Consumer price index: kept unregulated intrastate prices rising, and a Durable goods ................ 9.4 5.6 6.5 5.7 6.3 3.3 8.6 New cars................... 5.9 8.2 3.8 5.3 5.6 8.8 7.3 new rate structure approved by the Federal Used cars................... 6.0 10.8 24.4 14.5 7.2 -13.9 14.1 Power Commission permitted large price in­ Producer price index: Consumer nondurable creases for newly discovered gas. Since then, goods less food ....... 5.1 99 3.3 7.3 9.1 3.7 5.1 the increase in natural gas prices has abated only Consumer price index: Nondurable goods less occasionally from double-digit rates as expiring food ............................ 4.8 5.4 3.5 5.3 5.8 4.3 4.1 Apparel commodities .4 2.7 4.1 4.2 4.6 2.7 3.5 interstate gas contracts have been renegotiated 1 CPI changes from December to May at an annual rate. at higher rates and as supply from old wells Note.—Dept, of Labor data. has been replaced by flows from newly discov­ ered sources. where in the economy. Durable goods prices, One of the consequences of the severe cold however, are somewhat sensitive to materials of the winter of 1977 was the exhaustion of costs; for example, higher steel costs have an stored natural gas reserves in several Midwest­ impact on automobile and appliance prices and ern States and restrictions on the use of available lumber and insulation costs affect prices of new natural gas supplies to essential businesses and houses. services. Although gas rates rose because of the While the rise in the prices of new domestic cost of emergency gas purchases from higher- cars has averaged about 6 per cent for the last priced intrastate sources, interstate pipelines two model years, the decline in the foreign began to experience a slackening of demand as exchange value of the dollar since late 1977 has an aftermath of the gas shortage. The extensive resulted in substantial price increases for im­ supply curtailments as well as the energy pro­ ported Japanese and German cars. The dimin­ gram proposed by the administration, which ished competitive pressure from imports seems would penalize industrial gas usage, may have in part to have been responsible for another speeded conversions to substitute fuels. Because wave of price increases for domestic cars in late of the high fixed costs involved in the transmis­ spring of this year. Used-car prices have shown sion of natural gas, however, this shift has only pronounced fluctuations in recent years, rising aggravated the problem of rising unit gas prices, more than 20 per cent between the spring of which are passed on to consumers under provi­ 1976 and the spring of 1977. This run-up was sions of State regulatory commissions. Never­ followed by a precipitous reversal over the re­ theless, natural gas remains, on a BTU basis, mainder of 1977. After sharp increases in the comparatively quite inexpensive. If current ef­ first 2 months of 1978, these prices appear to forts toward deregulation are successful, it can have moderated. Among other durable goods, be expected that natural gas rates will seek price furniture and home appliances have until this parity with alternative fuels. spring shown only moderate price increases. Recent acceleration probably reflects, in part, reduced import competition for some items such Consumer Items as televisions and other electrical appliances. Prices of durable goods during the past 2 years, Nondurable goods, other than food and en­ in general, have risen no faster than the over-all ergy items, have posted moderate rates of price inflation rate. This, in part, reflects the greater increase for the last 2 years. One reason for capital intensity and the somewhat more rapid this moderation has been the relatively slow rate growth in productivity in this sector than else- of increase of apparel prices—just over 4 per Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Recent Behavior of Inflation 527 Service prices ate—by recent standards—among services, re­ 6-month percentage change gistering 5V2 per cent during 1976 and 6V2 per cent over 1977. Because of the length of con­ TOTAL SERVICES RENT tracts and leases, rental rates in general seem to adjust to other price changes in the economy n with a lag. In addition to the noticeable acceler­ ation from 1976 to 1977, rental increases appear to be quickening so far in 1978, to an annual rate of more than 7 per cent. HOMEOWNERSHIP MEDICAL CARE Home financing, property taxes, and insur­ COSTS ance—service costs of owning a home—moved up sharply to a double-digit rate in 1977 from 15 a more moderate pace in 1976. Moreover, there has been further acceleration in 1978, 10 principally because of rising mortgage costs. Producer Prices T=T Producer prices outside the food sector have not, in general, contributed significantly to the ad­ 1976 78 1976 78 vancing inflation rate. Higher producer prices 6-month changes ending June and December except 1978 is in most cases have reflected rising labor costs; change from Dec. 1977 to May 1978 at an annual rate. and in only a few relatively isolated cases have Homeownership costs are home financing, taxes, and insur­ ance. Seasonally adjusted annual rates, Dept, of Labor data. material shortages been a factor in higher costs. In fact, measures of capacity utilization in man­ cent in 1976 and only 3Vi per cent in 1977. ufacturing and materials that would signal such Apparel prices have been influenced by a drop bottlenecks have been, over the past 2 years, in cotton prices last year as well as by strong not only well below previous peaks but also, competition from imported textiles and clothing. in most cases, short of historical averages. Nevertheless, during several months in the Producer prices of consumer finished goods spring of this year larger-than-average price other than food rose only about 5 per cent during increases were posted for these items. 1976. After accelerating to an annual rate of Price increases for services, which account increase of more than 8 per cent in the first for more than two-fifths of consumer expendi­ half of 1977, when fuel prices were advancing tures, have persisted at advanced rates during rapidly, these prices slowed in the second half the past 2 years. Service prices rose, on average, of the year, registering a rise of about 6 per cent about IV2 per cent during 1976 and 1977, led for all of 1977. Rates of increase in 1978 appear by a 10 per cent rate of increase in the costs to have returned to a range around 5 per cent, of medical services. Recently, however, there although in April and May unusually large in­ have been indications that rises in medical costs creases in jewelry prices pushed up the over-all may be slowing; quarterly changes since mid- rate. 1977 have dipped below a 9 per cent annual Capital equipment prices maintained a rela­ rate. At the same time, legislation for the con­ tively steady rate of rise until the fall of last tainment of hospital costs remains under study year. Price increases for these kinds of invest­ in the Congress. ment goods averaged 6V2 per cent during 1976. Another important item of consumer service During most of 1977, prices rose somewhat expenditure is residential rent. In spite of rock­ more slowly, but in the fall a number of large eting house prices, rapidly rising utility costs, increases for trucks, autos, and various types and an historically low vacancy rate, the rate of machinery pushed the annual rate for the last of increase in rent was one of the most moder­ 3 months of the year to almost 11 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

528 Federal Reserve Bulletin □ July 1978 Producer price changes by stage of processing these prices have been advancing at double-digit rates, in part because of substantial increases 3-month percentage change in the price of coal, cotton, and scrap metals. Crude materials UNIT LABOR COSTS AND PROFITS Typically, during the mature phase of a cyclical expansion unit labor costs rise, price increases do not keep pace, and profit margins narrow. In the past this pattern has unfolded as capacity utilization rose to levels at which firms found it necessary to call marginal and less efficient capital into use and as scarcity of skilled labor 10 led to a bidding up of wages. + 0 The recent cyclical experience does not ap­ pear to conform well to this pattern. Produc­ tivity growth has slowed in the past year, al­ though this slowing has occurred in a setting Excludes food. Plotted on middle month. Seasonally adjusted of considerable labor and capital slack, at least annual rates, Dept, of Labor data. until recently. At' the same time compensation These increases have since decelerated to an has been growing at a very rapid rate, putting annual rate of around 7 to 8 per cent during considerable upward pressure on labor costs. the first half of 1978. Prices of nonfood intermediate materials have Unemployment rate advanced at about the same rate over recent Per cent years as have prices for finished goods other than food. They rose about 6V2 per cent during both 1976 and 1977, owing to generally abun­ dant supplies and weak demand worldwide for a number of major materials. In the first half of 1978 they accelerated significantly, led by large increases for steel and wood products and other construction materials such as cement. The most volatile prices among producer goods are those for crude nonfood materials. They rose Capacity utilization rate more than 15 per cent in 1976, sometimes more than 4 per cent in a single month. Crude fuels, raw cotton, and scrap metals registered some of the largest price jumps. During 1977 prices of crude nonfood materials declined during about half the months of the year, although they still posted an over-all increase of nearly 7 per cent. Large declines occurred primarily for raw cotton and for iron and steel scrap. These were more than offset, however, by other in­ creases—especially for crude fuels, nonferrous Unemployment rate from Dept, of Labor; capacity utilization scrap, tobacco, and wastepaper. So far in 1978, from F.R. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Recent Behavior of Inflation 529 Profit share pay adjustments for salaried workers can be Nonfinancial corporate gross domestic product expected to contribute to a continuation of the recent trend in compensation. The collective bargaining calendar is quite heavy in 1979—about 3V2 million workers will be negotiating new agreements compared with less than 2 million in 1978—and negotiations in key sectors could set a precedent for workers in related industries. Because prices have risen at a more rapid rate recently, wage increases for the first year of new contracts are likely to be substantially higher than current wage 1968 1970 1972 1974 1976 ’78 growth. In addition to the impact of this year’s Profit share includes inventory valuation adjustment and capital inflation on next year’s pay adjustments, legis­ consumption adjustment. Dept, of Commerce data. lated increases in the minimum wage and But the downward adjustment to profit margins payroll taxes scheduled to go into effect in that normally is expected in the face of such January 1979 will produce a bulge in first-quar­ a cost squeeze has been smaller than is typical. ter growth in compensation similar to the effect These rising costs are, in large part, the result witnessed this year. of inflation-induced wage increases and legis­ The outlook for consumer food prices is also lated payroll taxes that are general throughout not optimistic. The current phase of the cattle the economy—instead of the more typical cy­ production cycle suggests that beef output will clical tightening of individual labor markets that probably keep contracting at least through 1979. leads to additional overtime and the hiring of Meat prices, therefore, are likely to continue marginally qualified workers. As a result, firms trending upward, although some relief may appear to have a greater tendency to pass these come from increased output of pork and poultry. costs on in higher prices. At the same time, Furthermore, price supports for many key farm while profits have not regained the share of products would make it impossible for even output they held in the 1960’s, they have re­ unusually abundant harvests to contribute sig­ covered sharply from the recession and have nificantly to lower food costs. maintained a fairly level share during the past The near-term supply of petroleum appears 2 years. Exceptions are the two quarters in favorable; the addition of oil flows from the which activity was disrupted by the last two Alaskan North Slope and the North Sea, as well severe winters. These temporary dips in the as high rates of drilling activity worldwide, profit share, however, also coincided with the makes a crude oil shortage over the next few imposition of higher minimum wages and years unlikely. The outlook for energy prices payroll taxes. in the longer run, however, is less favorable, reflecting the effective control of world market prices of crude oil by OPEC and the possible deregulation of below-market prices of domestic OUTLOOK energy sources. In addition, the proposed Crude The pressure of rising labor costs on prices is Oil Equalization Tax is estimated by many to likely to remain substantial in the coming year. add at least 0.3 percentage point each year for Because of the prevalence of formal and infor­ the next 3 years to the rate of increase of prices mal cost-of-living adjustments, the recent ac­ measured by the GNP (gross national product) celeration of inflation probably will be reflected price index. Any deregulation of natural gas in higher pay for some time. Although collective prices, although it would take place more grad­ bargaining activity is relatively light this year, ually, also would be likely to have a heavy deferred increments in existing contracts and impact on prices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

530 Federal Reserve Bulletin □ July 1978 An additional concern in the inflation outlook periods because of demographic shifts in the is the possibility that in mid-1978 the economy composition of the labor force toward groups may be approaching supply constraints. Meas­ such as youth and women, who typically expe­ ured rates of capacity utilization are still far rience higher average rates of unemployment. below the 1973 peaks, but they may be under­ Because of ratchet mechanisms in our eco­ stating the effective constraint; the new relative nomic institutions such as price floors, progress price of energy, along with environmental and against inflation is necessarily slow. Over the safety regulations, may have rendered some of longer term, more stable price behavior is likely the Nation’s capital stock relatively inefficient to require a combination of disciplined restraint if not obsolete. Moreover, the unemployment in monetary and fiscal policy, improved pro­ rate has now reached about 53A per cent. While ductivity growth, and more attention to the rather high in historical terms, that rate conveys inflationary implications of Government ac­ a tighter labor supply today than it did in earlier tions. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

531 Staff Economic Studies The research staffs of the Board of Governors In all cases the analyses and conclusions set of the Federal Reserve System and of the forth are those of the authors and do not Federal Reserve Banks undertake studies that necessarily indicate concurrence by the Board cover a wide range of economic and financial of Governors, by the Federal Reserve Banks, subjects, and other staff members prepare or by the members of their staffs. papers related to such subjects. In some in­ Single copies of the full text of each of the stances the Federal Reserve System finances studies or papers summarized in the Bulle­ similar studies by members of the academic tin are available in mimeographed form. The profession. list of Federal Reserve Board publications at From time to time the results of studies that the back of each Bulletin includes a sepa­ are of general interest to the economics pro­ rate section entitled “Staff Economic Studies” fession and to others are summarized—or they that enumerates the papers prepared on these may be printed in full—in this section of the studies for which copies are currently available Federal Reserve Bulletin. in mimeographed form. STUDY SUMMARIES THE BEHAVIOR OF MEMBER BANK REQUIRED RESERVE RATIOS AND THE EFFECTS OF BOARD ACTION, 1968-77 Thomas D. Simpson—Staff, Board of Governors Prepared as a staff study in late 1977 The ratio of required reserves to deposits at 1977 deposit composition, thereby yielding hy­ member banks rose from 9.2 per cent in early pothetical reserve ratios for various dates in the 1968 to 9.7 per cent in 1970 and then declined past. A comparison of hypothetical changes in to a level of 6.4 per cent by early 1977. The required reserve ratios with actual changes over decline during the 1970’s has reflected actions the same time period provides an estimate of by the Board of Governors of the Federal Re­ the contribution of Board action to the decline serve System to alter the level and structure of in the ratios in the 1970’s. reserve requirements and also a change in the Empirical results imply that half of the de­ composition of deposits. cline in the ratios for member banks during the This paper attempts to separate the influence 1970’s has resulted from Board action, of Board action from the influence of changing principally the 1972 decision that fundamentally deposit composition by using a model based on altered the reserve requirement structure on de­ the principles underlying a Paasche index. In mand deposits and, to a lesser degree, several the model, deposit composition is held constant changes affecting required reserves on time de­ at 1977 levels and several sets of actual histor­ posits beginning in December 1974. The most ical required reserve ratios are applied to the important factor affecting deposit composition Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

532 Federal Reserve Bulletin □ July 1978 was a sharp drop in the share of demand depos­ 1970’s by size of bank indicates that although its—those deposits subject to the highest re­ over-all declines were greatest for large member quired reserve ratios—and a commensurate rise banks, action by the Board has resulted in a in the share of time deposits. An examination larger relative decline in reserve ratios of small of the changes in reserve requirements over the member banks. FOOTHOLD ACQUISITIONS AND BANK MARKET STRUCTURE Stephen A. Rhoades and Paul Schweitzer—Staff, Board of Governors Prepared as a staff study in early 1978 Whether foothold acquisitions by bank holding The current study uses insights gained from companies—acquisitions of banks with less than the Colorado case study to refine and extend $10 million in deposits—have a systematic ef­ the model from the earlier cross-section study. fect on the structure of the banking markets in Specifically, it includes new variables to account which they occur was the subject of a recent for the stage of holding company development, study.1 That study used cross-section analysis large acquisitions, mergers, de novo entry, new covering 58 metropolitan markets that had ex­ banks, and market size. In addition, since foot­ perienced foothold acquisitions and 54 metro­ hold acquisitions are by definition small, signif­ politan markets that had not, for the period icant structural changes may not materialize in 1966-72. Results of the multiple-regression the short run. The time required for the com­ tests did not show a statistically significant rela­ petitive interaction may in fact be especially tionship between foothold acquisitions and lengthy in metropolitan markets where indirect changes in market concentration. However, a competition is the rule and geographical product more recent case study found evidence of de­ differentiation is more significant than in smaller concentration in the two secondary Colorado urban markets. Therefore, this study extends the banking markets in which First National Ban­ analysis of structural change through 1976, corporation of Colorado entered through foot­ whereas the original study ended with 1972. hold acquisition between 1971 and 1973, in Results of the analysis show no systematic contrast to the three markets where the same relationship between foothold acquisitions and organization entered on a larger scale.2 changes in bank market structure. Similar re­ sults were obtained for the variables for large acquisitions and mergers. These somewhat sur­ 1 Stephen A. Rhoades, “The Impact of Foothold prising findings suggest that the type of acquisi­ Acquisitions on Bank Market Structure,” Antitrust tion—that is, horizontal or market extension— Bulletin (Spring 1977). and the size definitions of foothold acquisitions 2 Paul Schweitzer and Joshua Greene, “Greeley in may be significant in explaining changes in bank Perspective,” Staff Economic Studies, No. 91 (Board of Governors of the Federal Reserve System, 1977). market structure. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

533 Working Capital of Nonfinancial Corporations The quarterly tabulations on corporate working a probability sampling procedure in which cor­ capital that had been published by the Securities porations are stratified by asset size and sampled and Exchange Commission (SEC) as “Nonfi­ at various rates. The primary sampling frame nancial Corporations: Current Assets and Lia­ comes each year from IRS, and the results are bilities” were discontinued as of the third quar­ more current and consistent than those based ter of 1977. To replace this series the Federal on SOI benchmarks with a 3-year lag. Second, Trade Commission (FTC) and the Board of the basis for consolidation used in QFR is more Governors have jointly developed a new tabula­ appropriate than SOI for use in U.S. national tion of working capital of nonfinancial corpora­ aggregates. Foreign branches and subsidiaries tions that is somewhat different in coverage and and finance subsidiaries are excluded from the in use of benchmark data. consolidation, and subsidiaries in publicly reg­ The series compiled by the SEC was bench- ulated industries are also outside the consoli­ marked on tax-return balance sheets published dation to a large degree. The data are thus each year by the Internal Revenue Service (IRS) consistent with national totals of business in Statistics of Income (SOI). Because of the operations such as profits and capital expendi­ 3-year lag in the SOI publication, the usual tures that omit foreign operations, and coverage practice was to publish each year a revision for is consistent with use of other data sources for the three most recent years based on the latest finance and regulated industries. SOI data. However, the last benchmark that had A third advantage of QFR is that the types been used in SEC publications was 1971, and of current assets and liabilities are reported in Table 1 presents a revision of the series origi­ considerable detail and provide substantial in­ nally published by the SEC for 1972, 1973, and formation on liquidity management and on debt 1974 based on SOI totals for those years. This structure. As now structured, QFR is available table thus provides a continuous benchmarked from the end of 1973 for manufacturers and series of the SEC form of data that begins at from the end of 1974 for trade and mining. For the end of 1961. The fourth quarter of 1974 consistency, therefore, the new tabulation be­ is the link point between the old and new gins with the fourth quarter of 1974. (An earlier tabulations. form of QFR for 1947-73 was less detailed and Table 2 presents the new estimates for 10 was for broader consolidations within firms that industry groups and their total. It begins with included foreign affiliates.) the end of 1974, which is the first period for For industries subject to Federal regulation, which all of the data required for the new the new series is benchmarked directly on an­ compilation are available. nual tabulations of electric and gas utilities, The most important data source for the new telephone companies, railroads, and airlines series is the FTC’s Quarterly Financial Report prepared by the regulatory agencies. Quarterly for Manufacturing, Mining, and Trade Cor­ information for these industries is derived from porations (QFR), which has several advantages FTC mail surveys of working-capital positions over the SOI-based data. First, it is based on for major companies in electric, gas, and tele­ phone industries, and from regulatory reports Note—Inquiries about these new data should be for railroads and airlines. directed to Eugenie Mallinson at the Board of Governors or Paul Zarrett at the FTC. For the remainder of the nonfinancial cor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

534 Federal Reserve Bulletin □ July 1978 1. Current assets and liabilities of nonfinancial corporations SEC form benchmarked through 1974 Billions of dollars except for ratios Notes U.S. Receiv­ Inven­ Other Total and Other Total Net Liquidity Current Period Cash Govt. ables tories current current accounts current current working ratio1 ratio2 securities assets assets payable liabilities liabilities capital 1971—Q4... 53.3 11.0 221.1 200.4 43.8 529.6 220.5 105.5 326.0 203.6 .332 1.625 1972—Ql... 53.4 10.6 226.1 206.8 47.8 544.7 230.4 104.0 334.4 210.3 .334 1.629 Q2... 54.1 9.1 231.9 212.8 51.0 559.0 243.0 99.0 342.0 217.0 .334 1.634 Q3... 55.8 7.9 239.6 220.1 52.6 575.9 258.8 96.1 354.9 221.0 .328 1.623 Q4... 59.0 10.6 248.2 225.7 55.8 599.3 282.9 92.7 375.6 223.7 .334 1.595 1973—Ql... 60.3 11.8 256.2 234.8 58.8 621.9 288.8 99.1 387.9 234.0 .337 1.603 Q2... 61.9 10.9 269.3 243.8 60.5 646.3 305.9 101.2 407.1 239.2 .327 1.587 Q3... 62.7 10.8 282.0 253.4 62.1 671.0 321.1 106.0 427.1 243.9 .316 1.571 Q4... 66.3 12.8 288.5 263.9 66.4 697.8 340.3 110.7 450.9 246.9 .323 1.548 1974—Ql... 64.8 13.5 300.1 277.3 69.9 725.6 353.4 117.2 470.6 255.0 .315 1.542 Q2... 65.3 11.7 316.7 290.3 67.2 751.1 375.6 119.6 495.3 255.8 .291 1.516 Q3... 67.6 12.0 325.0 305.7 70.5 780.9 394.6 126.5 521.1 259.8 .288 1.499 Q4... 71.1 12.3 322.1 313.6 71.7 790.7 402.3 128.1 530.4 260.3 .292 1.491 1 (Cash U.S. Govt, securities -f Other current assets)/(Total current liabilities) 2 (Total current assets)/(Total current liabilities) porate universe, no current totals exist in acces­ substantial part of the group. In the tables, this sible form, and in the tabulation this group group is extrapolated forward on the basis of appears as “other.” Statistically this group is historical relationships to the other industries the weakest component of the totals: first, it can included. be based only on SOI benchmarks, of which Totals for the new series will be maintained only 1974 was available for this article; and in the statistical section of the Bulletin, and second, there are no quarterly indicators for any industry detail will be available on request. SOURCES OF DATA BY INDUSTRY Manufacturing, mining, and trade. Current assets and liabilities are taken directly from the balance sheets in the FTC’s Quarterly Financial Railroads. Benchmark data are for regulated rail carriers reporting Report for Manufacturing, Mining, and Trade Corporations, which in the Interstate Commerce Commission’s Transport Statistics in the is published about 3 months after the end of the latest quarter covered. United States', 1975 is the most recent year available. The railroads Each issue of the QFR describes the sampling procedure and consoli­ represented are Class I and Class II line-haul railroads and Class I and dation rules for the tabulations and lists the sources of discontinuity Class II switching and terminal companies. The ICC also provides in the data. The sampling rate is 1:1 for firms of more than $10 million quarterly data for major carriers, and these data are used as indicators in total assets; smaller corporations are selected randomly from national for quarterly movements in the industry totals. Conrail and Amtrak frames. are included. Electric utilities. The Statistics of Privately-Owned Electric Utilities Airlines. The source of both benchmark and quarterly data is the in the United States, published by the U.S. Department of Energy, Civil Aeronautics Board’s Air Carrier Financial Statistics. The data, Energy Information Administration, provides annual benchmarks for which are available through June 1977 in published form, reflect the electric and combination electric and gas public utilities; the most recent position of approximately 40 certificated route air carriers. data are for year-end 1976. The regulated companies covered in the Telephone and telegraph communications. This industry is defined tabulations represent nearly 100 per cent of the industry. Quarterly as the Bell System (exclusive of Western Electric), the independent movements in working capital are based on sample data collected telephone companies, Western Union Corporation, and Communications formerly by the SEC and now by the FTC. Satellite Corporation (Comsat). Benchmark data for the Bell System Gas utilities. Annual benchmarks, which are derived from the Amer­ and Comsat are published in the Federal Communication Commission’s ican Gas Association’s Gas Facts, represent the position of the pipeline, Statistics of Commercial Common Carriers; data for year-end 1976 are distribution, and integrated company segments of natural gas public the latest available. The United States Independent Telephone Associa­ utilities. The most recent available data for this compilation are for tion provides benchmark totals for the nearly 800 independent telephone year-end 1976. Gas Facts presents no detail on working-capital compo­ companies, in Statistics of the Independent Telephone Industry; the most nents, however, and detail on current assets and liabilities at year-end recent statistics are for year-end 1976. Published reports, such as is therefore based on data of interstate pipelines compiled by the Energy stockholder reports and SEC filings, furnish the data for Western Union. Information Administration of the U.S. Department of Energy in Sta­ Quarterly movement for the industry is based on information from tistics of Interstate Natural Gas Pipeline Companies. Quarterly data quarterly sample surveys provided to FTC by the major telephone are estimated from the FTC quarterly sample survey. corporations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Working Capital of Nonfinancial Corporations 535 2. Current assets and liabilities of nonfinancial corporations, by industry Billions of dollars except for ratios U.S. Other Total Other Total Net Cash Govt. Receiv­ Inven­ current current Pay­ current current working Liquidity Current Period securities ables tories assets assets ables liabilitiesliabilities capital ratio1 ratio2 Total nonfinancial corporations 1974—Q4........................... 73.0 11.3 265.5 318.9 65.9 734.6 272.3 179.5 451.8 282.8 .332 1.626 1975—QI........................... 69.2 12.1 255.5 316.3 63.0 716.1 253.8 179.1 432.9 283.2 .333 1.654 Q2........................... 74.4 12.6 259.7 309.6 66.1 722.4 251.0 176.1 427.1 295.3 .358 1.691 Q3........................... 75.7 14.6 271.1 313.6 68.0 743.0 257.3 183.8 441.1 301.9 .359 1.684 Q4........................... 80.0 19.6 272.1 314.7 69.9 756.3 261.2 185.7 446.9 309.5 .379 1.693 1976—01........................... 78.4 22.2 281.6 324.0 73.2 779.4 260.0 199.7 459.7 319.7 .378 1.696 Q2........................... 80.7 23.4 290.2 333.7 73.6 801.7 269.5 200.8 470.3 331.4 .378 1.705 Q3........................... 79.5 24.1 297.9 342.2 73.6 817.4 271.2 212.8 484.0 333.4 .366 1.689 Q4........................... 86.8 26.0 292.4 341.4 76.4 823.1 273.2 214.2 487.5 335.6 .388 1.688 1977—Ql........................... 80.9 26.9 304.5 352.4 78.3 843.2 280.6 222.9 503.4 339.8 .370 1.675 Q2........................... 83.2 22.3 313.2 359.3 79.2 857.3 287.4 223.1 510.5 346.9 .362 1.679 Q3........................... 83.6 21.7 327.1 367.9 81.2 881.7 298.2 231.7 530.2 351.6 .352 1.663 Q4........................... 94.4 20.8 326.2 375.4 84.3 901.2 307.1 236.8 543.9 357.3 .367 1.657 1978—Ql........................... Manufacturing 1974—Q4........................... 28.1 7.2 129.0 179.7 31.3 375.4 99.6 93.1 192.7 182.7 .346 1.948 1975—Ql........................... 26.4 7.5 123.3 179.2 30.1 366.5 91.9 93.2 185.1 181.4 .345 1.980 Q2........................... 27.7 8.1 126.5 174.5 31.7 368.5 89.7 91.2 180.9 187.6 .373 2.037 Q3........................... 28.8 9.2 133.7 172.2 32.5 376.4 91.4 93.8 185.2 191.2 .381 2.032 Q4........................... 31.3 13.8 128.2 174.0 33.5 380.8 94.6 93.5 188.1 192.7 .418 2.025 1976—Ql........................... 31.4 15.5 135.1 175.7 35.6 393.3 91.3 102.9 194.2 199.1 .425 2.025 Q2........................... 32.8 16.3 141.1 178.0 35.0 403.2 94.5 103.6 198.1 205.1 .425 2.035 Q3........................... 32.2 15.8 145.9 182.1 36.4 412.4 95.5 109.1 204.6 207.8 .412 2.016 Q4........................... 35.6 17.3 139.0 187.0 38.4 417.4 98.9 108.7 207.6 209.8 .440 2.011 1977—Ql........................... 32.9 17.2 148.0 189.4 40.0 427.4 100.0 114.6 214.5 212.9 .420 1.992 Q2........................... 34.2 13.6 153.6 193.1 39.7 434.2 103.1 113.4 216.5 217.7 .404 2.006 Q3........................... 33.3 12.9 160.6 196.3 41.1 444.1 106.0 118.3 224.3 219.8 .389 1.980 Q4........................... 40.4 12.3 157.3 200.9 42.5 453.4 111.1 120.6 231.7 221.6 .411 1.956 1978—Ql........................... 37.4 11.6 165.3 206.6 44.1 465.0 113.4 127.5 240.9 224.1 .387 1.930 Retail trade 1974—Q4........................... 10.0 .4 26.4 57.9 7.3 102.0 32.0 26.8 58.8 43.1 .300 1.733 1975—Ql........................... 10.2 .4 23.9 55.7 6.3 96.4 29.8 24.6 54.4 42.1 .310 1.774 Q2........................... 11.0 .4 24.4 55.2 6.9 97.8 30.4 24.9 55.3 42.5 .330 1.770 Q3........................... 11.2 .6 24.2 60.6 6.7 103.2 32.6 26.1 58.7 44.5 .314 1.758 Q4........................... 12.6 .6 26.9 59.0 7.5 106.5 31.2 27.0 58.3 48.3 .354 1.829 1976—Ql........................... 11.2 .6 25.6 63.3 6.7 107.4 34.4 26.4 60.8 46.7 .304 1.768 Q2........................... 11.2 .6 25.7 66.1 7.5 111.1 36.7 26.2 62.9 48.3 .308 1.768 Q3........................... 11.6 .6 26.7 70.9 7.1 116.9 41.4 26.7 68.2 48.7 .283 1.715 Q4........................... 12.7 .6 27.8 63.7 7.5 112.1 36.7 27.5 64.2 48.0 .322 1.747 1977—Ql........................... 11.5 .5 26.2 69.4 7.2 114.9 40.0 27.1 67.1 47.7 .287 1.711 Q2........................... 12.1 .5 26.7 70.7 7.5 117.5 40.6 28.6 69.2 48.3 .290 1.698 Q3........................... 12.5 .5 27.8 75.1 7.6 123.5 43.8 29.8 73.6 49.9 .279 1.679 Q4........................... 13.3 .7 30.2 73.7 7.9 125.8 40.7 30.5 71.2 54.6 .308 1.767 1978—Ql........................... Wholesale trade 1974—Q4........................... 12.6 .6 46.9 52.3 7.3 119.7 58.0 16.8 74.8 44.9 .274 1.601 1975—Ql........................... 11.3 .5 46.5 52.4 7.3 117.9 56.1 16.7 72.8 45.1 .261 1.619 Q2........................... 13.2 .5 46.7 50.8 7.7 118.9 56.6 15.8 72.4 46.5 .295 1.642 Q3........................... 12.8 .5 48.8 51.0 8.5 121.5 58.1 17.0 75.1 46.5 .290 1.619 Q4........................... 12.1 .5 49.8 51.2 8.3 121.9 58.2 17.3 75.4 46.5 .276 1.616 1976—Ql........................... 11.6 .5 52.1 53.9 8.8 126.9 60.1 16.8 77.0 49.9 .271 1.649 Q2........................... 11.6 .5 53.4 57.1 8.5 131.1 63.2 17.3 80.4 50.7 .257 1.630 Q3........................... 11.1 .7 53.4 55.8 7.9 128.8 60.5 18.2 78.7 50.2 .249 1.637 Q4........................... 11.7 .6 53.0 57.8 8.1 131.2 62.5 19.0 81.4 49.8 .250 1.611 1977—Ql........................... 10.8 .4 53.0 58.9 7.5 130.6 63.0 17.8 80.8 49.8 .232 1.617 Q2........................... 11.0 .4 55.5 59.5 7.7 134.2 65.1 18.7 83.8 50.3 .229 1.601 Q3........................... 11.8 .4 57.8 58.2 7.6 135.8 64.8 18.8 83.6 52.2 .237 1.625 Q4........................... 11.2 .5 56.0 62.3 8.0 137.9 65.9 19.8 85.8 52.1 .229 1.608 1978—Ql........................... 10.4 .4 57.0 64.6 8.1 140.6 68.4 20.2 88.7 51.9 .214 1.586 For notes see p. 537. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

536 Federal Reserve Bulletin □ July 1978 TABLE 2—Continued U.S. Other Total Other Total Net Cash Govt. Receiv­ Inven­ current current Pay­ current current working Liquidity Current Period securities ables tories assets assets ables liabilitiesliabilities capital ratio i ratio2 Mining 1974—Q4........................... 1.9 .4 2.7 1.1 1.1 7.2 2.5 2.1 4.6 2.6 .738 1.570 1975—Ql........................... 1.8 .5 2.6 1.2 1.1 7.1 2.5 2.4 4.9 2.3 .696 1.466 Q2........................... 1.7 .5 2.9 1.2 1.0 7.3 2.8 1.9 4.7 2.7 .686 1.571 Q3........................... 1.9 .6 3.1 1.4 1.1 8 0 3.0 2.2 5.2 2.8 .679 1.538 Q4........................... 2.5 .7 4.0 1.6 1.2 10.0 3.5 3.0 6.5 3.5 .682 1.530 1976—Ql........................... 2.4 .7 3.9 1.7 1.2 9.8 3.7 2.8 6.5 3.3 .647 1.505 Q2........................... 2.3 .7 3.8 1.8 1.2 9.8 3.2 2.6 5.8 4.0 .715 1,683 Q3........................... 2.1 .6 4.1 1.8 1.2 9.8 3.4 3.4 6.7 3.1 .574 1.455 Q4.......................... 2.3 .5 3.9 1.8 1.2 9.7 2.7 2.9 5.6 4.1 .716 1.737 1977—Ql........................... 2.2 .5 4.2 2.0 1.2 10.0 3.0 3.2 6.3 3.8 .616 1.605 Q2.......................... 2.3 .5 4.4 2.0 1.3 10.5 3.2 3.2 6.4 4.2 .644 1.652 Q3.......................... 2.4 .4 5.1 2.4 1.5 11.9 4.4 3.3 7.7 4.2 .565 1.550 Q4........................... 2.7 .4 5.4 2.4 1.5 12.4 4.4 3.8 8.2 4.3 .571 1.523 1978—Ql........................... 2.9 .6 4.9 2.5 1.5 12.3 4.1 3.9 8.1 4.2 .612 1.525 Electric public utilities 1974—Q4........................... 1.3 .2 4.7 4.3 1.3 11.9 10.1 5.1 15.2 -3.4 .183 .779 1975—Ql........................... 1.3 .3 4.8 4.2 1.3 11.8 8.6 5.4 13.9 -2.1 .206 .850 Q2........................... 1.4 .3 4.6 4.7 1.4 12.5 8.7 5.5 14.2 -1.7 .226 .882 Q3.......................... 1.3 1.0 4.8 4.6 1.5 13.1 7.4 6.4 13.8 -.7 .274 .949 Q4........................... 1.3 .6 5.4 4.9 1.5 13.5 7.8 5.8 13.7 -.1 .243 .991 1976—Ql.......................... 1.5 .5 5.4 4.7 2.0 14.1 6.8 6.7 13.5 .6 .296 1.045 Q2.......................... 1.4 .3 5.5 5.4 2.0 14.6 8.3 6.1 14.4 .2 .257 1.015 Q3........................... 1.3 1.0 5.6 5.1 1.8 14.7 6.9 6.9 13.8 .9 .290 1.069 Q4.......................... 1.3 .8 6.5 5.3 1.7 15.6 8.0 6.1 14.1 1.5 .268 1.108 1977—Ql.......................... 1.5 1.1 7.7 5.8 2.3 18.4 8.0 7.7 15.7 2.7 .314 1.173 Q2.......................... 1.3 .6 7.1 6.3 2.1 17.5 8.5 6.5 15.0 2.5 .268 1. 64 Q3........................... 1.2 .5 7.6 7.0 2.0 18.4 8.4 7.4 15.8 2.6 .238 1.166 Q4........................... 1.5 .3 7.7 7.2 2.4 19.0 10.0 6.7 16.7 2.3 .248 1.139 1978—Ql........................... 1.6 .3 8.2 6.2 2.6 18.8 9.5 7.1 16.6 2.2 .270 1.133 Gas public utilities 1974—Q4............................... .6 .1 2.6 1.1 .9 5.2 4.7 2.0 6.8 -1.5 .238 .772 1975—Ql.......................... .6 .5 2.7 .9 .9 5.6 4.2 2.6 6.8 -1.2 .291 .824 Q2.......................... .5 .3 2.4 1.1 1.1 5.4 3.7 2.4 6.1 -.7 .318 .880 Q3.......................... .5 .0 2.5 1.4 1.1 5.6 4.3 2.2 6.5 -.9 .256 .858 Q4.......................... .5 .2 3.3 1.4 1.4 6.7 5.2 2.2 7.4 -.7 .281 .906 1976—Ql.......................... .6 .5 3.7 1.3 1.2 7.3 4.4 3.1 7.5 -.2 .314 .978 Q2........................... .6 .1 3.2 1.5 1.3 6.7 3.9 2.5 6.4 .3 .315 1.047 Q3........................... .5 .3 3.4 1.9 1.6 7.5 5.1 2.4 7.5 .0 .308 1.005 Q4.......................... .6 .3 4.7 1.7 1.7 9.0 5.4 2.9 8.3 .6 .308 1.078 1977—Ql........................... .8 .4 5.6 1.7 2.1 10.6 5.2 3.8 9.0 1.7 .368 1.184 Q2........................... .5 .4 4.1 1.9 2.5 9.4 4.8 3.0 7.8 1.6 .433 1.202 Q3.......................... .3 .3 3.9 2.5 2.3 9.3 5.5 2.9 8.4 .9 .348 1.102 Q4........................... .4 .3 5.6 2.4 2.7 11.3 7.4 3.2 10.6 .8 .323 1.071 1978—Ql.......................... .7 .5 6.6 1.9 2.7 12.5 6.2 4.8 11.0 1.5 .366 1.136 Telephone and telegraph communication 1974—Q4........................... 1.3 .1 3.9 .8 .5 6.5 6.4 3.3 9.7 -3.3 .187 .665 1975—Ql........................... 1.3 .2 3.8 .8 .7 6.8 5.9 3.4 9.4 -2.6 .233 .724 Q2........................... 1.4 .1 4.0 .8 .7 7.0 5.5 3.3 8.8 -1.8 .253 .791 Q3........................... 1.6 .1 4.1 .8 .5 7.1 5.6 3.5 9.0 -1.9 .245 .789 Q4........................... 1.3 .1 4.3 .7 .4 6.8 5.3 3.6 8.9 -2.0 .200 .772 1976—Ql........................... 1.3 .2 4.1 .8 .9 7.3 5.1 3.9 9.0 -1.7 .269 .812 Q2........................... 1.4 .4 4.4 .8 1.3 8.3 5.1 3.6 8.7 -.5 .351 .947 Q3........................... 1.2 .4 4.6 .9 1.1 8.1 4.4 4.0 8.4 -.3 .317 .969 Q4........................... 1.1 .1 4.8 .8 .9 7.8 5.4 4.2 9.6 -1.8 .227 .811 1977—Ql........................... .9 .3 4.6 .9 .8 7.5 5.9 3.7 9.6 -2.1 .201 .778 Q2........................... .9 .2 5.0 1.0 .8 7.8 5.8 3.5 9.3 -1.5 .199 .840 Q3........................... 1.0 .1 5.1 1.0 1.0 8.2 6.3 3.5 9.9 -1.6 .213 .835 Q4........................... 1.1 .1 5.5 1.0 .7 8.4 7.0 3.5 10.5 -2.1 .182 .797 1978—Ql........................... .9 .1 5.4 .9 .8 8.1 6.8 4.7 11.5 -3.4 .156 .704 For notes see p. 537. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Working Capital of Nonfinancial Corporations 537 TABLE 2—Continued U.S. Other Total Other Total Net Cash Govt. Receiv­ Inven­ current current Pay­ current current working Liquidity Current Period securities ables tories assets assets ables liabilitiesliabilities capital ratio1 ratio2 Railroad transportation 1974—Q4........................... .2 1.2 2.5 1.0 .2 5.0 3.1 1.8 4.9 .1 .317 1.018 1975—Ql........................... .2 .9 2.5 1.1 .1 4.8 3.0 1.7 4.8 .0 .258 .999 Q2........................... .2 .9 2.5 1.1 .1 4.8 3.0 1.8 4.8 .0 .257 1.009 Q3........................... .2 1.1 2.4 1.1 .2 5.0 3.2 1.9 5.2 -.2 .283 .966 Q4........................... .2 1.1 2.5 1.1 .2 5.1 3.1 1.8 4.9 .2 .304 1.031 1976—Ql........................... .2 1.2 2.5 1.1 .2 5.3 3.2 1.9 5.1 .1 .319 1.027 Q2........................... .3 1.4 2.5 1.2 .2 5.5 3.3 2.0 5.3 .2 .345 1.039 Q3........................... .3 1.5 2.5 1.2 .2 5.6 3.4 2.3 5.6 .0 .347 1.000 Q4........................... .3 1.7 2.6 1.2 .2 6.0 3.4 2.1 5.6 .4 .394 1.075 1977—Ql........................... .3 1.8 2.8 1.3 .2 6.5 3.7 2.3 6.0 .5 .393 1.096 Q2........................... .3 1.9 2.9 1.4 .2 6.8 3.8 2.4 6.2 .6 .392 1.099 Q3........................... .3 2.1 3.1 1.5 .2 7.4 4.2 2.6 6.8 .7 .394 1.098 Q4........................... .3 1.8 3.3 1.4 .2 7.1 3.9 2.4 6.3 .9 .371 1.137 1978—Ql........................... .3 1.5 3.5 1.6 .2 7.2 4.3 2.4 6.7 .5 .302 1.070 Airline transportation 1974—Q4........................... .4 .1 1.9 .6 .7 3.7 1.9 1.5 3.4 .3 .362 1.093 1975—Ql........................... .4 .2 1.9 .6 .6 3.6 2.0 1.4 3.5 .2 .345 1.058 Q2........................... .4 .2 2.0 .6 .6 3.8 2.0 1.5 3.4 .3 .351 1.098 Q3........................... .4 .3 2.0 .6 .7 3.9 2.0 1.4 3.4 .5 .390 1.146 Q4........................... .4 .4 2.0 .6 .5 3.9 2.1 1.4 3.5 .4 .368 1.119 1976—Ql........................... .3 .3 2.0 .6 .6 3.9 1.8 1.9 3.7 .3 .358 1.069 Q2........................... .3 .3 2.2 .6 .9 4.4 1.7 2.3 4.0 .4 .397 1.103 Q3........................... .3 .4 2.2 .6 1.0 4.5 1.5 2.3 3.9 .6 .425 1.153 Q4........................... .4 .4 2.2 .7 1.0 4.5 1.5 2.3 3.9 .7 .451 1.181 1977—Ql........................... .3 .4 2.3 .7 1.0 4.6 1.6 2.5 4.1 .5 .409 1.123 Q2........................... .3 .4 2.4 .7 1.1 4.9 1.7 2.8 4.4 .5 .408 1.108 Q3........................... .3 .4 2.5 .7 1.2 5.1 1.7 2.8 4.5 .6 .422 1.121 Q4........................... .3 .5 2.5 .7 1.2 5.2 1.8 2.8 4.6 .6 .425 1.122 1978—Ql........................... .2 .5 2.6 .7 1.3 5.2 1.8 3.0 4.9 .4 .403 1.079 Other 1974—Q4........................... 16.7 1.0 44.8 20.2 15.3 98.0 53.9 27.0 80.8 17.2 .409 1.212 1975—Ql........................... 15.9 1.1 43.5 20.4 14.6 95.5 49.7 27.8 77.5 18.0 .408 1.233 Q2........................... 16.8 1.1 43.7 19.7 15.0 96.4 48.5 28.0 76.5 19.9 .431 1.260 Q3........................... 17.0 1.3 45.5 20.1 15.3 99.1 49.7 29.3 79.0 20.1 .424 1.254 Q4........................... 17.9 1.6 45.6 20.2 15.5 100.9 50.2 29.9 80.1 20.8 .437 1.260 1976—Ql........................... 17.9 2.2 47.2 20.8 16.0 104.0 49.2 33.2 82.4 21.6 .438 1.262 Q2........................... 18.8 2.6 48.4 21.3 15.8 107.0 49.6 34.6 84.3 22.7 .442 1.269 Q3........................... 19.0 3.1 49.6 21.8 15.5 109.0 49.2 37.6 86.7 22.3 .434 1.258 Q4......................... 21.0 3.8 48.0 21.4 15.7 109.8 48.8 38.5 87.3 22.5 .463 1.258 1977-r-Ql........................... 19.7 4.2 50.2 22.3 16.1 112.6 50.1 40.2 90.3 22.2 .444 1.246 Q2........................... 20.4 3.8 51.4 22.7 16.3 114.5 50.8 41.0 91.8 22.8 .441 1.248 Q3........................... 20.5 4.0 53.5 23.2 16.7 117.9 53.2 42.3 95.5 22.4 .431 1.234 Q4........................... 23.1 4.1 52.7 23.5 17.2 120.6 54.9 43.4 98.3 22.3 .451 1.227 1978—Ql........................... 1 (Cash + U.S. Govt, securities + Other current assets)/(Total current liabilities) 2 (Total current assets)/(Total current liabilities) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

538 Statements to Congress Statement by G. William Miller, Chairman, operate in this country. Rather, it has been Board of Governors of the Federal Reserve motivated by the desire to provide a secure System, before the Subcommittee on Financial framework, at the Federal level, in which Institutions of the Committee on Banking, foreign banks might operate here and which Housing and Urban Affairs, U.S. Senate, June would be fair and equitable to all participants 21, 1978. in our banking markets. I said that one of the reasons why the Federal I am pleased to appear before this committee Reserve has sought legislation in this area has today to present the views of the Board of been the growth in the number, size, and im­ Governors of the Federal Reserve System on portance of foreign bank operations in this H.R. 10899, the International Banking Act of country. Let me review briefly some of the 1978. dimensions of that growth. Before commenting on the specific provi­ When the Board was developing its legisla­ sions of the bill as enacted by the House of tive proposals at the end of 1973, there were Representatives, I should like to review some about 60 foreign banks operating banking of­ of the reasons why the Board has for several fices in the United States with combined assets years supported legislation that would provide of about $37 billion. Growth of these operations a Federal presence in the regulation and super­ had been swift in the preceding years, and, as vision of the operations of foreign banks in the the Board stated at the time, that trend was United States. These reasons lie in the growth clearly bound to continue. Those expectations in number and size of foreign bank operations, have been more than fulfilled. As of April 1978, and their ever-increasing importance to the 122 foreign banks operated banking facilities in structure of the banking system and to the func­ the United States with total assets of $90 billion. tioning of money and credit markets. The latter Appended to this statement are a series of has obvious implications for the conduct of charts illustrating the growth of the U.S. opera­ monetary policy. tions of foreign banks.1 Since the figures for The Federal Reserve has welcomed the entry total assets exaggerate the dimensions of foreign and activities of responsible foreign banks in bank activity because of intercompany and this country. Some of them are longtime resi­ clearing transactions, the charts also present dents here; others are relative newcomers to data on “standard banking assets,” which omit international banking and to the American mar­ these items. By either measure, as the charts ket. They have contributed to a more competi­ indicate, growth of foreign bank activity is not tive environment in our banking markets and abating. Additional foreign banks continue to to the more efficient functioning of our money enter the United States, and foreign banks with and credit markets. The banking and financial existing facilities here are continuing to expand services available to the American consumer their activities. and businessman have been enlarged by their One sector of foreign bank operations under­ presence. In addition, they have behaved lines their success in penetrating U.S. banking responsibly and have given little cause for supervisory concern. The Board’s support for 1 The attachments to this statement are available on request from Publications Services, Division of Admin­ Federal legislation to regulate foreign banks has istrative Services, Board of Governors of the Federal never been intended to curb their ability to Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 539 markets. I refer to their commercial lending. mendations on foreign banks have consistently The expansion of foreign banks in this segment been grounded on the principle of national of the credit market is shown in Chart 4. As treatment or nondiscrimination. That principle of April, U.S. offices of foreign banks had more has a long and respected history in the affairs than $26 billion in commercial and industrial of this Nation. It provides for fair and equitable loans. This amount equals about one-fifth of treatment for all. Currently, by contrast, foreign similar loans by large banks that report weekly banks have certain advantages over our indig­ to the Federal Reserve. In New York, the pro­ enous institutions. The Federal Reserve con­ portion of commercial and industrial loans tinues to believe that the foreign banking com­ accounted for by foreign banks was twice as munity should be incorporated into the U.S. large. Other aspects of current operations are banking system on an equal footing with do­ contained in the attached statistical appendix. mestic banks. In sum, foreign banks in this country can no Now I would like to turn to the specific longer be characterized as specialized institu­ provisions of H.R. 10899. The Board welcomes tions on the periphery of our banking system the achievement of the House of Representatives engaged principally in the financing of foreign in passing this act and believes that it represents trade. Those days are long since past. On the considerable progress toward the goal of appro­ contrary, what we have today is a diverse array priate legislation in this area. At the same time, of institutions operating on a very large scale the Board believes that the bill is deficient in in a wide range of markets for banking services several respects when viewed against the stand­ in this country. At the wholesale level, the ard of national treatment. Also, improvements foreign banks are competing directly and suc­ can be made in a number of provisions as they cessfully for the business of multinational cor­ are now drafted. We have already furnished the porations. Foreign banks are important partici­ committee with detailed suggestions for changes pants in U.S. money markets and are also major in the bill. I shall not go over them here. Rather, traders in the U.S. foreign exchange market. in the remainder of my remarks, I would like And at the retail level, foreign banks are be­ to focus on two key sections of the bill: Section coming increasingly important, notably in Cali­ 5, dealing with interstate banking, and Section fornia. In this connection, it is worth remem­ 7, dealing with the Federal Reserve’s authority. bering that of the 122 foreign banks operating Interstate banking has been and is a contro­ here, 45 have worldwide assets of more than versial topic. Opinions differ widely about the $10 billion, and all but a handful have world­ wisdom of the existing national policy that bars wide assets of more than $1 billion. These banks from operating full-scale offices across institutions are thus to be compared with the State lines. It is not surprising, therefore, that largest of our domestic banking organizations. Section 5 of the International Banking Act has It is incongruous that institutions such as proven the most controversial. What has been these can operate on such a scale in this country surprising was that, in enacting H.R. 10899, without being subject to Federal regulation of the House of Representatives chosfc to perpetu­ their entry and activities and without being ate the present situation in which foreign banks, subject to the rules of the central bank. These but not domestic banks, can operate banking institutions are really not a part of our dual offices on a multistate basis. banking system. As the dual banking system has As of this April, there were 63 foreign banks evolved in this country, there is some degree operating banking facilities in more than one of Federal supervision over virtually every bank State. Thirty-one of these institutions were in the United States. And in practice, the largest operating in three or more States, through banks are member banks of the Federal Reserve agencies, branches, and subsidiaries. There can System. The Federal Reserve believes that the be no doubt that these multistate facilities give correction of the anomalous position of foreign foreign banks a considerable advantage over banks is overdue. their domestic competitors. Under the House- The Federal Reserve’s legislative recom­ passed bill, these multistate operations are cer­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

540 Federal Reserve Bulletin □ July 1978 tain to grow further. Additional States have aware, Edge corporations were authorized by passed legislation to allow branches or agencies the Congress as a means of enlarging the inter­ of foreign banks to begin operations, and the national banking facilities available throughout foreign banks will take advantage of those op­ the country without impinging on purely do­ portunities sooner or later. mestic lending or deposit business. Besides al­ Another oddity of the present structure is that lowing foreign banks to own Edge corporations, a domestic banking institution, by changing to the Board would go further and permit them foreign ownership, can become part of a bank­ to operate agencies on a multistate basis so long ing organization with multistate facilities. This as their business was confined to international possibility is highlighted by the recent an­ operations such as those to which Edge cor­ nouncements by three foreign banks of proposed porations are limited. This seems to the Board acquisitions of large domestic banking institu­ to be a reasonable compromise between the tions. The three foreign banks involved already interests of the States and the national interest. have multistate facilities. The compromise just mentioned is the ap­ The national policy of barring interstate proach that is preferred by the Board. Nonethe­ banking, as embodied in the McFadden Act, less, some States contend that this is too re­ needs review. Banking has changed. The struc­ strictive: that foreign banks will not establish ture of the economy and its financial needs have limited agencies in their States and that conse­ also changed since the McFadden Act was quently they will be deprived of international passed more than 50 years ago. Pending com­ financial services. Accordingly, these States do pletion of that review, however, it is inconsist­ not wish any restrictions on the activities of ent with the principle of national treatment and agencies other than those in State laws. One unfair to domestic banks to allow foreign banks of their arguments is that even without restric­ to continue to expand offices across State lines. tions, the activities of agencies will be basically The Board therefore believes that Section 5 of an international character. The Board does of H.R. 10899 should be amended in two re­ not agree with these arguments and believes that spects: first, to provide that the McFadden Act the position advocated is inconsistent with the shall apply to Federal branches and agencies; principle of national treatment. However, the second, to impose on State branches the same Board would not oppose the legislation if this geographical restrictions that State laws impose position on State agencies were followed. on domestic State banks. Put in this way, the Section 7 of the bill is deficient, in the provision would allow foreign banks operating Board’s judgment, in two respects: the coverage State branches to benefit from any reciprocal on reserve requirements and the supervisory arrangements that the States might enter into authority of the Federal Reserve. with regard to interstate banking. As enacted by the House, the bill gives the The Board fully appreciates the States’ inter­ Federal Reserve authority to impose reserve ests in promoting their foreign commerce and requirements on the deposits and similar liabili­ foreign investment within their borders. As part ties of branches, agencies, and commercial of this effort, a number of States have amended lending companies of foreign banks. Omitted their banking laws in recent years to allow from that authority is the ability to impose foreign banks to operate agencies. These agen­ reserve requirements on the deposits of their cies are generally empowered to provide inter­ subsidiary banks. This omission evidently stems national banking services but not to compete in from the mistaken belief that these subsidiary local deposit banking. banks are comparable to the domestically owned The International Banking Act, as the Board State-chartered banks that have the option of envisages it, would not interfere with the avail­ being members of the Federal Reserve System. ability of these kinds of facilities in the States. I stated earlier that one of the features of the The legislation has always contained a provision dual banking system, as it in fact operates in to allow foreign ownership of Edge corpora­ this country, is that all the large banks are tions. As members of the subcommittee are directly subject to the rules of the central bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 541 The foreign banks operating in the United States international operations of member banks, and are very large banks, whether measured by their it already has close working relations with global activities or by the totality of their activ­ foreign central banks. Moreover, the act gives ities in this country. The operations of their the Federal Reserve authority to lend to foreign subsidiary banks are now an important segment banks maintaining reserves. In extending credit of those activities, collectively and individually. to domestic member banks, the Federal Reserve Total assets of these subsidiaries are about $19 relies on the examination process for informa­ billion while individual subsidiaries range up to tion on the condition of the borrowing institution $2 billion in size. and in policing the use of the discount window. Foreign banks operate their agencies, Further, the act gives the Federal Reserve au­ branches, and subsidiaries in this country as an thority and responsibility to employ cease-andintegrated organization. There is little logic, desist orders dealing with unsafe and unsound therefore, in subjecting agencies and branches banking practices in U.S. offices of foreign to reserve requirements but exempting subsidi­ banks. Detection and analysis of those practices ary banks. The latter account for about one-fifth come out of the examination process. of total foreign bank activity in the United Finally, under the act, the Board of Gover­ States. In the case of one of the largest foreign nors is required within 2 years to submit legis­ bank operations here, nearly half of its activities lative recommendations for additional require­ are conducted through subsidiaries. Foreign ments to be made applicable to foreign banks. bank interest in U.S. subsidiary banks is at a Informed recommendations will require the kind high level. That interest will be encouraged if of firsthand knowledge of the operations of these reserve requirements can be avoided simply by offices that is obtained through the examination shifting business to a subsidiary. process. For these reasons the Board urges that The other aspect of Section 7 that deserves Section 7 be amended to give the Federal Re­ amendment concerns the Federal Reserve’s serve adequate supervisory authority over supervisory authority. As the section now reads, foreign bank operations. that authority is not commensurate with the This suggestion, it should be noted, parallels responsibilities assigned to the Federal Reserve. the situation of State member banks. In that The emphasis is on purely State supervision of case, the Federal Reserve has the primary ex­ foreign bank operations, although the Federal amining authority at the Federal level with the Deposit Insurance Corporation would have ex­ Federal Deposit Insurance Corporation having amining authority under the provisions of Sec­ residual examining authority. The States have tion 6. The Federal Reserve would have no their examining authority as well. direct examining authority. Mr. Chairman, today I have emphasized The need for a direct Federal presence in the again the Board’s belief that legislation is examination of foreign bank operations is pat­ needed to regulate foreign banks in this country ent. These institutions are operating in several and that the basis for that legislation should be States, and the banking authorities of individual national treatment. Developments since the dis­ States are not and cannot be equipped to judge cussion of the role of foreign banks in this the soundness of their operations on a nation­ country was initiated have confirmed the grow­ wide basis. Furthermore, these are worldwide ing importance of foreign bank activity in our institutions and their supervision entails dealing economy and our financial markets. The issues with the parent institution overseas and its po­ have been explored and debated at length. The litical and regulatory authorities. main outlines of the legislative provisions have The Board believes that the Federal Reserve been determined. In the Board’s judgment, this should be given the primary examination au­ is the year in which action should be taken. thority at the Federal level to meet this need. The Federal Reserve has suggested a number The Federal Reserve possesses the international of amendments to the legislation. In this state­ banking expertise required to fill this role as a ment I have focused on the two main areas in result of its regulatory responsibilities for the which we believe changes should be made. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

542 Federal Reserve Bulletin □ July 1978 These changes would be consistent with the ments that we have suggested, the Board be­ principle of national treatment and would pro­ lieves that the International Banking Act would vide for adequate supervision of foreign bank equitably resolve the problems that have been activities in the United States. With the amend­ raised and would meet the public need. □ Statement by J. Charles Partee, Member, Board The principal need for the authority, histori­ of Governors of the Federal Reserve System, cally, has arisen on the occasion of sharp de­ before the Subcommittee on Domestic Monetary clines in the Treasury’s cash balance just prior Policy of the Committee on Banking, Finance to quarterly tax payment dates. Instead of going and Urban Affairs, U.S. House of Repre­ to the financial markets for funds that would sentatives, June 27, 1978. be needed only temporarily, the Treasury bor­ rowed directly from the Federal Reserve and I appreciate the opportunity to present the views repaid this indebtedness immediately upon re­ of the Board of Governors of the Federal Re­ ceipt of the tax revenues. In recent years, how­ serve System on the direct borrowing authority ever, the frequency of direct borrowing for this of the U.S. Treasury. As the committee is purpose has been reduced significantly with the aware, this authority permits the Federal Re­ introduction of short-dated cash-management serve to purchase obligations of the United bills. States directly from the Treasury in amounts up The direct purchase authority has always been to $5 billion. exercised at the initiative of the Treasury. Due The purpose of the direct borrowing authority to the close operational relationship between the is to aid the Treasury in the management of its Federal Reserve and the Treasury, a direct bor­ cash and debt positions. The authority provides rowing transaction can be accomplished assurance that the Treasury can meet its obliga­ quickly, even on the day it is requested. Thus, tions without delay in the event of temporary temporary accommodation of the Treasury can need. This supplemental source of funding can be achieved when needed without delay. be of particular value if there are large unfore­ The terms and conditions of direct Federal seen drains on the Treasury’s cash position—as Reserve purchases of Treasury obligations are when the timing of Federal receipts and expend­ established by the Federal Open Market Com­ itures is more erratic than expected—or in the mittee (FOMC). At present, the interest rate event of a national emergency. paid by the Treasury on such obligations is lA Since the establishment by the Congress of of 1 per cent below the discount rate at the the direct borrowing authority in 1942, it has Federal Reserve Bank of New York. In addi­ been needed on 44 occcasions—and only once tion, the Federal Reserve is fully aware of its since 1975. In every instance, the volume of responsibility to ensure that the authority for funds borrowed was well under the maximum direct purchases is used prudently. Thus, the permitted by law and was outstanding only a FOMC’s authorization for direct purchases has short time. In most cases, the amount borrowed consistently limited the System’s holdings to was below $1 billion, and in the great majority, amounts well below the statutory maximum. At the indebtedness was terminated in less than 10 present, that limit is $2 billion. A request for days. The largest single borrowing amounted to greater accommodation would be subject to re­ $2Vi billion; and the longest duration was 28 view by the FOMC before being honored. days. Thus, the record indicates that the Treas­ There are other safeguards and limitations on ury has utilized this borrowing authority infre­ the Treasury’s direct borrowing authority, quently, in limited amounts, and for very brief beyond the FOMC’s monitoring of this activity. periods. All direct borrowing is reported promptly in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 543 Treasury’s daily financial statement and in the contemplation of the expiration of the temporary weekly statements of condition of the Federal ceiling on the public debt. It should be empha­ Reserve Banks, all of which are available to sized that this borrowing was not undertaken the public. Use of the authority is also reported to circumvent restrictions imposed by the Con­ by the Federal Reserve in its Annual Report gress on Treasury indebtedness but was an in­ to the Congress. Also, direct borrowing is sub­ terim measure to assure timely discharge of the ject to the Federal debt ceiling imposed by the Treasury’s obligations until the Congress took Congress. action on a new temporary debt ceiling. In recent years, the Treasury’s need to offset In conclusion, the Board believes that the cash drains just before tax payment dates has direct purchase authority has been effective in been met principally by means of cash-manage- enabling the Treasury to meet unexpectedly ment bills. These debt instruments can be issued large cash drains and to achieve its debt-man­ with maturities of very short duration and are agement objectives. The assurance that the sold in the market in relatively large amounts Treasury would have the option of obtaining on short notice. And since the cash drains ex­ immediate—though limited—funds outside the perienced in recent years generally have been financial markets in times of unanticipated and within the ranges expected, the Treasury has had temporary need is a desirable safeguard. It is less need to fall back on its direct borrowing analogous to the ability of member banks to turn authority before tax payment dates. to the Federal Reserve as a temporary source Nonetheless, other circumstances may require of funds through the discount window, or to the Treasury to resort to direct borrowing to the arrangement for funding temporary credit meet its debt-management and cash disbursal needs that the Congress has mandated for obligations in an orderly and timely manner. various Federal agencies with the Treasury. For Such an episode occurred last fall when the these reasons the Board continues to support Treasury borrowed $2 Vi billion directly from the strongly the extension of the direct purchase Federal Reserve to bolster its cash position in authority. □ Statement by G. William Miller, Chairman, long coal strike, as shown in Chart I.1 But these Board of Governors of the Federal Reserve were transitory effects—and business activity System, before the Joint Economic Committee recovered vigorously in the spring. For the first of the U.S. Congress, June 29, 1978. 6 months of the year, real annual growth in the gross national product appears likely to average Mr. Chairman, I appreciate this opportunity to around 4 per cent—close to the pace during the participate on behalf of the Board of Governors latter half of 1977. Thus, despite the consid­ of the Federal Reserve System in the Joint erable volatility in key areas of the economy, Economic Committee’s midyear review of the the underlying momentum of the expansion ap­ economy. These sessions provide an excellent pears to have been well maintained. opportunity to assess economic conditions and The strength of aggregate demand has stimu­ policies. lated a substantial further improvement in the job market. Employment gains have been ex­ Economic activity exhibits healthy growth. ceptionally strong. More than 2 million nonfarm The economy has continued to expand at a jobs were created over the last 6 months, which satisfactory though uneven rate over the first half of this year. Industrial production, construction, 1 The attachments to this statement are available on request from Publications Services, Division of Admin­ and retail sales were temporarily depressed early istrative Services, Board of Governors of the Federal in the year by unusually severe weather and the Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

544 Federal Reserve Bulletin □ July 1978 lowered the unemployment rate by more than Some pick-up in growth abroad and our im­ V2 of 1 percentage point to just over 6 per cent proved competitive position should help to boost of the labor force. The jobless rate for heads exports. However, U.S. demand for imports— of households fell Vi of 1 percentage point to both oil and other products—is likely to remain 3.7 per cent. The proportion of the working-age quite high. population with jobs has moved up to 58.6 per Among other sectors of demand, State and cent, a new record high. The sustained strength local governments have maintained conservative of demand for workers suggests that business­ spending policies for some time, and it is likely men remain optimistic and are prepared to in­ that the reverberations of the passage of Propo­ crease production and other activities further. sition 13 in California may be evident in an even more cautious pattern of outlays in the period And growth prospects remain favorable. ahead. Growth of economic activity recently has Residential construction activity is expected slowed, as was expected, from the unusually to begin to taper off later this year in response rapid pace of the spring. A moderate rate of to tighter mortgage market conditions. How­ economic growth appears to be a reasonable ever, housing starts were still above a 2 million prospect for the balance of the year. Both con­ annual rate in May, virtually assuring brisk sumer outlays and business spending should construction activity over the next few months. provide support for further expansion of activ­ ity. Consumers’ demand for new cars has been But the price situation has worsened. Thus particularly strong, and the current rate of sales in some respects the immediate outlook appears is the highest in this expansion. The advanced generally favorable. But in one critical regard sales pace may, in part, represent purchasing the economic situation has deteriorated. The in anticipation of further price rises. But surveys recent intensification of inflation raises profound indicate that consumer confidence remains gen­ questions in regard to the longer run. The rate erally high, although there has been some recent of price increase has accelerated sharply both moderation, and if growth of income is sus­ at the consumer and the producer level. A major tained, the prospects for further gains in con­ factor was the effect on food prices of a decline sumer spending appear good. in meat production. But other prices rose at an Business outlays for both inventories and accelerated rate as well. Excluding food and fixed capital goods have contributed signifi­ energy, retail prices have risen at an annual rate cantly to the recent pace of activity. A larger of more than 8 per cent so far this year, up rate of inventory accumulation was to be ex­ from a 6V2 per cent rate of increase in 1977. pected, in light of the burst of final sales late Actions of the Government have also played a last year and the damping effect of adverse significant role in the recent worsening of infla­ weather on production during the winter. In­ tion. Service prices have risen strongly, in­ ventories in most sectors appear quite low rela­ fluenced importantly by the rise in the minimum tive to sales, and continued growth of inventory wage on January 1. Moreover, increases in investment—albeit at a more moderate rate— social security and unemployment insurance should be evident over the next few quarters. taxes have added to labor costs on a broad scale, Business investment in plant and equipment, while costly regulatory actions continue to put after lagging early in the economic upswing, upward pressures on costs. has increased at a reasonably good pace over There is some hope that the exceptional rate the past 2 years. While recent surveys have of increase in food prices will moderate as the shown little propensity for business to scale up year progresses, but there is much less likeli­ capital spending plans, these and other indica­ hood of any easing of underlying inflationary tors of prospective capital outlays suggest fur­ forces. The recent acceleration in consumer ther moderate growth in the year ahead. prices will add to the pressure for substantial Our foreign trade position should also lend wage boosts, and resulting higher labor costs moderate support to the economic expansion. will largely be transmitted through to prices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 545 Monetary policy has responded to emerging pect to support greater debt-service burdens via developments. The faster pace of price increases faster nominal earnings growth due to acceler­ in recent months along with the sizable expan­ ated rises in prices, wages, and salaries. sion of economic activity has been reflected The importance of such an anticipatory clearly in financial market developments. De­ process is being demonstrated very clearly right mands for both money and credit have exhibited now in the mortgage market. Evidently mort­ appreciable strength. The Federal Reserve, for gage borrowers, while expecting their nominal its part, has moved carefully in the direction incomes to continue to rise significantly, believe of greater restraint in order to ensure that ex­ prices of homes also will escalate rapidly. cessive money and credit supplies do not add Despite stiffer lending terms and higher interest to powerful inflationary forces evident in our rates on mortgages, home sales have continued economy. high, and the demand for mortgage credit has The firming of monetary policy was under­ remained very strong. Faced with reduced de­ taken also in response to the clear tendency for posit inflows, thrift institutions have drawn monetary expansion to exceed the growth ranges down their liquidity and sharply increased their that had been established. Transaction demands borrowing in order to accommodate these credit for cash balances have been especially sizable, demands. and the narrow money stock (M-l) has grown The Federal regulatory agencies have taken at an annual rate of nearly 8 per cent thus far action recently to improve the competitiveness this year, somewhat faster than the upper end of deposits subject to regulatory ceilings by of the Federal Reserve’s long-run ranges. authorizing two new savings instruments— In the presence of strong credit demands, the variable-ceiling, 6-month certificates with inter­ worsening of inflation, and the Federal Re­ est rates tied to the discount yield on newly serve’s efforts to contain excessive monetary issued Treasury bills, and 8-year certificates expansion, market interest rates have risen sig­ carrying ceiling rates of 1% and 8 per cent for nificantly further. Most short-term rates have banks and thrifts, respectively. It is still too risen by % to 1 percentage point since the early to quantify the contribution of the new beginning of the year, and long-term bond accounts, but early reports indicate considerable yields have followed much the same pattern. promotional activity on the part of depositary The rise of market interest rates has been ac­ institutions and interest on the part of savers. companied by slower growth of savings and small-denomination time accounts at banks and Consumer and business credit demands thrift institutions. As a result, growth rates of strong. Consumer borrowing through mortgage broader monetary aggregates—M-2 and M-3— credit has been a principal influence in the have remained within the Federal Reserve’s sustained high level of total credit demands. long-run ranges. Consumers have also taken on record amounts A good deal of the rise in interest rates this of new instalment debt to finance purchases of year can be attributed to the acceleration of durable goods, especially cars. The rapid rise inflation. For lenders, rising prices of goods and of household borrowing is a matter of concern. services result in an erosion in the purchasing High debt is apt to constrain spending later on power of loan principal. Consequently, when and always carries the risk of financial difficul­ greater inflation is expected, a rise in nominal ties for those who have borrowed heavily. Thus interest rates is necessary to offset such losses far, however, households generally appear to be and maintain the incentive to extend credit. For handling their increased indebtedness well. borrowers, higher interest rates are less of an While the ratio of consumer and mortgage loan obstacle to incurring debt under conditions of repayments to disposable income is very high accelerating inflation. Greater cost savings can by historical standards, delinquency rates have be enjoyed by buying now rather than later, only recently edged upward, and they remain while tangible assets purchased appreciate more well below recession peaks. rapidly in value. Borrowers, moreover, can ex­ Business demands for credit have expanded Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

546 Federal Reserve Bulletin □ July 1978 sharply of late, owing partly to the growth of adequate investment in new, more efficient capital spending and the pronounced upturn in technology, growth of productivity tends to inventories. In addition, internal cash flows slow—lending further momentum to cost-based slowed early in the year as bad weather cut into inflationary pressures. It is for this reason—be­ sales, and costs were pushed up by hikes in cause deep-seated inflation retards long-run Government payroll taxes and in the minimum growth and is a clear threat to sustained high wage. Bank business loans rose at about a 20 employment—that inflation must be charac­ per cent annual rate over the first 5 months, with terized as our highest priority economic prob­ the largest rises in March, April, and May. With lem. credit demands strong, banks have borrowed heavily in money markets through the issuance Need to focus on management of supply. As of large certificates of deposit and nondeposit this committee has heard in recent weeks in its liabilities. first series of hearings on economic change, a major impetus to inflation lies in problems on Total Government borrowing large as well. the supply side of the Nation’s economy. Government credit demands also have been Among these problems are: large, as State and local units recently issued • Inadequate growth of the capital stock; a particularly heavy volume of advance refund­ • Inadequate training, experience, and mo­ ing obligations to take advantage of invested bility among many of the unemployed; sinking fund provisions prior to a mid-May • Inadequate price competition in some ruling by the Internal Revenue Service (IRS) product and labor markets; and restricting securities with such provisions. Fur­ • Counterproductive, and frequently ineffi­ thermore, Federal agencies have borrowed more cient, Government regulation of private enter­ to finance support activities in mortgage mar­ prise. kets. Treasury borrowing—following heavy de­ Individually these supply-side issues have mands early this year—has moderated in recent been obvious for many years, but during the months with the seasonal inflow of tax receipts. past 3 or 4 years there has begun to be a general recognition that they must be addressed collec­ Inflation poses threat to the economy. The tively and aggressively if we hope to achieve recent acceleration of inflation has serious im­ our national economic objectives. Reorientation plications for continued economic growth. of the Nation’s economic policy to emphasize Unless inflation is brought under control, busi­ supply management will take time and careful ness and consumer confidence will be under­ consideration of many alternatives. However, mined, distortions and imbalances in the econ­ some aspects of the necessary reorientation al­ omy will develop, and ultimately recession will ready command general agreement. Perhaps the be the result. In this regard, the administration’s key element is to give renewed primacy to decision to request a delay in—and reduction technological advance and productivity growth. of the size of—the proposed tax cut, as well Surely, the sorry productivity performance over as to hold down Federal spending, and to try the last decade has been a significant factor in to develop voluntary price and wage restraint, the sustained inflation of the 1970’s, and it is encouraging. clearly has played a role in weakening our These recent steps do not constitute, by international competitiveness. themselves, an adequate long-term attack on the inflationary practices and policies that have Larger gains in productivity needed. Im­ given the economy its inflationary bias. Inflation proving productivity growth involves working is now the Nation’s most serious economic on three key elements: labor, energy, and capi­ problem. Because high rates of inflation erode tal. Potential labor contributions to the restora­ economic values and raise uncertainties about tion of faster productivity growth are many and the future, they continuously undermine the varied. The Government has a role to play in incentives for saving and investment. Without enhancing labor productivity: it should focus its Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 547 various labor market and welfare programs on ment from outside the business sector. To this skill training to the maximum practicable extent end, Government must have a smaller role in and should carefully re-examine the cost and the economy and budget deficits need to be price implications of various labor market regu­ eliminated over time, taking into account the latory programs, and minimum-wage policies. ups and downs in the economy. The private The energy problem has two main elements: sector can take up the slack if, over 5 or 7 years, a need for research to find new sources of the Federal Government curtails the growth of energy, and a need for appropriate incentives its expenditures until their ratio to GNP, which to encourage use of existing energy-efficient is now more than 22 per cent, is reduced to technologies. In this area, agreement on a na­ the 20 per cent range. This interim goal for tional energy policy is long overdue, and the Federal expenditures clearly is attainable with conference committee should intensify its ef­ a good measure of fiscal discipline coupled with forts to reach a compromise on the administra­ reduced public demands for Government serv­ tion’s proposals. ices. The capital problem is even more complex. As spending is brought under control, Gov­ In recent years, the stock of capital actually has ernment will move from its position as a sub­ declined relative to the labor force, and this is stantial net borrower of funds in credit markets. undoubtedly one important factor in the slower Such a change would moderate demand pres­ growth of productivity. sures on credit markets as well as relieve some of the pressures on prices that arise from passing Capital stock now inadequate. Capital accu­ on high and rising taxes. Resources will be more mulation is the chief engine of long-range readily available to meet needs in the private growth of labor productivity and rising living sector. Easier credit market conditions, less standards. Yet, for an extended period, the inflation, and greater availability of resources Nation’s tax policies have not provided adequate should help ensure adequate residential con­ incentives to invest in new capital. In particular, struction activity to meet the Nation’s housing depreciation guidelines do not approach actual needs—needs that are now prey to a boom-andreplacement costs in periods of rapid inflation. bust syndrome that profits no one. I believe a near-term, partial answer is to intro­ duce a more liberal variant of accelerated de­ Structural reforms required as well. Another preciation. Over time, careful reconsideration of essential element of a long-term strategy aimed all taxes on business is essential. at a high-growth, low-inflation economy is ex­ Because we have been neglecting capital ac­ tensive reform of Federal regulatory activities. cumulation and because the existing capital A critical look at price-regulating Government stock must also be adjusted to accommodate the programs should be undertaken; a painstaking reality of more expensive energy, a larger share examination of all existing and proposed regu­ of GNP must be devoted to capital investment. latory activities in the environmental and health It will not be enough simply to reach the IOV2 and safety areas is also necessary. In this con­ to 11 per cent range that has been characteristic nection, the President’s recent Executive order of past periods of prosperity and low unem­ to improve the regulatory process is encour­ ployment. The Nation should set an ambitious aging. The Federal Reserve is a participant in objective for capital investment of, say, 12 per this process and has initiated an over-all review cent of GNP for an extended period to enable of its own regulations. us to make up for past deficiencies and to narrow Another important element that requires im­ the gap between our performance and that of mediate attention, and which should be an im­ other strong, industrialized countries. portant part of a long-term strategy for the U.S. economy, is a reduction of our foreign trade Resources must be freed for private-sector deficit. A sound national energy policy that use. Fundamental to achieving this aim is an reduces our dependence on oil imports is cer­ expansion in the savings available for invest­ tainly one ingredient. In addition, we must raise Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

548 Federal Reserve Bulletin □ July 1978 the consciousness of businessmen to the sales causing conditions at their root, should lessen potential and profits that export markets can the burden on monetary policy and result in a provide. The Government can help by continu­ better balance between fiscal and monetary pol­ ing with other governments to resist protection­ icy, and thereby improve the prospects for lower ist pressures and by simplifying, and where interest rates. An economic program of this type possible eliminating, those regulations that would start the Nation on the road to becoming hinder our export trade. In my view, our ulti­ a model economy—an economy with a sound mate objective should be to expand the share dollar, price stability, and sustained full em­ of exports in our national product to 10 per cent ployment. Our Nation has met bigger chal­ or so, in line with the secular rise in the share lenges, and, with a sense of commitment on of imports. the part of policy-makers and citizens, I am I am convinced that the policy reorientation confident that we will meet this challenge as outlined above, by directly attacking inflation- well. □ Statement by G. William Miller. Chairman, annual rate, close to the average pace over the Board of Governors of the Federal Reserve first 3 years of the present expansion. System, before the Committee on the Budget, The vigor of employment growth is one im­ U.S. House of Representatives, July 13, 1978. portant measure of the underlying momentum of the economy and indicates that business has Mr. Chairman and members of the committee, confidence in the sustainability of the expansion. I appreciate this opportunity to meet with you The addition of 2lA million jobs so far this year to convey the views of the Board of Governors has pushed the unemployment rate substantially of the Federal Reserve System on the state of lower and supported brisk growth of personal the economy as well as on economic policy income. Almost all groups of workers have issues facing the Nation.1 benefited from improved job opportunities, The economy is now in its fourth year of though the unemployment rate remains unac­ expansion, and unemployment has been sub­ ceptably high for minorities and youth. stantially reduced. However, the Nation is beset by an unacceptably high and recently acceler­ And the near-term outlook appears favor­ ating inflation, and budget deficits continue large able. Not surprisingly, recent data indicate for this stage of the expansion. It is essential some slowing from the extremely rapid growth that longer-term policies be structured to con­ of over-all activity during the spring rebound. front these problems, while supporting contin­ Even so, the fundamental determinants of final ued growth. demand suggest that economic expansion will be reasonably well maintained in the near term. Pace of growth maintained recently. Eco­ In particular, consumer demand remains nomic growth, though uneven so far this year, strong. Auto sales continue at extremely high has been on the whole satisfactory. As you rates following the turnaround that began in know, the severe weather and the coal strike March. Some of the surge in purchases of dura­ temporarily halted over-all expansion during the ble goods appears to have represented buying winter. However, with the subsequent surge in in anticipation of further price rises. Gains in activity, growth of real GNP in the first half retail sales outside the automotive area have appears to have averaged about a 4% per cent moderated somewhat recently, but this was to be expected following the extremely rapid sales 1 The charts to this statement are available on request pace of February and March. With surveys from Publications Services, Divison of Administrative indicating a continued high level of consumer Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. confidence, sustained moderate growth in in­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 549 come should support further expansion of con­ ongoing reduction in the Nation’s cattle herds. sumer outlays over the near term. However, recently prices outside the food area The business sector also should continue to have also moved up sharply. Retail prices of be a source of support to activity. Inventory nonfood commodities and services rose at an policies have been conservative over the past 8 per cent annual rate during the first 5 months several years, and businesses have in general of the year—up appreciably from the 6V2 per thus avoided the imbalances that interrupted cent rate in 1977. previous expansions. Various investment sur­ We can expect some relief later this year from veys, as well as data on equipment orders and a slowing of food price increases. But with the construction contracts, suggest moderate in­ economy moving into a period of heavy collec­ creases in capital spending over the balance of tive bargaining, the intensified inflation is likely this year. to be reflected in larger wage adjustments and In contrast, it appears that residential con­ a more rapid increase in labor costs. These costs struction will cease to be the source of support also will be boosted early next year by addi­ that it has been in this expansion. While housing tional mandated increases in social security activity currently remains at a high level, mort­ taxes and in the minimum wage. The continued gage markets have tightened considerably, and interplay of wage and price rises, coupled with residential construction probably will begin to the legislated cost increases, makes it difficult slacken in coming months. And growth in State to anticipate much relief from underlying infla­ and local government outlays is likely to remain tionary pressures over the next year. modest. These jurisdictions have pursued rela­ tively conservative spending practices and this Rising inflation and rising interest rates are reluctance to accelerate spending seems unlikely two sides of the same coin. In the last year or to change, especially in light of tax relief man­ so, private and governmental credit demands dated by Proposition 13 in California and the have risen, putting upward pressure on interest possibility of similar actions elsewhere. But our rates. At the same time, the recent and expected net export position, which has deteriorated over inflation also has been an extremely important the past 2 years, should improve somewhat over factor underlying the increase in interest rates, the next year. Imports are likely to rise at a contributing to money and credit demands and slower pace. At the same time, exports should conditioning the stance of monetary policy. pick up if activity abroad increases as expected Obviously, inflation increases the volume of and as the changes in exchange rates that have credit necessary to finance any level of eco­ occurred over recent months improve the com­ nomic activity. Individuals have to borrow more petitive position of U.S. goods. to acquire houses, cars, and other durable goods. In the business sector, the rise in the Inflation continues as our basic problem. On dollar volume of spending on inventories and balance, the evidence suggests further moderate fixed capital, a significant portion of which growth of aggregate demand over the near term, represents rising prices, has outstripped internal sustaining one of the most durable expansions funds generation, producing a marked increase of the postwar period. But the longer-term out­ in borrowing this year. look is clouded by the price situation. During In addition to the direct effect of rising prices the first 3 years of the expansion, inflation rates on credit demands, the prevalent expectation were very high by historical standards, and there that the rate of inflation will remain extremely has now been a further acceleration of price high—if not accelerate—has also increased the increases. So far this year consumer prices have demand for goods requiring financing. As noted risen at an annual rate of 10.2 per cent, as earlier, the recent extremely strong pace of compared with 6.8 per cent in 1977. A key automobile sales appears to have reflected con­ element in the price surge this year has been sumer attempts to beat expected price rises. the adverse developments in the food sector, as Home sales may have been similarly buoyed by meat production has been constrained by an the perception that waiting can only result in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

550 Federal Reserve Bulletin □ July 1978 having to pay higher prices later. Such pur­ counterpart of a healthy and growing economy, chases have contributed to record instalment a significant—and I am afraid expanding—share debt financing and to substantial additions to of recent credit growth is both the direct and mortgage debt. The volume of borrowing also the indirect result of inflation. Moreover, has been strengthened by owners of existing mounting inflationary expectations raise the homes who have withdrawn part of their rising specter of possible speculative excesses, leading equity in the housing stock, partly to finance to a short-run explosion of credit and output and major expenditures and to otherwise maintain subsequently to recession. The Federal Re­ living standards in an inflationary environment. serve’s firming of monetary policy has been To help service their growing debt burden designed to minimize the possibility of such an borrowers appear to be counting on the general outcome. rise in nominal incomes that accompanies most In the presence of strong credit demands, the inflation. This attitude, in fact, has been a major worsening of inflation, and the Federal Re­ ingredient in the upward pressures on interest serve’s efforts to contain excessive monetary rates. Borrowers are willing to pay higher inter­ expansion, market interest rates have risen sig­ est rates because they expect that their future nificantly further. Most short-term rates have debt burdens will be eased by rising nominal increased by 1 to l1/^ percentage points since incomes; meanwhile lenders seek higher interest the beginning of the year and long-term bond rates in order to protect their real position. yields have followed much the same pattern. The rise of market interest rates has been ac­ Current borrowing levels imply future risks. companied by slower growth of savings and Moreover, such borrowing has contributed to small-denomination time accounts at banks and worrisome distortions in the financial positions thrift institutions. As a result, growth rates of of consumers and businesses. For example, the broader monetary aggregates—M-2 and M-3— ratio of consumer and mortgage loan repay­ have remained within the Federal Reserve’s ments to disposable income is now at a near-re­ long-run ranges. cord level. Thus far, households have ap­ The slower rate of growth of savings and parently been able to service this debt with little small-denomination time deposits has threat­ problem. Recently, however, delinquency rates ened to retard housing activity. Therefore, in have edged higher, although they remain well an environment of rising interest rates, the Fed­ below previous peaks. Nonetheless, the level of eral regulatory agencies have recently taken household indebtedness is of concern since it action to increase the competitiveness of bank may constrain future spending and could give and thrift deposits subject to regulatory ceilings rise to more widespread financial difficulties— in order to maintain the flow of credit to hous­ especially if the rate of income growth were to ing. Two new savings instruments were author­ slow. ized effective June 1—a variable-ceiling, 6- In the business sector, the pattern of financing month certificate, with weekly ceiling rates tied has similarly begun to cause some concern. An to yields on newly issued Treasury bills, and increasing share of business credit requirements an 8-year certificate carrying ceiling rates of 7% recently has been met through short-term bor­ and 8 per cent for banks and thrift institutions, rowing, especially at banks, and businesses respectively. The limited available evidence have slowed their accumulation of liquid assets. suggests that these new instruments, especially As a result of these changes in the composition the defensive 6-month certificates, are playing of business assets and liabilities, corporate li­ a significant role in helping to sustain net deposit quidity has deteriorated recently, although bal­ inflows to thrift institutions, even as market ance sheets remain in considerably stronger interest rates have risen further. condition than they were in 1974. Continued high deficits a major problem. The Response of monetary policy. While one persistence of large Federal budget deficits at would expect strong credit demands as a normal this advanced stage of our economic expansion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 551 is a disturbing problem. Businesses and house­ so over a period of 5 to 7 years. Such a reduction holds have had to compete for funds in credit would not fully return the Government propor­ markets with the public sector, whose borrow­ tion of GNP to that of the early I960’s. ing this year has continued at a high level. As spending is brought under tighter control, During the last recession, large deficits were Government will become less prominent as a both a consequence of and a reasonable policy borrower in credit markets. A lower Govern­ response to the underutilization of our produc­ ment profile will facilitate the flow of credit to tive resources. The Federal Government cut the housing sector, where it is becoming scarce, taxes and increased the size of public employ­ and to the business sector, where it can be put ment and other spending programs. Continued to use in rebuilding our currently inadequate large Federal deficits were justified well into the stock of fixed capital. recovery period, since the expansive impact of Federal fiscal policy was offset in part by sizable Measures needed to encourage investment. budget surpluses by States and localities, to­ Moreover, private capital investment should be gether with an increasing foreign sector deficit, encouraged directly by offering incentives to both of which drained purchasing power away businesses to expand their stock of plant and from the private sector of the economy. Devel­ equipment. Capital accumulation is the chief opments this year, however, suggest that the engine of long-range growth of labor produc­ Federal Government should be moving with tivity and rising living standards. Yet for an deliberate speed to rein in compensatory poli­ extended period, the Nation’s tax policies have cies. The level of private sector activity has not provided adequate incentives for business risen markedly over the past several years, and investment. In particular, depreciation guide­ there now appears to be much less usable slack lines and the resulting deductions have not ap­ in the economy. Moreover, the over-all surplus proached actual replacement costs in periods of of States and localities appears likely—in the inflation. Present depreciation-tax laws should wake of Proposition 13 in California and related be liberalized. For example, businessmen could developments—to be swinging back toward be permitted to use a shorter write-off period balance. for machinery, equipment, and structures. Careful consideration also should be given to We must reduce growth of Federal expendi­ present laws that tax corporate profits twice— tures. Positive steps are thus in order to lessen first at the firm and then at the stockholder level. the Government’s competition with the private Given the neglect of investment that has sector for resources. The Federal Government eroded the Nation’s capital stock, as well as the has a constructive role to play in moderating need to accommodate to the reality of scarcer the ups and downs in economic activity. In the and more expensive energy, a larger share of present circumstances, a damper on further ex­ GNP must be devoted to capital investment. It pansion of Federal expenditures would help to will not be enough simply to reach the invest­ assure a continuation of sustained long-term ment proportion of \0V2 to 11 per cent that has economic growth. been characteristic of past periods of prosperity In my view, the task of reducing the Federal and low unemployment. In my opinion, the share of GNP should begin now. A careful, Nation must set an ambitious goal of, say, 12 systematic review must be undertaken to reduce per cent of GNP for an extended period—a level or eliminate those Federal programs that are that would support increased growth and pro­ ineffective or that have outlived their usefulness. ductivity. We also need to recognize the limits on Govern­ ment resources when considering alternative Structural reforms are also necessary. Es­ spending proposals. tablishment of a high-growth, low-inflation I believe that we should strive to reduce the economy would be facilitated by extensive re­ Federal Government’s share of GNP from more form of costly governmental regulations. Regu­ than 22 per cent at present to 20 per cent or latory activities in the health, safety, and envi­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

552 Federal Reserve Bulletin □ July 1978 ronmental protection areas may not always prices. Notable examples are import controls, achieve the desired outcome at minimum costs, price supports, and the Davis-Bacon and and they need to be reviewed with that thought Walsh-Healy Acts. In addition, it seems appro­ in mind. priate to consider deferring the increase in the Similarly, market- and price-regulation pro­ minimum wage that is scheduled for January grams should be carefully re-examined to ensure 1, 1979, given its implications for costs and for that their benefits outweigh their costs. In this youth employment opportunities. connection, the President’s recent Executive To conclude, it is my belief that a reduction order to improve the regulatory process is most of budget deficits and restructuring of taxes to encouraging, and it deserves the fullest possible help investment, along with prudent monetary support and cooperation. management by the Federal Reserve, should, In the same vein, it is important that we over time, lead to an economy that enjoys carefully consider alternatives for those pro­ sustained growth, price stability, and a sound grams that tend to limit competition and raise dollar. □ Statement by J. Charles Partee, Member, Board agencies to the class of assets eligible to secure of Governors of the Federal Reserve System, Federal Reserve notes. before the Subcommittee on Domestic Monetary A brief review of the attached balance sheet Policy of the Committee on Banking, Finance of the Federal Reserve Banks may help to illus­ and Urban Affairs, U.S. House of Repre­ trate the increasing need for the expansion of sentatives, July 14, 1978. eligible assets.1 The major liabilities are mem­ ber bank reserve balances, the deposits of the I am pleased to have the opportunity to present Treasury, and Federal Reserve notes. By far the to this committee the views of the Board of largest and fastest growing item is the liability Governors of the Federal Reserve System on for currency outstanding, which represented 72 H.R. 12621 and H.R. 13148. The Board appre­ per cent of total liabilities and capital of the ciates your timely consideration of these two Federal Reserve Banks at the end of 1977, amendments that we have proposed to the Fed­ compared with about 59 per cent of the total eral Reserve Act. 10 years ago. This increase means that the Let me begin with H.R. 12621, a proposal proportion of assets pledged to secure Federal to expand the class of collateral eligible to Reserve notes has also been growing signifi­ secure Federal Reserve notes. As this com­ cantly since total assets must by definition equal mittee is aware, the currency of the United liabilities and capital accounts. States consists almost entirely of Federal Re­ Among the items on the asset side of the serve notes, which are liabilities of the Federal Federal Reserve’s balance sheet are gold certif­ Reserve Banks. By law, these notes must be icates, SDR certificates, U.S. Government and collateralized dollar for dollar by assets of the Federal agency securities, bankers acceptances, Federal Reserve, and only those assets specified loans to member banks, and other miscellaneous in Section 16 of the Federal Reserve Act are assets. The largest single entry is, of course, eligible as collateral. At present, the list of the System’s holdings of U.S. Government se­ eligible assets is restricted to gold certificates curities, which represented about 74 per cent and Special Drawing Rights (SDR) certificates, of total assets at the end of 1977. direct obligations of the United States, bankers acceptances and other paper eligible for dis­ 1 The attachment to this statement is available on request from Publications Services, Division of Admin­ count, and certain loans to member banks. H.R. istrative Services, Board of Governors of the Federal 12621 would add the obligations of Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 553 Virtually all of the increase in the assets of It should be emphasized that the Federal the Federal Reserve over the past decade is Reserve holds assets far in excess of its notes accounted for by net acquisitions of U.S. Gov­ outstanding. However, with a diminished level ernment and agency issues. In recent years we of excess eligible collateral, some technical have been able to conduct limited open market operating difficulties can arise. For example, operations in the growing secondary market for since each Reserve Bank must individually se­ agency issues so that our holdings of such cure its notes outstanding, the recent sharp de­ obligations—which under existing law are not cline in excess collateral has meant that, on eligible to secure Federal Reserve notes—now occasion, a Reserve Bank runs short of eligible total about $8.5 billion, compared with only $38 assets. In such an event, that Bank has had to million a decade ago. The net result is that, over borrow Government securities from another the decade, while Federal Reserve notes out­ Reserve Bank in order to meet collateral re­ standing have increased at an 8V2 per cent an­ quirements. The System’s operational flexibility nual rate on average, eligible collateral has would be enhanced by the passing of H.R. grown only at a 6% per cent annual rate. 12621, as the proposed expansion of collateral In the past few years, moreover, growth in assets would likely eliminate the need for these the currency needs of the economy appears to loans between Reserve Banks. have accelerated—to an annual rate of about 10 On occasion, also, excess collateral can be per cent on average. Experience has shown that reduced sharply by the need to offset sudden the economy’s currency requirements tend to be and unexpected increases in Federal Reserve a fairly stable proportion of GNP. Thus, if float. Such an episode occurred this past January nominal GNP—which reflects inflation as well when harsh winter weather conditions inter­ as real growth—continues to rise at its recent rupted the transport of checks through the rate of 10 to 11 per cent per year, and if eligible clearing process. As a result, float rose by about assets grow at the 7 per cent rate of recent $10 billion above its average level in a matter years, it can be projected that the Federal Re­ of just a few days. In such a situation, open serve’s stock of eligible collateral will be com­ market operations are automatically undertaken pletely pledged in 3 to 4 years, other things to offset the reserve effect of the increase in being equal. float. With the excess collateral cushion shrink­ A shortage of collateral is thus a very real ing, there is growing danger that such smooth­ possibility. Indeed, over the past IV2 years, the ing operations might have to be constrained at excess of eligible assets above collateral re­ times in order to avoid a corresponding reduc­ quirements has declined sharply. Excess Re­ tion of assets eligible to secure Federal Reserve serve note collateral averaged more than $20 notes. billion at year-end for the years 1970-76. It If the authorization to secure Federal Reserve averaged only $ 11 billion in the first half of this notes with agency obligations is not enacted, year. And with the introduction of the new note we will have no alternative other than to take option to the Treasury’s tax and loan account measures necessary to ensure compliance with program at depositary institutions expected this the law. The inventory of currency at Federal fall, excess Federal Reserve note collateral is Reserve Banks may have to be cut back, thereby likely to decline considerably further. This will reducing flexibility to meet unanticipated in­ result from a reduction in the System’s portfolio creases in the public’s demand for cash. A of Government securities associated with the developing shortage of eligible collateral could transfer of Treasury balances from the Reserve well force the System to cease purchases of Banks to commercial banks and other depositary Federal agency issues for the Open Market institutions. If agency issues were to be made Account and to replace agency securities with eligible to secure Federal Reserve notes, the other assets eligible as collateral. Since the more ample excess collateral “cushion” would volume of agency obligations has been increas­ permit greater operating flexibility during this ing rapidly of late, it would not seem desirable, transition. as a matter of public policy, to substantially Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

554 Federal Reserve Bulletin □ July 1978 curtail the Federal Reserve’s participation in this boards needs members with experience in man­ active and growing secondary market. And in aging an organization, since directors must the extreme case, if all eligible collateral were oversee the operations of their respective Re­ to be pledged, the System would find itself serve Banks. unable to issue additional currency in response Other important responsibilities include vot­ to the public’s need since the issuance of notes ing on changes in the discount rate, reviewing without collateral is unlawful. loans and discounts to member banks in their The Board urges that H.R. 12621 receive the respective districts, and providing important, prompt attention of the Congress in order to timely, and valuable intelligence about eco­ avoid the unnecessary potential difficulties re­ nomic conditions in their regions of the country. lated to the issuance of currency that I have The Board believes it highly desirable to select outlined. Passage of this bill also will remove directors who will contribute to the fulfillment the inconsistencies in treatment that now exist of these responsibilities. in the Federal Reserve Act so that all securities The chairman of the board of each Reserve eligible for open market operations would also Bank, as well as the deputy chairman who be eligible to secure Federal Reserve notes. serves in the chairman’s absence, must be des­ Moreover, it would correct the current anoma­ ignated by the Board of Governors from among lous situation whereby loans to member banks the Class C directors. Thus, at present, most that are secured by agency obligations are eligi­ or all of the Class C directors must assume—or ble collateral for Federal Reserve notes, but have the potential for assuming—one of these direct System holdings of the agency securities roles. Under these circumstances, it is of par­ are not. ticular importance that Class C directors bring Let me turn now to H.R. 13148, a bill to to the Federal Reserve a record of managerial expand the number of Class C directors of capacity that is essential to the effective super­ Federal Reserve Banks from three to six. vision of an operation as large and complex as Each of the twelve regional Federal Reserve a Federal Reserve Bank. Banks has a board consisting of nine directors The Board is keenly aware of the additional who are to be chosen without discrimination on criteria for selection of Class C directors speci­ the basis of race, creed, color, sex or national fied by the Federal Reserve Reform Act of 1977. origin. The three Class A directors are elected We fully support the intent of the Congress to by, and must by law be “representative of,” broaden the representation of interests on Re­ the member banks of the District. The three serve Bank boards. But in practice, we have Class B directors, who represent the public, are come to recognize that it is difficult to provide also elected by member banks with due but not representation of a wide diversity of interests exclusive consideration to the interests of agri­ among only three Class C directors. culture, commerce, industry, services, labor, Moreover, since the directors serve staggered and consumers. Class C directors are appointed terms, only one Class C vacancy occurs each by the Board of Governors to represent the year at each Reserve Bank. And because the public and are chosen with due but not exclusive complexity of the Bank’s business has given consideration to the interests of agriculture, special value to on-the-job experience, Boardcommerce, industry, services, labor, and con­ appointed directors are typically reappointed to sumers. All Reserve Bank directors are elected a second 3-year term. Thus, throughout the for 3-year terms. System only about six new Class C directors By statute, Class C directors must have been are chosen in any given year. The Board’s residents of their Federal Reserve district for 2 commitment to broader representation can be years, and cannot be officers, directors, em­ achieved only very gradually with such a limited ployees, or stockholders in any bank. Beyond number of new appointments. Of course, the these statutory guidelines, the Board of Gover­ Class B director appointments also may well nors typically seeks other attributes in candi­ include persons of diverse backgrounds and dates for Class C directors. Each of the Bank interests, but their selection is a process over Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 555 which the Board of Governors has no direct Federal Reserve Act that call for both broader control. representation among, and selection of the In the interest of promoting broader repre­ chairman and deputy chairman from, the Class sentation of agriculture, labor, services, con­ C directors. sumers, and other groups among Reserve Bank In summary, I want to convey the Board’s directors, the Board of Governors recommends recommendation for prompt passage of these the passage of H.R. 13148. The increase from two bills. If enacted, the first of these proposals three to six Class C directors at each Federal will enhance greatly the Federal Reserve’s flex­ Reserve Bank would provide 36 immediate ibility in meeting the collateral requirements for openings for which the Board can consider Federal Reserve notes, and the second will be individuals with a variety of backgrounds and of substantial benefit in helping to broaden interests. And with the greater number of Class promptly the diversity of backgrounds and in­ C directors at each Reserve Bank, it will be terests represented on the boards of directors of more feasible to carry out the provisions of the our regional Federal Reserve Banks. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

556 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MAY 16, 1978 1. Domestic Policy Directive The information reviewed at this meeting suggested that real output of goods and services was growing at a rapid rate in the current quarter, after having declined somewhat in the first quarter when activity was adversely affected by the unusually severe weather and the lengthy strike in coal mining. The rise in the fixed-weighted price index for gross domestic business product—which had stepped up in the first quarter to an annual rate of 6.6 per cent from 5.4 per cent in the fourth quarter of 1977—appeared to be still faster in the current quarter. Staff projections continued to suggest that output would grow at a moderate pace over the year ahead, although the projected rate of growth was slightly less than that of a month earlier. It was expected that real consumption expenditures and business fixed investment would expand at moderate rates but that residential construction would decline throughout the period. The projections also suggested that the rate of increase in prices over the year ahead would be significantly below the rate in the current quarter but would remain somewhat above that in the first quarter. It was also anticipated, as it had been 4 weeks earlier, that the unemploy­ ment rate would decline gradually over the period. In April the index of industrial production increased about 1 per cent to a level about 2Va per cent above that in November, before activity was adversely affected by the weather and the coal strike. A significant part of the April increase in the index was attributable to recovery in output of coal and steel from reduced levels, but assemblies of autos rose further to an advanced level, in response to rising sales of domestic models, and production of business equipment continued to expand. Nonfarm payroll employment continued to rise at a rapid pace in April, even after allowance for the return to work of large numbers of coal miners, and gains again were widespread among industry groups. The unemployment rate declined 0.2 of a percentage point to 6.0 per cent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 557 Total retail sales expanded substantially further in April to a level 3% per cent above the monthly average for the first quarter. Unit sales of new automobiles, already at an advanced rate in March, edged up further in April. The index of average hourly earnings for private nonfarm pro­ duction workers rose at an annual rate of about 9xh per cent in April, little changed from the rapid rate of advance during the first quarter. The wholesale price index for all commodities contin­ ued its rapid rise in April, reflecting chiefly further large increases in prices of farm products and foods. In March the consumer price index for all urban consumers had continued to advance at a considerably faster pace than in the second half of 1977, owing not only to additional large increases in foods but also to sizable increases in the apparel and housing components. In foreign exchange markets the trade-weighted value of the dollar rose about 1% per cent over the inter-meeting period, recovering to the level that had prevailed at the start of the year. While appreciating against all major currencies except the Canadian dollar, the dollar advanced most against the Swiss franc and the German mark. The U.S. foreign trade deficit declined considerably in March, but because it had been at a record level in February, the deficit in the first quarter as a whole was greater than the large deficit incurred in the final quarter of 1977. In the first quarter the value of exports recovered from a fourth-quarter level that had been somewhat depressed by the dock strike. However, the value of imports expanded substantially, despite a decline in imports of petroleum. The rate of expansion in total bank credit accelerated sharply in April, reflecting an unusually large increase in security loans and sizable additions to bank holdings of both U.S. Government and other securities. Business and real estate loans grew at about the same pace as in March. Outstanding commercial paper of nonfinancial businesses rose substantially in April, although by much less than in March. The sum of business loans (net of bankers acceptances) and nonfinancial commercial paper grew at an annual rate of nearly 25 per cent, compared with about 28 per cent in March. The narrowly defined money supply (M-l), which had grown Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

558 Federal Reserve Bulletin □ July 1978 at an annual rate of 5 per cent in the first quarter on a quarterlyaverage basis, expanded at a rate of 19 per cent in April. The renewed strength in economic activity increased the demand for money, but the high rate of monetary growth in April was also influenced by the public’s mobilization of cash for unusually large payments of Federal income taxes not withheld and by relatively slow processing of tax returns. The latest weekly data suggested that growth of M-l would slow substantially in May. Growth in M-2 and M-3 also accelerated in April but by much less than growth in M-l because inflows of the interest-bearing deposits included in the broader aggregates remained slow. Thus, M-2 and M-3 grew in April at annual rates of about IIVa and 10 per cent, respectively, compared with about 6V2 and IVz per cent in the first quarter. At its meeting on April 18 the Committee had decided that during the April-May period growth in M-l and M-2 within ranges of 4 to 8^ and 5xh to 9Vi per cent, respectively, would be appropriate, and it had judged that these growth rates were likely to be associated with a weekly-average Federal funds rate slightly above the level of 6% per cent prevailing at that time. 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 63A to IV2 per cent. It was also agreed, however, that an increase in the rate above IVa per cent would not be sought until the Committee had had an opportunity for further consultation. In accordance with the Committee’s decision, the Manager of the System Open Market Account began immediately after the April meeting to seek bank reserve conditions consistent with a firming of the Federal funds rate to around 7 per cent. As the inter-meeting period progressed, data becoming available suggested that over the April-May period M-l would grow at a rate close to or above the upper limit of the range specified by the Committee and that M-2 would grow at a rate in the upper part of the range specified for that aggregate. Therefore, the Manager sought conditions con­ sistent with a Federal funds rate of IVa per cent, and the rate rose to about that level in the statement week ending May 3. In early May estimates indicated that M-l had grown at a very Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 559 rapid pace in April, and staff projections suggested that for the April-May period, growth in M-l would be well above the upper limit of its range and growth in M-2 at about its upper limit. On May 5 the Committee voted to direct the Manager, until further instructed, to seek to maintain the weekly-average Federal funds rate at about per cent, with any deviations tending to be in the direction of higher rather than lower funds rates. At the time of this meeting the funds rate was in the area of IVa to 7% per cent. The rise in the Federal funds rate was accompanied by upward pressures on interest rates in general. Increases in short-term market rates ranged from about 20 to 45 basis points and those in longerterm rates from about 10 to 35 basis points. In early May commer­ cial banks raised the rate on loans to prime business borrowers from 8 to 8V4 per cent. On May 11 the Board of Governors announced its approval of actions by directors of all 12 Federal Reserve Banks raising the discount rate from 6V2 to 7 per cent. In announcing the approval, the Board stated that the action had been taken in recognition of increases that had already occurred in other short-term interest rates and that it would bring the discount rate into closer alignment with short-term rates generally. Mortgage lending in April apparently was at about the pace of the first quarter, which was below the peak reached in the fourth quarter of 1977. In March, the latest month for which data were available, mortgage commitments outstanding at savings and loan associations continued to decline, as new commitments remained near the reduced rate in February and takedowns of outstanding commitments picked up. During the inter-meeting period, there was a further rise both in average interest rates on new commitments for conventional home loans at those associations and in yields in the secondary markets for mortgages. In the Committee’s discussion of the economic situation and outlook, the members generally agreed that real output of goods and services was growing rapidly in the current quarter, but they differed on the likely course of activity in succeeding quarters. Many members concurred with the staff’s view that output would grow at a moderate pace over the year ahead, but some thought that the pace would be a little faster while others thought that it Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

560 Federal Reserve Bulletin □ July 1978 would be a little slower. A few members observed that the surge in the current quarter could generate forces that would sustain growth at a fairly rapid pace for a while but might then bring on a period of adjustment at some point in 1979. However, another member said he saw no evidence suggesting that such forces were likely to develop. To some extent differences of opinion concerning developments in the period ahead reflected varying assessments of the likely behavior of consumers. A number of members anticipated relatively strong consumer demand. One observed that the demand for new domestic autos would be sustained at fairly high levels by various new features, including greater fuel efficiency. On the other hand, one member expressed the view that demands by consumers would be weakened in the second half of the year by their accumulation of debt. It was stressed that consumer spending was particularly difficult to forecast because of uncertainty concerning consumers’ responses to inflation. One member observed that, in contrast with other recent episodes of inflation in this country, consumers now appeared to be more inclined to buy in anticipation of price increases. A second member suggested that consumers might respond to the current inflation by expanding credit-financed expenditures for durable goods while economizing on expenditures for nondurable goods and services. Another member believed that inflation at the rates generally expected would have an adverse impact on confidence sooner or later, causing consumers and others to retrench. Some differences of opinion were expressed concerning other sectors as well. Thus, one member thought that housing activity would be stronger over the year ahead than the staff projections suggested, but another believed that it would be weaker. The view was expressed that business fixed investment currently was gaining strength, but it was also observed that increases in interest rates might dampen such investment in 1979. With respect to business inventories, it was suggested that an excessive build-up could develop in the near future, setting the stage for a subsequent correction. Committee members were deeply concerned about the recent acceleration of inflation and about prospects for prices. Several expressed the view that the rise was likely to be more rapid than Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 561 projected by the staff. Thus, it was suggested that the supply-related increase in prices of foods over the remainder of 1978 would exceed the staff projection and that the effect on the over-all price level this year would influence the outcome of labor contract negotiations in 1979. It was also suggested that pressures had begun to develop on labor resources, particularly skilled labor, and on some types of capacity. A few members observed that in these circumstances it would be desirable for growth in real output to diminish in the second half of this year toward a rate that could be sustained for the longer term. At its meeting in April the Committee had agreed that from the first quarter of 1978 to the first quarter of 1979 average rates of growth in the monetary aggregates within the following ranges appeared to be consistent with broad economic aims: M-l, 4 to 6V2 per cent; M-2, 6V2 to 9 per cent; and M-3, IV2 to 10 per cent. The associated range for the rate of growth in commercial bank credit was IV2 to lO1/^ per cent. It had also been agreed that the longer-run ranges, as well as the particular aggregates for which such ranges were specified, would be subject to review and modifi­ cation at subsequent meetings. Committee members differed somewhat in their judgments con­ cerning the course of policy for the period immediately ahead, in part because of varying views about the current and prospective economic situation and in part because of differing judgments about the appropriate response to the surge of M-l in April. The dif­ ferences essentially concerned the degree of any further firming of money market conditions that might be pursued during the next few weeks. No member advocated an easing of money market conditions. Several reasons were advanced for pursuing a very cautious approach to any further firming at this time, including the fact that transitory influences had contributed to the April surge in M-1. It was observed that, despite the surge, the annual rate of growth of M-l, and also of M-2, over the 3, 6, and 12 months ending in April had been lower than growth over the four quarters of 1977. It was also noted that a significant degree of firming of money market conditions had been achieved since the April meeting of the Committee. Moreover, it was pointed out, the administration’s new tax proposals—which had just been announced—were consid­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

562 Federal Reserve Bulletin □ July 1978 erably less stimulative than the earlier ones, particularly as they affected the fourth quarter of 1978. It was suggested that further significant monetary firming at this time might risk provoking dislocations in financial markets that would contribute eventually to the onset of a downturn in economic activity. Finally, it was argued, a very cautious approach would give the Committee time to evaluate incoming evidence concerning both the underlying strength of economic activity and the consequences of the firming that had already been achieved. In support of a somewhat more restrictive posture, it was sug­ gested that the relatively low rate of growth of M-l in the first quarter of 1978 represented an aberration related to the temporary weakening in the pace of economic activity and that, abstracting from that aberration, the trend of monetary expansion had acceler­ ated. Views were expressed to the effect that further significant firming of money market conditions in the coming period in order to moderate growth of the monetary aggregates would have a beneficial effect on public confidence; that partly for that reason, such firming would reduce the chances of a further build-up of inflationary forces, and that it would increase the chances of achieving a rate of growth in real output that could be sustained for the longer term. In this connection, it was suggested that at times in the past when high levels of resource use had been approached, lags in the application of monetary restraint had contributed to bringing on a downturn in economic activity and to increasing the depth and duration of the downturn. The comment was made that if further significant action were not taken in the present circumstances, current monetary policy might be found in retrospect to have been procyclical. With respect to operating specifications for the period ahead, most members preferred ranges of tolerance for the annual rate of growth in M-l over the May-June period that more or less encompassed the Committee’s longer-run range of 4 to 6x/i per cent; the preferences centered on 3 to 8 per cent. However, some members preferred to widen the range by reducing the lower limit, on the ground that, given the April surge, growth somewhat slower than 3 per cent could be tolerated for a time and should not form the basis for an easing of money market conditions. One member, believing that the upper limit of the 2-month range should not be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 563 above 6V2 per cent in view of the April surge, favored a range of 2Vi to 6V2 per cent. For M-2 most members advocated a range of 4 to 9 per cent, but there was some sentiment for ranges of both 5 to 9 and 4 to 8 per cent. All of the members favored directing operations during the coming inter-meeting period initially toward a Federal funds rate slightly above the current rate, which was in the area of IVa to 73/s per cent. Views differed somewhat with respect to the degree of leeway for operations 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 IVa to 7% per cent, but there was some sentiment for an upper limit of 8 per cent. At the conclusion of the discussion the Committee decided that the ranges of tolerance for the annual rates of growth in M-l and M-2 over the May-June period should be 3 to 8 and 4 to 9 per cent, respectively. It was understood that in assessing the behavior of these aggregates the Manager should continue to give approxi­ mately 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 IVa to 7% per cent. The members agreed that if growth rates of the aggregates over the 2-month period appeared to be deviating significantly from the midpoints of the indicated ranges, the operational objective for the weekly-average Federal funds rate should be modified in an orderly fashion within a range of IVa to 7% per cent. As is customary, it was understood that the Chairman might call upon the Committee to consider the need for supplementary instructions before the next scheduled meeting if significant 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. The following domestic policy directive was issued to the Federal Reserve Bank of New York: The information reviewed at this meeting suggests that real output of goods and services is growing at a rapid rate in the current quarter, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

564 Federal Reserve Bulletin □ July 1978 after having declined somewhat in the first quarter when activity was adversely affected by the unusually severe weather and the lengthy strike in coal mining. In April retail sales, industrial pro­ duction, and nonfarm payroll employment increased substantially further and the unemployment rate declined from 6.2 to 6.0 per cent. The pace of the rise in wholesale prices remained rapid, reflecting mainly further large increases in farm products and proc­ essed foods. The index of average hourly earnings continued to advance at about the fast pace that it had on the average during the first quarter. The trade-weighted value of the dollar against major foreign currencies has risen over the past 4 weeks to the level prevailing at the beginning of the year. The trade deficit in the first quarter widened substantially from the already large deficit recorded in the final quarter of 1977. M -l, which had grown moderately in the first quarter, rose sharply in April. Growth in M-2 and M-3 also stepped up but much less than growth in M-1, because inflows of the interest-bearing deposits included in these aggregates remained slow. Market interest rates have increased in recent weeks. On May 11 an increase in Federal Reserve discount rates from 6 Vi to 7 per cent was announced. In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster bank reserve and other financial conditions that will resist inflationary pressures while encouraging continued moderate economic expansion and contrib­ uting to a sustainable pattern of international transactions. At its meeting on April 18, 1978, the Committee agreed that growth of M-l, M-2, and M-3 within ranges of 4 to 6V2 per cent, 6V2 to 9 per cent, and IV2 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 10Vi 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, the ranges of tolerance for the annual growth rates over the May-June period will be 3 to 8 per cent for M-l and 4 to 9 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 565 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 1XA to 13A per cent. In the conduct of day-to-day operations, account shall be taken of emerging financial market conditions. 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, Cold well, Eastburn, Gardner, Jackson, Partee, Wallich, and Winn. Vote against this action: Mr. Willes. Mr. Willes dissented from this action because he favored more vigorous measures to reduce the rate of monetary growth, given the acceleration of the rate of inflation and its adverse effect on consumer and business confidence and spending plans. Specifically, he preferred a range of 2V2 to 6V2 per cent for the annual rate of growth in M-l over the May-June period and an inter-meeting range of 1XA to 8 per cent for the Federal funds rate. Subsequent to the meeting, on June 15, revised projections based on newly available data suggested that M-l would grow in the May-June period at an annual rate of about IV2 per cent, near the upper limit of the range of tolerance of 3 to 8 per cent specified in the Committee’s directive. M-2 also was projected to grow in the 2-month period at a 7V2 per cent annual rate, but this was well within the range of 4 to 9 per cent specified for that aggregate. In general, the strength of the aggregates suggested a need for Committee consultation, looking toward further instruction to the Desk. In view of the proximity of the Committee meeting scheduled for June 20, Chairman Miller recommended that the Desk be instructed to continue aiming for a Federal funds rate of IV2 per cent at this time. On June 16, 1978, the Committee modified the domestic policy directive adopted at its meeting on May 16, 1978, to instruct the Desk to continue aiming for a weekly-average Federal funds rate of IV2 per cent at this time. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

566 Federal Reserve Bulletin □ July 1978 Votes for this action: Messrs. Miller, Baughman, Coldwell, Eastburn, Gardner, Partee, Wallich, Willes, Winn, and Timlen. Votes against this ac­ tion: None. Absent and not voting: Messrs. Volcker and Jackson. (Mr. Timlen voted as alternate for Mr. Volcker.) 2. Authorization for Foreign Currency Operations Paragraph ID of the Committee’s authorization for foreign currency operations authorizes the Federal Reserve Bank of New York, for the System Open Market Account, to maintain an over-all open position in all foreign currencies not to exceed $1.0 billion, unless a larger position is expressly authorized by the Committee. On March 21, 1978, the Committee had authorized an open position of $2.25 billion in view of the scale of recent and potential Federal Reserve operations in the foreign exchange markets undertaken pursuant to the Committee’s foreign currency directive. At this meeting the Committee voted to reduce the authorized open position to $2 billion. This action was taken in view of the decrease in the open position that had occurred in recent weeks. Votes for this action: Messrs. Miller, Volcker, Baughman, Coldwell, Eastburn, Gardner, Jackson, Partee, Wallich, Willes, and Winn. Votes against this action: None. Records of policy actions taken by the Federal Open Market Committee at each meeting, in the form in which they will appear in the Board’s Annual Report, are released about a month after the meeting and are subsequently published in the Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

567 Law Department Statutes, regulations, interpretations, and decisions INTERPRETATION OF REGULATION G to purchase securities in the near future, partici­ pations in securities purchase plans, list of unpaid Accepting a Purpose Statement Through the Mail Without Benefit of Face-to-Face Inter­ debts, and present income level. Some questions view. have been modified to facilitate understanding but The Board has been asked whether the accept­ no questions have been deleted. If additional in­ ance of a purpose statement submitted through the quiry is indicated by the answers on the form, a mail by a lender subject to the provisions of loan officer of the lender will interview the bor­ Regulation G will meet the good faith requirement rower by telephone to make sure the loan is of section 207.1(e). Section 207.1(e) states that “non-purpose.” Whenever the loan exceeds the in connection with any credit secured by collateral “maximum loan value” of the collateral for a which includes any margin security, a lender must regulated loan, a telephone interview will be done obtain a purpose statement executed by the bor­ as a matter of course. rower and accepted by the lender in good faith. Although the Board has expressed no views as Such acceptance requires that the lender be alert to the necessity for face-to-face meetings between to the circumstances surrounding the credit and borrower and lending officer under Regulation G, if further information suggests inquiry, he must an interpretation under Regulation U published in investigate and be satisfied that the statement is 1965 (12 CFR 221.115) on the subject has usually truthful. been considered applicable. That view, however, The lender is a subsidiary of a holding company was expressed before the adoption by the Board which also has another subsidiary which serves of Regulation X (12 CFR 224) in 1971. One of as underwriter and investment advisor to various the stated purposes of Regulation X was to prevent mutual funds. The sole business of the lender will the infusion of unregulated credit into the securi­ be to make “non-purpose” consumer loans to ties markets by borrowers falsely certifying the shareholders of the mutual funds, such loans to purpose of a loan. The Board is of the view that be collateralized by the fund shares. Mutual fund the existence of Regulation X, which makes the shares are margin securities for purposes of Regu­ borrower liable for willful violations of the margin lation G. Solicitation and acceptance of these regulations, will allow a lender subject to Regula­ consumer loans will be done principally through tion G or U to meet the good faith acceptance the mail and the lender wishes to obtain the re­ requirement of sections 207.1(e) and 221.3(a), quired purpose statement by mail rather than by respectively, without a face-to-face interview if the a face-to-face interview. Personal interviews are lender adopts a program, such as the one described not practicable for the lender because shareholders above, which requires additional detailed infor­ of the funds are scattered throughout the country. mation from the borrower and proper procedures In order to provide the same safeguards inherent are instituted to verify the truth of the information in face-to-face interviews, the lender has devel­ received. The 1965 interpretation has therefore oped certain procedures designed to satisfy the been withdrawn. Lenders intending to embark on good faith acceptance requirement of the regula­ a similar program should discuss proposed plans tion. with their district Federal Reserve Bank. Lenders The purpose statement will be supplemented may have existing or future loans with the with several additional questions relevant to the prospective customers which could complicate the prospective borrower’s investment activities such efforts to determine the true purpose of the loan. as purchases of any security within the last six In addition, Regulation U differs from Regulation months, dollar amount, and obligations to pur­ G in many important respects. chase or pay for previous purchases; present plans Section 220.7(a) of Regulation T, in general, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

568 Federal Reserve Bulletin □ July 1978 prohibits a broker/dealer from arranging any credit of 1977, provide that both class B and C directors which he himself cannot extend. Therefore, the shall be chosen to represent the public and with Board cautions that any prospectus or sales infor­ “due but not exclusive consideration to the inter­ mation for the mutual fund shares may not offer ests of agriculture, commerce, industry, services, the services of the lending company, as any bro­ labor, and consumers.” Section 4 further provides ker/dealer selling the fund shares would thereby that class A directors “shall be chosen by and be be deemed to have “arranged” a loan in violation representative of the stock-holding banks” of the of Regulation T. In connection with this interpre­ Federal Reserve System. Recognizing that Reserve tation the Board of Governors has rescinded a Bank directors may have, in their private capaci­ March 24, 1965, interpretation of Regulation U ties, business, consumer, or other interests to concerning accepting a purpose statement through which legitimate attention is to be given; but the mail without benefit of face-to-face interview. recognizing also that these same individuals have fiduciary responsibilities as directors of Reserve Banks, this regulation is promulgated for the pur­ RESERVE BANK DIRECTORS— pose of assuring preservation of and adherence to ACTIONS AND RESPONSIBILITIES the intent of both the Federal Reserve Act and Section 208 of Title 18, United States Code. The Board of Governors had adopted a new Part 264a, Reserve Bank Directors—Actions and Re­ sponsibilities. Section 264a.2—Definitions The regulation contains prohibitions against director participation in particular matters, sets For purposes of this part, the following defini­ tions shall apply: forth proposed procedures under which a director (a) The term “director,” unless otherwise in­ may obtain an ad hoc exemption from such prohi­ dicated, means a head office or branch director bitions, and identifies certain financial interests of of a Federal Reserve Bank. directors that the Board of Governors has ex­ empted from coverage by the statute as being too (b) The term “Board of Governors” means the remote or too inconsequential to affect the integrity Board of Governors of the Federal Reserve Sys­ tem. of directors’ services. Part 264a as amended May 31, 1978, reads as (c) The term “board” means the board of follows: directors of a Federal Reserve Bank or branch of a Federal Reserve Bank. (d) The term “related person” means (1) a PART 264a— partner of a director, (2) any organization in which RESERVE BANK DIRECTORS— the director is serving as an officer, director, ACTIONS AND RESPONSIBILITIES trustee, partner or employee, or (3) any person or organization with whom the director is nego­ Section 264a. 1—Purpose tiating or has any arrangement concerning Directors of Federal Reserve Banks are charged prospective employment. by law with the responsibility of supervising and (e) The term “participate” means to act controlling the operations of the Reserve Banks, through decision, approval, disapproval, recom­ under the general supervision of the Board of mendation, the rendering of advice, investigation, Governors, and for assuring that the affairs of the or as is otherwise within the meaning of the Banks are administered fairly and impartially. The provisions of 18 U.S.C. § 208. Federal Reserve Act provides that Reserve Bank (f) The term “particular matter” means a judi­ directors will be selected with due consideration cial or other proceeding, application, request for to the interests of various segments of the popula­ a ruling or other determination, contract, claim, tion and the economy, thus assuring that the Fed­ controversy, charge, accusation, arrest or other eral Reserve System will receive the benefit of the subject within the meaning of the provisions of experienced judgment of individuals from a broad 18 U.S.C, § 208. spectrum of the communities that will be affected (g) The term “discussions” means the consid­ by actions of the System. For example, the provi­ eration of a matter by a board and may include, sions of Section 4 of the Federal Reserve Act, depending upon the board’s statutory authority, as amended by the Federal Reserve Reform Act votes taken or other decisional action. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 569 Section 264a.3— and substantial competition with the borrowing Prohibition Against Director bank; Participation in Particular Matters (ii) service by the director as an officer or director of another bank that is known by the director: (a) Pursuant to the provisions of 18 U.S.C. (A) to have outstanding or to be nego­ § 208(a), no director may participate personally tiating an extension, of credit from, or to, the and substantially in a particular matter in which, borrowing bank, other than federal funds or to the director’s knowledge, the director, the foreign exchange transactions; or director’s spouse or minor child, or related persons (B) to maintain a correspondent or de­ have a financial interest unless such action is positary relationship with the borrowing bank in otherwise permitted by 18 U.S.C. § 208(b) and an amount exceeding that covered by federal de­ sections 264a.4 or 264a.5 of this part. posit insurance; or (b) Except as provided by 18 U.S.C. § 208(b) (iii) service by the director as one of the and sections 264a.4 or 264a.5 of this part, no principal officers of any business enterprise that director shall participate in deliberations or deci­ constitutes the director’s primary business or pro­ sions of a Reserve Bank board when the question fessional occupation where such business enter­ presented is whether the board should approve or prise is known by the director: ratify an extension of credit, advance, or discount (A) to have outstanding or to be nego­ by a Reserve Bank to a bank which is, in the tiating a direct and substantial extension of credit opinion of the President of the Reserve Bank, in or line of credit from the borrowing bank; a hazardous financial condition, and (B) to maintain a principal depositary (1) where the director has knowledge that he, relationship with the borrowing bank in an amount his spouse, or minor child has a financial interest exceeding that covered by federal deposit insur­ in the proposed transaction as a result of: ance; or (i) being a borrower or applicant for credit (C) to own stock, stock options, bonds, from the borrowing bank, other than consumer notes or other forms of indebtedness issued by the credit as defined in Regulation Z (12 CFR borrowing bank, the market value of which ex­ 226.2(p)); ceeds $100,000 or represents more than 1 per cent (ii) maintaining a depositary relationship of the value of that class of stock, stock options, with the borrowing bank in an amount exceeding bonds, notes or other form of indebtedness issued. that covered by federal deposit insurance; (3) where the director has knowledge that a (iii) owning stock, stock options, bonds, partner of the director has a financial interest in notes or other forms of indebtedness issued by the the proposed transaction; or borrowing bank, or its registered parent holding (4) where the director has a financial interest company, the market value of which exceeds in the proposed transaction as a result of the $100,000 or represents more than 1 per cent of director’s participation in current negotiations or the value of that class of stock, stock option, bond, arrangements concerning prospective employment note, or other form of indebtedness issued by the with the borrowing bank. borrowing bank or its registered parent holding (c) It is recognized that a Reserve Bank board company; or can, within the spirit and letter of its respon­ (iv) employment in a policy making posi­ sibilities, delegate to appropriate officials of the tion or service as a director with the borrowing Reserve Bank authority to act with respect to bank or the registered parent holding company of extensions of credit to individual banks determined the borrowing bank. to be in hazardous financial condition, thus avoid­ (2) where the director has a financial interest ing both ratification by the board and applicability in the proposed transaction as a result of: to the directors of the prohibitions of this section. (i) service by the director as an officer Sourc h delegation would not preclude continued director of another bank that is known by the advice to the board of appropriate information director to be located in the same geographic regarding bank conditions in the district so as to market for local banking services as the borrowing enable the board to perform fully its general over­ bank and is known by the director to be in direct sight responsibilities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

570 Federal Reserve Bulletin □ July 1978 Section 264a. A— § 208(a) and section 264a.3 of this part shall not Granting of Ad Hoc Exemptions apply to a director’s participation in such matters: (1) deliberations concerning or ratification of (a) The prohibitions of 18 U.S.C. § 208 and extensions of credit, advances, or discounts to any section 264a.3 of this part shall not apply if the bank that has not been determined to be in haz­ director first advises the Board of Governors of ardous financial condition by the President of the the nature and circumstances of the particular Reserve Bank, provided such credit extensions, matter before the board and makes full disclosure advances, or discounts are made under appropriate of the financial interest involved and receives in provisions of the Federal Reserve Act, regulations advance a written determination made by the and policies of the Board of Governors and the Board of Governors, or its designee, pursuant to Federal Reserve Banks, and the established 18 U.S.C. § 208(b)(1), that the interest is not so operating procedures at the director’s Reserve substantial as to be deemed likely to affect the Bank; integrity of the services which the Federal Reserve (2) deliberations concerning or affecting any System may expect from such director. financial institution, to the extent the financial (b) Telegraphic communications from the Pres­ interest in such matters results from: ident, First Vice President, Secretary or General (i) maintenance at the financial institution Counsel of a Reserve Bank to the Board of Gov­ of a checking or other deposit account covered ernors on behalf of a director and setting forth by Federal insurance; the precise nature of both the particular matter (ii) a fiduciary relationship involving the before the board and the financial interest involved utilization of the financial institution’s trust or shall be considered to meet the director’s duty of investment advisory services; full disclosure set forth in paragraph 264a.4(a). (iii) the receipt from the financial institu­ Telegraphic response to the same identified offi­ tion of consumer credit, as that term is defined cials of the Reserve Bank by the Board of Gover­ in Regulation Z (12 CFR 226.2(p)); or nors, or its designee, shall be deemed to meet the (iv) participation in Federal funds or requirement of a written determination by the foreign exchange transactions with the financial Board of Governors set forth in paragraph 264a.4. institution; (3) deliberations concerning or affecting any Section 264a.5—Exemption of Remote financial institution or other enterprise to the extent or Inconsequential Financial Interests the financial interest results from ownership of (a) Pursuant to the provisions of 18 U.S.C. stock, stock options, bonds, notes, or other forms § 208(b)(2), certain actions of directors of Federal of indebtedness, the market value of which is less Reserve Banks may be exempted from the prohi­ than $100,000 and represents less than 1 per cent bitions of 18 U.S.C. § 208(a) and section 264a.3 of the value of that class of stock, stock option, of this part, if by general rule or regulation pub­ bond, note or other form of indebtedness issued lished in the Federal Register, the financial interest by the financial institution or other enterprise. involved has been determined to be too remote (4) deliberations concerning or affecting any or too inconsequential to affect the integrity of financial institution or other enterprise to the extent directors’ services. Financial interests will be the financial interest results from holdings in a viewed as too remote or too inconsequential: diversified and widely held mutual fund, invest­ (1) in circumstances in which a director’s ment company, pension or retirement plan that, action on a matter will not directly, substantially, in turn, may have invested in the financial institu­ and predictably affect the financial interest; or tion, provided that the director does not contribute (2) in circumstances in which a director’s to investment decisions of the fund, company, or independence of judgment will not be affected by plan. the financial interest. (c) Section 264a.3(b) of this part specifically (b) The Board of Governors has determined that identifies certain financial interests, the existence the financial interests of a director, the director’s and knowledge of which will preclude a director spouse or minor child, or related persons in the from participating in deliberations or decisions of following matters are too remote or too inconse­ a Reserve Bank board (except through recourse quential to affect the integrity of directors’ services to the procedures set forth in section 264a.4) when and, accordingly, the prohibitions of 18 U.S.C. the question presented is whether the board should Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 571 approve or ratify an extension of credit, advance, and section 264a.3 of this part shall not apply to or discount by a Reserve Bank to a bank which a director’s participation in such matters. is, in the opinion of the President of the Reserve (e) Nothing in this section shall preclude a Bank, in hazardous financial condition. Financial director from refraining, to the extent consistent interests identified in section 264a.3(b) are viewed with responsibilities imposed upon the directors by the Board as offering a clear potential for by the Federal Reserve Act, from participation in conflict. The Board has determined that any other a particular matter. The Board hereby gives notice financial interest that a director, the director’s of its intention to undertake a continuing review spouse or minor child, or related persons may have of the experience of Reserve Bank boards under in such extensions of credit, advances, or dis­ this regulation with a view to assuring preservation counts to banks in hazardous condition are too of and adherence to the intent of both the Federal remote or too inconsequential to affect the integrity Reserve Act and 18 U.S.C. § 208, as amended. of directors’ services and, accordingly, the prohi­ In the course of such review, particular attention bitions of 18 U.S.C. § 208(a) and section 264a.3 will be given to the provisions of this section. of this part shall not apply to a director’s partici­ pation in such matters. These would include, for INTEREST ON DEPOSITS example, financial interests that might result from: (1) a director’s ownership of stock of a bank The Secretary of the Board, acting under dele­ or business, other than a registered parent holding gated authority, has approved a technical amend­ company of the borrowing bank, that may have ment to Regulation Q as the result of the recently an interest in the condition of the borrowing bank; adopted amendment creating two new deposit cat­ or egories. This action will add a reference to these (2) a director’s service as a director or trustee two new deposit categories to the paragraph of of a business or other organization, other than a Regulation Q that sets forth interest rate limits on bank or the registered parent holding company of deposits of less than $100,000. the borrowing bank, that may, itself or through Effective June 1, 1978, section 217.7 of Regu­ a subsidiary, have an interest in the condition of lation Q is amended to read as follows: the borrowing bank. (d) The functions of directors often include Section 217.7—Maximum their participation in discussions concerning (1) Rates of Interest Payable by international, national, and regional economic and Member Banks on Time and financial conditions, (2) monetary policy, (3) gen­ Savings Deposits eral conditions, trends or issues with respect to H: ifc sjt bank credit, (4) establishment of rates to be charged for all advances and discounts by Federal (b) TIME DEPOSITS OF LESS THAN $100,000. Reserve Banks, subject to review and determi­ (1) Except as provided in paragraphs (a), (d), nation of the Board of Governors pursuant to the (e), and (f), and subparagraphs (2), (3), and (4) Federal Reserve Act, (5) matters intended to have of this paragraph, no member bank shall pay generally uniform application to banks within the interest on any time deposit at a rate in excess Reserve Bank District, and (6) statutes and pro­ of the applicable rate under the following sched­ posed or pending legislation in which the Federal ule: Reserve System has a legitimate interest. The foregoing matters are not particular matters of the 9'. * type described in 18 U.S.C. § 208 and, therefore, that statute is not applicable to participation in such REGULATIONS RELATING TO BRANCHES matters. However, even if the statute were held OF FEDERAL RESERVE BANKS to be applicable to participation in such matters, the Board of Governors has determined that the The Board of Governors of the Federal Reserve financial interests of a director, the director’s System has revised its Regulations Relating to spouse or minor child, or related persons in such Branches of Federal Reserve Banks to bring the matters are too remote or too inconsequential to section concerning branch directors into conform­ affect the integrity of directors’ services and, ac­ ity with revisions relating to Reserve Bank direc­ cordingly, the prohibitions of 18 U.S.C. § 208(a) tors in the Federal Reserve Reform Act of 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

572 Federal Reserve Bulletin □ July 1978 Effective June 21, 1978, section 3 of the Regu­ appointed by the Board of Governors shall be lations Relating to Branches of Federal Reserve persons who meet the personal and occupational Banks is amended as follows: qualifications of Class C head office directors, except that Board-appointed Branch directors may Section 3— Directors be stockholders in commercial banks and bank holding companies. No director of a Federal Re­ serve Bank shall serve as a director of a branch (b) Directors shall be selected without discrim­ of the bank during his or her service as a director ination on the basis of race, creed, color, sex, or of the Federal Reserve Bank. All directors shall national origin. The directors appointed by the be citizens of the United States and shall reside Federal Reserve Banks shall be persons who meet or have principal occupational interest within the the personal and occupational qualifications of territory served by the branch. Class A or B head office directors. The directors BANK HOLDING COMPANY AND BANK MERGER ORDERS ISSUED BY THE BOARD OF GOVERNORS Orders Under Section 3 Applicant seeks Board approval to retain 228 of Bank Holding Company Act shares of Bank that were acquired without the Board’s prior approval as a result of Applicant’s Chevalier, Inc., exercise of an option to purchase 203 shares, and Postville, Iowa its purchase of an additional 25 shares.2 Bank, with deposits of $12.8 million, is the Order Approving 314th largest commercial bank in the State of Iowa Retention of Additional Shares of Bank and controls approximately one-tenth of 1 per cent Chevalier, Inc., Postville, Iowa, a bank holding of total deposits in commercial banks in the State.3 company within the meaning of the Bank Holding Bank is the fourth largest of six banks located in Company Act, has applied for the Board’s ap­ the relevant market, which is approximated by proval under § 3(a)(3) of the Act (12 U.S.C. Allamakee County and holds approximately 14.0 § 1842(a)(3)) to retain 228 shares, representing per cent of total market deposits. Inasmuch as the 9.12 per cent of the outstanding voting shares of proposal involves the retention of shares in a Bank Citizens State Bank, Postville, Iowa (“Bank”). that Applicant controlled at the time the shares Notice of the application, affording opportunity were acquired, it appears that retention of such for interested persons to submit comments and shares would involve neither an expansion of Ap­ views, has been given in accordance with § 3(b) plicant nor an increase in the banking resources of the Act. The time for filing comments and views controlled by it. It is the Board’s judgment that has expired, and the Board has considered the retention of this stock would not eliminate existing application and all comments received, including or potential competition or increase the concentra­ those of the Iowa State Banking Department, in tion of banking resources in any relevant area. light of the factors set forth in § 3(c) of the Act 2 Applicant contends that it has had the power to vote the (12 U.S.C. § 1842(c)). shares for which it held the option since it became a bank Applicant is a one-bank holding company by holding company on December 31, 1970, and that it has virtue of its ownership of approximately 51.8 per acknowledged control of such shares in its Registration State­ ment filed with the Board in 1971 and subsequent reports filed cent of the outstanding voting shares of Bank.1 with the Board. Applicant further contends that since it be­ lieved that it controlled the shares subject to the option, it 1 Applicant became a bank holding company on December controlled more than a majority of the shares of Bank and 31, 1970, as a result of the 1970 Amendments to the Act pursuant to § 3(a)(B) of the Act it did not have to obtain the by virtue of its ownership of more than 25 per cent of the Board’s prior approval to purchase additional shares. However, outstanding shares of Bank. Applicant also engages in a general inasmuch as Applicant has provided no documentary evidence insurance business, and pursuant to the provisions of § 4 of that it controlled such shares before it exercised the option, the Act. Applicant has until December 31, 1980, to divest it has filed this application for the Board’s approval to retain its insurance agency activities or, in the alternative, to apply the shares. to the Board for approval to retain such activities. 3 All banking data are as of June 30, 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 573 Thus, competitive considerations are consistent Bank is the 20th largest banking organization in with approval of the application. the Kansas City banking market,2 controlling 1.02 The financial and managerial resources of Ap­ per cent of the deposits therein. plicant and Bank are regarded as generally satis­ One of Applicant’s principals is affiliated with factory and their future prospects appear favorable. a Missouri multibank holding company and an Accordingly, banking factors are consistent with independent bank located within Bank’s market.3 approval. There is no indication that the conven­ Upon consummation of this proposal, the share ience and needs of the community to be served of market deposits held by these three banking are not currently being met, and such consid­ firms would total 12.7 per cent and the share of erations appear to be consistent with approval of market deposits held by the five largest banking the application. organizations, viewing the three banking firms On the basis of the record, the application is associated with Applicant’s principal as a single approved for the reasons summarized above. organization, would increase from 41.05 to 42.94 By order of the Board of Governors, effective per cent. It should also be noted that the relation­ June 9, 1978. ship between Bank and these two banking firms has existed since 1947, and little competition Voting for this action: Chairman Miller and Gover­ exists among them. Accordingly, in light of this nors Gardner, Coldwell, Jackson, and Partee. Absent lengthy relationship and the small increase in and not voting: Governor Wallich. market concentration, consummation of the pro­ posal would not have a significantly adverse effect (Signed) Theodore E. A llison, on competition. [seal] Secretary of the Board. The financial and managerial resources and fu­ ture prospects of Applicant and Bank appear to be satisfactory. Applicant will not incur any debt City Bancshares, Inc., to acquire Bank and considerations relating to Kansas City, Missouri banking factors are consistent with approval of the Order Approving application. Formation of a Bank Holding Company Although consummation of the proposal would effect no changes in the banking services offered City Bancshares, Inc., Kansas City, Missouri by Bank, considerations relating to the conven­ has applied for the Board’s approval under section ience and needs of the community to be served 3(a)(1) of the Bank Holding Company Act (12 are consistent with approval. It has been deter­ U.S.C. § 1842(a)(1)) of formation of a bank mined that consummation of the transaction would holding company by acquiring 90 per cent or be in the public interest and that the application more, less directors’ qualifying shares, of the should be approved. voting shares of City Bank and Trust Company On the basis of the record, the application is of Kansas City, Kansas City, Missouri (“Bank”) approved for the reasons summarized above. The (formerly Grand Avenue Bank and Trust Company transaction shall not be made (a) before the thir­ of Kansas City, Kansas City, Missouri). tieth day following the effective date of this Order Notice of the application, affording opportunity or (b) later than three months after the effective for interested persons to submit comments and date of this Order, unless such period is extended views, has been given in accordance with § 3(b) for good cause by the Board of Governors or by of the Act. The time for filing comments and views the Federal Reserve Bank of Kansas City pursuant has expired, and the application and all comments to delegated authority. received have been considered in light of the By order of the Secretary of the Board, acting factors set forth in § 3(c) of the Act (12 U.S.C. 1842(c)). Applicant is a newly formed corporation organ­ ized for the purpose of becoming a bank holding 2 The Kansas City banking market is approximated by the company. Bank has total deposits of $56.1 mil­ northern half of Cass, all of Clay, Jackson and Platte Counties lion, representing 0.3 per cent of total deposits in Missouri and Johnson and Wyandotte Counties in Kansas. 3 By Order dated June 20, 1978, the Board approved the in commercial banks in the State of Missouri.1 application of Overland Park Bancshares, Inc., Overland Park, Kansas, to acquire the independent bank, The Overland Park 1 All banking data are as of June 30, 1977. State Bank and Trust Company, Overland Park, Kansas. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

574 Federal Reserve Bulletin □ July 1978 pursuant to delegated authority for the Board of extensions of credit by American’s banking sub­ Governors, effective June 22, 1978. sidiaries. Such activities have been determined by regulation to be closely related to banking (12 CFR (Signed) G riffith L. Garwood, § 225.4(a)(1) and 9(ii)), respectively, and would [seal] Deputy Secretary of the Board. be conducted in accordance with that regulation. Notice of these applications has been given in accordance with §§3 and 4 of the Act (42 Fed. Combanks Corporation, Reg. 46,408) and the time for filing comments and Winter Park, Florida views has expired. The Board has considered the Order Approving applications and all comments received in light of the factors set forth in § 3(c) of the Act (12 U.S.C. Acquisition of Shares of Bank Holding Company § 1842(c)) and the considerations specified in Combanks Corporation, Winter Park, Florida, § 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)). a bank holding company within the meaning of Applicant, the twenty-sixth largest banking or­ the Bank Holding Company Act, has applied for ganization in Florida, controls seven banks with the Board’s approval under § 3(a)(3) of the Act aggregate deposits of $152 million, representing (12 U.S.C. § 1842(a)(3)) to acquire 51.5 per cent 0.5 per cent of the total deposits in commercial of the voting shares of American Bancshares, Inc., banks in the State.2 American, the twentieth larg­ North Miami, Florida (“American”),1 thereby est banking organization in Florida, controls nine acquiring indirectly voting shares of the following banks, with aggregate deposits of $261 million, banks in Florida: The Second National Bank of representing 1.0 per cent of total deposits in com­ North Miami, North Miami; The Seminole Bank mercial banks in the State. Upon consummation of Tampa, Tampa; The First National Bank of of the proposed transaction, the resulting banking Davie; Davie; Second National Bank of North organization would rank as the State’s fifteenth Miami Beach, North Miami Beach; First National largest banking organization and would control 1.5 Bank of the Upper Keys, Tavernier; Second Na­ per cent of the total deposits in commercial banks tional Bank of Clearwater, Clearwater; University in Florida. While American would be eliminated City Bank, Gainesville; Executive Bank of Fort as a competitor, the Board believes that consum­ Lauderdale, Fort Lauderdale; and Second National mation of the proposal would not have a signifi­ Bank of Homestead, Homestead. cantly adverse effect upon either the banking Applicant would also acquire indirectly voting structure or the concentration of banking resources shares of American Bancshares Mortgage Com­ in Florida. pany, Inc. (“Mortgage”), and American Banc­ None of Applicant’s bank subsidiaries is located shares Insurance Agency, Incorporated (“Insur­ in banking markets where American’s bank sub­ ance”), wholly-owned subsidiaries of American, sidiaries are situated.3 Furthermore, the distance located in North Miami, Florida. Accordingly, separating the closest of Applicant’s and Ameri­ Applicant has applied for the Board’s approval, can’s subsidiary banks is approximately 81 miles. under § 4(c)(8) of the Act (12 U.S.C. Accordingly, the Board concludes that no signifi­ § 1843(c)(8)) and § 225.4(b)(2) of the Board’s cant existing competition would be eliminated Regulation Y (12 CFR § 225.4(b)(2)), to engage, upon consummation of the proposal. With respect through Mortgage, in the activity of making mort­ to potential competition, the Board is of the view gage loans, construction and development loans, that while both Applicant and American are capa­ and related real estate loans, and through Insur­ ble of entering each other’s markets, the loss of ance, in the activity of selling credit life and credit either firm as a potential entrant would not be accident and health insurance directly related to serious. Given their relative size and the structure of most of the markets in which their subsidiaries 1 Combanks currently owns 4.9 per cent of the outstanding are located, the potential competitive impact of common stock of American. The subject application is for the acquisition of an additional 23.5 per cent of the outstanding either’s entry into any market in which the other common stock; 100,000 shares of American preferred stock convertible into 385,000 shares of American common stock; and permission to exercise up to 600,000 warrants representing 2 All banking data are as of June 30, 1977. 600,000 shares of American common stock at a cost of up 3 Applicant controls subsidiary banks located in the Orlando to $3.7 million. If all convertibility features and warrants were banking market. American, on the other hand, controls sub­ exercised, Applicant would control 51.5 per cent of the voting sidiary banks in the Greater Miami, North Broward, Tampa, shares of American. Gainesville, Key Largo and North Pinellas banking markets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 575 is located is small. In addition neither Applicant mation of the proposal will enable American to nor American has entered a new market since continue to provide services to its bank subsidi­ 1973, and therefore, the two firms cannot be aries and their customers and communities. considered likely entrants into each other’s mar­ Therefore, it is the Board’s judgment that consid­ kets. Accordingly, based upon these and other erations relating to convenience and needs of the facts of record, the Board concludes that the com­ community to be served are consistent with, and petitive effects of the proposal would not be sig­ lend some weight toward, approval of the applica­ nificant. tion. The financial and managerial resources and fu­ Applicant has also applied for the Board’s ap­ ture prospects of Applicant and its subsidiaries are proval to acquire indirectly shares of Mortgage and regarded as generally satisfactory and consistent Insurance, subsidiaries of American, and thereby with approval. American’s financial resources are engage indirectly in certain lending and insurance in need of strengthening, and the subject proposal agency activities, respectively, permissible under should alleviate American’s immediate need for sections 225.4(a)(1) and (9)(ii) of Regulation Y. equity capital. Upon consummation of this pro­ While Applicant has one nonbank mortgage sub­ posal, Applicant will inject $2.5 million of capital sidiary that engages in the same type of activity into American in exchange for 100,000 shares of as Mortgage, Applicant’s mortgage subsidiary has American preferred stock, and American’s finan­ neither originated nor services any loans in any cial resources and future prospects should be im­ relevant market served by American’s banking or proved significantly. American’s equity would be nonbanking subsidiaries. Mortgage has only one further augmented by $3.7 million upon Appli­ loan outstanding in an area served by Applicant’s cant’s exercise of all 600,000 warrants. Accord­ banking or nonbanking subsidiaries. Accordingly, ingly, banking factors lend weight toward ap­ it does not appear that this acquisition would have proval. any significantly adverse effects upon competition. In arriving at the above conclusion with respect Moreover, there is no evidence in the record that to the financial resources of Applicant, the Board consummation of the proposal would result in any has relied upon certain commitments made by undue concentration of resources, unfair competi­ Applicant regarding its overall financial plan for tion, conflicts of interests, unsound banking prac­ the future. In particular, the Board is concerned tices or other adverse effects upon the public about the high level of debt incurred by Appli­ interest. cant’s raising of approximately $25 million by Based upon the foregoing and other consid­ issuing seven year debentures.4 In order to better erations reflected in the record, the Board has ensure that Applicant maintains adequate ability determined that the considerations affecting the to service its debt and reduce the risk that it has competitive, banking, and convenience and needs incurred, the Board has relied upon a commitment factors under § 3(c) of the Act and the balance from Applicant to maintain a separate pool of of the public interest factors that the Board must funds in the amount of $10 million, in high quality consider under § 4(c)(8) of the Act both favor liquid and passive investments. Among the condi­ approval of Applicant’s applications. tions placed on Applicant is one permitting a On the basis of the record, the applications are reduction in the pool only when there is a com­ approved for the reasons summarized above. The mensurate reduction in Applicant’s outstanding transaction shall not be made before the thirtieth indebtedness on its debentures. In addition, Ap­ calendar day following the effective date of this plicant has committed not to incur additional Order, or later than three months after the effective funded indebtedness without Board approval. date of this Order, unless such period is extended While no major changes are contemplated in for good cause by the Board, or by the Federal American’s subsidiary banks’ services, consum­ Reserve Bank of Atlanta pursuant to delegated authority. The determination concerning Appli­ cant’s nonbanking activities is subject to the con­ 4 The Board was not consulted before the issuance of this ditions set forth in § 225.4(c) of Regulation Y and debt and does not intend to encourage such future action by others through its approval of this application. The commit­ to the Board’s authority to require reports by and ments made by Applicant, however, would reduce the risks make examinations of bank holding companies and associated with the level of debt, and the proposed injection their subsidiaries, and to require such modification of capital into American would substantially strengthen the financial position of that organization. or termination of the activities of a holding com­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

576 Federal Reserve Bulletin □ July 1978 pany or any of its subsidiaries as the Board finds light of the factors set forth in § 3(c) of the BHC necessary to assure compliance with the provisions Act (12 U.S.C. § 1842(c)). and purposes of the Act and the Board’s regula­ Applicant, the third largest banking organization tions and orders issued thereunder, or to prevent in Missouri, controls 32 banks with aggregate evasion thereof. deposits of approximately $1.5 billion, repre­ By order of the Board of Governors, effective senting 7.8 per cent of the total deposits in com­ June 2, 1978. mercial banks in the State.1 MFC, the 16th largest banking organization in Missouri, controls three Voting for this action: Chairman Miller and Gover­ banks with aggregate deposits of approximately nors Gardner, Coldwell, Jackson, and Partee. Absent $152.4 million, representing 0.8 per cent of the and not voting: Governor Wallich. total deposits in commercial banks in the State. In the event of consummation of the proposed (Signed) G riffith L. Garwood, merger, Applicant would remain the third largest [seal] Deputy Secretary of the Board. banking organization in the State with 8.6 per cent of total deposits in commercial banks in Missouri. Commerce Bancshares, Inc., Both Applicant and MFC compete in the St. Kansas City, Missouri Louis banking market.2 Based upon deposits derived from that market, Applicant is the fifth Order Approving largest banking organization in the market. Appli­ Merger of Bank Holding Companies cant controls eight subsidiary banks in the market. Commerce Bancshares, Inc., Kansas City, They hold aggregate deposits of approximately Missouri (“Applicant”), a bank holding company $289.8 million, representing 3.2 per cent of the within the meaning of the Bank Holding Company total deposits in commercial banks in the market. Act (“BHC Act”), has applied for the Board’s MFC is the eleventh largest banking organization approval under § 3(a)(5) of the BHC Act (12 in the market. MFC’s three subsidiary banks, all U.S.C. § 1842(a)(5)) to merge with Manchester located in the St. Louis banking market, hold Financial Corporation, St. Louis, Missouri aggregate deposits of $152.4 million, representing (“MFC”), a bank holding company within the 1.7 per cent of the total deposits in commercial meaning of the BHC Act. banks in the market. Notice of the application, affording opportunity The St. Louis banking market contains a large for interested persons to submit comments and number of banking organizations and is not par­ views, was given in accordance with § 3(b) of the ticularly concentrated. The four largest banking Act (42 Fed. Reg. 53999 (1977)). The Board organizations control 40.6 per cent of the deposits received comments from the Manchester-Tower in the market. The largest and second largest hold Grove Community Organization, an affiliate of shares of 15.9 per cent and 14.3 per cent, respec­ Missouri Association of Community Organizations tively. In the event of consummation of the pro­ for Reform Now (“ACORN”), the Plaza Bank posed merger, the combined bank holding com­ of West Port, St. Louis, Missouri (“Plaza Bank”), pany organization would control aggregate depos­ and Mr. William H. Kester, a resident of St. its of $442.2 million, or 4.9 per cent of the total Louis, Missouri. deposits in commercial banks in the market, and On February 16, 1978, the Board ordered an would be the fourth largest banking organization oral public presentation on whether the proposed in the market. Upon consummation, MFC’s largest transaction would serve the convenience and needs subsidiary bank, Manchester Bank of St. Louis of the St. Louis community. The oral presentation, (“Bank”), with deposits of $134.1 million, would held in St. Louis on March 9, 1978, before a become Applicant’s largest subsidiary bank in the representative of the Board, produced a substantial market. record on the convenience and needs issue through statements of some 31 witnesses and through doc­ umentary materials. The Board permitted ACORN 1 All deposit data are as of June 30, 1977. 2 The St. Louis banking market is approximated by the St. and Applicant until March 20, 1978, to submit Louis Rand McNally Metro Area (“RMA”), which includes additional materials. The time for filing comments all of the City of St. Louis and St. Louis County, portions of St. Charles, Franklin, Lincoln, and Jefferson Counties in and views has expired, the Board has considered Missouri, and portions of St. Claire, Monroe, Madison, Jersey, the record, including the comments received, in and Macoupin Counties in Illinois. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 577 The Board concludes that the amount of com­ the decision suggests that an unequal offer in and petition that would be eliminated by the merger of itself does not constitute a sufficient ground for is not significant in light of the relatively small Board denial of an application. market shares of Applicant’s and MFC’s subsidi­ With respect to Mr. Kester’s other assertions,5 ary banks and the sizable number of competitive the record reflects the following facts. The book alternatives that would remain in the market in value of the CBMC shares was readily computable the event the merger is consummated.3 from the information furnished in Applicant’s of­ The Board regards the financial and mangerial fering circular. In light of CBMC’s market value, resources and future prospects of Applicant, MFC, the price offered by Applicant for the CBMC and their subsidiary banks as generally satis­ shares does not appear unreasonable. Although factory, particularly in view of a commitment by CBMC’s dividend for 1974 was reduced, the ratio Applicant to increase capital in the National Bank of CBMC’s dividends to its net income for 1974 of Affton, a subsidiary of MFC upon consumma­ was approximately the same as for each of the tion of the proposed merger. previous two and the following three years, and Mr. William H. Kester opposed the subject the ratio was higher than that for similar sized application, asserting that the managerial resources banks. In these circumstances, the Board finds no of Applicant are adverse. Mr. Kester apparently impropriety in CBMC’s reduction in dividends for lacks standing in this matter, since it does not 1974. appear that he would suffer injury in fact as a result In its evaluation of every application under of Board approval of the application.4 Never­ Section 3 of the BHC Act, the Board is required theless, the Board has examined the substance of to consider the convenience and needs of the Mr. Kester’s charges. Mr. Kester asserted (1) that community to be served. ACORN contended that the purchase price offered by Applicant to minority the proposed merger at issue here will not serve shareholders of its subsidiary, Commerce Bank of the convenience and needs of, or produce positive Mound City, St. Louis, Missouri (“CBMC”), for benefits for, the Manchester-Tower Grove neigh­ their shares of CBMC represented “discrimination borhood,6 in particular its need for home mort­ in price”; (2) that Applicant’s offering circular for gage, home improvement, and small business the CBMC shares failed to specify their book credit. The Manchester-Tower Grove neighbor­ value; and (3) that, after gaining majority control hood is a predominantly low- to moderate-income of CBMC in 1974, Applicant reduced CBMC’s area of approximately 64 city blocks immediately dividend in an effort to lower the market price surrounding Bank (with a 1970 population of about of CBMC’s outstanding shares. 7,000).7 ACORN’s protest focused on one seg­ The Board finds no merit in Mr. Kester’s claims regarding Applicant’s managerial resources. With 5 Mr. Kester also alleged that Applicant’s offering circular respect to an unequal offer to shareholders, the reported inaccurately the amount of CBMC’s interest and fees U.S. Court of Appeals for the Tenth Circuit has on loans and resultant earnings for 1976. The record reflects no basis in fact for this claim and Applicant’s independent held that the Board may not deny an application auditors had previously examined and agreed to the financial to form a bank holding company solely on the statements included in the offering circular. 6 ACORN initially complained that Applicant planned to basis of an unequal offer to the majority and the merge Bank with Commerce Bank of St. Louis, N.A. minority shareholders of the bank to be acquired. (“CBSL”) and relocate Bank’s offices to CBSL’s downtown Western Bancshares, Inc. v. Board of Governors St. Louis location, depriving the Manchester-Tower Grove area of the only source of commercial banking services in the of the Federal Reserve System, 480 F.2d 749 neighborhood. Applicant has assured ACORN that the main (1973). While the Board does not view this deci­ office of the surviving bank will remain at Bank’s present location and ACORN has abandoned this aspect of its protest. sion as affecting its authority to consider how ACORN has also apparently abandoned its contention that the business practices of principals of a bank holding proposed merger would significantly limit competition among company may reflect upon the managerial re­ banks serving the area. 7 As stated earlier, the relevant market for purposes of this sources of the proposed bank holding company, application is the St. Louis RMA. This includes the City of St. Louis, St. Louis County, and portions of other surrounding 3 Plaza Bank asserted that the proposed merger would be suburban counties. Bank has indicated that its “immediate anit-competitive. However, Plaza Bank has provided the Board market area” covers seven postal Zone Improvement Plan with neither the facts nor the reasoning upon which its conclu­ (“ZIP”) codes within the City of St. Louis that surround Bank, sion rests, despite an express invitation by the Board’s staff including the area of ZIP code 63110, which encompasses the to submit additional materials. Manchester-Tower Grove neighborhood. The residential por­ 4 His comments were untimely and not received until after tions of this seven ZIP code area consist primarily of lowthe oral presentation. and moderate-income neighborhoods. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

578 Federal Reserve Bulletin □ July 1978 ment of the relevant market and on three specific proposed merger would serve the convenience and types of loans in that segment. ACORN made no needs (including the credit needs) of the relevant claim that Applicant’s and MFC’s subsidiaries market and the communities therein. None of have not served the convenience and needs of the ACORN’s witnesses testified that he or she had entire relevant banking market (the St. Louis been denied housing-related credit or any other RMA); nor that they have ignored or have not type of consumer credit by Bank. Indeed, adequately served the other credit needs of all, ACORN’s chairman testified that he could not state or any segment, of the relevant market, e.g., for that Bank had denied to any of ACORN’s 110 commercial, personal or installment loans. members (90 per cent of whom own their own ACORN requested that the Board deny the homes) home mortgage or home improvement application or condition approval upon detailed credit.8 written “commitments” and “firm guarantees” by The Board has carefully considered the conten­ Applicant to improve Bank’s record with respect tions of the parties and the record on the applica­ to meeting the need for home mortgage, home tion, including the record developed at the oral improvement and small business credit in the presentation. The Board concludes that Appli­ Manchester-Tower Grove neighborhood. ACORN cant’s present and proposed subsidiary banks in proposed that the written commitments include the St. Louis market are serving and, upon con­ criteria for determining the credit-worthiness of summation of the proposal, reasonably may be borrowers and the specific terms for each of these expected to continue to serve the convenience and three categories of loans; that Bank establish a needs (including the credit needs) of their com­ “Community Advisory Committee” and appoint munity, including, in Bank’s case, the Manches­ a “Community Reinvestment Officer” to assist ter-Tower Grove neighborhood and the other low- Bank in assessing and serving the credit needs of and moderate-income neighborhoods in Bank’s the Manchester-Tower Grove neighborhood; and immediate market area. The Board finds that affil­ that Bank engage in a program of affirmative iation of Bank with Applicant is likely to result marketing of housing-related credit in that neigh­ in an expansion of Bank’s service to the conven­ borhood. ACORN stated that, if Applicant would ience and needs of the community, including the agree in writing to these, or substantially similar need of residents in Bank’s immediate market area loan policy commitments, ACORN would with­ for home mortgage, home improvement, and small draw its protest to the application. business credit. These considerations relating to The Board ordered an oral presentation before the convenience and needs of the community to its representative to afford Applicant and ACORN be served lend weight toward approval of the an opportunity to present relevant facts and argu­ application. ment on whether the proposed transaction would In support of its protest, ACORN relied on the serve the convenience and needs of the St. Louis Congressional findings in section 802 of the CRA community, including and Manchester-Tower that the convenience and needs of the community Grove neighborhood, and whether the subsidiary to be served include credit needs and that financial banks of Applicant and MFC have been, are, or would be upon consummation of the merger 8 Subsequent to the oral presentation, ACORN submitted responsive to the credit needs of the community statements from two persons indicating that Commerce Bank to be served, including the Manchester-Tower of University City (“CBUC”), a subsidiary of Applicant in the St. Louis market, and Bank denied them home mortgage Grove neighborhood. Because of ACORN’s pro­ loans on properties located in the City of St. Louis. These test appeared to raise issue with respect to Bank’s denials occurred some six years earlier. ACORN also submitted a statement indicating that Bank had recently declined to extend service to the credit needs of its community and a $37,000 loan sought by a small real estate management and because of the recent enactment of the Community investment company in Bank’s area to refinance a number of Reinvestment Act of 1977 (“CRA”), 12 U.S.C. existing mortgages and to acquire for rehabilitation additional properties in the area near Bank. The record indicates that § 2901, which emphasizes the role of financial Bank declined to extend the requested credit at that time based institutions in helping to meet the convenience and on Bank’s assessment of the credit-worthiness and the financial needs (including the credit needs) of their local condition and prospects of the firm—not because of the location of the business or of the properties to be pledged as security communities, the Board believed an oral presenta­ for the loan. tion appropriate. In any event, the Board does not believe that accurate assessments of an institution’s service to its community can At the oral presentation, Applicant presented be drawn from such isolated instances of rejected credit appli­ facts and argument to support its view that the cations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 579 institutions have a continuing obligation to help immediate market area, which is part of the com­ meet the credit needs of the local communities in munity to be served. The Board regards such which they are chartered.9 As the Board indicated consideration as appropriate in this case, particu­ to the Congress during its consideration of the larly in the light of testimony on behalf of Appli­ CRA, the convenience and needs standard in the cant that Bank has served, and Applicant plans BHC Act already requires the Board to consider that Bank continue to serve this area and because whether the institutions involved are helping to of ACORN’s concern with the lending record of meet the credit needs of their communities, con­ Bank in the Manchester-Tower Grove neighbor­ sistent with safe and sound operations.10 However, hood, a part of Bank’s immediate market area.12 the Board has also pointed out that commercial While Applicant has stated that the purpose of banks are multi-product institutions that offer a the proposed acquisition is to enable Applicant, wide variety of credit services to their communities a Kansas City, Missouri-based bank holding com­ and that “bank managements should and do have pany, to utilize Bank’s position in the St. Louis a range of discretion as to the type of loans they area in order to compete more effectively in the will make and the degree of risk they will as­ St. Louis wholesale banking market,13 Applicant sume.”11 has projected that the proposed acquisition will The Board finds nothing in the BHC Act that also enable Applicant’s and MFC’s St. Louis sub­ requires or authorizes the Board to dictate a bank’s sidiaries, particularly Bank, to serve better the product mix (which credit or deposit services a convenience and needs of the entire relevant mar­ bank should emphasize) or to dictate what propor­ ket, including the City of St. Louis and the Man­ tion or amount of an institution’s funds must, or chester-Tower Grove neighborhood and their resi­ even should, be allocated to any particular credit dents’ housing and other retail credit needs. Ap­ need, borrower or neighborhood or on what spe­ plicant’s record at its subsidiary banks located in cific terms credit should be extended. The law or immediately adjacent to the City of St. Louis14 permits each bank to choose how it should fulfill (CBUC, CBMC and CBSL) lends credence to its responsibility to help meet the convenience and Applicant’s expectation that Bank’s affiliation with needs (including the credit needs) of its commu­ Applicant will result in such expanded and nity. The Board’s responsibility under the BHC strengthened service by Bank to its community. Act as well as the CRA is to evaluate the records As discussed below, since their acquisition by of the applicant and bank(s) involved and to de­ Applicant and with Applicant’s encouragement, termine whether the convenience and needs of the CBUC and CBMC have demonstrated positive community have been and are likely to be served. records of helping to meet the credit needs of their With respect to this proposal, the Board has communities, including the needs for home mort­ considered not only the convenience and needs of gage, home improvement and small business credit the relevant banking market, but has also consid­ in low- and moderate-income neighborhoods in ered the record of Bank (MFC’s lead bank) in its their communities. While Bank has chosen to emphasize service to the commercial and industrial credit needs of 9 Section 804 of the CRA, the operative section of that Act, requires (inter alia) that the Board (1) assess, in connection with its examination of a financial institution, the institution’s record in meeting the credit needs of its entire community, 12 ACORN’s concern over Bank’s meeting the credit needs including low- and moderate-income neighborhoods, consistent of its community was first brought to the Board’s attention with the safe and sound operation of such institution, and (2) in 1977, when ACORN protested MFC’s application for ap­ take that record into account in the evaluation of an application proval to acquire Manchester Bank of West County, Maryland for Board approval of an acquisition under section 3 of the Heights, Missouri, a de novo bank. 62 Federal Reserve Bul­ BHC Act. Applicant and ACORN agree that this section of letin 848 (1977). In that case (decided prior to enactment the CRA cannot now be given effect and will become effective of the CRA), the Board found that, in the context of Bank’s only upon publication of regulations that the Federal financial total investment and loan portfolio and the variety of services regulatory agencies are required to promulgate, by November offered by Bank, there was no probable cause to believe that 6, 1978, to carry out the purposes of the CRA. Bank had failed to serve the convenience and needs of its 10 Community Credit Needs: Hearings on S. 406 Before the community. Senate Committee on Banking, Housing, and Urban Affairs, 13 Applicant’s principal banking activities are in the Kansas 95th Cong., 1st Sess., 15 (1977) (Letter of Arthur F. Burns). City, Missouri market. Applicant entered the St. Louis whole­ 11 American Security Corporation, 62 Federal Reserve sale banking market through establishment in 1972 of CBSL. Bulletin 255, 258 (1976); see also Marine Midland Bank, 14 The other subsidiary banks of Applicant and MFC in the Inc. 61 Federal Reserve Bulletin 890 (1975); Manchester St. Louis banking market are located in suburban areas. There Financial Corporation, 63 Federal Reserve Bulletin 848 has been no claim that these banks have failed to serve the (1977). convenience and needs of their community. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

580 Federal Reserve Bulletin □ July 1978 its community15 and while an exodus in recent velopment Grant Program for the rehabiliation of years of business and industry from Bank’s imme­ housing in a low- and moderate-income neighbor­ diate geographic service area has resulted in ex­ hood in the immediate area of Bank. Bank has pansion of its service and market areas to include pledged its willingness to provide home mortgage large out-of-city areas, Bank has not ignored the and home improvement loans to creditworthy bor­ retail credit needs of the individuals in its imme­ rowers in the area served by MNHC and has diate market area, including their needs for hous­ extended loans to property owners in the area who ing-related and small business loans. Bank’s rec­ have agreed to rehabilitate thier homes. Bank has ord indicates that it rarely turns down applications also participated in, and has financially supported, for housing-related credit16 and that it has a high the Garden Tower East Community Corporation concentration of its housing-related loans in and its affiliated community development groups. neighborhoods contiguous to Bank. At the oral The Board finds no evidence that Bank has in presentation, Bank’s senior management stressed its residential lending excluded any geographic that, while Bank is recognized as an industrial and area in the City of St. Louis, including the lowcommercial bank, Bank’s policy is to serve the and moderate-income neighborhoods surrounding credit needs of all segments of its community and Bank. Rather, the evidence of record demonstrates to support all individuals in its local community that Bank has excluded no area of St. Louis in who wish to finance or improve their homes. Bank’s housing-related lending program or, as Bank’s management stated that Bank welcomes discussed below, any other type of lending activ­ the opportunity to increase its lending in its im­ ity. mediate market area. Apart from Bank’s positive record in helping In addition to its direct housing-related lending to meet the need for housing-related credit in the in its immediate market area, Bank has actively St. Louis market (including the Manchester-Tower supported the Midtown Neighborhood Housing Grove neighborhood), Bank has a favorable record Corporation (“MNHC”), a nonprofit housing cor­ in serving the business and industrial credit needs poration organized by neighborhood residents to of both its relevant market and its immediate receive funds through the Federal Community De­ geographic service area. Bank’s management stated that, because of Bank’s location in a part of the city with large commercial and industrial 15 As of October 1977, 66 per cent of Bank’s loan portfolio areas and because of Bank’s predominantly com­ (by dollar volume) consisted of commercial or industrial loans mercial deposit mix, a major thrust of Bank’s and approximately 77 per cent of Bank’s demand deposits were from commercial customers. efforts in serving the convenience and needs of 16 ACORN contended that Bank receives few applications its immediate market area has been toward en­ for housing-related credit because Bank has discouraged the couraging the maintenance and revitalization of the filing of such applications and has a reputation for doing so and that there is an unmet demand for mortgate credit in the economy of the area. The record amply supports Manchester-Tower Grove neighborhood. ACORN’s contention this claim. Bank’s commercial loans in the 63110 was based on a study ACORN conducted that indicated that, ZIP code area (as of June 15, 1977) exceeded in during a six-month period in 1977, 105 property transactions were recorded in the area, eight of which were financed with number and dollar amount Bank’s commercial mortgage loans. loans in any other ZIP code in Bank’s relevant In the Board’s view, ACORN’s study does not support its contention. Nothing in the study shows that any of the trans­ market. ferees needed or sought or was denied credit from Bank or Bank’s efforts in helping to maintain and pro­ any other lender. Nor does the study show the credit-worthiness mote the economic health of its immediate neigh­ of any of the transferees or how many of the recorded transfers were in fact legitimate real estate sales. ACORN stated that borhood is further evidenced by Bank’s partici­ it had interviewed 23 of the 105 transferees and that “several” pation in, and sponsorship of, the Manchesterof these stated they had had “difficulties” in obtaining loans Chouteau Industrial Redevelopment Corporation, from banks or savings and loan associations. However, without evidence of the credit-worthiness of these “several” individ­ a nonprofit corporation established over four years uals, of what their “difficulties” were, or of the reasons for ago to encourage business and industrial develop­ these “difficulties,” ACORN’s assumption of an unmet de­ mand for mortgage credit in the area based on these hearsay ment in an area immediately adjacent to Bank and statements is unwarranted. None of these individuals appeared the Manchester-Tower Grove neighborhood.17 or submitted any statement or affidavit at the oral presentation or thereafter concerning a denial of credit by any financial 17 Bank was one of the ten incorporators of the Redevel­ institution. opment Corporation and has extended to it a $300,000 line In any event, Applicant is committed to a program to of credit, on an unsecured and interest free basis. In addition, advertise and promote the availability of housing-related credit Bank’s executive officers devote a significant portion of their at Bank. time to the Redevelopment Corporation’s affairs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 581 Bank was the first bank in St. Louis to participate whether by choice or circumstance, are retail in such a redevelopment project. In the last three oriented banks 20 and are located, and extend large years, new construction in the area being redeve­ amounts of home mortgage credit, in residential loped by the Redevelopment Corporation exceeded neighborhoods. Bank, on the other hand, is located $6,000,000 in cost, a major portion of which was in a part of the City with extensive industrial areas financed by Bank. The Redevelopment Corpora­ and was organized in 1902 to serve, and has tion’s efforts have exerted a stabilizing influence chosen to continue to emphasize service to, the upon the economic health of the area in addition commercial and industrial credit needs of its im­ to providing employment opportunities for resi­ mediate market area. dents of the community. ACORN’s comparison is thus irrelevant as a Bank has also supported the efforts of the City measure of Bank’s service to the needs of its of St. Louis to finance redevelopment projects in community and ignores the legitimate diversity the City, to provide businesses in the City with between the investment portfolios of commercial an incentive to remain and expand, and to encour­ banks, a diversity that is often dictated by the wide age new business to locate in the City.18 Bank and competing variety of credit needs and services assisted in the use by the St. Louis Local Devel­ essential for the economic health of the entire opment Company (“St Louis L.D.C.”) of section community. There is nothing in the BHC Act that 502 of the Small Business Investment Act19 to requires every commercial bank to have the same provide small business credit in the inner City of product mix or that requires a bank to expand its St. Louis. Bank made the first loan under the lending to one segment of the community at the program and participated in five of the twelve loans expense of another or to redirect its lending pro­ negotiated by the St. Louis L.D.C., and Bank gram to match that of any other bank or financial plans to finance, in the near future, two additional institution. loan projects under this small business program. In addition to Bank’s record of helping to meet At the oral presentation, Bank offered statements the credit needs of its entire community, Applicant of a number of small businesses attesting to Bank’s has stated its intention to continue and to support for small business concerns in the geo­ strengthen Bank’s service to the needs of the graphic areas adjacent to Bank. community (including Bank’s lending activity in Bank’s record of active support for the economy the low- and moderate-income neighborhoods in of its local community and Bank’s promotion and Bank’s immediate market area). Applicant has support of community housing development are stated on the record (in a letter to ACORN) that significant elements in the Board’s evaluation of Applicant will implement at Bank a program to the convenience and needs factor in this case and advertise and promote residential mortgage and weigh in favor of approval of the application. improvement loans through neighborhood news­ ACORN challenged Bank’s record of home papers and brochures in customer statements and mortgage lending in the City of St. Louis (in will make experienced lending officers available particular, the Manchester-Tower Grove neigh­ to assess the banking needs of the neighborhoods borhood) as poor and compared Bank’s record to adjacent to Bank and to counsel with and advise those of two other commercial banks located in prospective borrowers. Applicant has further the City of St. Louis, which, during 1976, had pledged to meet with representatives of ACORN made approximately 42 and 47 per cent of their and other community organizations periodically to real estate loans in the City. These two banks, review Bank’s lending practices. With respect to its lending policy, Applicant stated that: 18 Apart from underwriting the legal expenses incurred in [T]he loan policy of Commerce is to encourage a lawsuit that permitted the City to issue industrial redevel­ opment bonds, Bank purchased the entire $1.3 million first all qualified applicants in a bank’s service area offering of such bonds issued by the Planned Industrial Expan­ to apply for home mortgage and home improve­ sion Authority of the City of St. Louis. The proceeds of these ment loans. Within the limits of legal restrictions bonds were earmarked for commercial redevelopment in the and prudent lending practices, Commerce makes Manchester-Tower Grove area. 19 Section 502 of the Small Business Investment Act author­ all residential mortgage loans and home im­ izes the Small Business Administration, in participation with provement loans without regard to race, color, commercial banks or other financial institutions, to lend funds to State or local development companies for the purpose of assisting in plant acquisition or construction by small business 20 One of the two banks has only about 8 per cent of its concerns. total credit outstanding to commercial borrowers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

582 Federal Reserve Bulletin □ July 1978 religion, national origin, age, sex or national affirmatively to carry out the commitments in that status. Loans are made available to all prospec­ policy. tive borrowers in a bank’s service area regardless Applicant’s commitment to serve the conven­ of the location of the property within that area. ience and needs of its community is also illustrated We do not confine our lending to certain zip code by its record at CBUC, which is Applicant’s areas and have no restrictions of this type in our largest subsidiary bank in the relevant market. lending policy. CBUC is located in University City, which is The performance of Applicant’s present St. adjacent to, and one of the older suburbs of, the Louis subsidiaries in and adjacent to the City of City of St. Louis. University City has experienced St. Louis further demonstrates Applicant’s com­ housing deterioration and many of the same urban mitment to serving the convenience and needs of housing problems that face the City of St. Louis. the communities in which its banks are located.21 From its acquisition by Applicant in 1969 through CBMC, located about 5 miles from Bank, serves 1977, CBUC increased its residential mortgage an area composed almost entirely of low- to mod- lending 577 per cent (from $1.7 to $11.4 million) erate-income housing, including large areas with and its home improvement lending 1,322 per cent housing described by Bank’s officers as being in (from $159,000 to $2.3 million). As of December conditions of “genuine distress.” In 1977, after 31, 1977, substantial amounts of CBUC’s credit acquisition of 80 per cent of CBMC’s shares, outstanding, including residential mortgage loans, Applicant replaced management and instructed were to residents of University City. An additional new management to decrease CBMC’s heavy reli­ amount of CBUC’s residential real estate loans and ance on automobile loans and to encourage appli­ consumer instalment loans were made on proper­ cations for residential real estate and small busi­ ties located in, or to residents of, the City of St. ness credit.22 Louis. CBUC has also supported, through lines At Applicant’s encouragement, CBMC partici­ of credit totaling about $2.3 million, local mort­ pated in discussions with representatives of various gage companies that originate residential mort­ community organizations in its immediate service gages (including Federally insured mortgages) in area affiliated with ACORN and adopted, in Feb­ areas of the St. Louis community that include lowruary 1977, a Real Estate and Home Improvement and moderate-income neighborhoods. Lending Policy that sets forth CBMC’s commit­ The record reflects that CBUC has supported ment to serve the borrowing as well as deposit redevelopment efforts in its service area, including needs of its community. The policy commits subsidized housing and rehabilitation projects in CBMC to encourage all qualified applicants in its University City and the City of St. Louis, and trading area to apply for home mortgage loans CBUC has an active record in small business (including Federally insured real estate loans) and lending in its market area and in the student loan home improvement loans and to a program to program. According to the mayor of University advertise and promote the availability of such City, it is University City’s position that CBUC loans in its service area. In the policy, CBMC “has been a good citizen and has exhibited a states that it makes loans available to all prospec­ responsible attitude toward the citizens of our tive borrowers regardless of the location or age community.” of the property to be acquired or improved and Applicant’s other subsidiary bank in the City that it does not “confine its lending to certain zip of St. Louis, CBSL, was organized by Applicant code areas.” CBMC’s policy is, in major points, in 1972 to compete in the St. Louis wholesale similar to that Applicant has stated it will imple­ banking market. Despite its losses and less-thanment at Bank upon consummation of the merger. projected deposit growth, CBSL has continued an The record reflects, and representatives of ACORN extremely active loan program in the relevant groups have acknowledged, that CBMC has acted market, including in the City of St. Louis. CBSL has adopted (and posted in its lobby) a Pledge of Fair Lending Practices, which commits CBSL not to reject arbitrarily mortgage loans for residential 21 Apart from the record of Applicant’s subsidiary banks, Applicant’s mortgage subsidiary, Commerce Mortgage Com­ properties in any geographic section of the City pany, has been active in financing a number of low- and because of the age or location of the property nor moderate-income housing projects in the City of St. Louis. to vary arbitrarily the loan terms or loan applica­ 22 As of June 30, 1977, automobile loans accounted for nearly 75 per cent of CBMC’s loan portfolio. tion procedures. CBSL has also pledged to make Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 583 housing loans available in neighborhoods of all By order of the Board of Governors, effective income levels in the City, consistent with prudent June 16, 1978. financial practices. CBSL has supported housing rehabilitation projects in the City of St. Louis, and Voting for this action: Chairman Miller and Gover­ CBSL’s management has met regularly with the nors Gardner, Wallich, Coldwell, and Partee. Absent Community Development Agency in the City to and not voting: Governor Jackson. locate additional projects for CBSL participation. (Signed) G riffith L. Garwood, The Board is of the view that the record amply [seal] Deputy Secretary of the Board. demonstrates that Bank and Applicant’s subsidi­ aries in, or immediately adjacent to, the City of St. Louis have been active in helping to meet, Ewing Agency, Inc., and are committed to continuing to help to meet, Ewing, Nebraska the credit needs of all segments of their relevant Order Approving market, including the needs of residents in low- Formation of Bank Holding Company and moderate-income neighborhoods in Bank’s immediate geographic market area for home mort­ Ewing Agency, Inc., Ewing, Nebraska, has gage, home improvement, and small business applied for the Board’s approval under Section credit. Bank’s record of support of its entire mar­ 3(a)(1) of the Bank Holding Company Act (12 ket, coupled with Applicant’s commitments and U.S.C. § 1842(a)(1)) of formation of a bank positive record of service to the St. Louis commu­ holding company by acquiring 100 per cent of the nity, demonstrates that consummation of the pro­ voting shares (less directors’ qualifying shares) of posed merger will serve the convenience and needs Farmers State Bank (“Bank”), Ewing, Nebraska. of the St. Louis banking market (including the Notice of the application, affording opportunity credit needs of the low- and moderate-income for interested persons to submit comments and neighborhoods in the vicinity of Bank). In addi­ views, has been given in accordance with Section tion, Applicant proposes to institute service 3(b) of the Act. The time for filing comments and charge-free checking (now available at Applicant’s views has expired, and the Board has considered banks) at MFC’s subsidiary banks. These benefi­ the application and all comments received in light cial aspects of the proposal weigh in favor of of the factors set forth in Section 3(c) of the Act approval of the application and outweigh any ad­ (12 U.S.C. § 1842(c)). verse effects upon competition that might result Applicant is a nonoperating corporation organ­ from consummation of this proposal. Accordingly, ized for the purpose of becoming a bank holding it is the Board’s judgment that the proposed ac­ company by acquiring Bank, which holds deposits quisition would be in the public interest and that of approximately $4.4 million.1 Upon acquisition the application should be approved. of Bank, Applicant would assume Bank’s position On the basis of the record, the application is as the 310th largest banking organization in the approved for the reasons summarized above.23 The State of Nebraska and would control approxi­ transaction shall not be made (a) before the thir­ mately .06 per cent of the total State commercial tieth calendar day following the effective date of bank deposits. this Order or (b) later than three months after that Bank is the smallest of six banks located in the date, unless such period is extended for good cause relevant banking market and controls 6.8 per cent by the Board or by the Federal Reserve Bank of of total deposits in commercial banks in the mar­ Kansas City pursuant to delegated authority. ket.2 Applicant’s principals are associated with a number of other banks and bank holding compa­ 23 ACORN has requested that the Board require Applicant nies in Nebraska. Where the principals of an to supply the loan policy manuals of Bank and CBSL and applicant are engaged in establishing a chain of certain specific data on each of their housing-related and small business loans made during the period from January 1975 one-bank holding companies, the Board applies through December 1977. ACORN has also requested specific multibank holding company standards in assessing data on the small business loans made by Manchester Bank both the impact of the proposal on competition West County in postal ZIP code 63141. In light of the extensive submissions to the record concerning the lending policies and among banking institutions and the financial and practices of Applicant’s and MFC’s subsidiary banks and the Board’s positive findings in regard to their record in meeting the convenience and needs of the St. Louis community, 1 Banking data are as of December 31, 1976. ACORN’s request is hereby denied. 2 The relevant market is approximated by Holt County. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

584 Federal Reserve Bulletin □ July 1978 managerial resources and future prospects of the calendar day following the effective date of this applicant and the proposed subsidiary bank.3 In Order, or later than three months after the effective this case, none of the other banking organizations date of this Order unless such period is extended with which Applicant’s principals are associated for good cause by the Board, or by the Federal competes in the Holt County banking market. It Reserve Bank of Kansas City pursuant to delegated appears that consummation of the proposal would authority. not have any adverse effects on competition or By order of the Board of Governors, effective further any undue concentration of banking re­ June 5, 1978. sources in any relevant area. Thus, the Board concludes that the effects of the proposal on com­ Voting for this action: Chairman Miller and Gover­ petition are consistent with approval. nors Gardner, Coldwell, Jackson, and Partee. Absent On June 14, 1976, the Board denied an appli­ and not voting: Governor Wallich. cation by Applicant’s principals to form a one- (Signed) G riffith L. Garwood, bank holding company by acquiring Nebraska [seal] Deputy Secretary of the Board. State Bank, Ord, Nebraska.4 The Board’s decision in part reflected its judgment that Applicant’s principals should direct their managerial resources First Formoso, Inc., to the improvement of banks that they already Formoso, Kansas controlled before seeking to establish additional Order Approving one-bank holding companies. Since that date, Ap­ Action to Become a Bank Holding Company plicant’s principals have restructured their owner­ ship interests, and have effected some significant Pursuant to Section 3(a)(1) of the Bank Holding improvements. With respect to banking organi­ Company Act of 1956 (12 U.S.C. § 1842(a)(1)), zations now controlled by Applicant’s principals, First Formoso, Inc., Formoso, Kansas (“Appli­ their financial and managerial resources and future cant”), has applied for prior approval to become prospects are considered consistent with approval a bank holding company through the acquisition of this application. The financial and managerial of 85.33 per cent, less directors’ qualifying shares, resources of Applicant, which are dependent upon of the voting shares of The First National Bank those of Bank, are also considered generally satis­ of Formoso, Formoso, Kansas (“Bank”). factory, and the future prospects of each appear Notice of the application, affording opportunity favorable. These factors are consistent with ap­ for interested persons to submit comments and proval of the application. While Applicant will views has been given in accordance with section incur debt in connection with the proposal, it 3(b) of the Act (43 Federal Register 12086 appears that the acquisition debt can be serviced (1978)). The time for filing comments and views without placing undue strain on the financial re­ has expired and the application and all comments sources of Applicant or Bank. received have been considered in light of the Although consummation of the transaction factors set forth in section 3(c) of the Act (12 would effect no changes in the services offered U.S.C. § 1842(c)). by Bank, considerations relating to the conven­ Applicant is a newly formed corporation organ­ ience and needs of the community to be served ized for the purpose of becoming a bank holding are consistent with approval. The Board concludes company through the acquisition of Bank, which that consummation of the proposal to form a bank has deposits of $1.16 million.1 Upon acquisition holding company would be consistent with the of Bank, Applicant would control the 612th largest public interest and that the application should be bank in Kansas, holding .01 per cent of total approved. deposits in commercial banks in the State. Bank On the basis of the record, the application is is the smallest of 12 banks in the relevant banking approved for the reasons summarized above. The market, which is approximated by all of Jewell transaction shall not be made before the thirtieth County, the towns of Courtland and Scandia in Republic County, Kansas, the town of Lebanon in Smith County, Kansas and the town of Superior 3 See the Board’s Order of June 14, 1976, denying the application of Nebraska Banco, Inc., Ord, Nebraska, 62 Fed­ eral Reserve Bulletin 638 (1976). 4 Nebraska Banco, Inc., supra, n. 3. 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 585 in Nuckolls County, Nebraska. Bank controls 1.69 is extended for good cause by the Board of Gov­ per cent of the deposits in the relevant market. ernors or by the Federal Reserve Bank of Kansas If the principals of an applicant are engaged in City, pursuant to delegated authority. establishing a chain of one-bank holding compa­ By order of the Secretary of the Board, acting nies,2 the Board has indicated that it is appropriate pursuant to delegated authority from the Board of to analyze such organizations as multibank holding Governors, effective June 2, 1978. companies and apply more stringent standards than are normally applied to one-bank formations. (Signed) G riffith L. Garwood, Several principals of Applicant are also associated [seal] Deputy Secretary of the Board. with two Nebraska one-bank holding companies and their two subsidiary banks. One of the holding companies, FSB, and its subsidiary, Farmers State Glen Rose Bancshares, Inc., Bank of Superior, are located in the same market Glen Rose, Texas as Bank. Together, Bank and the bank in Superior Order Approving control 20.04 per cent of market deposits. How­ Formation of Bank Holding Company ever, Bank, the smallest bank in the market, controls less than 2 per cent of market deposits Glen Rose Bancshares, Inc., Glen Rose, Texas, and 10 other banking alternatives remain in the has applied for the Board’s approval under market. Thus, the common ownership of the two § 3(a)(1) of the Bank Holding Company Act (12 banks and approval of the application would not U.S.C. § 1842(a)(1)) of formation of a bank have a significantly adverse effect on competition. holding company through acquisition of 80 per The financial and managerial resources and fu­ cent or more of the voting shares of The First ture prospects of Applicant are entirely dependent National Bank in Glen Rose, Glen Rose, Texas upon those of Bank. Applicant projects a 10-year (“Bank”). amortization period for its acquisition debt. Ap­ Notice of the application, affording opportunity plicant’s projected schedule for the retirement of for interested persons to submit comments and acquisition debt appears to provide Applicant with views, has been given in accordance with § 3(b) sufficient financial flexibility to meet its annual of the Act. The time for filing comments and views debt servicing requirement and to maintain an has expired, and the application and all comments adequate capital position for Bank. The managerial received have been considered in light of the resources of Applicant and Bank are considered factors set forth in § 3(c) of the Act (12 U.S.C. satisfactory and the future prospects of each appear § 1842(c)). favorable. Accordingly, considerations relating to Applicant, a nonoperating corporation with no banking factors are consistent with approval of the subsidiaries, was formed for the purpose of be­ application. coming a bank holding company through the ac­ Although consummation of the proposal would quisition of Bank. Bank has total deposits of $6.9 effect no changes in the banking services offered million1 and is the only bank in the relevant by Bank, considerations relating to convenience banking market.2 The purpose of the proposed and needs of the community to be served are transaction is to facilitate the transfer of the own­ consistent with approval. It has been determined ership of shares of Bank from individuals to a that consummation of the transaction would be in corporation owned by the same individuals. the public interest and that the application should Principals of Applicant are principals of Andrews be approved. Bancshares, Inc., a one-bank holding company On the basis of the record, the application is controlling Commercial State Bank, Andrews, approved for the reasons summarized above. The Texas. Commercial State Bank is located 280 transaction shall not be consummated (a) before miles from Bank in a separate banking market. the thirtieth day following the effective date of this In view of the relatively small size of Bank and Order or (b) later than three months after the Commercial State Bank and the distance between effective date of this Order, unless such period them, consummation of the instant proposal will 1 All deposit data are as of June 30, 1977, and reflect the 2 See the Board’s Order of June 14, 1976, denying the acquisitions and formations as of April 30, 1978. application of Nebraska Banco, Inc., Ord, Nebraska, 62 Fed­ 2 The relevant banking market is approximated by Somervell eral Reserve Bulletin 638 (1976). County. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

586 Federal Reserve Bulletin □ July 1978 have no adverse effect upon existing or potential this Order or (b) later than three months after the competition nor increase the concentration of effective date of this Order, unless such period banking resources in any relevant market. Ac­ is extended for good cause by the Board or by cordingly, it is concluded that competitive consid­ the Federal Reserve Bank of Dallas pursuant to erations are consistent with approval of the appli­ delegated authority. cation. By order of the Secretary of the Board, acting The Board applies multi-bank holding company pursuant to delegated authority from the Board of standards in assessing the financial and managerial Governors, effective June 22, 1978. resources and future prospects both of an applicant (Signed) G riffith L. Garwood, seeking to become a one-bank holding company [seal] Deputy Secretary of the Board. and of its proposed subsidiary bank, where the principals of the Applicant are engaged in estab­ lishing a chain of one-bank holding companies.3 Great Southwest Ban Corp, Inc., Commercial State Bank appears to be in satis­ Dodge City, Kansas factory condition, which suggests that Applicant’s Order Approving principals would conduct the operations of the Formation of Bank Holding Company, proposed holding company and of Bank in a satis­ Acquisition of Leasing Agency, and factory manner. In addition, Applicant has com­ Continuation of Insurance Sales Activities mitted that it will not declare dividends on its common stock unless the debt it will incur to Great Southwest Ban Corp, Inc., Dodge City, purchase shares of Bank is amortized as projected Kansas, has applied for the Board’s approval under in the application. Applicant has also committed section 3(a)(1) of the Bank Holding Company Act that, in the event any such dividend is paid, certain (12 U.S.C. § 1842(a)(1)), of formation of a bank capital ratios set forth in the application will be holding company by acquiring 81.67 per cent of maintained. Applicant proposes to service the debt the voting shares of Bank of the Southwest it will incur as a result of the proposed transaction (“Bank”), Dodge City, Kansas. through dividends from Bank over a 12-year pe­ Applicant has also applied pursuant to section riod. Based on Bank’s past earnings, it appears 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)) and that Applicant will be able to meet its annual section 225.4(b)(2) of the Board’s Regulation Y debt-servicing requirements and maintain Bank’s (12 C.F.R. § 225.4(b)(2)) for permission to ac­ capital position. These commitments and other quire 100 per cent of the voting shares of South­ facts of record cause the considerations relating west Agency, Inc. (“Agency”), Dodge City, to banking factors to be consistent with approval Kansas, a company engaged in leasing personal of the application. property, and to continue to engage in the sale It does not appear that the convenience and of life and accident and health insurance directly needs of the community to be served are not being related to extensions of credit and lease transac­ met currently. Although there will be no immedi­ tions of its proposed subsidiaries. Such activities ate change in the services offered by Bank upon have been determined by the Board to be closely consummation of the proposal, considerations re­ related to banking (12 C.F.R. §§ 225.4(a)(6) and lating to the convenience and needs of the com­ (9)). munity to be served are consistent with approval Notice of the application, affording opportunity of the application. It has been determined that for interested persons to submit comments and consummation of the proposed transaction would views, has been given in accordance with sections be in the public interest and that the application 3 and 4 of the Act (43 Federal Register 15365). should be approved. The time for filing comments and views has ex­ On the basis of the record, the application is pired, and the Board has considered the application approved for the reasons set forth above. The and all comments received in light of the factors transaction shall not be made (a) before the thir­ set forth in section 3(c) of the Act (12 U.S.C. tieth calendar day following the effective date of § 1842(c)) and the considerations specified in sec­ tion 4(c)(8) of the Act (12 U.S.C. § 1843(c)(8)). Applicant, a Kansas corporation, was incorpo­ 3 See the Board’s Order of June 14, 1976, denying the rated in March 1975, after its shareholders pur­ application of Nebraska Banco, Inc., Ord, Nebraska (62 Fed­ eral Reserve Bulletin 638 (1976)). chased the majority interest in Bank. Shortly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 587 thereafter, Applicant purchased from Bank’s capital in Bank. On the basis of facts of record, former principal shareholder all the stock of two the Board has determined that the financial and corporations, WesKan Insurance Limited, which managerial resources and future prospects of Ap­ engaged in the sale of credit-related insurance on plicant and Bank are consistent with approval of Bank’s premises, and First Management, Inc., this application. Considerations relating to the which owned Bank’s premises. Subsequently, convenience and needs of the community to be Applicant caused both corporations to be liqui­ served also are consistent with approval. It is the dated and acquired their assets and assumed their Board’s judgment that consummation of the pro­ liabilities.1 posal to form a bank holding company would be Bank ($13.0 million in deposits) ranks 214th in the public interest and that the application in size among 615 banks in the State and holds should be approved. .13 per cent of total commercial bank deposits in In connection with its application to become a Kansas.2 Bank is the third largest of seven banks bank holding company, Applicant also has applied in the relevant banking market3 and controls 10.6 for approval to acquire 100 per cent of the voting per cent of the total deposits in commercial banks shares of Agency and to engage in the sale of life in that market. One of Applicant’s principals is and accident and health insurance related to ex­ also affiliated with two other Kansas banks, Han- tensions of credit and lease transactions of its ston State Bank, Hanston, Kansas, and The First proposed subsidiaries. Agency leases personal National Bank of Hays City, Hays, Kansas, nei­ property subject to the conditions of sec­ ther of which competes in the relevant banking tion 225.4(a)(6) of Regulation Y (12 CFR market. It appears that consummation of the pro­ § 225.4(a)(6)), and Applicant now sells life and posal would not have a significant effect on com­ accident and health insurance in connection with petition in any relevant area. Accordingly, the extensions of credit by Bank and the lease trans­ Board concludes that competitive considerations actions of Agency. Applicant proposes to continue are consistent with approval of the application to to sell such insurance as permitted for bank hold­ acquire Bank. ing companies by section 225.4(a)(9)(ii) of Regu­ On February 4, 1977, the Board denied a pre­ lation Y (12 CFR § 225.4(a)(9)(ii)). It does not vious application by Applicant to acquire Bank.4 appear that the acquisition of Agency or Appli­ While the Board found the managerial resources cant’s sale of insurance would have any significant of Applicant and Bank to be generally satisfactory, effect on existing or future competition. On the it concluded that their financial resources and fu­ other hand, approval of the application would ture prospects were inconsistent with approval. In assure residents of the area of the convenient its Order, the Board noted that Applicant’s pro­ source of the services described above, which posal did not appear to provide Applicant the factor the Board regards as being in the public necessary financial flexibility to service its debt interest. Furthermore, there is no evidence in the while maintaining adequate capital in Bank. record indicating that consummation of these pro­ The financial resources and future prospects of posals would result in any undue concentration of Applicant and Bank have materially improved resources, unfair competition, conflicts of inter­ since the previous application. The injection of ests, unsound banking practices or other adverse $113,000 in equity capital and $250,000 of de­ effects on the public interest. Based on the fore­ bentures has improved the capital position of going and other considerations reflected in the Bank. Further, Bank’s earnings since 1972 have record, the Board has determined that the balance improved, and Applicant will have as an additional of the public interest factors the Board must con­ source of income the dividends from Agency. It sider under section 4(c)(8) favor approval of Ap­ now appears that Applicant can retire its out­ plicant’s proposal. standing indebtedness while maintaining adequate Accordingly, the application is approved for the reasons summarized above. The acquisition of Bank shall not be made before the thirtieth calen­ 1 Applicant’s continued ownership of Bank’s premises dar day following the effective date of this Order; would be.permissible under section 4(a)(2)(A) of the Act. and the acquisition of Bank and Agency shall not 2 All banking data are as of June 30, 1977. be made later than three months after the effective 3 The relevant market is approximated by Ford County, date of this Order, unless such period is extended Kansas. 4 63 Federal Reserve Bulletin 274 (1977). for good cause by the Board, or by the Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

588 Federal Reserve Bulletin □ July 1978 Reserve Bank of Kansas City pursuant to delegated Bank is the only commercial bank in the Kent authority. The determination as to Applicant’s County banking market.2 The subject proposal proposed non-banking activities is subject to the represents a restructuring of Bank’s ownership conditions set forth in section 224.4(c) of Regula­ from individuals to a corporation owned by the tion Y and the Board’s authority to require reports same individuals. Principals of Applicant are also by, and make examination of, holding companies principals in Ranco Bancshares, Inc., Spur, Texas, and their subsidiaries and to require such modifi­ a one-bank holding company that controls Spur cation or termination of the activities of a bank Security Bank, Spur, Texas, which is located holding company or any of its subsidiaries as the approximately 23 miles from Bank in a separate Board finds necessary to assure compliance with banking market. Accordingly, it appears from the the provisions and purposes of the Act and the facts of record that consummation of the proposal Board’s regulations issued thereunder, or to pre­ would not result in any adverse effects upon com­ vent evasion thereof. petition in any relevant area. Thus, competitive By order of the Board of Governors, effective considerations are consistent with approval of the June 13, 1978. application. Voting for this action: Chairman Miller and Gover­ The financial and managerial resources and fu­ nors Gardner, Coldwell, Jackson, and Partee. Absent ture prospects of Applicant are dependent upon and not voting: Governor Wallich. Bank. Applicant’s projected schedule of a 12-year (Signed) G riffith L. Garwood, amortization period for its acquisition debt appears to provide Applicant with the necessary financial [seal] Deputy Secretary of the Board. flexibility to meet its annual debt servicing re­ quirement and to maintain an adequate capital Kenco Bancshares, Inc., position for Bank, particularly in view of Appli­ Jay ton, Texas cant’s commitment to increase capital in Bank upon consummation of the proposal and in light Order Approving of certain other commitments by Applicant and Formation of Bank Holding Company Applicant’s shareholders that have been made a part of this record. The managerial resources of Kenco Bancshares, Inc., Jayton, Texas, has Applicant, Bank and the affiliated bank are con­ applied for prior approval under Section 3(a)(1) sidered satisfactory, and the future prospects of of the Bank Holding Company Act of 1956 (12 each appear favorable. Accordingly, consid­ U.S.C. § 1842(a)(1)) and section 225.3(a) of erations relating to banking factors are consistent Regulation Y (12 C.F.R. § 225.3(a)) to become with approval of the application.3 a bank holding company by acquiring 80 per cent or more of the voting shares of Kent County State Although consummation of the proposal would Bank, Jayton, Texas (“Bank”). effect no changes in the banking services offered Notice of the application, affording opportunity by Bank, considerations relating to the conven­ ience and needs of the community to be served for interested persons to submit comments and views has been given in accordance with section are also consistent with approval. It has been 3(b) of the Act. The time for filing comments and determined that consummation of the transaction views has expired, and the application and all would be in the public interest and that the appli­ comments received have been considered in light cation should be approved. of the factors set forth in section 3(c) of the Act On the basis of the record, the application is (12 U.S.C. § 1842(c)). approved for the reasons summarized above. The Applicant is a nonoperating corporation organ­ ized for the purpose of becoming a bank holding 2 The Kent County banking market is the relevant market company through the acquisition of Bank. Bank and is approximated by Kent County, Texas. holds deposits of $3.5 million, and is one of the 3 Where principals of an Applicant are engaged in establish­ smaller commercial banks in Texas.1 ing a chain of one-bank holding companies, the Board has 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, and reflect bank application of Nebraska Banco, Inc., Ord, Nebraska, to be­ holding company formations and acquisitions approved as of come a bank holding company (62 Federal Reserve Bulletin May 31, 1978. 638 (1976). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 589 transaction shall not be consummated (a) before in commercial banks in the Valley County banking the thirtieth calendar day following the effective market and is the second largest of five banks in date of this Order or (b) later than three months that market.3 The subject proposal involves a re­ after the effective date of this Order, unless such structuring of Bank’s ownership from individuals period is extended for good cause by the Board to a corporation owned by those same individuals. of Governors or by the Federal Reserve Bank of The facts of record indicate that, in addition to Dallas, pursuant to delegated authority. the voting shares of Bank, Applicant’s principal By order of the Secretary of the Board, acting holds significant voting share interests in North pursuant to delegated authority from the Board of Loup Valley Bank, North Loup, Nebraska Governors, effective June 29, 1978. (“North Loup Bank”), one of the other four banks located in the Valley County banking market.4 In (Signed) G riffith L. Garwood, addition, Applicant’s principal serves as president [seal] Deputy Secretary of the Board. and director of North Loup Bank. North Loup Bank holds deposits of approximately $6.3 mil­ lion, representing 13.0 per cent of the total market Mid-Nebraska Bancshares, Inc., deposits and ranks as the third largest commercial Ord, Nebraska bank in the relevant market. Under section 3(c) of the Act, the Board is Order Denying precluded from approving any proposed acquisi­ Formation of Bank Holding Company tion of a bank that, in any part of the country, Mid-Nebraska Bancshares, Inc., Ord, Ne­ (1) would result in a monopoly, or would be in braska, has applied for the Board’s approval under furtherance of any combination or conspiracy to § 3(a)(1) of the Bank Holding Company Act (12 monopolize or attempt to monopolize the business U.S.C. § 1842(a)(1)) of formation of a bank of banking; or that (2) may substantially lessen holding company acquiring 100 per cent of the competition or tend to create a monopoly or be voting shares of Nebraska State Bank, Ord, Ne­ in restraint of trade, unless the Board finds that braska (“Bank”). such anticompetitive effects are clearly outweighed Notice of the application, affording opportunity in the public interest by the proposal meeting the for interested persons to submit comments and convenience and needs of the community to be views, has been given in accordance with § 3(b) served. of the Act. The time for filing comments and views As part of its analysis of the competitive effects has expired, and the Board has considered the of a proposal involving the restructuring of a application and all comments received, including bank’s ownership into corporate form, the Board that of the United States Department of Justice, takes into consideration the competitive effects of in light of the factors set forth in § 3(c) of the the transaction whereby common share owner­ Act (12 U.S.C. § 1842(c)). ship and/or interlocking director/officer relation­ Applicant, a nonoperating corporation with no ships were established between the subject bank subsidiaries, was organized for the purpose of becoming a bank holding company by acquiring Bank. Applicant’s previous application to acquire 3 The Valley County banking market, the relevant banking market for the purposes of analyzing the competitive effects Bank was denied by the Board by Order dated of the proposed transaction, is approximated by Valley County, June 14, 1976.1 Upon acquisition of Bank pursuant Nebraska, and the town of Scotia, in Greely County, Nebraska. to approval of the present application, Applicant Applicant contends that the relevant banking market is signifi­ cantly smaller than Valley County, Nebraska. The Federal would control the 122nd largest commercial bank Reserve Bank of Kansas City and the Board’s staff have in Nebraska, with 0.20 per cent of total commer­ thoroughly reviewed and analyzed all facts of record relating to the definition of the relevant market. As a result of this cial bank deposits in the State.2 review and analysis, the Board concludes that the appropriate Bank holds deposits of approximately $14.7 market for analyzing the competitive effects of the subject million, representing 30.3 per cent of total deposits proposal is approximated by the Valley County banking market as described above. 4 It is noted that Applicant’s principal also is associated as principal with five other banks and bank holding companies, 1 62 Federal Reserve Bulletin 638 (1976). all of which are located outside the relevant banking market. 2 All banking data are as of December 31, 1977, unless It does not appear that there is any meaningful competition otherwise noted. between Bank and those five banking organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

590 Federal Reserve Bulletin □ July 1978 and one or more banks in the same market.5 In Board finds that the financial condition of Bank this case, the Board has considered the competitive and Applicant are satisfactory and consistent with effects of the purchase in October 1972 of Bank’s approval of the application. shares by Applicant’s principal. At that time, With respect to managerial resources, the Board Applicant’s principal held the above-described in­ stated in its Order denying Applicant’s previous terest in North Loup Bank, and served as its application that in considering an application in­ President and director. At that time, Bank and volving a bank whose principals control another North Loup Bank together controlled 39.4 per cent bank or bank holding company, the Board looks of the deposits in the market, or 26.7 per cent beyond the bank that is the subject of the applica­ and 12.7 per cent, respectively.6 The acquisition tion and analyses the financial and managerial of Bank by Applicant’s principal eliminated sig­ resources of the other bank or bank holding com­ nificant competition that existed at that time be­ pany.9 The Board notes that Applicant’s principal tween Bank and North Loup Bank, increased the previously held voting stock interests and direc­ concentration of banking resources within the tor/officer positions in several banks and bank Valley County banking market, and eliminated an holding companies from which he since has disaf­ independent banking competitor in the market. In filiated himself. The managerial resources of these the Board’s judgment, that acquisition had an banks and holding companies were considered to adverse effect on competition. be an adverse factor in the Board’s consideration In the Board’s view, the subject proposal in­ of Applicant’s previous application.10 The Board volves the use of the holding company form to recognizes that Applicant’s principal has reduced further an anticompetitive arrangement. On the his ownership interest and participation in certain basis of all facts of record, including the sizes of of those banks and bank holding companies. The the organizations involved, their collective posi­ Board recognizes that Bank’s managerial resources tion in the relevant market (together the two banks now appear to be satisfactory. Therefore, having hold 43.3 per cent of the market’s total commercial considered the financial and managerial resources bank deposits) and the limited number of banking of Applicant and Bank and the future prospects alternatives in the market, the Board concludes of each, the Board concludes that such consid­ that approval of this proposal would have signifi­ erations are consistent with, but lend no weight cant adverse competitive effects.7 Accordingly, in favor of approval of the subject application. under the standards set forth in the Act, the pro­ Since acquisition of Bank in 1972, Applicant’s posal may not be approved unless the anti-com­ principal has expanded and improved the services petitive effects are clearly outweighed by other offered by Bank. Considerations relating to the public interest considerations reflected in the rec­ convenience and needs of the community to be ord. served, therefore, lend some weight toward ap­ As the Board has indicated in previous occa­ proval, but, in the Board’s view, do not outweigh sions, a holding company should constitute a the significant adverse competitive effects of the source of financial and managerial strength to its subject proposal. subsidiary bank(s) and the Board closely examines On the basis of all of the facts of record in this the condition of Applicant with this consideration case, it is the Board’s judgment that approval of in mind.8 With regard to financial resources, the this application would not be in the public interest and that the application should be denied. While denial of this proposal may not immediately alter 5 See the Board’s Order of March 27, 1978, denying the application to become a bank holding company by Midwest Bancorp, Inc., Gardner, Illinois, 64 Federal Reserve Bulle­ tin 317 (1978). 6 As of June 30, 1972. poration owned by the same individuals, the Act requires that before an organization is permitted to become a bank holding 7 The Board made a similar finding in its Order denying company and thus obtain the benefits associated with the Applicant’s previous application, 63 Federal Reserve Bulle­ holding company structure, it must secure the Board’s ap­ tin 638 (1976). There are no facts in the record that warrant proval. Section 3(c) of the Act provides that the Board must, a different conclusion with respect to the present application. in every case, consider, among other things, the financial and 8 While this proposal involves the restructuring of Bank’s managerial resources of both the applicant company and the ownership into a corporate form, the Bank Holding Company bank to be acquired. The Board’s action in this case is based Act requires that the Board, in acting on an application to on a consideration of such factors. acquire a bank, inquire into the financial and managerial resources of an applicant. While this proposal involves the 9 62 Federal Reserve Bulletin 638 (1976). transfer of the ownership of Bank from individuals to a cor- 10 Ibid. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 591 the anticompetitive relationship existing between his voting shares of Bank. This corporate restruc­ Bank and North Loup Bank, denial would preserve turing will have no impact on the present compet­ the prospect that Bank and North Loup Bank itive arrangement in the relevant banking market would become independent and competing orga­ but will offer Applicant’s principal the opportunity nizations in the future. On the other hand, approval to take advantage of the benefits offered by the would serve to sanction the above described sig­ bank holding company structure. In the past, Ap­ nificant adverse consequences, strengthen and so­ plicant’s principal has taken steps to improve lidify the anticompetitive relationship between the Bank’s services. For instance, since his purchase two banks, and would diminish the likelihood of of Bank’s voting shares in 1972, Bank has in­ the market becoming more competitive in the creased the rate paid on time money deposits, has future. offered installment loan services, SB A loans and On the basis of all facts of the record, and in student loans, has constructed a new bank building light of the factors set forth in section 3(c) of the and has expanded the banking hours. Further, in Act, it is the Board’s judgment that consummation response to the Board’s comments in denying of the proposal to form a banking holding company Applicant’s previous application, and in antici­ would not be in the public interest and the appli­ pation of the present application, Applicant’s cation should be, and is hereby, denied for the principal divested himself of certain other banking reasons summarized herein. interests so as to eliminate factors that might By order of the Board of Governors, effective interfere with his management of Bank. June 16, 1978. In conclusion, in instances such as this, where Voting for this action: Governors Coldwell, Jackson, adverse competitive effects are not likely to be and Partee. Voting against this action: Chairman Miller diminished by Board action and significant contri­ and Governor Gardner. Absent and not voting: Gover­ butions to the convenience and needs of the com­ nor Wallich. munity to be served have been made by Appli­ (Signed) G riffith L. Garwood, cant’s principal, it would be appropriate for the [seal] Deputy Secretary of the Board. Board to temper the application of anticompetitive standards with an assessment of the practicalities involved. On this basis and for the reasons de­ Dissenting Statement of scribed above, we would approve this application. Chairman Miller and Vice Chairman Gardner We believe that denial of this application is not Republic of Texas Corporation, likely to result in disaffiliation of Applicant’s Dallas, Texas principal with either Bank or North Loup Bank. We also feel that appropriate weight should be Order Approving Acquisition of Bank given to the efforts of Applicant’s principal in reducing his interests in other banking organi­ Republic of Texas Corporation, Dallas, Texas, zations or his improvement of the services offered a bank holding company within the meaning of to the community by Bank. the Bank Holding Company Act, has applied for Applicant’s principal, a resident of the Valley the Board’s approval under § 3(a)(3) of the Act County banking market, has been affiliated with (12 U.S.C. § 1842(a)(3)) to acquire all of the North Loup Bank since 1962 and with Bank since voting shares (less directors’ qualifying shares) of 1972. There is nothing in the record to indicate the successor by merger to The First National Bank that Applicant’s principal intends to terminate his in Mineral Wells, Mineral Wells, Texas affiliation with Bank. The son of Applicant’s (“Bank”).1 principal recently has established residence in the The bank into which Bank is to be merged has community in order to assist with the management no significance except as a means to facilitate the of Bank. Despite his other banking interests, Ap­ plicant’s principal spends a majority of his time in Bank’s Qffices. These and other facts of record 1 Upon consummation of this proposal, Applicant will also indirectly own a one-third interest in Brazos Valley Computer indicate that Applicant’s principal intends to con­ Center, Mineral Wells, Texas, a bank service corporation that tinue his involvement with Bank. performs data processing services. Inasmuch as this investment is a permissible investment for a national bank, section 4(c)(5) This application represents an effort by Appli­ of the Act would permit Applicant to retain the subject interest cant’s principal to reorganize into corporate form without application to the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

592 Federal Reserve Bulletin □ July 1978 acquisition of the voting shares of Bank. Accord­ commercial banks in the market.3 None of Appli­ ingly, the proposed acquisition of shares of the cant’s subsidiary banks compete in the relevant successor organization is treated herein as the banking market and Applicant’s nearest subsidiary proposed acquisition of the shares of Bank. Ap­ banking office is located approximately 43 miles plicant presently controls 23.1 per cent of the from Bank. From the record it appears that no outstanding voting shares of Bank. significant competition presently exists between Notice of the application, affording opportunity Applicant’s banking subsidiaries and Bank, and for interested persons to submit comments and it is unlikely that any significant competition would views, has been given in accordance with § 3(b) develop between them in the future. While Appli­ of the Act. The time for filing comments and views cant could enter the market de novo, such entry has expired, and the Board has considered the appears unlikely in view of the fact that the ratio application and all comments received, including of population to banking offices is well below the those submitted by the Comptroller of the Cur­ Statewide average. Furthermore, the Board notes rency, in light of the factors set forth in § 3(c) that Applicant or its predecessor has held 23.1 per of the Act (12 U.S.C. § 1842(c)). cent of the shares of Bank since 1970, and that Applicant is the fourth largest banking organi­ the nature of this relationship is such that it is zation in Texas and controls 14 banking subsidi­ unlikely that Applicant would seek to enter the aries with aggregate deposits of approximately market through an acquisition of a bank other than $3.4 billion representing 6.3 per cent of total Bank. Moreover, while Bank is the largest in the deposits in commercial banks in the State.2 Bank, relevant banking market, one other bank in the with deposits of $34.4 million, is the 199th largest market controls 37.9 per cent of total deposits in banking organization in the State, and its acquisi­ commercial banks in the market. Thus, it appears tion by Applicant would increase Applicant’s share that acquisition of Bank by Applicant would not of commercial bank deposits in Texas by less than establish Applicant as the dominant banking orga­ one-fourth of one per cent, and would not alter nization in the market. Accordingly, consumma­ Applicant’s ranking in the State. tion of the proposal would not have any significant By Order dated October 25, 1973, the Board adverse effect upon existing or potential competi­ approved the application of Applicant to become tion, or increase the concentration of banking a bank holding company through the direct acqui­ resources in the relevant banking market. There­ sition of Republic National Bank of Dallas fore, the Board concludes that competitive con­ (“Republic Bank”) and the indirect acquisition of siderations are consistent with approval. 29.9 per cent of the voting shares of Oak Cliff The financial and managerial resources of Ap­ Bank & Trust Company, Dallas, Texas. In addi­ plicant, its subsidiaries, and Bank are regarded as tion to its interest in Bank, Republic Bank at the generally satisfactory and their future prospects time also owned indirectly between 5 and 24.99 appear favorable, particularly in light of Appli­ per cent of the shares of twenty other banks. cant’s commitment that upon consummation of the Applicant represented that it would file separate proposal, Bank will retain the capital of the interim applications for prior approval by the Board for bank. Thus, considerations relating to banking acquisition of additional shares in each of certain factors are consistent with approval of the appli­ of those banks and would divest completely its cation. interest in others. In its Order the Board stated Upon consummation of the transaction Appli­ that each such application filed by Applicant would cant intends to assist Bank in expanding its com­ be considered on its own merits in light of the mercial lending activities. In addition, Applicant statutory standards set forth in § 3 of the Act. has indicated that it will expand Bank’s drive-in Bank is the largest of six banking organizations facilities. Finally, Bank’s customers will have in the relevant banking market and controls ap­ convenient access to leasing and mortgage services proximately 44.0 per cent of total deposits in offered by Applicant’s other subsidiaries. There­ fore, considerations relating to the convenience and needs of the community to be served lend 2 All banking data are as of June 30, 1977, and reflect bank -------------------holding company acquisitions and formations approved as of 3 The relevant banking market is approximated by Palo Pinto April 30, 1978. County, Texas. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 593 weight toward approval of the application, and, holds deposits of approximately $47.9 million.1 in the Board’s view, outweigh any adverse com­ Upon acquisition of Bank, Applicant would con­ petitive effects that might result from consumma­ trol the 29th largest of 615 commercial banks in tion of this proposal. Accordingly, it is the Board’s Kansas with 0.48 per cent of the total State com­ judgment that the proposed transaction is in the mercial bank deposits. public interest, and that the application should be Bank is located in the Kansas City banking approved. market wherein it ranks as the 25th largest of 134 On the basis of the record, the application is commercial banks and holds .87 per cent of the approved for the reasons summarized above. The total deposits in commercial banks in the market.2 transaction shall not be made before the thirtieth It is noted that Applicant’s principals are also calendar day following the effective date of this associated with the market’s third largest banking Order or later than three months after the effective organization, which holds 10.8 per cent of the total date of this Order, unless such period is extended deposits in the market. for good cause by the Board, or by the Federal The subject proposal represents a restructuring Reserve Bank of Dallas pursuant to delegated of Bank’s ownership from individuals to a cor­ authority. poration owned by those same individuals. As part By order of the Board of Governors, effective of its analysis of the competitive effects of such June 26, 1978. a proposal, the Board takes into consideration the competitive effects of the transaction(s) whereby Voting for this action: Chairman Miller and Gover­ common share ownership and/or interlocking nors Gardner, Wallich, Coldwell, Jackson, and Partee. director/officer relationships were established be­ (Signed) G riffith L. Garwood, tween the subject bank and one or more other [seal] Deputy Secretary of the Board. banks in the same market.3 In this case, Bank’s purchase by principals of Applicant has been ex­ amined. At the time of that purchase, the transac­ tion did not have any significant adverse effects Overland Park Bancshares, Inc., on competition in any relevant area. Furthermore, Overland Park, Kansas based on the relative size of Bank, the nature of the Kansas City banking market, and the fact that Order Approving there are 103 other banking organizations in the Formation of Bank Holding Company market with which Applicant’s principals are not associated, it appears that consummation of this Overland Park Bancshares, Inc., Overland Park, proposal would not have any significant adverse Kansas, has applied for the Board’s approval under effects on competition or further any undue con­ section 3(a)(1) of the Bank Holding Company Act centration of banking resources in any relevant (12 U.S.C. § 1842(a)(1)) of formation of a bank holding company by acquiring 90 per cent or area. Thus, competitive considerations of this proposal are consistent with approval of the appli­ more, less directors’ qualifying shares, of the cation. voting shares of The Overland Park State Bank Applicant does not propose to incur any debt and Trust Company, Overland Park, Kansas in connection with the acquisition of Bank. The (“Bank”). Notice of the application, affording opportunity for interested persons to submit comments and 1 All banking data are as of June 30, 1977. views, has been given in accordance with section 2 The Kansas City banking market is defined as the northern 3(b) of the Act (43 Federal Register 14108 half of Cass, all of Clay, Jackson, and Platte Counties in Missouri, and Johnson and Wyandotte Counties in Kansas. (1978)). The time for filing comments and views 3 See the Board’s Order of May 11, 1977, denying the has expired and the application and all comments application to become a bank holding company by Mahaska received have been considered in light of the Investment Company, Oskaloosa, Iowa (63 Federal Reserve factors set forth in section 3(c) of the Act (12 Bulletin 579 (1977)), the Board’s Order of November 18, 1977, denying the application to become a bank holding U.S.C. § 1842(c)). company by Citizens Bancorp, Inc., Hartford City, Indiana Applicant is a non-operating corporation orga­ (63 Federal Reserve Bulletin 1083 (1977)), and the Board’s Order of March 27, 1978, denying the application to become nized for the purpose of becoming a bank holding a bank holding company by Midwest Bancorp., Inc., Gardner, company through the acquisition of Bank, which Illinois (64 Federal Reserve Bulletin 317 (1978)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

594 Federal Reserve Bulletin □ July 1978 financial and managerial resources of Applicant health insurance; and acting as a reinsurer for and Bank are considered satisfactory, and the credit life and credit accident and health insurance. future prospects of each appear favorable. Ac­ Such activities have been determined by the Board cordingly, considerations relating to banking fac­ to be closely related to banking (12 CFR tors are consistent with approval of the application. § 225.4(a)(1), (3), (6), (9)(ii)(a), and (10)). Although consummation of the proposal would Notice of the application, affording opportunity effect no changes in the banking services offered for interested persons to submit comments and by Bank, considerations relating to the conven­ views on the public interest factors, has been duly ience and needs of the community to be served published (43 Federal Register 21034 (1978)). are consistent with approval. It has been deter­ The time for filing comments and views has ex­ mined that consummation of the transaction would pired, and the Board has considered the application be in the public interest and that the application and all comments received in the light of the public should be approved. interest factors set forth in section 4(c)(8) of the On the basis of the record, the application is Act (12 U.S.C. § 1843(c)(8)). approved for the reasons summarized above. The Applicant, a one-bank holding company, con­ transaction shall not be consummated (a) before trols the third largest bank in Oregon, which holds the thirtieth day following the effective date of this deposits of approximately $470 million, repre­ Order or (b) later than three months after the senting 5.9 per cent of total deposits in commercial effective date of this Order unless such period is banks in Oregon.1 Applicant also controls several extended for good cause by the Board or by the nonbanking subsidiaries that engage in the activi­ Federal Reserve Bank of Kansas City, pursuant ties of making consumer, commercial and mort­ to delegated authority. gage loans; leasing personal property, primarily By order of the Secretary, acting pursuant to equipment leasing; and acting as agent in the sale delegated authority from the Board, effective June of credit-related insurance. 20, 1978. Union is primarily a consumer and commercial finance company. Union, with $101.8 million in (Signed) G riffith L. Garwood, total net receivables, ranks as the 75th largest [seal] Deputy Secretary of the Board. finance company in the nation.2 The company operates six offices located in Birmingham, Mich­ igan; Atlanta, Georgia; Denver, Colorado; Dallas, Texas; Phoenix, Arizona; and Salt Lake City, Orders Under Section 4 Utah. of Bank Holding Company Act Applicant’s subsidiary, Northwest Acceptance Orbanco, Inc., Corporation (“Northwest”), with total net receiv­ Portland, Oregon ables of $142 million, engages in the same activi­ ties as Union and ranks as the nation’s 68th largest Order Approving finance company. It operates offices located in Acquisition of Union Investment Company Portland and Eugene, Oregon; Mercer Island, Washington; Atlanta, Georgia; Dallas and Hous­ Orbanco, Inc., Portland, Oregon, a bank hold­ ton, Texas; Denver, Colorado; and Phoenix, Ari­ ing company within the meaning of the Bank zona. Holding Company Act (“Act”), has applied for It appears that commercial finance is the only the Board’s approval, under section 4(c)(8) of the type of business for which both Northwest and Act (12 U.S.C. § 1843(c)(8)) and section Union compete in the same location. Both organi­ 225.4(b)(2) of the Board’s Regulation Y (12 zations originate such loans from offices in At­ CFR § 225.4(b)(2)), to acquire Union Invest­ lanta, Denver, Dallas, and Phoenix. However, the ment Company, Birmingham, Michigan relevant geographic market for commercial loans (“Union”), a company that engages in the activi­ is considered to be at least regional in scope. Thus, ties of making or acquiring commercial, con­ relevant geographic markets for purposes of ana­ sumer, and mortgage loans; servicing loans and other extensions of credit; leasing personal prop­ erty or acting as agent, broker or advisor in the 1 All data are as of December 31, 1977. leasing of such property; acting as broker or agent 2 Source: Amercian Banker, June 19, 1978. (Ranking is for the sale of credit life and credit accident and based on total capital funds.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 595 lyzing the competitive effects of the subject pro­ of divesting the property no later than two years posal are approximated by the southeast and from the effective date of this Order.4 southwest regions of the nation. Within each of Based upon the foregoing and other consid­ these areas, it appears that the combined market erations reflected in the record, the Board has shares of Northwest and Union would not be determined that the balance of the public interest substantial. In fact, it is estimated that, together, factors the Board is required to consider under Northwest and Union control less than 1 per cent section 4(c)(8) is favorable. Accordingly, the ap­ of total commercial loan receivables in each of plication is approved subject to the condition that the four States where they both have offices. In upon consummation of this proposal Union addition, there are hundreds of commercial lenders transfer irrevocably its real estate holdings to an in these markets, including some of the largest independent trustee who will divest all such prop­ finance companies and banks in the nation. Based erty within two years from the effective date of upon all of the facts of record, the Board concludes this Order. This determination is also subject to that Applicant’s acquisition of Union would, at the conditions set forth in § 225.4(c) of Regulation most, have a slightly adverse effect on competition Y and to the Board’s authority to require such within the relevant markets. modification or termination of the activities of a In the Board’s view, the proposed merger will holding company or any of its subsidiaries as the likely result in operational and managerial im­ Board finds necessary to assure compliance with provements in the combined companies. The con­ the provisions and purposes of the Act and the solidation of the finance activities of Northwest Board’s regulations and orders issued thereunder, and Union would permit the combined organi­ or to prevent evasion thereof. zation to obtain capital funds at a lower cost. The transaction shall be made not later than Applicant’s present management is considered three months after the effective date of this Order, satisfactory and Applicant should be a source of unless such period is extended for good cause by managerial strength to the combined companies. the Board or by the Federal Reserve Bank of San Over time, this combination may produce a Francisco pursuant to delegated authority. stronger competitive force in the commercial fi­ By order of the Board of Governors, effective nance industry. In addition, Applicant’s acquisi­ June 30, 1978. tion of Union’s reinsurance activity will result in lower rates for credit-related insurance offered to Voting for this action: Chairman Miller and Gover­ customers of Northwest.3 On the basis of these nors Wallich, Coldwell, Jackson, and Partee. Absent and other facts of record, the Board concludes that and not voting: Governor Gardner. the benefits to the public that would result from (Signed) G riffith L. Garwood, Applicant’s acquisition of Union are sufficient to [seal] Deputy Secretary of the Board. outweigh any possible adverse effects on the public interest, including any adverse competitive effects, that might result from the proposed acquisition. Furthermore, there is no evidence of record to 4 Union also holds title under a contract of sale to certain indicate that consummation of the proposed ac­ improved real estate. The contract of sale is a finance instru­ ment serving much the same purpose as a mortgage. Applicant quisition would result in unfair competition, con­ has also committed to divest the contract within two years. flicts of interest, unsound banking practices, or other adverse effects. Union, through subsidiaries, also holds invest­ Republic of Texas Corporation, ments in certain real property, an activity the Dallas, Texas Board has not determined to be permissible for bank holding companies. Applicant has committed Order Approving Retention of Exchange Security to transfer irrevocably the subject real estate to & Investment Company and its wholly-owned sub­ an independent trustee who shall have the duty sidiary, Exchange National Life Insurance Com­ pany Republic of Texas Corporation, Dallas, Texas, a bank holding company within the meaning of the Bank Holding Company (“Act”), has applied for 3 Applicant has committed to reduce the rates at which credit life and credit accident and health insurance will be offered. the Board’s approval under § 4(c)(8) of the Act Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

596 Federal Reserve Bulletin □ July 1978 (12 U.S.C. § 1843(c)(8)) and § 225.4(b)(2) of the sions granted by the Board, Republic presently has Board’s Regulation Y (12 CFR § 225.4(b)(2)) until May 9, 1979 to complete the divestitures to retain all of the voting shares of Exchange required by section 4 of the Act. Security & Investment Company, Dallas, Texas, Applicant, the fourth largest banking organi­ (“Company”), and its wholly-owned subsidiary, zation in Texas, controls fourteen subsidiary banks Exchange National Life Insurance Company, with aggregate deposits of approximately $3,397 Scottsdale, Arizona (“Exchange Life”). Company million, representing 6.34 per cent of the total does not engage in any activity except holding the deposits in commercial banks in the State.3 Appli­ stock of Exchange Life. Exchange Life engages cant also engages, through nonbank subsidiaries, in the activity of underwriting, as reinsurer, credit in consumer finance and other nonbanking activi­ life and credit accident and health insurance di­ ties. rectly related to extensions of credit by Applicant’s Company and Exchange Life were formed de banking subsidiaries.1 Such activity has been de­ novo by a trusteed affiliate of Republic Bank in termined by the Board to be closely related to 1970, and Exchange Life presently derives sub­ banking (12 C.F.R. § 225.4(a)(10)). stantially all of its credit life and credit accident Notice of the application, affording opportunity and health underwriting business from Applicant’s for interested persons to submit comments and subsidiary banks. The Board generally regards the views on the public interest factors, has been duly standards under section 4(c)(8) of the Act for published (43 Federal Register 16266 (1978)). retention of shares to be the same as the standards The time for filing comments and views has ex­ for a proposed acquisition. The Board notes that pired, and the Board has considered the application Applicant’s acquisition of Exchange Life in 1974 and all comments received in the light of the public involved the acquisition of an insurance un­ interest factors set forth in § 4(c)(8) of the Act derwriting business that had been commenced de (12 U.S.C. § 1843(c)(8)). novo by Applicant’s lead bank, and that such Applicant became a bank holding company on business was limited to underwriting credit life and May 9, 1974 by acquiring Republic National Bank credit accident and health insurance for Republic of Dallas, Dallas, Texas, (“Republic Bank”) in Bank’s subsidiaries and nonsubsidiary affiliated a corporate reorganization pursuant to the Board’s banks. Accordingly, the Board concludes that Ap­ Order of October 25, 1973, approving Applicant’s plicant’s acquisition of Company and Exchange formation of a bank holding company. Applicant Life did not have any adverse effects on either acquired Company and Exchange Life at the same existing or potential competition in any relevant time as it acquired Republic Bank. Pursuant to area, and that Applicant’s retention of Company the provisions of section 4 of the Act, Applicant and Exchange Life likewise would not have any had until May 9, 1976, or two years from the date adverse competitive effects. it became a bank holding company, to divest its Credit life and credit accident and health insur­ interest in Company and Exchange Life, or in the ance is generally made available by banks and alternative, to apply to the Board for approval to other lenders and is designed to assure repayment retain them.2 By virtue of three one-year exten­ of a loan in the event of death or disability of the borrower. In connection with its addition of 1 This information derives from Agency’s correspondence with the Board concerning its request for this certification, Agency’s Registration Statement filed with the Board pursuant the shares of Bank were in fact received in a transaction in to the BHC Act, and other records of the Board. which gain was not recognized under section 368(a)(1)(E) of 2 Under the subsection (c) of Section 1101 of the Code, the Act. The 411 shares of Bank acquired on June 28, 1976, property acquired after July 7, 1970, generally does not qualify however, represent property acquired after July 7, 1970, for for the tax benefits of section 1101(b) when distributed by an which none of the exceptions provided in section 1101(c) of otherwise qualified bank holding company. However, where the Code appears to be available. Nevertheless, the legislative such property was acquired by a qualified bank holding com­ history of the Bank Holding Company Act of 1956 and the pany in a transaction in which gain was not recognized under related portions of the Code suggests that these shares may section 368(a)(1)(E) of the Code, then section 1101(b) is qualify for the tax benefits of section 1101(b) of the Code. applicable. Agency has indicated that the shares of Bank S. Rep. No. 1095, 84th Cong., 1st Sess. 17-18, reprinted acquired on January 30, 1974, were acquired in a transaction in 1956 U.S. Code Cong. & Ad. News 2482, 2499. in which gain was not recognized under section 368(a)(1)(E) 3 Sections 1103(g) and 1103(h) of the Code require that an of the Code. Accordingly, even though such shares were election thereunder be made “at such time and in such manner acquired after July 7, 1970, those shares would nevertheless as the Secretary [of the Treasury] or his delegate may by qualify as property eligible for the tax benefits provided in regulations prescribe. ” As of this date no such regulations have section 1101(b) of the Act, by virtue of section 1101(c), if been promulgated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 591 the underwriting of such insurance to the list of posal and upon which the approval of this proposal permissible activities for bank holding companies, is based, the Board has determined that the balance the Board stated: of the public interest factors the Board is required to consider under § 4(c)(8) is favorable. Accord­ To assure that engaging in the underwriting ingly, the application is hereby approved. This of credit life and credit accident and health determination is subject to the conditions set forth insurance can reasonably be expected to in § 225.4(c) of Regulation Y and to the Board’s be in the public interest, the Board will authority to require such modification or termina­ only approve applications in which an ap­ tion of the activities of a holding company or any plicant demonstrates that approval will benefit the consumer or result in other of its subsidiaries as the Board finds necessary to public benefits. Normally, such a showing assure compliance with the provisions and pur­ would be made by a projected reduction poses of the Act and the Board’s regulations and in rates or increase in policy benefits due orders issued thereunder, or to prevent evasion to bank holding company performance of thereof. this service. [12 CFR § 225.4(a)(10) n. 7] By order of the Board of Governors, effective June 26, 1978. Applicant has stated that following approval of Voting for this action: Chairman Miller and Gover­ this application, Exchange Life will offer at re­ nors Gardner, Wallich, Coldwell, Jackson, and Partee. duced premiums, the several types of credit insur­ ance policies that it underwrites. In particular, (Signed) G riffith L. G arwood, Exchange Life will offer credit life insurance and [seal] Deputy Secretary of the Board. credit accident and health insurance at premium rates ranging from 3.4 per cent to 6.7 per cent below those presently being charged.4 Applicant C ertifications Pursuant to the has also committed to the Board that it will reduce Bank H olding Company Tax A ct of 1976 its rates further in order to maintain these rate Evans Insurance Agency, Inc., reductions if State maximum rates should be re­ Billings, Oklahoma duced. On the basis of these and other facts of record, the Board concludes that the benefits to Evans Insurance Agency, Inc., Billings, Okla­ the public resulting from Applicant’s acquisition homa (“Agency”) has requested a prior certifi­ and retention of Company and Exchange Life cation pursuant to section 1101(b) of the Internal outweigh any adverse effects that may have re­ Revenue Code (“Code”), as amended by section sulted from the affiliation. Moreover, it is the 2(a) of the Bank Holding Company Tax Act of Board’s view that approval of Applicant’s reten­ 1976, that its proposed divestiture of all of the tion of company can reasonably be expected to 905 shares of The First State Bank in Billings, produce benefits to the public that would outweigh Billings, Oklahoma (“Bank”), presently held by possible adverse effects. Further, there is no evi­ Agency through the distribution of such shares to dence in the record indicating that approval of the the sole shareholder of Agency, is necessary or application would result in any undue concentra­ appropriate to effectuate the policies of the Bank tion of resources, conflicts of interest, unsound Holding Company Act (12U.S.C. § 1841 et seq.) banking practices, or other effects that would be (“BHC Act”). adverse to the public interest. In connection with this request, the following Based upon the foregoing and other consid­ information is deemed relevant for purposes of erations reflected in the record, including a com­ issuing the requested certification:1 mitment by Applicant to maintain on a continuing 1. Agency is a corporation organized under the basis the public benefits that the Board has found laws of the State of Oklahoma on May 26, 1967. to be reasonably expected to result from this pro­ 2. On May 31, 1967, Agency acquired owner­ ship and control of 247 shares, representing 41 4 As noted above, 411 of the shares of Bank to be distributed by Agency were acquired by it after July 7, 1970, and do not appear to qualify for any of the exceptions to the provision 1 This information is derived from Kyanite’s correspondence of section 1101(c) of the Code that makes section 1101(b) with the Board concerning its request for this certification, inapplicable to the distribution of shares acquired after that Kyanite’s Registration Statement filed with the Board pursuant date. to the BHC Act, and other records of the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

598 Federal Reserve Bulletin □ July 1978 per cent of the outstanding voting shares, of Bank. On the basis of the foregoing information, it On January 30, 1974, two shares of Bank were is hereby certified that: issued to Bank’s shareholders for each share of (A) Agency is a qualified bank holding cor­ Bank then held by such shareholders, thereby poration, within the meaning of section 1103(b) increasing the number of Bank shares held by of the Code, and satisfies the requirements of that Agency to 494. In order to raise additional capital, section; Bank issued additional shares on June 28, 1976, B) the 905 shares of Bank that Agency proposes 411 of which were acquired by Agency. Thus, to distribute to its shareholders are all or part of Agency presently owns and controls 905 shares, the property by reason of which Agency controls representing 41 per cent of the outstanding voting (within the meaning of section 2(a) of the BHC shares of Bank.2 Act) a bank or bank holding company;4 and 3. Agency became a bank holding company on (C) the distribution of the 905 shares of Bank December 31, 1970, as a result of the 1970 is necessary or appropriate to effectuate the poli­ Amendments to the BHC Act, by virtue of its cies of the BHC Act. ownership and control at that time of more than This certification is based upon the repre­ 25 per cent of the outstanding voting shares of sentations made to the Board by Agency and upon Bank, and it registered as such with the Board the facts set forth above. In the event the Board on September 1, 1971. Agency would have been should hereafter determine the facts material to this a bank holding company on July 7, 1970, if the certification are otherwise than as represented by BHC Act Amendments of 1970 had been in effect Agency, or that Agency has failed to disclose to on such date by virtue of its ownership and control the Board other material facts, it may revoke this on that date of more than 25 per cent of the certification. This certification is granted upon the outstanding voting shares of Bank. condition that Agency make the elections required 4. Agency holds property acquired by it on or by sections 1103(g) and 1103(h) of the Code at before July 7, 1970, the disposition of which, but such time and in such manner as the Secretary for clause (ii) of section 4(c) of the BHC Act and of the Treasury or his delegate may by regulation the proviso of section 4(a)(2) of that Act, would prescribe. be necessary or appropriate to effectuate section By order of the Board of Governors, acting 4 of the BHC Act if Agency were to continue through its General Counsel, pursuant to delegated to be a bank holding company beyond December authority, (12 CFR § 265.2(b)(3)), effective June 31, 1980, and which property, but for such clause 14, 1978. and such proviso, would be “prohibited property” within the meaning of section 1103(c) of the Code. (Signed) G riffith L. Garwood, Sections 1103(g) and 1103(h) of the Code provide [seal] Deputy Secretary of the Board. that any bank holding company may elect, for purposes of Part VIII of subchapter 0 of chapter 1 of the Code, to have the determination whether Footnote 3—Continued as the Secretary [of the Treasury] or his delegate may by property is “prohibited property,” or is property regulations prescribe.” As of this date no such regulations have eligible to be distributed without recognition of been promulgated. gain under section 1101(b)(1) of the Code, made 4 As noted above, the 5,064 shares of Bank to be distributed under the BHC Act as if that Act did not contain by Kyanite that were acquired by it after July 7, 1970, do not appear to qualify for any of the exceptions to the provisions clause (ii) of section 4(c) or the proviso of section of section 1101(c) of the Code, thereby making section 1101(b) 4(a)(2). Agency has represented that it will make of the Code inapplicable to the distribution of those shares. such an election.3 Kyanite Mining Corporation, 2 Section 1101(c) of the Code provides that, with certain Dillwyn, Virginia exceptions, property acquired after July 7, 1970, does not qualify for the tax benefit of section 1101(b) of the Code when Kyanite Mining Corporation, Dillwyn, Virginia distributed by an otherwise qualified bank holding corporation. (“Kyanite”), has requested a prior certification The 5,064 shares of Bank acquired by Kyanite on March 3, 1978, represent property acquired after July 7, 1970, for which pursuant to section 1101(b) of the Internal Reve­ none of the exceptions specified in section 1101(c) of the Code nue Code (the “Code”), as amended by section appears to be available. 2(a) of the Bank Holding Company Tax Act of 3 Sections 1103(g) and 1103(h) of the Code require that an election thereunder be made “at such time and in such manner 1976, that its proposed divestiture of all of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 599 21,116 shares of The Bank of Phenix, Phenix, for clause (ii) of section 4(c) of the BHC Act and Virginia (“Bank”), currently held by Kyanite, the proviso of section 4(a)(2) of that Act, would through the pro rata distribution of such shares be necessary or appropriate to effectuate section to the shareholders of all classes of stock of 4 of the BHC Act if Kyanite were to continue Kyanite, is necessary or appropriate to effectuate to be a bank holding company beyond December the policies of the Bank Holding Company Act 31, 1980, which property, but for section 4(c)(ii) (12 U.S.C. § 1841 et seq.) (“BHC Act”). Kyanite and the proviso of section 4(a)(2), would be proposes to distribute to its shareholders 0.170628 “prohibited property” within the meaning of sec­ share of Bank for each share of Kyanite held by tion 1103(c) of the Code. Sections 1103(g) and such shareholders regardless of the class of stock 1103(h) of the Code provide that any bank holding held. No fractional shares of Bank will be distrib­ company may elect, for purposes of Part VIII of uted and the number of shares would be rounded subchapter O of Chapter 1 of the Code, to have to whole shares in such manner that all shares of the determination whether property is ‘ ‘prohibited Bank will be distributed. Kyanite has two classes property,” or is property eligible to be distributed of shares: 7,500 shares of Class A (voting) stock; without recognition of gain under section and 112,500 shares of Class B (nonvoting stock). 1101(b)(1) of the Code, made under the BHC Act In connection with this request, the following as if that Act did not contain clause (ii) of section information is deemed relevant, for purposes of 4(c) or the proviso of section 4(a)(2). Kyanite has issuing the requested certification:1 represented that it will make such an election.3 1. Kyanite is a corporation organized under the On the basis of the foregoing information, it laws of the Commonwealth of Virginia on Febru­ is hereby certified that: ary 23, 1945. (A) Kyanite is a qualified bank holding cor­ 2. On December 21, 1966, Kyanite acquired poration, within the meaning of subsection (b) of ownership and control of 16,152 shares of Bank, section 1103 of the Code, and satisfies the re­ representing 80.76 per cent of its outstanding quirements of that subsection; voting shares. On July 7, and December 31, 1970, (B) the 21,116 shares of Bank that Kyanite Kyanite owned and controlled 16,052 shares of proposes to distribute to its shareholders are all Bank, representing 80.26 per cent of Bank’s out­ or part of the property by reason of which Kyanite standing voting shares. On March 3, 1978, Kyan­ controls (within the meaning of § 2(a) of the BHC ite acquired an additional 5,064 shares of Bank. Act) a bank or bank holding company;4 and Thus, Kyanite presently owns and controls 21,116 (C) the distribution of such shares is necessary shares of Bank, representing 84.46 per cent of or appropriate to effectuate the policies of the BHC Bank’s total outstanding voting shares.2 Act. 3. Kyanite became a bank holding company on This certification is based upon the repre­ December 31, 1970, as a result of the 1970 sentations made to the Board by Kyanite and upon Amendments to the BHC Act, by virtue of its the facts set forth above. In the event the Board control at that time of more than 25 per cent of should hereafter determine that facts material to the outstanding voting shares of Bank, and it this certification are otherwise than as represented registered as such with the Board on July 1, 1971. by Kyanite, or that Kyanite has failed to disclose 4. Kyanite holds property acquired by it on or to the Board other material facts, it may revoke before July 7, 1970, the disposition of which, but this certification. By order of the Board of Governors, acting through its General Counsel, pursuant to delegated 1 In addition to underwriting as reinsurer, credit life and authority, (12 CFR 265.2(b)(3)), effective June credit accident and health insurance directly related to exten­ 30, 1978. sions of credit by Applicant’s banking subsidiaries, Exchange Life presently underwrites as reinsurer such insurance with (Signed) G riffith L. G arwood, respect to extensions of credit by certain nonsubsidiary affi­ liated banks. However, pursuant to section 4(a)(2) of the Act, [seal] Deputy Secretary of the Board. Applicant has until May 9, 1979, to cease such impermissible underwriting activities. 3 All banking data are as of June 30, 1977. 2 Section 4 of the Act provides inter alia that a company 4 Premium rates for policies not exceeding 60 months are that becomes a bank holding company may not retain non­ regulated by the State, and Applicant proposes to reduce those banking activities beyond two years from the date it became rates between 3.4 per cent to 4.3 per cent. Premium rates for a bank holding company, except that the Board may extend policies exceeding 60 months are not regulated by the State, that time for one-year periods, up to an aggregate of three and Applicant proposes to reduce the rates on these policies years. from 4.0 to 6.7 per cent below the rates it now charges. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

600 Federal Reserve Bulletin □ July 1978 Lindoe, Inc., but for the proviso of section 4(a)(2) of the BHC Pueblo, Colorado Act, the Colonial Motel would be “prohibited property” within the meaning of section 1103(c) Lindoe, Inc., Pueblo, Colorado (“Lindoe”), of the Code. Section 1103(g) of the Code provides has requested a prior certification pursuant to sec­ that any bank holding company may elect, for tion 1101(c) of the Internal Revenue Code (the purposes of Part VIII of subchapter O of Chapter “Code”), as amended by section 2(a) of the Bank 1 of the Code, to have the determination of Holding Company Tax Act of 1976 (the “Tax whether property is “prohibited property” or is Act”), that Lindoe’s proposed distribution to its property eligible to be distributed without recog­ shareholders of all of its right, title and interest nition of gain under section 1101(b) of the Code, in the Colonial Motel, Estes Park, Colorado, is made under the BHC Act as if such Act did not necessary or appropriate to effectuate section 4 of contain the proviso of section 4(a)(2) thereof. the Bank Holding Company Act (12 U.S.C. Lindoe has represented that it will make such § 1843 et. seq.) (“BHC Act”). election.2 In connection with this request, the following On the basis of the foregoing information it is information is deemed relevant for purposes of hereby certified that: issuing the requested certification: 1 (A) Lindoe is a qualified bank holding corpora­ 1. Lindoe is a corporation organized on May tion, within the meaning of subsection (b) of 29, 1959 under the laws of the State of Colorado. section 1103 of the Code, and satisfies the re­ 2. On May 13, 1965, Lindoe acquired owner­ quirements of that subsection; ship and control of 275% shares, representing (B) the Colonial Motel is “prohibited prop­ approximately 55 per cent of the outstanding vot­ erty” within the meaning of section 1103(c) of ing shares, of The First National Bank of Ord way, the Code; and Ord way, Colorado (“Bank”). (C) the distribution by Lindoe of all of its right, 3. Lindoe became a bank holding company on title and interest in the Colonial is necessary or December 31, 1970, as a result of the 1970 appropriate to effectuate section 4 of the BHC Act. Amendments to the BHC Act, by virtue of its This certification is based upon the repre­ ownership and control at that time of more than sentations made to the Board by Lindoe and upon 25 per cent of the outstanding voting shares of the facts set forth above. In the event the Board Bank, and it registered as such with the Board should hereafter determine that facts material to on July 12, 1971. Lindoe would have been a bank this certification are otherwise than as represented holding company on July 7, 1970, if the BHC by Lindoe, or that Lindoe has failed to disclose Act Amendments of 1970 had been in effect on to the Board other material facts, it may revoke such date, by virtue of its ownership and control this certification. on that date of more than 25 per cent of the voting By order of the Board of Governors, acting shares of Bank. Lindoe’s presently owns and con­ through its General Counsel, pursuant to delegated trols approximately 55 per cent of the outstanding authority (12 CFR § 265.2(b)(3)), effective June voting shares of Bank. 13, 1978. 4. The Colonial Motel is an unincorporated (Signed) G riffith L. G arwood, business that was acquired by Lindoe on March [seal] Deputy Secretary of the Board. 5, 1964, and is operated as a seasonal resort hotel. Lindoe presently holds title to the Colonial Motel, which it acquired on or before July 7, 1970. But 2 Section 1103(g) requires that an election thereunder be made “at such time and in such manner as the Secretary [of for the proviso of section 4(a)(2) of the BHC Act, the Treasury] or his delegate may by regulations prescribe.” the disposition by Lindoe of its interest in the As of this date no such regulations have been promulgated. Colonial Motel would be necessary or appropriate to effectuate section 4 of the Bank Holding Com­ pany Act if Lindoe were to continue to be a bank Schnitzler Corporation, holding company beyond December 31, 1980, and Froid, Montana 1 This information derives from Lindoe’s correspondence Schnitzler Corporation, Froid, Montana with the Board concerning its request for this certification, (“Schnitzler”) has requested a prior certification Lindoe’s Registration Statement filed with the Board pursuant to the BHC Act and other records of the Board. pursuant to section 1101(c)(3) of the Internal Rev­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 601 enue Code (the “Code”), as amended by section continue to be a bank holding company beyond 2(a) of the Bank Holding Company Tax Act of December 31, 1980, and which property, but for 1976, that its proposed divestiture of all of the such clause and such proviso, would be “prohib­ 1,320 shares of First State Bank of Newcastle, ited property” within the meaning of section Newcastle, Wyoming (“Bank”), presently held 1103(c) of the Code. Sections 1103(g) and 1103(h) by Schnitzler, through the pro rata distribution to of the Code provide that any bank holding com­ Schnitzler’s stockholders of the stock of a cor­ pany may elect, for purposes of Part VIII of poration (“New Corporation”), created and subchapter 0 of Chapter 1 of the Code, to have availed of solely for the purpose of receiving the determination whether property is ‘ ‘prohibited Schnitzler’s Bank shares, is necessary or appro­ property,” or is property eligible to be distributed priate to effectuate the policies of the Bank Hold­ without recognition of gain under section ing Company Act (12 U.S.C. § 1841 et seq) 1101(b)(1) of the Code, made under the BHC Act (“BHC Act”). Schnitzler proposes to exchange as if that Act did not contain clause (ii) of section the 1,320 shares of Bank that it presently owns 4(c) or the proviso of section 4(a)(2). Schnitzler for all of the shares of New Corporation. After has represented that it will make such an election.2 the exchange, Schnitzler proposes to distribute On the basis of the foregoing information, it immediately all of New Corporation’s shares pro is hereby certified that: rata to the holders of common stock of Schnitzler. (A) Schnitzler is a qualified bank holding cor­ In connection with this request, the following poration within the meaning of subsection (b) of information is deemed relevant, for purposes of section 1103 of the Code, and satisfies the re­ issuing the requested certification: 1 quirements of that subsection; 1. Schnitzler is a corporation organized under (B) the shares of Bank that Schnitzler proposes the laws of Montana on December 28, 1925. to exchange for shares of New Corporation are 2. On March 23, 1964, Schnitzler acquired all or part of the property by reason of which ownership and control of 1,320 shares, repre­ Schnitzler controls (within the meaning of section senting 66 per cent of the outstanding voting 2(a) of the BHC Act) a bank or bank holding shares, of Bank. company; and 3. Schnitzler became a bank holding company (C) exchange of the shares of Bank for the on December 31, 1970, as a result of the 1970 shares of New Corporation and the distribution to Amendments to the BHC Act, by virtue of its the shareholders of Schnitzler of the shares of New ownership and control at that time of more than Corporation are necessary or appropriate to effec­ 25 per cent of the outstanding voting shares of tuate the policies of the BHC Act. Bank, and registered as such with the Board on This certification is based upon the repre­ November 1, 1971. Schnitzler would have been sentations made to the Board by Schnitzler and a bank holding company on July 7, 1970, if the upon the facts set forth above. In the event the BHC Act Amendments of 1970 had been in effect Board should hereafter determine that facts mate­ on that date by virtue of its ownership and control rial to this certification are otherwise than as rep­ on that date of more than 25 per cent of the resented by Schnitzler or that Schnitzler has outstanding voting shares of Bank. Schnitzler failed to disclose to the Board other material facts, presently owns and controls 1,320 shares, repre­ it may revoke this certification. This certification senting 66 per cent of the outstanding voting is granted upon the condition that Schnitzler make shares, of Bank. the elections required by sections 1103(g) and 4. Schnitzler holds property acquired by it on 1103(h) of the Code at such time and in such or before July 7, 1970, the disposition of which, manner as the Secretary of the Treasury or his but for clause (ii) of section 4(c) of the BHC Act, delegate may by regulation prescribe. and the proviso of section 4(a)(2) of that Act, By order of the Board of Governors, acting would be necessary or appropriate to effectuate through its General Counsel, pursuant to delegated section 4 of the BHC Act, if Schnitzler were to 2 Sections 1103(g) and 1103(h) of the Code require that an 1 This information derives from Schnitzler’s correspondence election thereunder be made “at such time and in such manner with the Board concerning its request for this certification, as the Secretary [of the Treasury] or his delegate may by Schnitzler’s Registration Statement filed with the Board pur­ regulations prescribe.” As of this date no such regulations have suant to the BHC Act, and other records of the Board. been promulgated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

602 Federal Reserve Bulletin □ July 1978 authority (12 CFR § 265.2(b)(3)), effective June Bank, Inc., Omaha, Nebraska (“Bank”), to In­ 30, 1978. vestment. The loan was repaid on May 16, 1978 (Signed) G riffith L. G arwood, and there is no other indebtedness owing to 304, [seal] Deputy Secretary of the Board. or its subsidiary, by Investment, or its subsidiary. (3) Neither 304 nor its sole subsidiary, Bank, holds any interest in Investment or any subsidiary 304 Corporation, of Investment, including Industrial. Omaha, Nebraska (4) Neither Investment nor any subsidiary of Investment holds any interest in 304 or Bank. 304 Corporation, Omaha, Nebraska (“304”) (5) No officer, director (including honorary or has requested a final certification pursuant to sec­ advisory director) or employee with policy making tion 6158(c)(2) of the Internal Revenue Code functions of 304 or any subsidiary of 304 holds (“Code”), as amended by section 3(a) of the Bank any such position with Investment or any subsidi­ Holding Company Tax Act of 1976, that it has ary of Investment. (before the expiration of the period prohibited property is permitted under the Bank Holding (6) 304 does not hold any other property that must be divested by December 31, 1980. Company Act (12 U.S.C. § 1841 et seq.) (“BHC (7) 304 has represented, through a resolution Act”) to be held by a bank holding company) of its board of directors, that it does not control disposed of all property the disposition of which or exercise a controlling influence over the man­ is necessary or appropriate to effectuate section 4 of the BHC Act. agement or policies of Investment and that it will not hereafter, alone or acting through one or more In connection with this request, the following other persons, directly or indirectly acquire, retain, information is deemed relevant for purposes of exercise or attempt to exercise, control or any issuing the requested certification: 1 controlling influence over the management or pol­ (1) Effective May 20, 1977, the Board issued icies of Investment.2 a prior certification pursuant to section 6158(a) of On the basis of the foregoing information, it the Code with respect to the proposed divestiture is hereby certified that 304 has (before the expira­ of all of the 1,050 issued and outstanding shares tion of the period prohibited property is permitted of Industrial Loan and Investment Company, under the BHC Act to be held by a bank holding Omaha, Nebraska (“Industrial”), a company that company) disposed of all of the property the engages in the activities of an industrial bank, held disposition of which is necessary or appropriate by 304 through the sale of such shares to Industrial to effectuate section 4 of the BHC Act. Investment Company, Omaha, Nebraska (“In­ This certification is based upon the repre­ vestment”). The Board’s order certified that: sentations made to the Board by 304 and upon (A) 304 is a qualified bank holding corporation the facts set forth above. In the event the Board within the meaning of section 6158(f)(1) and sub­ should hereafter determine that facts material to section (b) of section 1103 of the Code and satis­ this certification are otherwise than represented by fies the requirements of that subsection; 304, or that 304 has failed to disclose to the Board (B) Industrial is “prohibited property” within other material facts, it may revoke this certifi­ the meaning of section 6158(f)(2) and 1103(c) of cation. the Code; By order of the Board of Governors, acting (C) The sale of Industrial is necessary or ap­ through its General Counsel, pursuant to delegated propriate to effectuate section 4 of the BHC Act. authority (12 CFR 265.2(b)(3)) effective June 13, (2) On May 20, 1977, 304 sold 1,050 shares, 1978. representing 100 per cent of the outstanding (Signed) G riffith L. G arwood, shares, of Industrial to Investment for $610,000 [seal] Deputy Secretary of the Board. in cash. Of that purchase price, $250,000 was financed through a loan secured by the shares of Industrial from 304’s subsidiary bank, Mid City 2 Because of the facts of this case, including the facts that the indebtedness between Investment and Bank has been elim­ inated, and there are no interlocking officer, director or em­ 1 This information derives from 304’s correspondence with ployee relationships between 304 and Investment, including the Board concerning its request for this certification, 304’s their respective subsidiaries, it has been determined that a Registration Statement filed with the Board pursuant to the formal determination pursuant to section 2(g)(3) of the BHC BHC Act and other records of the Board. Act is not necessary. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 603 ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors During June 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 Applicant Bank(s) (effective date) Central Bancshares of the Bank of Springfield, June 5, 1978 South, Inc., Birmingham, Springfield, Alabama Alabama Commerce Companies, Inc. Commerce Bank and Trust, June 20, 1978 Topeka, Kansas Topeka, Kansas Community Bancorporation, Community State Bank of June 21, 1978 Clear Lake, Iowa Clear Lake, Clear Lake Iowa First Bancgroup—Alabama Eastern Shore National June 9, 1978 Inc., Mobile, Alabama Bank, Daphne, Alabama Grady Holding Company, First National Bank of June 30, 1978 Cairo, Georgia Grady County, Cairo, Georgia Harrison Bancorporation, The Harrison Deposit Bank June 13, 1978 Cynthiana, Kentucky and Trust Company, Cynthiana, Kentucky Mid-America Bancshares, Metro Insurance Agency, June 13, 1978 Inc., Kansas City, Inc., Kansas City, Missouri Missouri PDB Investment Corporation, Plaza Drive-In Bank, June 30, 1978 Chicago, Illinois Norridge, Illinois Polk County Banco, Inc., Polk County Bank, June 21, 1978 Centuria, Wisconsin Centuria, Wisconsin Republic of Texas Corporation, Bexar County National Bank June 16, 1978 Dallas, Texas of San Antonio, San Antonio, Texas Stratton Agency, Inc., Commercial Bank, June 5, 1978 Stratton, Nebraska Stratton, Nebraska Sections 3 and 4 Non Banking Company Effective Applicant Bank(s) or activity date Shawnee Bank Shares, Shawnee State Bank, C.H. Pflumm and June 9, 1978 Inc., Shawnee, Shawnee, Kansas Sons Insurance Kansas Agency, Inc., Shawnee, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

605 Announcements PROPOSED LEGISLATION the legal range of required reserves on time and ON REQUIRED RESERVES savings deposits at member banks from the present 3 to 10 per cent to a range of V2 of 1 per cent A plan to provide for greater competitive equality to 10 per cent. among financial institutions and to halt the with­ If the Congress approves universal reserve re­ drawal of member banks from the Federal Reserve quirements, the Board said it would evaluate the System by reducing the burden of membership has need for charges for Federal Reserve services and been sent to the Congress by the Board of Gover­ payment of interest on required reserve balances, nors. in the light of the effects of such legislation on A key element in the plan is proposed legislation membership, operations of the payments system, to require all financial institutions to hold reserves and monetary controls. with the Federal Reserve on checking or check-like accounts that exceed $5 million at the institution. Simultaneously, the Board is considering action Other Provisions whereby the Federal Reserve would charge for some of its services and would compensate insti­ 2. A two-stage reduction in reserve require­ tutions for reserves that they are required to hold ments for member banks. with the Federal Reserve. The Board asked the 3. The pricing of Federal Reserve services for Congress to pass legislation fixing a limit on pay­ all institutions that use them. ment of such compensation. 4. The payment of interest on reserve balances The Board sent its program to the House and required to be held with Federal Reserve Banks, Senate banking committees on July 7, 1978. In also to be accomplished in two stages. The Board letters transmitting the program to the Congress, has submitted proposed legislation—the Interest Federal Reserve Board Chairman G. William on Reserves Act of 1978—that would limit the Miller noted the announced intent of committee payment of interest on reserves. leaders to proceed promptly with hearings and 5. Compensation to the Treasury Department to legislative action. offset any loss of income during a transitional The Board’s program includes the following period while the program goes into effect. principal elements: In presenting its program the Board said: As a result of the inflation of recent years and the increased competition between banks Universal Reserve Requirements and other depository institutions in providing payment of services, more and more banks 1. A primary proposal for legislation would have . . . determined that the benefits asso­ require all depositary institutions (banks, thrift ciated with remaining a member bank do not institutions, credit unions) to maintain reserve outweigh the costs. Over the past ten years, 551 banks have withdrawn from membership balances with the Federal Reserve on transaction (and) there is a growing trend among larger accounts in excess of $5 million. The Board has banks to become nonmembers. . . . The submitted enabling legislation to this end: the proportion of total commercial bank deposits Reserve Requirement Act of 1978. held by member banks has been reduced to In this legislative proposal, no change would about 72 per cent. be made in the range of required reserves—7 to If corrective action is not taken a contin­ 22 per cent—for demand deposits. The legislation, ued, probably an accelerated, erosion of membership and deposits subject to regula­ however, would establish a range of 3 to 12 per tion by the Federal Reserve can be expected. cent for all other transaction accounts, including This threatens to weaken the nation’s finan­ negotiable orders of withdrawal (NOW) accounts. cial system, as more and more of the nation’s A companion legislative proposal would lower payments and credit transactions are handled Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

606 Federal Reserve Bulletin □ July 1978 outside the safe channels of the Federal Re­ charges in the first phase would result in revenue serve, as fewer and fewer banks have imme­ to the Federal Reserve of some $225 million diate access to Federal Reserve Bank credit annually and about $410 million annually thereaf­ facilities, as a national presence in bank supervisory functions becomes increasingly ter. diluted and as implementation of monetary System charges would be competitive for com­ policy becomes more difficult. parable services provided in the private sector. However, the Board would retain flexibility to alter Reduction and Simplification of charges or service policies in order to meet its Member Bank Reserve Requirements responsibilities to maintain satisfactory, basic levels of services for the Nation as a whole and The Board’s program includes a two-phase reduc­ to encourage innovation. tion and simplification of reserve requirements of member banks that, with few exceptions, would Access to reduce reserve requirements for all member banks Federal Reserve Services with net demand deposits up to $600 million. This would be done according to the following sched­ When charges are imposed for payments services ule: under the Board’s plan, the Federal Reserve would permit all nonmember depositary institutions with third-party-payments powers to deposit intrare- Net demand deposits of Reserve requirements of (millions of dollars)— (per cent)— gional checks or drafts at System regional check Existing schedule processing centers (RCPC’s). Payment would be 0-2 7 made, as at present, through member bank reserve 2-10 9l/i 10-100 IP/4 accounts. 100-400 12% Over 400 16V4 Once the proposed plan of charges has been fully implemented, and the Federal Reserve has Phase one evaluated the impact on membership and on the 0-10 7 10-200 9X/2 functioning of the payments mechanism, the Sys­ 200-600 12V4 Over 600 16% tem expects to provide direct and full access for Phase two nonmembers to payments and other operational services. 0-200 7 200-600 10 Over 600 16V4 Payment of Interest on These actions, when complete, would reduce Required Reserve Balances required reserves by about $5 billion. Required The amount of compensation paid on balances held reserves would be reduced by approximately $2% at Reserve Banks, after deducting charges col­ billion in the initial adjustment. lected, would be an amount not more than 7 per There would be no anticipated effect on mone­ cent of the total net earnings of the Federal Reserve tary policy from this action since open market Banks. operations would be used to assure a neutral im­ The phasing-in of payment of interest on re­ pact on money and interest rates. quired balances would take place as follows: Other elements of the Board’s plan are closely The first phase would begin when charging for linked as follows: services begins. During this phase, interest would Charges for be paid on all required reserve balances at a rate of 2 per cent a year. Federal Reserve Services In the second phase, when charges for services In the first phase, charges for Federal Reserve are broadened, interest would be paid equal to xh services would be made for payments services, of a percentage point below the average return on such as check clearing. In the second phase, the Federal Reserve System’s portfolio, for the charges would be made for certain other services, first $25 million of required reserve balances held including shipment of currency and transfer and at Federal Reserve Banks. Interest payable on settlement of reserve balances, and the purchase, required balances in excess of $25 million would sale, and safekeeping and clearing of securities. be 2 per cent per year. Based on present volume, it is estimated that Based on the present return on the System’s Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 607 portfolio, the interest that would be paid on re­ be determined by the Board within specified legal quired balances of up to $25 million would be ranges. In order to satisfy these reserve require­ 6 per cent. ments, member banks are required to maintain The Board estimated that interest payments to reserves in the form of vault cash and balances held in Federal Reserve Banks. Such balances member banks would amount to about $430 mil­ maintained by member banks do not earn any lion in the first phase and $765 million annually interest at present. By contrast, most banks that thereafter. are not members of the Federal Reserve System are permitted by State law to hold a substantial Transfers to the U.S. Treasury part of their required reserves in the form of earning assets, such as U.S. Treasury obligations, Since 1947 the Federal Reserve has paid most of or in the form of balances that would be held in its net earnings to the U.S. Treasury. Last year any event in the ordinary course of business. this payment amounted to nearly $6 billion. A Consequently, member banks incur a burden in portion of these earnings is attributable to the the form of foregone earnings on their required reserve balances. non-interest-bearing required reserve balances of As a result of the inflation of recent years and member banks held by the Federal Reserve. Non­ the increased competition between banks and other member banks do not contribute to Treasury re­ depositary institutions in providing payments ceipts in this way. The program being proposed services, more and more banks have become aware by the Board would substantially reduce this un­ of the burden of membership and have determined equal “tax” on member banks. It would, by the that the benefits associated with remaining a same token, reduce to some extent the net earnings member bank do not outweigh the costs. Over the of the Federal Reserve that are paid to the Treas­ past 10 years, 551 banks have withdrawn from ury. membership. Although many of the banks that To maintain Treasury revenues during a 3-year have left the System are small, there is a growing trend among larger member banks to become non­ transition period, the Board proposes to transfer members. Of the 69 banks that left the Federal to the Treasury from the surpluses of the Federal Reserve in 1977, 15 possessed deposits in excess Reserve Banks an amount adequate to offset any of $100 million. Because of the decline in mem­ net reduction of Treasury revenues. bership, the proportion of total commercial bank During the first 3 years after the proposed pro­ deposits held by member banks has been reduced gram is initiated, it is expected that there would by about 72 per cent. be a cumulative net reduction in Treasury revenues If corrective action is not taken, a continued, on the order of $575 million. probably an accelerated, erosion of membership The Board’s program is as follows: and of deposits subject to regulation by the Federal Reserve can be expected. This situation threatens to weaken the Nation’s financial system, as more PRELIMINARY PROPOSAL: To Promote and more of the Nation’s payments and credit Competitive Equality Among Member Banks transactions are handled outside the safe channels and Other Financial Institutions and to En­ of the Federal Reserve, as fewer and fewer banks courage Membership in the Federal Reserve have immediate access to Federal Reserve Bank credit facilities, as a national presence in bank System supervisory and regulatory functions becomes in­ The continuing decline of bank membership in the creasingly diluted, and as implementation of mon­ Federal Reserve System and the increasing com­ etary policy becomes more difficult. petition between banks and other depositary insti­ tutions in providing payments services require Proposed Legislation for prompt, responsive measures. Universal Reserve Requirements This preliminary proposal is intended as a means of submitting a program for consideration and In order to promote fair competition among appropriate action by the Congress. member banks and other depositary institutions and to stem the decline in deposits subject to reserve requirements of the Federal Reserve, the Background of the Problem Board will transmit to the Congress proposed Section 19 of the Federal Reserve Act provides legislation that would require all depositary insti­ that member banks of the Federal Reserve System tutions to maintain reserves against transactions be required to maintain reserves against their accounts in accordance with requirements set by demand and time deposits in such ratios as shall the Federal Reserve. If uniform, universal reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

608 Federal Reserve Bulletin □ July 1978 requirements on transactions balances become ef­ for these services under current circumstances. fective, competition among banks and other de­ Charging for the services, without compensating positary institutions would be on a more nearly banks for the reserves held, would simply increase equal basis. the burden of membership and exacerbate com­ The Board’s proposed legislation would make petitive inequality. transactions accounts—such as demand deposits and NOW accounts—at all Federally insured de­ Reserve requirement actions. Under the pro­ positary institutions subject to reserve require­ posed program, the Board would amend Regula­ ments set by the Federal Reserve. However, a total tion D (Reserves of Member Banks) to simplify of $5 million of transactions accounts at these the structure of reserve requirements. The proposal institutions, whether members or nonmembers of would also redefine a reserve city and impose the Federal Reserve, would not be subject to the reserve city reserve requirements on member basic reserve requirements. The proposed legisla­ banks with net demand deposits in excess of $600 tion also adjusts the existing 3 to 10 per cent million (compared with $400 million now). The statutory range for reserve ratios on time and structure of reserve requirements would be revised savings deposits at member banks. A reduction in two phases as follows: in the range to ^ of 1 to 10 per cent is proposed for time and savings deposits other than transac­ Size class Reserve requiretions accounts to provide needed flexibility that (millions of dollars) ment (per cent) would enable member banks to compete in this Present area on a more nearly equal basis with other 0-2 7 depositary institutions. 2-10 9Vi The Board simultaneously is considering a pro­ 10-100 11% 100-400 12% gram, described below, whereby the Federal Re­ Over 400 16*4 serve would charge for certain of its services and Proposed first phase would pay some compensation for required reserve 0-10 7 balances. However, if the Congress enacts a re­ 10-200 9*4 200-600 12*4 quirement for universal reserves, the Board would Over 600 16*4 need to reconsider whether, and to what extent, Proposed second phase its proposed program of service charges and re­ 0-200 7 serve compensation might need to be adjusted in 200-600 10 light of the effects of such legislation on Federal Over 600 16*4 Reserve membership, operation of the payments system, and monetary control. It is anticipated that these actions would have the effect of releasing approximately $5 billion in Proposed Federal Reserve Program reserves on an annual basis, with about $23A billion released by the initial adjustment. In view of the increasingly acute problems asso­ ciated with the decline in membership in the Fed­ Charges for Federal Reserve services. The sec­ eral Reserve System that is attributable to the ond element in the program relates to charging burden imposed on member banks by competitive for services rendered by the Federal Reserve. The inequality, the Board is also considering a program Federal Reserve does not now generally charge with the following principal elements: (1) restruc­ member banks for services it renders in view of turing and reduction of demand deposit reserve the substantial burden of membership incurred by requirements; (2) charging for services provided banks. Member banks “pay” for Federal Reserve by the Federal Reserve; (3) compensating for services through the maintenance of reserve bal­ required reserve balances held at Federal Reserve ances with Reserve Banks. Nonmember banks are Banks; and (4) transferring part of Federal Reserve now permitted to use a limited number of Federal surplus to the Treasury during a transition period Reserve services at no charge. to offset any Treasury revenue loss. Competitive equity between member banks and The program would provide time for the Con­ nonmember institutions requires that all users of gress to consider the issue of payment of interest Federal Reserve services be subject to charges on required reserve balances. If the Federal Re­ established on the same basis. Moreover, such serve is not able to pay interest on reserves, or charges might encourage more efficient use of otherwise to remove the burden of membership, check-clearing facilities and provide incentives for it would not be feasible to charge for services innovations that reduce costs. With explicit pric­ offered by Federal Reserve Banks. A portion of ing, therefore, the opportunities of the private reserve balances held by member banks with Fed­ sector to compete with and improve upon Federal eral Reserve Banks in effect represents payment Reserve services would be enhanced. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 609 In order to assure continued efficient functioning 2. Second phase: Charges for certain other of the payments mechanism and to avoid major services, including shipping of coin and currency disruption during the transition to a more compet­ to member banks, transfer and settlement of re­ itive environment, the Board would follow a con­ serve balances, and purchase, sale, safekeeping, servative and flexible approach in establishing and clearing of securities. charges for Federal Reserve services. To this end, Based on the present volume of Federal Reserve the System has concluded that its charges should Bank activity and on the direct and indirect costs be competitive with those for comparable services incurred by the System, it is estimated that charges (when available) in the private sector. However, imposed for System services would result in reve­ the Board would retain flexibility to alter charges nue to the Federal Reserve of approximately $225 or service policies in order to meet its respon­ million annually in the first phase and about $410 sibilities to maintain a satisfactory, basic level of million annually thereafter. The Federal Reserve service for the Nation as a whole and to encourage does not anticipate imposing charges for governinnovations. mental-type functions it performs, such as con­ The Board would use the following general ducting bank examinations and monetary policy principles as guidelines for establishing a price and certain activities associated with issuance and structure: destruction of Federal Reserve notes. 1. Each Federal Reserve service category for which charges are to be assessed would usually Access to Federal Reserve facilities. At present, have separate prices by geographic area, activity, Federal Reserve Banks maintain virtually no ac­ and class of work processed. The price schedule counts for nonmember depositary institutions. would employ explicit per item charges and be However, nonmember institutions may have as simple as possible. Prices would be adjusted access to Federal Reserve-operated ACH’s. Non­ as the System gained experience with service member commercial banks may also deposit incharges and observed their effects in the markets traregional checks and drafts at Federal Reserve in which the System operates. RCPC’s. When charges are imposed for payments 2. The System does not contemplate significant services under the proposed program, the Federal alterations in services provided at the time charges Reserve would permit all nonmember depositary initially are imposed. However, after charges are institutions with third-party payment powers to in place, some offices might find it necessary to deposit intraregional checks and drafts at RCPC’s. revise their operating policies and prices to main­ Nonmembers would pay the same charges as tain competitiveness and to enable the System to member banks for services rendered by the Federal maintain a basic level of service nationwide. Reserve and would continue to be required to settle 3. All users in the same pricing zone (typically through reserve accounts of member banks. a Federal Reserve Bank, branch, or office area) Once the proposed program has been fully im­ would pay the same price for a given service. plemented and the Federal Reserve has evaluated However, identical services might not be provided the impact of the program on membership and on in all areas. the functioning of the payments mechanism, the More specifically, guidelines established by the System expects to provide direct and full access Board for the pricing of Federal Reserve check for nonmember depositary institutions to payments and automated clearinghouse (ACH) services and other operational services provided by Federal would include the following: Reserve Banks. Access would be provided on the 1. Charges for check services would be im­ basis of equality of treatment with respect to posed on depositing institutions. balances held by members and nonmembers; bal­ 2. Prices for interoffice items deposited locally ances held by nonmembers would be equivalent might include both a local processing charge and to the reserve balances of members, and such a uniform national charge. funds would receive similar compensation. 3. Charges for ACH items could either be im­ posed on ACH associations or directly on financial Compensation for maintenance of required re­ institutions using the service. serves. The third element in the Federal Reserve’s 4. Prices for ACH services would be set to proposed program relates to compensating member encourage the use of such services and to reflect banks for the maintenance of required reserve mature volume levels. balances with the Federal Reserve. Member banks It is anticipated that schedules of charges for are at a clear competitive disadvantage because System services would be announced for public nonmember banks generally may satisfy reserve comments and implemented in two phases: requirements by holding interest-bearing assets or 1. First phase: Charges for Federal Reserve balances that would be held in the ordinary course payments services, including check processing, of business in any event, and this disadvantage check transportation, and ACH services. contributes substantially to the erosion of mem­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

610 Federal Reserve Bulletin □ July 1978 bership. In order to reduce this inequality and to amount of its surplus to the Treasury. The Federal prevent further erosion in membership, the Federal Reserve’s program, therefore, would not result in Reserve believes it would be appropriate to com­ any net reduction in the level of revenues received pensate member banks by paying interest on re­ by the Treasury during the implementation period. quired reserve balances. However, in no case With the program fully in place, the net cost would the amount of compensation paid to mem­ to the Treasury would be expected to be minimal, ber banks, after deducting service charges col­ if there were any cost at all. Although Treasury lected, exceed 7 per cent of the net earnings of revenues would be reduced by about $300 million Reserve Banks (before payment of compensation). per year as a consequence of the actions in this The Board will submit to the Congress proposed program, there would have been, in any case, a legislation to formalize this limitation on the pay­ substantial decline of Treasury revenues in the ment to banks of interest on required reserve absence of the program. At a minimum, if attrition balances. in deposits subject to reserve requirements of the The Board proposes to phase-in the payment Federal Reserve continued over the next 4 years of interest on required reserve balances of member at the average rate of the recent past, Treasury banks concurrent with the imposition of charges revenues would be reduced by about $80 million for System services in accordance with the fol­ in the fourth year and would increase further lowing schedule: thereafter. If the rate of attrition were at the more 1. First phase: Payment of interest on all re­ rapid pace experienced in New England in recent quired reserve balances maintained at Federal Re­ years, the loss in Treasury revenues would be serve Banks at a rate of 2 per cent per annum. about $200 million by the fourth year. The pro­ 2. Second phase: Rate of interest payable gram could be expected to reduce, if not eliminate, would be increased to Vi percentage point below such attrition in deposits. There might even be a the average return on the Federal Reserve System gain in Treasury revenues if the program succeeds portfolio, valued at book, for the first $25 million in increasing membership. The gain in revenues of required reserve balances at Federal Reserve would be more pronounced if the Congress enacted Banks. Based on the 1977 return on the Federal the Board’s proposed universal reserve require­ Reserve portfolio, the rate of compensation on ment legislation. those balances would be 6 per cent per annum. The rate of interest payable on required balances Result of the Proposal held at Federal Reserve Banks in excess of $25 million would be 2 per cent per annum. The Board believes that implementation of the The Board estimates that interest payments to program presented in this statement is essential to member banks would amount to about $430 mil­ the continued maintenance of a sound financial lion in the first phase and about $765 million system. Implementation of its various elements annually thereafter, based on the current level of should result in an environment in which financial member bank deposits. institutions can compete on a more equitable basis, should arrest the decline of bank membership in Effect on Treasury revenues. Since 1947 the the Federal Reserve System, and should facilitate Federal Reserve has paid almost all of its net the implementation of monetary policy. earnings to the U.S. Treasury. A portion of these earnings are attributable to the non-interest-earning required reserve balances that member banks hold at Federal Reserve Banks. Nonmember institutions CHANGE IN DISCOUNT RATE do not hold such balances and thus their reserve The Board of Governors of the Federal Reserve holdings are not a source of Treasury revenue. The program being proposed by the Board would sub­ System has announced its approval of actions by stantially reduce this unequal “tax” borne by the directors of nine Federal Reserve Banks in­ member banks. At the same time the Board rec­ creasing the discount rate of those banks from 7 ognizes the budgetary need to maintain Treasury per cent to l lA per cent, effective July 3, 1978. revenues. Action was taken in recognition of increases that The Board estimates that adoption of the pro­ have occurred recently in other short-term interest posed program, in the absence of universal reserve rates and to bring the discount rate into closer requirements, would in itself result in a cumulative alignment with short-term rates generally. net reduction in U.S. Treasury revenues on the The discount rate is the interest rate that member order of $575 million over a transition period of, banks are charged when they borrow from their for example, about 3 years, until the program would be fully in place. To eliminate this antici­ district Federal Reserve Banks. pated loss of revenue during the transition period, The new rate was effective at the Federal Re­ the Federal Reserve would transfer an equivalent serve Banks of Boston, New York, Cleveland, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 611 Richmond, Chicago, St. Louis, Minneapolis, cations of Class C head office directors, ex­ cept that Board-appointed branch directors Dallas, and San Francisco on July 3, at the Reserve may be stockholders in commercial banks and Banks of Philadelphia and Kansas City on July bank holding companies. No director of a 7, and at the Federal Reserve Bank of Atlanta on Federal Reserve Bank shall serve as a director July 10. of a branch of the bank during his or her service as a director of the Federal Reserve Bank. All directors shall be citizens of the United States and shall reside or have REGULATION O: Amendment principal occupational interest within the ter­ ritory served by the branch. The Board of Governors has amended its Regula­ tion O (Loans to Executive Officers of Member Banks). The amendment makes it clear that an REGULATIONS G AND U: executive officer may not become indebted to a Interpretation member bank under a bank credit-card, checkcredit, or similar plan on terms more favorable The Board of Governors has withdrawn a 1965 than those offered to the general public. interpretation of its margin regulations that gener­ The amendment was effective June 30, 1978. ally required face-to-face interviews for the ac­ ceptance of “purpose statements,” which are used to determine whether a loan is for the purpose of REGULATION T: Amendment purchasing securities. A new interpretation on the subject applicable The Board of Governors has adopted an amend­ to Regulation G (Securities Credit by Persons ment to its Regulation T (Credit by Brokers and Other than Banks, Brokers, or Dealers) and Regu­ Dealers) that permits any broker or dealer subject lation U (Credit by Banks for the Purpose of to the regulation to make a subordinated capital Purchasing or Carrying Margin Stocks) permits loan to another broker or dealer. Previously, only lenders to accept purpose statements through the those who were members of national securities mail under certain circumstances. exchanges could make such loans. The Board stated that a lender may satisfy the The amendment, effective July 13, 1978, also “good faith” requirement of the margin regula­ removes certain existing restrictions on the use of tions for acceptance of purpose statements, with­ such loans. out face-to-face interviews, if the lender adopts a program that requires detailed information from the borrower and proper procedures to verify the F.R. BRANCH REGULATIONS: truth of the information received. Revision The Board stated that lenders intending to em­ bark on such a program should discuss proposed The Board of Governors has announced a revision plans with their district Federal Reserve Banks. of its Regulations Relating to Branches of Federal Reserve Banks with regard to the qualifications of branch directors. The revision brings the branch regulations into PROPOSED ACTIONS conformity with provisions of the Federal Reserve Proposed guidelines for the enforcement of the Reform Act of 1977 that call for broadened repre­ Equal Credit Opportunity Act, its implementing sentation in the selection of Reserve Bank direc­ Regulation B, and the Fair Housing Act were tors. issued for public comment by the five Federal The revised portion (Section 3b) of the branch agencies that regulate banks, thrift institutions, and regulations follows: credit unions. Comment should be received by Directors shall be selected without discrim­ ination on the basis of race, creed, color, sex, September 1, 1978. or national origin. The directors appointed by The Federal regulators of banks and savings and the Federal Reserve Banks shall be persons loan associations have proposed regulations to who meet the personal and occupational implement the Community Reinvestment Act. The qualifications of Class A or B head office agencies requested comment by August 15, 1978. directors. The directors appointed by the Board of Governors shall be persons who The Board of Governors has proposed a change meet the personal and occupational qualifi­ in the provisions of its Regulation Y (Bank Hold­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

612 Federal Reserve Bulletin □ July 1978 ing Companies) concerning publication of notice payable in U.S. dollars and items payable in by bank holding companies of their intention to foreign currencies are now given in separate commence nonbank activities. The Board asked tables; (3) banks’ liabilities to and claims on for comment on the proposal by July 31, 1978. foreigners are broken down into greater detail than was previously available; and (4) when data are disaggregated by area, the designations “Other Latin American republics” and “Other Latin CHANGES IN BOARD STAFF America” have been combined into the single Richard H. Puckett, Associate Research Division designation “Other Latin America and Carib­ Officer, Division of Research and Statistics, was bean.” named Manager, Regulatory Improvement Proj­ Table 3.14, “Selected U.S. Liabilities to ect, Office of the Secretary, effective July 18, Foreign Official Institutions,” is a combination of 1978. Mr. Puckett will be responsible for the the “official institutions” section of old Table Systemwide review of all Federal Reserve regula­ 3.13, “Selected U.S. Liabilities to Foreigners” tions and related interpretations and rules. He will (lines 3-7) and all of old Table 3.14, “Selected coordinate staff activities for implementing this U.S. Liabilities to Foreign Official Institutions.” review, both at the Board and at the Federal The difference between the “official institutions” Reserve Banks. portion of old Table 3.13 and part A of Table Gordon B. Grim wood, Assistant Director and 3.14 is that Table 3.14 includes foreign official Program Director for Contingency Planning, in the holdings of U.S. corporate stocks (line 6); these Office of Staff Director for Management, retired data on stocks are based on monthly transactions on June 30, 1978. reports. Part B of Table 3.14, differs from the old Table 3.14 in that (1) it includes foreign official holdings of U.S. corporate stocks; (2) the desig­ nation “Latin American republics” has been changed to “Latin America and Caribbean”; and INTERNATIONAL STATISTICS: (3) the designation “Other countries” includes Revised Tables only countries in Oceania and Eastern Europe, A number of changes have been made in the tables whereas previously it had also included Western in the International Statistics section of the B u l­ European dependencies in Latin America. letin . These changes correspond to revisions in Part A of Table 3.15, “Liabilities to Foreigners, the Treasury’s International Capital Forms for by Holder and Type of Liability,” combines the U.S. liabilities to and U.S. claims on foreigners, amounts payable in U.S. dollars from old Tables as reported by banks in the United States, from 3.15, “Short-term Liabilities to Foreigners, by which certain tables are derived. As a result of Holder and Type of Liability,” and 3.18, “Long­ the changes in the International Capital Forms, term Liabilities to Foreigners.” Part A of Table some data are not shown for months or quarters 3.15 breaks down, by item, banks’ own liabilities before April 1978. A description of the changes and banks’ custody liabilities. Furthermore, banks’ in individual tables, including comparisons with own liabilities to banks abroad are separated be­ the previous data series, appears below. tween liabilities to unaffiliated foreign banks and In the process of revision, four tables have been liabilities to own foreign offices. A memorandum deleted, one new table has been added, and some item in part A of Table 3.15 shows the amount changes in general coverage and format have been of negotiable time certificates of deposit held in made in the remaining tables. The following tables custody for foreigners. The only items in Table have been deleted: (1) 3.17, “Short-term Liabili­ 3.15 that are comparable to items that appeared ties to Foreigners, Supplemental Other Coun­ in the old tables (data prior to April 1978) are tries”; (2) 3.18, “Long-term Liabilities to For­ liabilities to all foreigners, broken down by holder, eigners”; (3) 3.20, “Short-term Claims on For­ demand deposits, and banks’ holdings in custody eigners, by Type of Claim”; and (4) 3.21, of U.S. Treasury bills and certificates. Data prior “Long-term Claims on Foreigners.” to April 1978 for time deposits cover short-term The changes in general coverage and format of deposits only. the tables include: (1) the breakdown between Part B of Table 3.15, “Liabilities to Foreigners, long-term and short-term when referring to liabili­ by Area and Country,” combines the amounts ties and claims has been eliminated; (2) items payable in U.S. dollars from old Tables 3.16, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 613 “Short-term Liabilities to Foreigners, by This table is completely new. In the old tables Country,” and 3.18, “Long-term Liabilities to showing short- and long-term liabilities to and Foreigners. ’ ’ claims on foreigners, the maturity breakdown re­ Table 3.16, “Banks’ Own Claims on Foreign­ ferred to original maturities. In Table 3.18, it ers,” consists of claims payable in U.S. dollars. refers to time remaining to maturity. Data for the period prior to April 1978 are not Table 3.19, “Liabilities to and Claims on For­ comparable to these new data: old Tables 3.19, eigners, Payable in Foreign Currencies,” shows “Short-term Claims on Foreigners, by Country,” on a quarterly basis banks’ own liabilities and a and 3.21, “Long-term Claims on Foreigners,” breakdown of claims between banks’ own claims had included claims payable both in U.S. dollars and claims of banks’ domestic customers. Because and in foreign currencies and consisted of a com­ this breakdown will not be shown until data for bined total of banks’ own claims on foreigners and June 1978 are incorporated in the table, claims banks’ domestic customers’ claims on foreigners. of banks’ domestic customers will be included Table 3.17, “Bank’s Own and Domestic Cus­ with banks’ own claims until that date. Data on tomers’ Claims on Foreigners, by Type of Claim,” claims exclude foreign currencies held by U.S. shows claims payable in U.S. dollars. The data monetary authorities. for banks’ own claims are given on a monthly basis, but the data for claims of banks’ domestic customers are available on a quarterly basis only. SYSTEM MEMBERSHIP: Banks’ own claims on foreign banks have been separated into banks’ claims on own foreign of­ Admission of State Banks fices and banks’ claims on unaffiliated foreign The following banks were admitted to membership banks. The term “foreign public borrowers” is in the Federal Reserve System during the period broader in coverage than the term “foreign official June 16, 1978, through July 15, 1978: institutions” that was previously used on bank reporting forms for the collection of foreign claims Colorado data. In particular, corporations that are majority- Lakewood ...................Jefferson Bank & Trust owned by foreign central governments are in­ Florida cluded in the definition of “foreign public bor­ South Miami ................Bank of South Florida rowers” but are excluded from the definition of Utah “foreign official institutions.” North Logan .....................North Park Bank of Table 3.18, “Banks’ Own Claims on Unaffi­ Commerce liated Foreigners” shows maturity of claims pay­ Virginia able in dollars, broken down by borrower and area. Salem ...............................Salem Bank & Trust Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

614 Industrial Production Released for publication July 14 Output of durable materials advanced 0.6 per cent, mainly due to the continued strength in Industrial production increased an estimated 0.3 equipment parts and basic metals. Production of per cent in June, with gains about equally distrib­ nondurable materials increased only slightly. uted between products and materials industries. This increase follows advances in total production of 1.5 and 0.6 per cent in April and May, respec­ Seasonally adjusted, ratio scale, 1967=100 tively. The preliminary second-quarter index, strengthened somewhat by upward revisions in April and May levels, was up 12.3 per cent at an annual rate from the first quarter. At 144.3 per cent of the 1967 average, the index for June is 4.7 per cent higher than a year earlier. Despite a small decline in auto production, output of consumer goods advanced 0.3 per cent in June. Auto assemblies were at a seasonally adjusted annual rate of 9.3 million units, allowing for the earlier-than-usual model changeover. Cur­ rent schedules call for a rate of assemblies at about this level over the next few months. Production of home goods, such as appliances and nondurable consumer goods, increased somewhat further in June. Output of business equipment rose 0.4 per cent in June and, at 161.4 per cent of the 1967 average, is 7.5 per cent higher than a year earlier. Production of intermediate goods, such as business and construction supplies, also continued to ex­ 1972 1974 1976 1978 1972 1974 1976 1978 F.R. indexes, seasonally adjusted. Latest figures: June. Auto pand. sales and stocks include imports. 1967 -= 100 Percentage change from preceding month to— Percentage change Industrial production 1978 1978 6/77 to * Mayp Junep Jan. Feb. Mar. Apr. May June 6/78 Total .......................................... 143.8 144.3 -.6 .3 1.2 1.5 .6 .3 4.7 Products, total ............................. 143.3 143.7 -1.3 .8 1.4 .8 .4 .3 4.7 Final products ......................... 140.6 141.1 -2.0 1.1 1.8 1.2 .0 .4 4.2 Consumer goods ................ 147.1 147.5 -2.7 1.4 1.5 1.2 -.3 .3 2.6 Durable ............................. 159.6 159.9 -6.0 3.2 4.2 2.8 -1.4 .2 2.6 Nondurable ...................... 142.3 142.7 -1.3 .6 .4 .4 .3 .3 2.6 Business equipment ........... 160.7 161.4 -.9 1.0 2.1 1.3 .8 .4 7.5 Intermediate products ........... 153.2 153.6 .8 -.1 .0 .1 1.1 .3 6.2 Construction supplies 150.4 151.0 .6 -.4 -.5 .2 1.5 .4 7.9 Materials ........................................ 144.7 145.3 .3 -.4 .9 2.5 .9 .4 4.8 *Seasonally adjusted. p Preliminary. p Estimated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Al Financial and Business Statistics CONTENTS DOMESTIC FINANCIAL STATISTICS W eekly Reporting Commercial Banks A3 Monetary aggregates and interest rates Assets and Liabilities of— A4 Factors affecting member bank reserves A20 All reporting banks A5 Reserves and borrowings of member A21 Banks in New York City banks A22 Banks outside New York City A6 Federal funds transactions of money A23 Balance sheet memoranda market banks A24 Commercial and industrial loans 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 time and savings deposits at Federally A25 Commercial paper and bankers insured institutions acceptances outstanding A10 Margin requirements A26 Prime rate charged by banks on All Federal Reserve open market short-term business loans transactions A26 Terms of lending at commercial banks A27 Interest rates in money and capital markets Federal Reserve Banks A28 Stock market—Selected statistics A12 Condition and F.R. note statements A13 Maturity distribution of loan and A29 Savings institutions—Selected assets security holdings and liabilities Monetary and Credit Aggregates Federal Finance A13 Bank debits and deposit turnover A30 Federal fiscal and financing operations A14 Money stock measures and components A31 U.S. Budget receipts and outlays A15 Aggregate reserves and deposits of A32 Federal debt subject to statutory member banks limitation A15 Loans and investments of all A32 Gross public debt of U.S. Treasury— commercial banks Types and ownership A33 U.S. Government marketable securities—Ownership, by maturity Commercial Bank Assets and Liabilities A34 U.S. Government securities dealers— A16 Last-Wednesday-of-month series Transactions, positions, and financing A17 Call-date series A3 5 Federal and Federally sponsored credit A18 Detailed balance sheet, Dec. 31, 1977 agencies—Debt outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A2 Federal Reserve Bulletin □ July 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 Foreign branches of U.S. banks— A37 Corporate profits and their distribution Balance sheet data A3 8 Nonfinancial corporations—Assets and A58 Selected U.S. liabilities to foreign liabilities official institutions A38 Business expenditures on new plant and equipment Reported by Banks in the United States: A39 Domestic finance companies—Assets and liabilities; business credit A59 Liabilities to foreigners A61 Banks’ own claims on foreigners A62 Banks’ own and domestic customers’ Real Estate claims on foreigners A40 Mortgage markets A63 Banks’ own claims on unaffiliated A41 Mortgage debt outstanding foreigners A63 Liabilities to and claims on foreigners Consumer Instalment Credit Securities Holdings and Transactions A42 Total outstanding and net change A43 Extensions and liquidations A64 Marketable U.S. Treasury bonds and notes—Foreign holdings and transactions Flow of Funds A64 Foreign official assets held at F.R. A44 Funds raised in U.S. credit markets banks A45 Direct and indirect sources of funds to A65 Foreign transactions in securities credit markets Reported by Nonbanking Concerns in DOMESTIC NONFINANCIAL STATISTICS the United States: A46 Nonfinancial business activity— A66 Short-term liabilities to and claims on Selected measures foreigners A46 Output, capacity, and capacity A67 Long-term liabilities to and claims on utilization foreigners A47 Labor force, employment, and unemployment Interest and Exchange Rates A48 Industrial production—Indexes and gross value A68 Discount rates of foreign central banks A50 Housing and construction A68 Foreign short-term interest rates A51 Consumer and wholesale prices A68 Foreign exchange rates A52 Gross national product and income A53 Personal income and saving SPECIAL TABLE A69 Sales, revenue, profits, and dividends of large manufacturing corporations INSIDE BACK COVER Guide to Tabular Presentation and Statistical Releases Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Financial Statistics A3 1.10 MONETARY AGGREGATES AND INTEREST RATES 1977r 1978 1978 Item Q2 Q3 Q4 Qlr Jan.r Feb.r Mar.r Apr.r May 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 15.2 10.9 -8.6 9.4 10.2 3.5 6.8 6.3 8.3 12.7 11.8 -7.3 11.1 7.9 1.8 1.7 3.5 14.5 18.3 13.7 -6.2 1.9 -11.2 Concepts of money 1 4 M-l.............................................................................................. 8.1 8.1 7.5 5.6 10.3 -0.7 3.5 19.0 8.0 5 M-2.............................................................................................. 9.0 9.9 8.2 6.9 9.5 4.7 5.6 11.5 7.8 6 M-3.............................................................................................. 10.2 11.9 10.7 7.7 9.1 5.7 6.5 9.8 7.5 Time and savings deposits Commercial banks: 7 Total....................................................................................... 8.3 10.3 13.1 13.4 12.8 14.2 11.6 8.3 14.4 9.7 11.2 8.6 7.9 8.9 8.6 7.0 6.2 7.7 11.9 15.0 14.4 8.9 8.7 6.9 7.7 7.3 7.0 12.1 11.1 9.9 9.6 13.6 7.9 6.9 18.5 15.7 1977 1978 1978 Q3 Q4 Ql Q2 Feb. Mar. Apr. May June Interest rates (levels, per cent per annum) Short-term rates 11 Federal funds 4......................................................................... 5.82 6.51 6.76 7.28 6.78 6.79 6.89 7.36 7.60 12 Federal Reserve discount 5.................................................... 5.42 5.93 6.46 6.78 6.50 6.50 6.50 6.84 7.00 13 Treasury bills (3-month market yield) 6............................. 5.50 6.11 6.39 6.48 6.45 6.29 6.29 6.41 6.73 14 Commercial paper (90- to 119-day) 7.................................. 5.74 6.56 6.76 7.16 6.76 6.75 6.82 7.06 7.59 Long-term rates Bonds: 15 U.S. Govt.«........................................................................... 7.60 7.78 8.19 8.43 8.22 8.21 8.32 8.44 8.53 16 State and local government 9............................................ 5.59 5.57 5.65 6.02 5.62 5.61 5.80 6.03 6.22 17 Aaa utility (new issue) to................................................... 8.09 8.27 8.70 8.98 8.69 8.71 8.90 8.95 9.09 18 Conventional mortgages 11................................................... 9.00 9.05 9.23 9.25 9.30 9.40 9.60 9.75 1 M-l equals currency plus private demand deposits adjusted. 7 Beginning Nov. 1977, unweighted average of offering rates quoted by M-2 equals M-l plus bank time and savings deposits other than large five dealers. Previously, most representative rate quoted by these dealers. negotiable certificates of deposit (CD’s). 8 Market yields adjusted to a 20-year maturity by the U.S. Treasury. M-3 equals M-2 plus deposits at mutual savings banks, savings and 9 Bond Buyer series for 20 issues of mixed quality. loan associations, and credit union shares. i o Weighted averages of new publicly offered bonds rated Aaa, Aa, 2 Savings and loan associations, mutual savings banks, and credit and A by Moody’s Investors Service and adjusted to an Aaa basis. unions. Federal Reserve compilations. 3 Quarterly changes calculated from figures shown in Table 1.23. 11 Average rates on new commitments for conventional first mortgages 4 Seven-day averages of daily effective rates (average of the rates on on new homes in primary markets, unweighted and rounded to nearest a given date weighted by the volume of transactions at those rates). 5 basis points, from Dept, of Housing and Urban Development. 5 Rate for the Federal Reserve Bank of New York. 12 Unless otherwise noted, rates of change are calculated from average « 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 □ July 1978 1.11 FACTORS AFFECTING MEMBER BANK RESERVES Millions of dollars Monthly averages of daily Weekly averages of daily figures for weeks ending— figures Factors 1978 1978 Apr. May June*> May 17 May 24 May 31 June 7 June 14 June 21^ June 28p SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding... 116,784 119,603 122,063 119,885 117,204 116,703 117,385 117,964 124,981 126,112 2 U.S. Govt, securities1..................... 101,345 103,143 104,656 103,141 102.374 101,685 100.338 101.361 107,197 107,993 3 Bought outright.......................... 100,851 102,431 103,763 101,951 102.374 101,623 100.338 101.361 105,957 106,241 4 Held under repurchase agree­ ment ......................................... 494 712 893 1,190 62 1,240 1,752 5 Federal agency securities............. 8,013 8,171 8,138 8,442 7.895 7,899 7.895 7.883 7,995 8,570 6 Bought outright......................... 7,929 7,907 7,897 7,900 7.895 7,895 7.895 7.883 7,867 7,867 7 Held under repurchase agree­ ment ......................................... 84 264 241 542 4 128 703 8 Acceptances.................................... 137 204 213 411 39 175 460 9 Loans............................................... 539 1,227 1,112 866 701 1,399 645 793 1,194 1,716 10 Float................................................. 3,997 4,119 5,367 4,366 3,986 3,239 5,974 5,486 5,633 4,784 11 Other Federal Reserve assets 2,753 2,739 2,577 2,658 2,247 2,442 2,533 2,440 2,787 2,589 12 Gold stock.......................................... 11,718 11,718 11,709 11,718 11,718 11,718 11,718 11,706 11,706 11,706 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. 11,496 11,538 11,577 11,537 11,540 11,553 11,561 11,571 11,576 11,593 absorbing reserve funds 15 Currency in circulation..................... 103,256 104,389 105,658 104,515 104,368 104,818 105,425 105,830 105,668 105,534 16 Treasury cash holdings..................... 391 383 362 382 382 386 366 362 357 370 Deposits, other than member bank reserves with F.R. Banks: 17 Treasury.......................................... 5,001 6,514 7,577 6,589 4,412 3,291 4,525 3,690 9,231 11,663 18 Foreign............................................. 345 341 266 283 253 348 305 258 258 238 19 Other2.............................................. 738 639 776 615 603 638 675 870 912 648 20 Other F.R. liabilities and capital... 3,741 3,954 4,049 3,882 3,946 4,110 3,773 3,919 4,371 4,071 21 Member bank reserves with F.R. Banks............................................... 27,776 27,890 27,911 28,124 27,748 27,635 26,844 27,560 28,716 28,136 End-of-month figures Wednesday figures 1978 1978 Apr. May June*5 May 17 May 24 May 31 June 7 June 14 June 21^ June 28» SUPPLYING RESERVE FUNDS 22 Reserve Bank credit outstanding 119,782 119,193 127,103 116,577 119,649 119,193 116,801 115,246 131,149 130,777 23 U.S. Govt, securities1..................... 103,500 102,826 110,146 99.319 103.535 102,826 99.404 96.705 110,851 110,508 24 Bought outright........................ 102,768 102,395 107,859 99.319 103.535 102,395 99.404 96.705 108,069 106,918 25 Held under repurchase agree­ ment ......................................... 732 431 2,287 431 2,782 3,590 26 Federal agency securities............... 8,064 7,921 8,526 7.895 7.895 7,921 7.895 7.867 8,526 8,943 27 Bought outright......................... 7,929 7,895 8,168 7.895 7.895 7,895 7.895 7.867 7,867 7,867 28 Held under repurchase agree­ ment ......................................... 135 26 358 26 659 1,067 29 Acceptances.................................... 290 274 1,021 274 436 720 30 Loans............................................... 1,750 1,167 1,428 1,422 764 1,167 551 1,553 2,575 2,648 31 Float................................................. 3,017 4,419 3,528 5,805 5,142 4,419 6,438 6,683 6,130 5,411 32 Other Federal Reserve assets 3,161 2,586 2,454 2,136 2,313 2,586 2,513 2,438 2,631 2,547 33 Gold stock.......................................... 11,718 11,718 11,706 11,718 11,718 11,718 11,718 11,706 11,706 11,706 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... . 11,482 11,526 11,594 11,539 11,543 11,526 11,571 11,571 11,578 11,594 absorbing reserve funds 36 Currency in circulation.................... 103,114 105,443 106,285 104,694 104,675 105,443 105,948 106,060 105,793 106,214 37 Treasury cash holdings..................... 376 365 370 386 378 365 362 359 355 370 Deposits, other than member bank reserves with F.R. Banks: 38 Treasury.......................................... 7,177 2,398 11,614 4,505 4,558 2,398 4,989 3,631 14,132 12,173 39 Foreign............................................ 481 454 288 232 219 454 281 248 274 209 40 Other2.............................................. 684 660 773 577 619 660 594 675 652 663 41 Other F.R. liabilities and capital.. 4,080 4,235 4,193 3,805 4,021 4,235 3,728 4,294 3,987 4,167 42 Member bank reserves with F.R. Banks............................................... 28,321 30,135 28,130 26,886 29,690 30,135 25,438 24,505 30,490 31,531 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. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June** All member banks Reserves: 1 At F.R. Banks..................... 26,430 26,933 26,783 27,057 28,129 27,337 27,155 27,776 27,890 27,911 2 Currency and coin............. 8,548 8,820 8,932 9,351 9,980 9,320 8,992 9,028 9,151 9,345 3 Total held1........................... 35,136 35,860 35,782 36,471 38,185 36,738 36,231 36,880 37,119 37,330 4 Required........................... 34,964 35,521 35,647 36,297 37,880 36,605 35,925 36,816 36,867 37,133 5 Excess1............................. 172 339 135 174 305 133 306 64 252 197 Borrowings at F.R. Banks:2 6 Total...................................... 62 1,319 840 558 481 405 344 539 1,227 1,112 7 Seasonal................................ 12 114 83 54 32 52 47 43 93 120 Large banks in New York City 8 Reserves held............................ 6,520 6,175 6,181 6,244 6,804 6,563 6,276 6,247 6,315 6,216 9 Required............................... 6,602 6,120 6,175 6,279 6,775 6,584 6,193 6,320 6,236 6,376 10 Excess.................................... -82 55 6 -35 29 -21 83 -73 79 -160 11 Borrowings2............................. 15 133 132 48 77 12 21 61 113 55 Large banks in Chicago 12 Reserves held............................ 1,632 1,666 1,607 1,593 1,733 1,623 1,629 1,670 1,697 1,608 13 Required............................... 1,641 1,656 1,609 1,613 1,684 1,633 1,620 1,686 1,669 1,670 14 Excess.................................... -9 10 -2 -20 49 -10 9 -16 28 -62 15 Borrowings2............................. 4 24 23 26 14 11 11 19 20 Other large banks 16 Reserves held............................ 13,117 13,711 13,607 13,993 14,487 13,867 13,729 14,135 14,106 14,159 17 Required............................... 13,053 13,598 13,602 13,931 14,504 13,861 13,662 14,077 14,079 14,231 18 Excess.................................... 64 113 5 62 -17 6 67 58 27 -72 19 Borrowings2............................. 14 681 355 243 164 150 92 249 500 536 All other banks 20 Reserves held............................ 13,867 14,308 14,387 14,641 15,161 14,685 14,597 14,828 15,001 14,948 21 Required............................... 13,668 14,147 14,261 14,474 14,917 14,527 14,450 14,733 14,883 14,856 22 Excess.................................... 199 161 126 167 244 158 147 95 118 92 23 Borrowings2............................. 29 481 330 241 226 243 220 218 595 101 Weekly averages of daily figures for weeks ending- 1978 May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21*> June 28p All member banks Reserves: 24 At F.R. Banks................................ 28,600 27,589 28,124 27,748 27,635 26,844 27,560 28,716 28,136 25 Currency and coin........................ 9,247 9,515 9,192 8,639 9,215 9,391 9,518 9,035 9,388 26 Total held^...................................... 37,923 37,183 37,395 36,465 36,928 36,313 37,155 37,824 37,594 27 Required..................................... 37,608 37,000 37,389 36,218 36,529 36,264 37,042 37,527 37,350 28 Excess1........................................ 315 183 6 247 399 49 113 297 244 Borrowings at F.R. Banks:2 29 Total................................................. 1,664 1,688 866 701 1,399 645 793 1,194 1,716 30 Seasonal.......................................... 61 74 93 103 105 111 106 123 135 Large banks in New York City 31 Reserves held...................................... 6,393 6,184 6,530 6,079 6,225 6,061 6,657 6,432 6,254 32 Required.......................................... 6,370 6,157 6,596 5,972 6,161 6,105 6,653 6,443 6,229 33 Excess.............................................. 23 27 -66 107 64 -44 4 -11 25 34 Borrowings2........................................ 301 150 37 214 54 63 116 Large banks in Chicago 35 Reserves held...................................... 1,706 1,685 1,747 1,628 1,636 1,699 1,690 1,689 1,533 36 Required.......................................... 1,702 1,656 1,754 1,612 1,638 1,694 1,697 1,686 1,588 37 Excess.............................................. 4 29 -7 16 -2 5 -7 3 -55 38 Borrowings2........................................ 81 9 22 61 2 Other large banks 39 Reserves held...................................... 14,530 14,208 14,152 13,909 14,097 13,808 14,087 14,456 14,250 40 Required.......................................... 14,391 14,179 14,201 13,841 13,951 13,837 14,116 14,401 14,437 41 Excess.............................................. 139 29 -49 68 146 -29 -29 55 -187 42 Borrowings2........................................ 714 828 327 179 537 247 335 630 905 All other banks 43 Reserves held...................................... 15,294 15,106 14,966 14,849 14,970 14,745 14,721 15,049 15,149 44 Required.......................................... 15,145 15,008 14,838 14,793 14,779 14,628 14,576 14,997 15,096 45 Excess.............................................. 149 98 128 56 191 117 145 52 53 46 Borrowings2........................................ 568 701 502 522 648 398 382 440 693 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 □ July 1978 1.13 FEDERAL FUNDS TRANSACTIONS Money Market Banks Millions of dollars, except as noted 1978, week ending— Type May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 June 28 Total, 46 banks Basic reserve position 1 Excess reserves1.................................. 73 153 -17 166 231 49 -73 62 89 Less: 2 Borrowings at F.R. Banks........... 517 373 255 10 580 3 146 355 339 3 Net interbank Federal funds transactions.............................. 15,412 16,842 16,017 15,489 13,660 19,719 18,714 16,395 12,688 Equals: Net surplus, or deficit (—): 4 Amount............................................. -15,856 -17,062 -16,290 -15,333 -14,009 -19,673 -18,932 -16,688 -12,938 5 Per cent of average required 100.5 110.9 102.2 102.6 91.8 129.3 118.6 104.7 82.7 Interbank Federal funds transactions Gross transactions: 6 Purchases......................................... 23,201 23,772 23,281 22,940 22,915 26,944 25,547 23,710 21,515 7 Sales................................................... 7,789 6,931 7,264 7,451 9,256 7,225 6,834 7,316 8,827 8 Two-way transactions2..................... 5,900 5,124 5,264 4,914 6,090 5,146 4,599 5,130 5,609 Net transactions: 9 Purchases of net buying banks... 17,300 18,649 18,018 18,026 16,825 21,799 20,948 18,581 15,906 10 Sales of net selling banks.............. 1,888 1,807 2,001 2,538 3,166 2,080 2,235 2,186 3,218 Related transactions with U.S. Govt, securities dealers 11 Loans to dealers 3................................ 3,047 2,834 3,510 4,064 4,220 5,883 4,885 4,449 3,261 12 Borrowing from dealers4.................. 2,776 3,493 3,189 2,881 1,782 1,610 1,701 1,835 2,441 13 Net loans.............................................. 272 -659 321 1,183 2,438 4,272 3,184 2,613 820 8 banks in New York City Basic reserve position 14 Excess reserves1.................................. 32 72 -29 91 -121 12 -12 7 48 Less . 15 Borrowings at F R Banks........... 258 107 37 214 54 63 73 16 Net interbank Federal funds 3,415 4,849 4,291 3,693 3,387 6,412 5,008 3,849 2,898 Equals: Net surplus, or deficit (—): 17 Amount............................................. -3,641 -4,884 -4,357 -3,602 -3,480 -6,400 -5,075 -3,905 -2,922 18 Per cent of average required 62.9 87.6 72.9 67.1 62.5 116.1 84.2 67.0 51.9 Interbank Federal funds transactions Gross transactions: 19 Purchases.......................................... 5,010 5,895 5,389 4,826 4,778 7,194 5,818 5,039 4,491 20 Sales................................................... 1,595 1,047 1,098 1,133 1,391 781 810 1,190 1,593 21 Two-way transactions2..................... 1,556 1,047 1,099 1,133 1,391 781 810 1,190 1,593 Net transactions: 22 Purchases of net buying banks... 3,454 4,849 4,290 3,693 3,387 6,412 5,008 3,849 2,898 23 Sales of net selling banks............. 39 Related transactions with U.S. Govt, securities dealers 24 Loans to dealers3................................ 1,858 1,548 1,781 2,414 2,421 3,395 2,817 2,863 1,959 25 Borrowing from dealers4.................. 1,488 1,699 1,864 2,043 746 746 877 1,051 849 26 Net loans.............................................. 370 -152 -84 372 1,675 2,650 1,940 1,812 1,111 38 banks outside New York City Basic reserve position 27 Excess reserves1.................................. 41 81 11 74 110 37 -61 55 41 Less: 28 Borrowings at F.R. Banks........... 259 266 218 10 366 3 92 293 266 29 Net interbank Federal funds transactions.............................. 11,997 11,993 11,727 11,796 10,273 13,307 13,705 12,546 9,790 Equals : Net surplus, or deficit (—): 30 Amount............................................ -12,215 -12,179 -11,933 -11,731 -10,529 -13,273 -13,857 -12,784 -10,016 31 Per cent of average required reserves..................................... 122.4 124.2 119.7 122.5 108.6 136.8 139.4 126.4 100.0 Interbank Federal funds transactions Gross transactions: 32 Purchases......................................... 18,191 17,877 17,892 18,114 18,138 19,751 19,729 18,672 17,024 33 Sales................................................... 6,194 5,884 6,166 6,319 7,865 6,444 6,024 6,125 7,234 34 Two-way transactions2..................... 4,344 4,077 4,165 3,781 4,699 4,364 3,789 3,940 4,015 Net transactions: 35 Purchases of net buying banks... 13,846 13,800 13,727 14,333 13,438 15,386 15,940 14,732 13,009 36 Sales of net selling banks............. 1,849 1,807 2,001 2,538 3,166 2,080 2,235 2,186 3,218 Related transactions with U.S. Govt, securities dealers 37 Loans to dealers3................................ 1,189 1,286 1,729 1,650 1,798 2,488 2,068 1,586 1,302 38 Borrowing from dealers4................... 1,288 1,793 1,325 838 1,036 865 824 784 1,592 39 Net loans.............................................. -98 -507 405 811 763 1,623 1,244 801 -290 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Funds A7 1.13 Continued 1978, week ending— Type May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 June 28 5 banks in City of Chicago Basic reserve position 40 Excess reserves1............................ 6 36 17 15 16 8 -2 7 15 Less: 41 Borrowings at F.R. Banks... 71 22 61 42 Net interbank Federal funds transactions....................... 5,075 5,389 5,479 5,446 5,830 6,872 6,877 5,524 4,563 Equals: Net surplus, or deficit (—): 43 Amount.................................... -5,140 -5,353 -5,462 -5,431 -5,814 -6,863 -6,901 -5,579 -4,549 44 Per cent of average required reserves............................ 323.2 346.7 332.4 360.8 379.4 432.4 434.2 353.8 307.2 Interbank Federal funds transactions Gross transactions: Purchases........................................ 6,238 6,475 6,848 6,550 7,126 7,7 43 7,817 6,630 5,963 Sales................................................. 1.163 1,086 1.369 1,104 1,296 872 940 1.105 1.400 Two-way transactions2................... 1.163 1,086 1.369 1,103 1,295 872 940 1.106 1.400 Net transactions: Purchases of net buying banks.. 5,076 5,389 5,479 5,446 5,831 6,872 6,877 5,524 4,563 Sales of net selling banks........... Related transactions with U.S. Govt, securities dealers 50 Loans to dealers3................... 185 245 456 452 488 647 579 508 397 51 Borrowing from dealers*... 446 583 310 141 75 76 83 262 556 52 Net loans.................................. -262 -338 146 311 414 571 496 247 -159 33 other banks Basic reserve position 53 Excess reserves1.................................. 35 45 -6 59 93 29 -59 48 27 Less: 54 Borrowings at F.R. Banks........... 188 266 218 10 366 3 70 231 266 55 Net interbank Federal funds transactions.............................. 6,921 6,604 6,248 6,350 4,442 6,435 6,828 7,022 5,227 Equals: Net surplus, or deficit (—): 56 Amount............................................. -7,075 -6,825 -6,472 -6,301 -4,715 -6,409 -6,957 -7,205 -5,467 57 Per cent of average required reserves..................................... 84.3 82.6 77.7 78.0 57.7 79.0 83.3 84.4 64.0 Interbank Federal funds transactions Gross transactions: 58 Purchases.......................................... 11,953 11,402 11,045 11,565 11,012 12,007 11,912 12,042 11,061 59 Sales................................................... 5,031 4,798 4,797 5,215 6,569 5,572 5,084 5,020 5,833 60 Two-way transactions2..................... 3,182 2,991 2,796 2,678 3,404 3,492 2,849 2,834 2,615 Net transactions: 61 Purchases of net buying banks... 8,771 8,411 8,249 8,887 7,608 8,515 9,063 9,208 8,446 62 Sales of net selling banks............. 1,849 1,807 2,001 2,538 3,166 2,080 2,235 2,186 3,218 Related transactions with U.S. Govt, securities dealers 63 Loans to dealers3................................ 1,005 1,041 1,274 1,198 1,310 1,841 1,489 1,077 905 64 Borrowing from dealers4.................. 841 1,210 1,015 698 961 789 741 523 1,036 65 Net loans.............................................. 163 -169 258 500 349 1,052 748 555 -131 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 □ July 1978 1.14 FEDERAL RESERVE BANK INTEREST RATES Per cent per annum Current and previous levels Loans to member banks— Loans to all others Under Sec. 10(b)2 under Sec. 13, last par.4 Federal Reserve Under Secs. 13 and 13a1 Bank Regular rate Special rate 3 Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous 6/30/78 date rate 6/30/78 date rate 6/30/78 date rate 6/30/78 date rate Boston.................. 5/12/78 61/4 71/4 5/12/78 5/12/78 7V4 10 5/12/78 9Vi New York........... 5/11/78 6'A 71/4 5/11/78 5/11/78 7i/4 10 5/11/78 91/4 Philadelphia........ 5/11/78 6 *4 7i/4 5/11/78 5/11/78 71/4 10 5/11/78 9% Cleveland............. 5/11/78 61/4 71/4 5/11/78 5/11/78 7V4 10 5/11/78 91/4 Richmond........... 5/11/78 6i/4 7i/4 5/11/78 5/11/78 71/4 10 5/11/78 9i/4 Atlanta................. 5/11/78 61/4 7i/4 5/11/78 5/11/78 71/4 10 5/11/78 Chicago............... 5/11/78 61/4 7V4 5/11/78 5/11/78 7V4 10 5/11/78 18 St. Louis.............. 5/11/78 61/4 71/4 5/11/78 5/11/78 7i/4 10 5/11/78 Minneapolis........ 5/11/78 6V4 7V4 5/11/78 5/11/78 7V4 10 5/11/78 9% Kansas City......... 5/11/78 71/4 5/11/78 5/11/78 7V4 10 5/11/78 Dallas................... 5/12/78 71/4 5/12/78 5/12/78 7i/4 10 5/12/78 % San Francisco... 5/11/78 61/4 71/4 5/11/78 5/11/78 7i/4 10 5/11/78 9V4 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!ft 51/4 1973—Apr. 23................... 51/4-5% 5V4 1975—Mar. 10................... 614-634 61/4 May 4................... 5% 534 14................... 614 614 1971—Jan. 8..................... 514-51/4 514 11................... 5%-6 6 May 16................... 6-614 6 15..................... 514 514 18................... 6 6 23................... 6 6 19..................... 5 -514 514 June 11................... 6-6V4 6V4 22..................... 5 -514 5 15................... 6i/4 61/4 1976—Jan. 19................... 51/4-6 51/4 29..................... 5 5 July 2................... 7 7 23................... 51/4 5i/4 Feb. 13..................... 434-5 5 Aug. 14................... 7-7V4 71/4 Nov. 22................... 514-51/4 514 19..................... 434 434 23................... 71/4 7Vi 26................... 514 5*4 July 16..................... 434-5 5 23..................... 5 5 1974—Apr. 25................... 71/4-8 8 1977—Aug. 30................... 514-534 514 Nov 11..................... 434-5 5 30................... 8 8 31................... 514-534 534 19..................... 434 434 Dec. 9................... 7^4-8 734 Sept. 2................... 534 534 Dec. 13..................... 41/4-434 434 16................... 7% 734 Oct. 26................... 6 6 17..................... 4V4-434 4V4 24..................... 4Vi 4V4 1975—Jan. 6................... 714-734 1978—Jan. 9................... 6-6 V4 61/4 10................... 71/4-73/4 20................... 6V4 61,4 1973—Jan. 15................... 5 5 24................... 714 714 May 11................... 61/4-7 7 Feb. 26.................... 5-5V4 51/4 Feb. 5................... 634-714 634 12................... 7 7 Mar. 2................... 51/4 51/4 7................... 634 In effect June 30, 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(e)(2) of Banking and Monetary Statistics, 1914-1941, Banking and Monetary Regulation A. Statistics, 194l-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 June 30, 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 9% 12/30/76 10 2/13/75 10-100..................................................................................................... im 12/30/76 12 2/13/75 100-^00................................................................................................... 12*4 12/30/76 13 2/13/75 Over 400................................................................................................. 16V4 12/30/76 2/13/75 Time:2-3 Savings..................................................................................................... 3 3/16/67 3/2/67 Other time: 0-5, maturing in— 30-179 days................................................................................... 3 3/16/67 3/2/67 180 days to 4 years...................................................................... 4 2K 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 Vi 1/8/76 3 12/12/74 41 10/30/75 3 12/12/74 Legal limits, June 30, 1978 Minimum Maximum Net demand: Reserve city banks................................................................................ 10 22 Other banks........................................................................................... 7 14 3 10 1 For changes in reserve requirements beginning 1963, see Board’s (c) The Board’s Regulation M requires a 4 per cent reserve against net Annual Statistical Digest, 1971-1975 and for prior changes, see Board’s balances due from domestic banks to their foreign branches and to foreign Annual Report for 1976, Table 13. banks abroad. Effective Dec. 1, 1977, a 1 per cent reserve is required 2 (a) Requirement schedules are graduated, and each deposit interval against deposits that foreign branches of U.S. banks use for lending to applies to that part of the deposits of each bank. Demand deposits U.S. residents. Loans aggregating $100,000 or less to any U.S. resident are subject to reserve requirements are gross demand deposits minus cash excluded from computations, as are total loans of a bank to U.S. residents items in process of collection and demand balances due from domestic if not exceeding $1 million. Regulation D imposes a similar reserve re­ banks. quirement on borrowings from foreign banks by domestic offices of a (b) The Federal Reserve Act specifies different ranges of requirements member bank. for reserve city banks and for other banks. Reserve cities are designated 3 Negotiable orders of withdrawal (NOW) accounts and time deposits under a criterion adopted effective Nov. 9, 1972, by which a bank having such as Christmas and vacation club accounts are subject to the same net demand deposits of more than $400 million is considered to have the requirements as savings deposits. character of business of a reserve city bank. The presence of the head 4 The average of reserves on savings and other time deposits must be office of such a bank constitutes designation of that place as a reserve at least 3 per cent, the minimum specified by law. city. Cities in which there are F.R. Banks or branches are also reserve cities. Any banks having net demand deposits of $400 million or less Note.—Required reserves must be held in the form of deposits with are considered to have the character of business of banks outside of F.R. Banks or vault cash. reserve cities and are permitted to maintain reserves at ratios set for banks not in reserve cities. For details, see the Board’s Regulation D. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics □ July 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 June 30,1978 Previous maximum In effect June 30,1978 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% 1/21/70 5% (7) (8) 2 Negotiable orders of withdrawal (NOW) accounts 1........................... 5 1/1/74 5 1/1/74 3 Variable-rate time deposit of less than $100,0002........................................... (9) (9) (10) (9) (9) (10) Other time (multiple- and single­ maturity unless otherwise indicated) 3 30-89 days: 4 5 M Sin u g lt l i e p l m ea m tu a r t i u ty ri . t .. y .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7/1/73 9 1 / / 2 2 6 1 / / 6 7 6 0 (10) (10) 90 days to 1 year : 7 6 S M in u g lt l i e p - l m e- a m tu a ri t t u y r . i . t . y ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5% 7/1/73 7 9 / / 2 2 0 6 / / 6 6 6 6 45Y4 (7) 5Y4 1/21/70 8 8 2 1 t t o o 2 2 l/ y i e y a e rs a 4 r . s . 4 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7/7/73 5 5 1 % /z 1 1 / / 2 2 1 1 / / 7 7 0 0 6Y2 (7) 6 5Ya 1 1 / / 2 2 1 1 / / 7 7 0 0 10 2l/i to 4 years4.......................................... 61/2 7/1/73 5Y4 1/21/70 6Y4 (7) 6 1/21/70 11 4 to 6 years 5.............................................. m 11/1/73 C11) m 11/1/73 C11) 12 6 to 8 years5.............................................. m 12/23/74 m 11/1/73 m 12/23/74 7*4 11/1/73 13 8 years or more 5...................................... m 6/1/78 (10) 8 6/1/78 (10) 14 Governmental units (all maturities) ... 6/1/78 IYa 12/23/74 8 6/1/78 m 12/23/74 15 Individual retirement accounts and Keogh (H.R. 10) plans 6................. 6/1/78 m 7/6/77 8 6/1/78 m 7/6/77 1 For authorized States only. Federally insured commercial banks, 10 No separate account category. savings and loan associations, cooperative banks, and mutual savings 11 Between July 1, 1973, and Oct. 31, 1973, there was no ceiling for banks were first permitted to offer NOW accounts on Jan. 1, 1974. certificates maturing in 4 years or more with minimum denominations Authorization to issue NOW accounts was extended to similar institu­ of $1,000; however, the amount of such certificates that an institution tions throughout New England on Feb. 27, 1976. could issue was limited to 5 per cent of its total time and savings deposits. 2 Must have a maturity of exactly 26 weeks and a minimum denomina­ Sales in excess of that amount, as well as certificates of less than $1,000, tion of $10,000, and must be nonnegotiable. were limited to the 6Vi per cent ceiling on time deposits maturing in 2Vi 3 For exceptions with respect to certain foreign time deposits see the years or more. Federal Reserve Bulletin for October 1962 (p. 1279), August 1965 (p. Effective Nov. 1, 1973, the present ceilings were imposed on certificates 1094), and February 1968 (p. 167). maturing in 4 years or more with minimum denominations of $1,000. 4 A minimum of $1,000 is required for savings and loan associations, There is no limitation on the amount of these certificates that banks can except in areas where mutual savings banks permit lower minimum de­ issue. nominations. This restriction was removed for deposits maturing in less than 1 year, effective Nov. 1, 1973. Note—Maximum rates that can be paid by Federally insured commer­ 5 $1,000 minimum except for deposits representing funds contributed cial banks, mutual savings banks, and savings and loan associations are to an Individual Retirement Account (IRA) or a Keogh (H.R. 10) Plan es­ established by the Board of Governors of the Federal Reserve System, tablished pursuant to the Internal Revenue Code. The $1,000 minimum the Board of Directors of the Federal Deposit Insurance Corporation, requirement was removed for such accounts in December 1975 and No­ and the Federal Home Loan Bank Board under the provisions of 12 vember 1976, respectively. CFR 217, 329, and 526, respectively. The maximum rates on time de­ 6 3-year minimum maturity. posits in denominations of $100,000 or more were suspended in mid- 7 July 1, 1973, for mutual savings banks; July 6, 1973, for savings and 1973. For information regarding previous interest rate ceilings on all loan associations. types of accounts, see earlier issues of the Federal Reserve Bulletin, 8 Oct. 1, 1966, for mutual savings banks; Jan. 21, 1970, for savings and the Federal Home Loan Bank Board Journal, and the Annual Report loan associations. of the Federal Deposit Insurance Corporation. 9 Ceiling rate for commercial banks is the discount rate on most recently issued 6-month U.S. Treasury bills. Ceiling rate for savings and loan associations and mutual savings banks is Ya per cent higher than the rate for commercial banks. The rate for June were : June 3 June 10 June 17 June 24 Banks.......... 7.160 7.095 7.121 7.228 Thrifts......... 7.410 7.345 7.371 7.478 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 Al 1 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1977 1978 Type of transaction 1975 1976 1977 Nov. Dec. Jan. Feb. Mar. Apr. May U.S. GOVT. SECURITIES Outright transactions (excl. matched sale* purchase transactions) Treasury bills: 1 Gross purchases. 11,562 14,343 13,738 3,109 696 379 748 1,670 416 2 Gross sales........... 5,599 8,462 7,241 436 311 1,323 1,974 50 737 3 Redemptions 26,431 2 5,017 2,136 300 1,100 31 300 Others within 1 year:1 Gross purchases..................... 3,886 472 3,017 99 56 288 100 53 Gross sales............................... Exchange, or maturity shift. -4 792 4.499 1,352 623 -511 -653 261 -292 -1,915 Redemptions........................... 3,549 2.500 1 to 5 years: 8 Gross purchases..................... 2 3,284 2 3,202 2,833 628 311 813 235 290 9 Gross sales.............................. 177 10 Exchange, or maturity shift. 3,854 -2,588 -6,649 -1,267 -623 511 1,109 -261 292 -507 5 to 10 years: 11 Gross purchases.................... 1,510 1,048 758 166 89 370 191 101 12 Gross sales............................... 13 Exchange, or maturity shift. -4,697 1,572 584 -325 -906 1,526 Over 10 years: 14 Gross purchases..................... 1,070 642 553 108 100 147 145 74 15 Gross sales............................... 16 Exchange, or maturity shift. 848 225 1,565 240 450 895 All maturities:1 17 Gross purchases. 221,313 219,707 20,898 4,110 1,252 379 2,367 2,341 935 18 Gross sales........... 5,599 8,639 7,241 436 311 1,323 1,974 50 737 19 Redemptions 2 9,980 25,017 4,636 300 1,100 31 300 Matched sale-purchase transactions 20 Gross sales........................................ 151,205 196,078 425,214 56,899 32,320 54,859 40,128 44,976 42,262 40,634 21 Gross purchases.............................. 152,132 196,579 423,841 57,477 35,001 51,016 44,270 44,129 42,799 40,362 Repurchase agreements 22 Gross purchases 140,311 232,891 178,683 6,472 18,071 10,229 16.057 13,155 8,044 11,517 23 Gross sales................... 139,538 230,355 180,535 4,433 18,208 12,130 16.057 11,468 8,999 11,819 24 Net change in U.S. Govt, securities.......... 7,434 9,087 5,798 1,880 6,342 -5,815 1,447 3,127 1,923 -674 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 34 Repurchase agreements: 28 Gross purchases........... 15,179 10,520 13,811 615 2,712 1,680 966 2,638 1,282 3,927 29 Gross sales..................... 15,566 10,360 13,638 484 2,392 2,131 966 2,374 1,410 4,037 BANKERS ACCEPTANCES 30 Outright transactions, net... 163 -545 -196 31 Repurchase agreements, net. -35 410 159 248 705 -954 770 -480 -17 32 Net change in total System Account. 8,539 9,833 7,143 2,260 8,042 -7,220 425 4,107 1,315 -834 * 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 □ July 1978 1.18 FEDERAL RESERVE BANKS Condition and F.R. Note Statements Millions of dollars Wednesday End of month Account 1978 1978 May 31 June 7 June 14 June 21 June 28 April May June25 Consolidated condition statement ASSETS 1 11,718 11,718 11,706 11,706 11,706 11,718 11,718 11,706 2 Special Drawing Rights certificate account.......... 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 3 291 281 284 284 284 324 291 284 Loans: 4 Member bank borrowings.................................... 1,167 551 1,553 2,574 2,648 1,750 1,167 1,428 5 Acceptances: 6 7 274 436 720 290 274 1,021 Federal agency obligations: 8 7,895 7,895 7,867 7,867 7,867 7,929 7,895 8,168 q 26 659 1,076 135 26 358 U.S. Govt, securities Bought outright: 10 Bills........................................................................ 39,673 36,682 33,983 44,290 43,139 40,565 39,673 44,080 11 12 13 52,055 52,055 52,055 52,997 52,997 52,5i6 52,055 52,997 14 10,667 10,667 10,667 10,782 10,782 9,693 10,667 10,782 15 102,395 99,404 96,705 108,069 106,918 102,768 102,395 107,859 16 431 2,782 3,590 732 431 2,287 17 102,826 99,404 96,705 110,851 110,508 103,500 102,826 110,146 18 Total loans and securities.......................................... 112,188 107,850 106,125 122,387 122,819 113,604 112,188 121,121 19 11,854 13,163 13,526 13,064 11,794 9,206 11,854 9,529 20 388 388 388 390 390 387 388 389 Other assets: 21 121 76 57 49 33 54 121 58 22 2,077 2,049 1,993 2,192 2,124 2,720 2,077 2,007 23 139,887 136,775 135,329 151,322 150,400 139,263 139,887 146,344 LIABILITIES 24 94,570 95,020 95,133 94,854 95,274 92,331 94,570 95,345 Deposits: 25 Member bank reserves.......................................... 30,135 25,438 24,505 30,559 31,531 28,321 30,135 28,130 26 2,398 4,989 3,631 14,132 12,173 7,177 2,398 11,614 27 454 281 248 274 209 481 454 288 28 660 594 675 652 663 684 660 773 29 33,647 31,302 29,059 45,617 44,576 36,663 33,647 40,805 30 7,435 6,725 6,843 6,864 6,383 6,189 7,435 6,001 31 1,514 1,484 1,910 1,464 1,569 1,420 1,514 1,559 32' 137,166 134,531 132,945 148,799 147,802 136,603 137,166 143,710 CAPITAL ACCOUNTS 33 1,053 1,052 1,054 1,056 1,056 1,050 1,053 1,056 34 1,029 1,029 1,029 1,029 1,029 1,029 1,029 1,029 35 639 163 301 438 513 581 639 549 36 139,887 136,775 135,329 151,322 150,400 139,263 139,887 146,344 37 Memo: Marketable U.S. Govt, securities held in custody for foreign and inti, account............... 84,854 85,854 84,946 83,980 84,416 85,141 84,854 85,688 Federal Reserve note statement 38 F.R. notes outstanding (issued to Bank)............... 105,008 105,154 105,262 105,455 105,623 104,164 105,008 105,651 Collateral held against notes outstanding: 39 Gold certificate account........................................ 11,718 11,718 11,706 11,706 11,706 11,717 11,718 11,706 40 Special Drawing Rights certificate account.... 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 41 1,107 537 1,375 2,238 2,476 1,580 1,107 1,368 42 90,933 91,649 90,931 90,261 90,191 89,617 90,933 91,327 43 Total collateral............................................................. 105,008 105,154 105,262 105,455 105,623 104,164 105,008 105,651 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 31 June 7 June 14 June 21 June 28 Apr. 30 May 31 June 30 1,167 553 1,553 2,575 2,648 1,751 1,167 1,428 1,120 493 1,500 2,547 2,610 1,731 1,120 1,343 47 60 53 28 38 20 47 85 < Arranfanrpc ............................. 274 436 720 290 274 1,021 6 Within 15 days •• ....................................... 274 436 720 290 274 1,021 102,826 99,404 96,705 110,851 110,508 103,500 102,826 110,146 10 Within 15 days i........................................................ 2,956 2,235 2,195 9,802 8,243 3,710 2,956 4,958 20,129 17,447 14,863 19,980 20,010 21,381 20,129 21,179 29,416 29,398 29,323 29,823 31,009 30,757 29,416 32,383 29,687 29,686 29,686 30,404 30,404 29,611 29,687 30,784 11,760 11,760 11,760 11,849 11,849 10,132 11,760 11,849 8,878 8,878 8,878 8,993 8,993 7,909 8,878 8,993 16 Federal agency obligations.......................................... 7,921 7,895 7,867 8.526 8,943 8,064 7,921 8,526 17 Within 15 days1........................................................ 168 98 690 1,107 189 168 389 18 16 days to 90 days.................................................... 105 152 ...........262' 232 232 231 105 232 1,347 1,344 1,437 1,437 1,437 1,152 1,347 1,482 3,817 3,817 3,795 3,794 3,794 3,991 3,817 3,921 21 Over 5 years to 10 years......................................... 1,637 1,637 1,526 1.526 1,526 1,644 1,637 1,631 847 847 847 847 847 857 847 871 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 1975 1976 of customer Dec.r Jan.r Feb.r Mar.r Apr.r May Debits to demand deposits 2 (seasonally adjusted) 1 All commercial banks................ 25,028.5 29,180.4 34,322.8 37,054.6 36.477.2 37,129.4 39,236.3 39,685.9 2 Major New York City banks.. 9,670.7 11.467.2 13,860.6 14.327.8 13.422.3 13,664.7 15,128.5 14.775.4 3 Other banks.................................. 15,357.8 17.713.2 20,462.2 22.726.8 23,054.9 23,464.6 24,107.8 24.910.5 Debits to savings deposits 3 (not seasonally adjusted) 4 All customers................................ 174.0 387.4 317.6 380.8 424.5 395.6 21.7 50.2 42.3 48.1 49.3 51.2 6 Others............................................. 152.3 337.2 275.3 332.7 375.2 344.4 Demand deposit turnover 2 (seasonally adjusted) 7 All commercial banks................. 105.3 116.8 129.2 132.5 131.1 134.1 138.0 139.7 8 Major New York City banks.. 356.9 411.6 503.0 508.5 494.2 520.1 548.0 555.3 9 Other banks.................................. 72.9 79.8 85.9 90.3 91.8 93.6 93.9 96.8 Savings deposit turnover 3 (not seasonally adjusted) 10 All customers................................ 1.6 1.8 1.5 1.7 1.9 1.8 11 Business 1...................................... 4.1 4.7 4.0 4.6 4.7 4.7 12 Others............................................. 1.5 1.6 1.3 1.6 1.8 1.6 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 □ July 1978 1.21 MONEY STOCK MEASURES AND COMPONENTS Billions of dollars, averages of daily figures 1977 1978 1974 1975 1976 1977 *■ Dec. Dec. Dec. Dec. Item Dec.r Jan.r Feb.r Mar.r Apr.r May Seasonally adjusted MEASURES i 1 M-l........................................................... 282.9 294.5 312.6 337.2 337.2 340.1 339.9 340.9 346.3 348.6 2 M-2........................................................... 612.2 664.1 739.6 808.4 808.4 814.8 818.0 821.8 829.7 835.1 3 M-3........................................................... 981.2 1,091.8 1,235.6 1,375.0 1,375.0 1,385.4 1,392.0 1,399.5 1,410.9 1,419.7 4 M-4........................................................... 701.2 745.4 802.3 882.4 882.4 891.1 897.4 903.9 913.2 922.2 5 M-5........................................................... 1,070.3 1,173.2 1,298.3 1,449.0 1,449.0 1,461.7 1,471.3 1,481.5 1,494.3 1,506.8 COMPONENTS 6 Currency................................................... 67.8 73.7 80.7 88.6 88.6 89.4 90.1 90.7 91.3 92.2 Commercial bank deposits: 7 Demand............................................... 215.1 220.8 231.9 248.6 248.6 250.7 249.8 250.2 255.1 256.4 8 Time and savings............................ 418.3 450.9 489.7 545.2 545.2 551.0 557.5 562.9 566.8 573.6 9 Negotiable CD’s2......................... 89.0 81.3 62.7 74.0 74.0 76.3 79.4 82.0 83.4 87.1 10 Other................................................ 329.3 369.6 427.0 471.2 471.2 474.7 478.1 480.9 483.4 486.5 11 Nonbank thrift institutions 3............... 369.1 427.8 496.0 566.6 566.6 570.7 574.0 577.7 581.2 584.6 Not seasonally adjusted MEASURES i 12 M-l.......................................................... 291.3 303.2 321.7 346.9 346.9 345.9 334.1 336.2 348.7 343.3 13 M-2........................................................... 617.5 669.3 744.8 813.8 813.8 819.4 812.8 820.4 836.0 833.6 14 M-3........................................................... 983.8 1,094.3 1,237.5 1,376.3 1,376.3 1,387.8 1,384.9 1,399.5 1,420.7 1,420.2 15 M-4........................................................... 708.0 752.8 809.1 889.7 889.7 895.8 889.7 900.6 917.4 918.2 16 M-5........................................................... 1,074.3 1,177.7 1,301.8 1,452.3 1,452.3 1,464.2 1,461.8 1,479.7 1,502.0 1,504.9 COMPONENTS 17 Currency.................................................. 69.0 75.1 82.1 90.1 90.1 88.7 89.0 90.0 91.1 92.0 Commercial bank deposits: 18 Demand............................................... 222.2 228.1 239.5 256.8 256.8 257.2 245.0 246.2 257.6 251.3 19 Member........................................... 159.7 162.1 168.5 176.3 176.3 175.8 167.3 168.4 175.7 171.2 20 Domestic nonmember.................. 58.5 62.6 67.5 75.9 76.2 76.9 73.6 73.8 77.8 76.2 21 Time and savings................................ 416.7 449.6 487.4 542.8 542.8 549.9 555.7 564.4 568.7 574.9 22 Negotiable CD’s2.......................... 90.5 83.5 64.3 75.9 75.9 76.4 76.9 80.2 81.4 84.6 23 Other............................................... 326.3 366.2 423.1 466.9 466.9 473.5 478.8 484.2 487.3 490.3 24 Nonbank thrift institutions 3............... 366.3 424.9 492.7 562.5 562.5 568.4 572.1 579.1 584.6 586.7 25 U.S. Govt, deposits (all commercial banks).............................................. 4.9 4.1 4.4 5.1 5.1 4.3 4.3 4.7 4.9 3.9 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 Item 1974 1975 1976 Dec. Dec. Dec. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Seasonally adjusted 1Reserves1........................................................... 36.57 34.68 34.93 35.52 35.81 35.96 36.14 36.60 36.93 36.67 36.95 37.27 2 Nonborrowed................................................. 35.84 34.55 34.89 34.89 34.50 35.10 35.57 36.12 36.53 36.34 36.40 36.06 3 Required.......................................................... 36.31 34.42 34.29 35.31 35.60 35.71 35.95 36.33 36.69 36.47 36.81 37.05 4 Deposits subject to reserve requirements2. . 486.1 504.6 528.9 553.0 558.5 564.4 569.1 575.7 577.8 582.1 586.1 592.1 5 Time and savings........................................... 322.1 337.1 354.3 373.0 377.1 383.5 387.0 390.5 395.4 399.2 400.7 406.0 Demand: 6 Private.......................................................... 160.6 164.5 171.4 176.7 178.3 178.0 178.5 182.1 179.5 179.6 182.0 183.5 7 U.S. Govt.................................................... 3.3 2.9 3.2 3.3 3.1 3.0 3.6 3.1 3.0 3.4 3.3 2.6 Not seasonally adjusted 8 Deposits subject to reserve requirements2.. 491.8 510.9 534.8 552.1 558.2 562.1 575.3 581.3 572.5 579.4 588.6 588.3 9 Time ans savings.......................................... 321.7 337.2 353.6 373.0 377.5 380.7 386.4 390.3 393.2 399.3 401.2 406.1 Demand: 10 Private....................................................... 166.6 170.7 177.9 175.2 178.0 178.7 185.1 187.9 176.1 176.6 183.8 179.3 11 U.S. Govt................................................. 3.4 3.1 3.3 3.8 2.7 2.6 3.8 3.1 3.1 3.5 3.6 2.9 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 1978 1974 1975 1976 1977 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Category 3 Jan. 25 Feb. 22 Mar. 29 Apr. 26 May 31 June 30 p p p p p p Seasonally adjusted 1Loans and investments1............................................. 690.4 721.1 784.4 870.6 880.6 886.6 892.2 906.0 917.9 922.4 2 Including loans sold outright2............................ 695.2 725.5 788.2 875.5 885.4 891.2 896.7 910.5 922.3 926.9 Loans: 3 Total.......................................................................... 500.2 496.9 538.9 617.0 624.9 628.2 636.5 646.3 657.9 661.2 4 Including loans sold outright2........................ 505.0 501.3 542.7 621.9 629.7 632.8 641.0 650.8 662.3 665.7 5 Commercial and industrial.................................. 183.3 176.0 4179.5 5201.4 203.9 206.1 210.3 213.3 219.2 220.4 6 Including loans sold outright2......................... 186.0 178.5 4181.9 5204.2 206.4 208.4 212.5 215.6 221.5 222.6 Investments: 7 U.S. Treasury.......................................................... 50.4 79.4 97.3 95.6 96.3 99.0 95.6 97.6 97.1 98.4 8 Other......................................................................... 139.8 144.8 148.2 158.0 159.4 159.4 160.1 162.1 162.9 162.8 Not seasonally adjusted 9 Loans and investments1............................................. 705.6 737.0 801.6 888.9 876.1 878.4 889.7 904.9 917.0 928.9 10 Including loans sold outright2............................ 710.4 741.4 805.4 893.8 880.8 883.0 894.2 909.4 921.4 933.3 Loans: 11 Total1........................................................................ 510.7 507.4 550.2 629.9 619.3 620.3 631.6 642.3 657.1 669.2 12 Including loans sold outright2........................ 515.5 511.8 554.0 634.8 624.1 624.9 636.1 646.8 661.5 673.7 13 Commercial and industrial................................. 186.8 179.3 4182.9 5205.0 201.7 204.2 210.0 213.8 219.2 223.0 14 Including loans sold outright2....................... 189.5 181.8 4185.3 5207.8 204.2 206.5 212.2 216.1 221.5 225.2 Investments: 15 U.S. Treasury.......................................................... 54.5 84.1 102.5 100.2 97.9 99.6 98.6 99.6 96.6 96.1 16 Other......................................................................... 140.5 145.5 148.9 158.8 158.8 158.5 159.6 163.1 163.4 163.6 For notes see bottom of opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics □ July 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 Sept. Oct. Nov. Dec. Jan.* Feb.* Mar.** Apr.** May.2 June* All commercial 1 Loans and investments........................... 846.4 892.3 898.9 916.5 939.1 921.6 926.0 936.0 947.7 967.4 966.8 2 Loans, gross........................................ 594.9 637.4 643.4 659.3 680.1 664.9 668.0 677.8 685.0 707.4 707.8 Investments: 3 U.S. Treasury securities............... 102.5 98.8 98.2 98.5 100.2 97.9 99.6 98.6 99.6 96.6 95.9 4 Other................................................. 148.9 156.1 157.3 158.8 158.8 158.8 158.5 159.6 163.1 163.4 163.2 5 Cash assets............................................... 136.1 128.6 129.3 138.6 168.7 126.9 145.2 131.5 134.1 162.7 142.6 6 12.1 13.9 13.8 14.6 13.9 14.0 13.8 14.3 14.1 14.3 14.6 7 Reserves with F.R. Banks............... 26.1 30.0 28.3 26.3 29.3 26.6 31.0 30.2 27.6 30.3 30.8 8 Balances with banks........................... 49.6 42.7 44.4 46.8 59.0 42.4 46.9 44.1 44.7 53.3 45.5 9 Cash items in process of collection.. 48.4 42.1 42.8 50.9 66.4 43.9 53.5 43.0 47.6 64.7 51.6 10 Total assets/total liabilities and ' capital1................................................. 1,030.7 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 1,177.3 11 838.2 854.1 861.5 887.2 939.4 883.6 899.7 896.2 910.3 946.1 926.2 Demand: 12 Interbank......................................... 45.4 37.1 37.4 41.7 51.7 37.1 42.6 37.4 38.8 50.7 40.5 13 U.S. Govt......................................... 3.0 8.1 3.6 4.8 7.3 4.5 5.8 4.8 6.1 3.2 7.1 14 Other................................................. 288.4 272.9 280.0 294.0 323.9 284.2 288.6 280.2 292.0 310.6 294.9 Time: 15 9.2 8.5 8.6 9.0 9.8 9.1 8.7 9.0 9.0 9.4 9.8 16 Other................................................. 492.2 527.6 531.9 537.8 546.6 548.8 554.0 564.8 564.4 572.2 573.9 17 Borrowings............................................... 80.2 95.6 95.6 99.4 96.2 99.9 103.7 105.7 104.5 111.4 109.0 18 78.1 80.1 80.7 81.6 85.8 82.4 82.8 83.3 83.7 84.6 84.7 19 14,671 14,724 14,718 14,718 14,707 14,703 14,682 14,689 14,697 14,702 14,702 Member 20 Loans and investments........................... 620.5 640.8 645.2 658.6 675.5 659.5 661.8 668.6 676.8 693.8 691.5 21 Loans, gross........................................ 442.9 463.0 467.1 479.0 494.9 481.8 483.1 490.5 495.3 514.3 512.8 Investments: 22 U.S. Treasury securities............... 74.6 69.6 68.9 69.2 70.4 67.7 69.2 68.2 68.8 66.9 66.2 23 Other................................................. 103.1 108.3 109.3 110.3 110.1 110.0 109.5 109.9 112.7 112.7 112.5 24 Cash assets, total.................................... 108.9 103.1 102.3 110.6 134.4 102.2 117.2 104.8 106.5 130.7 114.6 25 Currency and coin.............................. 9.1 10.2 10.2 10.8 10.4 10.4 10.2 10.6 10.5 10.6 10.8 26 Reserves with F.R. Banks............... 26.0 30.0 28.3 26.3 29.3 26.6 31.0 30.2 27.6 30.3 30.8 27 Balances with banks.......................... 27.4 22.5 22.8 24.7 30.8 23.0 24.6 22.9 22.7 28.1 23.6 28 Cash items in process of collection.. 46.5 40.4 41.0 48.9 63.9 42.2 51.4 41.2 45.7 61.7 49.4 29 Total assets/total liabilities and capital i................................................. 772.9 793.2 796.5 823.9 861.8 818.0 835.3 833.2 843.3 884.7 864.5 30 618.7 617.0 620.9 641.8 683.5 636.8 649.2 645.1 655.1 686.7 668.4 Demand: 31 Interbank.......................................... 42.4 34.3 34.6 38.7 48.0 34.4 39.5 34.7 36.0 47.5 37.7 32 U.S. Govt......................................... 2.1 6.4 2.6 3.6 5.4 3.4 4.4 3.7 4.5 2.2 5.1 33 Other................................................. 215.5 200.3 205.3 216.4 239.4 208.4 211.8 205.1 213.4 229.1 216.2 Time: 34 7.2 6.3 6.5 6.8 7.8 7.1 6.7 7.0 6.9 7.3 7.7 35 Other................................................. 351.5 369.6 372.0 376.2 382.9 383.5 386.9 394.7 394.3 400.5 401.7 36 71.7 84.0 83.8 87.8 84.9 88.0 90.8 91.8 91.1 96.9 94.2 37 Total capital accounts2......................... 58.6 60.2 60.6 61.2 63.7 61.8 62.1 62.4 62.7 63.3 63.4 38 Memo: Number of banks................... 5,759 5,692 5,686 5,680 5,669 5,659 5,659 5,654 5,645 5,638 5,638 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) 1 773,701 827,696 854,734 914,783 443,959 476,610 488,240 523,000 Loans: 2 Gross..................................................................... 539,021 578,734 601,122 657,513 315,628 340,691 351,311 384,722 3 Net.......................................................................... 520,976 560,076 581,143 636,323 305,280 329,971 339,955 372,702 Investments: 4 U.S. Treasury securities.................................... 90,947 101,461 100,568 99,333 49,688 55,727 r53,345 52,244 5 143,731 147,500 rl53,053 157,937 78,642 80,191 r83,583 86,033 6 Cash assets.................................................................... 124,072 129,562 130,726 159,264 75,488 76,072 74,641 92,050 7 942,519 1,003,969 1,040,945 1,129,711 548,702 583,304 599,743 651,360 8 Deposits......................................................................... 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 13 459,753 484,467 507,324 536,899 263,147 276,296 285,915 302,795 14 Borrowings................................................................... 63,828 75,291 81,137 89,332 45,187 54,421 57,283 63,218 15 Total capital accounts................................................ 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.................................... 136,915 144,000 144,597 152,518 192,825 207,085 221,896 239,265 Loans: 18 Gross..................................................................... 98,889 102,277 102,117 110,247 124,503 135,766 ' 147,694 162,543 19 Net......................................................................... 96,037 99,474 99,173 107,210 119,658 130,630 >•142,015 156,411 Investments: 20 U.S. Treasury securities.................................... 16,323 18,849 19,296 18,179 24,934 26,884 27,926 28,909 21 21,702 r22,874 23,183 24,091 43,387 44,434 r46,275 47,812 22 30,422 32,859 35,918 42,305 18,161 20,631 20,166 24,908 23 179,649 189,578 195,452 210,441 214,167 231,086 245,749 267,910 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 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 72,624 75,178 76,827 80,216 123,980 132,993 144,581 153,887 30 15,300 17,310 19,697 21,729 3,339 3,559 4,155 4,384 31 12,791 13,199 13,441 14,184 16,696 17,542 18,919 19,905 32 1,029 1,023 1,019 1,014 8,597 8,639 8,705 8,729 Noninsured nonmember Total nonmember 33 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 *•168,559 185,230 35 Net......................................................................... 13,092 16,209 20,679 22,484 132,751 146,840 *•162,694 178,896 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 *•47,357 48,662 38 4,362 6,496 8,330 9,458 22,524 27,127 28,496 34,367 39 21,271 26,790 33,390 36,433 235,439 257,877 279,139 304,343 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 2,555 3,236 3,588 4,073 66,184 72,884 74,203 84,518 Time: 44 1,292 1,041 1,164 1,089 2,092 1,997 2,152 2,063 45 6,876 7,766 8,392 9,802 130,857 140,760 152,974 163,690 46 Borrowings................................................................... 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics □ July 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 bank:s1 All Insured Non- Asset account commercialcommercial Large banks member banks banks banks1 Total All other New York City of Other City Chicago large2 1 Cash 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 2,566 257,353 255,660 179,183 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 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,in 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 30 Other loans, gross......................................................... 626,347 607,824 456,080 78,064 23,869 169,778 184,368 170,266 31 Less: Unearned income on loans......................... 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 Other loans, net......................................................... 604,955 586,634 441,023 76,266 23,461 164,630 176,666 163,932 Other loans, gross, by category 34 Real estate loans....................................................... 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 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 4,894 4,886 3,535 536 104 1,294 1,601 1,359 42 FHA-insured................................................. 408 401 336 129 23 99 85 12 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 Loans to financial institutions.................................. 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 To domestic commercial banks......................... 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 Instalment loans..................................................... 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 Mobile homes............................................... 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 Single-payment loans to individuals................. 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 74 Total assets..................................................................... 1,166,146 1,129,712 861,802 164,045 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 City Chicago large2 75 Demand deposits......................................................... 382,987 377,034 292,842 68,192 11,825 104,931 107,895 90,145 76 Mutual savings banks............................................ 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 84 Time deposits............................................................... 337,137 326,837 238,124 35,766 13,922 85,562 102,874 99,013 100 100 78 1 77 23 86 Mutual savings banks............................................ 334 319 310 120 84 84 21 24 87 Other individuals, partnerships, and corpora- 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 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 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 All other................................................................... 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 4,253 102 Brokers and dealers............................................... 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 1,537 107 Other liabilities........................................................... 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 HI Preferred stock...................................................... 85 79 32 2 30 53 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 16,825 620,399 601,938 438,957 75,204 23,171 163,726 176,856 181,442 161,461 153,976 126,665 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 Other 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 Time deposits of $100,000 or more........................ 165,793 158,867 130,705 30,344 11,606 55,555 33,200 35,088 139,596 134,850 110,418 25,951 9,885 46,062 28,520 29,177 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 banks 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 ♦ 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 □ July 1978 1.27 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1978 Account May 3 May 10 May 17 May 24 May 31? June Ip June 14*» June 21 p June 28*> 1 Total loans and investments..................................... 456,305 456,142 459,618 456,724 468,035 467,777 466,781 464,816 464,623 Loans: 2 Federal funds sold1................................................ 24,822 24,861 27,310 25,122 31,150 28,456 28,786 25,140 25,790 3 To commercial banks...................................... 19,265 19,062 19,670 18,821 24,739 20,465 19,915 19,519 20,435 To brokers and dealers involving— 4 U.S. Treasury securities.............................. 2,717 2,965 4,575 3,534 3,384 5,285 5,612 3,459 2,842 5 Other securities.............................................. 607 547 585 603 493 520 578 587 546 6 To others............................................................. 2,233 2,287 2,480 2,164 2,534 2,186 2,681 1,575 1,967 7 Other, gross............................................................. 328,880 328,726 331,396 331,077 335,620 336,660 335,334 338,067 338,792 8 Commercial and industrial............................. 131,564 132,057 132,312 132,404 134,552 133,709 133,702 135,113 135,528 9 Agricultural........................................................ 4,834 4,887 4,927 A,919 5,001 5,019 5,120 5,082 5,094 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities.......................... 1,045 1,023 1,755 1,324 1,255 2,222 1,571 1,243 899 11 Other securities.......................................... 8,638 7,915 8,355 8,255 8,160 9,007 8,271 8,591 8,680 To others: 12 U.S. Treasury securities.......................... 101 103 101 99 102 100 101 100 100 13 Other securities.......................................... 2,622 2,636 2,621 2,646 2,695 2,683 2,662 2,653 2,656 To nonbank financial institutions: 14 Personal and sales finance cos., etc.......... 7,902 7,731 7,998 7,604 7,932 8,283 7,949 7,882 7,915 15 Other............................................................... 15,034 15,083 15,126 14,899 15,122 15,122 15,073 14,992 15,078 16 Real estate.......................................................... 77,954 78,237 78,635 78,926 79,142 79,300 79,812 80,213 80,530 To commercial banks: 17 Domestic......................................................... 2,194 1,961 2,015 2,245 2,372 2,283 2,319 2,489 2,478 18 Foreign............................................................ 5,592 5,686 5,775 5,800 6,316 6,109 5,896 6,120 6,125 19 Consumer instalment........................................ 48,467 48,535 48,720 49,031 49,246 49,401 49,705 50,041 50,429 20 Foreign govts., official institutions, etc........ 1,541 1,562 1,558 1,538 1,561 1,530 1,531 1,530 1,565 21 All other loans.................................................. 21,392 21,310 21,498 21,327 22,164 21,892 21,622 22,018 21,715 22 Less: Loan loss reserve and unearned income on loans.............................................. 9,813 9,894 9,971 10,054 10,030 10,140 10,192 10,254 10,222 23 Other loans, net...................................................... 319,067 318,832 321,425 321,023 325,590 326,520 325,142 327,813 328,570 Investments: 24 U.S. Treasury securities........................................ 44,335 44,265 43,342 43,113 43,424 44,479 44,577 44,247 42,742 25 Bills...................................................................... 4,811 4,879 A,121 4,615 4,922 5,721 6,037 6,164 4,731 Notes and bonds, by maturity: 26 Within 1 year................................................. 8,475 8,443 7,760 7,752 7,621 7,595 7,547 7,542 7,379 27 1 to 5 years..................................................... 26,297 26,163 25,929 25,669 25,899 26,203 25,965 25,667 25,754 28 After 5 years.................................................. 4,752 4,780 4,926 5,077 4,982 4,960 5,028 4,874 4,878 68,081 68,184 67,541 67,466 67,871 68,322 68,276 67,616 67,521 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills.......................................................... 7,949 7,873 7,233 7,110 7,027 7,090 6,765 6,308 6,245 31 All other.......................................................... 44,313 44,548 44,441 44,477 44,608 44,923 44,875 44,592 44,519 Other bonds, corporate stocks, and securities: 32 Certificates of participation2...................... 2,864 2,873 2,864 2,873 2,893 2,879 2,888 2,888 2,868 33 All other, including corporate stocks----- 12,955 12,890 13,003 13,006 13,343 13,430 13,748 13,828 13,889 34 Cash items in process of collection....................... 45,419 41,635 44,172 39,909 55,797 42,304 45,795 45,549 43,789 35 Reserves with F.R. Banks....................................... 23,809 22,398 19,513 22,301 22,551 18,928 18,262 23,305 24,252 36 Currency and coin..................................................... 5,830 6,174 6,235 6,517 6,525 6,183 6,518 6,563 6,651 13,905 14,439 13,809 13,653 17,748 14,366 14,542 14,368 14,422 38 Investments in subsidiaries not consolidated.... 3,187 3,173 3,182 3,160 3,194 3,259 3,266 3,191 3,188 39 Other assets................................................................. 64,101 64,319 62,593 62,118 64,742 63,948 63,033 62,123 63,291 612,556 608,280 609,122 604,382 638,592 616,765 618,197 620,515 620,216 Deposits: 41 Demand deposits.................................................... 188,146 181,401 183,770 177,634 206,915 185,624 191,835 191,728 187,760 133,580 128,823 133,641 129,085 144,860 133,875 139,590 136,447 133,823 6,510 5,928 5,748 5,503 6,144 5,460 5,472 6,049 6,182 44 U.S. Govt............................................................ 3,714 2,121 1,643 1,198 1,325 1,150 1,575 4,241 2,909 Domestic interbank: 45 Commercial.................................................... 26,886 27,931 26,939 25,734 35,972 27,817 28,576 28,258 27,540 46 Mutual savings.............................................. 998 828 778 758 893 810 836 800 792 Foreign: 47 Governments, official institutions, etc.... 1,167 1,029 993 1,137 1,639 1,124 1,151 1,154 1,392 6,568 6,905 6,628 6,905 7,782 7,364 6,651 6,720 6,959 49 Certified and officers’ checks.......................... 8,723 7,836 7,400 7,314 8,300 8,024 7,984 8,059 8,163 50 Time and savings deposits 3.................................. 261,453 262,778 263,278 265,714 265,176 266,088 265,404 264,068 266,884 93,199 93,248 93,382 93,475 93,404 93,375 93,006 92,872 92,879 52 Time: 168,254 169,530 169,896 172,239 111,112 172,713 172,398 171,196 174,005 53 Individuals, partnerships, and corps......... 128,299 129,148 129,735 131,652 131,673 132,690 132,818 132,058 134,298 54 States and political subdivisions................ 25,503 25,746 25,699 26,002 25,684 25,524 24,982 24,757 24,795 55 Domestic interbank...................................... 5,458 5,657 5,611 5,743 5,695 5,821 5,826 5,855 6,329 56 Foreign govts., official institutions, etc... 7,375 7,310 7,304 7,326 7,198 7,185 7,223 6,975 6,993 57 Federal funds purchased, etc.5.............................. 79,294 81,445 77,710 77,425 82,451 81,802 76,134 78,530 78,381 Borrowings from: 2,345 691 1,024 242 667 250 1,240 2,172 1,962 5,914 5,698 6,170 6,255 6,164 6,036 6,687 6,374 7,182 29,640 30,485 31,490 31,295 31,231 30,953 30,840 31,654 31,912 61 Total equity capital and subordinated notes/debentures7............................................. 45,764 45,782 45,680 45,817 45,988 46,012 46,057 45,989 46,135 * 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 May 3 May 10 May 17 May 24 May 31^ June lp June 14» June 21? June 28p 1 Total loans and investments..................................... 92,099 91,859 93,456 92,567 96,108 95,337 94,507 94,865 93,415 Loans: 2 Federal funds sold1................................................ 5,101 5,114 5,404 5,235 6,240 4,376 5,891 5,873 5,493 3 To commercial banks...................................... 3,025 2,771 3,016 3,039 3,717 2,045 3,771 3,598 3,361 To brokers and dealers involving— 4 U.S. treasury securities................................ 1,535 1,693 1,893 1,683 1,666 1,774 1,457 1,821 1,352 5 Other securities.............................................. 1 13 12 13 13 22 27 19 10 6 To others............................................................. 540 637 483 500 844 535 636 435 770 7 Other gross.............................................................. 68,105 67,693 69,251 68,671 70,830 71,722 69,535 70,378 70,265 8 Commercial and industrial.............................. 34,277 34,284 34,463 34,472 35,705 35,210 35,000 35,418 35,653 9 Agricultural........................................................ 158 171 179 191 188 176 176 161 156 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities.......................... 873 875 1,521 1,205 1,141 2,067 1,415 1,092 774 11 Other securities.......................................... 4,314 4,069 4,395 4,330 4,226 4,790 4,228 4,575 4,493 To others: 12 U.S. Treasury securities.......................... 26 25 25 25 25 25 25 25 26 13 Other securities.......................................... 348 351 352 352 354 346 357 357 361 To nonbank financial institutions: 14 Personal and sales finance cos., etc........... 2,748 2,612 2,787 2,528 2,691 2,916 2,605 2,693 2,691 15 Other............................................................... 4,750 4,786 4,755 4,685 4,744 4,720 4,674 4,624 4,647 16 Real estate.......................................................... 9,008 9,017 9,025 9,066 9,014 9,012 9,074 9,067 9,078 To commercial banks: 17 Domestic......................................................... 738 638 635 749 872 694 718 826 770 18 Foreign............................................................ 2,385 2,442 2,563 2,503 2,848 2,796 2,558 2,715 2,731 19 Consumer instalment....................................... 4,418 4,434 4,457 4,475 4,485 4,508 4,551 4,565 4,608 20 Foreign govts, official institutions, etc.......... 217 239 230 244 249 272 251 281 291 21 All other loans................................................... 3,845 3,750 3,864 3,846 4,288 4,190 3,903 3,979 3,986 22 Less: Loan loss reserve and unearned income on loans.................................................... 1,697 1,712 1,728 1,762 1,754 1,794 1,792 1,792 1,754 23 Other loans, net..................................................... 66,408 65,981 67,523 66,909 69,076 69,928 67,743 68,586 68,511 Investments: 24 U.S. Treasury securities........................................ 9,596 9,742 9,572 9,621 9,856 10,122 10,044 9,652 8,770 25 Bills...................................................................... 1,156 1,512 1,280 1,416 1,592 1,973 2,153 1,970 1,103 Notes and bonds, by maturity: 26 Within 1 year................................................. 1,188 1,241 1,158 1,116 1,089 1,031 996 1,093 1,002 27 1 to 5 years..................................................... 6,403 6,171 6,166 5,912 6,024 6,093 5,809 5,639 5,725 28 After 5 years................................................... 849 818 968 1,177 1,151 1,025 1,086 950 940 29 Other securities....................................................... 10,994 11,022 10,957 10,802 10,936 10,911 10,829 10,754 10,641 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills. 1,840 1,779 1,604 1,513 1,508 1,543 1,500 1,604 1,631 31 All other......................................................... 7,254 7,233 7,250 7,123 7,173 7,234 7,069 6,932 6,861 Other bonds, corporate stocks, and securities: 32 Certificates of participation2...................... 468 468 488 451 451 454 479 462 458 33 All other, including corporate stocks.... 1,432 1,542 1,615 1,715 1,804 1,680 1,781 1,756 1,691 34 Cash items in process of collection....................... 14,286 14,902 13,877 12,892 18,791 14,007 15,153 15,350 15,393 6,524 5,345 4,639 5,959 8,025 5,039 4,171 5,472 5,849 36 Currency and coin..................................................... 898 929 916 930 950 927 975 937 917 37 Balances with domestic banks................................ 6,793 7,598 7,179 6,785 9,008 7,454 7,528 6,855 7,026 38 Investments in subsidiaries not consolidated.... 1,625 1,628 1,635 1,627 1,641 1,654 1,652 1,653 1,653 25,342 25,243 23,783 23,991 25,803 24,987 25,109 24,760 25,521 40 Total assets/total liabilities...................................... 147,567 147,504 145,485 144,751 160,326 149,405 149,095 149,892 149,774 Deposits: 52,048 51,393 49,882 49,066 63,243 51,004 53,652 54,052 53,312 42 Individuals, partnerships, and corps............. 27,412 26,024 26,960 26,231 31,909 26,964 28,518 28,369 27,783 552 428 524 564 533 506 481 609 559 44 U.S. Govt............................................................ 667 380 142 132 146 115 181 783 429 Domestic interbank: 12,610 14,150 12,618 12,190 19,130 12,928 14,299 13,882 13,794 46 Mutual savings.............................................. 517 426 396 389 483 411 437 390 404 Foreign: 47 Governments, official institutions, etc.... 925 830 779 917 1,407 888 940 931 1,177 48 Commercial banks........................................ 4,875 5,262 5,085 5,206 5,963 5,444 5,009 5,144 5,204 49 Certified and officers’ checks......................... 4,490 3,893 3,378 3,437 3,672 3,748 3,787 3,944 3,962 46,190 46,267 46,213 46,831 46,566 46,390 46,088 45,807 46,656 9,965 9,943 9,990 9,975 9,908 9,935 9,915 9,932 9,888 36,225 36,324 36,223 36,856 36,658 36,455 36,173 35,875 36,768 53 Individuals, partnerships and corps.......... 27,789 27,820 27,790 28,215 28,083 28,012 27,737 27,558 28,270 54 States and political subdivisions............... 1,765 1,791 1,880 1,880 1,871 1,840 1,791 1,730 1,752 55 Domestic interbank.................................... 1,734 1,804 1,799 2,362 1,869 1,878 1,818 1,803 1,962 56 Foreign govts., official institutions, etc... 4,130 4,100 4,067 4,129 4,125 4,028 4,121 4,075 4,074 57 Federal funds purchased, etc.5............................. 19,842 20,854 19,463 19,312 21,264 22,572 19,705 19,691 18,839 Borrowings from: 695 0 262 0 0 0 380 440 510 2,918 2,761 2,928 2,946 2,823 2,950 3,173 3,144 3,386 12,870 13,203 13,702 13,562 13,355 13,398 12,998 13,663 13,991 61 Total equity capital and subordinated notes/ 13,004 13,026 13,035 13,034 13,075 13,091 13,099 13,095 13,080 1 Includes securities purchased under agreements to resell. 5 Includes securities sold under agreements to repurchase. 2 Federal agencies only. 6 Includes minority interest in consolidated subsidiaries and deferred 3 Includes time deposits of U.S. Govt, and of foreign banks, which tax portion of reserves for loans. are not shown separately. 7 Includes reserves for securities and contingency portion of reserves 4 For amounts of these deposits by ownership categories, see Table 1.30. for loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Financial Statistics □ July 1978 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS OUTSIDE NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1978 Account May 3 May 10 May 17 May 24 May 31^ June June 14*> June 21 p June 28p 1 Total loans and investments..................................... 364,206 364,283 366,162 364,157 371,927 372,440 372,274 369,951 371,208 Loans: 2 Federal funds sold1................................................ 19,721 19,747 21,906 19,887 24,910 24,080 22,895 19,267 20,297 3 To commercial banks...................................... 16,240 16,291 16,654 15,782 21,022 18,420 16,144 15,921 17,074 To brokers and dealers involving— 4 U.S. treasury securities................................ 1,182 1,272 2,682 1,851 1,718 3,511 4,155 1,638 1,490 5 Other securities.............................................. 606 534 573 590 480 498 551 568 536 6 To others............................................................. 1,693 1,650 1,997 1,664 1,690 1,651 2,045 1,140 1,197 7 Other, gross............................................................. 260,775 261,033 262,145 262,406 264,790 264,938 265,799 267,689 268,527 8 Commercial and industrial.............................. 97,287 97,773 97,849 97,932 98,847 98,499 98,702 99,695 99,875 9 Agricultural........................................................ 4,676 4,716 4,748 4,788 4,813 4,843 4,944 4,921 4,938 For purchasing or carrying securities: To brokers and dealers: 10 U.S. treasury securities........................... 172 148 234 119 114 155 156 151 125 11 Other securities.......................................... 4,324 3,846 3,960 3,925 3,934 4,217 4,043 4,016 4,187 To others: 12 U.S. Treasury securities.......................... 75 78 76 74 77 75 76 75 74 13 Other securities.......................................... 2,274 2,285 2,269 2,294 2,341 2,337 2,305 2,296 2,295 To nonbank financial institutions: 14 Personal and sales finance cos., etc........... 5,154 5,119 5,211 5,076 5,241 5,367 5,344 5,189 5,224 15 Other............................................................... 10,284 10,297 10,371 10,214 10,378 10,402 10,399 10,368 10,431 16 Real estate.......................................................... 68,946 69,220 69,610 69,860 70,128 70,288 70,738 71,146 71,452 To commercial banks: 17 Domestic......................................................... 1,456 1,323 1,380 1,496 1,500 1,589 1,601 1,663 1,708 18 Foreign........................................................... 3,207 3,244 3,212 3,297 3,468 3,313 3,338 3,405 3,394 19 Consumer instalment....................................... 44,049 44,101 44,263 44,556 44,761 44,893 45,154 45,476 45,821 20 Foreign govts., official institutions, etc........ 1,324 1,323 1,328 1,294 1,312 1,258 1,280 1,249 1,274 21 All other loans.................................................. 17,547 17,560 17,634 17,481 17,876 17,702 17,719 18,039 17,729 22 Less: Loan reserve and unearned income on loans.............................................................. 8,116 8,182 8,243 8,292 8,276 8,346 8,400 8,462 8,468 23 Other loans, net...................................................... 252,659 252,851 253,902 254,114 256,514 256,592 257,399 259,227 260,059 Investments: 24 U.S. Treasury securities........................................ 34,739 34,523 33,770 33,492 33,568 34,357 34,533 34,595 33,972 25 Bills...................................................................... 3,655 3,367 3,447 3,199 3,330 3,748 3,884 4,194 3,628 Notes and bonds, by maturity: 26 Within 1 year................................................. 7,287 7,202 6,602 6,636 6,532 6,564 6,551 6,449 6,377 27 1 to 5 years..................................................... 19,894 19,992 19,763 19,757 19,875 20,110 20,156 20,028 20,029 28 After 5 years................................................... 3,903 3,962 3,958 3,900 3,831 3,935 3,942 3,924 3,938 29 Other securities....................................................... 57,087 57,162 56,584 56,664 56,935 57,411 57,447 56,862 56,880 Obligations of States and political sub­ divisions : 30 Tax warrants, short-term notes, and bills. 6,109 6,094 5,629 5,597 5,519 5,547 5,265 4,704 4,614 31 Allother......................................................... 37,059 37,315 37,191 37,354 37,435 37,689 37,806 37,660 37,658 Other bonds, corporate stocks, and securities: 32 Certificates of participation2...................... 2,396 2,405 2,376 2,422 2,442 2,425 2,409 2,426 2,410 33 All other, including corporate stocks----- 11,523 11,348 11,388 11,291 11,539 11,750 11,967 12,072 12,198 34 Cash items in process of collection....................... 31,133 26,733 30,295 27,017 37,006 28,297 30,642 30,199 28,396 35 Reserves with F.R. Banks....................................... 17,285 17,053 14,874 16,342 14,526 13,889 14,091 17,833 18,403 36 Currency and coin..................................................... 4,932 5,245 5,319 5,587 5,575 5,256 5,543 5,626 5,734 37 Balances with domestic banks................................ 7,112 6,841 6,630 6,868 8,740 6,912 7,014 7,513 7,396 38 Investments in subsidiaries not consolidated.... 1,562 1,545 1,547 1,533 1,553 1,605 1,614 1,538 1,535 39 Other assets................................................................. 38,759 39,076 38,810 38,127 38,939 38,961 37,924 37,963 37,770 464,989 460,776 463,637 459,631 478,266 467,360 469,102 470,623 470,442 Deposits: 41 Demand deposits.................................................... 136,098 130,008 133,888 128,568 143,672 134,620 138,183 137,676 134,448 42 Individuals, partnerships, and corps............. 106,168 102,799 106,681 102,854 112,951 106,911 111,072 108,078 106,040 43 States and political subdivisions................... 5,958 5,500 5,224 4,939 5,611 4,954 4,991 5,440 5,623 44 U.S. Govt........................................................... 3,047 1,741 1,501 1,066 1,179 1,035 1,394 3,458 2,480 Domestic interbank: 45 Commercial.................................................... 14,276 13,781 14,321 13,544 16,842 14,889 14,277 14,376 13,746 46 Mutual savings.............................................. 481 402 382 369 410 399 399 410 388 Foreign: 47 Governments, official institutions, etc.... 242 199 214 220 232 236 211 223 215 48 Commercial banks........................................ 1,693 1,643 1,543 1,699 1,819 1,920 1,642 1,576 1,755 49 Certified and officers’ checks......................... 4,233 3,943 4,022 3,877 4,628 4,276 4,197 4,115 4,201 50 Time and savings deposits*.................................. 215,263 216,511 217,065 218,883 218,610 219,698 219,316 218,261 220,228 51 Savings4............................................................... 83,234 83,305 83,392 83,500 83,496 83,440 83,091 82,940 82,991 52 Time..................................................................... 132,029 133,206 133,673 135,383 135,114 136,258 136,225 135,321 137,237 53 Individuals, partnerships, and corps......... 100,510 101,328 101,945 103,437 103,590 104,678 105,081 104,500 106,028 54 States and political subdivisions............... 23,738 23,955 23,819 24,122 23,813 23,684 23,191 23,027 23,043 55 Domestic interbank...................................... 3,724 3,853 3,812 3,381 3,826 3,943 4,008 4,052 4,367 56 Foreign govts., official institutions, etc... 3,245 3,210 3,237 3,197 3,073 3,157 3,102 2,900 2,919 57 Federal funds purchased, etc. 5............................... 59,452 60,591 58,247 58,113 61,187 59,230 56,429 58,839 59,542 Borrowings from: 58 F.R. Banks.............................................................. 1,650 691 762 242 667 250 860 1,732 1,452 59 Others...................................................................... 2,996 2,937 3,242 3,309 3,341 3,086 3,514 3,230 3,796 60 Other liabilities, etc.6................................................ 16,770 17,282 17,788 17,733 17,876 17,555 17,842 17,991 17,921 61 Total equity capital and subordinated notes/debentures 7.............................................. 32,760 32,756 32,645 32,783 32,913 32,921 32,958 32,894 33,055 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 May 3 May 10 May 17 May 24 May 31^ June Ip June 14^ June 2\p June 28*> Total loans (gross) and investments adjusted1 444,659 445,013 447,904 445,712 450,954 455,169 454,739 453,062 451,932 2 New York City banks...................................... 90,033 90,162 91,533 90,541 93,273 94,392 91,810 92,233 91,038 354,626 354,851 356,371 355,171 357,681 360,777 362,929 360,829 360,894 Total loans (gross), adjusted 332,243 332,564 337,021 335,133 339,659 342,368 341,886 341,199 341,669 5 New York City banks...................................... 69,443 69,398 71,004 70,118 72,481 73,359 70,937 71,827 71,627 262,800 263,166 266,017 265,015 267,178 269,009 270,949 269,372 270,042 Demand deposits, adjusted2 112,127 109,714 111,016 110,793 113,821 114,353 115,889 113,680 113,522 8 New York City banks...................................... 24,485 21,961 23,245 23,852 25,176 23,954 24,019 24,037 23,696 9 Banks outside New York City....................... 87,642 87,753 87,771 86,941 88,645 90,399 91,870 89,643 89,826 Large negotiable time CD’s included in time and savings deposits3 Total: 82,990 84,003 84,498 86,476 86,075 86,741 86,234 85,004 87,491 25,229 25,358 25,313 26,007 25,672 25,464 25,076 24,871 25,820 57,761 58,645 59,185 60,469 60,403 61,277 61,158 60,133 61,671 Issued to IPC’s: 58,034 58,702 59,066 60,795 60,723 61,315 61,045 60,033 61,998 18,292 18,372 18,263 18,723 18,457 18,319 17,918 17,795 18,540 39,742 40,330 40,803 42,072 42,266 42,996 43,127 42,238 43,458 Issued to others: 24,956 25,301 25,432 25,681 25,352 25,426 25,189 24,971 25,493 6,937 6,986 7,050 7,284 7,215 7,145 7,158 7,076 7,280 18 Banks outside New York City....................... 18,019 18,315 18,382 18,397 18,137 18,281 18,031 17,895 18,213 All other large time deposits4 Total: 32,535 32,813 32,652 33,044 32,881 32.851 32,749 32,707 32,861 20 New York City banks...................................... 6,102 6,171 6,141 6,176 6,229 6,153 6,215 6,148 6,119 21 Banks outside New York City....................... 26,433 26,642 26,511 26,868 26,652 26,698 26,534 26,559 26,742 Issued to IPC’s: 18,320 18,496 18,696 18,893 18,910 19,022 19,167 19,263 19,363 4,757 4,807 4,910 4,965 5,013 4,997 5,065 5,027 5,007 13,563 13,689 13,786 13,928 13,897 14,025 14,102 14,236 14,356 Issued to others: 14,215 14,317 13,956 14,151 13,971 13,829 13,582 13,444 13,498 1,345 1,364 1,231 1,211 1,216 1,156 1,150 1,121 1,112 12,870 12,953 12,725 12,940 12,755 12,673 12,432 12,323 12,386 Savings deposits, by ownership category Individuals and nonprofit organizations: 86,836 86,881 86,970 87,045 87,018 86,890 86,565 86,399 86,461 29 New York City banks...................................... 9,202 9,194 9,199 9,194 9,171 9,160 9,118 9,106 9,125 30 Banks outside New York City....................... 77,634 77,687 77,771 77,851 11 M l 77,730 77,447 77,293 77,336 Partnerships and corporations for profit:5 4,909 4,962 4,967 5,036 5,066 5,072 5,008 4,966 4,986 32 New York City banks...................................... 473 476 480 485 486 489 481 476 474 33 Banks outside New York City....................... 4,436 4,486 4,487 4,551 4,580 4,583 4,527 4,490 4,512 Domestic governmental units: 1,418 1,379 1,419 1,368 1,302 1,387 1,396 1,482 1,404 269 260 295 281 244 271 290 334 270 1,149 1,119 1,124 1,087 1,058 1,116 1,106 1,148 1,134 All other:6 36 26 26 26 18 26 37 25 28 21 13 16 15 1 15 26 16 19 39 Banks outside New Yotk City....................... 15 13 10 11 11 11 11 9 9 Gross liabilities of banks to their foreign branches 4,980 4,324 4,618 4,200 4,983 4,763 5,228 4,699 5,462 2,535 2,265 2,438 2,158 2,785 2,914 2,785 2,560 2,493 2,445 2,059 2,180 2,042 2,198 1,849 2,443 2,139 2,969 Loans sold outright to selected institutions by all large banks7 2,273 2,193 2,176 2,191 2,251 2,314 2,282 2,303 2,237 246 246 249 251 249 250 253 256 252 45 All others............................................................... 1,944 1,951 1,955 1,928 1,926 1,957 1,933 1,945 2,004 1 Exclusive of loans and Federal funds transactions with domestic 5 Other than commercial banks. commercial banks. . 6 Domestic and foreign commercial banks, and official international 2 All demand deposits except U.S. Govt, and domestic commercial organizations. banks, less cash items in process of collection. 7 To bank’s own foreign branches, nonconsolidated nonbank af­ 3 Certificates of deposit (CD’s) issued in denominations of $100,000 or filiates of the bank, the bank’s holding company (if not a bank), and more. nonconsolidated nonbank subsidiaries of the holding company. 4 All other time deposits issued in denominations of $100,000 or more 8 Data revised beginning July 7, 1977, due to reclassifications at one not included in large negotiable (CD’s). large bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Financial Statistics □ July 1978 1.31 LARGE WEEKLY REPORTING COMMERCIAL BANKS Commercial and Industrial Loans Millions of dollars Outstanding Net change during— Industry classification 1978 1978 1978 May 31 June 7 June 14 June 21 June 28* Ql' Q2p Apr. May June? Total loans classified2 1 Total......................................................... 109,635 108,668 108,688 109,717 110,274 2,059 5,470 '1,016 3,815 639 Durable goods manufacturing: 2 Primary metals.................................. 2,896 2,887 2,820 2,832 2,798 -84 42 '41 99 -98 3 Machinery.......................................... 5,436 5,376 5,384 5,520 5,404 491 170 39 163 -32 4 Transportation equipment............... 2,722 2,682 2,707 2,786 2,799 447 76 -89 88 77 5 Other fabricated metal products... 2,478 2,466 2,477 2,474 2,453 351 181 '181 25 -25 6 Other durable goods......................... 3,792 3,833 3,827 3,949 3,909 52 376 82 177 117 Nondurable goods manufacturing: 7 Food, liquor, and tobacco............... 4,233 4,231 4,176 4,195 4,260 52 407 12 368 27 8 Textiles, apparel, and leather..... 3,911 3,988 4,028 4,101 4,139 280 567 '121 218 228 9 Petroleum refining............................. 2,589 2,536 2,539 2,621 2,636 -221 158 89 22 47 10 Chemicals and rubber....................... 3,470 3,578 3,535 3,498 3,570 532 155 58 -3 100 11 Other nondurable goods................. 2,247 2,234 2,248 2,278 2,267 -62 61 -21 62 20 12 Mining, including crude petroleum and natural gas.............................. 10,158 10,146 10,248 10,448 10,405 447 883 335 301 247 Trade: 13 Commodity dealers........................... 2,540 2,131 2,109 2,061 2,067 303 -187 -71 357 -473 8,786 8,804 8,796 8,896 8,938 800 449 208 89 152 15 Retail................................................... 8,256 8,346 8,059 8,282 8,274 564 649 '211 420 18 5,315 5,341 5,373 5,511 5,441 364 -147 '-335 62 126 17 Communication..................................... 1,679 1,621 1,615 1,629 1,665 11 249 149 114 -14 18 Other public utilities............................. 5,160 5,046 4,894 4,992 5,010 -568 38 64 124 -150 19 Construction.......................................... 4,999 5,016 5,017 5,084 5,110 201 475 142 222 111 20 Services.................................................... 13,127 13,149 13,241 13,266 13,471 712 1,130 '319 467 344 21 All other domestic loans..................... 7,879 7,710 7,881 7,842 7,844 -26 386 '360 61 -35 22 Bankers acceptances............................. 3,306 2,950 3,116 2,884 3,261 -2,533 -429 -783 399 -45 23 Foreign commercial and industrial loans................................................ 4,656 4,597 4,598 4,568 4,553 -54 -219 -96 -20 -103 Memo Items: 24 Commercial paper included in total classified loans1............................. 97 71 -27 -60 -7 -27 -26 25 Total commercial and industrial loans of all large weekly re­ porting banks................................. 134,552 133,709 133,702 135,113 135,528 3,006 6,692 '1,710 4,006 976 1978 1978 1978 Feb. 22 Mar. 29 Apr. 26 May 31 June 28p Ql' Q2p Apr. May June* “Term” loans classified3 26 Total..................................................... r48,837 '49,368 '50,159 51,204 51,362 1,902 1,994 '791 1,045 158 Durable goods manufacturing: 27 Primary metals................................... 1,564 1,579 1,671 1,736 1,706 -13 127 92 65 -30 ••2,475 '2,531 2,542 2,622 2,576 205 45 '11 80 -46 29 Transportation equipment............... 1,466 1,489 '1,452 1,460 1,420 152 -69 '-37 8 -40 30 Other fabricated metal products... 877 902 '960 968 994 50 92 '58 8 26 31 Other durable goods......................... 1,602 1,572 1,603 1,625 1,678 -105 106 31 22 53 Nondurable goods manufacturing: 32 Food, liquor, and tobacco............... 1,492 1,522 1,649 1,676 1,671 69 149 127 27 -5 33 Textiles, apparel, and leather......... 983 1,038 1,083 1,097 1,122 40 84 45 14 25 34 Petroleum refining............................ 2,000 1,873 1,850 1,962 1,947 -174 74 -23 112 -15 35 Chemicals and rubber....................... 2,017 2,116 2,147 2,229 2,412 215 296 31 82 183 3^ Other nondurable goods................. 1,182 1,169 1,093 1,093 1,091 2 -78 -76 -2 37 Mining, including crude petroleum and natural gas.............................. 6,811 7,084 7,443 7,604 7,760 530 676 359 161 156 Trade: 262 '252 244 254 229 -18 -23 '-8 10 -25 1,928 1,992 '2,084 2,141 2,176 201 184 '92 57 35 '2,542 '2,559 2,703 2,855 2,835 59 276 '144 152 -20 '3,733 '3,871 3,627 3,702 3,738 219 -133 '-244 75 36 908 924 965 980 1,010 47 86 41 15 30 3,855 3,822 3,723 3,770 3,535 -34 -287 -99 47 -235 1,973 2,066 2,085 2,101 2,119 165 53 19 16 18 '5,808 '5,881 '6,039 6,300 6,496 308 615 '158 261 196 46 All other domestic loans..................... '2,758 '2,465 2,576 2,525 2,378 -49 -87 '111 -51 -147 47 Foreign commercial and industrial '2,601 2,661 2,620 2,504 2,469 33 -192 -41 -116 -35 1 Reported for the last Wednesday of each month. all outstanding loans granted under a formal agreement—revolving credit 2 Includes “term” loans, shown below. or standby—on which the original maturity of the commitment was in 3 Outstanding loans with an original maturity of more than 1 year and excess of 1 year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Deposits and Commercial Paper A25 1.32 GROSS DEMAND DEPOSITS of Individuals, Partnerships, and Corporations Billions of dollars, estimated daily-average balances At commercial banks 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 3 Nonfinancial business................................................ 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. Nov. Dec. Jan. Feb. Mar. Apr. May 7 All holders, IPC.......................................................... 119.7 124.4 128.5 133.0 139.1 137.1 132.5 131.9 135.6 134.3 14.8 15.6 17.5 17.9 18.5 18.3 18.1 18.2 17.9 18.1 66.9 69.9 69.7 72.2 76.3 73.8 70.7 68.9 70.9 70.7 10 Consumer...................................................................... 29.0 29.9 31.7 33.4 34.6 35.2 34.4 35.4 37.6 36.0 11 Foreign.......................................................................... 2.2 2.3 2.6 2.5 2.4 2.4 2.4 2.3 2.2 2.4 12 Other.............................................................................. 6.8 6.6 7.1 7.0 7.4 7.4 6.9 7.0 7.0 7.1 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. Nov. Dec. Jan. Feb. Mar. Apr. May Commercial paper (seasonally adjusted) 1All issuers...................................................................... 48,459 53,025 65,112 62,753 65,112 65,488 65,477 67,354 70,183 71,213 Financial companies:1 Dealer-placed paper:2 2 6,202 7,250 8,871 8,497 8,871 9,018 8,918 8,889 9,670 10,314 3 Bank-related......................................................... 1,762 1,900 2,132 1,980 2,132 2,035 1,997 1,993 2,078 2,217 Directly-placed paper: 3 4 Total...................................................................... 31,374 32,500 40,399 38,954 40,399 41,586 42,137 42,781 44,220 44,664 5 Bank-related......................................................... 6,892 5,959 7,003 6,567 7,003 7,109 7,616 8,031 7,889 9,258 6 Nonfinancial companies4.......................................... 10,883 13,275 15,842 15,302 15,842 14,884 14,422 15,684 16,293 16,235 Dollar acceptances (not seasonally adjusted) 7 Total.............................................................................. 18,727 22,523 25,654 24,088 25,654 25,252 25,411 26,181 26,256 26,714 Held by: 8 Accepting banks....................................................... 7,333 10,442 10,434 8,952 10,434 7,785 7,513 7,375 7,091 7,286 9 Own bills.............................................................. 5,899 8,769 8,915 7,702 8,915 6,772 6,583 6,375 6,117 6,365 10 Bills bought......................................................... 1,435 1,673 1,519 1,251 1,519 1,013 931 1,000 974 921 F.R. Banks: 11 Own account.................................... 1 126 991 954 248 954 1 12 Foreign correspondents.................................... 293 375 362 392 362 371 456 522 550 679 13 Others........................................................................ 9,975 10,715 13,904 14,495 13,904 17,096 17,442 18,283 18,614 18,749 Based on: 14 Imports into United States.................................. 3,726 4,992 6,532 5,973 6,532 6,637 6,842 6,979 7,108 7,027 15 Exports from United States................................. 4,001 4,818 5,895 5,803 5,895 5,840 5,739 6,034 6,216 6,494 16 All other.................................................................... 11,000 12,713 13,227 12,312 13,227 12,774 13,026 13,168 12,932 13,193 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 □ July 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—Nov. 1.............. 6y2 1977—Oct. 7............ 7 Vi 1976—Nov........................ 6.50 1977—Sept........................ 7.13 Oct. 24............ m Dec......................... 6.35 Oct.......................... 7.52 Dec. 13.............. ey4 7.75 1978—Jan. 10............. 8 1977—Jan.......................... 6.25 Dec......................... 7.75 1977—May 13.............. 6 Vi Feb........................ 6.25 31.............. 6ft May 5............ 8 V4 Mar....................... 6.25 1978—Jan.......................... 7.93 May 26............ 8 Vi Apr........................ 6.25 Feb......................... 8.00 1977—Aug. 22.............. 7 May........................ 6.41 8.00 June 16............ 8 Va June........................ 6.75 Apr........................ 8.00 Sept. 16.............. 7% June 30............ 9 July........................ 6.75 May....................... 8.27 Aug......................... 6.83 8.63 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 1........................................................ 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 i....................................................... 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 Mar. Apr. May June June 3 |june 10June 17June 24 July 1 Money market rates 1 Federal funds 1..................... 5.82 5.05 5.54 6.79 6.89 7.36 7.60 7.36 7.47 7.49 7.53 7.78 Prime commercial paper 2 2 90-to 119-day................... 6.26 5.24 5.54 6.75 6.82 7.06 7.59 7.28 7.41 7.61 7.71 7.76 3 4- to 6-month................... 6.33 5.35 5.60 6.80 6.86 7.11 7.63 7.31 7.45 7.66 7.74 7.80 4 Finance company paper, directly placed, 3- to 6-month 3...................................... 6.16 5.22 5.49 6.73 6.74 6.98 7.41 7.23 7.25 7.38 7.46 7.58 5 Prime bankers acceptances, 90-day 4... 6.30 5.19 5.59 6.79 6.92 7.32 7.75 7.48 7.54 7.74 7.89 7.94 Large negotiable certificates of deposit 3-month, secondary market 5. 6.43 5.26 5.58 6.85 7.04 7.42 7.82 7.52 7.54 7.71 7.95 8.04 3-month, primary market 6. 5.15 5.52 6.75 r6.85 7.24 7.68 7.40 7.35 7.59 7.77 8.00 8 Euro-dollar deposits, 3-month 7. 6.97 5.57 6.05 7.27 7.38 7.82 8.33 8.02 8.00 8.09 8.48 8.65 U.S. Govt, securities Bills: 8 Market yields: 9 3-month............................... 5.80 4.98 5.27 6.29 6.29 6.41 6.73 6.62 6.62 6.65 6.79 6.93 10 6-month............................... 6.11 5.26 5.53 6.63 6.73 7.02 7.23 7.14 7.12 7.16 7.31 7.38 11 1-year................................... 6.30 5.52 5.71 6.82 6.96 7.28 7.53 7.37 7.36 7.46 7.64 7.72 Rates on new issue:9 12 3-month............................... 5.838 4.989 5.265 6.319 6.306 6.430 6.707 6.658 6.626 6.618 6.666 6.967 13 6-month............................... 6.122 5.266 5.510 6.644 6.700 7.019 7.200 7.160 7.095 7.121 7.228 7.396 Constant maturities:10 14 1-year........................... 6.76 5.88 6.09 7.31 7.45 7.82 8.09 7.92 7.89 8.03 8.22 8.32 Capital market rates Government notes and bonds U.S. Treasury Constant maturities:10 15 2-year............................. 6.45 7.58 7.74 8.01 8.24 8.11 8.07 8.13 8.36 8.45 16 3-year............................. 7.49 6.77 6.69 7.70 7.85 8.07 8.30 8.19 8.16 8.19 8.40 8.51 17 5-year............................. 7.77 7.18 6.99 7.86 7.98 8.18 8.36 8.27 8.25 8.29 8.43 8.49 18 7-year............................. 7.90 7.42 7.23 7.95 8.06 8.25 8.40 8.34 8.30 8.35 8.46 8.50 19 10-year........................... 7.99 7.61 7.42 8.04 8.15 8.35 8.46 8.41 8.38 8.41 8.49 8.59 20 20-year........................... 8.19 7.86 7.67 8.21 8.32 8.44 8.53 8.49 8.47 8.47 8.55 8.63 21 30-year........................... 8.23 8.34 8.43 8.50 8.49 8.45 8.45 8.52 8.59 Notes and bonds maturing in —11 22 3 to 5 years...................................... 7.55 6.94 6.85 7.76 7.90 8.10 8.31 8.19 8.18 8.22 8.39 8.50 23 Over 10 years (long-term)............ 6.98 6.78 7.06 7.63 7.74 7.87 7.94 7.92 7.88 7.89 7.96 8.02 State and local: Moody’s series:12 24 Aaa.......................... 6.42 5.66 5.20 5.11 5.41 5.57 5.73 5.75 5.65 5.65 5.75 5.85 25 Baa........................... 7.62 7.49 6.12 5.85 5.88 6.14 6.44 6.30 6.40 6.45 6.55 6.50 26 Bond Buyer series 13. 7.05 6.64 5.68 5.61 5.80 6.03 6.22 6.19 6.18 6.16 6.26 6.29 Corporate bonds Seasoned issues 14 All industries.......... 9.57 9.01 8.43 8.80 8.88 9.02 9.13 9.12 9.13 9.10 9.12 9.16 By rating groups: Aaa...................... 8.83 8.43 8.02 8.47 8.56 8.69 8.76 8.79 8.74 8.72 8.76 8.82 Aa........................ 9.17 8.75 8.24 8.66 8.73 8.84 8.95 8.94 8.95 8.93 8.94 9.00 A........................... 9.65 9.09 8.49 8.83 8.93 9.05 9.18 9.15 9.18 9.16 9.18 9.22 Baa...................... 10.61 9.75 8.97 9.22 9.32 9.49 9.60 9.60 9.63 9.58 9.58 9.58 Aaa utility bonds:15 32 New issue........................ 9.40 8.48 8.19 8.71 8.90 8.95 9.09 9.04 9.03 9.13 9.16 33 Recently offered issues. 9.41 8.49 8.19 8.67 8.85 8.98 9.07 9.05 9.06 8.96 9.10 9.18 Dividend/price ratio 34 Preferred stocks. 8.38 7.97 7.60 8.07 8.06 8.11 8.31 8.14 8.25 8.28 8.34 8.38 35 Common stocks. 4.31 3.77 4.56 5.68 5.42 5.20 5.19 5.22 5.07 5.10 5.28 5.32 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 I o Yields on the more actively traded issues adjusted to constant dealers. maturities by the U.S. Treasury, based on daily closing bid prices. 3 Averages of the most representative daily offering rates published by II 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. * 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics □ July 1978 1.37 STOCK MARKET Selected Statistics 1977 1978 Indicator 1975 1976 1977 Dec. Jan. Feb. Mar. Apr. May June 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 51.83 49.89 49.41 49.50 51.75 54.49 54.83 2 Industrial.................................................................. 51.88 60.44 57.84 55.55 53.45 52.80 52.77 55.48 59.14 59.63 3 Transportation....................................................... 30.73 39.57 41.07 39.75 39.15 38.90 38.95 41.19 44.21 44.19 4 Utility........................................................................ 31.45 36.97 40.91 40.36 39.09 39.02 39.26 39.69 39.47 39.41 5 Finance..................................................................... 46.62 52.94 55.23 53.85 50.91 50.60 51.44 55.04 57.95 58.31 6 Standard & Poor’s Corporation (1941-43 = 10) *.. 85.17 102.01 98.18 93.82 90.28 88.98 88.82 92.71 97.41 97.66 7 American Stock Exchange (Aug. 31,1973 = 100). 83.15 101.63 116.18 124.88 121.73 123.35 126.11 133.67 142.26 147.64 Volume of trading (thousands of shares)2 8 New York Stock Exchange.................................. 18,568 21,189 20,936 21,475 20,388 19,400 22,617 34,780 35,261 30,514 9 American Stock Exchange................................... 2,150 2,565 2,514 3,008 2,254 2,300 2,940 4,151 4,869 4,220 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 10,866 10.690 10,901 11,027 11,424 11 Brokers, total..................................................... 5,540 8,166 9,993 9,993 9,839 10,024 10,172 10,510 10,910 12 Margin stock4.............................................. 5,390 7,960 9,740 9,740 9,590 9,780 9,920 10,260 10,660 13 Convertible bonds........................................ 147 204 250 250 246 242 250 248 245 14 Subscription issues...................................... 3 2 3 3 3 2 2 2 1 15 Banks, total....................................................... 960 845 873 873 851 877 855 914 16 Margin stocks............................................... 909 800 827 827 809 838 824 882 17 Convertible bonds........................................ 36 30 30 30 27 25 24 25 18 Subscription issues...................................... 15 15 16 16 15 14 7 7 19 Unregulated nonmargin stock credit at banks5 2,281 ••2,283 2,568 2,568 2,565 2,544 2,544 2,560 Memo: Free credit balances at brokers6 20 Margin-account................................................ 475 585 640 640 660 635 630 715 755 21 Cash-account..................................................... 1,525 1,855 2,060 2,060 1,925 1,875 1,795 2,170 2,395 Margin-account debt at brokers (percentage distribution, end of period) 22 Total............................................ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 By equity class (in per cent):7 23 Under 40................................. 24.0 12.0 18.0 19.0 25.0 25.0 21.0 15.0 24 40-49........................................ 28.8 23.0 36.0 34.0 34.0 34.0 33.0 32.0 25 50-59....................................... 22.3 35.0 23.0 24.0 20.0 20.0 24.0 27.0 26 60-69....................................... 11.6 15.0 11.0 11.0 10.0 10.0 11.0 13.0 27 70-79........................................ 6.9 8.7 6.0 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 6.0 Special miscellaneous-account balances at brokers (end of period) 29 Total balances (millions of dollars) 8... 7,290 8,776 9,910 9,910 9,880 10,150 10,190 10,212 Distribution by equity status (per cent) 30 Net credit status.................................... 43.8 41.3 43.4 43.4 42.4 42.0 42.6 41.9 Debit status, equity of— 31 60 per cent or more.......................... 40.8 47.8 44.9 44.9 43.6 43.0 43.7 46.2 32 Less than 60 per cent....................... 15.4 10.9 11.7 11.7 14.0 14.0 13.5 11.9 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 Vi-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 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.r May** Savings and loan associations 1 Assets......................................... 295,545 338,233 391,907 444,383 450,563 455,644 459,282 464,279 469,726 475,320 480,986 487,083 2 Mortgages................................ 249,301 278,590 323,005 366,838 371,714 376,468 381,216 384,235 387,644 392,479 397,335 402,358 3 Cash and investment securities1............................. 23,251 30,853 35,724 39,709 40,642 40,522 39,197 40,356 41,646 41,870 41,901 42,498 4 Other.......................................... 22,993 28,790 33,178 37,836 38,207 38,654 38,869 39,688 40,436 40,971 41,750 42,227 5 Liabilities and net worth........ 295,545 338,233 391,907 444,383 450,563 455,644 459,282 464,279 469,726 475,320 480,986 487,083 6 Savings capital......................... 242,974 285,743 335,912 377,208 379,604 381,333 386,875 389,620 391,917 399,070 399,628 402,014 7 Borrowed money...................... 24,780 20,634 19,083 r22,912 r24,199 r25,540 r27,796 *■27,899 r28,666 29,274 31,838 32,675 8 FHLBB................................. 21,508 17,524 15,708 >•16,900 r17,539 *■18,275 r19,945 *•20,129 *•20,602 21,030 22,692 23,314 3,272 3,110 3,375 6,012 6,660 7,265 7,851 7,770 8,064 8,244 9,146 9,361 10 Loans in process..................... 3,244 5,128 6.840 9,741 9,856 9,924 9,932 9,849 9,924 10,435 10,959 11,413 11 Other.......................................... 6,105 6,949 8,074 r10,184 *•12,233 *•13,846 *•9,498 *•11,471 *•13,456 10,511 12,194 14,249 18,442 19,779 21,998 24,338 24,671 25,001 25,181 25,440 25,763 26,030 26,367 26,732 13 Memo: Mortgage loan com­ mitments outstanding 3.. 7,454 10,673 14,826 21,631 21,555 21,270 19,886 19,534 20,625 22,320 23,409 23,953 Mutual savings banks 14 Assets......................................... 109,550 121,056 134,812 144,666 145,651 146,346 147,287 148,511 149,528 150,962 151,383 Loans: 15 Mortgage.............................. 74,891 77,221 81,630 86,079 86,769 87,333 88,195 88,905 89,247 89,800 90,346 16 Other..................................... 3,812 4,023 5,183 6,878 7,115 7,241 6,210 6,803 7,398 7,782 7,422 Securities: 17 U.S. Govt.............................. 2,555 4,740 5,840 6,192 6,101 6,071 5,895 5,785 5,737 5,677 5,670 18 State and local government. 930 1,545 2,417 2,777 2,808 2,809 2,828 2,886 2,808 2,850 2,915 19 Corporate and other4........ 22,550 27,992 33,793 36,927 37,073 37,221 37,918 38,360 38,605 38,964 39,146 20 Cash........................................... 2,167 2,330 2,355 1,992 2,011 1,887 2,401 1,889 1,838 1,990 1,940 21 Other assets.............................. 2,645 3,205 3,593 3,821 3,773 3,783 3,839 3,882 3,895 3,899 3,945 109,550 121,056 134,812 144,666 145,651 146,346 147,287 148,511 149,528 150,962 151,383 23 Deposits..................................... 98,701 109,873 122,877 131,688 132,250 132,537 134,017 134,771 135,200 136,997 136,931 24 Regular:5.............................. 98,221 109,291 121,961 130,230 130,913 131,319 132,744 133,370 133,846 135,558 135,349 64,286 69,653 74,535 11M0 77,503 77,460 78,005 77,754 77,837 78,783 78,170 26 Time and other............... 33,935 39,639 47,426 52,590 53,410 53,859 54,739 55,616 56,009 56,775 57,179 27 Other...................................... 480 582 916 1,458 1,337 1,208 1,272 1,401 1,354 1,439 1,582 28 Other liabilities....................... 2,888 2,755 2,884 3,254 3,632 3,938 3,292 3,676 4,155 3,735 4,152 29 General reserve accounts.... 7,961 8,428 9,052 9,723 9,769 9,882 9,978 10,064 10,174 10,230 10,301 30 Memo : Mortgage loan com­ mitments outstanding 6.. 2,040 1,803 2,439 4,254 4,423 4,458 4,066 3,998 4,027 4,185 4,342 Life insurance companies 31 Assets....................... 263,349 289,304 321,552 341,382 343,738 347,182 350,506 352,914 355,068 357,925 361,848 Securities: 32 Government......... 10,900 13,758 17,942 19,515 19,519 19,681 19.508 19,579 19,677 19,560 19,391 33 United States7 3,372 4,736 5,368 5,883 5,810 5,993 5,693 5,717 5,748 5,629 5,214 34 State and local 3,667 4,508 5,594 5,994 5,979 5,961 6,016 6,009 6,073 6,015 5,868 35 Foreign*.......... 3,861 4,514 6,980 7,638 7,730 1,121 7,799 7,853 7,856 7,916 8,309 36 Business............... 119,637 135,317 157,246 170,606 172,005 174,109 175,204 177,134 178,718 180,688 183,922 37 Bonds............... 91,111 107,256 122,984 138,046 139,909 141,354 142,095 145,244 147,202 148,754 150,057 38 Stocks............... 21,920 28,061 34,262 32,560 32,096 32,755 33,109 31,890 31,516 31,934 33,865 39 Mortgages............... 86,234 89,167 91,552 94,070 94,684 95,110 96,765 97,171 97,475 97,963 98,533 40 Real estate.............. 8,331 9,621 10,476 10,930 11,024 11,113 11,201 11,252 11,318 11,310 11,307 41 Policy loans............. 22,862 24,467 25,834 27,087 27,220 27,355 27.508 27,628 27,762 27,951 28,169 42 Other assets............ 15,385 16,971 18,502 19,174 19,286 19,814 20,320 20,150 20,118 20,453 20,526 Credit unions 43 Total assets/liabilities and 31,948 38,037 45,225 52,136 52,412 53,141 54,084 53,982 54,989 56,703 56,827 58,018 44 Federal.................................. 16,715 20,209 24,396 28,384 28,463 28,954 29,574 29,579 30,236 31,274 31,255 31,925 15,233 17,828 20,829 23,752 23,949 24,187 24,510 24,403 24,753 25,429 25,572 26,093 46 Loans outstanding................... 24,432 28,169 34,384 40,573 40,865 41,427 42,055 41,876 42,331 43,379 44,133 45,506 47 Federal.................................. 12,730 14,869 18,311 21,692 21,814 22,224 22,111 22,590 22,865 23,555 23,919 24,732 11,702 13,300 16,073 18,881 19,051 19,203 19,338 19,286 19,466 19,824 20,214 20,774 49 Savings...................................... 27,518 33,013 39,173 45,103 45,441 45,977 46,832 47,317 48,093 49,706 49,931 50,789 50 Federal (shares).................. 14,370 17,530 21,130 24,775 24,945 25,303 25,849 26,076 26,569 27,514 27,592 28,128 51 State (shares and deposits). 13,148 15,483 18,043 20,328 20,496 20,674 20,983 21,241 21,524 22,192 22,339 22,661 For notes see bottom of page A30. 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A30 Domestic Financial Statistics □ July 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 H2 Mar. Apr. May U.S. Budget 1 Receipts 1............................................ 299,197 81,687 356,861 157,868 189,410 175,787 24,879 42,342 34,961 2 Outlays !,2,3...................................... 365,643 94,657 401,902 193,629 199,482 216,747 40,004 35,724 36,670 3 Surplus, or deficit ( —).................. -66,446 -12,970 - 45,041 -35,761 -10,072 -40,961 -15,125 6,618 -1,709 4 Trust funds..................................... 2,409 -1,952 7,833 -4,621 7,332 4,293 -1,147 -990 5,970 5 Federal funds 4.............................. -68,855 -11,018 -52,874 -31,140 -17,405 -45,254 -13,978 7,608 -7,679 Off-budget entities surplus, or deficit (—) 6 Federal Financing Bank outlays.., -5,915 -2,575 -8,415 -5,176 -2,075 -6,663 -1,149 -671 -795 7 Other2, s............................................ -1,355 793 -269 3,809 -2,086 428 -16 102 -245 U.S. Budget plus off-budget, in­ cluding Federal Financing Bank 8 Surplus, or deficit ( —)...................... -75,7/5 -14,752 -53,725 -37,125 -14,233 -47,196 -16,290 6,049 -2,749 Financed by: 9 Borrowing from the public 3. . . 82,922 18,027 53,516 35,457 16,480 40,284 9,656 -2,263 -555 10 Cash and monetary assets (de­ crease, or increase ( —)) -7,796 -2,899 -2,238 2,153 -4,666 4,317 993 -3,345 6,403 11 Other 6............................................ -1,396 -373 2,440 -485 2,420 2,597 5,640 -442 -3,099 Memo items : 12 Treasury operating balance (level, end of period)........................................ 14,836 17,418 19,104 11,670 16,255 12,274 6,407 9,281 3,726 13 F.R. Banks........................................ 11,975 13,299 15,740 10,393 15,183 7,114 4,705 7,177 2,398 14 Tax and loan accounts.................... 2,854 4,119 3,364 1,277 1,072 5,160 1,702 2,104 1,328 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 1977, 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 Mar. Apr. May Receipts 1 All sources 1............................................ 299,197 81,687 356,861 157,868 189,410 175,787 24,879 42,343 34,961 2 Individual income taxes, net................ 130,794 38,715 156,725 75,899 77,948 82,877 5,258 18,833 14,293 3 Withheld............................................. 123,408 32,949 144,820 68,023 73,303 75,480 14,469 13,095 14,808 4 Presidential Election Campaign Fund........................................... 34 1 37 1 37 1 9 10 6 5 Nonwithheld...................................... 35,528 6,809 42,062 8,426 32,959 9,397 2,537 13,611 6,750 6 Refunds 1............................................ 28,175 1,043 30,194 1,541 28,350 2,001 11,756 7,883 7,272 7 Corporation income taxes: 8 Gross receipts.................................... 46,783 9,808 60,057 20,706 37,133 25,121 8,682 9,342 1,624 9 Refunds............................................... 5,374 1,348 5,164 2,886 2,324 2,819 659 492 441 10 Social insurance taxes and contribu­ tions, net......................................... 92,714 25,760 108,683 47,596 58,099 52,347 8,560 11,828 16,092 11 Payroll employment taxes and contributions 2.......................... 76,391 21,534 88,196 40,427 45,242 44,384 7,616 7,495 10,796 12 Self-employment taxes and contributions 3.......................... 3,518 269 4,014 286 3,687 316 322 2,492 288 13 Unemployment insurance............... 8,054 2,698 11,312 4,379 6,575 4,936 144 1,393 4,499 14 Other net receipts 4.......................... 4,752 1,259 5,162 2,504 2,595 2,711 478 448 508 15 Excise taxes............................................ 16,963 4,473 17,548 8,910 8,432 9,284 1,395 1,368 1,670 16 Customs.................................................. 4,074 1,212 5,150 2,361 2,519 2,848 603 545 584 17 Estate and gift....................................... 5,216 1,455 7,327 2,943 4,332 2,837 462 296 512 18 Miscellaneous receipts 5...................... 8,026 1,612 6,536 3,236 3,269 3,292 577 622 629 Outlays9 19 All types 1,6.......................................... 365,643 94,657 401,902 193,629 199,482 216,747 40,004 35,724 36,670 20 National defense................................... 89,430 22,307 97,501 45,002 48,721 50,873 10,701 8,492 9,107 21 International affairs 6......................... 5,567 2,180 4,831 3,028 2,522 2,896 -795 1,259 60 22 General science, space, and technology...................................... 4,370 1,161 4,677 2,377 2,108 2,318 433 379 428 23 Energy..................................................... 3,127 794 4,172 542 165 550 24 Natural resources and environment. 8,124 2,532 10,000 841 771 848 25 Agriculture............................................. 2,502 584 5,526 " i , m "'2,62% *5j477 680 23 82 26 Commerce and housing credit........... 3,795 1,391 -31 52 -22 216 27 Transportation...................................... 13,438 3,306 14,636 991 1,153 1,114 28 Community and regional development.................................. 4,709 1,340 6,283 3,192 3,149 4,924 1,461 771 1,185 29 Education, training, employment, and social services........................ 18,737 5,162 20,985 9,083 9,775 10,800 2,214 1,913 2,389 30 Health..................................................... 33,448 8,720 38,785 19,329 18,654 19,422 3,895 3,589 3,716 31 Income security 1................................. 126,598 32,710 137,004 65,367 69,917 71,047 13,109 11,551 12,230 32 Veterans benefits and services........... 18,432 3,962 18,038 8,542 9,382 9,864 2,662 567 1,726 33 Administration of justice.................... 3,320 859 3.600 1,839 1,783 1,723 290 340 371 34 General government............................ 2,927 878 3,357 1,734 1,587 1,749 374 131 484 35 General-purpose fiscal assistance.... 7,235 2,092 9,499 4,729 4,333 4,926 43 2,050 153 36 Interest 7................................................ 34,589 7,246 38,092 18,409 18,927 19,962 3,091 3,295 3,296 37 Undistributed offsetting receipts 7,8 -14,704 -2,567 -15,053 -7,869 -6,803 -8,506 -581 -703 -1.284 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. 6 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 □ July 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.............. 534.2 577.8 621.6 635.8 654.7 675.6 700.0 720.1 737.7 532.6 576.0 619.8 634.1 652.9 673.8 698.2 718.3 736.0 10 Other debt1.............................................. 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 Feb. Mar. Apr. May June 492.7 576.6 653.5 718.9 729.8 738.0 736.6 741.6 749.0 By type: 491.6 575.7 652.5 715.2 728.5 736.9 733.1 740.6 748.0 3 Marketable............................................................. 282.9 363.2 421.3 459.9 470.8 478.3 472.2 473.7 477.7 4 Bills...................................................................... 119.7 157.5 164.0 161.1 161.8 165.7 159.6 159.4 159.8 5 Notes................................................................... 129.8 167.1 216.7 251.8 258.5 262.2 262.2 261.6 265.3 6 Bonds................................................................... 33.4 38.6 40.6 47.0 50.5 50.4 50.4 52.7 52.6 7 Nonmarketable1..................................................... 208.7 212.5 231.2 255.3 257.7 258.7 260.9 266.9 270.3 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 15.4 16.4 17.6 18.6 20.6 10 Foreign issues3................................................... 22.8 21.6 22.3 22.2 22.6 23.6 23.4 22.4 21.5 11 63.8 67.9 72.3 77.0 77.8 78.2 78.6 79.0 79.4 12 119.1 119.4 129.7 139.8 139.4 138.0 138.8 144.4 146.4 13 Non-interest-bearing debt........................................ 1.1 1.0 1.1 3.7 1.3 1.0 3.5 1.0 1.0 By holder:5 14 U.S. Govt, agencies and trust funds................. 138.2 145.3 149.6 154.8 154.2 152.7 153.6 15 F.R. Banks............................................................. 80.5 84.7 94.4 102.5 98.5 *■101.6 103.1 16 Private investors..................................................... 271.0 349.4 409.5 461.3 477.1 483.7 479.5 17 Commercial banks............................................ 55.6 85.1 103.8 102.4 103.5 102. 3 100.7 18 Mutual savings banks...................................... 2.5 4. 5 5.7 6.0 5.9 5.8 5 7 19 Insurance companies........................................ 6.2 9.5 12. 5 15.5 15.3 is!o 14.9 20 Other corporations........................................... 11.0 20.2 26.5 22.2 21.8 20.4 19^4 21 State and local governments.......................... 29.2 34.2 41.6 55.1 58.3 60.3 60.3 Individuals: 22 Savings bonds................................................ 63.4 67.3 72.0 76.7 77.6 78.0 78.4 23 Other securities.............................................. 21.5 24.0 28.8 28.6 29.1 28.9 28.7 24 Foreign and international6............................. 58.8 66.5 78.1 109.6 115.4 r124.5 120.4 25 Other miscellaneous investors7...................... 22.8 38.0 40.5 45.1 50.4 r48.5 51.1 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 Vi 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 Apr. May Apr. May All maturities 1 to 5 years 1All holders....................................................................................... 421,276 459,927 472,193 473,684 141,132 151,264 165,671 170,122 2 U.S. Govt, agencies and trust funds......................................... 16,485 14,420 13,977 13,967 6,141 4,788 4,772 4,772 96,971 101,191 103,072 101,329 31,249 27,012 30,015 28,329 307,820 344,315 355,144 358,388 103,742 119,464 130,884 137,020 5 Commercial banks.................................................................... 78,262 75,363 73,207 71,530 40,005 38,691 41,553 42,214 6 4,072 4,379 4,109 4,004 2,010 2,112 2,237 2,257 7 10,284 12,378 11,832 11,855 3,885 4,729 5,168 5,149 8 14,193 9,474 7,309 7,028 2,618 3,183 3,311 3,359 9 Savings and loan associations................................................ 4,576 4,817 4,786 4,540 2,360 2,368 2,586 2,569 10 State and local governments................................................... 12,252 15,495 15,848 14,646 2,543 3,875 4,769 4,453 11 184,182 222,409 238,053 244,785 50,321 64,505 71,269 17,019 Total, within 1 year 5 to 10 years 12 All holders....................................................................................... 211,035 230,691 226,401 219,559 43,045 45,328 44,121 45,690 13 U.S. Govt, agencies and trust funds......................................... 2,012 1,906 1,159 1,150 2,879 2,129 2,129 2,129 14 F. R. Banks..................................................................................... 51,569 56,702 54,970 52,314 9,148 10,404 10,175 11,802 15 Private investors............................................................................. 157,454 172,084 170,272 166,094 31,018 32,795 31,816 31,758 16 31,213 29,477 23,078 20,831 6,278 6,162 6,998 6,567 17 1,214 1,400 1,057 934 567 584 533 537 18 2,191 2,398 1,665 1,623 2,546 3,204 2,966 3,017 19 11,009 5,770 3,511 3,147 370 307 300 307 20 1,984 2,236 1,981 1,765 155 143 148 133 21 6,622 7,917 6,830 5,953 1,465 1,283 1,219 1,305 22 All others.................................................................................... 103,220 122,885 132,151 131,842 19,637 21,112 19,652 19,892 Bills, within 1 year 10 to 20 years 23 All holders...................................................................................... 163,992 161,081 159,640 159,391 11,865 12,906 14,298 14,927 24 U.S. Govt, agencies and trust funds......................................... 449 32 2 2 3,102 3,102 3,102 3,273 25 F. R. Banks..................................................................................... 41,279 42,004 40,688 39,867 1,363 1,510 1,624 1,806 122,264 119,035 118,950 119,522 7,400 8,295 9,571 9,847 27 Commercial banks.................................................................... 17,303 11,996 6,938 6,773 339 456 699 811 28 454 484 269 256 139 137 137 130 29 1,463 1,187 730 810 1,114 1,245 1,165 1,197 30 Nonfinancial corporations....................................................... 9,939 4,329 2,078 1,797 142 133 126 153 31 Savings and loan associations................................................ 1,266 806 676 562 64 54 56 57 32 5,556 6,092 4,639 3,898 718 890 1,276 1,043 33 86,282 94,152 103,621 105,426 4,884 5,380 6,112 6,456 Other, within 1 year Over 20 years 47,043 69,610 66,671 60,168 14,200 19,738 21,701 23,387 35 U.S. Govt, agencies and trust funds......................................... 1,563 1,874 1,158 1,149 2,350 2,495 2,813 2,642 10,290 14,698 14,282 12,447 3,642 5,564 6,287 7,077 35,190 53,039 51,321 46,572 8,208 11,679 12,601 13,668 38 13,910 15,482 16,139 14,058 427 578 880 1,107 39 760 916 788 678 143 146 145 146 40 Insurance companies................................................................. 728 1,211 936 813 548 802 868 869 41 Nonfinancial corporations....................................................... 1,070 1,441 1,433 1,350 55 81 61 62 42 Savings and loan associations................................................ 718 1,430 1,305 1,203 13 16 15 16 43 State and local governments.................................................. 1,066 3,875 2,191 2,055 904 1,530 1,763 1,891 44 16,938 28,733 28,530 26i416 6,120 8,526 8,868 9,577 Note.—Direct public issues only. Based on Treasury Survey of Owner­ banks, 464 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 485 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) 493 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 May 31, 1978; (1) 5,480 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 □ July 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 Mar. April May Apr. 26 May 3 May 10 May 17 May 24 May 31 1 U.S. Govt, securities............... 6,027 10,449 10,838 10,620 11,163 10,609 11,067 10,762 12,055 11,267 9,008 10,458 By maturity: 2 Bills........................................ 3,889 6,676 6,746 6,678 6,947 6,483 6,458 6,503 6,394 7,113 5,929 6,998 3 Other within 1 year........... 223 210 237 345 465 388 447 383 399 358 312 546 4 1-5 years.............................. 1,414 2,317 2,318 1,923 1,921 1,599 2,630 1,798 1,781 1,535 1,516 1,828 5 5-10 years............................ 363 1,019 1,148 1,027 1,107 1,156 908 1,340 1,680 1,230 722 592 6 Over 10 years...................... 138 229 388 648 724 984 624 736 1,800 1,031 529 494 By type of customer: 7 U.S. Govt, securities dealers.......................... 885 1,360 1,267 1,320 1,346 1,110 1,186 1,152 1,155 1,220 819 1,327 8 U.S. Govt, securities brokers......................... 1,750 3,407 3,709 3,324 3,882 4,002 4,088 3,811 5,046 4,326 3,589 3,191 9 Commercial banks............. 1,451 2,426 2,295 2,134 2,157 1,867 2,210 2,023 2,077 1,959 1,585 1,924 10 All others1........................... 1,941 3,257 3,567 3,842 3,777 3,631 3,583 3,775 3,778 3,761 3,015 4,017 11 Federal agency securities 1,043 1,548 693 1,847 1,603 1,587 1,681 1,218 1,375 1,644 1,665 2,045 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 Mar. April May Apr. 5 Apr. 12 Apr. 19 Apr. 26 May 3 May 10 Positions2 1 U.S. Govt, securities............... 5,884 7,592 5,172 3,519 3,063 822 4,418 3,808 3,469 1,465 1,450 1,508 2 Bills....................................... 4,297 6,290 4,772 2,773 3,249 1,109 4,416 4,118 3,820 1,432 1,718 1,312 3 Other within 1 year........... 265 188 99 226 239 312 222 206 84 332 378 320 4 1-5 years.............................. 886 515 60 460 -139 -622 -150 -254 -255 89 -151 -443 5 5-10 years............................ 300 402 92 67 -166 68 7 -223 -96 -214 -95 262 6 Over 10 years...................... 136 198 149 -7 -121 -46 -77 -40 -84 -174 -399 57 7 Federal agency securities.... 943 729 693 794 749 1,043 630 591 718 923 985 931 Sources of financing3 8 All sources................................ 6,666 8,715 9,877 9,586 9,099 8,397 8,663 9,733 9,814 8,525 8,194 8,725 Commercial banks: 9 New York City................... 1,621 1,896 1,313 777 698 249 -34 939 1,190 700 205 32 10 Outside New York City... 1,466 1,660 1,987 2,067 2,106 1,649 2,061 2,323 2,216 1,922 1,791 1,590 11 Corporations1......................... 842 1,479 2,358 2,406 2,190 1,823 2,429 2,507 2,348 1,696 1,751 1,771 12 All others................................ 2,738 3,681 4,170 4,335 4,105 4,677 4,207 3,964 4,060 4,208 4,447 5,313 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 Nov. Dec. Jan. Feb. Mar. Apr. 1 Federal and Federally sponsored agencies............ 89,381 97,680 103,325 109,427 110,409 111,520 112,945 114,371 115,903 2 Federal agencies......................................................... 12,719 19,046 21,896 23,257 23,245 23,293 23,284 23,695 23,766 3 Defense Department1.......................................... 1,312 1,220 1,113 991 983 974 963 954 949 4 Export-Import Bank2,3........................................ 2,893 7,188 7,801 9,246 9,156 9,156 9,156 9,416 9,416 5 Federal Housing Administration4..................... 440 564 575 585 581 599 602 607 607 6 Government National Mortgage Association participation certificates 5............................ 4,280 4,200 4,120 3,768 3,743 3,743 3,743 3,743 3,701 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 5,905 6,015 6,045 6,045 6,195 6,310 9 United States Railway Association6................. 3 209 104 331 336 345 344 349 352 10 Federally sponsored agencies.................................... 76,662 78,634 81,429 86,170 87,164 88,227 89,661 90,676 92,137 11 Federal home loan banks.................................... 21,890 18,900 16,811 17,867 18,345 18,692 19,893 20,007 20,163 12 Federal Home Loan Mortgage Corporation.. 1,551 1,550 1,690 1,686 1,686 1,768 1,768 1,768 1,639 13 Federal National Mortgage Association......... 28,167 29,963 30,565 31,333 31,890 32,024 32,553 33,350 34,024 14 Federal land banks............................................... 12,653 15,000 17,127 19,118 19,118 19,498 19,350 19,350 19,686 15 Federal intermediate credit banks..................... 8,589 9,254 10,494 11,421 11,174 11,103 10,958 10,881 10,977 16 Banks for cooperatives......................................... 3,589 3,655 4,330 4,208 4,434 4,625 4,622 4,728 5,046 220 310 410 535 515 515 515 590 600 18 Other........................................................................ 3 2 2 2 2 2 2 2 2 Memo items : 4,474 17,154 28,711 37,095 38,580 39,522 40,605 42,169 42,964 Lending to Federal and Federally sponsored agencies: 20 Export-Import Bank3.......................................... 4,595 5,208 5,924 5,834 5,834 5,834 6,094 6,094 500 1,500 212 ,748Postal 2S,e1r8v1ice6....2..,.1..8...1............2..,.1..8...1............2..,..1..8..1... 2,181 2,181 22 Student Loan Marketing Association7............. 220 310 410 535 515 515 515 590 600 23 Tennessee Valley Authority................................ 895 1,840 3,110 4,080 4,190 4,220 4,220 4,370 4,485 24 United States Railway Association6................. 3 209 104 331 336 345 344 349 352 Other lending: 9 25 Farmers Home Administration......................... 2,500 7,000 10,750 15,295 16,095 16,760 17,545 18,050 19,120 26 Rural Electrification Administration................ 566 1,415 2,535 2,647 2,809 2,947 3,124 3,323 27 Other........................................................................ 356 1,134 4,966 6,214 6,782 6,858 7,019 7,411 6,809 1 Consists of mortgages assumed by the Defense Department between 7 Unlike other Federally sponsored agencies, the Student Loan 1957 and 1963 under family housing and homeowners assistance programs. Marketing Association may borrow from the Federal Financing Bank 2 Includes participation certificates reclassified as debt beginning (FFB) since its obligations are guaranteed by the Department of Health, Oct. 1, 1976. Education, and Welfare. 3 Off-budget Aug. 17,1974, through Sept. 30,1976; on-budget thereafter. 8 The FFB, which began operations in 1974, is authorized to purchase 4 Consists of debentures issued in payment of Federal Housing Ad­ or sell obligations issued, sold, or guaranteed by other Federal agencies. ministration insurance claims. Once issued, these securities may be sold Since FFB incurs debt solely for the purpose of lending to other agencies, privately on the securities market. its debt is not included in the main portion of the table in order to avoid 5 Certificates of participation issued prior to fiscal 1969 by the Govern­ double counting. ment National Mortgage Association acting as trustee for the Farmers 9 Includes FFB purchases of agency assets and guaranteed loans; Home Administration; Department of Health, Education, and Welfare; the latter contain loans guaranteed by numerous agencies with the Department of Housing and Urban Development; Small Business Ad­ guarantees of any particular agency being generally small. The Farmers ministration; and the Veterans Administration. Home Administration item consists exclusively of agency assets, while the 6 Off-budget. Rural Electrification Administration entry contains both agency assets and guaranteed loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Financial Statistics □ July 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 Dec. Jan.r Feb.' Mar.r Apr. May 1All issues, new and refunding 1.................................................. 30,607 35,313 46,769 3,655 3,299 2,747 4,747 3,784 5,320 By type of issue: 2 General obligation................................................................... 16,020 18,040 18,042 1,372 1,877 1,023 1,425 1,361 2,185 3 14,511 17,140 28,655 2,274 1,418 1,720 3,319 2,412 3,115 4 Housing Assistance Administration 2.................................. 5 76 133 72 9 4 4 3 11 20 By type of issuer: 6 7,438 7,054 6,354 517 833 311 449 237 873 7 Special district and statutory authority.............................. 12,441 15,304 21,717 1,846 1,124 1,269 2,565 1,858 2,108 8 Municipalities, counties, townships, school districts.... 10,660 12,845 18,623 1,283 1,338 1,163 1,729 1,678 2,319 29,495 32,108 36,189 2,343 2,913 2,003 3,068 2,587 3,055 By use of proceeds: 10 Education.................................................................................. 4,689 4,900 5,076 348 561 415 348 331 677 11 Transportation.......................................................................... 2,208 2,586 2,951 184 227 56 273 156 129 12 Utilities and conservation...................................................... 7,209 9,594 8,119 525 484 368 959 720 554 13 Social welfare............................................................................ 4,392 6,566 8,274 659 855 518 684 847 935 14 Industrial aid............................................................................ 445 483 4,676 282 246 315 328 268 300 15 Other purposes..............................................'........................ 10,552 7,979 7,093 345 540 331 476 265 460 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 Oct. Nov. Dec. Jan. Feb. Mar. 1All issues 1...................................................................................... 53,619 53,488 54,205 4,221 5,331 6,531 3,013 2,657 3,442 2 Bonds.............................................................................................. 42,756 42,380 42,193 3,093 3,411 5,362 2,380 2,131 3,620 By type of offering: 3 Public.......................................................................................... 32,583 26,453 24,186 2,114 2,211 1,542 1,382 1,464 1,902 4 10,172 15,927 18,007 979 1,200 3,820 998 667 1,718 By industry group: 5 Manufacturing.......................................................................... 16,980 13,264 12,510 648 726 2,375 268 716 1,155 6 Commercial and miscellaneous............................................ 2,750 4,372 5,887 571 546 753 280 87 428 7 Transportation......................................................................... 3,439 4,387 2,033 120 178 345 123 101 217 8 Public utility.............................................................................. 9,658 8,297 8,261 854 851 476 284 205 631 9 Communication........................................................................ 3,464 2,787 3,059 8 288 189 519 9 291 10 Real estate and financial......................................................... 6,469 9,274 10,438 892 821 1,223 907 1,012 898 11 10,863 11,108 12,013 1,128 1,920 1,169 633 526 822 By type: 12 Preferred.................................................................................... 3,458 2,803 3,878 304 364 473 171 138 148 13 7,405 8,305 8,135 824 1,556 696 462 388 674 By industry group: 14 Manufacturing.......................................................................... 1,670 2,237 1,265 83 56 166 5 74 15 Commercial and miscellaneous............................................ 1,470 1,183 1,838 325 122 124 138 91 84 16 Transportation......................................................................... 1 24 418 50 17 6,235 6,121 6,058 ’” ‘583' 878 604 360 260 627 18 Communication........................................................................ 1,002 776 1,379 725 110 25 19 Real estate and financial......................................................... 488 771 1,054 137 88 165 130 150 28 1 Figures, which represent gross proceeds of issues maturing in more companies other than closed-endt 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 Nov. Dec. Jan. Feb. Mar. Apr. May INVESTMENT COMPANIES excluding money market funds 1 Sales of own shares1............................................ 4,226 6,401 511 557 638 451 613 625 558 2 Redemptions of own shares2............................ 6,802 6,027 430 562 465 348 459 580 831 3 Net sales................................................................. -2,496 357 81 5 173 103 154 45 -273 4 47,537 45,049 45,050 45,049 43,000 42,747 44,052 46,594 46,969 5 2,747 3,274 3,487 3,274 3,608 4,258 4,331 4,592 4,643 6 44,790 41,775 41,563 41,775 39,392 38,489 39,721 42,002 42,326 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 1978 Account 1975 1976 1977 Q3 Q4 Ql Q2 Q3 Q4 Ql 1 Profits before tax.......................................................... 123.5 156.9 171.7 159.9 154.8 161.7 174.0 172.8 178.3 171.9 2 Profits tax liability........................................................ 50.2 64.7 69.2 65.9 63.9 64.4 69.7 69.3 73.3 69.5 3 Profits after tax............................................................. 73.3 92.2 102.5 94.0 90.9 97.3 104.3 103.5 105.0 102.4 4 Dividends........................................................................ 32.4 35.8 41.2 36.0 38.4 38.5 40.3 42.3 43.6 43.8 40.9 56.4 61.3 58.0 52.5 58.8 64.0 61.2 61.4 58.6 6 Capital consumption allowances................................ 89.5 97.2 104.7 98.2 100.4 102.0 103.5 105.8 107.6 109.5 7 Net cash flow................................................................. 130.4 153.6 166.0 156.2 152.9 160.8 167.5 167.0 169.0 168.1 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 □ July 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 1 574.4 643.2 712.2 731.6 775.4 791.8 816.8 845.3 874.7 909.8 2 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.1......................................................... 3.4 3.5 3.5 3.6 3.7 4.3 4.3 4.7 4.8 5.3 6 Other..................................................................... 240.0 266.1 289.7 294.6 318.1 324.2 323.9 342.0 356.6 373.8 7 Inventories............................................................... 215.2 246.7 288.0 285.8 295.6 302.1 315.4 322.1 332.5 343.1 8 Other......................................................................... 48.1 54.4 56.6 60.0 63.9 66.3 69.8 74.3 78.8 84.5 9 352.2 401.0 450.6 457.5 475.9 484.1 499.9 516.6 532.0 556.3 10 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 12 230.4 261.6 287.5 281.6 287.0 284.7 295.9 302.2 313.2 323.5 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. Note.—This series will be revised. See “Working Capital of Non­ financial Corporations: Revised Series” on page 000 of this Bulletin. 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 Co o m m m m e u r n c i i c a a l t a io n n d . . o ... t . h ... e .. r .. 1 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1 0 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 \> 4At1.21 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 .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 Apr. 30, 1978 1978 1978 19781 Feb. Mar. Apr. Feb. Mar. Apr. Feb. Mar. Apr. 1 Total........................................................................ 58,400 461 810 827 13,468 14,318 15,125 13,007 13,508 14,298 2 Retail automotive (commercial vehicles)........ 12,622 161 159 136 1,038 1,076 1,059 877 917 923 3 Wholesale automotive........................................ 13,051 86 273 357 5,436 5,951 6,600 5,350 5,678 6,243 4 Retail paper on business, industrial, and farm equipment............................................ 14,440 72 -112 148 1,258 981 1,024 1,186 1,093 876 5 Loans on commercial accounts receivable. . . 4,035 75 73 2 2,508 2,915 2,938 2,433 2,842 2,936 6 Factored commercial accounts receivable.... 2,344 -2 34 125 1,694 1,666 1,811 1,696 1,632 1,686 7 All other business credit.................................... 11,908 69 383 59 1,534 1,729 1,693 1,465 1,346 1,634 1 Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Financial Statistics □ July 1978 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1977 1978 Item 1975 1976 1977 Dec. Jan. Feb. Mar. Apr. May 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 57.7 58.8 61.6 60.0 2 Amount of loan (thous. dollars)................... 33.3 35.9 40.5 42.6 43.5 r45.7 44.5 3 Loan/price ratio (per cent).............................. 74.7 74.2 76.3 75.5 75.5 76.1 75.9 4 Maturity (years)................................................. 26.8 27.2 27.9 28.0 27.4 28.4 28.1 5 Fees and charges (per cent of loan amount)2 1.54 1.44 1.33 1.32 1.37 1.44 1.39 6 Contract rate (per cent per annum)............. 8.75 8.76 8.80 8.87 9.03 9.07 9.14 Yield (per cent per annum): 7 FHLBB series 3................................................... 9.01 8.99 9.01 9.09 9.26 9.30 9.37 8 HUD series4....................................................... 9.10 8.99 8.95 9.10 9.30 9.40 9.60 SECONDARY MARKETS Yields (per cent per annum) on— 9 FHA mortgages (HUD series)5..................... 9.19 8.82 7.96 8.91 9.11 9.29 r9..37 9.67 10 GNMA securities6............................................ 8.52 8.17 8.04 8.29 8.56 8.60 8.71 8.90 FNMA auctions:7 11 Government-underwritten loans............... 9.26 8.99 8.73 8.94 9.17 9.35 9..44 9.66 12 Conventional loans...................................... 9.37 9.11 8.98 9.19 9.32 9.61 9.,72 9.90 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total....................................................................... 31,824 32,904 34,370 34,370 34,756 35,408 36,030 '36,701 37,937 19,732 18,916 18,457 18,457 18,500 18,664 18,759 19,792 19,382 15 VA-guaranteed................................................... 9,573 9,212 9,315 9,315 9,398 9,599 9,727 9,905 10,255 16 Conventional...................................................... 2,519 4,776 6,597 6,597 6,858 7,146 7,543 7,846 8,300 Mortgage transactions (during period) 17 Purchases................................................................. 4,263 3,606 4,780 497 636 879 891 937 1,551 18 Sales.......................................................................... 2 86 67 5 4 Mortgage commitments:8 19 Contracted (during period)................................ 6,106 6,247 9,729 1,333 *•1,818 1,942 1,563 2,119 3,439 4,126 3,398 4,698 4,698 5,781 6,851 7,445 8,486 1,027 Auction of 4-month commitments to buy— Government-underwritten loans: 21 Offered 9............................................................... 7,042.6 4,929.8 7,974.1 1,184.5 1,779.8 1,199.1 523.7 909.3 2,117.7 22 Accepted............................................................. 3,848.3 2,787.2 4,846.2 794.0 970.9 623.1 334.9 529.2 1,093.7 Conventional loans: 23 Offered 9............................................................... 1,401.3 2,595.7 5,675.2 591.6 949.9 1,214.1 823.5 974.2 1,935.8 24 Accepted............................................................. 765.0 1,879.2 3,917.8 359.4 449.6 566.0 512.5 578.1 968.3 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)1 o 25 Total......................................................................... 4,987 4,269 3,276 3,276 3,163 3,044 *•3,252 3,092 2,878 26 FHA/VA............................................................. 1,824 1,618 1,395 1,395 1,382 1,381 1,388 1,373 1,356 3,163 2,651 1,881 1,881 1,782 1,663 1,985 1,719 1,522 Mortgage transactions (during period) 28 Purchases................................................................. 1,716 1,175 3,900 489 401 363 344 356 479 29 Sales.......................................................................... 1,020 1,396 4,131 477 503 470 120 466 651 Mortgage commitments:11 982 1,477 5,546 361 367 363 593 512 811 31 Outstanding (end of period)............................... 111 333 1,063 1,063 961 1,021 1,233 1,346 1,640 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 QIp 1 682,321 742,512 801,537 889,327 948,826 985,607 1,021,169 1,048,380 ? 416,211 449,371 490,761 556,557 600,262 627,770 652,405 671,050 3 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 6 Maior financial institutions......................... 505,400 542,560 581,193 647,650 690,340 717,365 742,763 761,276 7 Commercial banks1.................................. 119,068 132,105 136,186 151,326 162,778 170,378 176,678 181,178 8 1- to 4-family........................................ 67,998 74,758 77,018 86,234 93,393 97,746 101,361 103,942 9 Multifamily............................................ 6,932 7,619 5,915 8,082 8,003 8,383 8,692 8,914 10 Commercial........................................... 38,696 43,679 46,882 50,289 54,038 56,565 58,657 60,151 11 Farm....................................................... 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 1- to 4-family........................................ 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 Commercial........................................... 21,876 24,506 29,140 33,799 35,694 36,794 37,969 39,087 21 Life insurance companies......................... 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 Farm....................................................... 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- to 4-family........................................ 1,455 2,248 4,728 1,970 1,654 1,522 1,548 1,414 29 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 Multifamily............................................ 29 167 215 218 97 192 275 287 33 Commercial........................................... 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 2,013 2,009 1,990 1,676 1,711 1,566 1,627 1,578 37 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 1- to 4-family........................................ 123 406 549 601 628 649 670 691 43 Farm....................................................... 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 2,447 46 Multifamily............................................ 158 369 399 380 487 558 538 481 47 Mortgage pools or trusts2........................... 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 4,642 5,621 6,733 53 Multifamily............................................ 149 149 249 389 522 690 989 1,184 54 Farmers Home Admin.............................. 9,384 11,273 14,283 16,558 17,715 18,426 18,783 19,283 55 1- to 4-family........................................ 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 Farm....................................................... 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 Farm....................................................... 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 □ July 1978 1.55 CONSUMER INSTALMENT CREDIT Total Outstanding, and Net Change Millions of dollars 1977 1978 Holder, and type of credit 1975 1976 1977 Nov. Dec. Jan. Feb. Mar. Apr. May Amounts outstanding (end of period) 1Total.......................................................... 164,955 185,489 216,572 212,074 216,572 215,925 216,297 219,203 in,m i 227,561 By holder: 2 78,667 89,511 105,291 103,469 105,291 105,466 105,663 107,166 109,336 111,673 3 35,994 38,639 44,015 43,322 44,015 43,970 44,107 44,486 45,182 46,136 4 25,666 30,546 37,036 36,488 37,036 36,851 37,217 38,185 38,750 39,951 5 18,002 19,052 21,082 19,629 21,082 20,525 20,060 19,920 19,941 20,141 6 6,626 7,741 9,149 9,166 9,149 9,114 9,250 9,446 9,528 9,660 By type of credit: 7 55,879 66,116 79,352 78,757 79,352 79,376 79,984 81,666 83,490 85,954 8 31,553 37,984 46,119 45,845 46,119 46,247 46,547 47,534 48,731 50,119 9 18,353 21,176 25,370 25,228 25,370 25,476 25,696 26,327 27,049 27,854 10 13,200 16,808 20,749 20,616 20,749 20,771 20,851 21,207 21,682 22,265 11 11,155 12,489 14,263 14,205 14,263 14,260 14,374 14,577 14,921 15,382 12 12,741 15,163 18,385 18,113 18,385 18,293 18,475 18,955 19,239 19,835 13 430 480 585 594 585 576 588 600 599 618 14 14,423 14,572 15,014 14,999 15,014 14,978 14,973 15,062 15,156 15,220 15 Commercial banks........................ 8,649 8,734 8,862 8,856 8,862 8,819 8,807 8,845 8,876 8,912 16 Finance companies........................ 3,451 3,273 3,109 3,123 3,109 3,115 3,098 3,085 3,095 3,098 17 Home improvement............................ 9,405 10,990 12,952 12,879 12,952 12,904 12,968 13,162 13,375 13,691 18 Commercial banks........................ 4,965 5,554 6,473 6,447 6,473 6,445 6,436 6,479 6,598 6,782 Revolving credit: 19 Bank credit cards.......................... 9,501 11,351 14,262 13,096 14,262 14,369 14,174 14,142 14,345 14,456 20 Bank check credit......................... 2,810 3,041 3,724 3,601 3,724 3,776 3,822 3,844 3,856 3,919 21 All other............................................... 72,937 79,418 91,269 88,743 91,269 90,522 90,376 91,327 92,515 94,321 22 Commercial banks, total............. 21,188 22,847 25,850 25,626 25,850 25,809 25,877 26,322 26,930 27,485 23 Personal loans............................ 14,629 15,669 17,740 17,555 17,740 17,708 17,769 18,002 18,383 18,640 24 Finance companies, total............. 21,238 22,749 26,498 25,850 26,498 26,452 26,489 26,675 27,012 27,496 25 Personal loans............................ 17,263 18,554 21,302 20,852 21,302 21,248 21,283 21,416 21,700 22,110 26 Credit unions.................................. 10,754 12,799 15,518 15,289 15,518 15,440 15,594 15,999 16,232 16,735 27 Retailers.......................................... 18,002 19,052 21,082 19,629 21,082 20,525 20,060 19,920 19,941 20,141 28 Others............................................... 1,755 1,971 2,321 2,350 2,321 2,296 2,356 2,411 2,400 2,464 Net change (during period)3 29 Total......................................................... 7,504 20,533 31,090 2,853 2,736 2,424 2,661 4,068 3,719 3,857 By holder: 30 Commercial banks............................ 2,821 10,845 15,779 1,384 1,611 1,115 1,280 2,021 2,001 1,881 31 Finance companies............................ -90 2,644 5,376 543 500 460 418 662 781 763 32 Credit unions...................................... 3,771 4,880 6,490 566 641 495 603 836 699 911 33 Retailers i............................................ 69 1,050 2,032 184 -12 309 202 367 129 170 34 Others 2................................................ 933 1,115 1,413 111 -3 44 158 182 109 132 By type of credit: 35 Automobile.......................................... 3,007 10,238 13,235 1,241 1,297 1,185 1,104 1,522 1,728 1,789 36 Commercial banks........................ 559 6,431 8,135 725 835 637 599 882 989 944 37 Indirect........................................ -334 2,823 4,194 444 486 407 389 564 603 575 38 Direct.......................................... 894 3,608 3,941 281 349 230 210 318 386 369 39 Finance companies....................... 532 1,334 1,774 242 111 247 201 238 375 367 40 Credit unions.................................. 1,872 2,422 3,222 263 328 244 300 406 343 465 41 Other................................................ 44 50 105 10 7 56 4 -4 21 13 42 Mobile homes...................................... -7 95 150 441 74 76 52 23 108 95 58 43 -323 85 128 23 60 1 1 46 28 33 44 Finance companies....................... -73 -111 -164 4 -8 36 -9 2 11 -3 45 Home improvement............................ 881 1,585 1,967 211 173 105 171 217 212 222 46 Commercial banks........................ 111 588 920 99 110 70 69 14 111 109 Revolving credit: 47 Bank credit cards.......................... 1,220 1,850 2,911 243 250 160 285 448 311 263 48 Bank check credit......................... 14 231 683 27 46 65 87 120 56 129 49 2,577 6,479 11,853 1,057 895 857 991 1,653 1,317 1,396 50 Commercial banks, total............. 1,080 1,659 3,003 267 310 180 238 451 506 403 51 Personal loans........................... 858 1,040 2,070 183 235 81 167 263 333 207 52 Finance companies, total............. -348 1,509 3,749 293 378 111 223 419 387 395 53 Personal loans............................ 279 1,290 2,748 235 254 162 183 309 307 327 54 Credit unions.................................. 1,580 2,045 2,719 252 252 205 252 358 301 371 55 Retailers.......................................... 69 1,050 2,032 184 -12 309 202 367 129 170 56 Others.............................................. 196 217 350 61 -33 -15 76 58 -6 57 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 Nov. Dec. Jan. Feb. Mar. Apr. May Extensions 3 1Total......................................................... 164,169 193,328 225,645 19,680 20,138 19,586 20,179 21,595 22,117 22,336 By holder: 7, Commercial banks............................ 77,312 94,220 110,777 9,688 10,226 9,625 9,905 10,608 11,120 11,004 3 Finance companies............................ 31,173 36,028 41,770 3,602 3,743 3,575 3,691 3,914 4,226 4,241 4 24,096 28,587 33,592 2,920 3,093 2,820 3,028 3,309 3,267 3,508 5 27,049 29,188 33,202 2,857 2,647 3,102 2,976 3,148 2,955 2,995 6 4,539 5,305 6,303 612 428 464 579 616 549 588 By type of credit: 7 51,413 62,988 72,888 6,330 6,721 6,263 6,400 6,822 7,248 7,387 8 Commercial banks........................ 28,573 36,585 42,570 3,717 3,941 3,650 3,700 3,924 4,212 4,189 9 15,766 19,882 22,904 2,076 2,153 2,026 2,065 2,173 2,347 2,327 10 12,807 16,704 19,666 1,641 1,788 1,624 1,635 1,751 1,865 1,862 11 Finance companies....................... 9,674 11,209 12,635 1,097 1,143 1,088 1,080 1,173 1,314 1,337 12 12,683 14,675 17,041 1,458 1,581 1,421 1,565 1,679 1,654 1,798 13 Others............................................... 483 518 642 58 55 105 55 46 68 63 14 4,323 4,841 5,244 464 460 449 406 502 508 490 IS 2,622 3,071 3,153 280 300 250 236 284 279 294 16 Finance companies....................... 764 690 r651 54 60 101 62 74 85 74 17 5,556 6,736 8,066 761 722 618 710 770 753 798 18 Commercial banks........................ 2,722 3,245 3,968 370 384 327 338 352 382 395 Revolving credit: 19 Bank credit cards.......................... 20,428 25,862 31,761 2,828 2,973 2,948 3,143 3,231 3,255 3,245 20 Bank check credit.......................... 4,024 4,783 5,886 492 531 556 535 608 646 677 21 All other............................................... 78,425 88,117 r101,801 8,804 8,731 8,751 8,985 9,662 9,707 9,739 22 Commercial banks, total............. 18,944 20,673 23,439 2,001 2,096 1,893 1,953 2,209 2,346 2,204 23 Personal loans............................ 13,386 14,480 16,828 1,434 1,518 1,338 1,405 1,537 1,669 1,511 24 20,657 24,087 '28,396 2,441 2,530 2,380 2,541 2,659 2,814 2,819 25 Personal loans............................ 16,944 19,579 *•22,348 1,914 1,975 1,851 1,989 2,105 2,226 2,273 26 Credit unions.................................. 10,134 12,340 14,604 1,285 1,326 1,236 1,288 1,429 1,431 1,500 27 Retailers.......................................... 27,049 29,188 33,202 2,857 2,647 3,102 2,976 3,148 2,955 2,995 28 1,642 1,830 2,160 221 131 138 227 217 161 221 Liquidations3 29 Total......................................................... 156,665 172,795 *"194,555 16,826 17,402 17,162 17,518 17,527 18,398 18,479 By holder: 30 74,491 83,376 94,998 8,305 8,615 8,509 8,625 8,587 9,119 9,123 31 Finance companies............................ 31,263 33,384 *•36,394 3,059 3,244 3,114 3,273 3,252 3,445 3,478 32 20,325 23,707 27,103 2,354 2,452 2,325 2,425 2,473 2,568 2,597 33 26,980 28,138 31,170 2,673 2,659 2,793 2,774 2,781 2,826 2,825 34 3,606 4,191 4,890 435 432 420 421 434 440 456 By type of credit: 35 48,406 52,750 r59,652 5,089 5,424 5,078 5,296 5,300 5,520 5,598 36 Commercial banks........................ 28,014 30,154 34,435 2,991 3,106 3,013 3,101 3,042 3,223 3,245 37 16,101 17,059 18,710 1,632 1,667 1,619 1,676 1,609 1,744 1,752 38 11,913 13,095 15,726 1,360 1,439 1,394 1,425 1,433 1,479 1,493 39 Finance companies....................... 9,142 9,875 10,819 855 1,017 841 879 935 939 970 40 Credit unions.................................. 10,811 12,253 13,819 1,195 1,253 1,177 1,265 1,273 1,311 1,333 41 439 468 536 48 48 48 51 50 47 50 42 4,517 4,691 r4,802 390 384 398 383 394 413 432 43 Commercial banks........................ 2,944 2,986 3,025 257 240 248 234 238 251 261 44 Finance companies....................... 837 867 806 50 68 65 71 72 74 77 45 4,675 5,151 6,098 550 549 514 539 553 541 576 46 Commercial banks........................ 2,451 2,657 3,048 272 274 257 269 278 271 286 Revolving credit: 47 19,208 24,012 28,851 2,585 2,723 2,788 2,858 2,783 2,944 2,982 48 4,010 4,552 5,202 466 485 491 448 488 590 548 49 All other............................................... 75,849 81,638 89,948 7,747 7,836 7,894 7,994 8,009 8,390 8,343 50 Commercial banks, total............. 17,864 19,014 20,436 1,734 1,786 1,713 1,715 1,758 1,840 1,801 51 12,528 13,439 14,757 1,250 1,284 1,258 1,238 1,274 1,336 1,304 52 Finance companies, total............. 21,005 22,578 *•24,647 2,148 2,152 2,203 2,318 2,240 2,427 2,424 53 16,665 18,289 *•19,600 1,678 1,722 1,688 1,806 1,796 1,919 1,946 54 Credit unions.................................. 8,554 10,295 11,884 1,033 1,075 1,031 1,036 1,071 1,130 1,129 55 26,980 28,138 31,170 2,673 2,659 2,793 2,774 2,781 2,826 2,825 56 1,446 1,613 1,811 159 165 153 151 159 167 164 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 □ July 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 Home............................................... 34.8 39.5 63.6 94.9 33.4 45.6 57.1 70.2 85.6 104.3 15 16 Multifamily residential................. 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 Farm................................................ 5.0 4.6 6.1 8.8 5.1 4.0 5.0 7.3 9.0 8.7 18 19 Other debt instruments.......................... 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 Bank loans n.e.c................................. 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 By borrowing sector................................... 162.4 107.0 179.0 272.5 93.1 120.9 166.2 191.7 256.6 288.4 24 2i> 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 Corporate equities..................................... -.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 Corporate equities......................................... .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 Corporate bonds........................................ 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 Private financial sectors..................................... 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 Investment company shares............................ -.7 -.1 -1.0 -1.3 .7 -.9 -2.5 .5 -1.4 -1.1 62 63 Other corporate equities................................... 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 Consumer credit............................................. 10.2 9.4 23.6 35.0 2.2 16.6 22.9 24.2 35.6 34.5 69 70 Bank loans n.e.c.............................................. 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: 52.7 44.3 54.6 85.7 55.0 33.6 53.2 56.0 73.6 97.9 2 11.9 22.5 26.8 40.2 33.4 11.6 21.1 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 5 FHLB advances to S&L’s................................ 6.7 -4.0 -2.0 4.3 -6.6 -1.3 -1.6 -2.4 3.5 5.2 5 6 Other loans and securities................................ 19.5 9.5 16.9 20.8 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 13 U.S. Govt, securities......................................... 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 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 30.0 41.5 47.6 60.8 38.3 44.7 47.8 47.3 57.7 63.9 22 4.7 -1.1 9.9 16.8 -1.4 -.7 3.4 16.3 13.3 20.3 23 24 Sources off unds...................................................... 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 21 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 31 Other, net......................................................... 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 33 U.S. Govt, securities......................................... 18.2 22.2 19.4 22.0 6.0 38.4 22.6 16.1 10.9 33.0 33 34 State and local obligations.............................. 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 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 40 Large negotiable CD’s.................................. 18.8 -14.0 -14.2 9.5 -27.8 -.2 -18.0 -10.4 -4.4 23.4 40 41 Other at commercial banks......................... 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 43 Money................................................................... 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 and currency.................................................... 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 50 T M o e t m al o n : e C t i o s r s p u o e r s a .. t . e .. . e .. q ... u .. i . t . i .. e .. s . . n ... o .. t . . i . n ... c .. l . u .. d .. e .. d ... . a .. b .. o .. v .. e ... 4.1 10.0 11.2 4.2 10.5 9.5 12.6 9.8 2.8 5.6 50 51 Mutual fund shares........................................... -.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 □ July 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 Nov. Dec. Jan. Feb. Mar. Apr. MayP Junee 1 Industrial production....................................................... 117.8 129.8 137.0 139.3 139.7 138.8 139.2 140.9 143.0 143.8 144.3 Market groupings: 2 Products, total......................................................... 119.3 129.3 137.1 139.5 140.3 138.5 139.6 r141.6 142.8 143.3 143.7 3 Final, total........................................................... 118.2 127.2 134.9 137.0 137.6 134.9 136.4 *•138.9 140.6 140.6 141.1 4 Consumer goods............................................. 124.0 136.2 143.4 145.2 145.8 141.8 '143.8 '145.9 147.6 147.1 147.5 6 Equipment....................................................... 110.2 114.6 123.2 125.8 126.2 125.4 *•126.2 *•129.1 130.9 131.7 132.3 6 Intermediate......................................................... 123.1 137.2 145.1 148.4 150.4 151.6 *•151.4 *•151.4 151.5 153.2 153.6 7 Materials................................................................... 115.5 130.6 136.9 139.0 138.8 139.2 138.6 '139.9 143.4 144.7 145.3 Industry groupings: 8 Manufacturing......................................................... 116.3 129.5 137.1 139.9 140.5 138.7 *•139.4 141.4 143.5 144.3 144.8 Capacity utilization (per cent)1 in— 9 Manufacturing............................................................. 73.6 80.2 82.4 82.9 83.0 81.7 '81.9 82.7 83.7 83.9 83.9 10 Industrial materials industries.................................. 73.6 80.4 81.9 82.3 81.9 81.9 '81.3 '81.9 83.8 84.3 84.4 11 Construction contracts2................................................ 162.3 190.2 253.0 258.0 299.0 270.0 266.0 254.0 279.0 332.0 12 Nonagricultural employment, total3............................. 117.0 120.6 124.7 126.4 126.7 127.1 127.6 128.4 129.4 129.8 130.2 13 Goods-producing, total.............................................. 97.1 100.3 104.1 105.4 105.4 105.7 106.3 107.2 109.0 109.3 109.7 14 Manufacturing, total.............................................. 94.3 97.5 100.6 101.4 102.2 102.7 103.2 103.7 104.0 104.2 104.1 15 Manufacturing, production-worker.................... 91.3 95.2 98.3 99.1 100.0 100.7 101.3 101.7 102.0 102.2 101.9 16 Service-producing....................................................... 127.8 131.7 136.0 137.9 138.3 138.8 139.3 140.0 140.6 140.9 141.4 17 Personal income, total4............................................................ 200.0 220.7 245.1 255.7 259.0 259.4 260.9 264.4 267.8 270.2 18 Wages and salary disbursements............................. 188.5 208.6 231.5 240.9 242.2 244.7 246.8 251.2 255.3 256.8 19 Manufacturing......................................................................... 157.3 177.7 199.3 206.9 209.7 211.3 214.5 219.5 221.0 222.1 20 Disnosahle nersonal income................................................. 199.2 217.8 239.0 245.3 263.6 21 Retail sales5..................................................................... 184.6 203.5 224.4 235.3 237.1 228.8 235.6 239.5 244.8 244.3 244.4 Prices:6 22 Consumer7................................................................... 161.2 170.5 181.6 185.4 186.1 187.2 188.4 189.8 191.5 193.3 23 Wholesale..................................................................... 174.9 183.0 194.2 197.0 198.2 199.9 202.0 203.8 206.4 207.9 209.4 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 Q3 Q4 Ql' Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 Output (1967= 100) Capacity (per cent of 1967 output) Utilization rate (per cent) 1 Manufacturing................................................... 138.7 139.9 139.8 144.2 167.1 168.7 170.3 172.0 83.0 82.9 82.1 83.8 2 Primary processing...................................... 147.3 148.2 148.2 153.5 173.5 175.1 176.8 178.5 84.9 84.6 '83.8 86.0 3 Advanced processing.................................. 129.3 135.6 135.4 139.2 163.8 165.3 166.9 168.5 81.9 82.0 81.1 82.6 4 Materials........................................................... 138.1 138.9 139.2 144.5 167.8 168.9 170.4 171.7 82.3 82.2 81.7 84.1 5 Durable goods.............................................. 136.0 137.7 137.9 143.7 171.6 172.8 174.0 175.2 79.2 79.6 79.3 82.0 6 Basic metal............................................... 109.4 109.4 110.5 145.3 145.5 145.8 75.3 75.2 75.8 7 Nondurable goods....................................... 154.4 155.0 158.0 i62*. 3 178.8 180.4 182.3 i84.4 86.3 85.9 '86.7 ”88:6’ 8 Textile, paper, and chemical................ 159.2 159.5 163.1 166.8 187.1 188.9 190.8 193.1 85.1 84.5 '85.5 86.4 9 Textile.................................................... 112.3 117.9 115.3 142.5 143.0 143.5 78.8 82.4 80.3 10 Paper...................................................... 135.1 132.3 136.5 151.3 152.5 153.6 89.3 86.7 88.9 11 Chemical............................................... 189.5 188.9 194.9 221.2 223.6 226.6 85 7 84.5 86 0 12 Energy........................................................... 123.4 121.9 119.1 124.4 145.2 145.7 147.2 147.8 85.0 83.7 '80.9 84.2 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 Dec. Jan. Feb. Mar. Apr. May June Household survey data 1 Noninstitutional population1................ 153,449 156,048 158,559 159,736 159,937 160,128 160,313 160,504 160,713 160,928 2 Labor force (including Armed 94,793 96,917 99,534 101,048 101,228 101,217 101,536 101,902 102,374 102,671 3 Civilian labor force............................... 92,613 94,773 97,401 98,919 99,107 99,093 99,414 99,784 100,261 100,573 Employment: 4 Nonagricultural industries2........ 81,403 84,188 87,302 89,286 89.527 89,761 89,956 90,526 90,877 91,346 5 Agriculture...................................... 3,380 3,297 3,244 3,323 3,354 3,242 3,310 3,275 3,235 3,473 Unemployment: 6 Number........................................... 7,830 7,288 6,855 6,310 6,226 6,090 6,148 5,983 6,149 5,754 7 Rate (per cent of civilian labor force)........................................ 8.5 7.7 7.0 6.4 6.3 6.1 6.2 6.0 6.1 5.7 8 Not in labor force.................................. 58,655 59,130 59,025 58,688 58,709 58,911 58,776 58,602 58,340 58,257 Establishment survey data 9 Nonagricultural payroll employment3 17,051 79,443 82,142 83,429 83,719 84,046 84,555 85,223 85,454 85,729 10 Manufacturing.................................... 18,347 18,956 19,555 19,868 19,972 20,075 20,164 20,216 20,257 20,253 11 Mining................................................. 745 783 831 711 705 24,733 24,945 898 903 912 12 Contract construction....................... 3,512 3,594 3,845 3,947 3,916 711 728 4,237 4,275 4,362 13 Transportation and public utilities. 4,498 4,509 4,589 4,652 4,628 4,651 4,672 4,709 4,713 4,716 14 Trade.................................................... 17,000 17,694 18,291 18,610 18,744 18,744 18,849 18,891 18,961 19,002 15 Finance................................................ 4,223 4,316 4,508 4,611 4,630 4,647 4,670 4,683 4,710 4,730 16 Service.................................................. 14,006 14,644 15,333 15,663 15,693 15,791 15,875 15,962 15,967 16,020 17 Government........................................ 14,720 14,948 15,190 15,367 15,431 15,480 15,544 15,627 15,668 15,734 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 □ July 1978 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted. 1967 1977 1978 Grouping pro­ 1977 por­ aver­ tion age Apr. May June Nov. Dec. Jan. Feb. Mar.r Apr. MayP Junee Index (1967 == 100) MAJOR MARKET 1Total index.................................................................... 100.00 137.1 136.1 137.0 137.8 139.3 139.7 138.8 139.2 140.9 143.0 143.8 144.3 2 Products........................................................................ 60.71 137.1 135.8 136.5 137.3 139.5 140.3 138.5 139.6 141.6 142.8 143.3 143.7 3 Final products........................................................... 47.82 134.9 134.1 134.7 135.4 137.0 137.6 134.9 136.4 138.9 140.6 140.6 141.1 4 Consumer goods................................................. 27.68 143.4 142.9 143.1 143.8 145.2 145.8 141.8 143.8 145.9 147.6 147.1 147.5 5 Equipment............................................................ 20.14 123.2 122.1 123.2 124.1 125.8 126.2 125.4 126.2 129.1 130.9 131.7 132.3 6 Intermediate products............................................ 12.89 145.1 142.3 143.5 144.7 148.4 150.4 151.6 151.4 151.4 151.5 153.2 153.6 7 Materials....................................................................... 39.29 136.9 136.5 137.8 138.7 139.0 138.8 139.2 138.6 139.9 143.4 144.7 145.3 Consumer goods 8 Durable consumer goods....................................... 7.89 153.1 151.5 152.2 155.8 155.2 155.8 146.5 151.2 157.5 161.9 159.6 159.9 9 Automotive products......................................... 2.83 174.2 173.9 172.8 179.8 173.6 172.4 157.5 162.8 175.8 184.3 178.1 177.9 10 Autos and utility vehicles............................. 2.03 169.2 171.2 167.4 177.4 167.6 165.5 145.5 153.9 171.0 183.3 174.2 173.7 11 Autos............................................................. 1.90 148.4 150.6 148.5 156.8 147.5 143.6 127.4 131.5 149.7 159.1 151.4 149.4 12 Auto parts and allied goods........................ .80 186.8 181.3 186.6 185.8 188.7 190.4 187.8 185.3 188.5 186.6 188.1 188.8 13 Home goods......................................................... 5.06 141.3 138.8 140.6 142.3 145.0 146.6 140.3 144.6 147.2 149.3 149.1 149.7 14 Appliances, A/C, and TV............................. 1.40 127.3 126.4 131.0 133.1 131.4 132.8 116.1 133.3 135.4 142.6 141.0 141.9 15 1.33 no 5 129.9 134.8 136.8 133.0 134.6 117.4 135.7 137.9 145.1 143.5 16 1.07 15? 2 145.0 147.3 151.2 160.0 161.5 159.1 160.2 159.3 158.9 160.6 17 Misc. home goods........................................... 2.59 144.3 143.0 143.1 143.6 146.3 147.7 145.9 144.3 148.7 149.0 148.6 149.1 18 Nondurable consumer goods.................................. 19.79 139.6 139.4 139.5 139.1 141.2 141.8 139.9 140.8 141.3 141.9 142.3 142.7 19 Clothing................................................................ 4.29 1?5 2 124.4 125.5 125.7 126.4 126.9 118.3 121.1 122.4 124.9 20 Consumer staples................................................ 15.50 143.6 143.6 143.4 142.9 145.3 145.9 145.9 146.3 146.4 146.6 146.9 147.2 ?1 8.33 135.5 136.1 135.0 135.4 136.7 137.9 136.5 138.3 138.7 140.8 141.2 22 Nonfood staples.............................................. 7.17 152.9 152.5 153.2 151.7 155.1 155.2 156.6 155.8 155.3 153.2 153.4 153.8 23 Consumer chemical products.................. 2.63 180.5 178.1 180.8 179.3 186.9 186.5 187.4 184.3 182.1 182.5 181.9 24 Consumer paper products........................ 1.92 117.1 116.6 118.4 116.3 118.5 119.8 121.4 118.8 118.9 117.7 117.5 25 Consumer energy products....................... 2.62 151.4 153.0 150.8 149.8 149.9 149.7 151.5 154.5 155.0 149.8 151.2 26 Residential utilities................................ 1.45 159.0 158.5 157.1 159.9 155.6 158.5 161.7 167.6 166.9 159.0 Equipment 27 Business equipment.................................................. 12.63 149.2 147.1 148.9 150.1 153.5 154.0 152.6 154.2 157.4 159.4 160.7 161.4 28 Industrial equipment......................................... 6.77 138.5 136.3 138.4 140.0 142.6 143.0 144.3 144.6 146.9 147.9 149.8 150.4 29 Building and mining equipment.................. 1.44 202.5 200.5 205.3 208.1 206.7 208.3 211.1 214.9 221.7 225.1 226.3 226.9 30 Manufacturing equipment............................ 3.85 113.9 112.0 112.8 115.0 118.7 118.2 118.8 117.7 118.3 119.0 121.2 121.9 31 Power equipment............................................ 1.47 140.2 136.7 139.9 139.0 142.1 143.7 146.1 145.8 148.8 147.9 149.4 150.1 32 Commercial transit, farm equipment............. 5.86 161.6 159.5 161.2 161.9 165.9 166.9 162.2 165.5 169.4 172.6 173.4 174.1 33 Commerical equipment................................. 3.26 191.6 189.7 191.1 191.4 197.4 198.8 198.5 200.9 202.0 203.8 205.0 205.6 34 Transit equipment........................................... 1.93 117.8 115.2 116.5 118.5 118.9 121.1 111.1 115.9 126.1 133.6 134.7 135.9 35 Farm equipment............................................. .67 142.3 141.0 144.4 143.2 147.8 144.5 131.4 134.8 137.0 132.9 131.7 36 Defense and space equipment................................ 7.51 79.6 79.9 80.0 80.3 79.3 79.5 79.7 79.2 81.9 82.9 83.0 83.4 Intermediate products 37 Construction supplies............................................. 6.42 140.8 137.2 138.7 139.9 146.5 148.3 149.2 148.6 147.9 148.2 150.4 151.0 38 Business supplies .................................... 6.47 149.5 147.5 148.4 149.6 150.1 152.6 153.8 154.2 155.0 154.8 155.8 39 Commercial energy products . . ...... 1.14 164.6 164.6 165.8 164.2 160.9 165.6 165.5 165.6 164.3 160.9 163.4 Materials 40 Durable goods materials......................................... 20.35 134.5 133.8 135.2 136.4 137.2 138.7 138.2 137.0 138.6 142.3 143.9 144.8 41 Durable consumer parts.................................... 4.58 132.0 129.4 132.0 134.5 136.5 135.7 133.0 131.1 133.1 136.6 138.0 138.8 42 Equipment parts................................................. 5.44 143.1 140.7 141.7 143.0 147.2 149.2 148.7 146.6 151.3 154.0 156.0 157.2 43 Durable materials n.e.c...................................... 10.34 131.1 132.2 133.2 133.8 132.3 134.3 134.9 134.6 134.5 138.7 140.1 141.0 44 Basic metal materials . 5.57 110.9 115.0 117.8 116.3 107.9 110.3 110.2 111.0 110.4 116.5 117.7 45 Nondurable goods materials.................................. 10.47 153.5 153.7 155.4 154.7 155.4 155.3 155.0 158.5 160.5 161.9 162.4 162.7 46 Textile, paper, and chem. mat......................... 7.62 158.3 159.0 160.7 160.1 159.3 159.3 160.7 162.8 165.7 166.4 166.8 167.2 47 Textile materials ................... 1.85 113.0 111.8 111.8 109.0 117.8 117.3 114.9 115.8 115.1 116.5 115.8 48 Paper materials... . ............................ 1.62 133.5 132.2 136.2 134.4 132.2 130.2 135.0 136.8 137.8 139.2 140.1 49 Chemical materials ................... 4.15 188.2 190.6 192.2 192.7 188.6 189.5 191.4 194.2 199.2 199.5 200.1 50 Containers nondurable 1.70 150.9 148.5 152.3 152.4 156.7 154.4 150.4 158.7 158.1 159.8 161.1 51 Nondurable materials n e c . . 1.14 125.3 125.6 123.1 122.9 128.5 129.9 123.6 128.9 129.3 134.5 134.8 52 Energy materials..................................................... 8.48 122.4 121.3 122.3 124.3 123.0 118.7 122.2 117.7 117.5 122.9 124.9 125.4 53 Primary energy . . .. 4.65 107.3 106.0 106.6 109.7 111.6 103.0 105.2 101.0 104.5 113.6 113.1 54 Converted fuel materials 3.82 140.7 140.1 141.4 142.0 136.9 137.7 142.8 138.0 133.3 134.2 139.2 Supplementary groups 55 Home goods and clothing.................................... 9.35 133.9 132.2 133.6 134.7 136.5 137.5 130.2 133.8 135.9 138.0 138.4 139.1 56 Energy, total............................................................. 12.23 132.5 132.1 132.5 133.5 132.3 129.7 132.5 130.0 129.8 132.2 134.1 134.5 57 Products................................................................ 3.76 155.4 156.5 155.3 154.1 153.2 154.5 155.8 157.9 157.9 153.0 154.9 58 Materials............................................................... 8.48 122.4 121.3 122.3 124.3 123.0 118.7 122.2 117.7 117.5 122.9 124.9 '{25.4 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 Apr. May June Nov. Dec, Jan. Feb. Mar.r Apr. Mayv June Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities. 12.05 136.2 135.7 137.1 138. 135.5 133.9 137.4 137.7 138.2 140.2 141.0 141.7 2 Mining................... 6.36 117.8 119.2 119.5 122. 118 113.4 115.0 114.4 119.3 126.1 126.1 126.8 3 Utilities.................. 5.69 156.5 154.0 156.7 156. 154.2 156.7 162.3 163.5 159.5 156.1 157.7 158.3 4 Electric............... 3. 175.5 170.4 175.4 176. 173.3 175.9 183.6 184.3 178.8 175.1 5 Manufacturing. 87.95 137.1 135. 137.1 137.8 139.9 140.5 138.7 139.4 141.4 143.5 144.3 144.8 6 Nondurable., 35.97 148.1 147.0 148.5 148.4 150.1 150.9 149.8 150.6 151.4 152.8 153.9 154.3 7 Durable........ 51.98 129.5 128.0 129.3 130.5 132.7 133.4 131.1 131.5 134.4 136.9 137.6 138.1 Mining 8 Metal mining...................... 10 .51 105.4 126.1 120.5 121.3 84.8 104.3 121.4 119.9 127.6 122.3 120.0 9 Coal....................................... 11,12 .69 118.0 118.4 122.4 133.4 140.6 74.6 54.8 56.5 78.4 129.7 132.9 137.0 10 Oil and gas extraction___ 13 4.40 118.0 117.5 118.3 121.3 117.8 118.4 121.1 120.4 123.3 125.4 125.3 125.8 11 Stone and earth minerals. 14 .75 124.9 124.0 123.0 122.5 127.2 126.5 130.0 129.1 128.2 128.9 128.7 Nondurable manufactures Foods................................ 8.75 137.9 138.0 138.3 136.9 139.4 140.4 139.3 140.8 141.1 142.7 143.2 Tobacco products.......... .67 114.3 112.1 105.2 119.2 117.5 120.6 113.4 117.7 115.6 121.0 Textile mill products... 2.68 137.1 134.6 136.0 135.4 141.6 143.7 137.1 136.4 135.1 137.7 138.3 Apparel products........... 3.31 124.2 121.4 123.5 122.1 125.1 125.8 118.6 121.1 122.8 126.1 Paper and products 3.21 137.4 136.3 139.5 139.3 137.8 138.6 139.9 143.9 144.9 145.9 146.6 146.0 17 Printing and publishing........ 4.72 124.7 123.4 124.4 124.1 126.2 127.5 129.9 128.3 129.1 128.6 128.4 128.5 18 Chemicals and products 7.74 180.7 180.6 182.8 183.5 183.1 183.0 184.4 183.7 185.2 185.5 187.4 19 Petroleum products............... 1.79 141.0 143.4 142.4 140.0 140.5 139.3 139.7 139.0 140.1 140.1 141.8 i40*8 20 Rubber & plastic products. 2.24 232.2 226.0 232.4 235.2 238.5 240.1 238.7 240.0 243.1 247.7 252.9 21 Leather and products........... .86 75.3 74.7 76.2 74.1 78.1 77.3 74.5 73.0 72.1 76.0 75.7 Durable manufactures 22 Ordnance, pvt. & govt.... 19,91 3.64 73.9 74.6 74.4 74.1 74.1 73.8 72.3 71.2 72.7 73.0 72.9 72.8 23 Lumber and products......... 24 1.64 133.4 130.6 133.0 132.4 137.5 138.1 138.5 135.5 136.5 136.0 137.1 24 Furniture and fixtures......... 25 1.37 140.9 135.4 137.5 139.9 146.0 146.6 146.4 150.1 149.5 148.9 150.4 25 Clay, glass, stone products. 32 2.74 146.1 145.0 145.0 147.7 152.8 152.1 152.2 152.6 154.2 156.3 156.6 26 Primary metals..................... 33 6.57 110.2 112.2 117.1 114.7 111.2 111.0 107.4 106.2 106.1 114.6 116.4 117.4 27 Iron and steel................... 331,2 4.21 103.4 103.9 111.0 109.2 104.3 103.8 99.5 96.3 96.4 109.1 111.3 28 Fabricated metal products. 34 5.93 130.9 127.6 128.2 130.8 135.8 136.4 136.9 136.9 138.1 139.4 140.9 141.6 29 Nonelectrical machinery... 35 9.15 144.8 142.9 142.6 144.0 149.7 151.7 150.1 150.1 151.5 152.1 153.2 154.1 30 Electrical machinery............ 36 8.05 141.9 139.6 141.8 142.6 146.0 147.3 144.0 146.4 149.5 152.3 153.0 153.4 31 Transportation equipment......... 37 9.27 121.1 119.8 120.3 123.7 122.0 122.2 116.2 118.4 126.5 130.5 130.0 130.5 32 Motor vehicles & parts........... 371 4.50 159.7 158.1 157.7 163.2 163.0 161.8 146.6 153.1 165.1 171.5 167.7 167.8 33 Aerospace & misc. tr. eq.. . . 372-9 4.77 84.7 83.8 85.2 86.5 83.3 84.9 87.6 85.8 90.1 91.8 94.4 95.1 34 Instruments.................................... 38 2.11 159.1 157.8 157.4 158.2 163.1 164.7 163.4 163.5 168.7 170.5 169.8 170.9 35 Miscellaneous mfrs...................... 39 1.51 149.1 145.6 148.0 148.4 151.8 152.5 153.0 151.8 153.7 152.9 152.3 152.8 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total............. 1507.4 583.9 578.3 582.2 585.9 591.3 594.7 582.0 591.2 601.1 607.4 609.4 609.4 37 Final products.......... i390.9 452.1 448.5 451.0 453.7 457.3 458.7 445.1 454.4 463.5 469.6 469.7 469.8 38 Consumer goods. 1277.5 317.5 316.1 316.3 318.9 320.0 320.4 311.2 318.6 321.6 326.4 325.5 325.1 39 Equipment............ 1113.4 134.6 132.6 134.6 134.9 137.3 138.2 133.9 135.8 142.0 143.3 144.6 144.8 40 Intermediate products. U16.6 131.9 130.1 131.4 131.8 134.1 135.9 136.7 137.0 137.5 137.9 139.5 139.4 i 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 □ July 1978 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates. Exceptions noted. 1977 1978 Item 1975 1976 1977 Nov. Dec. Jan. Feb. Mar.r Apr.' May Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized................................. 927 1,296 18,133 1,822 1,778 1,526 1,534 1,647 1,740 1,587 669 894 12,265 1,218 1,188 1,032 957 1,157 1,157 1,057 3 2-or-more-family................................ 278 402 5,861 604 590 494 577 610 583 530 1,160 1,538 1,986 2,096 2,203 1,548 1,569 2,047 2,181 2,075 5 1-family............................................... 892 1,163 1,451 1,544 1,574 1,156 1,103 1,429 1,500 1,488 6 2-or-more-family................................ 268 377 535 552 629 392 466 618 681 587 7 Under construction, end of period 1 1,003 1,147 1,442 1,211 1,249 r1,262 r1,260 1,265 1,283 8 1-family............................................... 531 655 829 746 770 r785 787 781 779 9 2-or-more-family............................... 472 492 613 466 479 478 r474 483 505 10 Completed,.............................................. 1,297 1,362 1,652 1,769 1,641 1,759 r 1,696 1,794 1,944 11 1-family........................................... 866 1,026 1,254 1,280 1,299 1,300 '1,233 1,368 1,506 12 2-or-more-family............................... 430 336 398 489 342 r459 463 426 438 13 Mobile homes shipped.......................... 213 246 277 318 324 322 2.69 2.84 r252 247 Merchant builder activity in 1-family units: 14 Number sold.......................................... 544 639 819 819 857 813 r774 799 836 831 15 Number for sale, end of period1......... 383 433 407 401 403 405 r404 404 411 416 Price (thous. of dollars)2 Median: 16 Units sold........................................ 39.3 44.2 48.9 51.8 52.9 52.3 53.2 53.5 53.1 55.8 17 Units for sale.................................. 38.9 41.6 48.2 46.7 47.7 48.2 Average: 18 Units sold........................................ 42.5 48.1 54.4 57.8 57.6 58.5 '59.1 60.1 59.5 63.0 EXISTING UNITS (1-family) 19 Number sold.......................................... 2,452 3,002 3,572 3,980 4,030 3,780 3,460 3,770 3,880 3,770 Price of units sold (thous. of dollars):2 35.3 38.1 42.9 44.5 44.2 45.5 46.3 46.5 48.2 47.8 21 Average............................................... 39.0 42.2 47.9 48.5 48.3 50.3 51.3 51.1 53.6 54.8 Value of new construction 4 (millions of dollars) CONSTRUCTION 22 Total put in place................................ 134,293 147,481 170,685 '178,060 '179,026 171,252 178,069 184,817 192,960 198,623 23 Private.................................................... 93,624 109,499 133,652 r140,666 '142,284 137,312 143,597 147,145 151,428 153,780 24 Residential........................................ 46,472 60,519 81,067 '85,244 '87,361 '79,716 '85,577 87,578 90,125 91,466 25 Nonresidential, total...................... 47,152 48,980 52,585 '55,422 '54,923 '57,596 '58,020 59,567 61,303 62,314 Buildings: 26 Industrial.................................. 8,017 7,182 7,182 '8,407 '7,874 7,484 7,563 9,199 9,244 8,794 27 Commercial.............................. 12,804 12,757 14,604 '15,876 '14,890 14,986 15,043 16,227 17,177 19,098 28 Other.......................................... 5,585 6,155 6,226 '6,378 '6,252 '6,012 '5,867 6,358 6,806 6,942 29 Public utilities and other........... 20,746 22,886 24,573 '24,761 '25,907 '29,114 '29,547 27,783 28,076 27,480 30 Public..................................................... 40,669 37,982 37,033 '37,414 '36,762 '36,425 '35,729 37,672 41,532 44,843 31 Military.............................................. 1,392 1,508 1,478 '1,303 '1,381 '1,430 '1,478 1,405 1,500 1,438 32 Highway............................................ 10,861 9,756 9,170 '8,973 '8,455 7,253 6,718 7,354 33 Conservation and development.. 3,256 3,722 3,765 '3,803 '3,854 '3,524 '3,330 3,546 34 Other3......................................................... 25,160 22,996 22,620 '23,335 '23,072 '24,218 '24,203 25,367 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 1978 May 1977 1978 1978 May May (1967 June Sept. Dec. Mar. Jan. Feb. Mar. Apr. May = 100)2 Consumer prices 3 1 All items............................................................. 6.7 7.0 7.8 4.5 4.9 9.3 .8 .6 .8 .9 .9 193.3 2 Commodities...................................................... 6.2 6.4 6.7 2.5 4.9 9.3 .9 .5 .8 .9 .9 185.5 3 Food............................................................... 6.5 9.7 11.5 1.9 4.2 16.4 1.3 1.2 1.3 1.9 1.5 210.3 4 Commodities less food............................... 5.9 5.0 4.2 2.7 5.4 6.1 .7 .2 .6 .5 .6 173.0 5 Durable...................................................... 6.4 5.3 3.5 1.5 5.2 8.7 1.0 .7 .5 .5 .8 172.0 6 Nondurable............................................... 5.5 4.3 4.7 3.4 5.1 3.1 .4 -.3 .6 .5 .4 172.8 7 Services............................................................... 7.7 8.2 9.4 7.6 4.9 9.1 .6 .7 .8 .9 1.0 208.0 8 Rent................................................................ 5.8 6.9 6.2 6.7 6.3 6.2 .6 .4 .6 .7 .7 162.7 9 Services less rent.......................................... 8.0 8.4 9.9 8.0 4.8 9.6 .6 .8 .9 .9 1.0 216.2 Other groupings: 10 All items less food...................................... 6.8 6.6 6.8 5.3 5.0 8.1 .8 .5 .7 .7 .8 189.0 11 All items less food and energy................. 6.4 6.7 6.9 5.1 5.3 8.0 .9 .4 .7 .7 .8 186.4 12 Homeownership........................................... 6.7 10.0 10.4 8.5 7.1 12.2 1.0 .7 1.2 1.1 1.1 222.5 Producer prices, formerly Wholesale prices 13 Finished goods................................................. 6.4 7.0 6.4 2.9 7.2 9.4 .7 1.0 .6 1.3 .7 193.0 14 Consumer....................................................... 6.5 6.6 6.2 1.8 5.4 10.5 .8 1.1 .5 1.6 .6 191.3 15 Foods......................................................... 5.0 7.6 4.3 -2.3 7.4 21.0 1.1 2.9 .8 1.9 .5 206.9 7.3 6.1 7.8 4.0 4.7 5.1 .6 .2 .5 1.3 .8 181.6 17 Capital Equiptment..................................... 6.4 7.9 6.8 6.0 10.9 6.9 .5 .5 .6 .6 .9 196.9 18 Materials............................................................ 7.9 6.1 1.2 .4 8.3 14.2 1.1 1.3 .9 .9 .5 218.5 19 Intermediate1................................................ 7.2 6.4 5.5 7.1 4.2 9.0 .9 .8 .5 .5 .5 214.5 Crude: 20 Nonfood.................................................... 17.4 5.7 -8.1 -5.3 20.1 15.7 1.2 1.0 1.5 .9 .4 282.5 21 Food........................................................... 3.9 5.2 -16.6 -19.6 27.6 43.6 2.8 4.7 1.8 3.7 .0 219.1 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 □ July 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 1,528.8 1,706.5 1,889.6 1,755.4 1,810.8 1,869.9 1,915.9 1,961.8 1,995.3 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 1,282.4 3 Durable goods................................................... 132.9 158.9 179.8 166.3 177.0 178.6 177.6 186.0 183.5 4 Nondurable goods............................................ 409.3 442.7 480.7 458.8 466.6 474.4 481.8 499.9 504.3 5 Services................................................................ 438.2 492.3 550.7 513.9 528.8 541.1 559.5 573.7 594.6 6 Gross private domestic investment...................... 189.1 243.3 294.2 243.4 271.8 294.9 303.6 306.7 320.0 7 Fixed investment............................................... 200.6 230.0 276.1 244.3 258.0 273.2 280.0 293.2 299.0 8 Nonresidential................................................ 149.1 161.9 185.1 167.6 177.0 182.4 187.5 193.5 198.8 9 Structures.................................................... 52.9 55.8 61.5 57.0 57.9 61.0 62.6 64.5 66.2 10 Producers’ durable equipment............... 96.3 106.1 123.6 110.6 119.2 121.4 124.9 129.0 132.6 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 21.4 14 Nonfarm......................................................... -15.1 14.9 17.1 1.4 14.1 22.4 23.1 9.0 20.3 15 Net exports of goods and services....................... 20.4 7.8 -10.9 3.0 -8.2 -9.7 -7.5 -18.2 —23.7 16 Exports................................................................ 147.3 162.9 174.7 168.5 170.4 178.1 179.9 170.6 180.5 17 Imports............................................................... 126.9 155.1 185.6 165.6 178.6 187.7 187.4 188.8 204.2 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................................................... 215.6 231.2 249.6 235.8 238.5 247.0 252.9 260.0 263.8 By major type of product: 21 1,540.3 1,693.1 1,871.4 1,756.3 1,797.0 1,848.2 1,892.2 1,948.2 1,974.3 22 686.2 764.2 834.7 774.7 805.9 827.1 843.5 862.5 865.4 23 Durable goods............................................... 258.2 303.4 341.3 312.6 334.4 341.0 342.3 347.6 348.6 24 Nondurable.................................................... 428.0 460.9 493.4 '463.6 471.5 486.1 501.2 514.9 515.8 25 Services............................................................... 699.2 782.0 867.4 813.8 833.7 855.3 881.6 898.8 930.0 26 Structures............................................................ 143.5 160.2 187.5 166.9 171.2 187.5 190.7 200.4 199.9 27 Change in business inventories.......................... -11.5 13.3 18.2 -.9 13.8 21.7 23.6 13.5 21.1 28 Durable goods................................................... -9.2 4.1 9.1 .6 7.8 11.5 10.3 6.8 15.5 29 Nondurable goods............................................ -2.2 9.3 9.1 ' — 1.6 6.0 10.2 13.4 6.8 5.6 30 1,202.1 1,274.7 1,337.3 1,287.4 1,311.0 1,330.7 1,347.4 1,360.2 1,360.3 National income 31 Total......................................................................... 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 32 Compensation of employees............................... 930.3 1,036.3 1,156.3 1.074.2 1,109.9 1.144.7 1,167.4 1,203.3 1,243.8 33 Wages and salaries............................................ 805.7 891.8 990.0 923.2 951.3 980.9 998.9 7,029./ 1,058.7 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............................................................... 630.3 704.6 790.1 730.7 756.4 783.6 798.3 822.2 848.8 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 77.1 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 39 Proprietors' income1.............................................. 86.0 88.0 98.2 88.7 95.1 97.0 95.5 105.0 103.3 40 Business and professional1.............................. 62.8 69.4 78.5 72.0 74.3 77.3 80.0 82.4 83.1 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................................................. 99.3 128.1 139.9 123.1 125.4 140.2 149.0 144.8 126.5 44 Profits before tax 3............................................ 123.5 156.9 171.7 154.8 161.7 174.0 172.8 178.3 171.9 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 98.9 103.1 106.1 109.4 1 With inventory valuation and capital consumption adjustments. 3 For after-tax profits, dividends, etc., see Table 1.50. 2 With capital consumption adjustments. Source.—Survey of Current Business (U.S. Dept, of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

National Income Accounts A53 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1976 1977 1978 1975 1976 1977 Account Q4 Ql Q2 Q3 Q4 Qlr 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 1,058.7 3 Commodity-producing industries...................... 275.0 308.4 346.4 317.7 328.9 345.4 351.0 360.2 370.5 4 Manufacturing................................................... 211.0 238.2 267.3 245.1 255.4 265.9 270.0 278.0 288.4 5 Distributive industries.......................................... 195.4 217.1 242.8 226.4 234.5 240.5 244.4 251.8 260.1 6 Service industries................................................... 159.9 179.0 200.9 186.7 193.0 197.7 202.8 210.2 217.6 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 86.0 88.0 98.2 88.7 95.1 97.0 95.5 105.0 103.3 10 Business and professional1.................................. 62.8 69.4 78.5 72.0 74.3 77.3 80.0 82.4 83.1 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.......................................... 115.6 130.3 147.8 136.4 140.3 145.4 150.3 155.2 160.0 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 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.... 169.0 196.9 227.5 209.5 224.4 224.8 226.1 234.7 236.6 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 1,316.5 22 Equals: Personal saving......................................... 80.2 65.9 67.3 56.3 51.4 68.5 73.3 76.1 85.7 Memo items : Per capita (1972 dollars): 23 5,629 5,924 6,167 5,966 6,064 6,143 6,206 6,254 6,243 24 Personal consumption expenditures.................. 3,629 3,817 3,971 3,892 3,934 3,943 3,963 4,045 4,029 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................................................... 259.4 272.5 293.9 261.6 262.9 292.1 310.5 309.9 309.7 28 Personal saving....................................................... 80.2 65.9 67.3 56.3 51.4 68.5 73.3 76.1 85.7 29 Undistributed corporate profits1....................... 16.7 27.6 29.5 20.8 22.5 30.3 37.4 27.9 13.2 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 Waee 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 -21.7 35 Federal.................................................................... -70.2 -54.0 -49.5 -55.9 -38.8 -40.3 -58.9 -60.0 -55.8 36 State and local....................................................... 5.9 18.4 29.2 26.5 27.3 25.4 32.9 31.1 34.1 37 Capital grants received by the United States, net......................................................................... 38 Investment................................................................... 201.0 242.5 273.3 237.5 254.7 276.1 285.4 277.2 283.7 39 Gross private domestic........................................ 189.1 243.3 294.2 243.3 271.8 294.9 303.6 306.7 320.0 40 Net foreign............................................................. 11.8 -.9 -20.9 -5.9 -17.1 -18.8 -18.2 -29.5 -36.4 41 Statistical discrepancy.............................................. 5.9 5.5 -.2 5.3 3.3 -1.2 .9 -3.9 -4.2 1 With inventory valuation and capital consumption adjustments. Source.—Survey of Current Business (U.S. Dept, of Commerce). 2 With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics n July 1978 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1977 1978 Item credits or debits 1975 1976 1977 Ql Q2 Q3 Q4 Ql 1 Merchandise exports................................................................... 107,088 114,694 120,585 29,477 30,638 31,013 29,457 30,664 2 Merchandise imports................................................................... 98,041 124,047 151,644 36.495 37,259 38,263 39,627 41,865 3 Merchandise trade balance 2................................................. 9,047 -9,353 -31,059 -7,018 -6,621 -7,250 -10,170 -11,201 4 Military transactions, net........................................................... -876 312 1,334 568 295 467 5 307 12,795 15,933 17,507 4,599 4,487 4,610 3,812 4,767 2,095 2,469 1,705 229 412 583 482 428 23,060 9,361 -10,514 -1,623 -1,427 -1,591 -5,870 -5,700 8 Remittances, pensions, and other transfers........................... -1,721 -1,878 -1,932 -490 -480 -490 -473 -502 9 U.S. Govt, grants (excluding military)................................... -2,894 -3,145 -2,776 -636 -763 -787 -591 -752 18,445 4,339 -15,221 -2,749 -2,670 -2,868 -6,934 -6,954 it -2,339 —2,492 -5,179 -5,212 -6,466 12 Change in U.S. Govt, assets, other than official reserve -3,470 -4,213 -3,679 -949 -795 -1,098 -838 -900 -607 -2,530 -231 —388 6 151 246 14 Gold............................................................................................ -118 -58 -60 15 Special Drawing Rights (SDR’s).....................r.................. -66 -78 -121 -83 -9 -29 -16 16 Reserve position in International Monetary Fund (IMF). -466 -2,212 -294 " ’ ’ -389 -80 133 42 324 17 -75 -240 302 59 169 27 47 -62 18 Change in U.S. private assets abroad (increase, — )3........... -35,368 -43,865 -30,740 3 -11,214 -5,668 -13,862 -13,632 19 -13,532 -21,368 -11,427 3,684 -4,582 -1,779 -8,750 -6,270 20 -2,357 -2,362 -751 -306 18 -447 -16 -311 21 -11,175 -19,006 -10,676 3,990 -4,600 -1,332 -8,734 -5,959 22 -1,357 -2,030 -1,700 -768 -1,137 1,389 -1,184 -2,015 23 -366 5 25 33 66 205 -279 -60 24 -991 -2,035 -1,725 -801 -1,203 1,184 -905 -1,955 25 U.S. purchase of foreign securities, net.............................. -6,235 -8,852 -5,398 -736 -1,766 -2,165 -731 -934 26 -14,244 -11,614 -12,215 -2,177 -3,729 -3,113 -3,197 -4,413 27 Change in foreign official assets in the United States (in- 6,907 18,073 37,124 5,451 7,884 8,246 15,543 15,691 28 4,408 9,333 30,294 5,323 5,123 6,948 12,900 12,965 29 905 573 2,308 98 610 627 973 117 30 Other U.S. Govt, liabilities 5................................................ 1,647 4,993 1,644 505 417 332 390 785 31 Other U.S. liabilities reported by U.S. banks................... -2,158 969 773 -725 752 -163 909 1,456 32 2,104 2,205 2,105 250 982 502 371 368 33 Change in foreign private assets in the United States (in- 8,643 18,897 13,746 -2,962 6,180 6,005 4,522 2,125 34 U.S. bank-reported liabilities.................................................. 628 10,990 6,719 -5,304 6,240 2,640 3,143 -314 35 Long-term.............................................................................. -280 231 373 42 104 194 33 250 36 Short-term.............................................................................. 908 10,759 6,346 -5,346 6,136 2,446 3,110 -564 37 319 -507 257 -346 -412 590 425 418 38 406 -958 -620 -220 -176 18 -242 45 39 -87 451 877 -126 -236 572 667 373 40 Foreign private purchases of U.S. Treasury securities, 2,590 2,783 563 981 -1,370 1,251 -299 881 41 Foreign purchases of other U.S. securities, net................. 2,503 1,284 2,869 828 725 513 803 462 42 Foreign direct investments in the United States, net3... 2,603 4,347 3,338 880 996 1,012 450 679 43 5,449 9,300 -998 1,593 609 -4,769 1,569 3,423 45 Owing to seasonal adjustments............................................. 130 -177 -2,230 2,276 176 46 Statistical discrepancy in recorded data before seasonal 5,449 9,300 -998 1,463 786 -2,539 -707 3,247 Changes in official assets: 47 -607 -2,530 -231 —388 6 151 246 48 Foreign official assets in the United States (increase, -f ). 5,259 13,080 35,480 4,946 7,467 7,914 15,153 14,906 49 Changes in Organization of Petroleum Exporting Countries (OPEC) official assets in the United States (part of line 27 above)................................................................. 7,092 9,581 6,733 2,927 1,344 1,438 1,024 1,810 50 Transfers under military grant programs (excluded from 2,207 373 194 39 53 31 71 77 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 5 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. 6 Consists of investments in U.S. corporate stocks and in debt securi­ 3 Includes reinvested earnings of incorporated affiliates. ties of private corporations and state and local governments. 4 Differs from the definition of “net exports of goods and services” in 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 Nov.r Dec.r Jan. Feb. Mar. Apr. May 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments............................................. 107,130 114,802 121,181 9,475 11,007 10,014 9,922 10,912 11,635 11,754 2 GENERAL IMPORTS including merchandise for immediate con­ sumption plus entries into bonded 96,115 120,678 147,671 12,398 13,474 12,381 14,440 13,699 14,496 13,992 11,014 -5,876 -26,490 -2,923 -2,467 -2,367 -4,518 -2,787 -2,861 -2,238 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 Dec. Jan. Feb. Mar. Apr. May June 1 Total......................................................... 15,883 16,226 18,747 19,312 19,454 19,373 19,192 18,842 3 18,966 3 18,864 2 Gold stock, including Exchange Stabilization Fund1.......................... 11,652 11,599 11,598 11,719 11,718 11,718 11,718 11,718 11,718 11,706 3 Special Drawing Rights2..................... 2,374 2,335 2,395 2,629 2,629 2,671 2,693 2,669 3 2,760 32,804 4 Reserve position in International Monetary Fund.................................. 1,852 2,212 4,434 4,946 4,934 4,966 4,701 4,388 3 4,347 3 4,270 5 Convertible foreign currencies............ 5 80 320 18 173 18 80 67 141 84 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 June amounted to $18,549; SDR holdings, $2,729; and reserve 1971; and $710 million on Jan. 1, 1972; plus net transactions in SDR’s. position in IMF, $4,030. 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 □ July 1978 3.13 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1977 1978 Asset account 1974 1975 1976 Oct. Nov. Dec. Jan. Feb. Mar. Apr.p All foreign countries 1 Total, all currencies............................... 151,905 176,493 219,420 247,451 250,454 259,094 *•258,703 r256,959 263,468 260,523 2 Claims on United States................... 6,900 6,743 7,889 8,233 8,964 11,623 r9,874 r9,361 11,013 13,768 3 Parent bank.................................... 4,464 3,665 4,323 4,535 5,238 7,806 5,932 5,410 6,698 9,348 4 Other................................................ 2,435 3,078 3,566 3,698 3,726 3,818 *•3,942 *•3,951 4,315 4,419 5 138,712 163,391 204,486 230,759 232,972 238,850 r239,624 r238,660 243,316 237,382 6 Other branches of parent bank.. 27,559 34,508 45,955 51,914 54,631 55,772 *•55,052 *•54,201 55,554 51,819 7 Other banks.................................... 60,283 69,206 83,765 91,871 *•89,410 91,883 92,229 *;92,341 95,348 92,334 8 Official institutions....................... 4,on 5,792 10,613 14,456 14,854 14,634 15,274 15,093 15,284 15,204 9 Nonbank foreigners...................... 46,793 53,886 64,153 72,517 *74,077 76,561 *77,069 *■77,025 77,130 78,025 10 Other assets........................................ 6,294 6,359 7,045 8,459 8,518 8,620 9,206 *•8,938 9,139 9,373 11 Total payable in U.S. dollars.............. 105,969 132,901 167,695 187,783 188,593 193,933 *192,968 *189,523 194,855 194,139 12 Claims on United States................... 6,603 6,408 7,595 7,690 8,393 11,049 *■.9,252 8,630 10,320 12,966 13 Parent bank.................................... 4,428 3,628 4,264 4,448 5,145 7,692 5,781 5,162 6,616 9,158 14 Other................................................ 2,175 2,780 3,332 3,243 3,248 3,357 *•3,471 3,467 3,704 3,808 15 Claims on foreigners.......................... 96,209 123,496 156,896 176,128 176,080 178,896 *•179,237 *■176,737 180,341 176,818 16 Other branches of parent bank.. 19,688 28,478 37,909 42,696 44,087 44,256 *"43,618 *■42,664 43,502 40,630 17 Other banks.................................... 45,067 55,319 66,331 71,592 *•69,122 70,786 70,535 *■69,721 71,934 70,471 18 Official institutions....................... 3,289 4,864 9,022 12,779 12,887 12,632 13,097 13,087 13,276 13,230 19 Nonbank foreigners...................... 28,164 34,835 43,634 49,061 *■49,984 51,222 *•51,987 r51,267 51,628 52,487 20 Other assets........................................ 3,157 2,997 3,204 3,965 4,120 3,988 *•4,479 *■4,156 4,195 4,354 United Kingdom 21 Total, all currencies............................. 69,804 74,883 81,466 90,154 88,748 90,933 90,789 89,626 90,162 87,100 22 Claims on United States................. 3,248 2,392 3,354 2,729 2,955 4,341 3,701 r2,547 3,075 2,506 23 Parent bank.................................. 2,All 1,449 2,376 1,789 2,123 3,518 2,928 1,775 2,274 1,548 24 Other.............................................. 776 943 978 940 833 823 773 m i 802 958 25 Claims on foreigners...................... 64,111 70,331 75,859 84,766 83,331 84.016 84,346 r84,423 84,648 81,871 26 Other branches of parent bank. 12,724 17,557 19,753 22,178 21,476 22.017 21,427 21,114 21,092 19,514 27 Other banks.................................. 32,701 35,904 38,089 41,923 40,530 39,899 40,605 40,996 41,612 40,436 28 Official institutions..................... 788 881 1,274 2,052 2,145 2,206 2,303 2,100 2,192 2,020 29 Nonbank foreigners................... 17,898 15,990 16,743 18,613 19,180 19,895 20,010 *■20,213 19,753 19,901 30 Other assets...................................... 2,445 2,159 2,253 2,659 2,462 2,576 2,742 2,656 2,439 2,724 31 Total payable in U.S. dollars............ 49,211 57,361 61,587 67,243 65,369 66,635 65,744 63,870 64,565 62,330 32 Claims on United States................. 3,146 2,273 3,275 2,545 2,744 4,100 3,443 2,186 2,850 2,312 33 Parent bank.................................. 2,468 1,445 2,374 1,748 2,062 3,431 2,815 1,558 2,236 1,520 34 Other.............................................. 678 828 902 797 682 669 628 628 614 793 35 Claims on foreigners........................ 44,694 54,121 57,488 63,596 61,587 61,408 61,094 60,521 60,610 58,845 36 Other branches of parent bank. 10,265 15,645 17,249 19,497 18,539 18,947 18,102 17,782 17,603 16,531 37 Other banks.................................. 23,716 28,224 28,983 31,134 29,560 28,530 28,661 28,641 28,947 28,177 38 Official institutions..................... 610 648 846 1,595 1,639 1,669 1,770 1,640 1,710 1,631 39 Nonbank foreigners................... 10,102 9,604 10,410 11,370 11,849 12,263 12,560 12,457 12,349 12,507 40 Other assets...................................... 1,372 967 824 1,103 1,038 1,126 1,208 1,163 1,104 1,173 Bahamas and Caymans 41 Total, all currencies. 31,733 45,203 66,774 75,962 76,769 79,052 80,081 79,711 82,947 84,409 42 Claims on United States. 2,464 3,229 3,508 4,687 5,259 5,782 4,994 5,837 6,761 9,921 43 Parent bank................. 1,081 1,477 1,141 2,104 2,552 3,051 2,097 2.918 3,570 6,710 Other............................. 1,383 1,752 2,367 2,583 2,707 2,731 2,897 2.919 3,191 3,211 45 Claims on foreigners........................ 28,453 41,040 62,048 69,685 69,839 71,671 73,470 72,272 74,397 72,689 46 Other branches of parent bank. 3,478 5,411 8,144 9,266 10,611 11,120 11,272 11,025 11,367 9,565 47 Other banks.................................. 11,354 16,298 25,354 27,131 r26,109 27,939 28,810 28,179 29,602 28,695 48 Official institutions..................... 2,022 3,576 7,105 9,207 9,198 9,109 9,322 9,486 9,438 9,362 49 Nonbank foreigners................... 11,599 15,756 21,445 24,082 *■23,922 23,503 24,067 23,583 23,990 25,067 50 Other assets........................... 815 933 1,217 1,589 1,670 1,599 1,617 1,602 1,789 1,799 51 Total payable in U.S. dollars. 28,726 41,887 62,705 70,415 71,728 73,987 74,831 74,283 77,521 79,324 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A57 3.13 Continued 1977 1978 Liability account 1974 1975 1976 Oct. Nov. Dec. Jan. Feb. Mar. Apr.* All foreign countries 52 Total, all currencies............................. 151,905 176,493 219,420 247,451 250,454 259,094 '258,703 '256,959 263,468 260,523 53 11,982 20,221 32,719 39,952 42,315 44,155 '45,811 45,811 50,860 49,088 54 Parent bank.................................. 5,809 12,165 19,773 22,706 24,780 24,542 '28,311 26,999 27,650 26,732 55 Other.............................................. 6,173 8,057 12,946 17,246 17,535 19,613 17,500 18,811 23,209 22,355 56 To foreigners..................................... 132,990 149,815 179,954 199,197 200,158 206,579 '.204,471 r203,041 204,629 202,912 57 Other branches of parent bank. 26,941 34,111 44,370 50,324 52,289 53,244 '51,901 '50,896 52,090 48,907 58 Other banks.................................. 65,675 72,259 83,880 89,542 90,141 94,140 90,744 *•90,904 90,557 91,678 59 Official institutions..................... 20,185 22,773 25,829 29,888 28,667 28,110 28,677 28,850 28,018 28,498 60 Nonbank foreigners................... 20,189 20,672 25,877 29,443 29,061 31,085 33,149 32,390 33,963 33,830 61 Other liabilities................................ 6,933 6,456 6,747 8,302 7,981 8,360 8,421 '8,108 7,980 8,523 62 Total payable in U.S. dollars............ 107,890 135,907 173,071 192,995 193,421 198,741 '197,934 '194,688 199,879 197,546 63 To United States.............................. 11,437 19,503 31,932 38,915 41,219 42,882 '44,602 44,473 49,248 47,811 64 Parent bank.................................. 5,641 11,939 19,559 22,398 24,488 24,213 '28,017 26,688 27,321 26,437 65 Other.............................................. 5,795 7,564 12,373 16,517 16,731 18,669 16,584 17,784 21,927 21,374 66 To foreigners..................................... 92,503 112,879 137,612 149,687 147,995 151,363 '148,878 '145,958 146,406 145,322 67 Other branches of parent bank. 19,330 28,217 37,098 41,811 43,105 43,268 '41,812 '40,120 41,636 39,256 68 Other banks.................................. 43,656 51,583 60,619 62,892 62,094 64,872 61,571 '60,815 60,353 61,650 69 Official institutions..................... 17,444 19,982 22,878 26,366 25,113 23,972 24,546 24,453 23,593 23,810 70 Nonbank foreigners................... 12,072 13,097 17,017 18,618 17,684 19,251 20,949 19,970 20,824 20,606 71 Other liabilities................................ 3,951 3,526 3,527 4,393 4,207 4,496 4,454 4,258 4,224 4,413 United Kingdom 72 Total, all currencies............................. 69,804 74,883 81,466 90,154 88,748 90,933 90,789 89,626 90,162 87,100 73 3,978 5,646 5,997 7,310 7,237 7,753 6,008 6,785 7,609 7,266 74 510 2,122 1,198 1,364 1,375 1,451 1,253 1,550 1,646 1,983 75 Other.............................................. 3,468 3,523 4,798 5,946 5,862 6,302 4,755 5,236 5,962 5,283 76 To foreigners..................................... 63,409 67,240 73,228 79,837 79,087 80,736 82,160 80,331 80,036 77,169 77 Other branches of parent bank. A,162 6,494 7,092 9,187 9,491 9,376 9,999 9,037 8,674 8,014 78 Other banks.................................. 32,040 32,964 36,259 36,676 36,974 37,893 36,915 36,764 36,250 34,940 79 Official institutions..................... 15,258 16,553 17,273 20,366 19,555 18,318 19,309 19,580 19,262 18,817 80 Nonbank foreigners................... 11,349 11,229 12,605 13,608 13,066 15,149 15,937 14,950 15,850 15,399 81 2,418 1,997 2,241 3,007 2,424 2,445 2,621 2,509 2,518 2,665 82 Total payable in U.S. dollars............ 49,666 57,820 63,174 68,594 66,289 67,573 66,619 65,021 65,477 62,662 83 To United States.............................. 3,744 5,415 5,849 7,004 7,012 7,480 5,737 6,479 7,250 6,938 84 484 2,083 1,182 1,288 1,339 1,416 1,222 1,524 1,598 1,953 85 Other.............................................. 3,261 3,332 4,666 5,716 5,673 6,063 4,515 4,955 5,652 4,985 86 To foreigners..................................... 44,594 51,447 56,372 60,304 58,285 58,977 59,671 57,386 57,045 54,498 87 Other branches of parent bank. 3,256 5,442 5,874 7,724 7,871 7,505 8,164 7,211 6,747 6,202 88 Other banks.................................. 20,526 23,330 25,527 25,306 24,605 25,608 24,015 23,352 23,075 22,115 89 Official institutions..................... 13,225 14,498 15,423 18,053 17,171 15,482 16,459 16,541 16,213 15,672 90 7,587 8,176 9,547 9,221 8,638 10,382 11,033 10,282 11,009 10,509 91 Other liabilities................................ 1,328 959 953 1,286 991 1,116 1,210 1,156 1,182 1,227 Bahamas and Caymans 31,733 45,203 66,11A 75,962 76,769 79,052 80,081 79,711 82,947 84,409 93 To United States.............................. 4,815 11,147 22,721 28,442 30,641 32,176 35,795 35,082 38,380 37,256 94 2,636 7,628 16,161 18,538 20,572 20,956 24,713 23,374 23,854 22,379 95 Other.............................................. 2,180 3,520 6,560 9,905 10,069 11,220 11,082 11,708 14,526 14,878 96 To foreigners..................................... 26,140 32,949 42,899 46,034 44,571 45,292 42,929 43,272 43,153 45,610 97 Other branches of parent bank. 7,702 10,569 13,801 13,844 13,308 12,816 11,642 11,598 10,839 10,288 98 Other banks.................................. 14,050 16,825 21,760 23,678 23,374 24,717 22,264 22,840 23,374 25,847 99 Official institutions..................... 2,377 3,308 3,573 3,357 3,053 3,000 3,183 3,207 3,060 3,489 100 Nonbank foreigners................... 2,011 2,248 3,765 5,155 4,836 4,759 5,840 5,628 5,880 5,986 101 Other liabilities................................ 778 1,106 1,154 1,485 1,557 1,584 1,357 1,358 1,414 1,543 102 Total payable in U.S. dollars............ 28,840 42,197 63,417 71,187 72,286 74,463 75,479 75,253 78,467 80,243 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics □ July 1978 3.14 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS^ Millions of dollars, end of period 1977 1978 Item 1974 1975 1976 Nov. Dec. Jan. Feb. Mar. Apr. May A. By type 1 Total i............................................................................ 77,040 82,572 95,634 128,067 131,049 134,905 137,859 145,948 142,380 140,544 2 Liabilities reported by banks in the United States2.................................................................. 18,547 16,262 17,231 17,715 18,003 17,988 19,020 19,459 19,255 18,823 3 U.S. Treasury bills and certificates3....................... 34,656 34,199 37,725 45,817 47,820 49,752 52,689 59,302 57,613 56,449 U.S. Treasury bonds and notes: 4 Marketable............................................................... 5,059 6,671 11,788 31,519 32,116 33,830 33,554 34,528 32,838 32,181 5 Nonmarketable4..................................................... 16,339 19,976 20,648 20,462 20,443 20,473 19,602 19,513 19,444 19,355 6 U.S. securities other than U.S. Treasury securities5............................................................. 2,439 5,464 8,242 12,554 12,667 12,862 12,994 13,146 13,230 13,736 B. By area 7 Total.............................................................................. 77,040 82,572 95,634 128,067 131,049 134,905 137,859 145,948 142,380 140,544 8 Western Europe1........................................................ 44,328 45,701 45,882 68,167 70,707 72,557 74,401 76,238 73,666 72,627 9 Canada.......................................................................... 3,662 3,132 3,406 1,919 2,334 2,078 1,389 1,633 2,493 2,712 10 Latin America and Caribbean................................ 4,449 4,461 4,926 4,880 4,649 4,591 5,179 5,773 5,554 5,413 11 Asia................................................................................ 18,844 24,411 37,767 50,355 50,693 53,207 54,335 59,537 57,700 56,937 12 Africa............................................................................ 3,160 2,983 1,893 1,792 1,742 1,706 1,899 1,756 1,872 1,945 13 Other countries6......................................................... 2,597 1,884 1,760 954 924 766 656 1,011 1,095 910 1 Includes the Bank for International Settlements. 5 Debt securities of U.S. Govt, corporations and Federally sponsored 2 Principally demand deposits, time deposits, bankers acceptances, agencies, and U.S. corporate stocks and bonds. commercial paper, negotiable time certificates of deposit, and borrowings 6 Includes countries in Oceania and Eastern Europe. under repurchase agreements. 3 Includes nonmarketable certificates of indebtedness (including those Note.—Based on Treasury Dept, data and on data reported to the payable in foreign currencies through 1974) and Treasury bills issued to Treasury Dept, by banks (including Federal Reserve Banks) and securities official institutions of foreign countries. dealers in the United States. 4 Excludes notes issued to foreign official nonreserve agencies. Includes <4 For a description of the changes in the International Statistics bonds and notes payable in foreign currencies. tables, see “Announcements” section, p. 612. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-reported Data A59 3.15 LIABILITIES TO FOREIGNERS Reported by Banks in the United States** Payable in U.S. dollars Millions of dollars, end of period 1977 1978 Item 1974 1975 1976 Nov. Dec. Jan. Feb. Mar. Apr. May A. By holder and type of liability 1 All foreigners................. 95,290 95,590 110,657 119,489 126,168 126,377 130,105 139,414 141,465 137,028 2 Banks’ own liabilities.. 65,354 61,604 3 Demand deposits---- 14,051 13,564 16,803 16,476 18,996 17,377 17,675 17,163 17,857 17,820 4 Time deposits1.......... 9,932 10,267 11,347 11,372 11,521 11,518 12,038 11,274 11,678 11,881 5 Other2......................... 7,327 7,149 6 Own foreign offices3. 28,492 24,753 7 Banks’ custody liabilities4........................................ 76,111 75,424 8 U.S. Treasury bills and certificates5.................. 35,662 37,414 40,744 47,098 48,906 51,094 54,233 61,071 59,104 58,262 9 Other negotiable and readily transferable instruments6.................................................... 13,996 14,473 10 Other......................................................................... 3,011 2,689 11 Nonmonetary International and Regional Organizations7.................................................... 3,992 5,699 5,714 3,589 3,274 3,625 3,102 3,618 3,008 3,179 12 Banks’ own liabilities. 833 567 13 Demand deposits... 139 139 290 173 231 186 180 245 272 298 14 Time deposits1........ 111 148 205 142 139 129 120 109 161 114 15 Other2....................... 400 154 16 Banks’ custody liabilities4........................................ 2,175 2,612 17 U.S. treasury bills and certificates..................... 497 2,554 2,701 767 706 959 1,111 1,317 892 1,153 18 Other negotiable and readily transferable instruments6.................................................. 1,281 1,456 19 Other......................................................................... 3 3 20 Official institutions8. 53,076 50,461 54,956 63,532 65,822 67,740 71,709 78,761 76,868 75,272 21 Banks’ own liabilities. 9,586 9,015 22 Demand deposits... 2,951 2,644 3,394 2,557 3,528 2,673 2,782 2,804 3,703 3,092 23 Time deposits1........ 4,167 3,423 2,321 1,848 1,797 1,788 2,570 1,777 1,884 1,980 24 Other2....................... 3,999 3,943 25 Banks’ custody liabilities4.................................... 67,282 66,257 26 U.S. Treasury bills and certificates 5.............. 34,656 34,199 37,725 45,817 47,820 49,752 52,689 59,302 57,613 56,449 27 Other negotiable and readily transferable instruments6................................................ 9,180 9,222 28 Other..................................................................... 489 586 29 Banks9. 29,729 29,330 37,174 37,782 42,335 40,228 40,549 42,115 47,287 43,549 30 Banks’ own liabilities............. 42,841 39,302 31 Unaffiliated foreign banks. 14,349 14,548 32 Demand deposits.............. 8,231 7,534 9,104 9,666 10,933 10,274 10,570 10,113 10,194 10,344 33 Time deposits1................... 1,910 1,873 2,297 1,805 2,040 1,995 182 1,734 1,644 1,609 34 Other2................................. 2,511 2,595 35 Own foreign offices3. 28,492 24,753 36 Banks’ custody liabilities4.................................... 4,446 4,247 37 U.S. treasury bills and certificates................. 232 335 119 141 141 152 165 161 314 363 38 Other negotiable and readily transferable instruments6................................................ 1,994 2,107 39 Other..................................................................... 2,138 1,777 40 Other foreigners. 8,493 10,100 12,814 14,587 14,736 14,785 14,745 14,919 14,302 15,028 41 Banks’ own liabilities. 12,094 12,720 42 Demand deposits... 2,729 3,248 4,015 4,080 4,304 4,245 4,143 4,000 3,687 4,086 43 Time deposits1........ 3,744 4,823 6,524 7,576 7,546 7,606 7,526 7,654 7,989 8,178 44 Other2....................... 418 457 45 Banks’ custody liabilities4.................................... 2,208 2,307 46 U.S. Treasury bills and certificates................ 277 325 198 373 240 231 268 291 286 296 47 Other negotiable and readily transferable instruments6................................................ 1,541 1,688 48 Other..................................................................... 381 323 49 Memo: Negotiable time certificates of deposit held in custody for foreigners........... 8,482 8,891 1 Excludes negotiable time certificates of deposit, which are included 6 Principally bankers acceptances, commercial paper, and negotiable in “Other negotiable and readily transferable instruments”. time certificates of deposit. 2 Includes borrowings under repurchase agreements. 7 Principally the International Bank for Reconstruction and Develop­ 3 U.S. banks: includes amounts due to own foreign branches and ment, and the Inter-American and Asian Development Banks. foreign subsidiaries consolidated in “Consolidated Report of Condition” 8 Foreign centra banks and foreign central governments and the filed with bank regulatory agencies. Agencies, branches, and majority- Bank for International Settlements. owned subsidiaries of foreign banks: principally amounts due to head 9 Excludes central banks, which are included in “Official institutions.” office or parent foreign bank, and foreign branches, agencies or whollyowned subsidiaries of head office or parent foreign bank. Note.—Data for time deposits prior to April 1978 represent short­ 4 Financial claims on residents of the United States, other than long­ term only. term securities, held by or through reporting banks. M For a description of the changes in the International Statistics 5 Includes nonmarketable certificates of indebtedness (including those tables, see “Announcements” section, p. 612. payable in foreign currencies through 1974) and Treasury bills issued to official institutions of foreign countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics □ July 1978 3.15 Continued <4 1977 1978 Item 1974 1975 1976 Nov. Dec. Jan. Feb. Mar. Apr. May B. By area and country 1Total.............................................................................. 95,290 95,590 110,657 119,489 126,168 126,377 130,105 139,414 141,465 137,028 2 Foreign countries......................................................... 91,297 89,891 104,943 115,900 122,893 122,752 127,002 135,795 138,456 133,849 3 Europe........................................................................... 48,619 44,072 47,076 54,645 60,295 59,702 60,970 63,994 63,067 62,932 4 Austria...................................................................... 605 759 346 375 318 294 302 419 322 350 5 Belgium-Luxembourg............................................ 2,500 2,893 2,187 2,624 2,531 2,629 2,765 2,992 3,109 2,893 6 Denmark.................................................................. 367 329 356 1,263 770 1,044 1,050 1,044 1,063 1,110 7 Finland..................................................................... 266 391 416 255 323 295 307 357 430 393 8 France....................................................................... 4,257 7,726 4,876 4,703 5,269 5,153 4,668 5,033 5,499 6,275 9 Germany............................................................... 9,560 4,543 6,241 5,812 7,239 8,832 10,585 11,530 11,013 9,537 10 Greece....................................................................... 248 284 403 644 603 538 548 571 588 563 11 Italy........................................................................... 2,568 1,059 3,182 6,748 6,857 6,199 5,943 5,626 5,988 6,364 12 Netherlands............................................................. 3,190 3,407 3,003 2,991 2,869 2,959 3,029 3,132 3,011 2,993 13 Norway..................................................................... 1,038 994 782 639 944 987 888 1,211 1,465 1,644 14 Portugal.................................................................... 309 193 239 266 273 205 188 174 164 288 15 Spain......................................................................... 378 423 559 649 619 707 648 717 659 111 16 Sweden..................................................................... 1,135 2,277 1,692 3,132 2,712 2,711 2,826 2,816 3,177 3,302 17 Switzerland.............................................................. 9,940 8,476 9,460 9,909 12,343 12,134 12,689 13,549 13,091 12,515 18 Turkey...................................................................... 125 118 166 118 130 187 171 115 249 200 19 United Kingdom.................................................... 7,580 6,867 10,018 12,195 14,125 12,576 11,929 12,274 11,021 11,606 20 Yugoslavia............................................................... 183 126 189 172 232 219 196 138 192 168 21 Other Western Europe1........................................ 4,080 2,970 2,673 1,915 1,804 1,787 1,966 2,030 1,757 1,706 22 U.S.S.R..................................................................... 82 40 51 66 98 63 98 72 62 96 23 Other Eastern Europe2......................................... 206 197 236 169 236 186 175 193 206 211 24 Canada.......................................................................... 3,264 2,919 4,659 4,639 4,607 5,279 4,758 4,564 5,916 6,620 25 Latin America and Caribbean.................................. 11,850 15,028 19,132 22,470 23,670 23,263 24,286 25,338 28,768 24,894 26 Argentina................................................................. 887 1,146 1,534 2,549 1,416 1,746 1,928 1,801 1,861 2,260 27 Bahamas................................................................... 1,106 1,874 2,770 3,474 3,596 3,150 3,755 4,199 7,259 3,324 28 Bermuda................................................................... 116 184 218 276 321 269 286 322 368 344 29 Brazil......................................................................... 1,039 1,219 1,438 941 1,396 1,113 977 1,327 1,414 1,298 30 British West Indies................................................ 449 1,311 1,877 3,166 3,998 4,081 3,993 4,097 4,814 3,961 31 Chile......................................................................... 277 319 337 322 360 387 412 415 394 361 32 Colombia................................................................. 305 417 1,021 1,159 1,221 1,226 1,207 1,290 1,350 1,298 33 Cuba.......................................................................... 7 6 6 6 6 6 7 8 6 7 34 Ecuador.................................................................... 122 120 320 316 330 358 376 438 360 318 35 Guatemala3............................................................. 447 541 36 Jamaica3................................................................... 41 46 37 Mexico...................................................................... 1,773 2,070 2,870 2,868 2,876 2,985 3,084 2,793 2,677 2,965 38 Netherlands Antilles4............................................ 158 129 158 203 196 205 203 212 212 189 39 Panama..................................................................... 526 1,115 1,167 1,016 2,331 2,189 2,121 2,132 2,176 2,559 40 Peru........................................................................... 272 243 257 236 287 265 267 262 309 274 41 Uruguay................................................................... 164 172 245 256 243 230 280 226 221 208 42 Venezuela................................................................. 3,434 3,309 3,118 3,788 2,929 3,016 3,246 3,438 3,225 3,299 43 Other Latin America and Caribbean................. 1,215 1,393 1,797 1,893 2,167 2,037 2,147 2,380 1,636 1,643 44 21,192 22,384 29,766 30,188 30,488 30,881 33,330 37,995 36,430 35,495 45 China, People’s Republic of (Mainland)............. 50 123 48 52 53 54 48 56 50 47 46 China, Republic of (Taiwan)............................... 818 1,025 990 927 1,013 1,041 995 1,014 1,208 1,043 47 Hong Kong............................................................. 529 605 894 975 1,094 1,037 1,121 1,174 1,118 1,490 48 India.......................................................................... 252 115 638 965 961 1,012 1,001 947 937 962 49 Indonesia................................................................. 1,221 369 340 743 410 896 506 492 649 451 50 Israel.......................................................................... 389 387 392 490 559 461 454 485 486 568 51 Japan......................................................................... 10,904 10,207 14,363 14,803 14,616 14,488 17,024 21,725 20,392 19,999 52 Korea........................................................................ 384 390 438 572 602 606 737 682 753 816 53 Philippines............................................................... 748 700 628 593 687 658 615 647 601 688 54 Thailand................................................................... 333 252 277 253 264 258 309 317 258 304 55 Middle East oil-exporting countries5................. 4,717 7,355 9,360 8,650 8,979 9,193 9,329 9,165 8,671 7,842 56 Other Asia............................................................... 847 856 1,398 1,165 1,250 1,178 1,190 1,291 1,307 1,285 57 Africa............................................................................ 3,546 3,369 2,298 2,564 2,535 2,507 2,645 2,469 2,699 2,641 58 Egypt......................................................................... 103 342 333 331 404 346 357 341 455 461 59 Morocco................................................................... 38 68 87 30 66 100 79 51 31 29 60 South Africa........................................................... 124 166 141 238 174 191 251 183 167 185 61 Zaire......................................................................... 84 62 36 30 39 41 50 45 46 49 62 Oil-exporting countries6....................................... 2,815 2,250 1,133 1,215 1,155 1,179 1,263 1,226 1,393 1,244 63 Other Africa............................................................ 382 481 568 720 698 649 645 623 607 673 64 Other countries............................................................ 2,827 2,119 2,012 1,394 1,297 1,121 1,014 1,434 1,575 1,267 65 Australia................................................................... 2,740 2,006 1,905 1,256 1,140 933 870 1,229 1,275 1,129 66 All other................................................................... 87 113 107 138 158 188 144 205 300 138 67 Nonmonetary International and Regional Organizations....................................................... 3,992 5,699 5,714 3,589 3,274 3,625 3,102 3,618 3,008 3,179 68 International........................................................... 3,552 5,415 5,157 3,022 2,752 3,116 2,558 3,094 2,591 2,441 69 Latin American regional...................................... 265 188 267 278 278 258 266 261 117 467 70 Other regional7....................................................... 175 96 290 289 245 250 279 262 300 271 1 Includes the Bank for International Settlements. Beginning April 6 Comprises Algeria, Gabon, Libya, and Nigeria. 1978, also includes Eastern European countries not listed in line 23. 7 Asian, African, Middle Eastern, and European regional organizations, 2 Beginning April 1978 comprises Bulgaria, Czechoslovakia, German except the Bank for International Settlements, which is included in Democratic Republic, Hungary, Poland, and Romania. “Other Western Europe.” 3 Included in “Other Latin America and Caribbean” through March 4 For a description of the changes in the International Statistics 1978. tables, see “Announcements” section, p. 612. 4 Includes Surinam through December 1975. 5 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 3.16 BANKS’ OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States** Payable in U.S. Dollars Millions of dollars, end of period 1977 1978 Area and country 1974 1975 1976 Nov. Dec. Jan. Feb. Mar. Apr. May 1 44,958 58,308 79,301 85,271 90,206 91,874 91,040 96,449 88,459 88,170 2 Foreign countries......................................................... 44,950 58,275 79,261 85,226 90,163 91,830 91,005 96,406 88,409 88,122 3 Europe............................................................................ 7,728 11,109 14,776 15,689 18,114 17,034 17,197 18,690 15,374 15,950 4 Austria...................................................................... 40 35 63 65 65 107 112 83 78 97 5 Belgium-Luxembourg............................................ 373 286 482 627 561 660 552 596 586 794 6 Denmark................................................................... 93 104 133 153 173 172 171 166 140 186 7 Finland...................................................................... 146 180 199 175 172 179 184 189 180 185 8 France....................................................................... 836 1,565 1,549 1,721 2,082 1,776 1,988 2,265 1,646 1,688 9 Germany................................................................... 526 380 509 610 644 640 615 783 704 756 10 Greece....................................................................... 261 290 279 220 206 188 209 211 200 280 11 Italy............................................................................ 424 443 993 1,202 1,334 1,170 1,147 1,155 912 1,201 12 Netherlands............................................................. 350 305 315 348 338 374 382 470 424 All 13 Norway..................................................................... 173 131 136 147 162 176 191 184 192 210 14 Portugal.................................................................... 27 30 88 151 175 137 155 155 134 135 15 Spain.......................................................................... 307 424 745 715 722 732 735 741 613 715 16 Sweden...................................................................... 198 198 206 197 218 230 200 171 206 192 17 Switzerland............................................................... 300 199 379 525 564 597 704 696 698 394 18 Turkey....................................................................... 98 164 249 396 360 337 311 315 308 307 19 United Kingdom..................................................... 2,800 5,170 7,033 7,154 8,964 8,133 8,200 9,204 6,842 6,974 20 Yugoslavia................................................................ 133 210 234 282 311 306 308 307 287 295 21 Other Western Europe1........................................ 44 76 85 63 86 142 74 49 268 141 22 224 406 485 406 413 424 383 370 337 381 23 Other Eastern Europe2......................................... 375 513 613 534 566 554 576 580 620 542 24 Canada.......................................................................... 2,609 2,834 3,319 3^524 3,355 3,758 4,009 4,084 2,798 2,463 25 Latin America and Caribbean................................... 14,911 23,863 38,879 43,540 45,850 48,616 47,249 49,866 48,982 47,008 26 Argentina................................................................. 879 1,377 1,192 1,346 1,478 1,622 1,574 1,642 1,532 1,612 27 Bahamas.................................................................... 3,418 7,583 15,464 18,558 19,858 22,348 21,517 22,801 22,016 20,939 28 Bermuda.................................................................... 91 104 150 195 232 111 233 195 182 345 29 Brazil......................................................................... 2,256 3,385 4,901 4,500 4,629 4,510 4,559 4,832 4,411 4,550 30 British West Indies................................................. 947 1,464 5,082 5, All 6,481 6,173 5,589 6,851 7,823 6,259 31 Chile.......................................................................... 446 494 597 595 675 690 700 710 721 718 32 Colombia.................................................................. 111 751 675 663 671 651 640 592 550 578 33 Cuba......................................................................... 14 14 13 15 10 14 4 3 1 1 34 Ecuador.................................................................... 170 252 375 479 517 518 530 544 524 530 35 Guatemala3............................................................. 55 79 36 Jamaica3................................................................... 19 43 37 2,646 3,745 4,822 5,051 4,909 4,898 4,719 4,836 4,386 4,564 38 Netherlands Antilles4............................................ 75 72 140 277 224 220 208 215 202 204 39 Panama..................................................................... 582 1,138 1,372 1,804 1,410 1,953 1,880 1,699 2,189 2,152 40 Peru............................................................................ 628 805 933 915 962 965 931 920 872 914 41 Uruguay.................................................................... 65 57 42 68 80 67 65 65 51 58 42 Venezuela.................................................................. 931 1,319 1,828 2,188 2,318 2,205 2,421 2,367 2,145 2,238 43 Other Latin America and Caribbean................. 987 1,302 1,293 1,408 1,394 1,671 1,678 1,593 1,302 1,225 17,801 17,706 19,204 18,741 19,236 18,830 18,985 20,039 18,074 19,502 45 China, People’s Republic of (Mainland)........... 38 22 3 21 10 15 13 11 13 22 46 China, Republic of (Taiwan)............................... 693 1,053 1,344 1,622 1,719 1,619 1,663 1,656 1,415 1,462 47 Hong Kong.............................................................. 266 289 316 550 543 516 495 609 825 754 48 India.......................................................................... 56 57 69 72 53 65 72 97 53 71 49 Indonesia.................................................................. 228 246 218 201 232 210 222 202 164 137 50 Israel.......................................................................... 500 721 755 489 584 501 498 491 432 505 51 Japan......................................................................... 12,749 10,944 11,040 9,629 9,839 9,626 9,767 10,266 9,488 9,758 52 1,058 1,791 1,978 2,140 2,336 2,458 2,315 2,090 1,847 1,802 53 Philippines............................................................... 507 534 719 639 594 602 642 660 610 751 54 Thailand.................................................................... 476 520 442 611 633 634 647 656 679 731 55 Middle East oil-exporting countries 5................. 714 744 1,459 1,918 1,746 1,681 1,753 2,219 1,489 2,525 56 Other Asia............................................................... 516 785 862 851 947 903 898 1,082 1,060 984 1,183 1,933 2,311 2,532 2,518 2,556 2,548 2,632 2,231 2,228 58 Egypt......................................................................... 126 123 126 136 119 126 121 107 79 73 59 18 8 27 43 43 61 44 39 35 38 60 South Africa............................................................ 367 657 957 1,044 1,066 1,095 1,106 1,169 1,050 1,058 61 136 181 112 98 98 98 98 101 77 80 62 Oil-exporting countries6........................................ 176 382 524 544 510 499 531 493 415 443 63 360 581 565 667 682 677 648 723 575 537 64 717 830 772 1,202 1,090 1,037 1,017 1,095 951 971 65 580 100 597 1,018 905 839 813 879 784 803 66 137 130 175 184 186 198 204 216 167 168 67 Nonmonetary International and Regional 8 33 40 45 43 44 35 43 49 48 1 Includes the Bank for International Settlements. Beginning April 6 Comprises Algeria, Gabon, Libya, and Nigeria. 1978, also includes Eastern European countries not listed in line 23. 7 Excludes the Bank for International Settlements, which is included 2 Beginning April 1978 comprises Bulgaria, Czechoslovakia, German in “Other Western Europe.” Democratic Republic, Hungary, Poland, and Romania. 3 Included in “Other Latin America and Caribbean” through March Note.—Data for period prior to April 1978 include claims of banks’ 1978. domestic customers on foreigners. 4 Includes Surinam through December 1975. A For a description of the changes in the International Statistics 5 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, tables, see “Announcements” section, p. 612. and United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics □ July 1978 3.17 BANKS’ OWN AND DOMESTIC CUSTOMERS’ CLAIMS ON FOREIGNERS Reported by Banks in the United States ^ Payable in U.S. Dollars Millions of dollars, end of period 1977 1978 Type of claim 1974 1975 1976 Nov. Dec. Jan. Feb. Mar. Apr. May 1 Total.............................................................................. 44,958 58,308 79,301 85,271 90,206 91,874 91,040 96,449 2 Banks’ own claims on foreigners............................ 88,459 88,170 3 Foreign public borrowers..................................... 4,574 4,841 4 Own foreign offices1.............................................. 35,848 35,476 5 Unaffiliated foreign banks.................................... 28,623 28,153 6 Deposits............................................................... 4,867 5,044 7 Other..................................................................... 23,756 23,108 8 All other foreigners.................................................... 19,415 19,700 9 Claims of hanks* domestic customers2................ 10 Deposits.................................................................... 11 Negotiable and readily transferable in­ struments 3....................................................... 12 Outstanding collections and other claims4.... 5,637 5,467 5,756 6,045 6,176 6,342 6,446 6,765 13 Memo: Customer liability on acceptances . 1 U.S. banks: includes amounts due from own foreign branches and 3 Principally negotiable time certificates of deposit and bankers ac­ foreign subsidiaries consolidated in “Consolidated Report of Condition” ceptances. filed with bank regulatory agencies. Agencies, branches, and majority- 4 Data for March 1978 and for period prior to that are outstanding owned subsidiaries of foreign banks: principally amounts due from head collections only. office or parent foreign bank, and foreign branches, agencies, or whollyowned subsidiaries of head office or parent foreign bank. Note.—Beginning April 1978, data for banks’ own claims are given 2 Assets owned by customers of the reporting bank located in the on a monthly basis, but the data for claims of banks’ domestic customers United States that represent claims on foreigners held by reporting banks are available on a quarterly basis only. for the account of their domestic customers. <4 For a description of the changes in the International Statistics tables, see “Announcements” section, p. 612. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-reported Data A63 3.18 BANKS’ OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period Maturity; by borrower and area 1 Total................................................................................. By borrower: 2 Maturity of 1 year or less1.................................... 3 Foreign public borrowers..................................... 4 All other foreigners.............................................. 5 Maturity of over 1 year1......................................... 6 Foreign public borrowers................................... 7 All other foreigners.............................................. NO I7IGU RES UNT By area: Maturity of 1 year or less1................................. 8 Europe................................................................. 10 Latin America and Caribbean....................... 11 Asia...................................................................... 12 Africa.................................................................. 13 All other 2........................................................... 14 Europe.....................................!........................ 15 Canada................................................................ 16 Latin America and Caribbean....................... 17 Asia...................................................................... 19 All other 2........................................................... ■J JNE 1978 DAT A Al■IE A VAII.ABL E 1 Remaining time to maturity. A For a description of the changes in the International Statistics 2 Includes nonmonetary international and regional organizations. tables, see “Announcements” section, p. 612. 3.19 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States-* Payable in Foreign Currencies Millions of dollars, end of period 1977 1978 Item 1974 1975 1976 Nov. Dec. Jan. Feb. Mar. 1 Banks’ own liabilities..................................................... 766 560 781 944 925 831 885 986 2 Banks’ own claims1........................................................ 1,276 1,459 1,834 2,086 2,356 2,371 2,317 2,383 3 Deposits........................................................................ 669 656 1,103 841 941 940 895 948 4 Other claims................................................................. 607 802 731 1,245 1,415 1,432 1,422 1,435 5 Claims of banks’ domestic customers2..................... 1 Includes claims of banks’ domestic customers through March 1978. Note.—Data on claims exclude foreign currencies held by U.S. mone- 2 Assets owned by customers of the reporting bank located in the tary authorities. United States that represent claims on foreigners held by reporting banks A For a description of the changes in the International Statistics for the accounts of their domestic customers. tables, see “Announcements” section, p. 612. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics □ July 1978 3.20 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1978 1977 1978 Country or area 1976 1977 Jan.- Mayp Nov. Dec. Jan. Feb. Mar. Apr.p MayP Holdings (end of period) 4 1 Estimated total... 15,799 38,620 37,661 38,620 40,101 40,380 41,230 39,661 39,321 2 Foreign countries. 12,765 33,874 33,285 33,874 35,648 35,479 36,475 34,812 34,299 3 Europe................................. 2,330 13,916 14,003 13,916 15,044 14,895 15,206 13,607 12,899 4 Belgium-Luxembourg.. 14 19 20 19 19 19 19 19 19 5 Germany......................... 764 3,168 2,742 3,168 3,373 3,494 3,816 3,820 4,031 6 Netherlands................... 288 911 911 911 930 954 1,029 1,079 1,070 7 Sweden........................... 191 100 100 100 125 125 155 175 175 8 Switzerland..................... 261 All 476 All 391 401 400 443 356 9 United Kingdom.......... 485 8,888 9,419 8,888 9,839 9,513 9,418 7,737 6,856 10 Other Western Europe. 323 349 331 349 362 384 363 330 388 11 Eastern Europe............. 4 4 4 4 4 4 4 4 4 12 Canada. 256 288 293 288 285 250 251 253 261 13 Latin America and Caribbean.................. 313 551 533 551 543 587 551 535 503 14 Venezuela.................................................... 149 199 199 199 201 241 200 189 174 15 Other Latin American and Caribbean. 47 183 167 183 181 184 189 184 167 16 Netherlands Antilles 1............................ 118 170 167 170 162 162 162 162 162 17 Asia........ 9,323 18,745 18,104 18,745 19,413 19,378 20,120 20,070 20,137 18 Japan. 2,687 6,860 6,547 6,860 7,463 7,617 8,313 8,332 8,964 19 Africa......... 543 362 348 362 362 362 341 341 491 20 All other. * 11 5 11 2 7 6 6 8 21 Nonmonetary international and regional organizations......................................... 3,034 4,746 4,376 4,746 4,453 4,901 4,755 4,849 5,022 22 International..................... 2,906 4,646 4,276 4,646 4,358 4,781 4,640 4,740 4,931 23 Latin American regional. 128 100 100 100 95 120 115 110 90 Transactions (net purchases, or sales (—), during period) 24 Total....................... 8,096 22,823 655 3,337 959 1,481 278 851 -1,569 -386 25 Foreign countries. 5,393 21,110 378 2,962 589 1,774 -169 996 -1,664 -559 26 Official institutions. 4,958 20,328 58 2,885 598 1,714 -277 975 -1,690 -659 27 Other foreign........... 435 782 319 76 -9 59 108 22 26 100 28 Nonmonetary international and regional organizations......................................... 2,704 1,713 276 376 370 -292 447 -145 94 172 Memo: Oil-exporting countries 29 Middle East 2............................ 3,887 4,451 -691 869 324 56 -184 72 -72 -563 30 Africa 3........................................ 221 -181 130 69 13 -20 150 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. 3.21 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS Millions of dollars, end of period 1977 1978 Assets 1974 1975 1976 Dec. Jan. Feb. Mar. Apr. May June 1 Deposits........................................................................ 418 353 352 424 422 445 352 481 453 288 Assets held in custody: 2 U.S. Treasury securities1...................................... 55,600 60,019 66,532 91,962 95,945 98,465 105,362 102,044 100,146 99,465 3 Earmarked gold2.................................................... 16,838 16,745 16,414 15,988 15,726 15,735 15,727 15,686 15,667 15,620 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 3.22 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1978 1977 1978 Transactions, and area or country 1976 1977 M Ja a n y .- v Nov. Dec. Jan. Feb. Mar. Apr.** May^ U.S. corporate securities Stocks 1 Foreign purchases.................................................. 18,227 14,155 7,517 1,282 1,235 1,024 825 1,413 1,864 2,391 2 Foreign sales............................................................ 15,475 11,479 5,706 899 945 909 762 921 1,151 1,963 3 Net purchases, or sales (—).................................. 2,753 2,676 1,811 383 290 115 63 492 713 428 4 Foreign countries..................................................... 2,740 2,661 1,836 385 286 116 63 510 720 427 5 Europe.................................................................. 336 1,006 1,221 200 156 30 41 319 508 323 6 France............................................................... 256 40 131 1 -3 -12 -2 68 79 -2 7 Germany.......................................................... 68 291 304 64 58 45 33 52 125 49 8 Netherlands..................................................... -199 22 -1 10 9 -4 -13 -9 16 9 9 Switzerland...................................................... -100 152 71 34 -3 -54 -16 7 103 31 10 United Kingdom............................................ 340 613 705 106 109 60 57 r187 173 228 11 Canada.................................................................. 324 65 -62 21 14 -19 -26 -3 44 -58 12 Latin America and Caribbean........................ 155 127 77 27 15 -9 -4 17 37 36 13 Middle East1....................................................... 1,803 1,390 512 128 100 107 48 170 97 90 14 Other Asia............................................................ 119 59 86 8 1 6 1 5 35 39 15 Africa.................................................................... 7 5 -2 * * * 2 1 -1 -4 16 Other countries................................................... -4 8 2 2 * 1 1 * * * 17 Nonmonetary international and regional organizations................................................... 13 15 -25 -2 4 -1 1 -19 -7 1 Bonds2 18 Foreign purchases.................................................. 5,529 7,739 2,675 743 354 459 524 600 312 780 19 Foreign sales............................................................ 4,322 3,404 2,022 226 267 377 348 621 343 333 20 Net purchases, or sales (—)................................. 1,207 4,335 654 517 87 83 176 -21 -31 447 21 Foreign countries..................................................... 1,248 4,239 652 507 41 101 131 * -29 449 22 Europe.................................................................. 91 2,006 -49 320 19 133 32 -163 -92 41 23 France............................................................... 39 -34 6 -5 -11 -4 1 5 -4 8 24 Germany.......................................................... -49 59 58 4 9 1 7 19 10 21 25 Netherlands..................................................... -29 72 -12 20 * 7 1 -20 3 -3 26 158 157 -110 -7 -6 -7 3 -37 -33 -36 27 United Kingdom............................................ 23 1,705 46 324 28 125 22 -122 -54 75 28 Canada.................................................................. 96 141 41 1 -1 7 7 5 13 9 29 Latin America and Caribbean........................ 94 64 41 -1 3 11 6 11 1 12 30 Middle East1....................................................... 1,179 1,695 556 159 4 -59 75 137 33 370 31 Other Asia............................................................ -165 338 60 27 16 9 11 9 16 15 32 Africa.................................................................... -25 -6 -1 * * * -1 * * * 33 Other countries................................................... -21 * 2 * * * * * 1 1 34 Nonmonetary international and regional organizations................................................... -41 96 4 10 46 -18 45 -20 -2 -1 Foreign securities 35 Stocks, net purchases, or sales (—)........................ -323 -410 460 34 59 103 113 114 143 -13 36 Foreign purchases.................................................. 1,937 2,255 1,547 214 291 255 280 337 404 271 37 Foreign sales............................................................ 2,259 2,665 1,087 180 232 152 167 223 261 284 38 Bonds, net purchases, or sales (—)......................... -8,740 -5,034 -1,798 -320 -330 -569 -176 -519 -495 -39 39 Foreign purchases................................................... 4,932 8,052 4,196 593 885 691 522 797 1,169 1,017 40 Foreign sales........................................................... 13,672 13,086 5,993 913 1,215 1,260 698 1,315 1,664 1,056 41 Net purchases, or sales (—) of stocks and bonds.. -9,063 -5,444 -1,338 -285 -271 -466 -64 -405 -352 -51 42 Foreign countries......................................................... -7,165 -3,886 -1,201 -308 -293 -473 17 -256 -442 -67 43 Europe...................................................................... -850 -1,125 221 -260 108 98 95 116 106 -194 44 Canada...................................................................... -5,245 -2,403 -1,514 9 -175 -446 -4 -177 -807 -80 45 Latin America and Caribbean........................... -3 -80 292 -2 -68 -6 37 69 120 72 46 Asia............................................................................ -699 -14 -216 -57 51 -114 -113 -270 150 131 47 Africa........................................................................ 48 2 5 * 1 -2 * * 7 * 48 Other countries....................................................... -416 -267 11 2 -210 -3 2 6 2 4 49 Nonmonetary international and regional organizations........................................................ -1,898 -1,557 -135 23 22 7 -80 -148 70 16 i 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 □ July 1978 3.23 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.*5 Dec. Mar. June Sept. Dec.p Liabilities to foreigners Claims on foreigners 1 Total.............................................................................. 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 name............................................................. 442 431 448 414 620 5 Other..................................................................... 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........................................ 169 111 138 119 107 162 170 218 232 218 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 Spain..................................................................... 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 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 Other Eastern Europe....................................... 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 Mexico................................................................. 102 121 120 103 115 332 317 301 304 316 37 Panama................................................................. 34 12 11 12 22 74 105 121 221 88 38 Peru....................................................................... 25 24 21 13 15 42 32 28 30 33 39 Uruguay............................................................... 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 10 11 17 9 25 9 14 8 8 12 43 100 160 151 154 210 441 914 1,146 987 718 44 Asia............................................................................ 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 1 1 12 9 46 110 113 138 152 156 197 130 131 139 157 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 organizations....................................................... 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 3.24 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 Nov. Dec. Jan. Feb. Mar. Apr.? 1 Total............................................ 3,185 3,357 3,799 5,468 7,575 6,769 7,324 7,937 8,446 9,049 By type: 2 Payable in dollars.................. 2,641 2,660 3,042 4,788 6,652 5,804 6,310 6,947 7,290 7,953 3 Deposits.............................. 2,604 2,591 2,710 4,415 6,207 5,402 5,856 6,462 6,715 7,310 4 Short-term investments 1. 37 69 332 373 445 402 454 485 575 643 5 Payable in foreign currencies 544 697 757 680 924 965 1,014 990 1,157 1,096 6 Deposits.............................. 431 429 511 373 489 552 561 541 647 597 7 Short-term investments 1. 113 268 246 302 435 413 453 449 510 499 By country: 8 United Kingdom................... 1,128 1,350 1,306 1,837 2,098 1,989 1,680 1,787 1,671 1,746 9 Canada.................................... 775 967 1,156 1,539 1,863 1,706 2,108 2,228 2,386 2,702 10 Bahamas.................................. 597 391 546 1,264 2,086 1,781 2,217 2,507 2,791 2,988 11 Japan........................................ 336 398 343 113 220 139 197 258 375 290 12 All other.................................. 349 252 446 715 1,308 1,154 1,122 1,157 1,223 1,323 i 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. 3.25 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.p Dec. Mar. June Sept. Dec.p 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 14 397 413 386 319 305 77 96 111 94 66 15 Africa............................................................................ 2 2 3 3 2 187 199 158 165 157 16 All other1..................................................................... 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 □ July 1978 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Per cent per annum Rate on June 30, 1978 Rate on June 30, 1978 Rate on June 30, 1978 Country Country Country Per Month Per Month Per Month cent effective cent effective cent effective Argentina 18.0 Feb. 1972 France.............................. 9.5 Aug. 1977 Norway................ 7.0 Feb. 1978 Austria... 4.5 June 1978 Germany, Fed. Rep. of. 3.0 Dec. 1977 Sweden................. 7.0 Apr. 1978 Belgium.. 5.5 Mar. 1978 Italy.................................. 11.5 Aug. 1977 Switzerland......... 1.0 Feb. 1978 Brazil 30.0 Sept. 1977 Japan................................ 3.5 Mar. 1978 United Kingdom 10.0 June 1978 Canada.. 8.5 Apr. 1978 Mexico............................. 4.5 June 1942 Venezuela............ 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. 3.27 FOREIGN SHORT-TERM INTEREST RATES Per cent per annum, averages of daily figures 1978 Country, or type 1975 1976 1977 Jan. Feb. Mar. Apr. May June 1 Euro-dollars............................................................... 7.02 5.58 6.03 7.32 7.28 7.27 7.38 7.82 8.33 2 United Kingdom....................................................... 10.63 11.35 8.07 6.23 6.82 6.72 7.47 9.17 10.02 3 Canada........................................................................ 8.00 9.39 7.47 7.08 7.14 7.44 8.14 8.01 8.12 4 Germany..................................................................... 4.87 4.19 4.30 3.52 3.45 3.49 3.54 3.60 3.61 5 Switzerland................................................................. 3.01 1.45 2.56 .92 .50 .46 .40 1.18 1.38 6 Netherlands................................................................. 5.17 7.02 4.73 5.01 5.28 5.35 4.62 4.48 4.60 7 France.......................................................................... 7.91 8.65 9.20 9.25 10.45 9.86 8.35 8.21 7.94 8 Italy.............................................................................. 10.37 16.32 14.26 10.99 0) 0) 11.75 11.80 11.75 9 Belgium....................................................................... 6.63 10.25 6.95 8.29 6.75 6.41 5.55 5.71 5.61 10 Japan............................................................................ 11.64 7.70 6.22 5.33 5.25 4.86 4.50 4.50 4.75 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 3.28 FOREIGN EXCHANGE RATES Cents per unit of foreign currency 1978 Country/currency 1975 1976 1977 Jan. Feb. Mar. Apr. May June 1 Australia/dollar.................... 130.77 122.15 110.82 113.82 113.56 113.83 113.97 112.76 113.83 2 Austria/shilling..................... 5.7467 5.5744 6.0494 6.5698 6.6893 6.8221 6.8081 6.6031 6.6718 3 Belgium/franc....................... 2.7253 2.5921 2.7911 3.0425 3.0930 3.1589 3.1419 3.0463 3.0590 4 Canada/dollar....................... 98.30 101.41 94.112 90.810 89.850 88.823 87.592 89.397 89.143 5 Denmark/krone................... 17.437 16.546 16.658 17.324 17.610 17.839 17.807 17.535 17.723 6 Finland/markka................... 27.285 25.938 24.913 24.816 24.527 24.013 23.900 23.430 23.390 7 France/franc......................... 23.354 20.942 20.344 21.196 20.628 21.256 21.803 21.513 21.841 8 Germany/deutsche mark... 40.729 39.737 43.079 47.220 48.142 49.181 48.964 47.497 47.984 9 India/rupee........................... 11.926 11.148 11.406 12.195 12.331 12.185 11.815 11.653 11.900 10 Ireland/pound....................... 222.16 180.48 174.49 193.53 193.96 190.55 184.97 181.81 183.72 11 Italy/lira................................. .15328 .12044 .11328 .11469 .11619 .11692 .11644 .11488 .11634 12 Japan/yen.............................. .33705 .33741 .37342 .41481 .41603 .43148 .45084 .44215 .46744 13 Malaysia/ringgit................... 41.753 39.340 40.620 42.230 42.374 42.428 42.057 41.462 41.964 14 Mexico/peso......................... 8.0000 6.9161 4.4239 4.3963 4.3972 4.3928 4.3945 4.3973 4.3840 15 Netherlands/guilder............. 39.632 37.846 40.752 44.084 44.880 45.994 45.865 44.407 44.716 16 New Zealand/dollar............. 121.16 99.115 96.893 101.95 102.07 102.20 101.92 100.69 101.90 17 Norway/krone...................... 19.180 18.327 18.789 19.401 19.025 18.775 18.621 18.360 18.450 18 Portugal/escudo................... 3.9286 3.3159 2.6234 2.4840 2.4806 2.4483 2.4075 2.2208 2.1857 19 South Africa/rand............... 136.47 114.85 114.99 115.02 115.05 115.05 115.05 115.01 114.93 20 Spain/peseta.......................... 1.7424 1.4958 1.3287 1.2397 1.2394 1.2497 1.2475 1.2317 1.2587 21 Sri Lanka/rupee................... 14.385 11.908 11.964 6.2167 6.4028 6.5000 6.4950 6.2945 6.2859 22 Sweden/krona....................... 24.141 22.957 22.383 21.413 21.554 21.693 21.731 21.491 21.690 23 Switzerland/franc................. 38.743 40.013 41.714 50.353 52.422 52.693 52.511 50.892 53.046 24 United Kingdom/pound... 222.16 180.48 174.49 193.53 193.96 190.55 184.97 181.81 183.72 Memo: 25 United States/dollar 1......... 82.20 89.68 89.10 84.05 83.74 82.94 83.10 84.37 83.22 1 Index of weighted-average exchange value of U.S. dollar against cur­ Note.—Averages of certified noon buying rates in New York for cable rencies of other G-10 countries plus Switzerland. May 1970 parities = 100. transfers. Weights are 1972 global trade of each of the 10 countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Business Finance A69 4.10 SALES, REVENUE, PROFITS, AND DIVIDENDS—Large Manufacturing Corporations Millions of dollars 1976 1977 Industry 1976 1977 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 Total (170 corps.) 1 Sales..................................................................... 667,821 748,757 159,311 166,452 161,596 180,462 177,430 190,302 180,384 200,641 2 Total revenue...................................................... 676,596 758,013 161,461 168,958 164,631 181,546 179,496 192,996 182,488 203,033 Profits before taxes............................................ 71,885 78,909 17,502 18,902 16,894 18,587 18,874 21,468 '18,146 20,421 4 Profits after taxes............................................... 34,707 37,854 8,621 9,532 8,442 8,113 9,056 10,472 '9,337 8,989 5 Memo: PAT unadj.1.................................... 36,016 38,391 8,636 9,490 8,550 9,340 9,107 10,553 8,656 10,075 6 Dividends............................................................. 14,491 16,855 3,191 3,449 3,480 4,371 3,840 4,269 3,985 4,873 Nondurable goods industries (86 corps.):2 7 362,935 404,141 86,927 87,404 88,678 99,926 95,836 101,035 97,144 110,126 8 Total revenue...................................................... 368,184 409,601 88,179 88,864 90,967 100,174 96,948 102,807 98,232 111,614 9 Profits before taxes............................................ 42,694 45,906 10,674 10,595 10,632 10,793 11,074 12,064 '11,195 11,573 10 Profits after taxes............................................... 18,571 22,284 4,809 4,833 4,871 4,058 4,837 5,160 '5,144 7,143 11 Memo: PAT unadj.1.................................... 19,468 19,768 4,829 4,809 4,962 4,868 4,880 5,224 5,234 4,430 12 7,910 8,934 1,879 1,947 1,990 2,094 2,185 2,227 2,268 2,254 Durable goods industries (84 corps.):3 n Sales...................................................................... 304,886 344,616 72,384 79,048 72,918 80,536 81,594 89,267 83,240 90,515 14 Total revenue...................................................... 308,412 348,412 73,282 80,094 73,664 81,372 82,548 90,189 84,256 91,419 15 Profits before taxes............................................ 29,191 33,003 6,828 8,307 6,262 7,794 7,800 9,404 6,951 8,848 16 Profits after taxes............................................... 16,136 18,283 3,812 4,699 3,571 4,055 4,219 5,312 4,193 4,559 17 Memo: PAT unadj.1.................................... 16,548 17,804 3,807 4,681 3,588 4,472 4,227 5,329 3,422 4,826 18 Dividends............................................................. 6,577 7,921 1,308 1,502 1,490 2,277 1,655 2,042 1,717 2,619 Selected industries: Food and kindred products (28 corps.): 19 62,568 68,422 14,762 15,057 16,048 16,701 15,903 16,776 16,947 18,796 20 Total revenue...................................................... 63,142 69,168 14,993 15,395 16,221 16,533 16,155 17,136 17,239 18,638 21 Profits before taxes............................................ 5,750 6,040 1,471 1,507 1,462 1,310 1,448 1,560 1,526 1,506 22 Profits after taxes............................................... 2,890 3,172 665 778 817 630 739 825 826 782 23 Memo: PAT unadj.1.................................... 3,013 3,309 667 785 827 734 746 835 836 892 24 1,259 1,423 307 325 309 318 342 352 364 365 Chemical and allied products (22 corps.): 25 64,125 70,251 15,756 16,081 15,878 16,410 17,103 17,347 17,586 18,215 26 Total revenue...................................................... 64,837 70,906 15,899 16,242 16,084 16,612 17,271 17,526 17,743 18,366 27 Profits before taxes............................................ 8,197 8,530 2,179 2,117 2,008 1,893 2,112 2,290 2,062 2,066 28 Profits after taxes............................................... 4,511 4,604 1,244 1,208 1,130 929 1,192 1,288 1,184 940 29 Memo: PAT unadj.1.................................... 4,622 4,831 1,225 1,153 1,163 1,081 1,181 1,289 1,178 1,183 30 1,918 2,186 444 445 481 548 514 539 553 580 Petroleum refining (15 corps.): 31 Sales...................................................................... 196,154 221,694 46,656 46,065 46,923 56,510 52,344 55,903 51,593 61,854 32 Total revenue...................................................... 199,688 225,338 47,407 46,888 48,744 56,649 52,891 57,096 52,130 63,221 33 Profits before taxes............................................ 25,857 28,144 6,254 6,210 6,559 6,834 6,746 7,396 '6,818 7,184 34 Profits after taxes............................................... 9,555 10,072 2,481 2,383 2,606 2,085 2,498 2,655 '2,694 2,225 35 Memo: PAT unadj.1.................................... 10,168 10,684 2,512 2,404 2,635 2,617 2,546 2,708 2,756 2,674 36 4,089 4,615 971 1,017 1,036 1,065 1,163 1,160 1,166 1,126 Primary metals and products (23 corps.): 37 54,044 58,713 12,733 14,441 13,751 13,119 13,773 15,573 14,454 14,913 38 Total revenue...................................................... 54,825 59,488 12,904 14,650 13,958 13,313 13,963 15,769 14,636 15,120 39 Profits before taxes............................................ 2,834 1,476 633 924 701 576 460 100 239 677 40 Profits after taxes............................................... 1,652 1,579 409 603 513 127 260 536 493 290 41 Memo: PAT unadj.1.................................... 1,947 1,474 416 610 521 400 274 553 287 360 42 Dividends............................................................. 926 976 218 227 230 251 234 246 266 230 Machinery (27 corps.): 43 Sales...................................................................... 87,274 96,820 20,455 21,627 21,133 24,059 22,727 24,380 24,317 25,396 44 Total revenue...................................................... 88,519 98,380 20,707 22,072 21,280 24,460 23,051 24,702 24,767 25,860 45 Profits before taxes............................................ 11,320 13,158 2,469 2,781 2,700 3,370 2,900 3,318 3,264 3,676 46 Profits after taxes............................................... 6,181 7,158 1,355 1,528 1,461 1,837 1,573 1,805 1,771 2,009 47 Memo: PAT unadj.1.................................... 6,202 7,204 1,354 1,517 1,467 1,864 1,571 1,804 1,782 2,047 48 2,383 2,939 537 581 602 663 712 767 702 758 Motor vehicles and equipment (9 corps.): 49 Sales...................................................................... 107,563 127,049 26,395 28,710 24,250 28,208 31,069 33,502 28,835 33,643 50 Total revenue...................................................... 108,394 127,816 26,702 28,942 24,500 28,250 31,350 33,716 29,104 33,646 51 Profits before taxes............................................ 8,909 10,738 2,494 3,056 1,272 2,087 2,988 3,489 1,575 2,686 52 4,870 5,747 1,331 1,668 705 1,166 1,599 1,914 892 1,342 53 Memo: PAT unadj.1.................................... 4,918 5,861 1,337 1,658 704 1,219 1,603 1,926 898 1,434 54 Dividends............................................................. 2,062 2,607 285 422 372 983 392 698 413 1,104 1 Profits after taxes unadjusted are as reported by the individual com­ of returns, allowances, and discounts, and exclude excise taxes paid di­ panies. These data are not adjusted to eliminate differences in accounting rectly by the company. Total revenue data include, in addition to sales, treatments of special charges, credits, and other nonoperating items. income from nonmanufacturing operations and nonoperating income. 2 Includes 21 corporations in groups not shown separately. Profits are before dividend payments and have been adjusted to exclude 3 Includes 25 corporations in groups not shown separately. special charges and credits to surplus reserves and extraordinary items not related primarily to the current reporting period. Income taxes (not Note.—Data are obtained from published reports of companies and shown) include Federal, State and local government, and foreign. reports made to the Securities and Exchange Commission. Sales are net Previous series last published in June 1972 Bulletin, p. A-50. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Board of Governors G. W illiam M iller, Chairman Henry C. W allich Stephen S. Gardner, Vice Chairman Philip E. C oldw ell OFFICE OF BOARD MEMBERS OFFICE OF STAFF DIRECTOR FOR MONETARY POLICY Thomas J. O’Connell, Counsel to the Chairman Joseph R. Coyne, Assistant to the Board Stephen H. Axilrod, Staff Director Kenneth A. Guenther, Assistant to the Board Arthur L. Broida, Deputy Staff Director Sidney L. Jones, Assistant to the Board Murray Altmann, Assistant to the Board Jay Paul Brenneman, Special Assistant to the Peter M. Keir, Assistant to the Board Board Stanley J. Sigel, Assistant to the Board Frank O’Brien, Jr., Special Assistant to the Board Normand R. V. Bernard, Special Assistant to the Joseph S. Sims, Special Assistant to the Board Board Donald J. Winn, Special Assistant to the Board DIVISION OF RESEARCH AND STATISTICS LEGAL DIVISION James L. Kichline, Director Neal L. Petersen, General Counsel Joseph S. Zeisel, Deputy Director Robert E. Mannion, Associate General Counsel Edward C. Ettin, Associate Director Allen L. Raiken, Associate General Counsel John H. Kalchbrenner, Associate Director Charles R. McNeill, Assistant to the General John J. Mingo, Senior Research Division Officer Counsel Eleanor J. Stockwell, Senior Research Division Officer James R. Wetzel, Senior Research Division Officer OFFICE OF THE SECRETARY Robert A. Eisenbeis, Associate Research Division Officer Theodore E. Allison, Secretary Jared J. Enzler, Associate Research Division Griffith L. Garwood, Deputy Secretary Officer *Cathy E. Minehan, Assistant Secretary J. Cortland G. Peret, Associate Research Richard H. Puckett, Manager, Regulatory Im­ Division Officer provement Project Helmut F. Wen del, Associate Research Division Officer James M. Brundy, Assistant Research Division DIVISION OF CONSUMER AFFAIRS Officer Janet O. Hart, Director Ro O b f e fi r c t e r M. Fisher, Assistant Research Division J N e a r t a h u a l n d i e C l . E K . l B uc u k tl m e a r n , , A A s s s s o o c c ia ia te te D D ir ir e e c c to to r r St O ep ff h ic e e n r P. Taylor, Assistant Research Division Levon H. Garabedian, Assistant Director DIVISION OF BANKING SUPERVISION AND REGULATION DIVISION OF INTERNATIONAL FINANCE John’E. Ryan, Director Edwin M. Truman, Director * Frederick C. Schadrack, Deputy Director John E. Reynolds, Counselor Frederick R. Dahl, Associate Director Robert F. Gemmill, Associate Director William W. Wiles, Associate Director George B. Henry, Associate Director Jack M. Egertson, Assistant Director Charles J. Siegman, Associate Director Don E. Kline, Assistant Director Samuel Pizer, Senior International Division Robert S. Plotkin, Assistant Director Officer Thomas A. Sidman, Assistant Director Samuel H. Talley, Assistant Director William Taylor, Assistant Director 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. Denkler, Staff Director William H. Wallace, Staff Director Robert J. Lawrence, Deputy Staff Director Donald E. Anderson, Assistant Director for DIVISION OF FEDERAL RESERVE Construction Management BANK EXAMINATIONS AND BUDGETS Joseph W. Daniels, Sr., Assistant Director and Director of Equal Employment Opportunity Albert R. Hamilton, Director Clyde H. Farnsworth, fa., Associate Director DIVISION OF DATA PROCESSING John F. Hoover, Assistant Director P. D. Ring, Assistant Director Charles L. Hampton, Director Bruce M. Beardsley, Associate Director DIVISION OF Uyless D. Black, Assistant Director FEDERAL RESERVE BANK OPERATIONS Glenn L. Cummins, Assistant Director Robert J. Zemel, Assistant Director James R. Kudlinski, Director Walter Althausen, Assistant Director DIVISION OF PERSONNEL Brian M. Carey, Assistant Director Harry A. Guinter, Assistant Director David L. Shannon, Director Lorin S. Meeder, Assistant Director John R. Weis, Assistant Director Charles W. Wood, Assistant Director OFFICE OF THE CONTROLLER John Kakalec, Controller Edward T. Mulrenin, Assistant Controller DIVISION OF ADMINISTRATIVE SERVICES Walter W. Kreimann, Director John L. Grizzard, Assistant Director John D. Smith, Assistant Director *On loan from the Federal Reserve Bank of New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Bulletin □ July 1978 FOMC and Advisory Councils FEDERAL OPEN MARKET COMMITTEE G. W illiam M iller, Chairman Paul A. Volcker, Vice Chairman Ernest T. Baughman Stephen S. Gardner Henry C. W allich Philip E. Coldwell Philip C. Jackson, Jr. M ark H. W illes David P. Eastburn . J. Charles Partee W illis J. W inn Arthur L. Broida, Secretary Richard G. Davis, Associate Economist M urray Altmann, Deputy Secretary Edward C. Ettin, Associate Economist Normand R. V. Bernard, Assistant Secretary Ira Kaminow, Associate Economist Thomas J. O ’Connell, General Counsel Peter M. Keir, Associate Economist Edward G. Guy, Deputy General Counsel James L. Kichline, Associate Economist Robert E. M annion, Assistant General Counsel John Paulus, Associate Economist Stephen H. Axilrod, Economist John E. Reynolds, Associate Economist Joseph Burns, Associate Economist Edwin M. Truman, Associate Economist John M. Davis, Associate Economist Joseph S. Zeisel, Associate Economist Alan R. Holmes, Manager, System Open Market Account Peter D. Sternlight, Deputy IManager for Domestic Operations Scott E. Pardee, Deputy Manager for Foreign Operations FEDERAL ADVISORY COUNCIL Gilbert F. Bradley, twelfth federal reserve district, President J. W . McLean, tenth federal reserve district, Vice President Henry S. W oodbridge, first district Frank A. Plummer, sixth district W alter B. W riston, second district Edward Byron Smith, seventh district W illiam B. Eagleson, Jr., third district Clarence C. Barksdale, eighth district M. Brock W eir, fourth district Richard H. Vaughan, ninth district John H. Lumpkin, fifth district James D. Berry, eleventh district Herbert 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. M organ, 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 M arcia A. Hakala, Omaha, Nebraska Thomas R. Sw an, 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

A 73 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK, Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* ................... 02106 Louis W. Cabot Frank E. Morris Robert M. Solow James A. McIntosh NEW YORK* ............ 10045 Robert H. Knight Paul A. Volcker Boris Yavitz Thomas M. Timlen Buffalo .................... 14240 Donald R. Nesbitt John T. Keane PHILADELPHIA 19105 John W. Eckman David P. Eastburn Werner C. Brown Richard L. Smoot CLEVELAND* 44101 Robert E. Kirby Willis J. Winn Otis A. Singletary Walter H. MacDonald Cincinnati ............... 45201 Lawrence H. Rogers, II Robert E. Showalter Pittsburgh ............... .15230 G. Jackson Tankersley Robert D. Duggan RICHMOND* ..............23261 E. Angus Powell Robert P. Black Maceo A. Sloan George C. Rankin Baltimore ...................21203 I. E. Killian Jimmie R. Monhollon Charlotte ...................28230 Robert C. Edwards Stuart P. Fishburne Culpeper Communications and Records Center.. 22701 Albert D. Tinkelenberg ATLANTA ................. 30303 Clifford M. Kirtland, Jr. Monroe Kimbrel 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 no* 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 M onetary 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 M onetary 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 M onthly Chart Book. Subscrip­ Open Market Policies and Operating Proce­ tion includes one issue of Historical Chart Book. dures—Staff Studies. 1971. 218 pp. $2.00 $ 12.00 per year or $ 1.25 each in the United States, each; 10 or more to one address, $1.75 each. its possessions, Canada, and Mexico; 10 or more Reappraisal of the Federal Reserve Discount of same issue to one address, $1.00 each. Else­ Mechanism. Vol. 1. 1971. 276 pp. Vol. 2. 1971. where, $15.00 per year or $1.50 each. 173 pp. Vol. 3. 1972. 220 pp. Each volume $3.00; Historical Chart Book. Issued annually in Sept. 10 or more to one address, $2.50 each. Subscription to Monthly Chart Book includes one The Econometrics of Price Determination Con­ issue. $1.25 each in the United States, its posses­ ference, October 30-31, 1970, Washington, D.C. sions, Canada, and Mexico; 10 or more to one 1972. 397 pp. Cloth ed. $5.00 each; 10 or more address, $1.00 each. Elsewhere, $1.50 each. to one address, $4.50 each. Paper ed. $4.00 each; Capital Market Developments. Weekly. $15.00 per 10 or more to one address, $3.60 each. year or $.40 each in the United States, its posses­ sions, Canada, and Mexico; 10 or more of same Federal Reserve Staff Study: Ways to Moderate issue to one address, $ 13.50 per year or $.35 each. Fluctuations in Housing Construction. 1972. Elsewhere, $20.00 per year or $.50 each. 487 pp. $4.00 each; 10 or more to one address, $3.60 each. Selected Interest and Exchange Rates—Weekly Series of Charts. Weekly. $15.00 per year or Lending Functions of the Federal Reserve $.40 each in the United States, its possessions, Banks. 1973. 271 pp. $3.50 each; 10 or more Canada, and Mexico; 10 or more of same issue to one address, $3.00 each. to one address, $13.50 per year or $.35 each. Improving the M onetary 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 REPRINTS (Except for Staff Papers, Staff Economic Studies, and (Short pamphlets suitable for classroom use. Multiple some leading articles, most of the articles reprinted do copies available without charge.) not exceed 12 pages.) The Equal Credit Opportunity Act and . . . Age The Equal Credit Opportunity Act and . Measures of Security Credit. 12/70. Credit Rights in Housing Revision of Bank Credit Series. 12/71. the Equal Credit Opportunity Act and . . . Doc­ Assets and Liabilities of Foreign Branches of tors, Lawyers, Small Retailers, and Others U.S. Banks. 2/72. Who May Provide Incidental Credit Bank Debits, Deposits, and Deposit Turnover— the Equal Credit Opportunity Act and . Revised Series. 7/72. Women Yields on Newly Issued Corporate Bonds. 9/72. Fair Credit Billing Recent Activities of Foreign Branches of U.S. A Guide to Federal Reserve Regulations Banks. 10/72. How to File A Consumer Credit Complaint Revision of Consumer Credit Statistics. 10/72. If You Borrow To Buy Stock One-Bank Holding Companies Before the 1970 Truth in Leasing Amendments . 12/7 2. U.S. Currency Yields on Recently Offered Corporate Bonds. What Truth in Lending Means to You 5/73. Rates on Consumer Instalment Loans. 9/73. New Series for Large M anufacturing Corpora­ STAFF ECONOMIC STUDIES tions. 10/73. U.S. Energy Supplies and Uses, Staff Economic Studies and papers on economic and financial subjects Study by Clayton Gehman. 12/73. that are of general interest in the field of economic Inflation and Stagnation in Major Foreign In­ research. dustrial Countries. 10/74. The Structure of Margin Credit. 4/75. Summaries Only Printed in the Bulletin New Statistical Series on Loan Commitments at (Limited supply of mimeographed copies of full text Selected Large Commercial Banks. 4/75. available upon request for single copies. Recent Trends in Federal Budget Policy. 7/75. Recent Developments in International Financial The Performance of Bank Holding Company-Af­ filiated Finance Companies, by Stephen A. M arkets. 10/75. MINNIE: A Small Version of the MIT-PENN-SSRC Rhoades and Gregory E. Boczar. Aug. 1977. 19 Econometric Model, Staff Economic Study by pp. Douglas Battenberg, Jared J. Enzler, and Arthur Greeley in Perspective, by Paul Schweitzer and M. Havenner. 11/75. Joshua Greene. Sept. 1977. 17 pp. An Assessment of Bank Holding Companies, Staff Structure and Performance Studies in Banking: Economic Study by Robert J. Lawrence and Sam­ A Summary and Evaluation, by Stephen A. Rhoades. Dec. 1977. 45 pp. uel H. Talley. 1/76. Industrial Electric Power Use. 1/76. An Analysis of Federal Reserve Attrition Since 1960, by John T. Rose. Jan. 1978. 44 pp. Revision of Money Stock Measures. 2/76. Problems in Applying Discriminant Analysis in Survey of Finance Companies, 1975. 3/76. Credit Scoring M odels, by Robert A. Eisenbeis. Revised Series for Member Bank Deposits and Jan. 1978. 28 pp. Aggregate Reserves. 4/76. Industrial Production— 1976 Revision. 6/76. External Capital Financing Requirements of Commercial Banks: 1977-81, by Gerald A. Han- Federal Reserve Operations in Payment Mecha­ weck and John J. Mingo. Feb. 1978. 34 pp. nisms: A Summary. 6/76. M ortgage 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 M aterials. 11/76. Bank Holding Company Financial Developments The Behavior of Member Bank Required Reserve in 1976. 4/77. Ratios and the Effects of Board Action, Survey of Terms of Bank Lending— New Series. 1968-77, by Thomas D. Simpson. July 1978. 39 5/77. pp. The Commercial Paper M arket. 6/77. Foothold Acquisitions and Bank M arket Struc­ Consumption and Fixed Investment in the Eco­ ture, by Stephen A. Rhoades and Paul Schweit­ nomic Recovery Abroad. 10/77. zer, July 1978. 8 pp. Recent Developments in U.S. International Transactions. 4/78. Printed in Full in the Bulletin Survey of Time and Savings Deposits at A ll Com­ Staff Economic Studies shown under “Reprints.” mercial Banks, January 1978. 5/78. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 76 Index to Statistical Tables References are to pages A-3 through A-69 although the prefix “A” is omitted in this index ACCEPTANCES, bankers, 11, 25, 27 Demand deposits: Agricultural loans, commercial banks, 18, 20-22, 26 Adjusted, commercial banks, 13, 15, 19 Assets and liabilities (See also Foreigners): Banks, by classes, 16, 17, 19, 20-23 Banks, by classes, 16, 17, 18, 20-23, 29 Ownership by individuals, partnerships, and Domestic finance companies, 39 corporations, 25 Federal Reserve Banks, 12 Subject to reserve requirements, 15 Nonfinancial corporations, current, 38 Turnover, 13 Automobiles: Deposits (See also specific types of deposits): Consumer instalment credit, 42, 43 Banks, by classes, 3, 16, 17, 19, 20-23, 29 Production, 48, 49 Federal Reserve Banks, 4, 12 Subject to reserve requirements, 15 BANKERS balances, 16, 18, 20, 21, 22 Turnover, 13 (See also Foreigners) Discount rates at F.R. Banks (See Interest rates) Banks for cooperatives, 35 Discounts and advances by F.R. Banks (See Loans) Bonds (See also U.S. Govt, securities): Dividends, corporate, 37, 69 New issues, 36 Yields, 3 EMPLOYMENT, 46, 47 Branch banks: Euro-dollars, 27 Assets and liabilities of foreign branches of U.S. banks, 56 FARM mortgage loans, 41 Liabilities of U.S. banks to their foreign Farmers Home Administration, 41 branches, 23 Federal agency obligations, 4, 11, 12, 13, 34 Business activity, 46 Federal and Federally sponsored credit agencies, 35 Business expenditures on new plant and Federal finance: equipment, 38 Debt subject to statutory limitation and Business loans (See Commercial and industrial types and ownership of gross debt, 32 loans) Receipts and outlays, 30, 31 Treasury operating balance, 30 CAPACITY utilization, 46 Federal Financing Bank, 30, 35 Capital accounts: Federal funds, 3, 6, 18, 20, 21, 22, 27, 30 Banks, by classes, 16, 17, 19, 20 Federal home loan banks, 35 Federal Reserve Banks, 12 Federal Home Loan Mortgage Corp., 35, 40, 41 Central banks, 68 Federal Housing Administration, 35, 40, 41 Certificates of deposit, 23, 27 Federal intermediate credit banks, 35 Commercial and industrial loans: Federal land banks, 35, 41 Commercial banks, 15, 18, 23, 26 Federal National Mortgage Assn., 35, 40, 41 Weekly reporting banks, 20, 21, 22, 23, 24 Federal Reserve Banks: Commercial banks: Condition statement, 12 Assets and liabilities, 3, 15-19, 20-23 Discount rates (See Interest rates) Business loans, 26 U.S. Govt, securities held, 4, 12, 13, 32, 33 Commercial and industrial loans, 24, 26 Federal Reserve credit, 4, 5, 12, 13 Consumer loans held, by type, 42, 43 Federal Reserve notes, 12 Loans sold outright, 23 Federally sponsored credit agencies, 35 Number, by classes, 16, 17, 19 Finance companies: Real estate mortgages held, by type of holder and Assets and liabilities, 39 property, 41 Business credit, 39 Commercial paper, 3, 24, 25, 27, 39 Loans, 20, 21, 22, 42, 43 Condition statements (See Assets and liabilities) Paper, 25, 27 Construction, 46, 50 Financial institutions, loans to, 18, 20-22 Consumer instalment credit, 42, 43 Float, 4 Consumer prices, 46, 51 Flow of funds, 44, 45 Consumption expenditures, 52, 53 Foreign: Corporations: Currency operations, 12 Profits, taxes, and dividends, 37 Deposits in U.S. banks, 4, 12, 19, 20, 21, 22 Sales, revenue, profits, and dividends of large Exchange rates, 68 manufacturing corporations, 69 Trade, 55 Security issues, 36, 65 Foreigners: Cost of living (See Consumer prices) Claims on, 60, 61, 66, 67 Credit unions, 29, 42, 43 Liabilities to, 23, 56-59, 64—67 Currency and coin, 5, 16, 18 Currency in circulation, 4, 14 GOLD: Customer credit, stock market, 28 Certificates, 12 Stock, 4, 55 DEBITS to deposit accounts, 13 Government National Mortgage Assn., 35, 40, 41 Debt (See specific types of debt or securities) Gross national product, 52, 53 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Bulletin □ July 1978 All HOUSING, new and existing units, 50 REAL estate loans: Banks, by classes, 18, 20-23, 29, 41 INCOME, personal and national, 46, 52, 53 Life insurance companies, 29 Industrial production, 46, 48 Mortgage terms, yields, and activity, 3, 40 Instalment loans, 42, 43 Type of holder and property mortgaged, 41 Insurance companies, 29, 32, 33, 41 Reserve position, basic, member banks, 6 Insured commercial banks, 17, 18, 19 Reserve requirements, member banks, 9 Interbank deposits, 16, 17, 20, 21, 22 Reserves: Interest rates: Commercial banks, 16, 18, 20, 21, 22 Bonds, 3 Federal Reserve Banks, 12 Business loans of banks, 26 Member banks, 3, 4, 5, 15, 16, 18 Federal Reserve Banks, 3, 8 U.S. reserve assets, 55 Foreign countries, 68 Residential mortgage loans, 40 Money and capital markets, 3, 27 Retail credit and retail sales, 42, 43, 46 Mortgages, 3, 40 Prime rate, commercial banks, 26 SALES, revenue, profits, and dividends Time and savings deposits, maximum rates, 10 of large manufacturing corporations, 69 International capital transactions of the United Saving: States, 56-67 Flow of funds, 44, 45 International organizations, 56-61, 64—67 National income accounts, 53 Inventories, 52 Savings and loan assns., 3, 10, 29, 33, 41, 44 Investment companies, issues and assets, 37 Savings deposits (See Time deposits) Investments (See also specific types of investments): Savings institutions, selected assets, 29 Banks, by classes, 16, 17, 18, 20, 21, 22, 29 Securities (See also U.S. Govt, securities): Commercial banks, 3, 15, 16, 17, 18 Federal and Federally sponsored agencies, 35 Federal Reserve Banks, 12, 13 Foreign transactions, 65 Life insurance companies, 29 New issues, 36 Savings and loan assns., 29 Prices, 28 Special Drawing Rights, 4, 12, 54, 55 LABOR force, 47 State and local govts.: Life insurance companies (See Insurance Deposits, 19, 20, 21, 22 companies) Holdings of U.S. Govt, securities, 32, 33 Loans (See also specific types of loans): New security issues, 36 Banks, by classes, 16, 17, 18, 20-23, 29 Ownership of securities of, 18, 20, 21, 22, 29 Commercial banks, 3, 15-18, 20-23, 24, 26 Yields of securities, 3 Federal Reserve Banks, 3, 4, 5, 8, 12, 13 State member banks, 17 Insurance companies, 29, 41 Stock market, 28 Insured or guaranteed by U.S., 40, 41 Stocks (See also Securities): Savings and loan assns., 29 New issues, 36 Prices, 28 MANUFACTURING: Capacity utilization, 46 TAX receipts, Federal, 31 Production, 46, 49 Time deposits, 3, 10, 13, 15, 16, 17, 19, 20, 21, Margin requirements, 10 22, 23 Member banks: Trade, foreign, 55 Assets and liabilities, by classes, 16, 17, 18 Treasury currency, Treasury cash, 4 Borrowings at Federal Reserve Banks, 5, 12 Treasury deposits, 4, 12, 30 Number, by classes, 16, 17, 19 Treasury operating balance, 30 Reserve position, basic, 6 Reserve requirements, 9 UNEMPLOYMENT, 47 Reserves and related items, 3, 4, 5, 15 U.S. balance of payments, 54 Mining production, 49 U.S. Govt, balances: Mobile home shipments, 50 Commercial bank holdings, 19, 20, 21, 22 Monetary aggregates, 3, 15 Member bank holdings, 15 Money and capital market rates (See Interest Treasury deposits at Reserve Banks, 4, 12, 30 rates) U.S. Govt, securities: Money stock measures and components, 3, 14 Bank holdings, 16, 17, 18, 20, 21, 22, 29, Mortgages (See Real estate loans) 32, 33 Mutual funds (See Investment companies) Dealer transactions, positions, and financing, 34 Mutual savings banks, 3, 10, 20-22, 29, 32, 33, 41 Federal Reserve Bank holdings, 4, 12, 13, 32, 33 Foreign and international holdings and NATIONAL banks, 17, 19 transactions, 12, 32, 64 National defense outlays, 31 Open market transactions, 11 National income, 52 Outstanding, by type of security, 32, 33 Nonmember banks, 17, 18, 19 Ownership, 32, 33 Rates in money and capital markets, 3, 27 OPEN market transactions, 11 Yields, 3 PERSONAL income, 53 Utilities, production, 49 Prices: VETERANS Administration, 40, 41 Consumer and wholesale, 46, 51 Stock market, 28 WEEKLY reporting banks, 20-24 Prime rate, commercial banks, 26 Wholesale prices, 46 Production, 46, 48 Profits, corporate, 37, 69 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 78 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories February 1978 — ■ Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities ----- Boundaries of Federal Reserve Branch • Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Guide to Tabular Presentation and Statistical Releases GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations p Preliminary SMSA’s Standard metropolitan statistical areas r Revised (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