Federal Reserve Bulletin, 1978-09

SEPTEM BER 1978 FEDERAL RESERVE BULLETIN The Federal Budget in the ’s 1970 Treasury and Federal Reserve Foreign Exchange Operations Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A copy of the Federal Reserve Bulletin is sent to each member bank without charge; member 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 9 □ VOLUM E 64 □ SEPTEM BER 1978 FEDERAL RESERVE BULLETIN PU B LIC A TIO N S c o m m it t e e Joseph R. Coyne, Chairman o Stephen H. Axilrod □ John M. Denkler Janet O. Hart □ James L. Kichline D Neal L. Petersen □ Edwin M. Truman 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 701 The Federal Budget in the 1970’s 740 Governor Coldwell discussed the Board’s support for simplification of the During the 1970’s policy-makers have Truth in Lending Act and offered sug­ been willing to employ fiscal tools ac­ gestions for implementing such simplitively in order to promote economic cation including the segregation of Truth growth and stability, and as a result in Lending information from other in­ Federal spending has outpaced the formation in consumer credit contracts, growth in gross national product and simplification of the other provisions of Federal outlays have consistently ex­ consumer contracts, clarification of the ceeded tax receipts. disclosure responsibilities of creditors, and Board approval of creditors’ forms 715 Staff Economic Studies for 1-year periods, before the Subcom­ “Interest Rate Ceilings and Disinterme­ mittee on Consumer Affairs of the diation” provides an historical review of House Committee on Banking, Finance the developments since 1966 regarding and Urban Affairs, September 6, 1978. interest rate ceiling structure, deposit 742 Governor Jackson discussed the Board’s flows, mortgage lending, and earnings enforcement of the Equal Credit Oppor­ of depositary institutions. tunity Act and the Fair Housing Act specifically with regard to redlining reg­ 717 Treasury and Federal Reserve ulations and monitoring, the ongoing Foreign Exchange Operations revision of the Board’s examination and For the period January to July 1978, enforcement program in the area of according to the semiannual report on Equal Credit Opportunity and Fair foreign exchange operations, the ex­ Housing and its efforts to obtain volun­ change markets remained uncertain as tary compliance, and the Board’s con­ serious economic imbalances persisted sumer education program, in testimony among the industrial countries. before the Subcommittee on Commerce, Consumer, and Monetary Affairs of the 736 Statements to Congress House Committee on Government Opera­ tions, September 15, 1978. Chairman Miller appeared before the Senate Finance Committee on Sep­ 745 Record of Policy Actions of the tember 6, 1978, to give the recom­ Federal Open Market Committee mendations of the Board of Governors in the area of tax legislation, including At the conclusion of its meeting on July the judgment that the $15 billion tax 18, 1978, the Committee decided to reduction being considered by the Con­ retain the existing longer-run ranges for gress for the coming calendar year the monetary aggregates. Thus, the would be appropriate. In addition, the ranges for the period from the second Chairman recommended a 1-year defer­ quarter of 1978 to the second quarter of ral of the tax increases dictated by the 1979 were 4 to 6V2 per cent for M-l, Social Security Amendments of 1977 6V2 to 9 per cent for M-2, and 7^2 to and a comprehensive study of the Social 10 per cent for M-3. The associated Security System by the Congress. range for growth in commercial bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

credit was raised to 8V2 to IIV2 per cent The Board has denied requests for a in recognition of the greater share of delay in the November 1 effective date borrower demands being directed toward of its rule to permit the automatic banks. transfer of funds from savings to check­ The Committee decided that opera­ ing accounts. tions in the period immediately ahead The following Truth in Lending actions should be directed toward maintaining have been taken: amendment to facilitate the weekly-average Federal funds rate computation of the annual percentage rate within a range of 7% to 8 per cent. The in long-term credit transactions involving members agreed that, in deciding on the minor irregularities in the repayment specific objective for the Federal funds schedule; proposed interpretation of Reg­ rate, the Manager should be guided ulation Z that requires disclosure of loss mainly by the relation between the latest of interest when a time deposit is used as estimates of annual rates of growth in security for a loan; and amendment re­ M-l and M-2 over the July-August pe­ garding the disclosure of the complete riod and the following ranges of toler­ payment schedule in any credit transaction ance: 4 to 8 per cent for M-l and 6 to with monthly repayments in varying 10 per cent for M-2. It was also agreed amounts. that if, giving approximately equal weight to M-l and M-2, their rates of Appointment of Secretary of the Federal growth appeared to be close to or beyond Open Market Committee. the limits of the indicated ranges, the Changes in Board staff. Manager should raise or lower the ob­ jective for the funds rate in an orderly An educational film describing the func­ fashion within its range. tions of the Nation’s central bank has been released. 756 Law Department Recordings of all open Board meetings Amendments to Regulations D and Z will be prepared. and various rules, interpretations, bank Three State banks admitted to membership holding company and bank merger in the Federal Reserve System. orders, and pending cases. 774 Membership of the Board of 781 Industrial Production Governors of the Output increased an estimated 0.5 per Federal Reserve System, 1913-78 cent in August. List of appointive and ex officio members. 777 Announcements Al Financial and Business Statistics Appointment of Nancy H. Teeters as a A70 Board of Governors and Staff member of the Board of Governors. A72 Open Market Committee and The Board has approved an increase in the Staff; Advisory Councils discount rate from 7lA to 13A per cent, A73 Federal Reserve Banks, effective August 21, 1978. Branches, and Offices The Board has announced a change in A74 Federal Reserve Board Publications reserve requirements to make it more attractive for member banks to borrow A76 Index to Statistical Tables funds in the Euro-dollar market. A78 Map of Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Federal Budget in the 1970’s This article was prepared in the Government Korean war, the ratio of Federal outlays to GNP Finance Section of the Division of Research and remained below 20 per cent over the latter part Statistics. of the 1950’s and the first half of the 1960’s. With the advent of major social programs and The expanded role of the Federal sector in the the onset of the Vietnam war, growth in Federal U.S. economy during the 1970’s has been both outlays began to outpace gains in GNP and by significant and controversial. Federal spending 1968 the ratio of outlays to GNP rose to around has outpaced the growth in the gross national 21 per cent. The ratio then fluctuated around product and, as a consequence, the share of this level until the 1974—75 recession, when it Federal outlays in GNP has been higher in rose to its highest level since World War II as recent years than at any time since World War Federal outlays increased sharply while growth II. Moreover, Federal outlays have consistently of nominal GNP leveled off. The ratio has been exceeded tax receipts; and so, in every year of edging down during the subsequent recovery the 1970-78 period, the Federal budget has been period. As discussed later, the relative uptrend in deficit. of Federal outlays reflects a sharp expansion of To some degree, these budgetary imbalances Federal transfer programs and grants to States have reflected the automatic responses of taxes and localities. Direct Federal purchases of goods and outlays to inflation and fluctuations in real and services have been declining relative to economic activity. Beyond this, policy-makers GNP (Table 1). have been willing to employ fiscal tools actively The persistent relative increase of Federal in order to promote economic growth and sta­ outlays has from time to time generated strong bility. This article reviews fiscal policy during support for counteracting measures. One such the 1970’s. measure was the Congressional Budget and Im­ poundment Control Act of 1974, which estab­ lished new procedures for legislative control REVIEW OF over the budget. Passage was spurred by reac­ BUDGET DEVELOPMENTS tion to the sharp relative rise in Federal spending in the late 1960’s and subsequent disappoint­ Trends in Federal Outlays ment over the failure of spending to decline in Federal outlays have advanced from approxi­ the early 1970’s despite the end of the Vietnam mately $200 billion in 1970 to about $450 conflict and the maturation of the social pro­ billion in 1978. This sharp increase, at an grams of the 1960’s. average annual rate of 11 per cent, exceeded Concerns about the relative growth of Federal the 10 per cent average annual rate of growth spending were temporarily deflected by the in GNP. Thus, the ratio of Federal expenditures onset of the 1974-75 recession, as the need to to GNP has risen further over this decade. promote economic recovery became paramount. The historical relationship of Federal national Government spending in the form of income income accounts (NIA) expenditures to GNP is security payments—such as unemployment illustrated in Chart 1. Following a temporary compensation—rose sharply, a normal occur­ surge of Federal spending at the time of the rence during periods of rising unemployment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

702 Federal Reserve Bulletin □ September 1978 1. Federal expenditures as a per cent of GNP 1952 1957 1962 1967 1972 1977 National income accounts data, U.S. Dept, of Commerce. Also, in response to the severity of the reces­ spending programs designed to reduce the ratio sion, additional compensatory programs— of Federal outlays to GNP. Federal expenditures countercyclical revenue sharing and public em­ are targeted to increase by around $40 billion ployment—were enacted even with the Federal (to slightly below $490 billion) in the coming budget in substantial deficit. Over the course of year, and the ratio of Federal NIA outlays to the subsequent recovery, however, Federal GNP is projected to drop to 21.8 per cent. In spending has remained large relative to GNP, addition, the administration has announced its and inflationary pressures have intensified. intention to make further cuts in Federal spend­ Therefore, concern regarding the adequacy of ing relative to GNP by 1981 so that this ratio fiscal discipline has once again increased. can be reduced to a level more in line with the In their recent 1979 budget proposals, both relative size of Federal spending in the late the President and the Congress have set forth 1950’s and early 1960’s. 1. Federal sector expenditures as per cent of GNP, calendar years, 1960-77 Grants- Purchases of in-aid Total Calendar year goods and Transfer to State Net expendi­ services payments and local interest Subsidies tures govern­ ments 1960-69 average 10.7 5.0 1.7 13 .6 19.4 1970 ................... 9.7 6.5 2.5 1.5 .6 20.8 1971 .................... 9.0 7.1 2.7 1.3 .6 20.7 1972 .................... 8.7 7.1 3.2 1.2 .7 20.9 1973 .................... 7.8 7.3 3.1 1.4 .6 20.3 1974 .................... 7.9 8.3 3.1 1.5 .4 21.2 1975 .................... 8.1 9.8 3.6 1.5 .4 23.3 1976 .................... 7.6 9.5 3.6 1.6 .3 22.7 1977 .................... 7.7 9.2 3.6 1.5 .4 22.4 Source.—Based on the national income accounts data, U.S. Department of Commerce. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Federal Budget in the 1970’s 703 of total budget outlays and GNP than it did in Changing Composition and the period just before the Vietnam build-up. Controllability In contrast to Federal purchases, outlays for of Federal Spending Federal income transfer programs—which are The goal of the administration and the Congress hard to control—have been rising sharply both of reducing the relative size of Federal expendi­ in absolute and in relative terms over the present tures is difficult to achieve. Hard choices decade (Chart 2). Payments of social security will have to be made among many new pro­ benefits, for example, have tripled over the 8 grams likely to be proposed in coming years. years of this decade to a current level of $97.7 Room for new programs will be limited by billion. Expenditures for medicare and medicaid longstanding trends in the composition of Fed­ have risen even faster and now total $36 billion. eral outlays that have raised substantially the Moreover, outlays under the much smaller food proportion of spending that cannot be readily stamp program, which had shown only modest controlled. growth in the 1960’s, have risen nearly nine As indicated earlier, Federal purchases of times to more than $5.6 billion. goods and services—which are relatively con­ The growing importance of transfer payments trollable because a sizable portion of procure­ in the budget imposes important constraints on ment and manpower spending is subject to the the ability of policy-makers to control outlays annual appropriations process—have accounted because most of these programs are “openfor a progressively smaller share of GNP over ended”; once they are established, funds are the present decade. This decline is largely the disbursed, without specific congressional action, result of a leveling-off of defense expenditures in response to developing economic circum­ after the end of the Vietnam conflict. Defense stances. Under many transfer programs, for spending today accounts for a lower proportion example, entitlements increase automatically 2. Functional classification of budget outlays Other & veterans benefits Interest Income security Education & health Transportation & energy National defense 20 1971 1973 1975 1977 1979 Data for 1969-77 are from The Budget of the United States Government, Fiscal Year 1979. Data for 1978 and 1979 are from the Mid-Session Review of the 1979 Budget. GPFA: general purpose fiscal assistance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

704 Federal Reserve Bulletin □ September 1978 with an economic downturn. Inflation also has of about 9 per cent, reflects the impact of both an immediate and automatic impact on some changing economic conditions and discretionary transfer payment programs. Provisions for reg­ congressional measures, whose interactions ular cost-of-living adjustments are incorporated have affected the relative growth of the various into many income security programs, and rising categories of receipts. health care costs are ordinarily passed through The individual income tax has been the to the Federal Government under the medicare mainstay of the U.S. tax system in relative as and medicaid programs. well as absolute terms since the beginning of Demographic factors also play a major role World War II. With its broad base and progres­ in transfer outlays. Since age determines eligi­ sive rate structure, this tax has a pronounced bility for benefits under many programs, pay­ tendency (in the absence of new legislation) to ments are subject to strong upward pressures increase the dollar volume of receipts more as the proportion of older persons in the popu­ rapidly than disposable income or than revenues lation increases, a process that has been under from other tax sources. On the other hand, way for some time and that will continue over payroll taxes for social insurance, which are the remainder of this century. characterized by a regressive rate structure, Federal grants to States and localities have normally register slower rates of growth. Para­ also assumed greater importance in the budget. doxically, this pattern did not materialize during This trend reflects, of course, the advent of the 1970’s (Chart 3). Instead, the share of general revenue sharing in the early 1970’s as revenue produced by the personal income tax well as the enactment of countercyclical grants actually declined 6 per cent from 1970 to 1977, for public works and public employment pro­ as a number of steps were taken to reduce grams and for general fiscal assistance. personal income tax liabilities so as to bolster Even though outlays for defense and Federal private demands during times of depressed eco­ grants are subject to periodic review by the nomic activity and to lighten tax burdens during Congress, proposals for substantial cuts in these periods of inflation. The decline in the share areas always meet strong resistance. Moreover, of income taxes in total receipts was more than while most spending programs do not have offset by growth in the share of payroll taxes specific provisions for automatic inflation ad­ (for social insurance), reflecting increases both justment, such as that built into social security, in payroll tax rates and in the taxable wage base. the appropriations process has often allowed for Corporations benefited from a number of leg­ advances in costs and prices. The other spending islated tax reductions during the 1970’s. At the categories also present difficult problems to fis­ same time, however, the strong inflation tended cal managers attempting to hold down outlays. to raise the measured profits of many firms. This Perhaps most notable are the interest costs on was particularly the case for those operating on the national debt. a FIFO (first-in, first-out) inventory accounting Thus the bulk of current Federal outlays ap­ basis, but it also applied to the effect of record­ pears more or less insulated from short-run cost ing depreciation on an historical cost basis, cutting. Nonetheless, no budget outlay is when the costs of replacing capital had climbed beyond the ultimate control of the Congress; with inflation. Thus, corporate income tax pay­ and, certainly, a reduction in the relative size ments advanced about in line with total reve­ of the Federal sector is an attainable goal over nues. As is evident in Chart 3, the share of total the longer term. revenue accounted for by indirect business taxes declined over the period, reflecting excise tax cuts implemented in the early 1970’s. Trends in Federal Receipts The appendix tables set out the specific Federal receipts have increased from $194 bil­ changes in the tax law that have affected the lion in 1970 to about $400 billion in the current growth rate of Federal revenues over the decade year. This advance, at an average annual rate to date. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Federal Budget in the 1970's 705 3. Categorial classification of receipts All other Individual income taxes Corporate income taxes Excise taxes Social insurance taxes Data for 1969-77 are from Budget of U.S. Government, Fiscal Year 1979. Data for 1978 and 1979 are from the Mid- Session Review of the 1979 Budget. The Federal Deficit two of the early years of the decade, and then rising to $66 billion in fiscal 1976, $45 billion The rapid growth of Federal expenditures, to­ in 1977, and about $50 billion in 1978. gether with the slower expansion of Federal Recent deficits have been exceptionally large, receipts, has generated deficits in the Federal not only in absolute terms but also when scaled budget in every year of the current decade—a by GNP (Table 2). Furthermore, the recent large continuation of a longstanding trend. Indeed, deficits have had a pronounced tendency to with the exception of a modest surplus in 1969, persist well into the recovery period. This de­ the budget has been in deficit in every year since velopment in turn reflects the interplay of eco­ 1961. During the 1970’s, however, Federal nomic conditions and discretionary budget ac­ deficits (unified basis) have been unusually tions, which are discussed below. large, amounting to more than $20 billion in 2. Federal deficit (-) or surplus, as per cent of Trends in Federal Debt GNP, at trough and in later years, selected years, 1954-75 As a result of the series of deficits registered thus far in the 1970’s, the U.S. Treasury has Business Year Years following economic trough been confronted by a formidable financing task. cycle of trough trough 1 2 3 Moreover, the Treasury has had to raise addi­ tional funds in order to finance indirectly the Fiscal year 1954 ............•• -.33 -.79 1.00 .72 activities of a number of wholly owned Gov­ 1958 .................. -.66 -2.74 .05 -.67 1961 .................. -.67 -1.30 -.83 -.96 ernment agencies whose operations are not re­ 1971 .................. -2.26 -2.10 -1.19 -.35 corded in the budget. (The Treasury provides 1975 ................. -3.09 -4.09 -2.45 -2.50** funds by making direct loans to the Federal 1‘ Estimated. Financing Bank which, in turn, lends funds to Source.—Budget of U.S. Government (various years) and the Mid-Session Review of the 1979 Budget. the other oft-budget agencies.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

706 Federal Reserve Bulletin □ September 1978 3. Federal deficits and Treasury borrowing activity, fiscal years, 1970-78 Billions of dollars 1970 1971 1972 1973 1974 1975 1976 Transition 1977 1978 Item quarter Deficits (-+-): Unified budget ................ 2.8 23.0 23.4 14.8 4.7 45.1 66.4 13.0 45.0 51.1 « Oii-budget ....................... 0.1 1.4 8.1 7.2 1.8 8.7 11.0<* Total ............................. 2.8 23.0 23.4 14.9 6.1 53.2 73 6 14.8 53.7 62. le Total debt issued to the public1 ........................ 5.4 19.4 19.4 19.3 3.0 50.9 82.8 18.5 53.5 59.2 e Treasury nonmarket­ able .............................. 14 7.8 10.5 13.5 — .4 2.0 3.7 1.0 16.82 15 1 * Treasury marketable __ 5.5 11.8 10.0 5.6 2.5 49.8 79.1 16.8 37.9 44. le Government agency securities3 .................... -1.4 -1.1 0.3 0.9 -1.0 0.7 -1.2 n.a. Memo: Outlays by Governmentsponsored agencies ... 9.6 4.4 11.4 14.5 7.0 4.6 2.3 10.2 16.5* Net change: Federal loan guarantees ......... 2.3 12.2 15.6 14.0 6.2 5.7 10.3 -.1 14.1 16.5* 1 Also includes matured debt and debt bearing no interest. e Estimated, Excludes securities held by Government accounts. n.a. Not available. 2 Includes $2.5 billion in special certificates issued to the * Less than $50 million. Federal Reserve. Note.—Total debt issued to the public does not equal the 3 Securities issued by Government agencies such as Gov­ total deficit due to technical adjustments such as changes in ernment National Mortgage Association, Export-Import Bank, the Treasury cash balance. and Tennessee Valley Authority. A sizable portion of total debt issued to the home purchases. The dimensions of these ac­ public in the 1970’s was in nonmarketable form, tivities are indicated in Table 3. including not only sales of savings bonds to individuals but also issuance of special debt certificates to foreign official institutions (Table THE FISCAL POLICY 3). These institutions have also acquired a sub­ RECORD OF THE 1970’S stantial amount of marketable debt over the period, as they invested funds obtained in cur­ Fiscal policy can moderate fluctuations in rency exchange operations to support the dollar. prices, output, and employment in two ways: Corresponding to the increases in the public’s first, through automatic changes in taxes and currency holdings and in member bank reserves, expenditures in response to variations in eco­ the Federal Reserve System has regularly ac­ nomic activity; and second, through deliberate quired sizable amounts of marketable debt. Of changes in taxes and expenditures by the Con­ the total increase in marketable debt outstand­ gress and the administration in an attempt to ing for the period, foreign central banks ac­ stabilize the economy. During recessions, for quired 32 per cent and the Federal Reserve 23 example, the budget automatically moves per cent. toward deficit as the growth of tax receipts falls Beyond the activities of wholly owned agen­ in the wake of reduced or negative growth of cies, whether included on or off budget, the personal income and corporate profits. At the Federal sector also influences the course of same time, expenditures such as unemployment economic and financial developments through compensation and other income security pay­ institutions that, although privately owned, have ments rise as a result of the higher levels of Federal Government sponsorship. Sponsored unemployment. These cyclically induced agencies, such as Federal home loan banks, changes in the budget help to moderate fluctua­ borrow to finance lending in the mortgage mar­ tions in economic activity, but they do not nec­ ket and in the farm sector. The Federal Govern­ essarily impel a return to acceptable levels of ment is also involved in loan-guarantee pro­ employment and income with stable prices. grams designed to assist a wide variety of ac­ Hence, policy-makers often decide to supple­ tivities, including development of new energy ment the automatic stabilizers with discretionary technology, inner-city housing projects, and action. In a recessionary period, for example, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Federal Budget in the 1970’s 707 legislation may be enacted to cut taxes or to in 1974 did not arise from discretionary fiscal establish new expenditure programs as a spur actions designed to achieve greater restraint. to after-tax income or employment. Rather, it was attributable to an increase in The uncertainty and controversy surrounding effective tax rates that resulted when inflation the effects of fiscal policy on real output and raised nominal incomes and pushed taxpayers the price level complicate any assessment of into higher tax brackets. such policies. The relative size of the effects An alternative measure of the effects of dis­ on output and prices depends on a number of cretionary fiscal policy on economic activity— factors, including the gap between the econ­ the change in the standardized surplus—has omy’s actual and potential output, the stance recently been developed. It is the difference of monetary policy, the trend of economic de­ between the direct budgetary cost of all changes velopments, and the impact of fiscal policy on in tax law and all changes in spending other work and savings incentives, on price expecta­ than net interest and transfer payments. Changes tions, and on investor confidence. Some simple in net interest payments and transfer payments summary measures of the effects of discretion­ are not included in the change in the stand­ ary policies on economic activity follow. ardized surplus since separate measures of their automatic and discretionary components have not been developed (with the exception of dis­ Summary Measures cretionary changes in unemployment compen­ of Fiscal Actions sation). For example, if a cut in personal income The simplest summary measure of the stimula­ tax rates having a direct budgetary cost of $10 tive, or restrictive, effect of fiscal action on billion is enacted and purchases are increased economic activity is the budget surplus or defi­ by $7 billion during a year, the change in the cit. It has long been recognized, however, that standardized deficit for that year would be $17 the actual Federal surplus or deficit in itself is billion. This fiscal indicator thus attempts to not a satisfactory measure of the effect of dis­ focus on discretionary policy changes. It leaves cretionary fiscal policy on economic activity out the growth of tax revenues due to inflation because changes in revenues and to some extent and normal economic growth. These latter expenditures reflect not only new policy initia­ items, however, are included in the full em­ tives but also the automatic responses resulting ployment budget measure. from cyclical fluctuations. Fiscal policy is usually considered to have The full employment budget concept was an expansionary impact on current dollar output developed to separate the automatic and discre­ when the change in the standardized surplus or tionary components of the budget. This analyti­ the change in the full employment balance is cal device focuses on discretionary fiscal policy negative. Such a change indicates that these by abstracting from the impact of economic budgets are moving toward deficit and are add­ fluctuations on the budget. In particular, receipts ing to nominal demands. are measured as if the economy were at a full Like most summary measures, the full em­ employment level of income and thus are inde­ ployment and standardized budgets have short­ pendent of cyclical variations in income. On the comings. For one thing, the two concepts give expenditures side, adjustments are made to re­ equal weight to changes in the budget’s various move cyclically related unemployment insur­ components: an increase of $10 billion in ance benefits. Thus, any shift in the deficit or transfer payments will have the same effect on surplus position of the full employment budget the full employment budget surplus or deficit is due mainly to changes in discretionary policy. as a $10 billion increase in Federal purchases Although the full employment surplus can be of goods and services, but the economic impacts a useful analytic tool, the resulting data must of these changes—in terms of both the ultimate be interpreted with care, especially during peri­ size of the economic response and the time lag ods of inflation. For example, the sharp shift between the action and the response—may in the full employment budget toward surplus differ substantially. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

708 Federal Reserve Bulletin o September 1978 4. Fiscal policy indicators * The ratio of the change in the full employment surplus Data are Federal Reserve staff estimates and from the Coun­ to potential GNP. cil of Economic Advisors. t The ratio of the change in the standardized surplus to GNP. As indicated earlier, the major compositional ultimate size and timing of the policy response, change on the expenditures side of the budget the change in the full employment surplus and has been a decline in the share of purchases the change in the standardized surplus still serve of goods and services and a corresponding in­ as useful starting points for analyzing the effects crease in the share of transfer payments and of fiscal policy on economic stabilization. Both grants to States and localities. Economic theory measures are shown relative to GNP in Chart and empirical evidence suggest that an increase 4 so that inter-temporal comparisons are not in purchases—once it has occurred—will have distorted by economic growth. both a larger and a more immediate impact on aggregate output than will an identical increase Review of Fiscal in transfer payments. Thus, the shifting empha­ sis in Federal spending toward transfers and Policy Action grants during the 1970’s may have blunted the As measured by the full employment budget, expansionary thrust of fiscal policy as compared the economy entered the 1970’s under consid­ with the recent past. erable fiscal restraint. The full employment Changes in the tax laws also can have effects budget increased from a deficit of $14 billion on aggregate output and inflation that differ with in the first half of 1968 to a surplus of $7.5 different types of taxes. For example, approxi­ billion in the first half of 1969 (Table 4). The mately half of the payroll tax is paid by em­ change in the standardized surplus also indicated ployers, and many economists believe that this a move to restraint. These shifts from deficit share is largely passed on to consumers in the to surplus resulted from a slowdown in the form of higher prices. Thus, a change in the growth of Government expenditures in 1969 and payroll tax is likely to have a greater effect on the enactment of a 10 per cent income tax the inflation rate than would a change in per­ surcharge in 1968. Each action was part of the sonal income taxes, which cannot be shifted policy response to the inflationary pressures that directly into changes in prices. This greater had been building since the mid-1960’s, pres­ effect is especially significant in light of the sures that also led to high interest rates. growing share of payroll taxes in total Federal With the recession of 1970, fiscal policy receipts. moved toward expansion, as evidenced by a Even with these limitations concerning the shift of the full employment budget from a $5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Federal Budget in the 1970’s 709 4. Selected fiscal policy indicators, 1966-77 In 1972 the growth of Federal expenditures also Billions of dollars accelerated—to 10.9 per cent compared with an Chamge average of 6.9 per cent in the preceding 3 years. Calendar Full Full Standardized Vigorous economic growth in 1972 appeared to half-year employment employment surplus* surplus surplus be an acceptable development at that time, but 1966 strong domestic and foreign demands started to H2 ............. -8.9 -4.9 -6.0 1967 strain industrial capacity in early 1973, contri­ HI ............ -14.4 -5.5 -4.2 buting to shortages of materials and upward H2 ............. -15.6 -1.2 —6.4 1968 pressure on prices. At this point, the general HI ............. -14.3 1.3 ' —,7 H2 ............. -5.3 9.0 6.6 thrust of fiscal policy entered a restrictive phase, 1969 which lasted from early 1973 through 1974. The HI ............ 7.5 12.8 8.0 H2 .......... 5.3 -2.3 -6.6 full employment budget moderated to about an 1970 HI ............. 0 -5.3 -5.6 $8 billion deficit in 1973, and then, in the lat­ H2 ............. -5.4 -5.4 -5.0 1971 ter half of 1974, it moved to a $12 billion sur­ HI ............. -9.6 -4.2 -5.1 plus. H2 ............. -10.1 -.5 -4.4 1972 Both the inflation rate and the full employ­ HI ............ —8.6 1.6 -11.3 H2 ............. -15.1 -6.6 -5.1 ment surplus were increasing throughout 1973 1973 and 1974. The economy, immediately following HI ............. -11.2 4.0 11.4 H2 ............. —5.5 5.7 -3.5 sharp increases in the prices of oil by the Orga­ 1974 HI ............. 3.8 9.3 -2.1 nization of Petroleum Exporting Countries, H2 ............ 11.8 8.1 —9.0 began to weaken after reaching a business cycle 1975 HI ............. -24.3 -36.1 -57.4 peak in November 1973. Even as real output H2 ............ -24.3 .1 15.0 1976 began to decline, the price effects of disap­ HI ............ -17.7 6.6 2.9 H2 ............ — 17,0 .7 -9.1 pointing grain harvests, of dollar devaluations, 1977 of unprecedented increases in energy costs, and HI ............. -5.6 11.5 -6.5 H2 ............. -30.8 -25.3 -26.8 of entrenched inflationary expectations pushed the inflation rate higher. One result of the viru­ 1 The change in the standardized surplus is the difference lent inflation was that individual taxpayers, between the direct budgetary cost of all changes in tax laws and all changes in spending other than net interest and transfer whose nominal incomes were rising, moved into payments. Since these changes involve additions or subtrac­ higher tax brackets and found less tax shelter tions from the actual surplus, the changes in the standardized surplus presented in the table are comparable to changes in from their exemptions and standard deductions. the full employment budget. Corporate income tax receipts also rose as in­ Source.—Staff estimates, Council of Economic Advisers, and U.S. Department of Commerce. ventory profits and depreciation allowances based on historical cost tended to distort busi­ billion surplus in the second half of 1969 to ness income statements. These effects kept the a $5 billion deficit in the second half of 1970. full employment budget surplus rising, even as At the same time, the standardized surplus the economy moved into recession. moved toward deficit by $17 billion and thus A comparison of the full employment and gives a similar reading. In this period, taxes standardized budgets suggests that most of the were cut as the income tax surcharge was al­ fiscal restraint during 1973 and 1974 was the lowed to expire in two stages. result of higher tax burdens due to inflation. In response to persisting unemployment and In late 1973 and during 1974 the standardized inflation in the early part of 1971, the adminis­ budget continued to change toward larger defi­ tration instituted the New Economic Policy in cits because of the higher growth rates of Gov­ August 1971. The fiscal policy portion of this ernment expenditures. The full employment program included an acceleration of the phase-in budget, on the other hand, consistently moved of the tax reductions that had been scheduled toward surplus—thus suggesting greater re­ in the Tax Reform Act of 1969. These actions straint—because rapid growth in nominal in­ tended to keep both the full employment and come increased revenues without any legislated standardized budgets in deficit during late 1971. changes in tax rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

710 Federal Reserve Bulletin □ September 1978 As the severity of the recession became more Fiscal Policy in apparent, fiscal policy, as measured by both the Previous Recessions full employment and the standardized budgets, The process of formulating and implementing became highly expansionary. The full employ­ fiscal policy has evolved in several ways. Both ment balance dropped from an $8 billion surplus the Congress and the administration have shown in 1974 to a deficit of $24 billion in 1975 (Chart greater flexibility in recent years in responding 4). The standardized budget registered deficits to economic problems, and so the time lag of $11 billion in 1974 and then $42 billion in between the recognition of the need for fiscal 1975. action and ultimate enactment appears to have Much of the stimulus was provided by the shortened in the 1970’s (Table 5). For example, Tax Reduction Act of 1975, which was passed the major fiscal policy response to the 1960 in March 1975. This act provided approximately recession was the passage of an investment tax $20 billion in tax relief for 1975, about $18 credit in 1963; the credit was recommended 2 billion of it to individuals. Part of this tax cut months after the business cycle trough and en­ for individuals took the form of $8 billion in acted 20 months after that trough. In contrast, tax rebates on 1974 personal taxes, the bulk of the Tax Reduction Act of 1975 was recom­ which was paid in the second quarter of 1975, mended 1 month before the trough of the recescausing a temporary but sharp increase in the full employment and standardized deficits dur­ 5. Timing of policy responses ing that quarter. Other provisions—the in­ Months creased standard deduction, the $30 tax credit per exemption, and a refundable tax credit for Prior low income workers with dependents—were economic Recommen­ Trough to Economic development peak to dation to enactment modified and extended into 1976, 1977, and and policy response recommen­ enactment 1978. dation The economic situation showed persistent Recession in I960 Investment tax cred­ improvement by the spring of 1976, and the it ......................... 12 18 20 change in the full employment budget indicated Liberalized deprecia- 27 (*> 17 a gradual backing away from the expansionary Acceleration of in­ fiscal policies of 1975. For example, the full flation in 19652 Tax Adjustment Act employment deficit declined from $24.3 billion ot 1966 .............. 2 2 (2> in the second half of 1975 to $17 billion in the Suspension of invest­ ment credit ...... 10 2 (2> second half of 1976. The move toward less Surcharge on indi­ vidual and cor­ stimulus in the full employment budget contin­ porate income ... 14 5 <2) ued through the first half of 1977 as slower Recession in growth in Federal spending reinforced increases 1969-70 Liberalized deprecia­ in revenues due to higher nominal incomes. In tion (introduction of asset deprecia­ the final half of 1977, fiscal policy, measured tion range) ......... 13 5 7 by both indicators, returned to a more expan­ Revenue Act of 1971 20 4 13 sionary posture as a result of the enactment of Recession in the 1977 Tax Reduction Act, which reduced 1974—75 personal withholding beginning in June 1977, Tax Reduction Act of 1975 .................. 15 1 0 and some increases on the spending side due to countercyclical public works and employ­ 1 Administrative action. ment programs. With no new spending initia­ 2 Expansionary fiscal policy actions are dated relative to the business cycle peak and trough. No corresponding widely tives and with continued growth in income and accepted benchmarks facilitate the dating of discretionary ac­ payroll taxes in 1978, the budgets reverted tions undertaken to counteract inflationary conditions. An arbi­ trary benchmark of late 1965, when inflation accelerated toward restraint in 1978. sharply, was used. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Federal Budget in the 1970’s 711 sion and passage came at the trough of the though fiscal policy seems to have moved recession. Some of this reduction of the legisla­ toward restriction during the most recent reces­ tive lag undoubtedly was due to a more timely sion, it should be noted that countercyclical awareness of the need for, and a greater aware­ policy was hampered by severe inflation. During ness of the potential effects of, Federal Govern­ the other recessions, fiscal policy appears to ment countercyclical policies; but some was no have been mildly stimulative. doubt due also to the severity of the most recent The full employment surplus indicates that in economic downturn. periods immediately following the recession Although the legislative lags associated with trough, fiscal policy became more expansive in fiscal policy appear to have shortened in recent all but the 1954-55 period, when defense ex­ years, some questions have arisen about the penditures continued their post-Korean war de­ appropriateness of fiscal policy actions over the cline. The move toward a full employment course of the business cycle. In the three reces­ deficit, relative to GNP, was strongest during sions since 1960, for example, the full employ­ the most recent economic expansion. This may ment budget measure shifted substantially reflect the severity of the preceding recession toward surplus during the year immediately and the apparently quite restrictive fiscal policy preceding the recession, an indication that the in effect just before the 1974-1975 recession. thrust of fiscal policy was probably restrictive and thus contributed in part to the recession. By contrast, in the 1950’s fiscal policy seems CONCLUSION to have been mildly stimulative in the year before the business cycle peak. This was the In this fourth year of economic expansion, case especially in 1954, when the full employ­ strong growth in income and employment and ment budget measure continued to move into intense inflationary pressures have led to the deficit up to the start of the recession. These adoption of a fiscal policy that will be less points are illustrated in Table 6. stimulative. This stance is reflected in a some­ Between the peak in 1973:Q4 and the trough what slower rate of growth in Government ex­ in 1975:Q1, fiscal policy continued to be re­ penditures in recent months. If these trends strictive because of the effect of inflation on toward restraint on spending continue, Federal tax receipts. Restraint also was present between outlays will contract further, relative to GNP, the peak and the trough of the 1953-54 reces­ from their recent peacetime high. Moreover, sion, mainly because of the decline in Korean Federal receipts are expected to rise faster be­ war expenditures. These changes toward surplus cause of scheduled increases in social security in the full employment budget suggest that fiscal taxes and the effects of high rates of growth policy may have reinforced the downturn. Al­ in income on effective tax rates. Tax cuts rang­ 6. Change in the full employment budget surplus ratio,1 per cent, five recessions, 1953-75 Peak Trough 4 quarters 2 quarters Peak Trough to Trough to before peak before peak to 2 quarters 4 quarters to peak to peak trough after trough after trough 1953:Q2 1954:Q2 -1.5 -1.0 1.9 .7 1.8 1957:Q3 1958:Q1 -.5 -.1 -.7 -1.2 -.1 1960:Ql 1960:Q4 1.6 1.0 -.2 -.9 -1.0 1969:Q3 1970:Q4 1.3 -.2 -1.0 -.6 -.4 1973:Q4 1975:Q1 1.6 .3 .7 -1.7 -1.7 1 The ratio of the full employment surplus or deficit to full torted by the growth of GNP. A negative change represents employment GNP. This measure is used to keep intertemporal stimulation; a positive change represents restriction, comparisons of the full employment budget from being dis- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

712 Federal Reserve Bulletin □ September 1978 ing between $15 billion and $20 billion have Limitations in the art of economic forecasting been proposed to offset some of these increases make it desirable to have great flexibility in in revenues. carrying out fiscal policy in order to respond A number of fiscal policy questions remain to rapid changes in economic conditions. A unsolved. There are major uncertainties in eval­ major additional problem is the question as to uating the over-all posture of fiscal policy. how much a “stimulative” fiscal policy will Simple indicators such as the full employment engender faster economic growth and how much budget are useful; but because of compositional it will result in more inflation. The answer here shifts in spending, the effects of inflation, and will depend to a large extent on associated variations in the lags associated with different economic conditions—that is, on the degree of expenditure and tax programs, such indicators utilization of both capital and labor. But this are not always accurate signals of the magnitude general statement still leaves large areas of or the timing of fiscal policy initiatives. differing interpretations. □ NOTES TO TABLE A2: 1 First full year of operation. 4 In accordance with limitations on the cost of health care 2 This amount shows the annual rate of the increase in imposed under Phase 3 of the Economic Stabilization Program, old age, survivors, and disability insurance (OASDI) benefit the standard premium rates for July and August 1978 were payments that began April 1. In addition, in late April a set at $5.80 and $6.10, respectively. Effective September 1973, lump-sum retroactive payment was disbursed in the amount the rate increased to $6.30. of $0.7 billion. 5 Automatic cost-of-living increases in benefits and tax rates 3 This amount shows the annual rate of increase in OASDI were effective January 1, 1975. benefits that began June 1. In addition, in late June a lump-sum retroactive payment of $1.1 billion was disbursed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Federal Budget in the 1970’s 713 APPENDIX Al. Major revenue actions, 1970-771 Measure Recommended Enacted Change Excise, Estate and Gift May 1970 Dec. 1970 Extended the excise tax rates on automobiles and Tax Adjustment Act of telephone services, previously scheduled for repeal 1970 at their respective 7 and 10 per cent levels until January 1972. Sped up collections of estate and gift taxes. Treasury’s Asset Depre­ Jan. 1971 June 19712 Gave firms the option of raising or lowering the ciation Guidelines “guideline lives” of depreciable assets by up to 20 per cent. The reserve ratio test was abandoned. Revenue Act of 1971 Aug. 1971 Dec. 1971 Accelerated by 1 year scheduled increases in personal exemptions and the standard deduction. Repealed the 7 per cent automobile excise tax retroactive to August 15, 1971. Reinstated the 7 per cent investment tax credit. Defined and granted the Domestic International Sales Corporation the option of indefinite deferral of the Federal tax due on “export related operations.” Tax Reduction Act of Feb. 1975 Mar. 1975 Provided for a 10 per cent rebate on 1974 taxes up 1975 to a maximum of $200 for individuals. Provided tax cuts retroactive to January 1975 for both individuals and corporations. Individual cuts were in the form of increased standard deductions, a $30 exemption credit, and an earned income credit for certain lowincome families. Reduced the normal corporate tax rate and increased the surtax exemption. Increased the investment tax credit to 10 per cent. Phased out oil and gas depletion allowances and limited credits in connection with income derived from foreign oil and gas operations. Revenue Adjustment Act Oct. 1975 Dec. 1975 Provided tax reductions for the first 6 months of of 1975 calendar year 1976. Extended corporate rate reduc­ tions enacted in the Tax Reduction Act of 1975. Reduced individual taxes in order to maintain the withholding rates that applied during the last 8 months of calendar year 1975. Tax Reform Act of 1976 Nov. 1975 Oct. 1976 Provided a new general tax credit of $35 per exemp­ tion, or 2 per cent of taxable income up to $9,000. Replaced the retirement income credit with an ex­ panded and simplified credit for the elderly. Replaced the sick pay exclusion with a disability income exclu­ sion. Provided a tax credit in lieu of the former child­ care deduction. Continued the 1975 reduction in cor­ porate rates and the 10 per cent investment credit. Increased the holding period for long-term capital gain and loss treatment and limited losses from tax shelters to the amount “at risk.” Increased the minimum tax on tax preferences from 10 per cent to 15 per cent, reduced the minimum tax exemption, and added new tax preference items. Tax Reduction and Sim­ Feb. 1975 May 1977 Extended for 1 year the temporary provisions of the plification Act of 1977 Tax Reform Act of 1976 including the general tax credit, the earned income credit, and the corporate rate reductions. Provided a temporary jobs tax credit. Replaced the former standard deduction with a flat amount equal to $3,200 for married persons filing jointly, $2,200 for single persons, and $1,600 for married persons filing separately. Postponed for 1 year the disability income exclusion and the reduction in the exclusion for foreign earned income, scheduled to go into effect in 1976. 1 Excludes changes in social security tax rates shown in Table A2. 2 This administrative action was, in large part, incorporated in legislation when the Revenue Act of 1971 was enacted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

714 Federal Reserve Bulletin □ September 1978 A2. Major changes in benefit schedules and tax rates, social security trust funds, 1970-79 Effective Benefits Tax rates Billions of dollars* Ian. 1970 15 per cent OASDI benefit increase and other liberalization ....................................... 24.4 July 1970 Voluntary supplementary medicare insurance premiums increased to $5.30 per month ......... .3 Jan. 1971 Combined tax rate increased to 10.40 per cent 3.3 Jan. 1971 10 per cent OASDI benefit increase 33.6 July 1971 Supplementary medicare insurance premiums increased to $5.60 per month ........................... .1 Jan. 1972 Amount of earnings subject to tax increased to $9,000 ...................................................................... 3.0 July 1972 Supplementary medicare insurance premiums increased to $5.80 monthly ................................ 1 Sept. 1972 20 per cent OASDI benefit increase ........... 8.5 Jan. 1973 Substantial liberalization of social security benefits, especially for widows and widowers 2.3 Jan. 1973 Maximum earnings subject to tax increased to $10,800 and combined rate increased to 11.70 per cent ..................................................................... 11 1 July 1973 Medicare benefits increased, including liberalization of benefits ......................... .2 July 1973 Supplementary medicare insurance premiums increased to $6.30 monthly ................................ 4.1 Jan. 1974 Maximum earnings subject to tax increased to $13,200 ................................................;................... 5.0 Mar. 1974 7 per cent OASDI benefit increase 4.1 June 1974 4 per cent OASDI benefit increase 2.3 July 1974 Supplementary medicare insurance premiums increased to $6.70 monthly ................................ .3 Jan. 1975 5 Maximum earnings subject to tax increased to $14,100 ....................................................................... 1.6 June 1975 8 per cent OASDI benefit increase 5.5 Jan. 1976 Maximum earnings subject to tax increased to $15,300 .................................................................. 2.2 June 1976 6.4 per cent OASDI benefit increase 5.0, July 1976 Supplementary medicare insurance premiums increased to $7.20 monthly ................................ .1 Jan. 1977 Maximum earnings subject to tax increased to $16,500 ..................................................................... 2.3 June 1977 5.9 per cent OASDI benefit increase 5.3 July 1977 Supplementary medicare insurance premiums increased to $7.70 monthly ................................ .2 Jan. 1978 Maximum earnings subject to tax increased to $17,700 and combined rate increased to 12.1 per cent .................................................................... 5.9 June 1978 6.5 per cent OASDI benefit increase 6.2 July 1978 Supplementary medicare insurance premiums scheduled to increase to $8.20 monthly ...... Jan. 1979 Maximum earnings subject to tax scheduled to increase to $22,900 and combined rate sched­ uled to increase to 12.26 per cent ............... 9.7 For notes, see page 712. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

715 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 SUMMARY INTEREST RATE CEILINGS AND DISINTERMEDIATION Edward F. McKelvey—Staff, Board of Governors Prepared in April 1978 for the Administration’s Task Force on Deposit Interest Rate Ceilings and Housing Credit In September 1966 the Congress enacted legis­ since 1966 regarding the interest rate ceiling lation to authorize the establishment of interest structure, deposit flows, mortgage lending, and rate ceilings on the deposit liabilities of thrift earnings of depositary institutions. institutions and to require consultation among The deposit rate ceilings have not insulated the Federal regulatory agencies in the determi­ depositary institutions or the mortgage market nation of their interest rate policies. The purpose from the adverse impacts of rising market rates. of this legislation was to protect the competitive Deposit flows have become more cyclically un­ position of nonbank depositary intermediaries in stable since 1966, although how much of this the market for small-denomination time and increased instability can be attributed to the savings deposits and thereby to help sustain deposit rate ceilings is problematical. With each mortgage lending activity. In order to accom­ cycle of interest rate fluctuations the financial plish this purpose, the regulatory agencies es­ system has displayed considerable ingenuity in tablished a differential between the maximum developing alternatives for individual investors rates payable by thrift institutions and those that provide market returns through the use of payable by commercial banks. This paper pro­ convenient and attractive investment vehicles. vides an historical review of the developments Continued development of such alternatives Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

716 Federal Reserve Bulletin □ September 1978 may significantly constrain the ability of all financial innovations, such as thrift notes and depositary institutions to attract funds during money market mutual funds, will help deposi­ future periods of high market interest rates. tors circumvent the ceilings as they become Changes in the liability structure of the de­ more familiar with these instruments and other positary institutions and the financial innova­ market alternatives. If disintermediation does tions that have taken place since the mid-1960’s develop, the larger institutions should be in a will have an important influence on future better position to offset the weakness in growth rounds of disintermediation if deposit rate ceil­ of small-denomination time and savings depos­ ings remain in force. For example, the impor­ its with nondeposit sources of funds. tance of time deposits in the liability structure The Appendix to the paper (prepared by Da­ of thrift institutions should reduce the exposure vid Humphrey) reviews the literature on deposit of such institutions to withdrawals for short rate elasticities and their implications for changes periods of time because of the large penalties in interest rates and in the interest rate differ­ for premature redemption. On the other hand, ential between banks and thrift institutions. □ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

717 Treasury and Federal Reserve Foreign Exchange Operations This 33rd joint interim report reflects the actions taken over the course of early 1978. But Treasury-Federal Reserve policy of making by midsummer the process was far from com­ available additional information on foreign ex­ plete. At the Bonn summit on July 16-17, change operations from time to time. The Fed­ Germany and Japan again committed them­ eral Reserve Bank of New York acts as agent selves to take additional stimulative measures. for both the Treasury and the Federal Open For its part, the United States promised to curb Market Committee of the Federal Reserve Sys­ inflation and to press ahead on legislation to tem in the conduct of foreign exchange opera­ reduce its dependence on imported oil. tions. Against this background, market sentiment This report was prepared by Alan R. Holmes, toward the dollar remained very bearish in early Manager, System Open Market Account and 1978, leaving the dollar exposed to bouts of Executive Vice President in charge of the heavy selling pressure. This was particularly Foreign Function of the Federal Reserve Bank true in February and March, when the dollar of New York, and by Scott E. Parcfee, Deputy declined across the board in frequently disor­ Manager for Foreign Operations of the System derly trading. Between late March and mid- Open Market Account and a Vice President in May, the immediate pressures on the dollar the Foreign Function of the Federal Reserve eased, as market sentiment became more posi- Bank of New York. It covers the period lanuary through July 1978. Previous reports have been 1. Federal Reserve published in the March and September Bulle­ reciprocal currency arrangements tins of each year beginning with September Millions of dollars 1962. Amount of facility, Institution July 31, 1978 During the 6-month period under review, the Austrian National Bank ....................... 250 National Bank of Belgium .................. 1,000 exchange markets remained in the grip of un­ Bank of Canada ....................................... 2,000 National Bank of Denmark ................ 250 certainty over the outlook for major currencies Bank of England ..................................... 3,000 as serious economic imbalances persisted Bank of France ......................................... 2,000 among the industrial countries. These imbal­ German Federal Bank ........................... x4,000 Bank of Italy ............................................. 3,000 ances were reflected in the sluggishness of eco­ Bank of Japan ........................................... 2,000 Bank of Mexico ....................................... 360 nomic growth abroad relative to the strong ex­ Netherlands Bank .................................... 500 pansion under way in the United States, the Bank of Norway ....................................... 250 continuing current-account surpluses in coun­ Bank of Sweden ....................................... 300 Swiss National Bank ............................. 1,400 tries such as Japan, Germany, and Switzerland Bank for International Settlements: in contrast to the U.S. current-account deficit, Swiss francs/dollars ........................... 600 and the indications that inflation was still abating Other authorized European currencies/dollars ........................... 1,250 elsewhere while accelerating in this country. Total ........................................... 20,160 Determined efforts to correct the imbalances 1 Increased by $2,000 million effective March 13, were under way in most countries with further 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

718 Federal Reserve Bulletin □ September 1978 2. Federal Reserve System activity under its reciprocal swap lines Millions of dollars equivalent System Drawings, or repayments (-), 1978 System Transactions with— commitments, commitments, Jan. 1, 1978 Ql Q2 July July 31, 1978 German Federal Bank ....... 800.1 1,008.5 {_8^:i _393.3 } 650 5 Swiss National Bank .............. 69.0 { * 18 0 } 22.9 Total ..................................... 800.! 1,077.6 {„869;! -3933} 673 3 Note.—Data are on a value-date basis with the exception of the last two columns, which include transactions executed in late July for value after the reporting period. Because of rounding, figures may not add to totals. tive following a series of anti-inflation steps by quire substantial amounts of marks from corre­ the administration and the Federal Reserve. The spondents and in the market to liquidate swap dollar thus rose on an unwinding of speculative debt. By the end of July the System’s debt in short positions and the reversal of previously marks had been reduced by $1,193.4 million adverse commercial leads and lags. Never­ to $650.5 million, and the Treasury’s debt had theless, in the late spring and early summer, been cut by $803.0 million of marks to $197.0 bearish sentiment resurfaced in the absence of million. further progress on economic fundamentals, and During the period, the Federal Reserve also by late July the dollar was again under wide­ intervened on a few occasions in Swiss francs, spread selling pressure. selling a total of $82.1 million equivalent. Of In line with the more active intervention tac­ this amount, $50.1 million equivalent was sold tics adopted in early 1978, the U.S. authorities in February, which was financed by drawings continued to respond forcefully at times when on the swap line with the Swiss National Bank, exchange markets became disorderly. As be­ and was fully repaid by late May using francs fore, most U.S. intervention was in German acquired directly from the Swiss National Bank. marks. For the 6-month period as a whole, the The remaining $32.0 million equivalent of foreign exchange trading desk of the Federal francs was sold in late June and July. Of this Reserve Bank of New York sold a total of amount, a part came from balances acquired $1,511.0 million net of German marks, of from correspondents and $22.9 million equiva­ which $843.5 million was for the account of lent was financed by new drawings on the Swiss the Federal Reserve and $667.5 million for the central bank. U.S. Treasury. Most of this intervention was On the repayment of swap debt incurred in carried out in February and March. On March 13, as part of a broader agreement 3. Federal Reserve System repayments under special swap arrangement between U.S. and German authorities, the Fed­ with the Swiss National Bank eral Reserve swap line with the German Federal Bank was doubled to $4 billion. By late March, Millions of dollars equivalent the combined swap indebtedness of the U.S. Commitments, Jan. 1, 1978 ................................. 506.5 authorities in German marks had reached a peak Repayments: of $2,844 million equivalent, of which $1,844 1978—Ql .................................................................. -95.6 Q2 .................................................................. -95.6 million equivalent was drawn by the Federal July ................................................................ -36.4 Reserve and $1 billiorl equivalent was drawn Commitments, July 31, 1978 ............................... 278.8 by the Treasury on its facility with the German Note.—Data are on a value-date basis with the exception Federal Bank. From the end of March through of the last two entries, which include transactions executed in late July for value after the reporting period. mid-July the U.S. authorities were able to ac­ Because of rounding, details do not add to total. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 719 4. Drawings and repayments on Federal Reserve System by its swap partners Millions of dollars; drawings, or repayments (-) 1978 Banks drawing Outstanding, Outstanding, on System Jan. 1, 1978 Ql Q2 July July 31, 1978 BIS G e ( r a m ga a i n n s m t arks)1 / 295.0 22.0 \ I 295.0 -22.0/ 1 BIS drawings and repayments of dollars against European currencies other than Swiss francs to meet temporary cash requirements. Note.—Data are on a value-date basis. 1977 and 1978, the policy was to repay these well beyond its target of 8 per cent for the year. drawings as soon as feasible in conformity with Interest rates, too, had fallen to the point that the short-term nature Of the swap facilities. the central bank’s Lombard rate—which forms Since dollar rates did not recover fully to the the upper limit of the day-to-day money rate earlier levels at which much of the debt was in the interbank market—was at a historical low incurred, the repayment resulted in net realized of 3lh per cent, and yields on outstanding bonds losses on current operations during the first 7 had plummeted to their lowest levels since months of 1978. These losses amounted to World War II. $22.8 million for the System and $2.2 million Meanwhile in the exchanges a sharp rise in for the Treasury. the German mark late in the year had threatened Finally, during the period the Federal Reserve to present a severe obstacle to further growth and the Treasury made further repayments to in economic activity. The mark’s appreciation the Swiss National Bank of Swiss franc debt had also set oft a wave of anticipatory orders incurred prior to the suspension of gold con­ for German goods from abroad, in the event vertibility for the dollar in August 1971. The that the mark would strengthen even more. On System liquidated $191.2 million of its special balance, Germany ended the year with a trade swap debt, reducing the remaining total to surplus even larger than in 1976 and little $278.8 million. The Treasury repaid $267.6 change in its current-account surplus. million of foreign-currency-denominated se­ More orderly trading conditions were estab­ curities, leaving $850.4 million remaining. lished in the exchanges following the an­ Repayment netted losses to the Federal Reserve nouncement on January 4 of a swap arrangement of $140.9 million and to the Treasury of $196.1 between the U.S. Treasury and the German million in the first 7 months of 1978. Federal Bank and the shift to a more open and forceful intervention approach by the United States. Once these operations, together with GERMAN MARK 5. U.S. Treasury drawings and repayments In contrast to the strong expansion under way under swap arrangement in the United States during 1977, economic with the German Federal Bank recovery in Germany had been only moderate. Millions of dollars equivalent; drawings, To provide support to the domestic economy, or repayments (-) the government had adopted a more stimulatory Commitments, Jan. 1, 1978 ................................. fiscal policy, undertaking to provide additional Transactions: 1978—Ql .................................................................. 964.8 tax relief and government investment into early Q2 .................................................................. / 35.2 \-533.6 1978. Monetary policy had also been accom­ July ................................................................ -269.5 Commitments, July 31, 1978 ............................... 197.0 modative. The German Federal Bank, which had intervened in the exchange markets to Note.—Data are on a value-date basis with the exception cushion the mark’s rise, had temporarily ac­ of the last two figures, which include transactions executed in late July for value after the reporting period. cepted a sharp acceleration of monetary growth Because of rounding, details do not add to total. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

720 Federal Reserve Bulletin □ September 1978 6. U.S. Treasury securities, Germany on the need for further stimulus in foreign currency series, Germany. Coming at a time when the market issued to the Swiss National Bank was already caught off guard by an 8 per cent Millions of dollars equivalent; issues, or redemptions (-) devaluation of the Norwegian krone within the Commitments, Jan. 1, 1978 ................................. 1,168.9 European Community (EC) snake, these reports spurred heavy bidding for marks around mid- Transactions: 1978—Ql ................................................................. -133.8 February. Q2 ................................................................. -133.8 July ................................................................ -50.9 As the mark’s rise accelerated, rumors ap­ peared that members of the Organization of Commitments, July 31, 1978 ............................... 850.4 Petroleum Exporting Countries (OPEC) had Note.—Data are on a value-date basis with the exception shifted substantial amounts of funds out of dol­ of the last two figures, which include transactions executed in late July for value after the reporting period. lars and that the Federal Reserve and the Treas­ ury were approaching their respective swap those of foreign central banks, restored a sense limits with the German Federal Bank. With this of two-way risk in the market, large interest rate talk spreading through the exchanges, both pro­ differentials favoring the dollar began to show fessional and commercial bidding for marks through. As a result, the mark eased back some gathered force and drove the rate higher in late 3 per cent from its early-January peak to trade February. In response to these rapidly intensi­ at $0.4740 by the end of January. Official inter­ fying pressures, the German Federal Bank vention in the exchanges was reflected in the stepped up its purchases of dollars. Also, the $979 million increase in Germany’s reserves Federal Reserve Bank of New York operated during January to $40.7 billion. Meanwhile, on ten trading days between February 10 and swap drawings by the Federal Reserve and the February 28, selling a total of $714.5 million Treasury were, by the end of the month, up equivalent of marks net. These sales were split to $1,251.2 million and $407.4 million equiva­ evenly between the Federal Reserve and the lent of marks, respectively. Treasury and were financed by drawings on their This respite was short-lived, however. respective swap lines with the German Federal Dealers were disappointed that no new measures Bank. to bolster the dollar were announced in the By late February, the mark had risen 5 per administration’s major policy addresses of late cent. With the spot rate now approaching $0.50 January. Talk in mid-February of a series of (2.00 marks to the dollar), some traders feared international meetings of high-level government that a clear breach of that level would trigger officials served to remind the market of the adoption either in the United States or in Ger­ continuing imbalances among the major indus­ many of exchange controls such as Switzerland trial nations. Reports circulated of a renewed had just announced. To the extent that such disagreement between the United States and measures might force a reversal of existing 7. U.S. Treasury and Federal Reserve foreign exchange operations Millions of dollars Net profits, or losses (-) On liquidations of foreign currency debts outstanding 1978 Related to current operations as of Aug. 15, 1971 Exchange Exchange Federal Stabilization Federal Stabilization Reserve Fund Reserve Fund Ql .......... -1.2 -1.2 -58.7 -81.1 Q2 .............. -17.2 -2.9 -60.6 -84.8 July ............ -5.4 .9 -21.6 -30.2 Note.—Data are on a value-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 721 positions and thus a snapback in dollar rates, prior to the release of the communique, was bid some dealers were hesitant to take on new up sharply, rising more than 2 per cent to as positions at prevailing exchange rates while high as $0.4898 on March 13 in New York. some others moved to cover their outstanding In coordination with the German Federal Bank, positions. Consequently, although the mark rate the New York Bank again intervened forcefully briefly rose above $0.50 in early March, it soon that day and the next, selling a further $372 settled back without intervention by the U.S. million equivalent of marks financed through authorities. Meanwhile, both President Carter equal swap drawings by the System and the and Chancellor Schmidt indicated that new Treasury. consultations on economic and financial policy After this intervention, the market came into were under way between their two governments. better balance for a while. But then toward the With this sense of movement on the policy end of the month, news of the U.S. record front, some selling of marks emerged. monthly trade deficit of $4.5 billion for February Following their discussions, on March 13 the and a rush into Japanese yen brought the Ger­ U.S. and German authorities issued a joint man mark again into strong demand, driving the statement reaffirming that continuing forceful rate up as high as $0.5031 by March 31. The action would be taken to counter disorderly German and U.S. authorities stepped up their conditions in the exchange market and that close intervention once more. The trading desk in cooperation to that purpose would be main­ New York intervened on two more trading days tained. To reassure the markets that ample re­ in late March, selling $120.2 million equivalent sources would be available to finance U.S. in­ of marks. Of that total, $98.7 million equivalent tervention, the swap line between the Federal was financed by equal drawings by the System Reserve and the German Federal Bank was and by the Treasury on their respective swap doubled to $4 billion. Moreover, the U.S. lines with the German Federal Bank, and the Treasury announced that it was prepared to sell rest came from System balances. These swap 600 million in special drawing rights (SDR’s) drawings raised the combined mark indebt­ to Germany and, if necessary, to draw on its edness of the U.S. authorities to a peak of reserve position at the International Monetary $2,844 million equivalent, of which $1,844 Fund (IMF) to acquire currencies that might be million equivalent was drawn by the Federal needed for intervention. Reserve and $1 billion equivalent by the Treas­ The United States also indicated its commit­ ury. In Germany, official purchases of dollars ment to conserve energy, to develop new in the exchanges contributed to a further $1.5 sources of supply, and to press for congressional billion increase in Germany’s reserves to $42.2 approval of the energy bill. For its part the billion. German Government reaffirmed its commitment During April, the Federal Reserve shifted to to support economic recovery at home. But, a less accommodative stance in the domestic because output in the first quarter had been money market. Also, the administration adversely affected by transitory factors includ­ strengthened its efforts to moderate price and ing industrial disputes, the authorities were to wage increases and to reach a compromise on wait to consider the need for new measures until the energy bill. These actions prompted an im­ a clearer picture of the state of the German provement in market sentiment toward the dol­ economy was available. lar. As a result, a heavy reflow of funds out The market’s initial reaction to this statement of marks into dollar-denominated assets devel­ was one of disappointment. Most participants oped, a tendency that was encouraged by the had been looking for a more far-reaching agree­ exceptionally wide interest differentials favoring ment that would have had an immediate impact the dollar and a dramatic rebound of the U.S. on current payments flows. As a result the mark, market. These flows, together with the re-emer­ which had declined to as low as $0.4788 just gence for the first time this year of long-term Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

722 Federal Reserve Bulletin □ September 1978 capital exports from Germany, triggered a fall desk also intervened on two occasions, May 18 in the mark, which brought the rate down some and May 31, selling $74.4 million equivalent 7 per cent from its levels at the end of March of marks in the market, including $54.1 million to $0.4681 by mid-May. equivalent out of System balances and $20.3 During this time, the Federal Reserve and the million equivalent out of Treasury balances. Treasury took the opportunity of a declining These operations, together with the continued mark to purchase marks to liquidate outstanding rise in U.S. interest rates and end-of-quarter swap debt with the German Federal Bank. These considerations, helped steady the market in marks were bought mostly from correspondents, early June. Thereafter, dealers became cautious but a small amount was purchased in the market. about moving into marks ahead of the EC sum­ Otherwise, the Desk intervened on only four mit in Bremen on July 6-7 and the summit of occasions, selling $95.9 million equivalent of industrialized countries in Bonn on July 16-17. marks from System balances and $1.6 million Indeed, since Germany’s production figures equivalent from Treasury balances. Over all, the showed growth to be still disappointingly slow, Federal Reserve repaid by May 18, $493.4 expectations developed that the Schmidt gov­ million of drawings, reducing the amount the ernment might cut taxes to stimulate the econ­ System had outstanding to $1,350.4 million omy before these meetings took place. equivalent. The Treasury also repaid $309.4 With Germany’s bond market already facing million equivalent, cutting its debt to $690.6 a heavy schedule of new issues by state and million equivalent. In addition, the German local governments, the need for financing an Federal Bank sold dollars, particularly in con­ increased federal government deficit generated nection with the conversion of foreign mark expectations of rises in German interest rates bonds but also at times when the spot mark was and triggered flows of funds out of German dropping rapidly. Government securities to avoid capital losses. In late May, however, the balance of market Moreover, talk of an expansion of the EC snake forces suddenly tipped in favor of the mark once to include the currencies of all Common Market more. Concern over the U.S. economic per­ countries also tended to divert funds flowing out formance resurfaced as new data and forecasts of dollars away from the mark and, in this case, were released, pointing to both a further widen­ into the French franc, the pound, and the Italian ing of the U.S. current-account deficit and an lira—the three major candidates for membership acceleration of our inflation rate. Moreover, the in the snake. excessive liquidity in the German money market As a result, the mark lost some of its earlier had been largely absorbed by the outflows of buoyancy. Although the mark was well bid in capital and by heavy borrowings, in excess of early July following the passing of constraints current needs, by the government and others at the end of the quarter and news of the narrow taking advantage of low interest rates. decision by the Federal Reserve to raise the As part of its efforts to provide liquidity, the discount rate by lA percentage point to l lA per German Federal Bank announced it would ter­ cent, the mark rate generally lagged behind the minate the 100 per cent reserve requirement on rapid advances of other European currencies and the growth of commercial bank nonresident lia­ the yen against the dollar through midsummer. bilities, effective June 1. But the withdrawal of After the Bremen and Bonn summit meetings, this reserve requirement, which had been im­ news that a new stimulatory package would be posed to contain exchange-market pressures in forthcoming intensified the strains in Germany’s December 1977, as well as disclosure of dollar financial markets and funds continued to be sales by several central banks, triggered a new shifted out of German bonds into higher-yield­ wave of commercial and professional bidding ing sterling and French-franc assets. But at for the mark. The rate jumped 3 per cent, up times when the mark was caught up in the to $0.4820, and to maintain orderly trading pressures surrounding the dollar’s decline, the conditions the German Federal Bank returned German Federal Bank bought dollars in the to the market as a buyer of dollars. The trading Frankfurt market. The Federal Reserve trading Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 723 desk also intervened on 5 days in late June and tapered off during January, and the spot rate during July, selling $132.4 million equivalent eased from its early-January peak of $0.004228 of marks. But, in addition, the desk continued to trade at $0.004140 (241.5 yen) by the end to buy marks from correspondents, thereby re­ of the month. ducing outstanding swap debt to the German But concern over Japan’s trade imbalance Federal Bank to $650.5 million equivalent for persisted. In fact, the 22 per cent rise in the the System and to $197.0 million equivalent for yen during 1977 so inflated Japan’s export val­ the Treasury by July 31. ues through the improvement in the terms of By the end of July the mark was trading trade that, even as the export volumes were against the dollar at $0.4919, up nearly 4 per beginning to level off, the surplus for 1977 as cent over the 6-month period. Against the yen a whole reached $17.3 billion, up $7.4 billion and the Swiss franc, however, the mark had from the previous year. fallen almost 19 per cent and 10 per cent, Meanwhile, with private forecasters still respectively. As of July 31, Germany’s external skeptical that the government’s fiscal 1978 tar­ reserves stood at $41.1 billion, down $1.1 bil­ get for real growth of 7 per cent could be lion from end-of-March levels but up $371 achieved, the market had little confidence that million for the period under review. a “considerably reduced” trade surplus would materialize. Also, inasmuch as the rate of infla­ tion in Japan’s chief export market, the United States, showed signs of accelerating early in the JAPANESE YEN year, Japanese exports were no longer so Faced with a rapidly appreciating currency, a seriously threatened by the rising yen as was comparatively slow growth rate, and a further once feared. In this atmosphere, the market widening in an already large trade surplus, the remained highly sensitive to any new develop­ Japanese authorities took further steps in 1977 ment that might touch off another increase in to boost domestic demand and to turn around the yen. Although a better balahce was restored the balance of payments position. Following the in the market by early February, there was little introduction of two supplementary budgets late unwinding of long yen positions or of nonresi­ last year, the government was to provide for dent holdings of “free” yen deposits and gov­ a further expansion of public works expendi­ ernment securities. tures in the first half of the new fiscal year Then, in mid-February, a general decline in starting in April 1978. the dollar on the exchanges triggered a renewed Interest rates in Japan were lowered, both to rise in the Japanese yen. At first, the yen moved reduce the cost of capital to Japanese firms and in line with the rise in European currencies. But to promote capital outflows that would offset, in view of Japan’s awesome trade surplus, talk at least to a degree, Japan’s continuing current- spread in the market that the government would account surplus. In addition, the Japanese Gov­ move to limit any further increase in Japanese ernment responded to threats of rising protec­ exports. In response, exporters rushed to speed tionism abroad by finding ways to open the up their shipments abroad before the fiscal Japanese economy more to foreign goods. In year-end in March, and as the yen advanced, bilateral trade negotiations with the United they scrambled to cover anticipated receipts States before the Tokyo round of multilateral partly in the forward market. As a result, the negotiations, Japan agreed to reduce tariff and premium on forward yen increased, providing nontariff barriers, to raise import quotas on an arbitrage incentive to move funds into yenseveral products, to stockpile commodities, and denominated assets. Indeed, by early March the to accelerate the purchase of some imports. inflows into bonds and free-yen deposits had Following these policy initiatives in Japan and swollen to enormous proportions. the U.S. authorities’ announcement of a more Concerned that a further rise in the yen would active intervention approach, the previously hamper economic recovery and delay even heavy, speculative bidding for Japanese yen longer the needed reduction in the trade surplus, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

724 Federal Reserve Bulletin □ September 1978 the authorities tried to counter the upward pres­ fell back from the record highs reached around sure on the currency by intervening heavily both the end of the quarter. Japanese exports declined in Tokyo and in New York through the agency sharply. The tightening of controls on capital of the Federal Reserve Bank of New York. In inflows began to take hold. This development, addition, the authorities announced new meas­ along with the decline in Japanese interest rates ures to reduce capital inflows, to stabilize the and the rise in comparable rates in the U.S. yen, and to give a further boost to the domestic money market, produced some easing of capital economy. inflows to Japan. Moreover, yen borrowings by The Bank of Japan announced a cut of % foreign governments and international financial of a percentage point in its official discount rate institutions rose sharply during April. As a to a post-World-War-II low of 3.5 per cent and result, the yen declined with the other European a rise from 50 per cent to 100 per cent in reserve currencies against the dollar, dropping as much requirements on increases in nonresident free- as 5V4 per cent to as low as $0.004354 (229.7 yen accounts above the averages of daily levels yen) on May 23. for mid-February. In addition, the government Meanwhile, the government continued to announced a prohibition on sales to nonresidents seek ways of achieving temporary reductions in of yen bonds issued by domestic entities with exports and increases in imports until its expan­ maturities of less than 5 years and 1 month. sionary fiscal and monetary policies had time Except for a brief respite following these to work through the economy and to generate announcements, the yen remained in heavy de­ an increase in consumer demand, investment, mand during the rest of March. To some extent, and imports. During* April the authorities acted foreign funds sought outlets in longer-term Jap­ to restrain some exports through administrative anese bonds and the Tokyo stock market, which guidance, to increase imports through commod­ were not subject to the new controls. Also, ity stockpiling, and to encourage a shift from despite the cost of new reserve requirements on dollar to yen financing by offering to refinance nonresident yen balances, banks were willing import settlement bills for the banks outside to attract these funds in order to build up de­ their regular rediscount ceilings. Also, industrial posits for the fiscal year-end. production and consumer demand picked up Moreover, by the end of March, the current- during the first quarter. account surplus ballooned to a seasonally ad­ But Japanese trade and current-account sur­ justed annual rate of $22 billion for the first pluses continued to mount, reflecting the relative quarter. All in all, the pressure on the yen price effects of the yen’s appreciation since gained momentum toward the end of the month, February and the continued adjustments of Jap­ pushing the rate up 7% per cent to $0.004445 anese exporters to the higher yen values. As (225.0 yen) by March 28. The Bank of Japan a result, exchange market participants con­ continued to intervene heavily in the exchanges cluded that the yen would appreciate further in Tokyo and New York. Largely as a result, against the mark and other European currencies. Japan’s official reserves rose $5.8 billion from The yen therefore was bid up strongly, begin­ the end of January to $29.6 billion at the end ning in late May, on a combination of renewed of March. professional demand and the covering of for­ However, as the upward pressures on the yen ward receipts by Japanese exporters. Within 6 began to subside, the Bank of Japan scaled weeks it had appreciated more than 14 per cent, down its intervention toward the end of March. far outstripping the rise in other strong curren­ Thereafter, the rate rose 3x/2 per cent to as high cies. as $0.004598 (217.5 yen) in London on April As the yen approached the 200-yen level and 3, before easing back as the passing of the as exchange market participants focused in late Japanese fiscal year-end led to a reduction in June and early July on the Bremen and Bonn the covering activity by Japanese exporters and summit meetings, the yen’s rise slowed tempo­ an outflow of foreign funds from free-yen de­ rarily. But, in the aftermath of those meetings, posits. the talk of linking together all the major Euro­ Then, from early April to late May, the yen pean currencies in an expanded joint float ar­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 725 rangement left the impression in the market that growth in a domestic economy just pulling out the yen was more vulnerable to upward pressure of recession. But, by late winter, economic than those other currencies. Moreover, seasonal output flagged and the prospects for further factors pointing to a large volume of exports economic recovery came into question when in July led traders to anticipate that heavy com­ Swiss businessmen, responding to the uncer­ mercial bidding for yen would persist for the tainties generated by the accelerating appreci­ next several weeks. Therefore, market profes­ ation of the franc, began to curtail investment sionals and Japanese exporters saw little risk on spending plans. the downside for yen over the near term. Meanwhile, in the exchange markets, the Against this background, the yen became the Swiss authorities had intervened forcefully and immediate focus of speculative pressure, and tightened up controls on capital inflows to inflows into “free” yen deposits swelled to counter the pressures on the Swiss franc. By large proportions, though not to the extent of late winter the cumulative intervention in Swiss March. Thus, the yen came into demand again francs had added far more liquidity to the do­ in July and burst through 200 yen on July 21 mestic money market than was called for by in the midst of a swift exchange-market reaction the National Bank’s target for monetary growth to news that an OPEC special advisory panel of 5 per cent for the year. The central bank had recommended pricing oil in terms of a continued to absorb some of this liquidity by basket of currencies. Thereafter, the yen was selling dollars to nonresident borrowers of Swiss bid up to successive new highs each day, as francs under the official capital export conver­ the speculative surge in the rate continued to sion requirement. But the National Bank per­ be reinforced by another rush of Japanese ex­ mitted a sharp expansion of liquidity in the short porters to cover their forward receipts. Trading run to prevent money market strains from push­ volume mounted, and the yen was bid up to ing up the Swiss franc even more, while recog­ a high of $0.005301 (188.6 yen) on July 31. nizing that the persistence of such excess liqui­ At this level the yen had advanced 28 per cent dity might generate troublesome inflationary against the dollar over the 6-month period. pressures over time. Moreover, the yen had gained 23 per cent Against this background, the market sought against the German mark. To moderate this rise to test the authorities’ resolve to avoid a re­ in the yen, the Bank of Japan continued to newed rise in the Swiss franc after the an­ intervene both in Tokyo and in New York nouncement of more active intervention by the through the Federal Reserve Bank of New York, U.S. authorities in early January. Thus, the albeit to a lesser extent than in March. franc remained subject to bouts of buying that threatened to trigger broader unsettlement in the exchanges. Consequently, the Federal Reserve resumed intervention in Swiss francs during SWISS FRANC January, financing its franc sales with drawings In the face of generalized tensions in the ex­ of $18.9 million equivalent of francs that re­ change markets, the Swiss franc came into in­ mained outstanding as of the end of the month. creasingly strong upward pressures during 1977, In mid-February, when the dollar again came rising by the end of the year some 27% per on offer generally, the franc came under a new cent against the dollar and significantly against wave of commercial and professional demand. the German mark as well as other currencies. Reports that multinational corporations were At least initially, Swiss firms were able to take buying francs to repay Swiss franc loans gave advantage of Switzerland’s low inflation rate— further momentum to this rise, propelling the running slightly above 1 per cent per year—to rate 12 per cent above early-February levels to maintain their competitive position in world $0.5651 against the dollar and up 6% per cent markets. Thus the current account, bolstered by to 0.88 Swiss francs per mark by February 24. Switzerland’s traditionally large earnings on In response, the Swiss National Bank stepped overseas investments, remained in sizable sur­ up its intervention not only in Zurich but also plus and provided the major contribution to in New York through the agency of the Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

726 Federal Reserve Bulletin □ September 1978 Reserve Bank of New York. The Federal Re­ ing became increasingly hesitant on the possi­ serve also sold a further $50.1 million equiva­ bility that the authorities might take advantage lent of francs on February 10-17 in New York, of a more settled exchange market to relax some financing these sales with additional drawings of the existing or newly imposed exchange on the swap line with the Swiss National Bank. controls. As it was, the Swiss National Bank Toward the end of the month the Swiss au­ sold more dollars under its capital export con­ thorities took further steps to halt the rise of version program than it bought in the market. the franc. Effective February 27, the central When the National Bank announced it had sold bank cut by Vi percentage point the official dollars in the market to mop up liquidity gen­ discount and Lombard rates to 1 per cent and erated by the heavy intervention earlier in the 2 per cent, respectively, the lowest levels in the year, and, moreover, when figures were released history of the National Bank. Also, the Swiss showing a 16.7 per cent increase in the mone­ authorities further tightened controls restricting tary aggregate for the year ended in March, foreign inflows. In particular, they reduced the market participants began to question the au­ amount of nonresident Swiss franc deposits ex­ thorities’ willingness to intervene again should empt from the negative interest charge, ex­ the franc strengthen. tended the negative interest charge to central Against this background, the Swiss franc bank holdings of francs (at maturity of current soon came into strong demand again, beginning deposit), banned nonresident purchases in pri­ in late May when the dollar came on offer mary and secondary markets of Swiss franc generally. In part,, the demand was generated securities issued by domestic entities, and re­ by traders anticipating another rush of nonresi­ stricted nonresident acquisitions of franc-deno­ dent covering of franc-denominated loans. After minated bonds issued by foreign entities to 35 a rapid advance in late June, the franc leveled per cent of the total issue. off as the authorities provided temporary assist­ Following these measures, inflows of foreign ance at the end of the quarter to the domestic funds tapered off. Moreover, the market became money market through swapping francs for dol­ sensitive to the possibility that existing official lars for short maturities. franc holdings in time deposits might be liqui­ But during July the franc was bid up even dated as they matured and become subject to more after news that an OPEC advisory panel the negative interest charge. The franc, there­ had recommended pricing oil in terms of a fore, fell back sharply against both the dollar basket of currencies and by further signs of a and the mark. Although it recouped some of pick-up in the U.S. inflation rate. In response these losses at the end of March and in early to the franc’s continued advance, the Swiss April in response to end-of-quarter liquidity authorities adopted a more flexible limit for the pressures and news of the U.S. massive trade expansion of central bank money and provided deficit in February, the franc resumed its down­ further assistance to relieve the money market trend in mid-April, when trading conditions in strains. But over the course of the month, the the exchange markets generally became more flow of funds out of dollars and other currencies settled. into francs gathered further steam, and the franc By mid-May, the franc dropped 11V2 per cent emerged as the lead currency in the advance from its early-March highs to $0.5002. Taking against the dollar. By the end of the month, advantage of this slide in the rate, the Federal it had soared 15% per cent from levels in Reserve bought sufficient amounts of francs mid-May to $0.5797 to close the 6-month period directly from the Swiss National Bank to liqui­ as a whole up a net 15 per cent against the dollar date in full the swap debt it had incurred with and 103A per cent against the mark. the Swiss central bank earlier in the year. Under these circumstances, the Federal Re­ Meanwhile, an official forecast of a current- serve returned to the market on six trading days account surplus of 9 billion Swiss francs for the in June and July, selling $32.0 million equiva­ year, second only to Japan’s, attracted market lent of Swiss francs to maintain orderly trading. attention. Also, as the franc moved lower, sell­ Of this amount, $9.1 million equivalent came Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 727 from the System balances, which had been In view of the pound’s strength in the ex­ replenished by purchases of francs from corre­ changes, Britain was identified as one of those spondents. The remaining $22.9 million equiv­ countries that could contribute to an improved alent of francs was financed by drawings with economic performance worldwide by providing the Swiss National Bank that remained out­ some stimulus to the domestic economy. In­ standing as of the close of the period. The Swiss deed, the government took advantage of a sharp central bank also bought dollars against francs drop in the public sector borrowing requirement, in the market both in Zurich and through the well below the level anticipated in Britain’s foreign exchange trading desk of the Federal standby arrangement with the IMF, to propose Reserve Bank of New York. in October a modest tax reduction. Thus, by During the period under review, the Federal the end of the year, private and official fore­ Reserve and the U.S. Treasury continued with casters expected a strong pick-up in economic the program agreed to in October 1976 for an activity this year. But, unlike previous British orderly repayment of pre-August 1971 franc- recoveries from recession, the current-account denominated liabilities. The Federal Reserve surplus was expected to widen substantially in repaid $191.2 million equivalent of special swap 1978, bolstered by a continued expansion of oil indebtedness, while the Treasury redeemed production in the North Sea. As a result, the $267.6 million equivalent of Swiss franc-deno­ pound soared to as high as $1.9930 on January minated securities by the end of July. Most of 4, before settling back to around $1.9500 in late the francs for these repayments were acquired January. Meanwhile, the British authorities an­ directly from the Swiss National Bank against nounced plans to repay and restructure external dollars. However, the Federal Reserve also debt to reduce foreign obligations and to bought francs from the Swiss National Bank lengthen maturities. against the sale of $57.9 million equivalent of During February, however, market sentiment German marks and $13.5 million equivalent of over the outlook for the pound turned more French francs, which were in turn either covered hesitant. As the rise in retail prices slowed, the in the market or drawn from existing balances. ensuing increase in real incomes together with By the end of July, the Federal Reserve’s special the October tax cuts led to a faster-than-anticiswap debt to the Swiss National Bank stood at pated increase in imports, and the trade account $278.8 million equivalent, while the Treasury’s showed a substantial deficit for January. Also, Swiss franc-denominated obligations were re­ the tax cuts contributed to a rise in the monetary duced to $850.4 million equivalent. aggregates at a time when the slowdown of the inflation rates already appeared to be bottoming out. Against this background, concern surfaced over the competitiveness of British industry at STERLING prevailing exchange rates as well as over the By 1977, fiscal, monetary, and income restraints prospects for a continuation of the pay-restraint in the United Kingdom had produced positive policy. Meanwhile, further reflationary meas­ results. During the second half of the year, retail ures were widely expected to be contained in prices rose by well under 10 per cent per year the government’s April budget. for the first time since 1973, and Britain’s cur­ Under these circumstances, the financing of rent account swung into surplus. In response to the government’s borrowing needs became more these improvements in Britain’s financial posi­ difficult as bond market participants, fearing a tion, the pound was in heavy demand, and the near-term jump in British interest rates, held off authorities at first took advantage of the favor­ acquiring new government stock and shifted able shift in market sentiment to build up official portfolio investments abroad. Consequently, reserves by purchasing dollars in the market. sterling came under occasionally heavy selling But, when continuing inflows of funds threat­ pressure in February and March, falling by 43/s ened to undercut domestic monetary policy last per cent against the dollar to around $1.8650 fall, sterling was allowed to float upward. and by 4.7 percentage points on an effective Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

728 Federal Reserve Bulletin □ September 1978 basis to 61.8 per cent. The authorities inter­ in part the intervention support for the pound vened, at times heavily, to moderate the decline and net repayments of external debt of $600 of the rate. million, Britain’s external reserves fell over the In April the British Government announced 4 months by $4.1 billion to $17.3 billion as a budget that was only mildly expansionary but of May 31. brought the public sector borrowing requirement Meanwhile, the Bank of England had aban­ up quickly to the maximum suggested by the doned its market-related formula adopted in IMF. To help finance that deficit while still 1972 for determining its minimum lending rate containing monetary growth, the Bank of Eng­ and reverted to its previous practice of setting land’s minimum lending rate was raised a full the official discount rate administratively. The percentage point to IVi per cent. Even so, authorities kept the rate at 9 per cent, but market market participants were doubtful that further expectations of an early hike in interest rates fiscal stimulus would be compatible with the were reflected in a considerable widening in the new guidelines for monetary expansion, unless discounts on forward sterling. additional restrictive measures were imposed. Then in order to resume sales of gilt-edge Data revisions suggesting further growth in securities and to bolster the pound, on June 8 Britain’s monetary aggregates, combined with the British Government announced a package a continued advance of U.S. interest rates, of measures to bring the economy back on the deepened doubts that the government would be course anticipated at the time of the budget. The able to finance its debt at prevailing interest authorities reintroduced the supplementary spe­ rates. In addition, the imposition by Parliament cial deposit scheme restraining the growth of of tax cuts in excess of those proposed in the interest-bearing eligible liabilities of the com­ budget and prospects of an early general election mercial banks in order to curb the expansion made this task seem increasingly difficult. of the money supply. In the exchanges, dealers were wary that In addition, to offset the impact of the extra nonresidents who had built up large-scale port­ cuts in income taxes on the public sector deficit, folios last year might liquidate their holdings, the government increased the national insurance should British interest rates rise further. Also, surcharge levied on employers and announced market participants had noted that Britain’s it would seek to limit wage increases even trade figures, while fluctuating widely between further in a fourth phase of voluntary pay policy deficit and surplus, were, on average, showing to begin in July. Moreover, the authorities a much smaller surplus than had been implied raised the official discount rate 1 percentage in official forecasts, even after these forecasts point to 10 per cent. Finally, Chancellor Healey had been scaled back substantially. Under these reaffirmed the government’s commitment to circumstances, sterling was subject to bouts of keep the public sector borrowing requirement professional and commercial selling after mid- and the expansion of domestic credit within the April. Against the dollar, spot sterling fell an­ limits agreed upon with the IMF. other 3 Vs per cent from levels at the end of Following these announcements, the pres­ March to a low of $1.8057 by May 17, while sures against sterling subsided. The ensuing also falling 0.3 percentage points on an effective tightening in the domestic and Euro-sterling basis to 61.5 per cent. money markets helped attract funds from To counter these selling pressures, the Bank abroad. Moreover, the pound was buoyed by of England sold fairly large amounts of dollars talk, ahead of the July 6-7 Bremen summit, of at times through early June. But at the same the possibilities of the pound’s eventual inclu­ time the authorities proceeded to liquidate ex­ sion in an expanded EC snake. The widespread ternal debt while also renegotiating terms and press commentary over the various proposals for stretching out maturities on some major loans achieving some new form of joint floating ar­ to take advantage of more favorable borrowing rangement frequently generated bidding for conditions in the Euro-dollar market. Reflecting sterling by international investors shifting funds Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 729 out of both the dollar, which was declining, and the franc came on offer, the spot rate fell to the German mark. Sterling thus advanced $0.2020 by February 6, while plummeting 5% strongly with the other independently floating per cent to record lows against the German mark European currencies and the yen over the last and the Swiss franc. 2 months of the period. The Bank of France scaled up its official By the end of July, the pound rose to $1.9310 dollar sales and suspended its facility for redis­ against the dollar, almost 7 per cent above its counting Treasury bills and other medium-term mid-May lows and just 1 per cent down on paper, thereby setting the stage for an abrupt balance from levels at the end of January. On upward adjustment in short-term interest rates. an effective basis, the pound rose from a low These actions helped to steady the market, ena­ of 60.9 per cent in early June to 62.5 per cent. bling the franc to rise somewhat against the Meanwhile, the Bank of England was able to dollar. But this advance was insufficient for the add dollars to its reserves in June and July while franc to keep pace with the German mark. In continuing to repay and to prepay its external fact, just before the first round of balloting on debts. Taking these liquidations into account, March 12, the franc dropped to a record low Britain’s official reserves rose $292 million dur­ of 2.3873 francs per mark, even as the Bank ing the last 2 months of the period to $17.6 of France intervened in marks and in dollars billion as of July 31, a net decline of $3.8 billion to moderate the decline. over the 6-month period. Early reports indicating that the left-wing coalition had failed to make its hoped-for elec­ toral gains in the first round prompted some quick covering of positions. At about the same FRENCH FRANC time, the market learned of a further improve­ By the end of 1977, inflationary pressures in ment in the French trade account and of a France were decelerating and France’s current pick-up in industrial output. account had swung into surplus in response to Buoyed by this news and by an unexpectedly more than a year of fiscal, monetary, and price comfortable majority the government obtained restraints. The cost to the domestic economy in the final vote of the parliamentary elections, had nevertheless been severe. Consequently, by the franc moved up sharply. But market senti­ September the government had taken advantage ment toward the franc remained cautious be­ of its stronger external position to adopt selec­ cause of expectations that the new government tive measures to boost employment while still would now shelve the austerity program in favor giving priority to the fight against inflation and of more reflationary measures to reduce unem­ to the maintenance of a sound balance of pay­ ployment and to placate the growing unrest ments. within French labor’s rank and file. Thus, fol­ Meanwhile, performance of the economy was lowing a short-lived rally, the franc leveled off a key issue in the upcoming elections scheduled against other European currencies in late March for March 1978 and, by the time the period while continuing to rise against an easing dol­ under review began, opinion polls were sug­ lar. gesting that a coalition of the Socialist and Meanwhile, during the first quarter, the cur­ Communist parties was in a position to win a rent account moved strongly into surplus. In­ majority in the French Parliament. dustrial production was expanding and, with the Amidst uncertainty over France’s economic elections over, investment demand and stock and political outlook, the French franc at times building were expected to spur output even had come under selling pressure in both the spot more. At this point, President Giscard d’Estaing and forward markets when adverse commercial moved quickly to reaffirm his government’s leads and lags and speculative short positions commitment to continue current policies, with built up against the franc. Such a spasm of Premier Barre heading up the new government. nervousness broke out again in mid-January. As Over the course of the next month, Barre Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

730 Federal Reserve Bulletin □ September 1978 announced the government’s intention to reduce currencies. A late-June report from Luxem­ the growth of public financing needs and to bourg, suggesting the possibility that France’s channel more personal savings into business rejoining the EC snake might be discussed at investment. These objectives were to be met by the EC summit meeting in Bremen on July 6 increasing charges for certain public services, and 7, brought the franc quickly into demand, gradually relaxing longstanding controls on in­ not only against the dollar but also against the dustrial prices, and providing some form of tax mark. Although the French president denied the relief for capital gains. Although this program next day that the franc would re-enter the snake was expected to raise prices over the next few as it was then constituted, talk of various pro­ months, the market viewed the freeing-up of posals for some new joint floating arrangement prices and the prospective slowdown in the kept alive the possibility that the franc might public sector deficit as courageous moves. be linked to other EC currencies in some man­ Moreover, news of a 1.2 billion French franc ner. trade surplus in March pointed toward further As a result, a combination of speculative progress in redressing the external imbalance, bidding and commercial demand to cover pay­ even as the domestic economy began to recover. ments needs by the end of the half-year pushed Market confidence in the franc thus strength­ the spot rate up sharply against both the dollar ened generally. With French interest rates re­ and the mark. As expectations of a near-term maining relatively high, the franc benefited agreement to link the franc with the other EC throughout the rest of the spring from an un­ currencies faded following the Bremen summit, winding of the adverse commercial leads and the franc edged back briefly against both the lags and speculative short positions that had German mark and the dollar. However, when been accumulated over many months prior to the dollar came under renewed selling pressure, the elections. the franc was climbing again as the period came In addition, the exchange rate was aided by to a close. Thus, by the end of July, the franc conversions of some foreign borrowings by had risen 8% per cent over the 6-month period French private corporations and by talk of a to $0.2293 and 4% per cent on balance to placement of a large amount of funds in francs 2.1452 French francs per mark. Meanwhile, the by a major member of OPEC. As a result, the Bank of France continued to buy dollars to franc rose 8% per cent above its pre-election moderate the franc’s rise. These acquisitions level to $0.2215 by early April. Then as the were reflected in a $1.2 billion increase in dollar generally recovered, the franc eased back France’s foreign-currency reserves in June and only slightly to $0.2127 during April and May, July to $7.1 billion as of July 31, a net gain while gaining 3 to 53A per cent against the mark of $2.3 billion over the 6-month period. and Swiss franc. Meanwhile, after mid-March the Bank of France bought sizable amounts of dollars and marks in the market. These opera­ ITALIAN LIRA tions were partially reflected in a $1.4 billion rise in France’s foreign currency reserves over Following the implementation of a comprehen­ the 3 months to almost $6 billion by the end sive stabilization program in Italy—one that had of May. served as the basis for a new standby arrange­ In early June, the franc remained well bid. ment with the IMF—substantial progress was With interest rates remaining high even after made during the second half of 1977 in turning they had declined from pre-election levels, there around Italy’s balance of payments and slowing continued to be large flows of interest-sensitive the rate of domestic inflation. For the year as funds from abroad. Meanwhile, the market a whole, Italy’s current account had strength­ gradually became aware of the discussion, be­ ened sharply, swinging from a $2.8 billion tween French President Giscard d’Estaing and deficit in 1976 to a $2.3 billion surplus for 1977. German Chancellor Schmidt, on ways to reduce Moreover, the inflation rate had been brought exchange-rate fluctuations between European down from 19 per cent to 15 per cent in just Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 731 half a year. The completion of a stabilization serve position, helped keep the selling pressures program and restrictions on the availability of from cumulating. By mid-February the lira was domestic credit had paved the way for more more nearly keeping pace with other currencies, private external borrowing in 1977. and the Bank of Italy was able to buy dollars Bolstered by both the current-account and again. capital inflows, the lira thus rose gradually Meanwhile, Italy’s trade account remained in against the dollar in the exchange markets. In surplus even through the normally adverse pe­ fact, the authorities were able to buy substantial riod of the year and despite a rapid recovery amounts of dollars in the market so that, even of economic activity. Unlike other periods of after repayment of some official borrowings, expansion, the recovery this time was not ac­ Italy’s foreign currency reserves rose $4.8 bil­ companied by a large build-up of inventories lion in 1977 to nearly $8.0 billion by the end and hence of imports. Instead, imports were of the year. sluggish because the recovery was expected to But these improvements resulted in a consid­ be only temporary in view of continuing dis­ erable slowing of the domestic economy. In­ cussion about the need to curb the public sector dustrial production dropped below levels of the deficit. At the same time, exports continued to previous year, unemployment rose, and with be buoyed by the existence of excess industrial corporate profits squeezed by the high cost of capacity and by the competitive effects of the borrowing funds, the prospects for a strength­ lira’s previous decline against other European ening of the labor market seemed dim. Conse­ currencies. quently, by the end of the year, pressure was Looking ahead, the current account was ex­ building up for new action to stimulate the pected to remain strong because of the bulge domestic economy now that progress had been in tourist receipts over the spring and summer achieved on the inflation and balance of pay­ months. Moreover, by March a compromise ments fronts. worked out between the two major political At the same time, however, the public sector parties, in which the Communists would func­ deficit exceeded the limit specified in the tion as part of the governing coalition within standby arrangement and subsequent discus­ the Parliament without actually being in the sions with the IMF. The minority government Cabinet, set the stage for renewed discussions attempted to negotiate with the opposition par­ on the government’s economic policy. The ties and trade unions for new measures to in­ strength of Italy’s reserve position was further crease public service prices and to reduce ex­ highlighted with the announcement of official penditures. But, when the fall of the government repayments amounting to SDR 300 million to in January and subsequent political develop­ the IMF, $500 million of the gold-dollar swap ments delayed the approval of the budget and to the German Federal Bank, and a planned the adoption of new measures, the budget deficit repayment of $350 million to the EC. In addi­ grew even larger, thereby playing an important tion, an extension of ceilings for domestic bank role in stimulating economic activity in the early credit signaled a continuation of the cautious months of 1978. monetary policy. These uncertainties overshadowed the market Against this background, the lira eased back for the Italian lira early in 1978. During Febru­ against the dollar more gradually than other ary, selling pressure on the French franc also currencies during April and May. The relative spilled over to unsettle trading in lire. Flows strength in the lira rate, combined with the of funds into Italy slowed, Italian banks repaid continued tightness in the domestic money mar­ some of their external borrowings, and the lira ket, generated a new rise in Euro-dollar bor­ came on offer. As a result, the lira lagged far rowings by Italian residents. Accordingly, the behind the other currencies as the dollar de­ Bank of Italy bought steadily larger amounts of clined generally. On occasion the Bank of Italy dollars in the market to repay external debt intervened forcefully, and these operations, to­ coming due this year. gether with the awareness of Italy’s ample re­ During June and July, Italy’s current-account Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

732 Federal Reserve Bulletin □ September 1978 surplus became even stronger, generating ex­ Among the snake currencies, the Norwegian pectations that it would exceed $3 billion for krone remained relatively weak, however. Nor­ the year as a whole. At the same time the way’s trade deficit had widened following Swe­ renewed selling of dollars enhanced the near- den’s withdrawal from the snake in August 1977 term prospects for lira stability and encouraged and the subsequent rise in the joint float as a further capital inflows. Notwithstanding the group against the dollar. To restore Norway’s continuing debate over ways of reducing infla­ competitiveness, after a meeting of EC mone­ tion still further and of curbing the public sector tary officials on February 10, the Norwegian deficit, the lira remained in heavy demand in authorities announced an 8 per cent devaluation the exchange markets. Thus the authorities were of the krone against the other snake currencies. able to intensify their dollar purchases and con­ Immediately, the krone rose to the top of the tinued to make substantial repayments of official newly realigned EC snake, and funds flowed debt to the IMF, the EC, and the German back into Norway even as the krone was pulled Federal Bank. They also liberalized foreign ex­ up further against the dollar by the rise in the change controls by removing the requirement mark. that 25 per cent of the financing of exports be But by late March, the market was concerned done in foreign currencies. that some of the competitive gains from the Even so, the lira advanced with the other February devaluation against currencies outside European currencies against the dollar, rising the EC band were being eroded by the snake’s 3% per cent to $0.001189 (841.04 lire) by July rise against the dollar. As a result, reflows from 31. At this level, the lira was at its peak for abroad slackened, and the krone dropped back the 6-month reporting period and at its highest to the bottom of the joint float, occasionally level since October 1976. Over the 6 months, coming under light selling pressure. Italy’s foreign exchange reserves increased $1.7 Meanwhile, the Danish krone, whose parity billion to $9.3 billion even after the authorities in the joint float had remained unchanged in had liquidated $1.3 million net of external debt. February, also initially experienced some diffi­ culty in keeping up with the mark’s advance and required support through sales of dollars and marks by the National Bank of Denmark. But E C SN A K E tight restrictions on the expansion of domestic Late in 1977 the sharp rise in the German mark credit in Denmark prompted Danish companies pulled up the other four currencies in the EC to finance domestic credit needs by borrowing snake against the dollar. At times, these curren­ heavily abroad. cies had been caught at the bottom of the 2lA Thus, the pressures on the krone soon eased, per cent band, prompting the respective central and the rate rose more or less on its own with banks to provide support by intervention and the mark against the dollar during March. Then, by tightening up on domestic liquidity. Follow­ once the mark started easing back against the ing more forceful U.S. intervention in early dollar in April, both the Norwegian and the 1978, the market became more settled generally Danish krone were bolstered by reflows of funds and as the mark eased back against the dollar, out of marks and reversals of previously adverse the pressures in the snake largely dissipated. commercial leads and lags. The entire snake The four currencies at the bottom of the band thus narrowed to a width of as little as 1 per all moved above their lower intervention limits cent, and the Danish krone was propelled to the against the mark, thereby enabling all the central top half of the band, where it remained for the banks to buy marks in the exchange market to next 2 months while the National Bank of Den­ repay debt to the German Federal Bank. In mark took dollars into its reserves. addition, the central banks of the Netherlands, By early May, the Netherlands guilder and Belgium, and Denmark took advantage of re­ commercial Belgian franc eased lower in the flows into their currencies to buy back dollars joint float, partly in response to seasonal de­ as well. clines in domestic interest rates but also in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 733 reaction to growing concerns in the market over broad-based program of restraint that remained the performance of the Dutch and Belgian in force coming into the period under review. economies. Fueled by rising consumer spend­ The modest stimulatory package of tax cuts, ing, Dutch imports rose, exports sagged, and announced in October 1977, did not basically the Netherlands’ current-account surplus thus change the cautious stance of fiscal policy. The was eroded. In Belgium, the domestic economy annual target for monetary expansion, also an­ remained stagnant, unemployment continued nounced in October 1977, represented the sec­ high, and some within industry were in favor ond consecutive reduction—this year to a range of a depreciation of the franc as a means of of 7 to 11 per cent. And, although Canada’s stimulating business activity. These factors in­ wage-price program was approaching an end, fluenced market sentiment toward both curren­ the dismantling of controls was to be more cies, and the snake widened out again in the gradual than originally expected and was taking late spring and early summer as the mark moved place against the backdrop of clearly deceler­ back up above its mid-May lows against the ating wage pressures. dollar. But after more than 2 years of this stabiliza­ By June, trading relationships within the EC tion policy, the rate of economic growth in snake were affected first by talk and then—fol­ Canada slowed to a pace insufficient to absorb lowing the July 6-7 EC summit meeting at a rapidly expanding labor force, and unemploy­ Bremen—by a commitment to study the idea ment continued edging up to new postwar highs. of bringing the currencies of all EC countries Even so, the inflationary excesses of earlier back into a new joint floating arrangement. On years had resulted in a deterioration of Canada’s the one hand, currencies that were new candi­ competitive position in world markets. For a dates for membership—sterling, the French time, Canada’s sizable current-account deficit franc, and to a lesser extent the Italian lira— was more than covered by large inflows of were buoyed by this possibility. On the other long-term capital. By 1977, however, the hand, present snake members were affected by mounting debt service requirement added fur­ talk that the rules governing the snake might ther strain to the current account. Also, capital be diluted. As a result, the Dutch guilder weak­ inflows declined from the record levels of the ened somewhat further in the joint float and the previous year, partly because the cash-flow re­ commercial Belgian franc, which had already quirements of Canada’s largest borrowers (the fallen to the floor of the snake, came more provinces and municipalities) were lower. heavily on offer. Moreover, uncertainties arose in connection Consequently, the National Bank of Belgium with political developments in Quebec, and a intervened forcefully to maintain the franc’s narrowing of favorable interest differentials visintervention limits against the mark. In addition, a-vis the United States reduced the incentive for both the Netherlands Bank and the National Canadian borrowers to tap capital markets Bank of Belgium raised their official discount abroad. Thus, the Canadian dollar became ex­ rates in mid-July to contain the pressures on posed to downward pressure in the exchange their respective currencies. These pressures markets. By the end of January the spot rate, were moderated by the tendency of the mark at $0.9031, was down by 12% per cent from to lag behind the advances of the independently its peak in October 1976. The Bank of Canada floating currencies against the dollar until early intervened to maintain orderly markets as the August. rate declined. But, since these operations re­ sulted in large net dollar sales, they exerted a drain on Canada’s reserves. Meanwhile, in re­ sponse to the depreciation of the Canadian dol­ C A N A D IA N D O L L A R lar, rising import as well as food prices aggra­ Following the build-up of severe inflationary vated price pressures in the domestic economy, pressures in the early 1970’s, the Canadian keeping the rate of inflation around the 9 per Government had adopted a medium-term and cent level. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

734 Federal Reserve Bulletin □ September 1978 The Canadian dollar remained on offer in credit line from $1.5 billion to $2.5 billion, and February. With the drop in long-term place­ a new government bond issue of $750 million ments abroad and an absence of a full calendar in New York, its first external borrowing since of new foreign issues, market participants were 1968. Moreover, the Bank of Canada, judging even more sensitive than usual to rumors about that short-term interest rates could not be raised the timing of conversions of the few large bor­ without prejudicing the achievement of an ac­ rowings that were known to have been made. ceptable rate of monetary expansion, increased A renewed tightening in the U.S. money mar­ its discount rate in two successive Vi percentage ket, which drove Euro-dollar deposit rates above point hikes to 8V2 per cent by April 4 to moder­ comparable Canadian interest rates, inhibited ate pressures on the exchange rate. capital inflows even more. Reports that a major Nevertheless, market sentiment toward the insurance company was thinking of moving its Canadian dollar remained bearish. The impact head office from Montreal to Toronto had also of the announced government bond issue was reinforced the market’s concern about the pos­ undercut by the news of a similarly sized drop sible political and economic consequences of in official reserves for February. Moreover, having in Quebec a government committed over market participants were expecting that, with the long term to establishing the province’s unemployment stubbornly above 8 per cent and independence. In this atmosphere, professional a national election to be scheduled over the next and commercial selling gathered force, driving year, the upcoming budget would generally be the rate down still further. In response, the Bank stimulatory. of Canada stepped up its support, and Canada’s Thus, the Canadian dollar continued to come reserves fell $700 million during February to heavily on offer, with the pressures especially $3.7 billion at the end of the month, the lowest strong when U.S. corporations came into the level since 1970. market to repatriate funds to cover their needs By this time, a succession of monthly trade at the end of the quarter or for mid-April tax figures pointed to a sharp improvement in Can­ payments. As the selling continued, the rate fell ada’s net export position in response to the rapid with increasing speed, declining virtually every growth in the U.S. economy and to the large day in early April until it hit a 45-year low of effective depreciation of the Canadian dollar. $0.8663 on April 14. At this level, the rate was The rise in the real trade balance, together with 4 per cent below early-February levels. a modest pick-up of consumer spending follow­ Meanwhile, on April 10 Finance Minister ing the tax cuts of last fall, suggested some Chretien presented a budget proposing a tempo­ improvement in Canada’s over-all growth per­ rary cut in the sales tax and a modest increase formance. But the continuing decline in the in an already large budget deficit. But, with Canadian dollar was by now a serious political these measures less stimulatory than some in issue. Moreover, the most recent statistics the market had feared and in response to a showed sharp jumps in both wholesale and resumption of foreign borrowings and conver­ consumer price indexes. The wage and price sions, the market for Canadian dollars came into control program was being phased out. Under better balance. The spot rate began to move off these circumstances the impact of further de­ its lows. preciation on Canada’s cost structure was Around the end of April the Canadian Gov­ threatening to undermine the government’s ef­ ernment announced plans for three new me­ forts to achieve noninflationary growth for the dium-term placements of marks, totaling more Canadian economy. than $700 million equivalent, and a $3 billion The authorities, therefore, acted to shore up standby credit with a consortium of U.S. and the Canadian dollar. To supplement the net other foreign banks. The announcement of these inflow of capital, the government announced arrangements brought the total credits immedi­ between late February and early April an acti­ ately available to the authorities to roughly $7 vation of the standby facility arranged with billion. In addition, the announcement by Can­ Canadian banks last October, an increase in that ada of an $840 million trade surplus for March Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Foreign Exchange Operations 735 indicated an underlying improvement in that The market became unsettled again in late account. July when, with the U.S. dollar coming under These developments gave a boost to market increasingly heavy selling pressure, participants sentiment, triggering the reversal of some short came to expect that further increases in U.S. positions and previously adverse commercial short-term interest rates would virtually elimi­ leads and lags. The Canadian dollar thus ad­ nate the interest differential favoring Canada. vanced further to recover all of its losses since Even after the Bank of Canada raised its dis­ the end of January, moving back to as high as count rate another Vz of a percentage point to $0.9035 by mid-May. The Bank of Canada 9 per cent on July 26, trading remained unset­ continued to intervene, buying dollars in May, tled. thereby replenishing some of the reserve losses The announcement that Canada’s trade ac­ of earlier months. count fell into deficit during June (later revised But before long, in the face of unsettling news to a small surplus) gave the market a further about prices and the Quebec issue, the Canadian jolt. As a result, the rate declined to $0.8813 dollar eased back from its mid-May peak. An on July 31, down 2% per cent for the reporting unexpected drop in Canada’s trade surplus in period as a whole but still almost 2 per cent April also contributed to the market’s skeptical above its mid-April lows. Meanwhile, the Bank attitude toward the Canadian currency. More­ of Canada intervened more heavily again, sell­ over, the squeezing out of interest rate differen­ ing dollars in June and July. But, at the same tials favorable to Canada continued as U.S. time, since March it had drawn a total of $1.2 money rates rose further. Also, some U.S. cor­ billion on its credit facilities with Canadian and porations were again in the market to hedge their foreign banks. Bolstered by these takedowns Canadian holdings before the end of the quarter and the other external borrowings in marks and for tax purposes. In this atmosphere, the Cana­ dollars, Canada’s official reserves rose nearly dian dollar eased back to $0.89 by the end of $900 million net above the lows at the end of June, and the rate then fluctuated narrowly February to $4.6 billion as of July 31, a net around this level through most of July. increase of $186 million for the period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

736 Statements to Congress Statement by G. William Miller, Chairman, pace of expansion moderate as a business-cycle Board of Governors of the Federal Reserve upswing matures and as the economy ap­ System, before the Committee on Finance, U.S. proaches high levels of utilization of labor and Senate, September 6, 1978. industrial capacity. At times in the past, aggre­ gate demand overshot the level at which these Mr. Chairman, I am pleased to participate in resource constraints became significant, and in­ the Finance Committee’s hearings on tax legis­ flationary pressures mounted dramatically. We lation. While decisions regarding taxation fall cannot run the risk of repeating that mistake. outside the province of the Federal Reserve, the Inflation is the pre-eminent economic concern System is certainly not a disinterested observer. of our people today and the greatest threat to I hope that my appearance today will contribute the vitality of the current expansion. The ad­ to the development of a coherent set of public vance in prices has accelerated sharply this year, policies to deal equitably and effectively with averaging almost 10 per cent, at an annual rate, the economic problems confronting the Nation. at the consumer level. Food prices have been a major element in this step-up in inflation. Economic achievements and concerns. The While there have been signs recently of im­ past 3V2 years of economic expansion have provement in that sector, other prices are con­ brought substantial gains in production and em­ tinuing to rise briskly. Across the economy, cost ployment. Real gross national product has in­ pressures have remained intense, reflecting in creased more than 18 per cent, and total em­ part the effects of a rise in the minimum wage ployment has risen by almost IOV2 million. A and of increased employer contributions for larger proportion of our people have jobs today social security and unemployment insurance. At than at any time in the Nation’s history. the same time, the depreciation of the dollar Even so, unemployment remains unaccepta- in international exchange markets has raised bly high among some segments of the popula­ import prices and reduced the competitive pres­ tion—especially certain minority groups and sures on prices of domestically produced goods. youth. And there are areas of the country that, owing to their particular industrial mixes or to Setting the dimensions of the tax cut. Under other factors, have lagged noticeably in eco­ the circumstances, the Congress must weigh nomic recovery. We must make certain that all with great care the size and composition of its of our people have an opportunity to achieve tax program. A tax cut certainly should provide a greater measure of prosperity. But in setting no more stimulus than is necessary to sustain monetary and fiscal policy we must also recog­ moderate economic expansion; anything more nize that many of these lingering elements of could jeopardize our chances of restraining in­ weakness in the economy reflect structural flation. It should also be structured in a way problems that will not be solved through rising that recognizes that our tax system exerts a levels of aggregate demand alone. powerful influence on our economy through the Indeed, while there is a clear need to maintain incentives it provides for work and for capital the upward momentum of economic activity, we formation. The Congress can take a significant must be increasingly alert to the need to avoid step toward the enhancement of our Nation’s excessively rapid growth. It is desirable that the economic welfare by paying heed to these Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 737 “supply-side” effects. In the remainder of my expenditure side of the budget ledger when statement, I want to discuss briefly both the size determining the size of tax cut that can be and the shape of a desirable tax cut today. afforded. If we are to have any real hope of It is my judgment that the tax reduction in containing inflationary pressures, it is impera­ the vicinity of $15 billion being discussed by tive that the budget deficit be reduced from the the Congress would be appropriate for the com­ $50 billion level projected for the current fiscal ing calendar year. Despite some bumpiness re­ year. Spending cuts of the dimension recom­ lated to strikes and weather this past winter, the mended recently by the administration would recent pace of economic expansion, on balance, permit reasonable progress toward the longerhas been satisfactory. However, available indi­ range objective of restoring budgetary bal­ cators of future economic trends suggest that, ance—even with a tax cut. A narrowing of the in the absence of some fiscal adjustment, private deficit to the $40 billion area also would be demands might well prove insufficient to sustain consistent with sustained economic expansion growth that is strong enough to prevent the and further sizable gains in employment. unemployment rate from rising in the next year. Consumer buying sentiment remains gener­ Providing tax relief to the household sector. ally favorable, but the savings rate is already The next question is how a tax cut of the proper at a fairly low level and debt repayment burdens over-all size should be structured in order to are at a record high. Consequently, consumption make the maximum contribution to the achieve­ expenditures, which up to now have been a ment of the goals of full employment, price dynamic factor in the expansion, are likely to stability, and a sound dollar. The fact that there provide little impetus to activity. Housing starts will be substantial contemporaneous increases have remained at a high level thus far this year; in taxes on individuals suggests the desirability given the tighter conditions that have developed of allotting to this group a large share of the in the mortgage market, however, it is probable tax reduction. Rising prices of food and other that residential construction activity will begin necessities have strained the budgets of many to taper off in upcoming months. Businessmen households, and these hardships should not be meanwhile remain hesitant about undertaking intensified. In this respect, the distribution of major capacity-expanding outlays for plant and the tax cuts between the household and cor­ equipment. Recent data on orders for machinery porate sectors implied by H.R. 13511 appears and other capital goods have been on the weak reasonable. However, I have some doubts re­ side, and these data suggest that real business garding the particular devices employed in fixed investment may grow rather sluggishly delivering this tax relief. over the next few quarters. As I noted earlier, a significant portion of the Against this backdrop, a reduction in Federal tax cuts would serve only to offset the revenue taxes next year would provide timely support impacts of scheduled social security tax in­ to spendable income. It must be remembered creases. It might reasonably be asked, I think, that without a tax cut we would actually be whether it would not be more desirable simply facing a substantial tax increase in 1979. Man­ to defer the 1979 social security tax changes. dated social security tax increases alone will This course of action would have some signifi­ boost Federal revenues by about $8 billion; in cant advantages. Besides bolstering disposable addition, taxes for individuals will be increased personal income, it would avert another infla­ another $8 billion or more by the interaction tionary impulse to the structure of labor costs. of inflation and the progressive income tax The Board’s staff has estimated that the sched­ structure. As a result, a tax cut on the order uled increase in employer contributions to social of that embodied in the House-passed bill would security would add roughly Vi of a percentage serve only to neutralize the impact of these other point to inflation next year. revenue changes already in train. A 1-year deferral of the further tax increases Of course, it is also essential to consider the dictated by the Social Security Amendments of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

738 Federal Reserve Bulletin □ September 1978 1977 would not place undue strain on the re­ and low unemployment. In my opinion, the sources of the trust funds. Nevertheless, a de­ Nation must set an ambitious goal of, say, 12 ferral should be enacted only with an explicit per cent of GNP for an extended period—a level and urgent commitment to action that deals that would foster more rapid improvement in realistically with the remaining long-range productivity and faster economic growth. problems of the social security system. Last year’s legislation did ensure the system’s finan­ Some shortcomings of the capital gains and cial viability by making much needed correc­ corporate income tax cuts. The capital gains and tions of the benefit computation formula and by corporate income tax cuts in the House bill increasing contributions. But the people of this should provide some impetus to business capital country are faced with the prospect of a rapidly formation and represent moves in the right di­ growing financial burden, and a social security rection. What must be considered is whether tax that is both inflationary and regressive. I they are the most effective measures that might would recommend that the Congress undertake be taken at this time. I have some reservations a comprehensive study of the social security on this score. system so that needed legislation could be en­ There is, as you know, considerable contro­ acted next year. versy about the effects of a capital gains tax cut on investment and on Federal revenues. This The need to increase business investment. In is not surprising. A change in capital gains considering the corporate and capital gains tax treatment would work its influence through a provisions of H.R. 13511, I would hope that complex and uncertain set of channels. In as­ this committee would focus its attention partic­ sessing the impact on business capital forma­ ularly on how the proposed cuts would contrib­ tion, one must contend with the fact that the ute to the enhancement of business fixed invest­ tax change would affect investment by both ment. The performance of capital spending in households and businesses in all sorts of assets, this economic expansion has been most unsatis­ ranging from diamonds to real estate. How factory. Real business fixed investment reat­ much effect the tax cut would have on the price tained its previous peak level only in the second of corporate stock and thus on the cost and quarter of this year—much later than has been availability of equity capital is unclear, and how the case in other cyclical upswings. Further­ this would translate into acquisition of new plant more, the growth of the Nation’s capital stock and equipment is a further uncertainty. has not kept pace with the increases in its work Still, a reduction in capital gains taxes does force. Indeed, throughout the 1970’s the ratio have its attractions. It would, for example, bring of capital stock to labor has fallen ever shorter some relief to investors who are confronted with of its earlier growth-trend line, and this un­ very high effective real tax rates—ofttimes ex­ doubtedly has been a significant factor in the ceeding 100 per cent—because their cost bases slower growth of productivity we have experi­ in calculating capital gains do not rise to reflect enced over this period. inflation. It would also benefit young, emerging Capital accumulation is a critical ingredient firms, which have little current income and thus in the long-range growth of labor productivity are not in a position to benefit from other and the raising of living standards. To compen­ changes in business taxes; lower capital gains sate for the neglect of recent years, as well as taxes would encourage equity investment in to accommodate to the reality of scarcer and such enterprises. All things considered, I would more expensive energy, a larger share of GNP conclude that some cut in capital gains taxes must now be devoted to the expansion and would be appropriate, but I would not assign modernization of the Nation’s capital stock. It it so high a priority as other tax actions whose will not be enough simply to reach the invest­ impacts on investment are more direct. ment proportion of 10!/2 to 11 per cent that has My reservation about the capital gains provi­ been characteristic of past periods of prosperity sions of the House bill extends to the corporate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 739 tax changes as well. Again, insofar as incentives proposal, rehabilitates—a capital good. There for business investment are concerned, the bill are, however, likely to be differences in the uses a shotgun approach rather than a rifle. It cost-effectiveness of accelerated depreciation does provide for a phased liberalization of the and investment credits—that is, in the degree investment tax credit, with an estimated first- of investment stimulus per dollar of tax relief. year impact of $500 million, but the bulk of These differences will hinge on some rather the corporate tax reduction occurs through a technical factors, among the most critical of lowering of the rate structure. Although lower which is the importance that businesses attach tax rates would improve after-tax profits, the to the time pattern of their income. When firms linkage between this improvement in cash flow require very short pay-off periods for invest­ and spending on new plant and equipment is ment, accelerated depreciation will tend to be a loose one. more cost-effective than tax credits in stimulat­ The additional cash might be channeled into ing capital outlays. There unfortunately is no any of a number of uses—including the acqui­ simple, direct way to measure the relevant vari­ sition of other firms, the purchase of securities, ables; however, it is my judgment that at the or an increase in dividends. It thus seems quite present time, when changes affecting the envi­ likely that a smaller gain in real investment ronment in which firms operate seem to occur would be achieved for a given dollar of tax rapidly and unpredictably and businessmen are revenue loss than would be the case with tax highly risk-averse, faster depreciation is likely reductions that are linked directly to capital to yield the greatest addition to investment per expenditures. While some cut in corporate tax dollar of tax reduction. rates is desirable—in part to enhance the profit­ ability of businesses in less capital-intensive A new challenge for fiscal policy-makers. I sectors such as services and finance—greater hope that the committee will find the foregoing emphasis should be placed on other, more effi­ remarks helpful in its deliberations on the tax cient, tax incentives for investment. bill. The issues that it must address are many and complex. The Congress has made notable The advantages of more direct tax incentives progress in the past few years in bringing better for investment. Accelerated depreciation is a order to the Nation’s finances. The Congres­ very efficient way to encourage investment. The sional Budget Act has accomplished a great deal tax benefits of faster depreciation accrue to a in providing a more effective means for setting firm only after new plant and equipment has the over-all levels of revenues and expenditures been put in place. In addition, enlarged depre­ consistent with the prospective strength of ag­ ciation allowances would redress—if in an indi­ gregate demand. But traditional demand man­ rect way—the serious drag on real corporate agement policies are not sufficient to solve many profitability that has occurred in recent years as of the basic problems of the economy. Thus the inflation has caused replacement costs to exceed Congress now faces a further challenge—to depreciation deductions by a wide margin. structure its fiscal actions so as simultaneously Larger investment tax credits also provide to satisfy the criterion of equity, to minimize direct incentives to capital formation and there­ inflationary pressures, and to provide adequate fore are more efficient in stimulating investment incentive for capital formation to enhance than are cuts in corporate tax rates. As with growth and productivity. This is no small order, accelerated depreciation, a firm only receives a but conditions in the domestic and international tax benefit if it acquires—or, under the current economy demand that you aim for no less. □ Additional statements follow. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

740 Federal Reserve Bulletin □ September 1978 Statement by Philip E. Coldwell, Member, items on which the consumer is asked to focus Board of Governors of the Federal Reserve in reviewing a Truth in Lending statement. System, before the Subcommittee on Consumer The complexity of the many disclosures re­ Affairs of the House Committee on Banking, quired under present law is hampering full ac­ Finance and Urban Affairs, September 6, 1978. complishment of the purpose of the statute to inform consumers about credit costs. The July I am pleased to appear before this subcommittee 1977 survey indicates that consumers do not to present the views of the Board of Governors read their disclosure statements very carefully. on the need for simplification of the Truth in They apparently neither are concerned with Lending Act, simplification that we strongly many of the items presently disclosed nor regard support. many of the items as particularly useful. But The basic purpose of Truth in Lending is to they do rank highly information such as the provide the consumer with information that in­ annual percentage rate, the finance charge, and dicates how much a particular credit transaction the size of monthly payments. Survey results will cost. The consumer benefits by knowing indicate, however, less consumer interest in the additional cost of using credit rather than charges imposed for late payment, rebate cash and is able to compare and shop credit methods used in the event of prepayment, and costs, thus maintaining a competitive discipline descriptions of required security interests. in credit pricing. In the Board’s view, improved delivery of We believe that Truth in Lending has made disclosures also requires that Truth in Lending great progress toward accomplishing its pur­ information be segregated from other contrac­ pose. The Board commissioned a survey of tual provisions and that it be presented in simple approximately 2,500 households in July 1977 terms. At the present time, the consumer often to determine whether consumers have benefited receives lengthy and complex Truth in Lending from Truth in Lending. Partial results of the disclosures interspersed among contractual pro­ survey were presented in the Board’s 1977 An­ visions and disclosures required by State laws. nual Report to the Congress on the Truth in We believe that Truth in Lending cannot be truly Lending Act. Those results demonstrate that effective when the consumer is presented with there has been a significant increase since the discouragingly detailed and complicated disclo­ act was passed in awareness by consumers of sures. Overwhelming the consumer cannot re­ the annual percentage rates charged in consumer sult in a better informed, credit-conscious con­ credit transactions. Many more consumers are sumer; rather, it will result in a consumer who now aware of the costs involved in borrowing will often ignore all disclosures and not attempt money and purchasing goods and services on to digest the information provided. credit. The information provided in accordance with The Board believes, however, that a simpli­ a simplified Truth in Lending statute would fied version of the Truth in Lending Act would focus on those items necessary for consumers operate even more effectively, would result in to know the cost of credit. Simplification would even greater awareness of credit costs, and not deny needed information. If Truth in Lend­ would reduce the costs incurred by creditors in ing continues to be regarded as a vehicle for achieving compliance with the act’s require­ furnishing the consumer with all information ments. Thus, the Board believes that simplified relevant to a credit transaction, it will do no Truth in Lending requirements would better more than repeat large portions of the credit serve the consumer. contract, rather than extract and highlight those Simplification of the Truth in Lending Act, terms considered most useful in shopping for as recommended by the Board, should result in credit and comparing its cost. the improved delivery of information to the There are terms other than credit-cost terms consumer. One of the principal improvements that consumers need to know when entering into would be achieved by reducing the number of credit transactions. However, most of those Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 741 terms are included in the underlying contract. continues to burden the courts. Unfortunately, Efforts are being made in several States—for compliance with a specific Truth in Lending example, California and New York—to require requirement often means different things to dif­ that consumer contracts be written in simplified, ferent courts. Courts in one district may inter­ understandable language to ensure that those pret a statutory requirement differently from terms not considered relevant to the cost of those in another. Many creditors operating out­ credit are presented to the consumer in a coher­ side local areas have had to design different ent manner. disclosure statements for different judicial dis­ The present lengthy and complex disclosures tricts or circuits. Court opinions also occasion­ that overwhelm and confuse the consumer are ally differ from Board or staff opinions on the not the only reason for simplification of the act. same issue. The consistent, uniform interpreta­ Since Truth in Lending’s passage approximately tion of the act has become almost an impossi­ 10 years ago, a great deal has been learned. bility. Even though creditors may make every The practical application of its requirements to effort to comply with the statute’s requirements, individual credit programs has often proven to multitudinous interpretations of broad statutory be a difficult task. These difficulties have arisen language make it impossible for them to know in two basic contexts. that their disclosure statements comply fully First, several of the statutory directives, al­ with the act’s provisions. though they appear to be simple and straight­ Simplification, aside from its desirable focus forward, have proven to be vague and imprecise on the most important aspects of credit costs, in their application. also should result in a savings to consumers. For example, both the Board’s staff and the Creditors’ costs in complying with Truth in courts have had difficulty in interpreting the Lending appear to be substantial and must nec­ broad statutory requirement that default, delin­ essarily be borne in large measure by the con­ quency, or similar charges payable in the event sumer. of late payment be disclosed. The staff and the Significant costs are incurred in the constant courts are comfortable in applying this statutory review and redesigning of disclosure forms in provision to a flat $3 charge imposed when a order to incorporate statutory amendments, consumer is 10 days late in making a scheduled Board and staff interpretations, judicial activity, payment. However, they have not been so sure and State law considerations. The fact that civil about requiring disclosure that interest will con­ liability attaches to violations that are highly tinue to accrue in the event of late payment in technical in nature compels creditors to engage a simple interest loan, when accrual of interest in frequent and costly review procedures. Sim­ is an inherent term of the loan. This is only plification, in clarifying disclosure respon­ one of many examples. sibilities, should reduce the possibility of inad­ Second, the Truth in Lending Act also has vertent violations and aid in reducing creditors’ proven to be difficult to apply to the wide variety compliance costs, thus serving to keep con­ of new credit programs developed over the past sumers’ credit costs down. 10 years. The Federal Paperwork Commission indi­ The Board and its staff, in trying to be cated in its July 29, 1977, report on Consumer responsive to questions about the day-to-day Credit Protection that creditors would save ap­ application of the act’s requirements, have pub­ proximately $600 million if the Board approved lished approximately 1,300 informal staff inter­ creditors’ forms for 1-year periods. The Com­ pretations, 150 official staff interpretations, and mission believed that the use of a form that 55 Board interpretations. Nor have we been would not need revision for a year “would save alone in our efforts to provide guidance with creditors the formidable costs of printing and regard to Truth in Lending; the courts, too, have reprinting forms and, further, would serve to issued numerous opinions. provide some measure of protection to creditors A large amount of Truth in Lending litigation from lawsuits resulting from differences in in­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

742 Federal Reserve Bulletin □ September 1978 terpretation rather than intent.” Although ap­ terms and facilitate earlier disclosure. These proval of individual creditors’ forms may not latter improvements will better ensure that con­ be feasible, the Board could, under a simplified sumers have the opportunity to review and statute, prepare model forms that would provide evaluate the information provided. This oppor­ clear guidance to creditors. tunity, in turn, will facilitate comparison credit The Board believes that the simplification of shopping. Truth in Lending not only will result in a savings We urge the Congress to enact promptly a to creditors and, thus, in a savings to consumers simplified Truth in Lending statute that is clear but also will improve the focus on credit-cost and concise in its requirements. □ Statement by Philip C. Jackson, Jr., Governor, tice as “redlining,” the regulation makes clear Board of Governors of the Federal Reserve that it is unlawful to discriminate against an System, before the Subcommittee on Commerce, applicant because of the characteristics of per­ Consumer, and Monetary Affairs of the Com­ sons to whom the extension of credit relates (for mittee on Government Operations, U.S. House example, the prospective tenants in an apart­ of Representatives, September 15, 1978. ment complex to be constructed with the pro­ ceeds of the credit requested) or because of the Thank you for the opportunity to appear before characteristics of other individuals residing in this subcommittee on behalf of the Board of the neighborhood where the property ottered as Governors of the Federal Reserve System to collateral is located. discuss the Board’s enforcement of the Equal To others, redlining refers to the arbitrary Credit Opportunity Act (ECOA) and the Fair refusal to consider loans in a geographic area Housing Act. without any apparent rational economic basis for The Board is firmly committed to the goal doing so. This type of lending practice, to the of eliminating unlawful discrimination in credit extent that it may exist, is not prohibited under transactions and to the full exercise of its en­ present Federal law. While several bills on the forcement powers in order to assure that banks subject have been introduced in the Congress, subject to its jurisdiction comply with these none has been enacted. laws. The Congress has addressed the problems that In keeping with your request, the Board has flow from this latter concept of redlining in a directed its testimony to the topics of redlining, different way under the Community Reinvest­ recent and future enforcement, civil litigation, ment Act (CRA), which was passed in this and consumer information. The first questions Congress. Regulations to implement this act, to relate to redlining regulations and redlining become effective November 6, 1978, have been monitoring. Unfortunately, the term “redlin­ published for comment. ing” is used to describe a wide variety of credit The fundamental purpose of the CRA is to underwriting practices. Thus, it becomes neces­ help the Nation’s communities by emphasizing sary to describe the practices to which the word to insured financial institutions and their Federal applies before responding to questions and regulators that the standards imposed by Federal issues. banking statutes with regard to the “conven­ To some, the word “redlining” describes the ience and needs” of the community being refusal to consider loan applications relating to served include credit as well as deposit and other properties in a geographic area because of the services. The CRA objective is similar to that area’s racial or ethnic characteristics. That of the Home Mortgage Disclosure Act (HMDA) practice has been declared unlawful by the of 1975, although the approach taken by the courts under the Fair Housing Act. It is also CRA is quite different and promises to be far prohibited by Regulation B, which implements more effective than the HMDA approach. The the ECOA. While it does not refer to the prac­ HMDA, as you will recall, requires that major Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 743 depositary institutions in metropolitan areas monitoring compliance with the ECOA and with furnish to the public information about the lo­ the Fair Housing Act. cation of the collateral securing residential real The Board has no present plans to expand estate loans. This was required in the belief that the detail or scope of Regulation B monitoring local public officials and private citizens could information. The regulation applies to many take appropriate action on a local level if they types of creditors that are subject to the en­ had the proper information. forcement jurisdiction of different Federal The GRA directs the four financial regulatory agencies. It permits an enforcement agency to agencies to encourage the institutions they reg­ substitute its own monitoring program for the ulate to fulfill their continuing and affirmative one specified in the regulation. The Federal obligation to help meet the credit needs of their Home Loan Bank Board and the Federal Deposit communities (including low- and moderate-in- Insurance Corporation (FDIC) have done so. come neighborhoods) consistent with the safe The Board of Governors believes it is preferable and sound operation of those institutions. The to evaluate the effectiveness of these current Board believes that the CRA approach, which monitoring programs before considering more permits evaluation of a State member bank’s extensive data notation requirements for State credit services in the context of local circum­ member banks. stances and the community’s perceived needs, In reviewing our recent enforcement, we find may prove to be a more effective way to deal that Federal Reserve consumer affairs examina­ with the problem of geographic redlining than tions of 861 State member banks were con­ a legal prohibition against geographic discrim­ ducted between April 1977 and August 1978, ination in the extension of credit. and that examiners found a total of almost At the same time, the Board recognizes that 18,000 possible violations of the two acts. The a better understanding by Federal Reserve ex­ vast majority are procedural rather than sub­ aminers and by State member banks of racial stantive violations. For example, of 17,525 redlining and of creditor practices that result in possible violations relating to noncompliance unlawful discrimination will enhance examina­ with the requirements of Regulation B, almost tion techniques and will improve compliance half related to nonconforming application forms with credit nondiscrimination laws. (8.000). Another one-fourth involved incom­ As part of a review of its entire program of plete notifications of reasons for credit denials consumer affairs enforcement, the Board earlier (4.000). Failure to comply with data notation this year contracted with Warren Dennis, a requirements (2,000) and recordkeeping viola­ former member of the Civil Rights Division of tions (700) accounted for the bulk of the re­ the Department of Justice, for an evaluation and maining citations. Similarly, the Fair Housing critique of our civil rights enforcement program. citations (about 300) related almost exclusively The Dennis Report on the Detection and Cor­ to failure to display the Equal Housing Lender rection of Credit Discrimination was submitted poster. to the Board in May. Subsequently, the Board The major substantive violation of Regulation and its staff have been engaged in a review and B (almost 2,000 instances reported) related to revision of our ECOA and Fair Housing exami­ improper requests for the signature of a nonap­ nation and enforcement program. When the plicant spouse. Other substantive violations in­ • revision is complete, details of the new program cluded failure to give reasons for denials and will be furnished to the subcommittee. failure to report jointly held accounts in the To assist the enforcement agencies in moni­ name of each account holder. toring compliance, Regulation B requires a Second examinations of 105 banks indicated creditor to request information about an appli­ that about half of them were still not in full cant’s race or national origin, sex, marital compliance. Again, violations were largely status, and age when it receives a written mort­ procedural: three-fourths related to forms (65 gage loan application for the purchase of resi­ involved applications and 15 involved state­ dential real estate. This information is used for ments of adverse action). A good number of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

744 Federal Reserve Bulletin □ September 1978 these institutions have now been brought into regulations. If repeated violations occur and compliance after further clarification as to what voluntary compliance is not obtained, the Board Regulation B requires. The Federal Reserve could decide to make the identity of the institu­ Banks are dealing with the others on a case-by- tion public. case basis. With regard to possible criminal prosecution The Federal Reserve’s enforcement program against banks or their officers, there is no crimi­ seeks to effect voluntary compliance whenever nal liability provision under either the ECOA possible. In most instances, corrective action is or the Fair Housing Act for any failure to initiated by bank management as a result of an eliminate discriminatory practices. Hence, the on-site, post-examination discussion. The Board is without authority to seek criminal bank’s board of directors is subsequently also prosecution. apprised of the examiner’s findings, and where The ECOA and the Fair Housing Act do give appropriate a special follow-up examination is private individuals the right to sue a creditor scheduled. for unlawful discrimination. The Board believes When warranted, the Federal Reserve Bank that the possibility of money damages and ad­ will take appropriate administrative action verse publicity resulting from a lawsuit provides against a State member bank. That action in­ creditors with an important incentive for com­ cludes proceedings under the Financial Institu­ plying voluntarily. It is impossible to establish tions Supervisory Act of 1966, which empowers the extent to which the civil damages provisions the Board to issue an order requiring a bank have deterred creditors from unlawful discrim­ to cease and desist from the unlawful action and ination, but we do know that creditors are to correct the conditions resulting from the vio­ keenly aware of the potential liability. Many of lation. The Board is also authorized under the them cite their exposure to the civil damages ECOA to refer the matter to the Attorney Gen­ provisions when they write to ask the Board for eral, who in turn may file an appropriate civil interpretations of the regulations. action. Consumers can exercise their legal rights, With regard to future enforcement, the Board however, only if they know about these rights. and four other Federal regulators (the Comp­ The consumer education activities of the Federal troller of the Currency, the FDIC, the Home Reserve inform consumers about laws barring Loan Bank Board, and the National Credit credit discrimination in a variety of ways: Union Administration) have published proposed • Through brochures explaining the pur­ guidelines for the enforcement of Regulation B poses and basic provisions of the statutes; about and the Fair Housing Act. The guidelines indi­ 7 million copies have been distributed through cate the corrective actions that creditors will be creditors, Federal agencies, schools, consumer required to take regarding violations discovered organizations, civic associations, and other in the course of examinations or through inves­ community groups. tigation of complaints. The proposed guidelines • Through public speeches by the staff of do not directly require a bank to inform an the Reserve Banks and of the Board. applicant of violations. However, some of the • Through the staff’s responses to consumer corrective actions that a bank would be required complaints, including referrals for investigation. to take will give notice to applicants of the • Through other means of an experimental bank’s noncompliance (for example, the re­ character. The Federal Reserve Bank of Chi­ quired resolicitation of applicants in cases where cago, for example, has been experimenting with a bank has been found to have discriminated information booths at the national meetings of unlawfully). professional groups, and I understand that the You also asked about the circumstances under response has been excellent. which the Board would publicly name institu­ In closing, I want to emphasize again that tions that repeatedly fail to correct discrim­ the Board is committed to the enforcement of inatory practices. The Board does not now con­ the laws against credit discrimination and has template routinely publicizing violations of the already taken a number of steps toward this end. ECOA, Fair Housing, or other consumer credit It is constantly seeking better ways to do so. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

745 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON JULY 18, 1978 1. Domestic Policy Directive The information reviewed at this meeting suggested that growth in economic activity had slowed in recent months. From the first to the second quarter, however, real output of goods and services appeared to have expanded sharply, reflecting the rebound in activity from the adverse effects of the severe winter and the lengthy coal strike. The rise in average prices—as measured by the fixedweighted price index for gross domestic business product—accel­ erated markedly in the second quarter, largely because of substantial increases in food prices. The staff continued to project moderate expansion in output from the second quarter of 1978 through the second quarter of 1979. The staff projections also suggested that the price advance would remain rapid, although not so rapid as in the second quarter of 1978, and that the unemployment rate would change little from its current level. In June the index of industrial production rose an estimated 0.3 per cent, down from 0.6 per cent in May and much below the substantial gains in March and April. Total nonfarm payroll em­ ployment rose considerably in June, but the advance, like May’s, was well below the increases in March and April. In manufacturing, employment and the average workweek were about unchanged in June. The over-all unemployment rate fell 0.4 of a percentage point to 5.7 per cent, its lowest level in nearly 4 years. Total retail sales changed little in June for the second consecutive month, following 3 months of exceptionally large gains. Unit sales of new automobiles remained at a high level. The advance in the index of average hourly earnings for private nonfarm production workers moderated in May and June, but it was somewhat faster over the first half of 1978 than during 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

746 Federal Reserve Bulletin □ September 1978 Average prices of producer goods rose less rapidly in May and June than earlier in the year, but their increase over the first half was considerably faster than the pace during 1977. In May the consumer price index for all urban consumers rose sharply further, led by rises in food, housing, and energy; over the first 5 months of the year the annual rate of increase averaged slightly above 10 per cent. In foreign exchange markets the trade-weighted value of the dollar against major foreign currencies declined about 2 per cent further from mid-June to the date of this meeting, reaching its lowest point so far in 1978. The downward pressure on the dollar in recent weeks appeared to reflect heightened market concern about the high rate of inflation in the United States relative to rates abroad and about the persistence of extremely large current-account sur­ pluses in Japan and Germany and a large deficit in the United States. In May the U.S. trade deficit was somewhat lower than its very high average rate in the first 4 months of the year. The expansion in total credit at U.S. commercial banks slowed substantially in June from the unusually rapid rates in the preceding 2 months, as growth of business loans decelerated sharply after a surge in May. Growth of other types of loans moderated as well, but bank holdings of Treasury securities increased. Outstanding commercial paper of nonfinancial businesses increased substantially in June. Nevertheless, expansion of total short-term credit to nonfinancial businesses by banks and through the paper market was well below the exceptionally rapid pace earlier in the second quarter. Growth of the narrowly defined money supply (M-l) moderated in May and June from the extraordinarily rapid pace in April, but growth from the first to the second quarter was at an annual rate of 9V2 per cent. Growth in M-2 and M-3 had been moderate over recent months. In June inflows of small-denomination time deposits to banks and to nonbank thrift institutions picked up, following introduction on the first of the month of a short-term money market certificate with a ceiling interest rate for new deposits that changes weekly with the average discount rate on new issues of 6-month Treasury bills. Preliminary reports indicated relatively strong in­ vestor interest in these certificates. Over the year from the second quarter of 1977 to the second Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 141 quarter of 1978, growth in M-l was about 8 per cent—above the 4 to 6^ per cent range for that period adopted by the Committee in July 1977. However, growth in M-2 and in M-3 over the period was within the ranges for those aggregates adopted at that time: M-2 expanded by about 8V2 per cent, compared with its range of 6V2 to 9 per cent; M-3 grew about 10 per cent, compared with its range of 8 to 1 0 per cent. At its meeting on June 20 the Committee had decided on ranges of tolerance for the annual rates of growth in M-1 and M-2 during the June-July period of 5 to 10 per cent and 6 to 10 per cent, respectively. The Committee had agreed that during the coming inter-meeting period operations should be directed initially toward a Federal funds rate of 7% per cent, slightly above the prevailing level of IV2 per cent. Subsequently, if the 2-month growth rates of M-l and M-2 appeared to be significantly above or below the midpoints of the indicated ranges, the objective for the funds rate was to be raised or lowered in an orderly fashion within a range of IV2 to 8 per cent. In accordance with the Committee’s decision, the Manager of the System Open Market Account began immediately after the June meeting to seek bank reserve conditions consistent with a firming of the Federal funds rate to a weekly average of around 7% per cent. Incoming data throughout the inter-meeting period suggested that growth in the monetary aggregates would be well within the ranges that had been specified by the Committee, and the Manager continued to seek reserve conditions consistent with a Federal funds rate averaging about 7% per cent. In the final days of the period the funds rate fluctuated around a level somewhat above 13A per cent. Market interest rates on both long- and short-term securities had shown further increases since the June meeting of the Committee, ranging from about Vs to % of a percentage point. In addition, commercial banks raised the rate on loans to prime business borrowers from 8% to 9 per cent. Interest rates on new commit­ ments for conventional mortgage loans at savings and loan associa­ tions had changed little during the inter-meeting period, while yields in the secondary market for home mortgages had risen somewhat further. On June 30 an increase in Federal Reserve discount rates from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

748 Federal Reserve Bulletin □ September 1978 7 to 1XA per cent was announced by the Board of Governors. The Board stated that the action was 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. In the Committee’s discussion of the economic situation and outlook, there was general agreement among the members that over the year ending in the second quarter of 1979 output of goods and services was most likely to grow at about the moderate pace projected by the staff. However, a number of the members antici­ pated a little less growth and a few anticipated a little more. Despite the consensus that continuing moderate growth in real GNP was still the most likely development, some members sug­ gested that for a number of reasons—including the high rate of inflation and developing financial stringencies—the probabilities of such an outcome were lower than they had seemed to be earlier. A few members observed that the chances of a decline in output during the period had increased. In the opinion of one of these members, the prospects for a gradual slowing of growth in output toward a rate that might be sustainable for the longer term had been diminished by the recent rapid decline in the unemployment rate and by the development of some imbalances in the economy. Another member expected that consumer buying of houses and durable goods, which had been stimulated in recent months by anticipations of further increases in prices, would weaken in the period immediately ahead. He was concerned, moreover, that financial strains might develop to the point of bringing on a downturn in activity, although he did not regard such a development as inevitable. Other members of the Committee felt more confident that a recession would not develop during the four quarters ahead and that output would grow moderately. One of these members thought that expectations of further price increases might well sustain consumer buying—and perhaps business buying, at least to some extent—during the second half of 1978 and that reductions in Federal taxes would strengthen demands in the first half of 1979. Similarly, another member believed that expansive elements in the economy were sufficient to sustain a moderate growth in output, and that distortions were not developing to the point that they would Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 749 overcome those expansive influences. In his view, it remained possible to slow growth to a rate sustainable for the longer term. Another member agreed that there was still time to achieve such a slowing of growth, given appropriate Government policies. All members of the Committee expected a continuation of a rapid rate of inflation over the period to the second quarter of 1979—in the view of several members, even more rapid than the pace projected by the staff. It was observed that in 1979 strong pressures for large increases in wages would tend to spread throughout the economy from the many industries ih which new contracts would be negotiated. It was also noted that minimum wage rates and social security taxes were scheduled to go up again at the beginning of the new year, exerting upward pressure on costs and prices. Most members of the Committee thought that the unemployment rate a year ahead, in the second quarter of 1979, would be little changed from the average rate in recent months, which was well below the level that had been expected earlier. It was suggested that the rate of participation in the labor force would continue to rise, in part because of the pressure of inflation on family budgets. At this meeting the Committee reviewed its 12-month ranges for growth in the monetary aggregates. At its meeting in April 1978 the Committee had specified the following ranges for the period from the first quarter of 1978 to the first quarter of 1979: M-l, 4 to 6V2 per cent; M-2, 6V2 to 9 per cent; and M-3, IV2 to 10 per cent. The associated range for growth in commercial bank credit was IV2 to 10V2 per cent. The ranges being considered at this meeting were for the period from the second quarter of 1978 to the second quarter of 1979. The Committee members differed principally in their preferences for the 12-month range for M-l: A majority favored retention of the existing range, while a number favored an increase in its upper limit. In the case of the broader aggregates, most members ex­ pressed a preference for retaining the existing ranges; one member suggested that the lower limits be reduced by V2 of a percentage point, yielding ranges of 6 to 9 per cent for M-2 and 7 to 10 per cent for M-3. An increase in the upper limit of the range for M-1 was advocated on the expectation that, over the coming year, growth of M-l would have to exceed the 6V2 per cent upper limit of the existing range, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

750 Federal Reserve Bulletin □ September 1978 as it had over the past year, if strains in the financial markets were not to be so severe as to threaten an economic downturn. That expectation was based on the probable rates of inflation and on the recent behavior of the income velocity of money. In this connection it was emphasized that the high rate of inflation in prospect for the quarters immediately ahead was attributable in part to governmental actions and to some strong forces in the private sector—including the effects of the depreciation of the dollar—that were not likely to be moderated appreciably by the stance of monetary policy. In these circumstances, it was argued, the Com­ mittee ought to raise the upper limit of the range for M-1 to allow for a growth rate that—given upward cost pressures on prices—was more nearly consistent with the generally anticipated rate of growth in real and nominal GNP for the year ahead and that, consequently, was more likely to be achieved. Several arguments were advanced in favor of retaining the existing range of 4 to 6V2 per cent for M-l. First, M-l growth in the second quarter—at an annual rate of 9Vi per cent, on a quarterly-average basis—had exceeded the upper limit of the Com­ mittee’s range by a considerable margin, so that retention of the existing range for the year from the second quarter of 1978 to the second quarter of 1979 would allow for growth considerably faster than 6V2 per cent over the five-quarter period beginning the first quarter of 1978. Second, for a considerable period of time growth in M-l on the average had exceeded the range adopted by the Committee and a reduction of growth to a rate within the existing range would be an important step toward moderating inflation. Also, such a reduction would have a positive effect on the economic outlook. Moreover, any increase in the range could be misleading: Such an action, no matter what reasons might be offered for it, was likely to be interpreted both in this country and abroad as a signal of a shift in System policy toward less emphasis on fighting inflation. Since that was not the case, it would be consistent to retain the existing range, although the rate of growth over the period might be around the upper limit of the range. The members also noted that authorization for automatic transfers of funds into checking accounts from savings deposits at commercial banks was scheduled to become effective on November 1, 1978, and that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 751 during a transition period such transfers would tend to reduce the demand for M-l and increase its income velocity. With regard to M-2 and M-3, it was observed that growth over the year ending in the second quarter of 1978 had been within the Committee’s longer-run ranges. One member proposed that in formulating policy for the period ahead the Committee begin to increase the emphasis given to M-2 and reduce that given to M-1. That proposal did not attract support from other members of the Committee. At the conclusion of its discussion the Committee decided to retain the existing ranges for the monetary aggregates. Thus, the ranges for the period from the second quarter of 1978 to the second quarter of 1979 were 4 to 6V2 per cent for M-l, 6V2 to 9 per cent for M-2, and IVi to 10 per cent for M-3. The associated range for growth in commercial bank credit was raised to SV2 to IIV2 per cent in recognition of the greater share of borrower demands being directed toward banks. It was agreed that the longer-run ranges, as well as the particular aggregates for which longer-run ranges were specified, would be subject to review and modification at subsequent meetings. It was also understood that short-run factors might cause growth rates from one month to the next to fall outside the ranges anticipated for the year ahead. The Committee adopted the following ranges for rates of growth in monetary aggregates for the period from the second quarter of 1978 to the second quarter of 1979: M-l, 4 to 6V2 per cent; M-2, 6V2 to 9 per cent; and M-3, IV2 to 10 per cent. The associated range for bank credit is 8V2 to IIV2 per cent. Votes for this action: Messrs. Miller, Volcker, Baughman, Coldwell, Eastburn, Wallich, Willes, and Winn. Votes against this action: Messrs. Jack­ son and Partee. Absent and not voting: Mr. Gardner. Messrs. Jackson and Partee dissented from this action because they preferred to raise the upper limit of the range for M-l to a level more nearly consistent with the anticipated growth in GNP—Mr. Jackson, to 7V2 per cent; Mr. Partee, to 8 per cent. In the discussion of policy for the period immediately ahead, the members differed mainly in their views as to whether, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

752 Federal Reserve Bulletin □ September 1978 to what degree, additional firming in money market conditions should be sought during the next few weeks for the purpose of restraining monetary growth in coming months. No sentiment was expressed for easing money market conditions. Several members proposed that for the time being operations be directed toward maintaining the money market conditions cur­ rently prevailing. It was argued that, in light of increased uncer­ tainties in the economic outlook, such a “pause” would afford the Committee an opportunity to evaluate additional evidence on the current situation and outlook. It was suggested that, coming on top of the considerable firming in money market conditions over the past year or so, further significant firming would risk bringing on a recession. It was also observed that the restraining effects of the rise in interest rates over the past month had not yet been fully felt and that any additional firming that might be appropriate could be achieved at a later time. On the other hand, a number of members favored a prompt further firming of money market conditions. Such a course was needed, it was suggested, to bring growth in M-l within the Committee’s longer-run range. Given the rate of inflation, it was argued, current levels of interest rates were relatively low and were much less restrictive in real terms than their nominal levels might suggest. And the point was made that failure to pursue additional firming at this time might well create a need for a greater degree of firming later. In considering the ranges for the annual rates of growth in the monetary aggregates to be specified for the July-August period, the members took account of the indications that growth in M-l might accelerate in July. Most members preferred ranges of toler­ ance for growth in M-l over the 2-month period extending from a lower limit of 4 or 5 per cent to an upper limit of 8 or 9 per cent. One favored a higher range, from 5 to 10 per cent, and another a lower range, from 3 to 7 per cent. For M-2, most members favored ranges extending from 6 or 7 per cent to 10 or 11 per cent; one member preferred a range of 5 to 10 per cent. With respect to the Federal funds rate, most members favored ranges centered either on 7% per cent, the midpoint of the IV2 to 8 per cent range specified at the June meeting, or on the somewhat higher level that had developed in the most recent days; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 753 their proposals included ranges having a lower limit of IVi per cent or slightly above, and an upper limit of 8 per cent or slightly above. However, a number of members advocated a range centered on 8 per cent and extending from 7% to 8lA per cent. A majority of the members favored giving greater weight than usual to money market conditions in the conduct of open market operations until the next meeting. At the conclusion of the discussion the Committee decided that operations in the period immediately ahead should be directed toward maintaining the weekly-average Federal funds rate within a range of !3A to 8 per cent. The members agreed that, in deciding on the specific objective for the Federal funds rate, the Manager should be guided mainly by the relation between the latest estimates of annual rates of growth in M-l and M-2 over the July-August period and the following ranges of tolerance: 4 to 8 per cent for M-l and 6 to 10 per cent for M-2. It was also agreed that if, giving approximately equal weight to M-l and M-2, their rates of growth appeared to be close to or beyond the limits of the indicated ranges, the Manager should raise or lower the objective for the funds rate in an orderly fashion within its range. 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 following domestic policy directive was issued to the Federal Reserve Bank of New York: The information reviewed at this meeting suggests that growth in economic activity has slowed in recent months. Following sub­ stantial gains in March and April, increases in industrial production and nonfarm payroll employment moderated in May and June and retail sales changed little. In June, however, the unemployment rate dropped 0.4 of a percentage point to 5.7 per cent. Average producer prices rose somewhat less rapidly in May and June than earlier in 1978, but over the first half of this year prices increased at a considerably faster rate than they had on the average during 1977. The advance in the index of average hourly earnings also moderated in May and June but was at a somewhat faster pace over the first half of 1978 than during 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

754 Federal Reserve Bulletin □ September 1978 Since mid-June the trade-weighted value of the dollar against major foreign currencies has declined further to its lowest level of the year. The U.S. trade deficit in May was lower than the very high rate of the first 4 months of the year. Growth in M-l moderated in May and June, but reflecting the extraordinarily rapid pace in April, growth from the first to the second quarter was relatively high. Growth in M-2 and M-3 has been moderate over recent months. In June inflows of small-denomination time deposits to commercial banks and other thrift institutions picked up, following introduction of the new 6-month certificate. Market interest rates have risen further in recent weeks. On June 30 an increase in Federal Reserve discount rates from 7 to 7Va per cent was announced. In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster monetary and financial conditions that will resist inflationary pressures while encouraging continued moderate economic expansion and contributing to a sus­ tainable pattern of international transactions. The Committee agreed that these objectives would be furthered by growth of M-l, M-2, and M-3 from the second quarter of 1978 to the second quarter of 1979 at rates within ranges of 4 to 6V2 per cent, 6V2 to 9 per cent, and IV2 to 10 per cent, respectively. The associated range for bank credit is 8V2 to IIV2 per cent. These ranges are subject to recon­ sideration at any time as conditions warrant. In the short run, the Committee seeks to achieve bank reserve and money market conditions that are broadly consistent with the longer-run ranges for monetary aggregates cited above, while giving due regard to developing conditions in financial markets more gener­ ally. During the period until the next regular meeting, System open market operations shall be directed at maintaining the weekly-average Federal funds rate within the range of 7% to 8 per cent. In deciding on the specific objective for the Federal funds rate the Manager shall be guided mainly by the relationship between the latest estimates of annual rates of growth in the July-August period of M-l and M-2 and the following ranges of tolerance: 4 to 8 per cent for M-l and 6 to 10 per cent for M-2. If, giving approximately equal weight to M-l and M-2, their rates of growth appear to be close to or beyond the upper or lower limits of the indicated ranges, the objective for the funds rate shall be raised or lowered in an orderly fashion within its range. If the rates of growth in the aggregates appear to be above the upper limit or below the lower limit of the indicated ranges at a time when the objective for the funds rate has already been moved Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of FOMC 755 to the corresponding limit of its range, 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, Coldwell, Eastburn, Jackson, Partee, and Wallich. Votes against this action: Messrs. Baughman, Willes, and Winn. Absent and not voting: Mr. Gardner. Messrs. Baughman, Willes, and Winn dissented from this action because they favored more vigorous measures to curb the rates of growth in the monetary aggregates. All three preferred a directive that would have instructed the Manager to direct operations initially toward an increase in the Federal funds rate to 8 per cent and that would have provided for a further increase in the rate to a level of 8V4 per cent, if growth in the monetary aggregates over the July-August period appeared to be strong relative to the specified ranges. In addition, Mr. Willes favored specifying a 2-month range for M-l of 3 to 7 per cent, somewhat lower than the range agreed upon by the majority. 2. Authorization for Domestic Open Market Operations Paragraph 2 of the authorization for domestic open market opera­ tions authorizes the Federal Reserve Bank of New York (and, under certain circumstances, other Reserve Banks) to purchase short-term certificates of indebtedness directly from the Treasury, subject to certain conditions. This authorization is, in turn, based on a provision of Section 14(b) of the Federal Reserve Act authorizing the Federal Reserve Banks to buy and sell obligations of specified types “directly from or to the United States,” subject to certain conditions. It was noted at this meeting that, because the statutory authority in question had expired on April 30, 1978, paragraph 2 of the authorization had been in a state of de facto suspension since then, and that the paragraph would remain in suspension until the enactment of expected legislation extending the authority. 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

Law Department S ta tu te s , re g u la tio n s , in te rp r e ta tio n s , a n d d e c is io n s RESERVES OF MEMBER BANKS be acted upon promptly in order to avoid delay FOREIGN ACTIVITIES OF NATIONAL that would be inconsistent with the public interest, BANKS other than (i) those relating to rulemaking, (ii) those pertaining principally to monetary and credit The Board of Governors has amended its Regu­ policies, and (iii) those for which a statute ex­ lations D (Reserves of Member Banks) and M pressly requires the affirmative vote of more than (Foreign Activities of National Banks) to lower three members of the Board. This delegation of to zero per cent the reserve requirement percentage authority shall terminate June 30, 1980. that member banks must maintain against their Eurodollar borrowings. Effective October 5, 1978, §§ 204.5(c) of Reg­ RULES REGARDING ulation D (12 CFR 204.5(c)) and 213.7(a) of PUBLIC OBSERVATION OF MEETINGS Regulation M (12 CFR 213.7(a)) are amended by substituting the word “zero” for the number “4” The Board of Governors has amended its rules that appears immediately before the term “per regarding public observation of meetings to pre­ cent,” and § 213.7(b) of Regulation M (12 CFR scribe for the treatment of certain meetings of a 213.7(b)) is amended by substituting the word three member group under the Government in the “zero” for the word “one” that appears immedi­ Sunshine Act. ately before the term “per cent.” Effective August 2, 1978, Part 26lb.2 is amended by adding a new subsection 26lb.2(h) RULES REGARDING to read as follows: DELEGATION OF AUTHORITY The Board of Governors has amended its rules Section 26lb.2—Definitions regarding delegation of authority to delegate to any three Board members designated by the Chairman * * * * * authority to act on certain matters in the absence of a quorum of the Board where delay would be (h) “Committee” means the Action Committee inconsistent with the public interest. established pursuant to 12 CFR § 265.1a(c). Effective August 2, 1978, Part 265 is amended by adding a new § 265.1a(c) to read as follows: Section 26lb.7 (Meetings Closed to Public Ob­ Section 265.1a—Specific servation Under Expedited Procedures) is amended by inserting “and the Committee” after “Board.” Functions Delegated to Board Members * * * * * TRUTH IN LENDING (c) ANY THREE BOARD MEMBERS DESIG­ NATED FROM TIME TO TIME BY THE CHAIR­ MAN (the “Action Committee”) are authorized, The Board of Governors has amended its provi­ upon certification by the Secretary of the Board sion of Regulation Z concerning disclosure of of an absence of a quorum of the Board present varying payments scheduled to repay the indebt­ in person, to act by unanimous vote on any matter edness. that the Chairman of the Board has certified must Section 226.8 is amended as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 757 Section 226.8— Credit Other than Section 226.503— Minor Irregularities— Open End— Specific Disclosures Maximum Irregular Period Limits * * * * * (a) general rule . * * * Notwithstanding the provisions of paragraphs (1) and (2) of this subsection, a creditor may, in Notwithstanding the above or the language in any transaction in which the payments scheduled § 226.5(d) that limits the minor irregularities pro­ to repay the indebtedness vary, satisfy the re­ visions to transactions that are “otherwise payable quirements of § 226.8(b)(3) with respect to the in equal instalments scheduled at equal intervals,” number, amount, and due dates or periods of the following rule may apply. payments by disclosing the required information An initial payment period of 62 days or less on the reverse of the disclosure statement or on may be treated as though it were regular and an a separate page(s), provided that the following irregular initial payment or any portion thereof notice appears with the other required disclosures: resulting from the application of a rate to the “NOTICE: See [reverse side] [accompanying balance for such an irregular period may be disre­ statement] for the schedule of payments.” garded if: 1) the scheduled amortization of the obligation (the date from which the finance charge begins INTERPRETATION OF REGULATION Z to accrue to the date of the final scheduled pay­ The Board of Governors has amended a pre­ ment) is at least 10 years, and vious interpretation of Regulation Z (1969 B ul­ 2) the obligation is otherwise payable in letin 608) by adding to the end the following: monthly instalments. B A N K H O L D IN G C O M PA N Y A N D B A N K M E R G E R O R D E R S IS SU E D B Y T H E B O A R D O F G O V E R N O R S Applicant is a non-operating corporation formed Orders Under Section 3 for the purpose of acquiring Bank, which holds of Bank Holding Company Act $14.5 million in deposits, representing 0.1 per cent of deposits in commercial banks in Kentucky.1 Citizens Bankshares, Inc., Bank is the largest of four banks in the banking Louisville, Kentucky market approximated by McLean County, Ken­ tucky, and holds 44.2 per cent of deposits in Order Denying commercial banks in the market. Applicant pro­ Formation of Bank Holding Company poses a restructuring of Bank’s ownership from individuals to a corporation owned by the same Citizens Bankshares, Inc., Louisville, Ken­ individuals. Consummation of the proposal would tucky, has applied for the Board’s approval under have no adverse effect on competition. § 3(a)(1) of the Bank Holding Company Act (12 The Board has indicated on previous occasions U.S.C. § 1842(a)(1)) of formation of a bank that it believes that a holding company should holding company by acquiring 87 per cent (or constitute a source of financial and managerial more) of the voting shares of Citizens Deposit strength to its subsidiary banks and that the Board Bank, Calhoun, Kentucky (“Bank”). will closely examine the condition of an applicant Notice of the application, affording opportunity in each case with this consideration in mind.2 The for interested persons to submit comments and financial and managerial resources and future views, has been given in accordance with § 3(b) of the Act. The time for filing comments and views has expired, and the Board has considered the 1 All financial data are as of December 31, 1977. application and all comments received in light of 2 The Bank Holding Company Act requires that the Board in acting upon an application to acquire a bank, inquire into the factors set forth in § 3(c) of the Act (12 U.S.C. the financial and managerial resources of an applicant. While § 1842(c)). this proposal involves the transfer of ownership of Bank from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

758 Federal Reserve Bulletin □ September 1978 prospects of Applicant are entirely dependent on Voting for this action: Chairman Miller and Gover­ those of Bank. To acquire Bank, Applicant would nors Wallich, Coldwell, and Partee. Absent and not voting: Governors Gardner and Jackson. assume debt in excess of the price of the shares acquired. Bank is presently in satisfactory condi­ tion, but Applicant’s projections for the future (Signed) G riffith L. G arw ood, earnings performance of Bank are optimistic when [seal] Deputy Secretary of the Board. compared to its past record. Moreover, Appli­ cant’s projections of Bank’s future asset growth, and therefore of its future need for capital, appear unduly low in light of Bank’s past asset growth. It does not appear, using projections based on historical data or comparable data for other banks Commerce Bancshares, Inc., in the area, that Applicant can meet its debt service Kansas City, Missouri requirements while preserving the financial flexi­ Order Denying bility necessary to maintain an adequate capital Requests for Reconsideration and a Stay position for Bank. Financial resources of Appli­ cant and future prospects of Applicant and Bank The Manchester-Tower Grove Community Or­ are adverse to approval of this application. ganization, an affiliate of the Missouri Association Present management of Bank is considered of Community Organizations for Reform Now satisfactory, and Applicant proposes no changes (“ACORN”), has requested reconsideration and in Bank’s management. However, principals of a stay, pending reconsideration by the Board, and Applicant do not live in Calhoun and devote little Mr. William H. Kester, a resident of St. Louis, time to the management of Bank. The managerial Missouri, has requested reconsideration of the resources of Bank and Applicant lend no weight Order of the Board dated June 16, 1978, approving toward approval. the application of Commerce Bancshares, Inc., In connection with its proposal, Applicant plans Kansas City, Missouri, pursuant to section 3(a)(5) to extend maturities on certain types of credit to of the Bank Holding Company Act (12 U.S.C. customers of Bank. Bank’s present operation is § 1842(a)(5)) to merge with Manchester Financial consistent with the convenience and needs of its Corporation, St. Louis, Missouri. community, but the proposed changes lend only The Board has reviewed both requests for re­ slight weight toward approval of the application. consideration and finds that neither ACORN nor On the basis of all the facts of record, the Board Mr. Kester have presented relevant facts that, for finds that the adverse financial effects of Appli­ good cause shown, were not previously presented cant’s proposal far outweigh the slight benefits to to the Board. Moreover, it does not otherwise Bank’s community. Since competitive and mana­ appear to the Board that reconsideration of the gerial considerations lend no weight to approval Board’s Order of June 16, 1978, would be appro­ of the application, the balance of factors that the priate. Board is required to consider under § 3(c) of the Therefore, the Board hereby denies the requests Act is adverse to approval of the application. by ACORN and Mr. Kester for reconsideration Accordingly, it is the Board’s judgment that ap­ of the Board’s June 16, 1978 Order approving the proval would not be in the public interest and that merger of Commerce Bancshares, Inc. with Man­ the application should be denied. chester Financial Corporation. In view of the The application is denied for the reasons sum­ Board’s decision to deny the requests for recon­ marized above. By Order of the Board of Gover­ sideration, ACORN’s request for a stay, pending nors, effective August 11, 1978. reconsideration by the Board, is deemed moot. By order of the Board of Governors, effective August 16, 1978. individuals to a corporation owned by the same individuals, the Act requires that before an organization is permitted to Voting for this action: Governors Wallich, Coldwell, become a bank holding company and thus obtain the benefits Jackson, and Partee. Absent and not voting: Chairman associated with the holding company structure, it must secure Miller and Governor Gardner. the Board’s approval. Section 3(c) of the Act provides that the Board must, in every case, consider among other things, the financial and managerial resources of both the applicant (Signed) Griffith L. Garwood, company and the bank to be acquired. The Board’s action in this case is based on a consideration of such factors. [seal] Deputy Secretary of the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 759 Holladay Bancorporation, the bank to be acquired. In this regard, the Board Salt Lake City, Utah has indicated on previous occasions that a bank holding company should constitute a source of Order Denying financial and managerial strength to its subsidiary Formation of Bank Holding Company bank(s) and that the Board will closely examine the condition of an applicant in each case with Holladay Bancorporation, Salt Lake City, Utah, this consideration in mind. has applied for the Board’s approval under section With regard to financial considerations, the 3(a)(1) of the Bank Holding Company Act (12 Board notes that Applicant proposes to borrow U.S.C. § 1842(a)(1)) of formation of a bank approximately $300 thousand to acquire newly holding company by acquiring 80 per cent of the issued shares of Bank, thereby increasing Bank’s voting shares of Holladay Bank & Trust, Salt Lake capital. The Board believes that borrowing by a City, Utah (“Bank”). bank holding company in order to place additional Notice of the application, affording opportunity capital in its subsidiary bank(s) may be appropriate for interested persons to submit views and recom­ under certain circumstances. However, in this mendations, has been given in accordance with case, Applicant proposes to service the debt that section 3(b) of the Act (12 U.S.C. § 1842(b)). it would incur in order to increase Bank’s capital The time for filing views and recommendations over a ten-year period, primarily through divi­ has expired, and the Board has considered the dends to be paid by Bank. Although Bank’s application and all comments received in light of operations have been profitable since it opened for the factors set forth in section 3(c) of the Act (12 business in 1974, Applicant’s projections are U.S.C. § 1842(c)). viewed as overly optimistic. From the record, it Applicant, a nonoperating corporation with no appears that certain practices and policies in evi­ subsidiaries, was organized for the purpose of dence in Bank’s existing operations may adversely becoming a bank holding company through the affect the future earnings of Bank. At the same acquisition of Bank, which holds deposits of $13.1 time, the asset growth projected for Bank by million.1 Upon acquisition of Bank, Applicant Applicant is much less than the annual asset would control approximately 0.2 per cent of total growth rate of Bank since its establishment and deposits in commercial banks in the State of Utah. is less than the annual asset growth rate of all Bank is the seventeenth largest of twenty-seven banks in Utah from 1972 through 1976. In this banking organizations in the relevant banking regard, Applicant has submitted no persuasive market,2 and controls approximately 0.3 per cent evidence to support its projections of Bank’s asset of total deposits in commercial banks in the mar­ growth. In addition, Bank plans to establish branch ket. Inasmuch as the proposed transaction involves offices which, in the Board’s opinion, would in­ the transfer of ownership of Bank from individuals crease the likelihood that Bank’s assets would to a corporation owned by the same individuals grow at a rate far in excess of that projected by and principals of Applicant and bank are not Applicant. In summary, it is the Board’s view that principals of any other commercial bank, it ap­ Bank does not have the ability to realize the pears that consummation of this proposal would earnings necessary to service the debt that Appli­ not have an adverse effect upon existing or poten­ cant would incur as a part of this proposal without tial competition, nor would it increase the concen­ adversely affecting the capital position of Bank. tration of banking resources in any relevant area. Therefore, the Board concludes that considerations Accordingly, the Board concludes that competitive relating to financial resources and future prospects considerations of the instant proposal are consist­ weigh against approval of this application. ent with approval of the application. With regard to managerial considerations, the Section 3(c) of the Bank Holding Company Act operations of Bank are currently under the direc­ provides that the Board must, in every application tion of Applicant’s principals. The Board notes under section 3 of the Act, consider, among other that Applicant’s president, who serves as president things, the financial and managerial resources and of Bank, is president of an industrial bank located future prospects of both the applicant company and in the relevant market. Other principals of Appli­ cant are also principals of that industrial bank. The record indicates that the overall positions of both 1 All banking data are as of December 31, 1977. Bank and the industrial bank are the result of 2 The relevant banking market is approximated by the Salt Lake City SMSA. certain practices and policies employed by Appli­ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

760 Federal Reserve Bulletin □ September 1978 cant’s principals. The operations of Bank under Mankato Bankshares, Inc., the direction of Applicant’s principals during the Mankato, Kansas last four years are such that they do not warrant a favorable finding by the Board with respect to Order Approving Applicant’s and Bank’s managerial resources.3 Formation of Bank Holding Company Thus the Board is of the view that the record indicates that managerial factors should be re­ Mankato Bankshares, Inc., Mankato, Kansas, garded as an adverse consideration. Therefore, the has applied for the Board’s approval under Board concludes that considerations relating to § 3(a)(1) of the Bank Holding Company Act (12 managerial resources weigh against approval of U.S.C. § 1842(a)(1)) of formation of a bank this application. holding company by acquiring 93.33 per cent of No significant changes in Bank’s operations or the voting shares of First National Bank in Man­ in the services offered to its customers are antici­ kato, Mankato, Kansas (“Bank”). pated to follow from consummation of the pro­ Notice of the application, affording opportunity posed acquisition. Consequently, convenience and for interested persons to submit comments and needs factors lend no weight towards approval of views, has been given in accordance with § 3(b) this application. of the Act. The time for filing comments and views On the basis of the circumstances concerning has expired, and the Board has considered the this application, the Board concludes that the application and all comments received in light of banking factors involved in this proposal reflect the factors set forth in § 3(c) of the Act (12 U.S.C. adversely upon the financial and managerial re­ § 1842(c)). sources and future prospects of Applicant and Applicant, a non-operating corporation with no Bank.4 Such adverse considerations are not out­ subsidiaries, was organized for the purpose of weighed by any procompetitive effects or by ben­ becoming a bank holding company through the efits that would result in better serving the con­ acquisition of Bank ($5.1 million in deposits).1 venience and needs of the community. Accord­ Upon consummation of the proposal, Applicant ingly, it is the Board’s judgment that approval of would control a bank ranking 429th out of the 615 the application would not be in the public interest commercial banks in Kansas with 0.05 per cent and that the application should be denied. of total commercial bank deposits in the State. On the basis of the facts of record, the applica­ Bank, which is the seventh largest of twelve tion is denied for the reasons summarized above. banks in the Mankato banking market (the relevant By order of the Board of Governors, effective market),2 controls 7.4 per cent of total commercial August 25, 1978. bank deposits in the market. The subject proposal involves a restructuring of Bank’s ownership from individuals to a corporation owned by those same individuals. In analyzing the competitive effects Voting for this action: Chairman Miller and Gover­ of the proposal, it is necessary to consider that nors Wallich, Coldwell, Jackson, and Partee. Absent two of the principals of Applicant are also the and not voting: Governor Gardner. principal stockholders, officers and directors of two other one-bank holding companies with sub­ sidiary banks located in the Mankato banking market.3 These holding companies are Citizens (Signed) G riffith L. G arw ood, Insurance Agency, Inc., Jewell, Kansas, which [seal] Deputy Secretary of the Board. controls the sixth largest bank in the market, 1 All banking data are as of June 30, 1977, and reflect bank 3 The Board has previously indicated that it is reasonable holding company formations and acquisitions approved through to expect an applicant to demonstrate a record of satisfactory March 31, 1978. managerial performance. (See, e.g., the Board’s Order dated 2 The Mankato banking market is approximated by all of November 21, 1977, denying the formation of a bank holding Jewell County, Kansas, the towns of Courtland and Scandia company by Chickasha Bancshares, Inc., Chickasha, Okla­ in Republic County, Kansas, the town of Lebanon in Smith homa, 63 Federal Reserve Bulletin 1082 (1977).) County, Kansas, and the town of Superior in Nuckolls County, 4 The Board’s conclusions are based upon the facts of record Nebraska. presently contained in the record. Should Bank’s operations 3 See the Board’s Order of May 11, 1977, denying the show improvement, the Board would be receptive to consid­ application of Mahaska Investment Company, Oskaloosa, eration of an application at some time in the future. Iowa, to become a bank holding company (63 Federal Re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 761 Citizens State Bank, Jewell, Kansas ($5.1 million servicing requirements without adversely affecting in deposits) (“Citizens Bank”), and Lull and Rush the financial condition of Bank, particularly in Agency, Inc., Smith Center, Kansas (“Lull and light of Applicant’s commitment to inject addi­ Rush”), which controls the fifth largest bank in tional capital into Bank. The additional capital is the market, First National Bank of Lebanon, Le­ to be raised primarily by the issuance of nonvot­ banon, Kansas ($5.2 million in deposits) (“Le­ ing, cumulative, preferred stock of Applicant to banon Bank”). The same individuals also serve Lull and Rush, one of the two one-bank holding as officers and directors of both Citizens Bank and companies controlled by principals of Applicant.5 Lebanon Bank. A third bank located outside the Furthermore, the financial and managerial re­ Mankato banking market is also controlled by sources of the other banking organizations with these individuals. which Applicant’s principals are associated are Acquisition of control of Bank by Applicant’s regarded as satisfactory. Therefore, considerations principals in September 1977 eliminated some relating to banking factors are consistent with competition that existed between Bank and the approval of the subject application. other two banks controlled by the same individuals Since Applicant’s principals acquired Bank, in in the relevant market. However, it is the Board’s September 1977, Bank has increased the avail­ view that acquisition of control of Bank had only ability of loans and has offered a broader range slightly adverse effects on competition in the of time deposits. Bank has also increased its Mankato market. The Board’s finding on the com­ banking hours and proposes to hire an agricultural petitive effects of the subject proposal is based representative to assist Bank’s customers. These upon the facts of record, including the following convenience and needs factors are sufficient to considerations. The Mankato market is not highly outweigh any slightly adverse competitive effects concentrated; the four largest banks control 55.9 that might have resulted from acquisition of Bank per cent of total commercial bank deposits in the by Applicant’s principals. Based upon the forego­ market. Together, the three banks controlled by ing and other considerations reflected in the record, Applicant’s principals hold 22.5 per cent of the it is the Board’s judgment that the proposed ac­ total commercial bank deposits in the market, a quisition is in the public interest and that the market share which is only slightly larger than the application should be approved. market share held by each of the market’s two On the basis of the record, the application is largest banks. Moreover, even following consum­ approved for the reasons summarized above. The mation of the proposal there will remain nine other acquisition of Bank shall not be made before the banks in the market that are not associated with thirtieth calendar day following the effective date Applicant’s principals and that provide alternative of this Order or later than three months after the sources of banking services. In view of all the effective date of this Order, unless such period facts of record, it is the Board’s view that con­ is extended for good cause by the Board, or by summation of the proposal would have only the Federal Reserve Bank of Kansas City pursuant slightly adverse effects on competition in the rele­ to delegated authority. vant market. By order of the Board of Governors, effective The financial and managerial resources and fu­ August 28, 1978. ture prospects of Applicant are entirely dependent Voting for this action: Chairman Miller and Gover­ upon those of Bank.4 Although Applicant will nors Gardner, Wallich, Jackson, and Partee. Absent and incur debt in connection with the proposal, it not voting: Governor Coldwell. appears that Applicant will be able to meet its debt (Signed) Theodore E. A llison, [seal] Secretary of the Board. serve Bulletin 579 (1977)), and the Board’s Order of No­ vember 18, 1977, denying the application of Citizens Bancorp, Inc., Hartford City, Indiana, to become a bank holding com­ 5 The Board has received a written commitment from Lull pany (63 Federal Reserve Bulletin 1083 (1977)). and Rush that it will, subsequent to the consummation of the 4 Where principals of an applicant are engaged in establish­ proposal, treat Applicant as a subsidiary of Lull and Rush and ing or operating a chain of one-bank holding companies, the comply with the provisions of Federal banking law as if Board has indicated it is appropriate to analyze such organi­ Applicant were a subsidiary of Lull and Rush. In view of this zations by the standards normally applied to multi-bank holding commitment and the current applicability of § 23A of the companies. See the Board’s Order dated June 14, 1976, deny­ Federal Reserve Act (12 U.S.C. § 371(c)) to the relationships ing the application of Nebraska Banco., Inc., Ord, Nebraska, among Lull and Rush and Applicant, it is not necessary to to become a bank holding company (62 Federal Reserve determine at this time whether Lull and Rush controls Appli­ Bulletin 638 (1976)). cant under § 2(a)(2)(C) of the Bank Holding Company Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

762 Federal Reserve Bulletin □ September 1978 Mercantile Texas Corporation, this proposal the San Antonio market, including Dallas, Texas the southern quadrants, appears to be capable of supporting additional entrants. Accordingly, it ap­ Order Approving Acquisition of Bank pears from the facts of record that consummation of the proposal would not result in any adverse Mercantile Texas Corporation, Dallas, Texas, effects upon competition in any relevant area. a bank holding company within the meaning of Thus, competitive considerations are consistent the Bank Holding Company Act, has applied for with approval of the application. the Board’s approval under section 3(a)(3) of the The financial and managerial resources and fu­ Act (12 U.S.C. § 1842(a)(3)) to acquire 100 per ture prospects of Applicant and its subsidiary cent of the voting shares (less directors’ qualifying banks are regarded as generally satisfactory. Bank, shares) of South Park National Bank, San Antonio, as a proposed de novo bank, has no financial or Texas (“Bank”), a proposed de novo bank. operating history; however, its prospects as a Notice of the application, affording opportunity subsidiary of Applicant appear favorable. Accord­ for interested persons to submit comments and ingly, considerations relating to banking factors views has been given in accordance with section are consistent with approval of this application. 3(b) of the Act. The time for filing comments and The Board has received comments in opposition views has expired, and the Board has considered to the proposal from Protestants, whose banks are the application and all comments received includ­ the only other banks located in Bank’s proposed ing those of Union State Bank and Harlandale service area. Protestants assert that the southern Bank (“Protestants”), both located in San An­ quadrants of the city of San Antonio, in which tonio, Texas, and the Comptroller of the Currency, area Bank will be located, do not need and cannot in light of the factors set forth in section 3(c) of support another bank.3 Protestants contend that the Act (12 U.S.C. § 1842(c)). this area of San Antonio was experiencing slow Applicant is the fifth largest banking organi­ economic growth at the time Bank’s charter was zation in Texas and controls seven banking sub­ granted in 1974 and that economic conditions in sidiaries, with aggregate deposits of approximately this area have not changed since that time. Fur­ $2.2 billion, representing 4.0 per cent of total thermore, Protestants allege that the growth of deposits in commercial banks in the State.1 Since Bank would occur at the expense of Protestants’ this application involves the acquisition of a pro­ banks. posed de novo bank, consummation of the pro­ The San Antonio banking market appears mod­ posal would not immediately increase Applicant’s erately attractive to de novo entry. Although the share of deposits in commercial banks in Texas. population in the southern portion of San Antonio Bank is to be located in the San Antonio banking is not growing as rapidly as in the northern portion, market,2 in which Applicant ranks as the third the southern portion of the San Antonio banking largest out of 46 banking organizations, with two market still has far fewer banks per capita than subsidiary banks controlling 9.2 per cent of total does the market as a whole. Approximately onemarket deposits. The proposed site of Bank is in half of the population of the city of San Antonio the southern portion of the San Antonio market, lives in the city’s southern quadrants; however, approximately six miles from Applicant’s nearest only eight out of the 42 banks in San Antonio banking subsidiary, Alamo National Bank. Appli­ are located in this area, resulting in a populacant’s market share would not change initially as tion-to-banking office ratio for this area of 50,250. a result of approval of this application. Since Bank would be a de novo bank, there will be no elimi­ nation of existing competition. In addition, the 3 Protestants also maintain that Bank’s charter, granted by record indicates that even after consummation of the Comptroller of the Currency on May 16, 1974, does not “authorize ownership” of Bank by Applicant since the Comp­ troller’s charter approval was granted to Federated Capital Corporation, Houston, Texas (“FCC”), the prospective parent holding company for Bank. On December 30, 1976, FCC was 1 All deposit data are as of June 30, 1977, and reflect bank merged into Applicant with the Board’s prior approval. The holding company formations and acquisitions approved as of Comptroller of the Currency, the primary regulator of Bank, April 30, 1978. has continued to grant periodic extensions, first to FCC and 2 The San Antonio banking market is approximated by the then to Applicant, following the merger of FCC into Applicant. San Antonio Standard Metropolitan Statistical Area After considering the submissions of the Protestants, the (“SMSA”), which includes Bexar, Comal, and Guadalupe Comptroller, by letter of May 17, 1978, recommended ap­ Counties in Texas. proval of this application. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 763 This ratio is five times greater than the Statewide National Detroit Corporation, figure and 2.6 times greater than the ratio for the Detroit, Michigan San Antonio banking market. Moreover, the growth of deposits in Protestants’ banks has not Order Approving Acquisition of Bank lagged behind that of other banks in the market. Indeed, total deposits in the market doubled from National Detroit Corporation, Detroit, Michigan year-end 1970 to year-end 1976, and total deposits (“Applicant”), a bank holding company within for each of Protestants’ banks grew at or near the the meaning of the Bank Holding Company Act, market average during this period. Thus, it appears has applied for the Board’s approval under from these and other facts of record that the § 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to market, including the southern portion of the San acquire 80 per cent or more of the voting shares Antonio market, would be capable of supporting of First State Bank of Saginaw, Saginaw, Michi­ an additional bank without having a significant gan (“Bank”). adverse effect upon Protestants’ banks. Moreover, Notice of the application, affording opportunity the establishment of a de novo bank, the first new for interested persons to submit comments and entrant in the southeast quadrant of San Antonio views, has been given in accordance with § 3(b) since 1964, would provide a new and convenient of the Act. The time for filing comments and views banking alternative for that area’s residents. As has expired, and the Board has considered the a subsidiary of Applicant, Bank would have access application and all comments received, including to Applicant’s financial and managerial resources those of the Financial Institutions Bureau of the and would be able to institute and develop a full State of Michigan and Second National Corpora­ line of banking services. Thus, considerations re­ tion, Saginaw, Michigan (“Protestant”), in light lating to the convenience and needs of the com­ of the factors set forth in § 3(c) of the Act (12 munity to be served lend weight toward approval U.S.C. § 1842(c)). of the application. Accordingly, it is the Board’s Applicant, the largest banking organization in judgment that consummation of the transaction Michigan, controls six banks with total deposits would be in the public interest and that the appli­ of $5.3 billion,1 representing 15.8 per cent of total cation should be approved. deposits in commercial banks in the State. Despite On the basis of the record, the application is Protestant’s allegation that acquisition of Bank by approved for the reasons summarized above. The Applicant would have a significant adverse effect transaction shall not be made (a) before the thir­ upon the concentration of banking resources State­ tieth calendar day following the effective date of wide, it is the Board’s opinion that since acqui­ this Order or (b) later than three months after that sition of Bank ($64.5 million in deposits) would date, and (c) South Park National Bank, San increase Applicant’s shares of Statewide deposits Antonio, Texas, shall be opened for business not by less than 0.2 per cent and in view of the banking later than 6 months after the effective date of this structure in Michigan, such an acquisition would Order. Each of the periods described in (b) and have no significant adverse effect upon the con­ (c) may be extended for good cause by the Board, centration of banking resources in Michigan. or by the Federal Reserve Bank of Dallas, pursuant Bank is the seventh largest of twelve banking to delegated authority. organizations located in the Saginaw banking By order of the Board of Governors,4 effective market, and controls approximately 3.9 per cent August 4, 1978. (or $51.3 million) of market deposits.2 A branch office of Bank is located in Vassar, Michigan, Voting for this action: Chairman Miller and Gover­ which is in the separate Tuscola banking market, nors Wallich and Partee. Absent and not voting: Gov­ ernors Gardner, Coldwell, and Jackson. and holds 9.1 per cent (or $13.1 million) of market (Signed) G riffith L. G arw ood, 1 All banking data are as of June 30, 1977, and reflect bank [seal] Deputy Secretary of the Board. holding company formations and acquisitions approved through June 30, 1978. On February 16, 1978, Applicant received the Board’s prior approval to acquire NBD Portage Bank, Portage, Michigan, but this transaction has not been consummated to date. 2 The Saginaw banking market is approximated by Bay, 4 This action was taken pursuant to the Board’s Rules Midland and Gladwin Counties and all of Saginaw County Regarding Delegation of Authority (12 CFR § 261.1a(c)) by with the exception of the southeastern corner of that County, a committee of Board members. including the town of Frankenmuth. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

764 Federal Reserve Bulletin □ September 1978 deposits and ranks fourth among the eleven bank­ transaction shall not be made before the thirtieth ing organizations in that market.3 Protestant, the calendar day following the effective date of this largest banking organization in the Saginaw mar­ Order or later than three months after that date, ket, contends that consummation of this proposal unless such period is extended for good cause by would have adverse effects on competition in the the Board, or by the Federal Reserve Bank of Saginaw market and that Applicant should enter Chicago pursuant to delegated authority. the market de novo. Applicant is not presently By order of the Board of Governors,4 effective represented in either the Saginaw or Tuscola August 7, 1978. banking markets. Applicant’s subsidiary bank clo­ Voting for this action: Chairman Miller and Gover­ sest to Bank is located approximately 65 miles nors Wallich and Partee. Absent and not voting: Gov­ south of Bank’s Vassar office, in Oakland County. ernors Gardner, Coldwell and Jackson. It appears that in view of the distance between Bank and Applicant’s nearest subsidiary bank, and (Signed) G riffith L. G arw ood, other facts of record, no significant competition [seal] Deputy Secretary of the Board. exists between Bank and Applicant’s banking subsidiaries. Furthermore, the Saginaw banking market is not considered to be particularly attrac­ 4 This action was taken pursuant to the Board’s Rules tive for de novo entry since both its per capita Regarding Delegation of Authority (12 CFR § 261.1a(c» by a committee of Board members. income and its deposits per banking office are below the State average. Moreover, even after consummation of the subject proposal, there will remain in both the Tuscola and Saginaw markets Order U nder Sections 3 & 4 a number of other points of entry for banking of Bank Holding Company Act organizations not currently represented in these markets. Thus, consummation of this proposal Moline Manufacturing Company, would have only a slightly adverse effect on po­ Moline, Illinois tential competition. Order Approving Formation of The financial and managerial resources of Ap­ Bank Holding Company plicant, its subsidiaries, and Bank are satisfactory and Engagement in Leasing Activity and the future prospects of each appear favorable. Thus, banking factors are consistent with approval Moline Manufacturing Company, Moline, Illi­ of the application. Following consummation of the nois, has applied for the Board’s approval under proposal, Applicant will assist Bank in offering section 3(a)(1) of the Bank Holding Company Act trust services to its customers. Bank will also offer (12 U.S.C. § 1842(a)(1)) of formation of a bank continuous compounding of interest on statement holding company by acquiring 95.68 per cent of savings accounts and more flexible individual re­ the voting shares of Southeast National Bank of tirement accounts as well as other services not Moline, Moline, Illinois (“Bank”).1 Applicant presently provided by Bank. While Protestant has also applied under section 4(c)(8) of the Act contends that Bank could implement these services (12 U.S.C. § 1843(c)(8)) and section 225.4(b)(2) without Applicant’s intervention, Bank has not of the Board’s Regulation Y (12 CFR done so in the past. Thus, the Board concludes § 225.4(b)(2)) for permission to continue to en­ that considerations relating to the convenience and gage in the activity of leasing real and personal needs of the communities to be served lend suffi­ property. Such activity has been determined by cient weight toward approval as to outweigh the the Board to be closely related to banking (12 CFR slightly adverse competitive effects associated with § 225.4(a)(6)(a) and (b)). this proposal. It is the Board’s judgment that the Notice of the applications, affording opportunity proposed acquisition would be in the public inter­ for interested persons to submit views and recom­ est and that the application should be approved. On the basis of the record, the application is approved for the reasons summarized above. The 1 The Board notes that Applicant does not engage in any nonbanking activities other than leasing real and personal property. Applicant has committed to the Board that it will change its name within 90 days of the effective date of this 3 The Tuscola banking market is approximated by all of Order in order to avoid any confusion concerning the nature Tuscola County except the southwestern corner of that county. of its business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 765 mendations, has been given in accordance with application. While no major changes in Bank’s sections 3 and 4 of the Act. The time for filing services are contemplated, from the record it ap­ views and recommendations has expired, and the pears that considerations relating to the conven­ Board has considered the applications and all ience and needs of the community to be served comments received in light of the factors set forth are likewise consistent with approval of the appli­ in section 3(c) of the Act (12 U.S.C. § 1842(c)) cation. Accordingly, it is the Board’s judgment and the considerations set forth in section 4(c)(8) that consummation of the proposed transaction to of the Act. form a bank holding company would be in the Bank, with deposits of 29.4 million,2 is the public interest and that the application should be thirteenth largest of thirty-two banking organi­ approved. zations in the relevant banking market,3 and holds In connection with its application to become a approximately 2.2 per cent of total market depos­ bank holding company, Applicant also has applied its. Upon acquisition of Bank, Applicant would for the Board’s approval to continue to engage in control approximately 0.4 per cent of the total the activity of leasing real and personal property. deposits in commercial banks in the State of Illi­ Applicant presently leases real estate and manu­ nois. Inasmuch as the proposed transaction to form facturing facilities to an industrial concern and at a bank holding company is merely a reorganization the expiration of the term of the lease it is antici­ whereby the shareholders who presently control pated that the property will be purchased by the Bank will control it indirectly through Applicant, lessee. Furthermore, since Applicant presently en­ consummation of the proposal would not have any gages in such activity, it does not appear that adverse effects upon existing or potential competi­ approval of Applicant’s proposal to continue to tion nor would it increase the concentration of engage in the activity would have any adverse banking resources in the relevant banking market.4 effect upon existing or potential competition. Therefore, the Board concludes that competitive Moreover, Applicant has committed that it will considerations are consistent with approval of the not engage in any other lease transactions without application to form a bank holding company. obtaining the Board’s prior approval. Furthermore The financial and managerial resources of Ap­ there is no evidence in the record indicating that plicant and Bank are regarded as satisfactory and consummation of the proposal to continue to en­ their future prospects appear favorable. While gage in the leasing activity would result in any Applicant will incur some debt in connection with undue concentration of resources, decreased or this proposal to form a bank holding company, unfair competition, conflicts of interests, unsound it appears that Applicant will be able to meet its banking practices, or other adverse effects on the debt service requirements through dividends from public interest. Based on the foregoing and other Bank and revenues derived from its leasing activity facts of record, the Board has determined that the without adversely affecting the financial condition balance of public interest factors the Board must of Bank. Accordingly, the Board regards banking consider under section 4(c)(8) favor approval of factors as being consistent with approval of the Applicant’s proposal, and that the application to continue to engage in the real and personal prop­ erty leasing activity should be approved. 2 All banking data are as of June 30, 1977. Accordingly, the applications are approved for 3 The relevant banking market is approximated by the Dav­ enport, Iowa/Rock Island, Illinois RMA, plus the remainder the reasons summarized above. The acquisition of of Scott County, Iowa, and Durant, Iowa, located in the Bank shall not be made before the thirtieth calen­ southeastern corner of Cedar County, Iowa. 4 The Board notes that Applicant’s principals and share­ dar day following the effective date of this Order, holders also own 100 per cent of the outstanding voting shares or later than three months after the effective date of McLaughlin Body Company, Moline, Illinois (“McLaugh­ of this Order unless such period is extended for lin”), which in turn owns 10.5 per cent of the voting shares of First National Bank of Moline, Moline, Illinois (“First good cause by the Board or by the Federal Reserve National”), and that a principal of Applicant serves as a Bank of Chicago pursuant to delegated authority. director of First National. However, other directors of First The determination as to Applicant’s nonbanking National, who are not affiliated with McLaughlin or Applicant, hold a majority of the voting shares of that bank. Thus, from activity is subject to the conditions set forth in the facts of record it does not appear that First National is section 224.4(c) of Regulation Y and the Board’s controlled by Applicant or McLaughlin. Furthermore, the Board has received a commitment that Applicant’s principal authority to require reports by, and make exami­ will resign his positions as a director, officer and employee nation of, holding companies and their subsidiaries of Applicant prior to consummation of Applicant’s acquisition and to require such modification or termination of of Bank so that a violation of the provisions of the Board’s Regulation L (12 CFR § 212) will not occur. the activities of a bank holding company or any Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

766 Federal Reserve Bulletin □ September 1978 of its subsidiaries as the Board finds necessary to Now, however, the Independent Bankers Asso­ assure compliance with the provisions and pur­ ciation of Georgia (“IB AG”), which brought the poses of the Act and the Board’s regulations issued suit leading to the Court of Appeals’ order that thereunder, or to prevent evasion thereof. a hearing be held, has indicated that it no longer By order of the Board of Governors,5 effective desires to protest the subject application. IB AG August 7, 1978. indicates that changes made in the Code of Georgia since the Court of Appeals’ decision render moot Voting for this action: Chairman Miller and Gover­ its previous claim that the activities of C&S Mort­ nors Wallich and Partee. Absent and not voting: Gov­ ernors Gardner, Coldwell and Jackson. gage at the eight Georgia locations in which it commenced operations pursuant to the Board’s (Signed) G riffith L. G arw ood, Order violate Georgia’s branch banking law. C&S [seal] Deputy Secretary of the Board. Holding has indicated that it does not desire to commence mortgage banking operations at the 5 This action was taken pursuant to the Board’s Rules remaining three Georgia locations (Rome, Co­ Regarding Delegation of Authority (12 CFR § 261.1a(c» by lumbus, and Dalton) and has withdrawn its request a committee of Board members. to the Board for permission to do so. In addition, as a result of a corporate reorganization entered into subsequent to the Court of Appeals’ Order, Order Under Section 4 the bulk of the mortgage banking activities here­ of Bank Holding Company Act tofore engaged in by C&S Mortgage were trans­ Notice of Dismissal of Proceeding ferred to an operations subsidiary of The Citizens and Southern National Bank, Atlanta, Georgia, On February 13, 1976, the Board of Gover­ C&S Holding’s lead bank. In addition, a small nors of the Federal Reserve System entered an portion of the mortgage loans originated by C&S Order (41 Federal Register 1466) directing that Mortgage, for the most part second mortgage a public hearing be held on the application of loans, were transferred to other subsidiaries of Citizens and Southern Holding Company, Atlanta, C&S Holding, whose status was not at issue before Georgia (“C&S Holding”), to establish Citizens the Board or before the Court of Appeals. This and Southern Mortgage Company, Atlanta, Geor­ corporate reorganization and creation of an opera­ gia (“C&S Mortgage”), and to engage thereby tions subsidiary of Citizens and Southern National de novo in mortgage banking and other activities Bank was approved by the Comptroller of the pursuant to section 4(c)(8) of the Bank Holding Currency pursuant to 12 CFR § 7.7376 after Company Act of 1956, as amended (12 U.S.C. appropriate consultations among C&S Holding, § 1843(c)(8)). The Board had previously approved the Comptroller, and the Federal Reserve Bank C&S Holding’s application on August 31, 1973, of Atlanta. but upon judicial review was directed by the In light of the above corporate reorganization United States Court of Appeals for the District of and IB AG’s withdrawal of its protest of the appli­ Columbia Circuit to conduct a hearing on the cation, the Board believes that the underlying application. No request for a stay having been filed application is substantially moot. In reaching this with either the Board or the Court of Appeals, conclusion, the Board is mindful of the fact that C&S Holding has proceeded to engage in the a substantial portion of the loans originated by mortgage banking business by opening offices at C&S Mortgage during the period of its operations eight of the eleven locations that were the subject pursuant to the Board’s previous order in this case of its application.1 remain within the C&S system. However, such operations were lawfully engaged in under author­ ity of the Board’s previous order, and nothing in 1 The C&S Mortgage identified in this order is the company the present record would lead the Board to deny created by C&S Holding under authority of the Board’s pre­ the application were it not considered moot. vious order approving the subject application. 38 Fed. Reg. 24932 (1973). As explained herein, substantially all of the The Administrative Law Judge, the Honorable assets of this C&S Mortgage have been transferred to Citizens James W. Mast, has issued an order terminating & Southern Financial Corporation, an operations subsidiary of Citizens and Southern National Bank. The company within the hearing in this matter subject to approval by the C&S System at present that bears the title C&S Mortgage the Board. C&S Holding and IB AG have pre­ conducts mortgage banking operations outside of Georgia at sented for the Board’s consideration a settlement locations not at issue in the present case. This order does not deal with the conduct of operations by the latter company. agreement that terminates the hearing and leaves Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 767 the underlying application, as amended, for deter­ Notice of an opportunity for hearing with re­ mination by the Board on its merits. The Assistant spect to Summit’s request for a determination Attorney General, Antitrust Division, U.S. under section 2(g)(3) was published in the Federal Department of Justice, has submitted an opinion Register on April 5, 1977 (42 Fed. Reg. 18129 indicating that the proposed settlement would not (1977)). The time provided for requesting a hear­ violate the Antitrust Laws of the United States. ing has expired. No such request has been received The Board hereby approves the Administrative by the Board. Summit has submitted to the Board Law Judge’s action terminating the hearing in the evidence to show that it is not in fact capable of captioned matter; ^nd the Board finds that the controlling Mr. Waters or Bank, and the Board parties’ settlement agreement and the intervening has received no contradictory evidence. It is corporate reorganization render this application hereby determined that Summit is not in fact moot. Accordingly, the proceedings in this matter capable of controlling either Mr. Waters or Bank. are hereby terminated and the application dis­ This determination is based upon the evidence of missed as moot. record in this matter that reflects the following: By Order of the Board of Governors, effective That the sale of Bank’s shares by Summit was August 1, 1978. the result of arm’s length negotiations, that Mr. Waters’ purchase appears to have been an invest­ Voting for this action: Chairman Miller and Gover­ ment for his own account and not as a nominee nors Wallich, Coldwell, and Partee. Absent and not or representative of any other party, that Mr. voting: Governors Gardner and Jackson. Waters had no previous relationship or affiliation (Signed) G riffith L. G arw ood, with Summit or its affiliates, and that all manage­ [seal] Deputy Secretary of the Board. ment and director interlocks between Summit and its affiliates, on the one hand, and Bank, on the other, have been terminated. Mr. Waters executed two promissory notes to Summit secured by deeds Order Under Section 2 of trust on real estate, and by securities other than of Bank Holding Company Act those of Bank held by Mr. Waters. It further Summit Home Insurance Company, appears that Mr. Waters has sufficient personal Minneapolis, Minnesota resources to enable him to resist any attempt to control him or influence his management of Bank, Summit Home Insurance Company, Min­ and that the terms governing the debt relationship neapolis, Minnesota (“Summit”), a bank holding are limited to those reasonably required in accor­ company within the meaning of § 2(a) of the Bank dance with sound and accepted banking practices, Holding Company Act of 1956, as amended (12 to protect Summit’s security. Finally, Summit has U.S.C. § 1841 et seq.) (the “Act”), has requested undertaken that it will not attempt to exercise a determination, pursuant to the provisions of control over Waters or Bank, and Bank has re­ section 2(g)(3) of the Act (12 U.S.C. solved that Summit retains no interest in or control § 1841(g)(3)), that with respect to the sale by over Bank. Summit of approximately 87 per cent of the out­ Accordingly, it is ordered, that the request of standing voting shares of Colfax National Bank, Summit for a determination pursuant to section Denver, Colorado (“Bank”), to Mr. Thomas A. 2(g)(3) is granted. This determination is based on Waters of Denver, Colorado, Summit is not in fact representations made to the Board by Summit, capable of controlling Mr. Thomas A. Waters Bank, and Mr. Waters. In the event that the Board notwithstanding the fact that Mr. Waters is in­ should hereafter determine that facts material to debted to Summit in connection with his purchase this determination are otherwise than as repre­ of Summit’s stock interest in Bank. sented, or that Summit, Bank, or Waters have Under the provisions of section 2(g)(3) of the failed to disclose to the Board other material facts, Act, shares transferred after January 1, 1966, by this determination may be revoked, and any any bank holding company to a transferee that is change in the facts and circumstances relied upon indebted to the transferor are deemed to be indi­ by the Board in making this determination would rectly owned or controlled by the transferor unless result in the Board reconsidering the determination the Board, after opportunity for hearing, deter­ made herein. mines that the transferor is not in fact capable of By order of the Board of Governors, acting controlling the transferee. through its General Counsel, pursuant to delegated Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

768 Federal Reserve Bulletin □ September 1978 On the basis of the foregoing information, it authority (12 CFR § 265.2(b)(1)), effective Au­ is hereby certified that Serco has (before the expi­ gust 30, 1978. ration of the period prohibited property is permit­ ted under the BHC Act to be held by a bank (Signed) G riffith L. G arw ood, holding company) ceased to be a bank holding [seal] Deputy Secretary of the Board. company. This certification is based upon the repre­ sentations made to the Board by Serco and upon the facts set forth above. In the event the Board Certifications Under the should hereafter determine that facts material to Bank Holding Company Tax Act of 1976 this certification are otherwise than as represented by Serco, or that Serco has failed to disclose to Serco Investment Company, the Board other material facts, it may revoke this Prairie Village, Kansas certification. By order of the Board of Governors, acting Final Certification Pursuant to the through its General Counsel pursuant to delegated Bank Holding Company Tax Act of 1976 authority (12 CFR § 265.2(b)(3)), effective Au­ gust 1, 1978. Serco Investment Company, Prairie Village, Kansas (“Serco”), has requested a final certifi­ (Signed) G riffith L. G arw ood, cation pursuant to section 1101(e) of the Internal [seal] Deputy Secretary of the Board. Revenue Code (“Code”), as amended by section 2(a) of the Bank Holding Company Tax Act of 1976, that it has (before the expiration of the Time Holdings, Inc., period prohibited property is permitted under the Milwaukee, Wisconsin Bank Holding Company Act (12 U.S.C. § 1841 et. seq.) (“BHC Act”) to be held by a bank Final Certification Pursuant to the holding company) ceased to be a bank holding Bank Holding Company Tax Act of 1976 company. In connection with this request, the following Time Holdings, Inc., Milwaukee, Wisconsin information is deemed relevant for purposes of (“Time”) has requested a final certification pur­ issuing the requested certification: 1 suant to section 1101(e)(2) of the Internal Revenue 1. Effective May 30, 1978, the Board issued Code (“Code”), as amended by section 3(a) of a prior certification pursuant to section 1101(b) of the Bank Holding Company Tax Act of 1976, that the Code with respect to the proposed divestiture it has (before the expiration of the period prohib­ of all of the 102,895 voting shares of Southgate ited property is permitted under the Bank Holding State Bank and Trust Company, Prairie Village, Company Act (12 U.S.C. § 1841 et seq.) (“BHC Kansas (“Bank”), held by Serco, through the pro Act”) to be held by a bank holding company) rata distribution of such shares to the sole share­ ceased to be a bank holding company. holder of Serco. The Board’s Order certified that: In connection with this request, the following A. Serco is a qualified bank holding cor­ information is deemed relevant for purposes of poration within the meaning of section 1103(b) of issuing the requested certification: 1 the Code, and satisfies the requirements of that 1. Effective December 21, 1977, the Board section; issued a prior certification pursuant to section B. the 102,895 shares of Bank that Serco 1101(b) of the Code with respect to the proposed proposes to distribute are all or part of the property divestiture of all of the 362,900 issued and out­ by reason of which Serco controls (within the standing shares of Bank of Commerce, Milwau­ meaning of section 2(a) of the BHC Act) a bank kee, Wisconsin (“Bank”), held by Time through or a bank holding company; and the pro rata distribution of such shares to the C. the distribution of such shares is necessary shareholders of Time. The Board’s order certified or appropriate to effectuate the policies of the BHC that: Act. (A) Time is a qualified bank holding cor­ 2. On June 15, 1978, Serco distributed the poration within the meaning of subsection (b) of 102,895 shares of the Bank to the sole shareholder section 1103 of the Code and satisfies the require­ of Serco. ments of that subsection; 1 This information derives from Serco’s communications 1 This information derives from Time’s correspondence with with the Board concerning its request for this certification, the Board concerning its request for this certification, Time’s Serco’s Registration Statement filed with the Board pursuant Registration Statement filed with the Board pursuant to the to the BHC Act, and other records of the Board. BHC Act and other records of the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 769 (B) The 362,900 shares of Bank that Time sentations made to the Board by Time and upon proposes to distribute are all or part of the property the facts set forth above. In the event the Board by reason of which Time controls (within the should hereafter determine that facts material to meaning of section 2(a) of the BHC Act) a bank this certification are otherwise than represented by holding company; and Time, or that Time has failed to disclose to the (C) The distribution of such shares is neces­ Board other material facts, it may revoke this sary or appropriate to effectuate section 4 of the certification. BHC Act. By order of the Board of Governors acting 2. On January 6, 1978, Time distributed 362,- through its General Counsel pursuant to delegated 900 shares, representing 96.773 per cent of the authority (12 CFR § 265.2(b)(3)) effective August outstanding shares, of Bank on a pro rata basis 3, 1978. to Time’s stockholders. At that time certain offi­ cer/directors of Time were also officer/directors (Signed) Theodore E. A llison, of Bank. Officer/directors of Time also received [seal] Secretary of the Board. approximately 25 per cent of Bank’s outstanding shares in the pro rata distribution. As a result of the subsequent resignation of certain officer/direc­ Voyageur Development Corporation, tors of Time and its subsidiaries, however, no Park Falls, Wisconsin person holding an office or position (including an honorary or advisory position) with Time or any Prior Certification Pursuant to the of its subsidiaries as an officer, director, policy Bank Holding Company Tax Act of 1976 making employee or consultant, or who performs, (directly, or through an agent, representative or Voyageur Development Corporation, Park nominee) functions comparable to those normally Falls, Wisconsin (“Voyageur”), has requested a associated with such office or position, holds any prior certification pursuant to § 6158(a) of the such position with Bank, its subsidiaries, or any Internal Revenue Code (“Code”), as amended by other bank. The current officer/directors of Time § 3(a) of the Bank Holding Company Tax Act of own approximately three per cent of Bank’s 1976 (“Tax Act”), that the proposed sale by shares. Voyageur of substantially all the assets of Park 3. On January 9, 1978, AMEV American, Inc., Falls Insurance Agency, Park Falls, Wisconsin a wholly owned subsidiary of N.V. AMEV, a Dutch Corporation, was merged into Time. Each (“Park Falls”), a general insurance agency, is of Time’s shareholders received cash for their necessary or appropriate to effectuate § 4 of the shares of Time and each share of AMEV America, Bank Holding Company Act (12 U.S.C. § 1843) Inc. was converted to a share of Time. Thus, Time (“BHC Act”). became a wholly owned subsidiary of N.V. In connection with this request, the following AMEV. information is deemed relevant for purposes of 4. Neither Time nor its subsidiaries holds any issuing the requested certification: 1 interest in Bank, any other bank or any company 1. Voyageur is a corporation organized under that controls a bank. the laws of the State of Wisconsin on October 12, 5. Bank does not hold any interest in Time or 1967. E. J. Aschenbrener Company, Park Falls, its subsidiaries. Wisconsin (“Aschenbrener”), was a corporation 6. Time has represented, that it does not, di­ organized under the laws of the State of Wiscon­ rectly or indirectly, exercise, or have the power sin. On September 30, 1969, Voyageur merged to exercise, a controlling influence over the man­ with Aschenbrener and became the successor by agement or policies of Bank, any other bank or merger to Aschenbrener, which ceased to exist any company that controls a bank.2 after that date. On the basis of the foregoing information, it 2. On March 5, 1964, Aschenbrener acquired is hereby certified that Time has (before the expi­ 847 shares, representing 84.7 per cent of the ration of the period prohibited property is permit­ outstanding voting shares, of Park Falls State ted under the BHC Act to be held by a bank Bank, Park Falls, Wisconsin (“Bank”). Voyageur holding company) ceased to be a bank holding acquired 70 shares, representing 7 per cent of the company. outstanding voting shares, of Bank, shortly before This certification is based upon the repre­ its merger with Aschenbrener in September 1969, 2 Because of the facts of this case, including the fact that 1 This information is derived from Voyageur’s corre­ there are no interlocking officer, directpr or employee relation­ spondence with the Board concerning its request for this ships between Time and Bank, including their respective sub­ certification, Voyageur’s Registration Statement filed with the sidiaries, a formal determination pursuant to section 2(g)(3) Board pursuant to the BHC Act, and the other records of the of the BHC Act is not necessary. Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

770 Federal Reserve Bulletin □ September 1978 and succeeded to Aschenbrener’s ownership of the ing honorary or advisory director), or employee 847 shares of Bank. with policy-making functions of Voyageur or any 3. Voyageur succeeded to Aschenbrener’s of its subsidiaries. Keyes does not hold any interest ownership of the E. J. Aschenbrener Insurance in Voyageur or any of its subsidiaries. Keyes is Agency, Inc., Park Falls, Wisconsin (“Agency”). not indebted to Voyageur or any of its subsidiaries, In 1970, Agency changed its name to Park Falls and would not become indebted to Voyageur or Insurance Agency (“Park Falls”). any of its subsidiaries as a result of the subject 4. Voyageur became a bank holding company proposal. on December 31, 1970, as a result of the 1970 On the basis of the foregoing information, it Amendments to the BHC Act by virtue of its is hereby certified that: ownership and control at that time of more than (A) Voyageur is a qualified bank holding cor­ 25 per cent of the outstanding voting shares of poration, within the meaning of § 6158(F)(1) and Bank, and it registered as such with the Board subsection (b) of section 1103 of the Code, and on August 30, 1971. Voyageur would have been satisfies the requirements of that subsection: a bank holding company on July 7, 1970, if the (B) the assets of Park Falls proposed to be sold BHC Act Amendments of 1970 had been in effect are “prohibited property” within the meaning of on such date, by virtue of its ownership and control §§ 6158(F)(2) and 1103(c) of the Code; and on that date, of more than 25 per cent of the (C) the sale of substantially all the assets of outstanding voting shares of Bank. Voyageur Park Falls is necessary or appropriate to effectuate presently owns 1551 shares, representing 96.9 per § 4 of the BHC Act. cent of the outstanding voting shares of Bank. This certification is based upon the repre­ 5. Voyageur holds property acquired by it on sentations made to the Board by Voyageur and or before July 7, 1970, the disposition of which upon the facts set forth above. In the event the would be necessary or appropriate to effectuate Board should hereafter determine that facts mate­ § 4 of the BHC Act if Voyageur were to continue rial to this certification are otherwise than as re­ to be a bank holding company beyond December presented by Voyageur, or that Voyageur has 31, 1980, which property is “prohibited property” failed to disclose to the Board other material facts, within the meaning of §§ 6158(F)(2) and 1103(c) it may revoke this certification. of the Code. By order of the Board of Governors acting 6. Voyageur proposes to sell substantially all through its Acting General Counsel, pursuant to of the assets of Park Falls that it owns to Mr. delegated authority (12 CFR § 265.2(b)(3)), ef­ Robert Keyes in exchange for cash in an amount fective August 28, 1978. equal to twice the annual commissions on insur­ ance sales plus receivables in Park Falls at the closing of the sale. (Signed) G riffith L. G arw ood, 7. Mr. Keyes is not an officer, director (includ­ [seal] Deputy Secretary of the Board. ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors During August 1978, the Board of Governors approved the applications listed below. Copies are available upon request to Publications Services, Division of Administrative Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Board action (Effective Applicant Bank(s) date) First Alabama Bancshares, Inc., East Lauderdale Banking August 11, 1978 Birmingham, Alabama Company, Rogers ville, Alabama First State Bank of Cullman Cullman, Alabama Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 111 Section 3—Continued Board action (Effective Applicant Bank(s) date) FIRST EVERGREEN CORPORATION, First National Bank of August 9, 1978 Evergreen Park, Illinois Evergreen Park, Evergreen Park, Illinois First Kansas Bancorp., First National Bank of August 9, 1978 Leavenworth, Kansas Leavenworth, Leavenworth, Texas Harrogate Corporation, Commercial Bank of August 4, 1978 Harrogate, Tennessee Claiborne County, Harrogate, Tennessee Indian Head Banks, Inc., The Carroll County Trust August 25,* 1978 Nashua, New Hampshire Company, Conway, New Hampshire Section 4 Nonbanking Board action company (Effective Applicant Bank(s) (or activity) date) Bank Land Company, agent for sale of in­ August 28, 1978 Denver, Colorado surance directly re­ lated to extensions of credit by its sub­ sidiary bank Capitol Bancor­ Globe Financial Ser­ August 21, 1978 poration, vices, Inc., Boston, Boston, Massa­ Massachusetts chusetts Sections 3 and 4 Nonbanking Board action company (Effective Applicant Bank(s) (or activity) date) First Chandler The First to engage in the August 29, 1978 Corp., Chand­ National Bank activity of acting ler, Oklahoma of Chandler, as agent or broker Oklahoma for the sale of in­ surance Forest City Forest City Bank to engage in the August 16, 1978 Limited, Des and Trust Com­ sale of certain Moines, Iowa pany, Forest types of credit- City, Iowa related insurance First Corpor­ The First National ation, Bank of Henderson, Henderson, Henderson, Kentucky Kentucky Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

772 Federal Reserve Bulletin □ September 1978 Section 3 and A—Continued Board action (Effective Applicant Bank(s) date) First Corpor­ Peoples Security In­ August 1, 1978 ation, vestment, Inc., Henderson, Madisonville, Ken­ Kentucky tucky Peoples Security Finance Company, Inc., Madi­ sonville, Kentucky ORDER APPROVED UNDER BANK MERGER ACT Effective Applicant Bank(s) date The Conway Trust Company, The Carroll County Trust August 25, 1978 Conway, New Hampshire Company, Conway, New Hampshire By Federal Reserve Banks A recent application has been approved by a Federal Reserve Bank as listed below. Copies of the order are available upon request to the Reserve Bank. Section 3 Reserve Effective Applicant Bank(s) Bank date Citizens and Southern Corpora­ Carolina Credit Life Richmond August 3, 1978 tion, Charleston, South Insurance Company, Carolina Phoenix, Arizona 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. Cradel v. The United States and the Reserve Independent Bankers Association of Texas v. Bank of Philadelphia, filed July 1978, First National Bank in Dallas, et al., filed U.S.D.C. for the Eastern District of Penn­ July 1978, U.S.C.A. for the Northern Dis­ sylvania. trict of Texas. Beckley v. Board of Governors, filed July Mid-Nebraska Bancshares, Inc. v. Board of 1978, U.S.D.C. for the Northern District of Governors, filed July 1978, U.S.C.A. for the Illinois. District of Columbia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Law Department 773 NCNB Corporation v. Board of Governors, October 1977, U.S.C.A. for the District of filed June 1978, U.S.C.A. for the Fourth Columbia. Circuit. Investment Company Institute v. Board of NCNB Corporation v. Board of Governors, Governors, filed September 1977, U.S.C.A. filed June 1978, U.S.C.A. for the Fourth for the District of Columbia. Circuit. BankAmerica Corporation v. Board of Gov­ Ellis Banking Corporation v. Board of Gov­ ernors, filed May 1977, U.S.C.A. for the ernors, filed May 1978, U.S.C.A. for the Northern District of California. Fifth Circuit. BankAmerica Corporation v. Board of Gov­ United States League of Savings Associations ernors, filed May 1977, U.S.C.A. for the v. Board of Governors, filed May 1978, Ninth Circuit. U.S.D.C. for the District of Columbia. National Automobile Dealers Association, Inc. Hawkeye Bancorporation v. Board of Gov­ v. Board of Governors, filed November ernors, filed April 1978, U.S.C.A. for the 1976, U.S.C.A. for the District of Columbia. Eighth Circuit. Central Wisconsin Bankshares, Inc. v. Board Dakota Bankshares, Inc. v. Board of Gov­ of Governors, filed June 1976, U.S.C.A. for ernors, filed April 1978, U.S.C.A. for the the Seventh Circuit. Eighth Circuit. Memphis Trust Company v. Board of Gov­ Citicorp v. Board of Governors, filed March ernors, filed February 1976, U.S.D.C. for 1978, U.S.C.A. for the Second Circuit. the Western District of Tennessee. Security Bancorp and Security National Bank First Lincolnwood Corporation v. Board of v. Board of Governors, filed March 1978, Governors, filed February 1976, U.S.C.A. U.S.C.A. for the Ninth Circuit. for the Seventh Circuit. Michigan National Corporation v. Board of Roberts Farms, Inc. v. Comptroller of the Governors, filed January 1978, U.S.C.A. for Currency, et. al., filed November 1975, the Sixth Circuit. U.S.D.C. for the Southern District of Cali­ Wisconsin Bankers Association v. Board of fornia. Governors, filed January 1978, U.S.C.A. for Florida Association of Insurance Agents, Inc. the District of Columbia. v. Board of Governors, and National Asso­ Vickars-Henry Corp. v. Board of Governors, ciation of Insurance Agents, Inc. v. Board filed December 1977, U.S.C.A. for the Ninth of Governors, filed August 1975, actions Circuit. consolidated in U.S.C.A. for the Fifth Cir­ Emch v. The United States of America, et al., cuit. filed November 1977, U.S.D.C. for the David R. Merrill, et. al. v. Federal Open Eastern District of Wisconsin. Market Committee of the Federal Reserve Corbin v. Federal Reserve Bank of New York, System, filed May 1975, U.S.D.C. for the Board of Governors, et. al., filed October District of Columbia. 1977, U.S.D.C. for the Southern District of Bankers Trust New York Corporation v. Board New York. of Governors, filed May 1973, U.S.C.A. for Central Bank v. Board of Governors, filed the Second Circuit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

774 Membership of the Board of Governors of the Federal Reserve System , 1913-78 A P P O IN T IV E M E M B E R S 1 Federal Reserve Date of initial Other dates and information relating Name district oath of office to membership2 Charles S. Hamlin............. Boston............... Aug. 10, 1914 Reappointed in 1916 and 1926. Served until Feb. 3, 1936.3 Paul M. Warburg............. . New York........ .do . Term expired Aug. 9, 1918. Frederic A. Delano.......... . Chicago ........... Resigned July 21, 1918. W. P. G. Harding........... . Atlanta............. Term expired Aug. 9, 1922. Adolph C. Miller............. . San Francisco .. Reappointed in 1924. Reappointed in 1934 from the Richmond District. Served until Feb. 3, 1936.3 Albert Strauss ................... New York.......... Oct. 26, 1918 Resigned Mar. 15, 1920. Henry A. Moehlenpah ...,. Chicago............. Nov. 10, 1919 Term expired Aug. 9, 1920. Edmund Platt................... . New York.......... June 8, 1920 Reappointed in 1928. Resigned Sept. 14, 1930. David C. Wills................. . Cleveland.......... Sept. 29, 1920 Term expired Mar. 4, 1921. John R. Mitchell............. . Minneapolis___ May 12, 1921 Resigned May 12, 1923. Milo D. Campbell........... . Chicago............. Mar. 14, 1923 Died Mar. 22, 1923. Daniel R. Crissinger......... Cleveland.......... May 1, 1923 Resigned Sept. 15, 1927. George R. James.............,. St. Louis........... May 14, 1923 Reappointed in 1931. Served until Feb. 3, 1936.3 Edward H. Cunningham ... Chicago ........... .do . Died Nov. 28, 1930. Roy A. Young................. . Minneapolis Oct. 4, *1927 Resigned Aug. 31, 1930. Eugene Meyer................. . New York.......... Sept. 16, 1930 Resigned May 10, 1933. Wayland W. Magee......... . Kansas City---- May 18, 1931 Term expired Jan. 24, 1933. Eugene R. Black............... Atlanta ............. May 19, 1933 Resigned Aug. 15, 1934. M. S. Szymczak ............... Chicago............. June 14, 1933 Reappointed in 1936 and 1948. Re­ signed May 31, 1961. J. J. Thomas....................... Kansas City---- .do . Served until Feb. 10, 1936.3 Marriner S. Eccles ......... . San Francisco .. Nov. 15, *1934 Reappointed in 1936, 1940, and 1944. Resigned July 14, 1951. Joseph A. Broderick........,. New York.......... Feb. 3, 1936 Resigned Sept. 30, 1937. John K. McKee............... . Cleveland.......... .do . Served until Apr. 4, 1946.3 Ronald Ransom............... . Atlanta............. .do . Reappointed in 1942. Died Dec. 2, 1947. Ralph W. Morrison.......... . Dallas ............... Feb. 10, 1936 Resigned July 9, 1936. Chester C. Davis............. . Richmond.......... June 25, 1936 Reappointed in 1940. Resigned Apr. 15, 1941. Ernest G. Draper............. . New York.......... Mar. 30, 1938 Served until Sept. 1, 1950.3 Rudolph M. Evans ......... . Richmond.......... Mar. 14, 1942 Served until Aug. 13, 1954.3 James K. Vardaman, Jr. .. St. Louis........... Apr. 4, 1946 Resigned Nov. 30, 1958. Lawrence Clayton............. Boston............... Feb. 14, 1947 Died Dec. 4, 1949. Thomas B. McCabe ......... Philadelphia---- Apr. 15, 1948 Resigned Mar. 31, 1951. Edward L. Norton ........... Atlanta ............. Sept. 1, 1950 Resigned Jan. 31, 1952. Oliver S. Powell................. Minneapolis___ .do . Resigned June 30, 1952. Wm. McC. Martin, Jr. .. New York.......... Apr. 2, 1951 Reappointed in 1956. Term expired Jan. 31, 1970. A. L. Mills, Jr..................., . San Francisco .. Feb. 18, 1952 Reappointed in 1958. Resigned Feb. 28, 1965. J. L. Robertson................. Kansas City---- .do . Reappointed in 1964. Resigned Apr. 30, 1973. For notes, see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Membership of the Board of Governors, 1913-78 775 Federal Reserve Date of initial Other dates and information relating Name district oath of office to membership2 Minneapolis ... . Aug. 13, 1954 Died Oct. 21, 1954. Philadelphia ... . Aug. 12, 1954 Served through Feb. 28, 1966. Dallas ............... . Mar. 17, 1955 Retired Apr. 30, 1967. Atlanta ............. . Mar. 25, 1959 Reappointed in I960. Resigned Sept. 18, 1963. Chicago............. . Aug. 31, 1961 Reappointed in 1962. Served until Feb. 13, 1976.3 Richmond......... . Nov. 29, 1963 Served until Mar. 8, 1974.3 San Francisco .. Apr. 30, 1965 Served through May 31, 1972. Philadelphia ... . Mar. 9, 1966 Resigned Aug. 31, 1974. Dallas ............... . May 1, 1967 Reappointed in 1968. Resigned Nov. 15, 1971. New York......... . Jan. 31, 1970 Term began Feb. 1, 1970. Resigned Mar. 31, 1978. St. Louis........... . Jan. 4, 1972 Resigned June 1, 1975. San Francisco .. June 5, 1972 Resigned Jan. 2, 1976. Kansas City ... . June 11, 1973 Resigned May 15, 1976. Boston............... 8, 1974 Dallas ............... 29, 1974 Atlanta ............. July 14, 1975 Richmond......... . Jan. 5, 1976 Philadelphia ... . Feb. 13, 1976 Minneapolis ... . June 1, 1976 Resigned Feb. 24, 1978. San Francisco.. . Mar. 8, 1978 Chicago............. . Sept. 18, 1978 CHAIRMEN4 VICE CHAIRMEN4 Charles S. Hamlin . .Aug. 10, 1914-Aug. 9, 1916 . .Aug. 10, 1914--Aug. 9, 1916 W. P. G. Harding .. .Aug. 10, 1916-Aug. 9, 1922 Paul M. Warburg . .Aug. 10, 1916--Aug. 9, 1918 Daniel R. Crissinger .May 1, 1923-Sept. 15, 1927 . .Oct. 26, 1918--Mar. 15, 1920 Roy A. Young...........Oct. 4, 1927-Aug. 31, 1930 July 23, 1920-Sept. 14, 1930 Eugene Meyer...........Sept. 16, 1930-May 10, 1933 . .Aug. 21, 1934--Feb. 10, 1936 Eugene R. Black-----May 19, 1933-Aug. 15, 1934 . .Aug. 6, 1936--Dec. 2, 1947 Marriner S. Eccles . .Nov. 15, 1934-Jan. 31, 1948 n Mar. 11, 1955--Feb. 28, 1966 Thomas B. McCabe .Apr. 15, 1948-Mar. 31, 1951 . .Mar. 1, 1966--Apr. 30, 1973 Wm. McC. Martin, Jr. Apr. 2, 1951-Jan. 31, 1970 .May 1, 1973--Feb. 13, 1976 Arthur F. Burns-----Feb. 1, 1970-Jan. 31, 1978 .Feb. 13, 1976- G. William Miller .. .Mar. 8, 1978- E X -O F F IC IO M E M B E R S 1 SECRETARIES OF THE TREASURY COMPTROLLERS OF THE CURRENCY W. G. McAdoo.........Dec. 23, 1913-Dec. 15, 1918 John Skelton WilliamsFeb. 2,1914-Mar. 2, 1921 Carter Glass...............Dec. 16, 1918-Feb. 1, 1920 Daniel R. Crissinger .Mar. 17, 1921-Apr. 30, 1923 David F. Houston .. .Feb. 2, 1920-Mar. 3, 1921 Henry M. Dawes ...May 1, 1923-Dec. 17, 1924 Andrew W. Mellon . .Mar. 4, 1921-Feb. 12, 1932 Joseph W. McIntosh Dec. 20, 1924-Nov. 20, 1928 Ogden L. M ills.........Feb. 12, 1932-Mar. 4, 1933 J. W. Pole...................Nov. 21, 1928-Sept. 20, 1932 William H. Woodin .Mar. 4, 1933-Dec. 31, 1933 J. F. T. O’Connor.. .May 11, 1933-Feb. 1, 1936 Henry Morgenthau, Jr. Jan. 1, 1934-Feb. 1, 1936 xUnder the provisions of the original Federal Reserve Act the of the Currency should continue to serve as members until Feb. Federal Reserve Board was composed of seven members, in­ 1, 1936; that the appointive members in office on the date of cluding five appointive members, the Secretary of the Treasury, that Act should continue to serve until Feb. 1, 1936, or until who was ex-officio chairman of the Board, and the Comptroller their successors were appointed and had qualified; and that of the Currency. The original term of office was 10 years, and thereafter the terms of members should be 14 years and that the the five original appointive members had terms of 2, 4, 6, 8, designation of Chairman and Vice Chairman of the Board should and 10 years, respectively. In 1922 the number of appointive be for a term of 4 years. members was increased to six, and in 1933 the term of office 2Date after words “Resigned” and “Retired” denotes final was increased to 12 years. The Banking Act of 1935, approved day of service. Aug. 23, 1935, changed the name of the Federal Reserve Board Successor took office on this date. to the Board of Governors of the Federal Reserve System and 4Chairman and Vice Chairman were designated Governor and provided that the Board should be composed of seven appointive Vice Governor before Aug. 23, 1935. members; that the Secretary of the Treasury and the Comptroller Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Ill Announcements N A N C Y H . T E E T E R S: C H A N G E IN D ISC O U N T R A T E A ppointm ent as a M em ber The Board of Governors announced an increase of the B oard of G overnors in the discount rate from l lA per cent to 13A per cent, effective August 21, 1978. President Carter on August 28, 1978, announced Action was taken in view of recent disorderly his intention to appoint Nancy H. Teeters as a conditions in foreign exchange markets as well as member of the Board of Governors of the Federal the continuing serious domestic inflationary prob­ Reserve System. Mrs. Teeters’ appointment was lem. subsequently confirmed by the Senate on Sep­ In making the change, the Board acted on re­ tember 15 and her oath of office was administered quests from the directors of the Federal Reserve on September 18 at a White House ceremony. Banks of Boston, New York, Philadelphia, The text of the White House announcement Cleveland, Richmond, Atlanta, Chicago, St. follows: Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The discount rate is the interest rate The President announced he will nominate that is charged member banks when they borrow Nancy Hays Teeters, of Indiana, to be a from their district Federal Reserve Banks. Member of the Board of Governors of the Federal Reserve System for the remainder of the term expiring January 31, 1984. She will replace Arthur Burns, who has resigned. R E G U L A T IO N S D A N D M : A m endm ent Ms. Teeters is currently chief economist In a further move to improve the international of the House Budget Committee, a position she has held since 1975. From 1973 to 1975, position of the dollar, the Board of Governors on she was a senior specialist of the Congres­ August 28, 1978, announced a change in reserve sional Research Service, Library of Con­ requirements to make it more attractive for mem­ gress. From 1970 to 1973, she was a senior ber banks to borrow funds in the Euro-dollar Fellow at the Brookings Institution. market. The change was the second move an­ She served as a fiscal economist in the nounced by the Board within 10 days to improve Office of Management and Budget from conditions in the foreign exchange markets. 1966 to 1970, and from 1957 to 1966 she was an economist for the Federal Reserve On August 18, the Board had announced an Board. She also served, in 1962 and 1963, increase in the discount rate from 1XA to 13A per as an economist for the Council of Economic cent in view of disorderly conditions that had Advisers. prevailed earlier in the month in foreign exchange Ms. Teeters was a Teaching Fellow at the markets as well as the continuing serious domestic University of Michigan from 1956 to 1957, inflationary problem. and from 1954 to 1955. From 1955 to 1956 The new action involves a reduction from 4 per she was an instructor at the University of cent to zero in the reserve requirement on foreign Maryland overseas division, in Stuttgart, West Germany. borrowings of member banks, primarily Euro­ dollars, from their foreign branches and other She was born July 29, 1930, and received foreign banks. The 1 per cent reserve ratio on an A.B. from Oberlin College in 1952. She received an M.A. from the University of foreign branch loans to U.S. borrowers was also Michigan in 1957. She is a member of the reduced to zero. American Economic Association, and is a Also affected by the change are U.S. offices director of the American Finance Associa­ of foreign-owned banking institutions that have tion. She is Director of the National Econo­ mist Club and a member of the Cleveland voluntarily maintained reserves on increases in net Park Club. foreign borrowings since mid-1973. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

778 Federal Reserve Bulletin □ September 1978 The reduction in reserves is intended to encour­ monitor the effects of the amendment and would age member banks to substitute Euro-dollar bor­ consider adjustments if competitive conditions in­ rowings for domestic borrowings as a source of dicated that adjustments were necessary. funds. Such increased Euro-dollar borrowings should improve the demand in Euro-markets for dollar-denominated assets. R E G U L A T IO N Z: A ctions In taking the action, the Board re-emphasized the importance of compliance by U.S. banks with The Board of Governors has announced the three its previous requests not to solicit or to encourage following actions affecting its Regulation Z (Truth deposits by U.S. residents at their foreign branches in Lending): unless such deposits serve a definite international 1. The Board has adopted an amendment in­ purpose. tended to facilitate the computation of the annual The reduction in reserve requirements will be percentage rate (APR) in long-term credit transac­ effective with borrowings during the 4-week com­ tions involving minor irregularities in the repay­ putation period that began August 24. ment schedule. An example would be graduated payment mortgages, in which mortgage payments increase annually during the early years of the mortgage. The amendment adopted applies to any N O D E L A Y IN A U T O M A T IC credit transaction of 10 years or more with minor T R A N SFE R variations in the monthly repayment schedule. The Board of Governors has turned down requests Adoption of this amendment will simplify use seeking to change the effective date of its rule of APR computation tables prepared by the permitting automatic transfer of funds from sav­ Department of Housing and Urban Development ings to checking accounts at member banks. The for homes bought on its plan for graduated pay­ rule is scheduled to go into effect on November 1. ment mortgages. In a letter to the Independent Bankers Associa­ The Board proposed such an amendment to tion of New York, which petitioned the Board Regulation Z on May 24. The proposed amend­ to delay the effective date to May 1, 1979, the ment was adopted with certain changes, chiefly Board said that the substantial public benefits of to make it applicable to all long-term credit trans­ automatic transfer of funds from interest-bearing actions (not only mortgage credit) with minor savings accounts to checking accounts outweigh irregularities in the repayment schedule and with the possible benefits of further delay in introducing a maturity of 10 years or more (not 15 years). the service. 2. The Board has proposed for comment In letters to banks making a similar request, the through September 29 an interpretation of Regula­ Board noted that when it had approved automatic tion Z that requires disclosure of loss of interest transfer May 1, 1978, it gave 6 months’ lead time when a time deposit is used as security for a loan. for orderly introduction of the service and that Under the interpretation the amount of such a loss, recent communications from banks of all sizes when caused by State law, need not be disclosed. indicated most financial institutions desiring to do When a time deposit is used as security for a so will be ready to proceed on November 1. loan, Federal law requires that the interest on the The Board also denied an alternative request of loan be at least 1 percentage point more than the the Independent Bankers Association of New York interest the customer is receiving on the time that the Board create a new category of savings deposit. That is, if the time deposit pays IV2 per deposits subject to automatic transfer on which cent interest, the interest on a loan for which the banks and thrift institutions would be subject to time deposit is collateral must be at least 8V2 per the same interest rate ceiling. The Board noted cent. it had asked the Congress to authorize such rate However, some State laws fix maximum interest parity and said it considered congressional action rates. In certain cases, the State maximum would the most appropriate approach. At present, thrift be less than the creditor would be required to institutions may pay interest on savings deposits charge on a loan secured by a time deposit. For up to Va of a per cent higher than may commercial example, the State interest rate maximum might banks. The Board noted it had previously indi­ be 8Va per cent. That would be less than the 8V2 cated, in adopting automatic transfer, that it would per cent interest rate required to maintain the 1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 119 percentage point differential in the example above. Division of International Finance In such a case, the rate being paid on the time Jeffrey R. Shafer, appointed Associate Interna­ deposit must be reduced (from IV2 to IVa per cent). tional Division Officer. In this way, when the mandatory differential of Dale W. Henderson, appointed Assistant Inter­ 1 percentage point for a loan secured by a time national Division Officer. deposit is added, the interest charged the customer Larry J. Promisel, appointed Assistant Interna­ on the loan will remain within the State maximum tional Division Officer. of 8V4 per cent. Ralph W. Smith, Jr., appointed Assistant Inter­ Such cases have resulted in questions as to national Division Officer. whether the consequent loss of interest on the time Mr. Prell holds a Ph.D. from the University of deposit should be disclosed as a part of the finance California at Berkeley. He was at the Federal charge. The proposed interpretation would rule Reserve Bank of Kansas City before joining the that a loss of interest need not be made a part Board’s staff in May 1973. of the finance charge or be disclosed as such, but Mr. Struble holds a B.S. from the University that the creditor must disclose that there will be of Kansas and a Ph.D. from the University of such a loss. Colorado. Prior to joining the Board’s staff in 3. The Board has amended Regulation Z with 1969, he was at the Federal Reserve Bank of respect to the disclosure of the complete payment Kansas City. schedule in any credit transaction with monthly Mr. Shafer, a staff member of the Division of repayments that are made in varying amounts International Finance since 1972, has been on (such as a mortgage with mortgage insurance in detail to the Council of Economic Advisers since which the amount of the monthly payment de­ April 1977. He received an A.B. from Princeton clines). The amendment provides that the required University and a Ph.D. from Yale University. disclosure may be made on a separate sheet(s) of Mr. Henderson was appointed to the Board’s paper to be included in the disclosure document staff in September 1971, prior to which he was required by Truth in Lending. A proposed revision at the Wharton School at the University of Penn­ of an interpretation (Section 226.808 of Regulation sylvania. He was an undergraduate at Wesleyan Z) on this subject that was published April 24 has University and did graduate work at the London been withdrawn. School of Economics and at Yale University. Mr. Promisel joined the Board’s staff in 1968. He was an undergraduate at Cornell University and the London School of Economics and did graduate FO M C A PPO IN T M E N T work at Yale University. The Federal Open Market Committee has an­ Mr. Smith joined the Board’s staff in 1967. He nounced the appointment of Murray Altmann as received an A.B. from Southern Methodist Uni­ its Secretary, effective August 15, 1978, to suc­ versity and did graduate work at the University ceed Arthur L. Broida who has retired. of Maryland. A V A IL A B IL IT Y O F FIL M C H A N G E S IN B O A R D ST A FF The Board of Governors has announced the release The Board of Governors announced the following of “The Fed . . . Our Central Bank,” an educa­ promotions and appointments to its official staff, tional film describing the functions of the Nation’s effective September 7, 1978: central bank. Division of Research and Statistics The film goes behind the scenes to show how James M. Brundy, promoted from Assistant the Fed makes credit available for economic Research Division Officer to Associate Research growth and jobs—managing money and credit, Division Officer. clearing checks, putting coin and currency into Michael J. Prell, appointed Associate Research circulation, destroying old currency, supervising Division Officer. banks, and administering such consumer credit Frederick M. Struble, appointed Assistant Re­ laws as Truth in Lending and Equal Credit Oppor­ search Division Officer. tunity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

780 Federal Reserve Bulletin □ September 1978 The film includes a sequence showing the open Since the Government in the Sunshine Act went market operations of the New York Fed’s trading into effect on March 12, 1977, the Board has room, where the Federal Reserve buys and sells prepared recordings or minutes of its meetings that Government securities to keep the amount of have been closed to the public under exemptions money and credit in the economy in line with the provided in the Act. Much of this material has Nation’s economic needs. been made available to the public. However, no The 20-minute, 16mm. film is available on a recordings or “Sunshine” minutes were kept of free-loan basis from Association Films, 866 Third open meetings since the public was invited to Avenue, New York, New York 10022, and its 10 attend. regional film centers, as well as from the Board In changing the procedure, the Board felt that of Governors and the 12 Federal Reserve Banks. interested persons who were unable to attend an open meeting should have the opportunity to listen to a recording of the discussion. R E C O R D IN G S O F O PE N B O A R D M E E T IN G S SY ST E M M E M B E R S H IP: Effective immediately, the Board will prepare re­ A dm ission of State B anks cordings of all meetings that are open to the public The following banks were admitted to membership under provisions of the Government in the Sun­ in the Federal Reserve System during the period shine Act. July 16, 1978, through September 15, 1978: Facilities are available at the Board’s Freedom of Information Office for interested persons to Montana listen to taped recordings of the Board’s meetings. Lewistown .............Midstate Bank of Montana The recordings may also be purchased for $5.00 Utah per cassette. Requests should be directed to the: Salt Lake County........................Utah Firstbank Freedom of Information Office, Board of Gover­ Virginia nors of the Federal Reserve System, Washington, Springfield ...............Continental Bank & Trust D.C. 20551. Company Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

781 Industrial Production Released for publication September 15 materials remained at about the same level as in July and was still 0.7 per cent below the June Industrial production increased an estimated 0.5 level, in part as a result of the paper strike. Output per cent in August, following revised increases of of energy materials declined 0.1 per cent, as coal 0.7 per cent in both June and July. Output of production fell in August. equipment, construction supplies, and durable Seasonally adjusted, ratio scale, 1967=100 goods materials each rose by relatively large amounts again in August; however, production of consumer goods was about unchanged and still remains slightly below the April level. At 146.6 per cent of the 1967 average, the August 1978 index is 6.2 per cent higher than the depressed August level of last year. Production of business equipment continued strong in August, increasing 1.1 per cent to a level CONSUMER GOODS Energy 9.4 per cent higher than a year earlier. Output of CONSUMER GOODS: intermediate products, especially construction BUSINESS SUPPLIES/ supplies, also continued to rise appreciably. How­ ever, output of consumer goods—both durable and "CONSTRUCTION SUPPLIES nondurable—changed little again in August. Auto assemblies were at a seasonally adjusted annual rate of 9.4 million units—the same rate as in July. AUTOS: Stocks MANUFACTURING: Output of materials increased 0.3 per cent in August. Widespread strength continued in the V \ / Domestic / \V /Uunh)m 00 _ \ f assemblies _ g / \ / —► — production of durable goods materials, with espe­ L j____I___11___I____I____I__J L___I____I____£lJ____I____I____100 cially large gains in equipment parts and basic 1972 1974 1976 1978 1972 1974 1976 1978 F.R. indexes, seasonally adjusted. Latest figures: August. Auto sales metals. However, production of nondurable goods and stocks include imports. 1$67 == 100 Percentage change from preceding month to— Percentage change Industrial production 1978 1978 8/77 to July p Aug. e Mar. Apr. May June July Aug. 8/78 Total .............................. 145.9 146.6 1.2 1.6 .5 .7 .7 .5 6.2 Products, total .................... 144.9 145.6 1.4 1.0 .1 .6 .7 .5 5.2 Final products................ 141.9 142.5 1.8 1.2 .0 .3 .7 .4 4.5 Consumer goods....... 147.2 147.3 1.5 1.1 -.3 -.1 .2 .1 1.8 Durable .................. 160.9 160.8 4.2 2.7 -1.0 .2 .2 -.1 3.9 Nondurable ........... 141.7 141.9 .4 .4 -.1 -.1 .1 .1 .9 Business equipment.. 163.5 165.3 2.1 1.2 .6 1.0 1.1 1.1 9.4 Intermediate products .. 155.8 156.8 .0 .5 .3 1.2 .8 .6 7.3 Construction supplies 153.8 155.0 -.5 .4 1.3 1.1 1.1 .8 9.4 Materials ............................. 147.6 148.1 .9 2.7 1.0 .9 .8 .3 7.6 Preliminary. ^Estimated. Note.—Indexes are seasonally adjusted. * Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A l Financial and Business Statistics CO N TEN TS 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 M arkets A10 Maximum interest rates payable on A25 Commercial paper and bankers time and savings deposits at Federally insured institutions acceptances outstanding A10 Margin requirements A26 Prime rate charged by banks on 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— Types and ownership commercial banks A33 U.S. Government marketable securities—Ownership, by maturity Commercial Bank Assets and Liabilities A34 U.S. Government securities dealers— A16 Last-Wednesday-of-month series Transactions, positions, and financing A17 Call-date series A35 Federal and Federally sponsored credit A18 Detailed balance sheet, Mar. 31, 1978 agencies—Debt outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A2 Federal Reserve Bulletin □ September 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 A38 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 1977 1978 1978 Item Q3 Q4 Ql Q2 Mar. Apr. May June July Monetary and credit aggregates (annual rates of change, seasonally adjusted in per cent)12 Member bank reserves 1 Total............................................................................................ 7.3 6.1 8.5 6.3 -8.6 9.4 10.2 14*7 14.8 6.8 6.3 8.3 7.0 -7.3 11.1 7.9 16.2 14.2 3 Nonborrowed............................................................................ 1.7 3.5 14.5 .4 -6.2 1.9 -11.2 19.2 7.9 Concepts of money 1 4 M-l.............................................................................................. 8.1 7.5 5.6 9.5 3.5 19.0 8.0 5.9 5.5 5 M-2.............................................................................................. 9.9 8.2 6.9 8.3 5.6 11.5 7.8 7.8 8.6 6 M-3.............................................................................................. 11.9 10.7 7.7 8.0 6.5 9.8 7.6 8.4 9.7 Time and savings deposits Commercial banks: 7 Total........................................................................................ 10.3 13.1 13.4 11.0 11.6 8.3 14.4 6.7 10.8 8 Other than large CD’s......................................................... 11.2 8.6 7.9 7.4 7.0 6.2 7.7 8.9 11.0 9 Thrift institutions 2............................................................ 15.0 14.4 8.9 7.6 7.7 7.3 7.2 9.2 11.2 10 Total loans and investments at commercial banks 3........... 11.1 9.9 9.6 13.0 6.9 18.5 15.6 6.0 16.7 1977 1978 1978 Q3 Q4 Ql Q2 Apr. May June July Aug. Interest rates (levels, per cent per annum) Short-term rates 11 Federal funds 4......................................................................... 5.82 6.51 6.76 7.28 6.89 7.36 7.60 7.81 8.04 12 Federal Reserve discount s..................................................... 5.42 5.93 6.46 6.78 6.50 6.84 7.00 7.23 7.43 13 Treasury bills (3-month market yield) *.............................. 5.50 6.11 6.39 6.48 6.29 6.41 6.73 7.01 7.08 14 Commercial paper (90- to 119-day) ?.................................. 5.74 6.56 6.76 7.16 6.82 7.06 7.59 7.85 7.83 Long-term rates Bonds: 15 U.S. Government 8............................................................... 7.60 7.78 8.19 8.43 8.32 8.44 8.53 8.69 8.45 16 State and local government 9............................................ 5.59 5.57 5.65 6.02 5.80 6.03 6.22 6.28 6.12 17 Aaa utility (new issue) *o................................................... 8.09 8.27 8.70 8.98 8.90 8.95 9.09 9.14 8.82 18 Conventional mortgages 11.................................................... 9.00 9.05 9.23 9.58 9.40 9.60 9.75 9.80 9.80 1 M-l equals currency plus private demand deposits adjusted. 7 Beginning Nov. 1977, unweighted average of offering rates quoted by M-2 equals M-l plus bank time and savings deposits other than large five dealers. Previously, most representative rate quoted by these dealers. negotiable certificates of deposit (CD’s). 8 Market yields adjusted to a 20-year maturity by the U.S. Treasury. M-3 equals M-2 plus deposits at mutual savings banks, savings and 9 Bond Buyer series for 20 issues of mixed quality. loan associations, and credit union shares. I o Weighted averages of new publicly offered bonds rated Aaa, Aa, 2 Savings and loan associations, mutual savings banks, and credit and A by Moody’s Investors Service and adjusted to an Aaa basis. unions. Federal Reserve compilations. 3 Quarterly changes calculated from figures shown in Table 1.23. II Average rates on new commitments for conventional first mortgages 4 Seven-day averages of daily effective rates (average of the rates on on new homes in primary markets, unweighted and rounded to nearest a given date weighted by the volume of transactions at those rates). 5 basis points, from Dept, of Housing and Urban Development. 5 Rate for the Federal Reserve Bank of New York. 12 Unless otherwise noted, rates of change are calculated from average 6 Quoted on a bank-discount 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 □ September 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 June July Aug.p July 19 July 26 Aug. 2 Aug. 9 Aug. 16 Aug. 23p Aug. 30^ SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding... 121,992 126,958 125,984 128,852 127,255 126,301 123,399 124,323 127,156 127,898 2 U.S. Govt, securities1..................... 104,656 108,626 109,243 110,095 109,046 108,607 106,767 107.720 110,373 111,595 3 Bought outright........................ 103,763 107,350 108,380 108,162 107,417 108,016 106,664 107.720 109,093 109,912 4 Held under repurchase agree­ ment ..................................... 893 1,276 863 1,933 1,629 591 103 1,280 1,683 5 Federal agency securities............. 8,138 8,584 8,220 8,913 8,745 8,322 8,095 7.983 8,204 8,485 6 Bought outright....................... 7,897 8,166 8,016 8,168 8,164 8,162 8,084 7.983 7,981 7,981 7 Held under repurchase agree­ ment ..................................... 241 418 204 745 581 160 11 223 504 8 Acceptances................................. 213 337 145 291 444 154 1 152 329 9 Loans........................................... 1,111 1,286 1,147 1,589 1,462 1,438 878 963 1,604 1,020 10 Float............................................. 5,297 5,399 4,855 5,293 4,701 4,920 4,790 5,066 4,878 4,498 11 Other Federal Reserve assets... 2,577 2,726 2,374 2,672 2,857 2,860 2,868 2,590 1,945 1,971 12 Gold stock....................................... 11,709 11,698 11,683 11,693 11,693 11,693 11,690 11,680 11,680 11,680 13 Special Drawing Rights certificate account..................................... 1,250 1,250 1,279 1,250 1,250 1,250 1,250 1,271 1,300 1,300 14 Treasury currency outstanding. 11,576 11,612 11,645 11,613 11,624 11,628 11,631 11,640 11,651 11,658 absorbing reserve funds 15 Currency in circulation................... 105,661 107,057 107,235 107,342 106,760 106,715 107,130 107,516 107,260 107,066 16 Treasury cash holdings................... 358 343 322 345 333 335 321 319 314 306 Deposits, other than member bank reserves with F.R. Banks: 17 Treasury....................................... 7,577 10,512 10,065 10,464 11,219 10,606 8,725 8,419 10,810 11,675 18 Foreign......................................... 266 281 281 256 279 258 331 262 270 264 19 Other2.......................................... 776 709 609 662 699 701 619 588 563 601 20 Other F.R. liabilities and capital 4,049 4,047 3,971 4,002 4,170 4,155 3,650 3,805 4,061 4,319 21 Member bank reserves with F.R. Banks........................................... 27,840 28,570 28,108 30,337 28,362 28,101 27,194 28,007 28,510 28,305 End-of-month figures Wednesday figures 1978 1978 June July Aug.** July 19 July 26 Aug. 2 Aug. 9 Aug. 16 Aug. 23» Aug. 30^ supplying RESERVE FUNDS 22 Reserve Bank credit outstanding 126,893 126,509 127,043 135,912 121,518 130,457 122,658 126,999 129,871 130,398 23 U.S. Govt, securities1................... 110,146 108,885 111,739 111,615 103,820 109,921 105,514 109.512 112,744 112,303 24 Bought outright......................... 107,859 108,149 109,858 108,017 103,281 108,135 104,793 109.512 109,687 109,800 25 Held under repurchase agree­ ment ......................................... 2,287 736 1,881 3,598 539 1,786 721 3,057 2,503 26 Federal agency securities.............. 8,526 8,235 8,097 9,474 8,396 8,690 8,063 7.981 8,645 8,874 27 Bought outright......................... 8,168 8,164 7,978 8,168 8,164 8,158 7,985 7.981 7,981 7,978 28 Held under repurchase agree­ ment ......................................... 358 71 119 1,306 232 532 78 664 896 29 Acceptances.................................... 1,021 268 296 668 119 478 10 401 449 30 Loans............................................... 1,428 1,127 953 5,274 1,324 2,288 852 1,089 1,797 1,310 31 Float................................................. 3,318 5,092 3,895 6,082 4,933 6,173 5,308 6,510 4,330 5,448 32 Other Federal Reserve assets... 2,454 2,902 2,063 2,799 2,926 2,907 2,911 1,907 1,954 2,014 33 Gold stock.......................................... 11,706 11,693 11,679 11,693 11,693 11,692 11,683 11,680 11,680 11,680 34 Special Drawing Rights certificate account............................................ 1,250 1,250 1,300 1,250 1,250 1,250 1,250 1,300 1,300 1,300 35 Treasury currency outstanding.... 11,565 11,592 11,669 11,622 11,626 11,630 11,633 11,651 11,654 11,669 absorbing reserve funds 36 Currency in circulation.................... 106,288 106,577 107,616 107,300 106,914 107,047 107,700 107,690 107,359 107,640 37 Treasury cash holdings..................... 337 313 304 343 334 334 317 321 308 304 Deposits, other than member bank reserves with F.R. Banks: 38 Treasury.......................................... 11,614 10,331 12,068 10,201 9,964 11,573 7,701 10,435 11,460 12,162 39 Foreign............................................. 288 347 309 263 253 243 301 272 243 235 40 Other2.............................................. 773 771 691 645 647 726 670 622 627 631 41 Other F.R. liabilities and capital.., 4,193 4,247 4,329 4,150 4,211 3,650 3,690 3,855 4,201 4,421 42 Member bank reserves with F.R. Banks............................................... 27,920 28,461 26,374 37,576 23,765 31,457 26,845 28,435 30,307 29,653 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 hanking 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. Dec. Jan. Feb. Mar. Apr. May June July Aug.P All member banks Reserves: 26,430 27,057 28,129 27,337 27,155 27,776 27,890 27,840 28,570 28,108 8,548 9,351 9,980 9,320 8,992 9,028 9,151 9,345 9,542 9,519 35,136 36,471 38,185 36,738 36,231 36,880 37,119 37,262 38,189 37,698 34,964 36,297 37,880 36,605 35,925 36,816 36,867 37,125 38,049 37,423 172 174 305 133 306 64 252 137 140 275 Borrowings at F.R. Banks:2 62 558 481 405 344 539 1,227 1,111 1,286 1,147 12 54 32 52 47 43 93 120 143 190 Large banks in New York City 6,520 6,244 6,804 6,563 6,276 6,247 6,315 6,341 6,606 6,310 6,602 6,279 6,775 6,584 6,193 6,320 6,236 6,376 6,581 6,290 -82 -35 29 -21 83 -73 79 -35 25 20 15 48 77 12 21 61 113 54 129 58 Large banks in Chicago 1,632 1,593 1,733 1,623 1,629 1,670 1,697 1,668 1,708 1,639 1,641 1,613 1,684 1,633 1,620 1,686 1,669 1,670 1,707 1,646 -9 -20 49 -10 9 -16 28 -2 1 -7 4 26 14 11 11 19 20 20 3 Other large banks 13,117 13,993 14,487 13,867 13,729 14,135 14,106 14,250 14,553 14,367 13,053 13,931 14,504 13,861 13,662 14,077 14,079 14,225 14,569 14,421 64 62 -17 6 67 58 27 25 -16 -54 14 243 164 150 92 249 500 536 499 418 All other banks 20 Reserves held....................................... 13,867 14,641 15,161 14,685 14,597 14,828 15,001 15,003 15,322 15,109 21 Required.......................................... 13,668 14,474 14,917 14,527 14,450 14,733 14,883 14,854 15,192 15,066 22 Excess............................................... 199 167 244 158 147 95 118 149 130 43 23 Borrowings2........................................ 29 241 226 243 220 218 595 501 638 668 Weekly averages of daily figures for weeks ending— 1978 June 28 July 5 July 12 July 19 July 26 Aug. 2 Aug. 9 Aug. 16 Aug. 23^ Aug. 30p All member banks Reserves: 24 At F.R. Banks................................ 28,038 29,457 26,978 30,337 28,362 28,101 27,194 28,007 28,510 28,305 25 Currency and coin ........................ 9,389 9,513 9,761 9,080 9,565 9,881 9,890 9,790 8,806 9,470 26 Total held1..................................... 37,503 39,043 36,810 39,488 38,004 38,058 37,159 37,872 37,385 37,843 27 Required...................................... 37,335 38,324 37,037 39,116 38,041 37,705 37,144 37,549 37,333 37,539 28 Excess1........................................ 168 719 -227 372 -37 353 15 323 52 304 Borrowings at F.R. Banks:2 29 Total................................................. 1,716 1,193 903 1,589 1,462 1,438 878 963 1,604 1,020 30 Seasonal.......................................... 134 137 131 138 151 162 179 182 196 208 Large banks in New York City 31 Reserves held................................. 6,276 6,816 6,188 7,202 6,352 6,432 6,267 6,419 6,255 6,148 32 Required.......................................... 6,229 6,630 6,310 7,122 6,428 6,370 6,255 6,480 6,207 6,198 33 Excess............................................... 47 186 -122 80 -76 62 12 -61 48 -50 34 Borrowings2............................ 116 362 9 327 41 25 66 Large banks in Chicago 35 Reserves held...................................... 1,597 1,784 1,594 1,844 1,688 1,654 1,646 1,658 1,593 1,662 36 Required.......................................... 1,588 1,727 1,616 1,843 1,679 1,663 1,637 1,668 1,609 1,662 37 Excess............................................... 9 57 -22 1 9 -9 9 -10 -16 38 Borrowings2........................................ 2 2 19 69 7 4 Other large banks 39 Reserves held...................................... 14,410 14,911 13,997 15,137 14,496 14,630 14,206 14,635 13,991 14,646 40 Required........................................ 14,425 14,671 14,169 14,964 14,555 14,496 14,318 14,446 14,391 14,522 41 Excess............................................... -15 240 -172 173 -59 134 -112 189 -400 124 42 Borrowings2........................... 905 491 437 515 696 409 305 338 849 156 All other banks 43 Reserves held...................................... 15,220 15,532 15,031 15,305 15,468 15,342 15,040 15,160 15,101 15,216 15,093 15,296 14,942 1445, 187 Re1q5u,i3re7d9........1...5..,.1..7..6...........1..4..,.9...3..4... 14,955 15,126 15,157 45 Excess............................................... 127 236 89 118 89 166 106 205 -25 59 46 Borrowings 2........................................ 693 700 447 643 757 695 573 584 726 798 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 □ September 1978 1.13 FEDERAL FUNDS TRANSACTIONS Money Market Banks Millions of dollars, except as noted 1978, week ending- Type July 5 July 12 July 19 July 26 Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30 Total, 46 banks Basic reserve position 1 Excess reserves1................................ 385 -60 141 -7 109 39 71 43 131 Less: 2 Borrowings at F.R. Banks......... 168 144 522 114 481 118 212 299 129 3 Net interbank Federal funds transactions............................ -12,149 16,201 13,573 12,827 12,965 16,499 16,804 16,079 14,334 Equals: Net surplus, or deficit (—): 4 Amount.......................................... -11,932 -16,405 -13,954 -12,949 -13,337 -16,578 -16,945 -16,335 -14,333 5 Per cent of average required reserves................................... 73.3 105.3 81.7 81.1 83.9 105.9 106.2 105.0 91.4 Interbank Federal funds transactions Gross transactions: Purchases...................................... 22,683 24,235 23,133 21,181 21,816 23,680 24,010 23,037 22,130 Sales................................................. 10,534 8,033 9,560 8,354 8,851 7,181 7,206 6,957 7,796 Two-way transactions2................... 6,676 5,810 6,878 6,172 6,814 5,693 5,690 5,655 5,680 Net transactions: Purchases of net buying banks.. 16,008 18,424 16,255 15,009 15,002 17,987 18,321 17,382 16,450 Sales of net selling banks............ 3,858 2,223 2,682 2,182 2,038 1,489 1,571 1,303 2,116 Related transactions with U.S. Govt, securities dealers 11 Loans to dealers 3................... 3,695 3,600 2,649 3,051 2,584 4,071 3,396 2,649 2,524 12 Borrowing from dealers4... 2,106 1,288 2,443 2,550 1,879 1,682 1,399 1,701 2,028 13 Net loans.................................. 1,589 2,312 206 502 705 2,390 1,997 948 496 8 banks in New York City Basic reserve position 14 Excess reserves1... 223 -7 52 -13 32 50 -33 53 3 324 9 15 Borrowings at F.R. Banks......... 327 36 25 66 16 Net interbank Federal funds transactions............................ 3,882 4,700 3,421 2,817 2,947 5,195 5,877 4,595 3,906 Equals : Net surplus, or deficit (—): 17 Amount........................................... -3,659 -4,707 -3,693 -2,839 -3,242 -5,145 -5,946 -4,567 -3,969 18 Per cent of average required reserves................................... 60.9 82.3 57.1 48.9 56.3 91.0 101.3 81.5 70.9 Interbank Federal funds transactions Gross transactions: 19 Purchases........................................ 5,177 5,678 5,091 4,426 4,750 5,977 6,703 5,570 5,453 20 Sales................................................. 1.295 978 1,669 1,609 1,803 781 826 975 1.547 21 Two-way transactions2................... 1.295 978 1,324 1,529 1,778 781 825 975 1.547 Net transactions: 22 Purchases of net buying banks.. 3,882 4,700 3,767 2,897 2,972 5,195 5,877 4,595 3,906 23 Sales of net selling banks........... 346 80 25 Related transactions with U.S. Govt, securities dealers 24 Loans to dealers*.................. 2,426 2,468 1,504 1,859 1,593 2,567 2,444 1,815 1,657 25 Borrowing from dealers4.., 652 677 782 866 872 961 746 731 598 26 Net loans................................. 1,774 1,791 722 993 721 1,606 1,697 1,084 1,060 38 banks outside New York City Basic reserve position 27 Excess reserves1............................ 162 -54 89 6 77 -11 104 -10 128 Less: 28 Borrowings at F.R. Banks... 168 144 198 105 154 118 176 274 64 29 Net interbank Federal funds transactions....................... 8,267 11,501 10,152 10,011 10,018 11,304 10,927 11,484 10,429 Equals: Net surplus, or deficit (-): 30 Amount...................................... . -8,273 -11,699 -10,261 -10,110 -10,095 -11,433 -10,999 -11,768 -10,364 31 Per cent of average required reserves............................... 80.6 118.6 96.6 99.6 99.6 114.3 109.1 118.3 102.8 Interbank Federal funds transactions Gross transactions: 32 Purchases....................................... 17,506 18,557 18,043 16,755 17,066 17,704 17,308 17,466 16,677 33 Sales................................................. 9,239 7,055 7,891 6,744 7,049 6,400 6,381 5,982 6,249 34 Two-way transactions2................... 5,381 4,832 5,555 4,643 5,036 4,912 4,864 4,679 4,133 Net transactions: 35 Purchases of net buying banks.. 12,125 13,724 12,488 12,112 12,030 12,792 12,443 12,787 12,545 36 Sales of net selling banks........... 3,858 2,223 2,336 2,102 2,012 1,489 1,517 1,303 2,116 Related transactions with U.S. Govt, securities dealers 37 Loans to dealers*................... 1,269 1,131 1,145 1,193 991 1,504 953 834 866 38 Borrowing from dealers4.... 1,454 610 1,661 1,684 1,007 720 653 970 1,431 39 Net loans.................................. -185 521 -516 -491 -16 784 300 -136 -564 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 July 5 July 12 July 19 July 26 Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30 5 banks in City of Chicago Basic reserve position 40 Excess reserves1................................... 60 -2 1 9 3 14 2 3 8 Less: 19 68 7 42 Net interbank Federal funds transactions.............................. 4,702 5,311 4,753 4,402 4,666 5,031 4,618 4,845 4,356 Equals: Net surplus, or deficit (—): 43 Amount............................................. -4,642 -5,332 -4,820 -4,393 -4,670 -5,017 -4,616 -4,842 -4,349 44 Per cent of average required reserves..................................... 286.8 353.1 278.3 279.8 300.4 327.9 296.4 322.6 280.0 Interbank Federal funds transactions Gross transactions: 45 Purchases.......................................... 6,099 6,707 6,105 5,937 6,283 6,499 6,150 6,338 5,749 46 Sales................................................... 1,396 1,395 1,352 1,535 1,617 1,468 1,532 1,494 1,393 47 Two-way transactions2..................... 1,397 1,395 1,352 1,535 1,617 1,468 1,533 1,494 1,392 Net transactions: 48 Purchases of net buying banks... 4,702 5,312 4,753 4,402 4,666 5,031 4,618 4,845 4,356 49 Sales of net selling banks............. Related transactions with U.S. Govt, securities dealers 50 Loans to dealers 3................................ 275 161 245 296 188 335 223 188 173 51 Borrowing from dealers4.................. 477 51 374 309 133 77 106 167 336 -202 110 -129 -13 55 258 117 22 -163 33 other banks Basic reserve position 5 3 Excess reserves1.................................. 102 -52 88 -4 74 -25 102 -13 120 Less : 54 Borrowings at F.R. Banks........... 168 125 130 105 147 118 176 274 64 55 Net interbank Federal funds transactions.............................. 3,565 6,190 5,399 5,608 5,352 6,273 6,309 6,639 6,072 Equals: Net surplus, or deficit (—): 56 Amount............................................. -3,631 -6,367 -5,441 -5,717 -5,425 -6,416 -6,383 -6,926 -6,016 57 Per cent of average required 42.0 76.2 61.2 66.6 63.2 75.7 74.9 82.0 70.6 Interbank Federal funds transactions Gross transactions: 58 Purchases.......................................... 11,408 11,850 11,938 10,818 10,783 11,205 11,157 11,128 10,929 59 Sales.................................................. 7,843 5,660 6,539 5,210 5,431 4,932 4,848 4,488 4,856 60 Two-way transactions2............. 3,984 3,437 4,203 3,108 3,419 3,444 3,332 3,186 2,740 Net transactions: 61 Purchases of net buying banks... 7,423 8,413 7,735 7,710 7,364 7,761 7,825 7,942 8,188 62 Sales of net selling banks............. 3,858 2,223 2,336 2,102 2,012 1,489 1,517 1,303 2,116 Related transactions with U.S. Govt, securities dealers 63 Loans to dealers 3................................ 994 971 900 897 804 1,169 730 645 694 64 Borrowing from dealers4.................. 977 559 1,287 1,375 874 643 547 803 1,094 18 411 -387 -478 -71 526 183 -158 -401 * 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 □ September 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* Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous Rate on Effective Previous 8/31/78 date rate 8/31/78 date rate 8/31/78 date rate 8/31/78 date rate Boston.................... m 8/21/78 71/4 81/4 8/21/78 7Va 834 8/21/78 814 1034 8/21/78 10V4 New York............. 7Va 8/21/78 71/4 8!/a 8/21/78 m 834 8/21/78 814 1034 8/21/78 1014 Philadelphia.......... 73/4 8/21/78 7 V4 81/4 8/21/78 73/4 83/4 8/21/78 814 1034 8/21/78 1014 Cleveland............... m 8/21/78 7% 81/4 8/21/78 734 834 8/21/78 81/4 1034 8/21/78 1014 Richmond............. 7Va 8/21/78 71/a 81/4 8/21/78 73/4 83/4 8/21/78 814 103/4 8/21/78 1014 Atlanta................... 7Va 8/21/78 71/4 8Va 8/21/78 73/4 834 8/21/78 814 103/4 8/21/78 1014 Chicago.................. 7Va 8/21/78 7Va 81/4 8/21/78 73/4 834 8/21/78 814 1034 8/21/78 1014 St. Louis................. 7Va 8/21/78 7Va 81/4 8/21/78 73/4 834 8/21/78 814 1034 8/21/78 1014 Minneapolis........... 7Va 8/21/78 7Va 81,4 8/21/78 734 834 8/21/78 814 1034 8/21/78 10V4 Kansas City........... 7Va 8/21/78 7i/a Wa 8/21/78 73/4 834 8/21/78 814 1034 8/21/78 1014 Dallas..................... 7Va 8/21/78 71/4 8V4 8/21/78 73/4 834 8/21/78 814 1034 8/21/78 1014 San Francisco.... m 8/21/78 71/4 8i/4 8/21/78 73/4 834 8/21/78 814 103/4 8/21/78 1014 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 5V4 5% 1973—Apr. 23................... 5%-5% 5% 1975—May 16................... 6-614 6 1971—Jan. 8............. 514-5% 514 May 1 4 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5^ 5 4 % -6 56 Va 23................... 6 6 15............. 514 514 18................... 6 6 1976—Jan. 19................... 51/4-6 5% 19............. 5-514 514 June 11................... 6-6^ 6V4 23................... 51/4 5 V4 22............. 5-514 5 15................... 6 Vt 61/4 Nov. 22................... 514-51/4 514 29............. 5 5 July 2................... 7 7 26................... 514 514 Feb. 13............. 434-5 5 Aug. 14................... 7-7% 7% 19............. 434 434 23................... m 7V4 1977—Aug. 30................... 514-534 514 July 16............. 434-5 5 31................... 514-534 534 2 3 5 5 1974—Apr. 25................... m -* 8 Sept. 2................... 534 534 Nov 11............. 434-5 5 30................... 8 8 Oct. 26................... 6 6 19............. 434 434 Dec. 9................... 7%-8 73/4 Dcc. 1 1 7 3 . . . . . . . .. .. . . . . . . .. . . . . . . . 4 4 V 1/ 4 4 - - 4 4 3 3 / 4 4 4 41 3 / 4 4 16................... m m 1978—Jan. 2 9 0. . . .. .. . . .. .. . . .. .. . . .. .. . . .. .. . . .. .. . 6 6% -6% 6 6V % 4 2 4 4% 41/4 1975—Jan. 1 6 0 . . . .. .. . . . . . . . . .. .. . . . . . . . . .. .. . . . . . . . 7 7 1 % /4 - - 7 73 % 4 m May 1 1 2 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6% 7 -7 7 7 1973—J F a e n b . . 2 1 6 5. . . . . . . .. . . . . . . .. .. . . . 5 5 -51/2 5 51/4 Feb. 2 5 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63/ 7 4 i - / 7 a 1 /4 7 63,4 July 1 3 0 . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 7-7 7 1 V 4 4 7 7 V 14 4 Mar. 2........... 5V4 51/4 7................... 634 63/4 Aug. 21................... 734 734 Mar. 10................... 6VA-6YA 6i* 14................... 61/4 6i/4 In effect Aug. 31, 1978... 734 734 1 Discounts of eligible paper and advances secured by such paper or by 4 Advances to individuals, partnerships, or corporations other than U.S. Govt, obligations or any other obligations eligible for F.R. Bank member banks secured by direct obligations of, or obligations fully purchase. guaranteed as to principal and interest by, the U.S. Govt, or any agency 2 Advances secured to the satisfaction of the F.R. Bank. Advances thereof. secured by mortgages on 1- to 4-family residential property are made at 5 Rates under Secs. 13 and 13a (as described above). For description the Section 13 rate. and earlier data, see the following publications of the Board of Governors: 3 Applicable to special advances described in Section 201.2(e)(2) of Banking and Monetary Statistics, 1914-1941, Banking and Monetary Regulation A. Statistics, 1941-1970, Annual Statistical Digest, 1971-75, and Annual Statistical Digest, 1972-76. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.15 MEMBER BANK RESERVE REQUIREMENTS1 Per cent of deposits Requirements in effect Previous requirements August 31, 1978 Type of deposit, and deposit interval in millions of dollars Per cent Effective date Per cent Effective date Net demand:2 7 12/30/76 m 2/13/75 2-10.......................................................................................................... 9i4 12/30/76 10 2/13/75 10-100...................................................................................................... 113/4 12/30/76 12 2/13/75 100-400................................................................................................... 1234 12/30/76 13 2/1-3/75 16^ 12/30/76 16Vi 2/13/75 Time:2* 3 3 3/16/67 3ft 3/2/67 Other time: 0-5, maturing in— 3 3/16/67 3ft 3/2/67 A2ft 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 2ft 1/8/76 3 12/12/74 41 10/30/75 3 12/12/74 Legal limits, August 31, 1978 Minimum Maximum Net demand: Reserve city banks............................................................................... 10 22 Other banks........................................................................................... 7 14 3 10 1 For changes in reserve requirements beginning 1963, see Board’s reserve cities and are permitted to maintain reserves at ratios set for banks Annual Statistical Digest, 1971-1975 and for prior changes, see Board’s not in reserve cities. For details, see the Board’s Regulation D. Annual Report for 1976, Table 13. (c) Effective August 24, 1978, the Regulation M reserve requirements 2 (a) Requirement schedules are graduated, and each deposit interval on net balances due from domestic banks to their foreign branches and applies to that part of the deposits of each bank. Demand deposits on deposits that foreign branches lend to U.S. residents were reduced to subject to reserve requirements are gross demand deposits minus cash zero from 4 per cent and 1 per cent, respectively. The Regulation D items in process of collection and demand balances due from domestic reserve requirement on borrowings from unrelated banks abroad was banks. also reduced to zero from 4 per cent. (b) The Federal Reserve Act specifies different ranges of requirements 3 Negotiable orders of withdrawal (NOW) accounts and time deposits for reserve city banks and for other banks. Reserve cities are designated such as Christmas and vacation club accounts are subject to the same under a criterion adopted effective Nov. 9, 1972, by which a bank having requirements as savings deposits. net demand deposits of more than $400 million is considered to have the 4 The average of reserves on savings and other time deposits must be character of business of a reserve city bank. The presence of the head at least 3 per cent, the minimum specified by law. office of such a bank constitutes designation of that place as a reserve city. Cities in which there are F.R. Banks or branches are also reserve Note.—Required reserves must be held in the form of deposits with cities. Any banks having net demand deposits of $400 million or less F.R. Banks or vault cash. are considered to have the character of business of banks outside of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics □ September 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 August 31, 1978 Previous maximum In effect August 31,1978 Previous maximum Per cent Effective Per cent Effective Per cent Effective Per cent Effective date date date date 1 Savings.......................................................... 5 7/1/73 4Vi 1/21/70 5V4 (7) 5 (8) 2 Negotiable orders of withdrawal accounts i......................................... 5 1/1/74 (i°) 5 1/1/74 (10) 3 Variable-rate time deposit of less than $100,0002......................................... (9) (9) (9) (9) (9) (9) (9) (9) Other time (multiple- and single­ maturity unless otherwise indicated) 3 30-89 days: 4 Multiple-maturity................................ 7/1/73 4Va 1/21/70 (10) (10) 5 Single-maturity..................................... 5 9/26/66 90 days to 1 year: 6 7 S M in u g lt l i e p - l m e- a m tu a r t it u y r . i . t . y ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 5V4 7/1/73 7 9 / / 2 2 0 6 / / 6 6 6 6 } 45% (7) 5 M 1/21/70 8 9 2 1 t t o o 2 2 * y /i e y ar e s a 4 r . s .. 4 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7/1/73 5 5 V % l 1 1/ / 2 2 1 1/ / 7 7 0 0 } 6 Vi (7) 2* 1 1 / / 2 2 1 1 / /7 7 0 0 10 2l/i to 4 years4......................................... evt 7/1/73 5% 1/21/70 6 y4 (7) 6 1/21/70 11 4 to 6 years 5............................................. IVa 11/1/73 m 11/1/73 O1) 12 6 to 8 years*............................................ m 12/23/74 m 11/1/73 m 12/23/74 m 11/1/73 13 8 years or more 5..................................... m 6/1/78 (10) 8 6/1/78 (i°) 14 Governmental units (all maturities).. 8 6/1/78 m 12/23/74 8 6/1/78 m 12/23/74 15 Individual retirement accounts and Keogh (H.R. 10) plans*............... 6/1/78 m 7/6/77 8 6/1/78 m 7/6/77 1 For authorized States only. Federally insured commercial banks, loan associations and mutual savings banks is lA per cent higher than savings and loan associations, cooperative banks, and mutual savings the rate for commercial banks. The rates and effective dates for August banks were first permitted to offer negotiable orders of withdrawal were: (NOW) accounts on Jan. 1, 1974. Authorization to issue NOW accounts was extended to similar institutions throughout New England on Feb. 27, 1976. Aug. 3 Aug. 10 Aug. 17 Aug. 24 Aug. 31 2 Must have a maturity of exactly 26 weeks and a minimum denomina­ tion of $10,000, and must be nonnegotiable. 3 For exceptions with respect to certain foreign time deposits see the 7.362 7.172 7.259 7.471 7.550 Federal Reserve Bulletin for October 1962 (p. 1279), August 1965 (p. 7.612 7.422 7.509 7.721 7.800 1094), and February 1968 (p. 167). 4 A minimum of $1,000 is required for savings and loan associations, except in areas where mutual savings banks permit lower minimum de­ 10 No separate account category. nominations. This restriction was removed for deposits maturing in less 11 Between July 1, 1973, and Oct. 31, 1973, there was no ceiling for than 1 year, effective Nov. 1, 1973. certificates maturing in 4 years or more with minimum denominations 5 $1,000 minimum except for deposits representing funds contributed of $1,000; however, the amount of such certificates that an institution to an Individual Retirement Account (IRA) or a Keogh (H.R. 10) Plan es­ could issue was limited to 5 per cent of its total time and savings deposits. tablished pursuant to the Internal Revenue Code. The $1,000 minimum Sales in excess of that amount, as well as certificates of less than $1,000, requirement was removed for such accounts in December 1975 and No­ were limited to the 6 Vi per cent ceiling on time deposits maturing in 2Vi vember 1976, respectively. years or more. * 3-year minimum maturity. Effective Nov. 1, 1973, the present ceilings were imposed on certificates 7 July 1, 1973, for mutual savings banks; July 6, 1973, for savings and maturing in 4 years or more with minimum denominations of $1,000. loan associations. There is no limitation on the amount of these certificates that banks can 8 Oct. 1, 1966, for mutual savings banks; Jan. 21, 1970, for savings and issue. loan associations. 9 Ceiling rate for commercial banks is the discount rate on most Note—Maximum rates that can be paid by Federally insured commer­ recently issued 6-month U.S. Treasury bills. Ceiling rate for savings and cial banks, mutual savings banks, and savings and loan associations are established by the Board of Governors of the Federal Reserve System, the Board of Directors of the Federal Deposit Insurance Corporation, and the Federal Home Loan Bank Board under the provisions of 12 CFR 217, 329, and 526, respectively. The maximum rates on time de­ posits in denominations of $100,000 or more were suspended in mid- 1973. For information regarding previous interest rate ceilings on all types of accounts, see earlier issues of the Federal Reserve Bulletin, the Federal Home Loan Bank Board Journal, and the Annual Report of the Federal Deposit Insurance Corporation. 1.161 MARGIN REQUIREMENTS Per cent of market value; effective dates shown. Type of security on sale Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 1 Margin stocks............................................................ 70 80 65 55 65 50 2 Convertible bonds..................................................... 50 60 50 50 50 50 3 Short sales................................................................. 70 80 65 55 65 50 Note.—Regulations G, T, and U of the Federal Reserve Board of difference between the market value (100 per cent) and the maximum Governors, prescribed in accordance with the Securities Exchange Act of loan value. The term “margin stocks” is defined in the corresponding 1934, limit the amount of credit to purchase and carry margin stocks regulation. that may be extended on securities as collateral by prescribing a maximum Regulation G and special margin requirements for bonds convertible loan value, which is a specified percentage of the market value of the into stocks were adopted by the Board of Governors effective Mar. 11, collateral at the time the credit is extended. Margin requirements are the 1968. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A ll 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1978 Type of transaction 1975 1976 1977 Jan. Feb. Mar. Apr. May June July U.S. GOVT. SECURITIES Outright transactions (excl. matched salepurchase transactions) Treasury bills: 1 Gross purchases. 11,562 14,343 13,738 696 379 748 1,670 416 4,395 701 2 Gross sales........... 5,599 8,462 7,241 1,323 1,974 50 737 466 3 Redemptions 26,431 2 5,017 2,136 1,100 31 300 Others within 1 year:1 Gross purchases.................... 3,886 472 3,017 56 288 100 53 135 Gross sales............................... Exchange, or maturity shift. -4 792 4.499 -511 -653 261 -292 -1,915 -380 -241 Redemptions.......................... 3,549 2.500 1 to 5 years: 8 Gross purchases..................... 2 3,284 2 3,202 2,833 311 813 235 290 631 9 Gross sales.............................. 177 10 Exchange, or maturity shift. 3,854 -2,588 -6,649 511 1,109 -261 292 -507 467 241 5 to 10 years: 11 Gross purchases.................... 1,510 1,048 758 89 370 191 101 176 12 Gross sales.............................. 13 Exchange, or maturity shift. -4,697 1,572 584 -906 1,526 -87 Over 10 years: 14 Gross purchases.................... 1,070 642 553 100 147 145 74 115 15 Gross sales............................... 16 Exchange, or maturity shift. 848 225 1,565 450 895 All maturities:1 17 Gross purchases. 221,313 219,707 20,898 1,252 379 2,367 2,341 935 5,451 701 18 Gross sales........... 5,599 8,639 7,241 1,323 1,974 50 737 466 19 Redemptions 2 9,980 25,017 4,636 1,100 31 300 Matched sale-purchase transactions 20 Gross sales........................................ 151,205 196,078 425,214 54,859 40,128 44,976 42,262 40,634 52,544 44,657 21 Gross purchases.............................. 152,132 196,579 423,841 51,016 44,270 44,129 42,799 40,362 52,557 44,712 Repurchase agreements 22 Gross purchases 140,311 232,891 178,683 10,229 16.057 13,155 8,044 11,517 14,956 15,822 23 Gross sales................... 139,538 230,355 180,535 12,130 16.057 11,468 8,999 11,819 13,100 17,374 24 Net change in U.S. Government securities... 7,434 9,087 5,798 -5,815 1,447 3,127 1,923 -674 7,320 -1,261 FEDERAL AGENCY OBLIGATIONS Outright transactions: 25 Gross purchases.................................................... 1,616 891 1,433 301 26 Gross sales............................................................. 27 Redemptions......................................................... 246 169 223 22 53 34 “28* Repurchase agreements: 28 Gross purchases.................................................... 15,179 10,520 13,811 1,680 1.966 2,638 1,282 3,927 3,421 5,170 29 Gross sales............................................................. 15,566 10,360 13,638 2,131 1.966 2,374 1,410 4,037 3,088 5,457 BANKERS ACCEPTANCES 30 Outright transactions, net... 163 -545 -196 31 Repurchase agreements, net. -35 410 159 -954 770 -480 -17 747 -753 32 Net change in total System Account. 8,539 9,833 7,143 -7,220 1,425 4,107 1,315 -834 8,673 -2,305 1 Both gross purchases and redemptions include special certificates amounting to $189 million. Acquisition of these notes is treated as a created when the Treasury borrows directly from the Federal Reserve, purchase; the run-off of bills, as a redemption. as follows (millions of dollars): 1975, 3,549; 1976, none; Sept. 1977, 2,500. Note.—Sales, redemptions, and negative figures reduce holdings of 2 jn 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 o September 1978 1.18 FEDERAL RESERVE BANKS Condition and F.R. Note Statements Millions of dollars Wednesday End of month Account 1978 1978 Aug. 2 Aug. 9 Aug. 16 Aug. 23*> Aug. 3QP June July Aug.p Consolidated condition statement ASSETS Gold certificate account............................... 11,692 11,683 11,680 11,680 11,680 11,706 11,693 11,679 Special Drawing Rights certificate account. 1,250 1,250 1,300 1,300 1,300 1,250 1,250 1,300 3 Coin. 270 274 273 283 277 284 276 283 Loans: 4 Member bank borrowings................ 2,288 852 1,089 1,797 1,310 1,428 1,127 953 5 Other.................................................. Acceptances: 6 Bought outright................................. 7 Held under repurchase agreements.. 478 10 401 449 1,021 268 296 Federal agency obligations: 8 Bought outright................................. 8,158 7,985 7,981 7,981 7,978 8,168 8,164 7,978 9 Held under repurchase agreements., 532 78 664 896 358 71 119 U.S. Government securities Bought outright: 10 Bills................................................ 44,356 41,014 45,733 44,962 45,075 44,080 44,370 45,133 11 Certificates—Special..................... 12 Other....................... 13 Notes.............................................. 52,997 52,997 52,397 53,229 53,229 52,997 52,997 53,229 14 Bonds............................................ 10,782 10,782 11,382 11,496 11,496 10,782 10,782 11,496 15 Total i............................................... 108,135 104,793 109,512 109,687 109,800 107,859 108,149 109,858 16 Held under repurchase agreements. 1,786 721 3,057 2,503 2,287 736 1,881 17 Total U.S. Government securities. 109,921 105,514 109,512 112,744 112,303 110,146 108,885 111,739 18 Totalloans and securities.............. 121,377 114,439 118,582 123,587 122,936 121,121 118,515 121,085 19 Cash items in process of collection..., 12,716 11,149 14,109 10,467 11,686 9,319 9,466 9,398 20 Bank premises....................................... 388 389 390 392 392 389 389 392 Other assets: 21 Denominated in foreign currencies. 39 18 18 18 18 58 67 18 22 All other............................................ 2,480 2,504 1,499 1,544 1,604 2,007 2,446 1,653 23 Total assets. 150,212 141,706 147,851 149,271 149,893 146,134 144,102 145,808 LIABILITIES 24 F.R. notes.......................................... 96,020 96,658 96,638 96,296 96,553 95,345 95,571 96,534 Deposits: 25 Member bank reserves.................. 31,457 26,845 28.435 30,307 29,653 27,920 28,461 26,374 26 U.S. Treasury—General account. 11,573 7,701 10.435 11,460 12,162 11,614 10,331 12,068 27 Foreign........................................... 243 301 272 243 235 288 347 309 28 Other2............................................ 726 670 622 627 631 773 771 691 29 Total deposits.......................................... 43,999 35,517 39,764 42,637 42,681 40,595 39,910 39,442 30 Deferred availability cash items........... 6,543 5,841 7,594 6,137 6,238 6,001 4,374 5,503 31 Other liabilities and accrued dividends. 1,496 1,387 1,392 1,587 1,639 1,559 1,469 1,541 32 Total liabilities......................................... 148,058 139,403 145,388 146,657 147,111 143,500 141,324 143,020 CAPITAL ACCOUNTS 33 Capital paid in........................................................ 1,057 1,056 1,057 1,058 1,059 1,056 1,057 1,058 34 Surplus.................................................................... 1,029 1,029 1,029 1,029 1,029 1,029 1,029 1,029 35 Other capital accounts.......................................... 68 218 377 527 694 549 692 701 36 Total liabilities and capital accounts..................... 150,212 141,706 147,851 149,271 149,893 146,134 144,102 145,808 37 Memo: Marketable U.S. Govt, securities held in custody for foreign and inti, account............. 86,682 86,657 87,686 86,675 85,717 85,688 86,620 85,731 Federal Reserve note statement 38 F.R. notes outstanding (issued to Bank)............. 107,689 107,784 107,957 108,078 108,520 105,651 107,558 108,625 Collateral held against notes outstanding: 39 Gold certificate account..................................... 11,692 11,683 11,680 11,680 11,680 11,706 11,693 11,679 40 Special Drawing Rights certificate account.... 1,250 1,250 1,300 1,300 1,300 1,250 1,250 1,300 41 Eligible paper................................................. 1,998 814 1,041 1,718 1,117 1,368 1,056 886 42 U.S. Government securities............................... 92,749 94,037 93,936 93,380 94,423 91,327 93,559 94,760 43 Total collateral. 107,689 107,784 107,957 108,078 108,520 105,651 107,558 108,625 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 Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30 June 30 July 31 Aug. 31 1 Loans........................... 2,288 851 1,089 1,797 1,310 1,428 1,132 953 2 Within 15 days.... 2,053 721 984 1,759 1,272 1,343 1,055 892 3 16 days to 90 days. 235 130 105 38 38 85 77 61 4 91 days to 1 year... 5 Acceptances................ 478 401 449 1,021 268 296 6 Within 15 days----- 478 401 449 1,021 268 296 7 16 days to 90 days. 8 91 days to 1 year.., 9 U.S. Government securities. 109,921 105,514 109,512 112,744 112,303 110,146 108,885 111,739 10 Within 15 days1............... 7,814 6,729 5,514 6,819 6,404 4,958 6,094 4,086 11 16 days to 90 days........... 18,964 16,175 19,412 22,001 22,059 21,179 19,449 22,058 12 91 days to 1 year............. 31,276 30,743 30,980 29,542 29,458 32,383 31,475 31,408 13 Over 1 year to 5 years... 31,025 31,025 30,730 31,154 31,154 30,784 31,025 30,959 14 Over 5 years to 10 years. 11,849 11,849 13,283 13,521 13,521 11,849 11,849 13,521 15 Over 10 years................... 8,993 8,993 9,593 9,707 9,707 8,993 8,993 9,707 16 Federal agency obligations.. 8,690 8,063 7,981 8,645 8,874 8,526 8,235 8,097 17 Within 15 days i.............. 536 82 3 714 1,041 389 114 264 18 16 days to 90 days........... 299 313 310 262 258 232 299 258 19 91 days to 1 year............. 1,528 1,422 1,423 1,423 1,479 1,482 1,495 1,479 20 Over 1 year to 5 years... 3,825 3,744 3,744 3,744 3,594 3,921 3,825 3,594 21 Over 5 years to 10 years. 1,631 1,631 1,641 1,641 1,641 1,631 1,631 1,641 22 Over 10 years................... 871 871 860 861 861 871 871 861 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, turnover as ratio of debits to deposit. Monthly data are at annual rates. 1978 Bank group, or type 1975 1976 1977 of customer Mar. Apr. May June July Debits to demand deposits 2 (seasonally adjusted) 1 A11 commercial banks............... 25,028.5 29,180.4 34,322.8 37,129.4 39,236.3 39,685.9 41.703.1 40.718.3 2 Major New York City batiks.. 9,670.7 11.467.2 13,860.6 13,664.7 15,128.5 14.775.4 15.976.1 15.358.3 3 Other banks............................... 15,357.8 17.713.2 20,462.2 23,464.6 24,107.8 24.910.5 25,727.0 25,360.1 Debits to savings deposits 3 (not seasonally adjusted) 4 All customers............................. 174.0 380.8 424.5 395.6 442.8 431.7 5 Business 1................................... 21.7 48.1 49.3 51.2 60.3 54.8 6 Others......................................... 152.3 332.7 375.2 344.4 382.5 376.9 Demand deposit turnover 2 (seasonally adjusted) 7 All commercial banks............... 105.3 116.8 129.2 134.1 138.0 139.7 144.9 139.4 8 Major New York City banks.. 356.9 411.6 503.0 520.1 548.0 555.3 596.0 553.2 9 Other banks............................... 72.9 79.8 85.9 93.6 93.9 96.8 98.6 95.9 Savings deposit turnover 3 (not seasonally adjusted) 10 All customers............................. 1.6 1.7 1.9 1.8 2.0 2.0 11 Business 1................................... 4.1 4.6 4.7 4.7 5.5 5.1 12 Others......................................... 1.5 1.6 1.8 1.6 1.8 1.8 1 Represents corporations and other profit-seeking organizations (ex­ Note.—Historical data—estimated for the period 1970 through June cluding commercial banks but including savings and loan associations, 1977, partly on the basis of the debits series for 233 SMSA's, which were mutual savings banks, credit unions, the Export-Import Bank, and available through June 1977—are available from Publications Services, Federally sponsored lending agencies). Division of Administrative Services, Board of Governors of the Federal 2 Represents accounts of individuals, partnerships, and corporations, Reserve System, Washington, D.C. 20551. Debits and turnover data for and of States and political subdivisions. savings deposits are not available prior to July 1977. 3 Excludes negotiable orders of withdrawal (NOW) accounts and special club accounts, such as Christmas and vacation clubs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Financial Statistics □ September 1978 1.21 MONEY STOCK MEASURES AND COMPONENTS Billions of dollars, averages of daily figures 1978 1974 1975 1976 1977 Dec. Dec. Dec. Dec. Item Feb. Mar. Apr. May June July Seasonally adjusted MEASURES i 1 M-l...................................................... 282.9 294.5 312.6 337.2 339.9 340.9 346.3 348.6 350.3 351.9 2 M-2...................................................... 612.2 664.1 739.6 808.4 818.0 821.8 829.7 835.1 840.5 846.5 3 M-3...................................................... 981.2 1,091.8 1,235.6 1,375.0 1,392.0 1,399.5 1,410.9 1,419.8 1,429.7 1,441.2 4 M-4...................................................... 701.2 745.4 802.3 882.4 897.4 903.9 913.2 922.2 927.2 933.9 5 M-5...................................................... 1,070.3 1,173.2 1,298.3 1,449.0 1,471.3 1,481.5 1,494.3 1,506.9 1,516.4 1,528.6 COMPONENTS 6 Currency.............................................. 67.8 73.7 80.7 88.6 90.1 90.7 91.3 92.2 92.9 93.4 Commercial bank deposits: 7 Demand........................................... 215.1 220.8 231.9 248.6 249.8 250.2 255.1 256.4 257.4 258.4 8 Time and savings............................. 418.3 450.9 489.7 545.2 557.5 562.9 566.8 573.6 576.8 582.0 9 Negotiable CD’s2........................ 89.0 81.3 62.7 74.0 19 A 82.0 83.4 87.1 86.7 87.4 10 Other............................................ 329.3 369.6 427.0 471.2 478.1 480.9 483.4 486.5 490.1 494.6 11 Nonbank thrift institutions3.............. 369.1 427.8 496.0 566.6 574.0 577.7 581.2 584.7 589.2 594.7 Not seasonally adjusted MEASURES i 12 M-l...................................................... 291.3 303.2 321.7 346.9 334.1 336.2 348.7 343.3 349.3 353.6 13 M-2...................................................... 617.5 669.3 744.8 813.8 812.8 820.4 836.0 833.6 841.9 848.9 14 M-3...................................................... 983.8 1,094.3 1,237.5 1,376.3 1,384.9 1,399.5 1,420.7 1,420.3 rl,435.1 1,448.2 15 M-4...................................................... 708.0 752.8 809.1 889.7 889.7 900.6 917.4 918.2 928.1 936.2 16 M-5...................................................... 1,074.3 1,177.7 1,301.8 1,452.3 1,461.8 1,479.7 1,502.0 '1,505.0 1,521.3 1,535.5 COMPONENTS 17 Currency............................................. 69.0 75.1 82.1 90.1 89.0 90.0 91.1 92.0 93.0 94.2 Commercial bank deposits: 222.2 228.1 239.5 256.8 245.0 246.2 257.6 251.3 256.3 259.5 19 Member....................................... 159.7 162.1 168.5 176.3 167.3 168.4 175.7 171.2 174.0 176.0 20 Domestic nonmember................ 58.5 62.6 67.5 76.2 73.6 73.8 77.8 76.2 78.3 79.4 21 Time and savings............................. 416.7 449.6 487.4 542.8 555.7 564.4 568.7 574.9 578.9 582.6 22 Negotiable CD’s2....................... 90.5 83.5 64.3 75.9 76.9 80.2 81.4 84.6 86.3 87.3 23 Other........................................... 326.3 366.2 423.1 466.9 478.8 484.2 487.3 490.3 492.6 495.3 24 Nonbank thrift institutions3.............. 366.3 424.9 492.7 562.5 572.1 579.1 584.6 586.7 593.2 599.3 25 U.S. Govt, deposits (all commercial banks).......................................... 4.9 4.1 4.4 5.1 4.3 4.7 4.9 3.9 6.1 4.4 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 508 of commercial banks. (H.6) release. Back data are available from the Banking Section, Division M-2: M-l plus savings deposits, time deposits open account, and time of 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”), noncontfolidated 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. _ had4>een 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 a» 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. Nov. Dec. Jan. Feb. Mar. Apr. May June July Seasonally adjusted 1Reserves1...................................................... 36.57 34.68 34.93 35.96 36.14 36.60 36.93 36.67 36.95 37.27 37.73 38.19 2 Nonborrowed............................................. 35.84 34.55 34.89 35.10 35.57 36.12 36.53 36.34 36.40 36.06 36.63 36.87 3 Reauired..................................................... 36.31 34.42 34.29 35.71 35.95 36.33 36.69 36.47 36.81 37.05 37.55 37.99 4 Deposits subject to reserve requirements2. . 486.1 504.6 528.9 564.4 569.1 575.7 577.8 582.1 586.1 592.1 595.6 600.3 5 Time and savings....................................... 322.1 337.1 354.3 383.5 387.0 390.5 395.4 399.2 400.7 406.0 407.1 410.5 Demand: 6 160.6 164.5 171.4 178.0 178.5 182.1 179.5 179.6 182.0 183.5 184.6 186.1 7 U.S. Government................................... 3.3 2.9 3.2 3.0 3.6 3.1 3.0 3.4 3.3 2.6 3.9 3.7 Not seasonally adjusted 8 Deposits subject to reserve requirements2.. 491.8 510.9 534.8 562.1 575.3 581.3 572.5 579.4 588.6 588.3 596.8 600.8 9 Time and savings.................................... 321.7 337.2 353.6 380.7 386.4 390.3 393.2 399.3 401.2 406.1 408.6 411.1 Demand: 10 166.6 170.7 177.9 178.7 185.1 187.9 176.1 176.6 183.8 179.3 183.7 '186.4 11 U.S. Government................................. 3.4 3.1 3.3 2.6 3.8 3.1 3.1 3.5 3.6 2.9 4.5 3.2 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 Mar. 29 Apr. 26 May 31 June 30 July 26 Aug. 30 P p p p p p Seasonally adjusted 1Loans and investments1......................................... 690.4 721.1 784.4 870.6 892.2 906.0 917.9 922.4 935.2 939.2 2 Including loans sold outright2.......................... 695.2 725.5 788.2 875.5 896.7 910.5 922.3 926.9 939.8 943.9 Loans: 3 Total.................................................................... 500.2 496.9 538.9 617.0 636.5 646.3 657.9 661.2 672.0 677.2 4 Including loans sold outright2...................... 505.0 501.3 542.7 621.9 641.0 650.8 662.3 665.7 676.6 681.9 5 Commercial and industrial................................ 183.3 176.0 4179.5 5201.4 210.3 213.3 219.2 220.4 222.3 224.4 6 Including loans sold outright2..................... 186.0 178.5 4181.9 5204.2 212.5 215.6 221.5 222.6 224.6 226.9 Investments: 7 U.S. Treasury..................................................... 50.4 79.4 97.3 95.6 95.6 97.6 97.1 98.4 99.7 97.0 8 Other................................................................... 139.8 144.8 148.2 158.0 160.1 162.1 162.9 162.8 163.5 165.0 Not seasonally adjusted 705.6 737.0 801.6 888.9 889.7 904.9 917.0 928.9 931.1 936.6 10 Including loans sold outright2......................... 710.4 741.4 805.4 893.8 894.2 909.4 921.4 933.3 935.7 941.3 Loans: 11 Total1.................................................................. 510.7 507.4 550.2 629.9 631.6 642.3 657.1 669.2 672.6 678.0 12 Including loans sold outright2...................... 515.5 511.8 554.0 634.8 636.1 646.8 661.5 673.7 677.1 682.7 13 Commercial and industrial.............................. 186.8 179.3 4182.9 5205.0 210.0 213.8 219.2 223.0 222.4 223.3 14 Including loans sold outright2..................... 189.5 181.8 4185.3 5207.8 212.2 216.1 221.5 225.2 224.7 225.8 Investments: 15 U.S. Treasury..................................................... 54.5 84.1 102.5 100.2 98.6 99.6 96.6 96.1 95.2 93.9 16 Other................................................................... 140.5 145.5 148.9 158.8 159.6 163.1 163.4 163.6 163.4 164.7 For notes see bottom of opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics □ September 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 Nov. Dec. Jan.p Feb.* Mar.p Apr.P May.p JuneP JulyP Aug.p All commercial 1 Loans and investments............... 846.4 916.5 939.1 921.6 926.0 936.0 947.7 967.4 966.8 972.1 977.0 2 Loans, gross........................... 594.9 659.3 680.1 664.9 668.0 677.8 685.0 707.4 707.8 713.5 718.4 Investments: 3 U.S. Treasury securities.. 102.5 98.5 100.2 97.9 99.6 98.6 99.6 96.6 95.9 95.2 93.9 4 Other................................... 148.9 158.8 158.8 158.8 158.5 159.6 163.1 163.4 163.2 163.4 164.7 5 Cash assets................................. 136.1 138.6 168.7 126.9 145.2 131.5 134.1 162.7 142.6 131.8 139.9 6 Currency and coin............... 12.1 14.6 13.9 14.0 13.8 14.3 14.1 14.3 14.6 14.6 15.0 7 Reserves with F.R. Banks... 26.1 26.3 29.3 26.6 31.0 30.2 27.6 30.3 30.8 23.6 29.7 8 Balances with banks............... 49.6 46.8 59.0 42.4 46.9 44.1 44.7 53.3 45.5 46.3 44.9 9 Cash items in process of collection.. 48.4 50.9 66.4 43.9 53.5 43.0 47.6 64.7 51.6 47.3 50.3 10 Total assets/total liabilities and capital i................................... 1,030.7 1,119.3 1,166.0 1,113.7 1,136.4 1,136.7 1,151.2 1,199.5 1,177.3 1,170.4 1,184.5 11 Deposits.................................... 838.2 887.2 939.4 883.6 899.7 896.2 910.3 946.1 926.2 924.0 929.8 Demand: 12 Interbank.......................... 45.4 41.7 51.7 37.1 42.6 37.4 38.8 50.7 40.5 40.2 40.1 13 U.S. Govt.......................... 3.0 4.8 7.3 4.5 5.8 4.8 6.1 3.2 7.1 4.2 2.7 14 Other................................. 288.4 294.0 323.9 284.2 288.6 280.2 292.0 310.6 294.9 293.2 295.8 Time: 15 9.2 9.0 9.8 9.1 8.7 9.0 9.0 9.4 9.8 10.2 10.6 16 Other................................... 492.2 537.8 546.6 548.8 554.0 564.8 564.4 572.2 573.9 576.2 580.6 17 Borrowings................................. 80.2 99.4 96.2 99.9 103.7 105.7 104.5 111.4 109.0 102.3 108.2 18 78.1 81.6 85.8 82.4 82.8 83.3 83.7 84.6 84.7 85.4 85.9 19 Memo: Number of banks......... 14,671 14,718 14,707 14,703 14,682 14,689 14,697 14,702 14,701 14,713 14,713 Member 20 620.5 658.6 675.5 659.5 661.8 668.6 676.8 693.8 691.5 695.8 698.9 21 Loans, gross........................... 442.9 479.0 494.9 481.8 483.1 490.5 495.3 514.3 512.8 517.7 520.3 Investments: 22 U.S. Treasury securities... 74.6 69.2 70.4 67.7 69.2 68.2 68.8 66.9 66.2 65.7 65.3 23 Other................................... 103.1 110.3 110.1 110.0 109.5 109.9 112.7 112.7 112.5 112.5 113.3 24 Cash assets, total....................... 108.9 110.6 134.4 102.2 117.2 104.8 106.5 130.7 114.6 104.2 111.6 25 Currency and coin................. 9.1 10.8 10.4 10.4 10.2 10.6 10.5 10.6 10.8 10.8 11.1 26 Reserves with F.R. Banks... 26.0 26.3 29.3 26.6 31.0 30.2 27.6 30.3 30.8 23.6 29.7 27 Balances with banks.............. 27.4 24.7 30.8 23.0 24.6 22.9 22.7 28.1 23.6 24.3 22.9 28 Cash items in process of collection.. 46.5 48.9 63.9 42.2 51.4 41.2 45.7 61.7 49.4 45.4 48.0 29 Total assets/total liabilities and capital i................................... 772.9 823.9 861.8 818.0 835.3 833.2 843.3 884.7 864.5 857.3 868.9 30 618.7 641.8 683.5 636.8 649.2 645.1 655.1 686.7 668.4 666.1 670.5 Demand: 31 42.4 38.7 48.0 34.4 39.5 34.7 36.0 47.5 37.7 37.3 37.2 32 U.S. Govt........................... 2.1 3.6 5.4 3.4 4.4 3.7 4.5 2.2 5.1 3.1 1.9 33 Other................................... 215.5 216.4 239.4 208.4 211.8 205.1 213.4 229.1 216.2 214.6 217.0 Time: 34 7.2 6.8 7.8 7.1 6.7 7.0 6.9 7.3 7.7 8.2 8.6 35 Other................................... 351.5 376.2 382.9 383.5 386.9 394.7 394.3 400.5 401.7 402.9 405.9 36 Borrowings................................. 71.7 87.8 84.9 88.0 90.8 91.8 91.1 96.9 94.2 88.0 93.9 37 58.6 61.2 63.7 61.8 62.1 62.4 62.7 63.3 63.4 64.0 64.3 38 Memo: Number of banks..... 5,759 5,680 5,669 5,659 5,659 5,654 5,645 5,638 5,611 5,613 5,613 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 I6an 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 All 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 53,345 52,244 5 Other................................................................ 143,731 147,500 153,053 157.937 78,642 80,191 83,583 86,033 6 Cash assets.............................................................. 124,072 129,562 130,726 159,264 75,488 76,072 74,641 92,050 7 Total assets/total liabilities1................................... 942,519 1,003,969 1,040,945 1,129,711 548,702 583,304 599,743 651,360 8 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 Other................................................................ 459,753 484,467 507,324 536,899 263,147 276,296 285,915 302,795 14 Borrowings.............................................................. 63,828 75,291 81,137 89,332 45,187 54,421 57,283 63,218 15 68,988 72,061 75,503 79,084 39,501 41,319 43,142 44,994 16 Memo: Number of banks..................................... 14,373 14,397 14,425 14,397 4,747 4,735 4,701 4,654 State member (all insured) Insured nonmember 17 136,915 144,000 144,597 152,518 192,825 207,085 221,896 239,265 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 22,874 23,183 24,091 43,387 44,434 46,275 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 49,659 52,204 52,570 57,605 63,629 69,648 70,615 80,445 Time: 28 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 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 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 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 48 270 275 293 310 8,867 8,914 8,998 9,039 * 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 □ September 1978 1.26 COMMERCIAL BANK ASSETS AND LIABILITIES Detailed Balance Sheet, March 31, 1978 Millions of dollars, except for number of banks. Member banks1 Insured Non­ Asset account commercial Large banks member banks banks1 Total All other New York City of Other City Chicago large 1Cash bank balances, items in process.......................................... 148,275 126,359 40,297 4,853 44,741 36,468 21,923 2 Currency and coin.................................................................... 11,654 8,556 922 183 2,734 4,718 3,097 3 Reserves with F.R. Banks........................................................ 29,373 29,373 5,021 1,338 11,935 11,079 1 4 Demand balances with banks in United States..................... 35,658 22,002 10,601 95 2,928 8,377 13,662 5 Other balances with banks in United States.......................... 5,250 2,914 584 5 726 1,598 2,337 6 Balances with banks in foreign countries............................... 4,235 3,713 582 327 1,819 985 522 7 Cash items in process of collection........................................ 62,105 59,801 22,588 2,904 24,599 9,710 2,303 8 Total securities held—Book value................................................ 256,200 177,684 20,044 8,012 57,309 92,319 78,536 9 U.S. Treasury........................................................................... 98,358 68,855 9,874 3,223 22,426 33,333 29,518 10 Other U.S. Government agencies........................................... 37,712 24,043 1,767 976 6,868 14,432 13,670 11 States and political subdivisions............................................. 113,825 80,789 8,027 3,616 26,803 42,344 33,038 12 All other securities................................................................... 6,202 3,923 376 197 1,192 2,157 2,280 11 103 74 20 54 29 14 Trading-account securities........................................................ 5,922 5,745 2,143 867 2,487 248 176 15 U.S. Treasury....................................................................... 3,358 3,338 1,361 659 1,245 72 21 16 Other U.S. Government agencies........................................ 981 974 365 65 496 48 7 17 998 983 285 96 529 73 15 18 All other trading acct. securities......................................... 482 377 132 47 197 1 105 19 103 74 20 54 29 20 Bank investment portfolios........................................................ 250,278 171,939 17,901 7,145 54,822 92,071 78,359 21 U.S. Treasury....................................................................... 94,999 65,518 8,513 2,564 21,180 33,261 29,497 22 Other U.S. Government agencies........................................ 36,731 23,069 1,402 911 6,372 14,384 13,664 23 States and political subdivisions.......................................... 112,827 79,807 7,742 3,520 26,274 42,270 33,023 24 All other portfolio securities................................................ 5,720 3,546 244 150 996 2,156 2,175 1,624 1,373 307 107 488 471 252 26 Federal funds sold and securities resale agreement..................... 45,780 35,129 3,622 1,931 17,552 12,024 10,715 27 Commercial banks................................................................... 38,829 28,401 2,139 1,587 13,391 11,284 10,492 28 Brokers and dealers................................................................. 4,315 4,168 1,151 269 2,166 581 147 29 Others........................................................................................ 2,636 2,560 332 75 1,995 158 75 616,444 459,958 72,630 24,555 173,551 189,222 156,486 31 Less: Unearned income on loans............................................ 14,864 9,980 586 96 3,243 6,054 4,884 32 Reserves for loan loss.................................................... 6,904 5,471 1,233 321 2,070 1,846 1,433 33 Other loans, net........................................................................ 594,676 444,507 70,811 24,137 168,237 181,322 150,169 Other loans, gross, by category 34 182,790 125,708 9,472 2,463 46,667 67,105 57,082 35 Construction and land development................................... 21,562 16,178 2,253 505 7,951 5,470 5,384 36 Secured by farmland............................................................ 7,919 3,453 21 8 381 3,042 4,466 37 Secured by residential properties........................................ 104,315 73,123 4,769 1,344 27,459 39,552 31,191 38 1- to 4-family residences.................................................... 99,365 69,561 4,203 1,244 26,163 37,951 29,804 39 FHA-insured or VA-guaranteed................................. 7,612 6,613 547 45 3,581 2,440 999 40 91,754 62,948 3,655 1,199 22,582 35,511 28,805 41 4,950 3,562 566 100 1,296 1,600 1,387 42 FHA-insured................................................................. 387 325 129 25 84 86 62 43 Conventional................................................................. 4,562 3,237 437 74 1,212 1,514 1,325 44 Secured by other properties............................................... 48,994 32,953 2,430 607 10,875 19,041 16,041 45 Loans to financial institutions.................................................. 34,258 32,199 11,202 4,135 13,951 2,910 2,059 46 REIT’s and mortgage companies........................................ 8,476 8,092 2,267 869 4,298 658 384 47 Domestic commercial banks................................................ 2,806 2,136 743 138 1,008 247 670 48 Banks in foreign countries................................................... 6,597 6,427 2,786 264 2,681 696 170 49 Other depository institutions............................................... 1,424 1,302 211 40 840 212 122 50 Other financial institutions.................................................. 14,955 14,242 5,196 2,824 5,124 1,097 713 51 Loans to security brokers and dealers.................................... 10,108 9,805 5,597 1,420 2,497 291 303 52 Other loans to purchase or carry securities........................... 4,216 3,494 376 302 1,833 983 722 53 Loans to farmers—except real estate.................................... 25,440 13,955 165 157 3,321 10,312 11,485 54 Commercial and industrial loans............................................ 201,203 163,093 37,199 12,602 64,071 49,221 38,110 55 Loans to individuals................................................................. 142,918 98,541 6,336 2,195 35,289 54,721 44,377 56 115,070 79,424 4,732 1,406 29,071 44,215 35,646 57 Passenger automobilities.................................................. 51,361 32,804 889 157 9,796 21,962 18,557 58 Residential repair and modernization............................. 7,325 4,834 286 69 1,771 2,708 2,491 59 Credit cards and related plans........................................ 18,708 16,487 2,085 1,003 8,846 4,554 2,221 60 Charge-account credit cards........................................ 14,819 13,256 1,351 964 7,288 3,653 1,564 61 Check and revolving credit plans................................ 3,888 3,231 734 39 1,558 900 657 62 Other retail consumer goods........................................... 17,696 12,036 368 53 4,480 7,136 5,660 63 Mobile homes............................................................... 9,097 6,376 169 20 2,359 3,828 2,721 64 Other.............................................................................. 8,599 5,659 199 33 2,121 3,307 2,939 65 Other instalment loans..................................................... 19,980 13,262 1,104 124 4,178 7,856 6,718 66 Single-payment loans to individuals................................... 27,848 19,117 1,604 789 6,218 10,505 8,731 67 All other loans......................................................................... 15,510 13,163 2,284 1,279 5,921 3,679 2,348 898,279 658,693 94,784 34,187 243,587 286,136 239,671 69 Direct lease financing................................................................... 5,990 5,626 1,041 140 3,458 988 364 70 Fixed assets—Buildings, furniture, real estate........................... 21,948 16,359 2,380 760 6,227 6,992 5,595 71 Investment in unconsolidated subsidiaries................................. 3,079 3,038 1,498 242 1,201 98 41 72 Customer acceptances outstanding............................................. 13,803 13,376 6,540 939 5,492 405 All 73 Other assets................................................................................... 37,661 33,818 14,263 1,283 13,472 4,800 3,907 74 Total assets................................................................................... 1,129,035 857,269 160,802 42,404 318,177 335,885 271,928 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 Insured Non- Liability or capital account commercial Large banks member banks banks1 Total All other New York City of Other City Chicago large 75 Demand deposits........................................................ .............. 343,578 264,614 61,165 10,354 94,367 98,728 78,977 76 Mutual savings banks............................................................ 1,242 1,068 511 2 252 304 176 77 Other individuals, partnerships, and corporations............. 264,540 196,602 31,756 7,025 75,203 82,618 67,937 78 U.S. Government................................................................... 3,550 2,370 146 31 681 1,512 1,180 79 States and political subdivisions............................................ 16,671 11,298 663 277 3,340 7,019 5,372 80 Foreign governments, central banks, etc.............................. 1,439 1,346 1,083 15 203 44 92 81 Commercial banks in United States..................................... 36,160 34,900 17,748 2,499 10,586 4,067 1,271 82 Banks in foreign countries..................................................... 7,023 6,856 5,306 213 1,130 207 167 83 Certified and officers’ checks, etc.......................................... 12,955 10,173 3,951 293 2,971 2,957 2,783 84 Time deposits.............................................................................. 340,980 247,508 36,646 14,894 88,682 107,286 93,472 85 97 77 1 76 21 86 Mutual savings banks............................................................ 367 350 171 45 113 21 17 87 Other individuals, partnerships, and corporations.............. 267,045 192,741 27,651 10,975 67,811 86,305 74,304 88 U.S. Government................................................................... 858 669 45 22 354 249 189 89 States and political subdivisions............................................ 56,281 38,502 1,820 1,340 15,789 19,553 17,779 90 Foreign governments, central banks, etc.............................. 8,469 8,224 4,872 1,442 1,794 116 245 91 Commercial banks in United States..................................... 6,473 5,719 1,380 982 2,599 758 754 92 Banks in foreign countries.................................................... 1,389 1,226 708 88 221 209 163 93 Savings deposits.......................................................................... 224,267 155,670 11,086 2,909 56,219 85,456 68,597 94 Individuals and nonprofit organizations............................... 208,729 145,150 10,324 2,758 52,523 79,545 63,579 95 Corporations and other profit organizations....................... 10,674 7,433 509 142 3,103 3,678 3,241 96 60 47 4 18 26 13 97 States and political subdivisions............................................ 4,766 3,006 231 io 559 2,205 1,760 98 All other.................................................................................. 38 35 18 • 15 2 4 99 Total deposits............................................................................. 908,825 667,792 108,896 28,157 239,268 291,470 241,046 100 Federal funds purchased and securities sold under agreements to repurchase....................................................................... 89,613 84,592 21,755 9,112 40,981 12,744 5,026 101 Commercial banks................................................................. 45,167 43,009 8,459 6,188 22,824 5,537 2,158 102 Brokers and dealers................................................................ 10,272 9,595 2,115 1,115 5,029 1,336 682 103 Others...................................................................................... 34,175 31,988 11,181 1,808 13,128 5,871 2,186 104 Other liabilities for borrowed money....................................... 6,413 6,073 2,583 123 2,608 759 340 105 Mortgage indebtedness.............................................................. 1,686 1,380 229 29 681 442 310 106 Bank acceptances outstanding.................................................. 14,394 13,966 7,119 942 5,499 407 428 107 Other liabilities........................................................................... 21,389 18,620 6,655 1,158 7,006 3,802 2,897 108 Total liabilities............................................................................ 1,042,320 792,424 147,237 39,521 296,042 309,623 250,047 109 Subordinated notes and debentures.......................................... 5,734 4,459 1,109 80 1,995 1,275 1,275 110 Equity capital............................................................................. 80,981 60,387 12,456 2,802 20,141 24,987 20,606 Ill Preferred stock....................................................................... 80 32 2 29 49 112 Common stock....................................................................... 17,439 12,623 2,645 570 3,926 5,482 4,822 113 Surplus..................................................................................... 31,468 22,763 4,542 1,404 7,997 8,821 8,708 114 Undivided profits................................................................... 30,246 23,763 5,137 776 7,855 9,994 6,485 115 Other capital reserves............................................................. 1,748 1,206 132 52 361 660 543 116 Total liabilities and equity capital............................................. 1,129,035 857,269 160,802 42,404 318,177 335,885 271,928 Memo items: 117 Demand deposits adjusted2....................................................... 241,764 167,543 20,683 4,920 58,500 83,439 74,223 Average for last 15 or 30 days: 118 Cash and due from bank....................................................... 133,088 113,373 32,111 5,086 42,039 34,136 19,722 119 Federal funds sold and securities purchased under agree­ ments to resell................................................................. 46,678 35,671 4,328 1,997 16,675 12,671 11,090 120 Total loans............................................................................... 596,705 446,117 71,996 24,061 168,519 181,541 150,589 121 Time deposits of $100,000 or more....................................... 165,180 135,150 30,866 11,960 56,901 35,422 30,030 122 Total deposits......................................................................... 887,163 649,600 101,607 26,568 233,300 288,125 237,573 123 Federal funds purchased and securities sold under agree­ ments to repurchase........................................................ 91,131 86,470 23,676 9,751 40,486 12,557 4,661 124 Other liabilities for borrowed money................................... 6,488 6,176 2,702 117 2,538 820 312 125 Standby letters of credit outstanding........................................ 16,408 15,465 8,772 1,169 4,378 1,146 944 126 Time deposits of $100,000 or more........................................... 168,974 138,295 31,243 12,496 58,552 36,004 30,679 127 Certificates of deposit............................................................ 144,741 117,812 27,027 10,698 49,085 31,002 26,930 128 Other time deposits................................................................ 24,233 20,483 4,216 1,798 9,467 5,002 3,750 129 Number of banks....................................................................... 14,372 5,652 12 9 153 5,478 8,733 1 Member banks exclude and nonmember banks include 13 noninsured Note.—Data include consolidated reports, including figures for all trust companies that are members of the Federal Reserve System. bank-premises subsidiaries and other significant majority-owned do­ 2 Demand deposits adjusted are demand deposits other than domestic mestic subsidiaries. Securities are reported on a gross basis before deduc­ commercial interbank and U.S. Govt., less cash items reported as in tions of valuation reserves. Holdings by type of security will be reported process of collection. as soon as they become available. Back data in lesser detail were shown in previous Bulletins. Details 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 □ September 1978 1.27 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1978 Account July 5 July 12 July 19 July 26 Aug. 2*> Aug. 9p Aug. 16^ Aug. 23p Aug. 30* 1 Total loans and investments. 473,375 465,227 463,038 467,773 467,722 470,167 473,202 467,324 468,539 Loans: Federal funds sold1................................ 31,647 25,644 22,951 26,864 25,659 27,084 26,805 22,900 23,190 To commercial banks........................ 22,972 19,963 17,820 20,055 19,981 19,762 20,720 17,600 17,668 To brokers and dealers involving— U.S. Treasury securities................ 5,642 2,841 2,734 4,152 2,874 4,446 3,390 2,721 2,797 Other securities.............................. 632 487 486 538 587 551 511 554 542 To others............................................ 2,401 2,353 1,911 2,119 2,217 2,325 2,184 2,025 2,183 Other, gross....................................................... 342,449 340,047 340,648 341,273 342,414 343,201 345,689 344,078 345,153 Commercial and industrial........................... 135,588 135,112 134,973 134,664 135,378 134,562 135,128 134,970 134,938 Agricultural................................................... 5,088 5,121 5,135 5,156 5,188 5,222 5,227 5,223 5,244 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities........................ 1,563 1,051 832 1,945 1,053 1,743 1,536 958 915 11 Other securities.................................... 8,896 8,618 8,654 8,162 8,392 8,276 8,866 8,118 8,870 To others: 12 U.S. Treasury securities........................ 100 100 100 100 106 106 106 105 106 13 Other securities...................................... 2,663 2,652 2,642 2,627 2,620 2,623 2,619 2,626 2,626 To nonbank financial institutions: 14 Personal and sales finance cos., etc......... 8,615 8,200 8,042 7,909 8,097 8,044 7,969 8,274 7,894 15 Other......................................................... 15,254 15,266 15,108 15,298 15,423 15,557 15.700 15,577 15,535 16 Real estate..................................................... 81,011 81,411 81,869 82,309 82,710 83,164 83.701 84,048 84,274 To commercial banks: 17 Domestic................................................... 2,591 2,132 2,354 2,297 2,498 2,332 2,327 2,246 2,316 18 Foreign...................................................... 6,348 6,173 6,333 5,976 5,809 6,242 6,024 6,010 6,116 19 Consumer instalment................................... 50,628 50,777 51,010 51,356 51,665 51,854 52,223 52,436 52,686 20 Foreign govts., official institutions, etc....... 1,500 1,485 1,513 1,536 1,644 1,671 1,591 1,564 1,623 21 All other loans.............................................. 22,604 21,949 22,083 21,938 21,831 21,805 22,672 21,923 22,010 22 Less: Loan loss reserve and unearned income on loans.......................................... 10,187 10,264 10,342 10,387 10,448 10,543 10,621 10,677 10,693 23 Other loans, net................................................. 332,262 329,783 330,306 330,886 331,966 332,658 335,068 333,401 334,460 Investments: U.S. Treasury securities.............................. 42,556 42,501 42,445 42,560 42,847 42,613 43,577 43,331 42,832 Bills.......................................................... 4,132 4,130 4,059 4,321 4,497 4,418 4,278 4,737 4,621 Notes and bonds, by maturity: Within 1 year....................................... 7,466 7,440 7,472 7,501 7,255 7,227 6,912 6,623 6,685 1 to 5 years.......................................... 26,241 25,837 25,829 25,667 26,242 26,085 26,565 26,242 25,924 After 5 years........................................ 4,717 5,094 5,085 5,071 4,853 4,883 5,822 5,729 5,602 Other securities............................................ 66,910 67,299 67,336 67,463 67,250 67,812 67,752 67,692 68,057 Obligations of States and political subdivisions: Tax warrants, short-term notes, and bills........................................... 6,056 6,323 6,271 6,202 6,131 6,540 6,110 6,079 6,122 All other............................................... 44,410 44,651 44,713 44,800 44,764 44,947 45,352 45,382 45,732 Other bonds, corporate stocks, and securities: Certificates of participation2.............. 2,857 2,846 2,852 2,886 2,870 2,847 2,796 2,836 2,837 All other, including corporate stocks. 13,587 13,479 13,500 13,575 13,485 13,478 13,494 13,395 13,366 34 Cash items in process of collection............... 54,024 44,515 46,558 41,123 45,401 40,752 47,325 41,697 43,509 35 Reserves with F.R. Banks.............................. 17,422 22,412 29,937 16,302 24,721 20,679 21,713 23,166 22,446 36 Currency and coin.......................................... 5,923 6,677 6,653 6,648 6,256 6,191 6,354 6,506 6,717 37 Balances with domestic banks....................... 18,267 15,795 14,569 15,224 14,621 13,727 15,736 13,737 14,098 38 Investments in subsidiaries not consolidated. 3,195 3,238 3,315 3,306 3,369 3,378 3,267 3,274 3,286 39 Other assets..................................................... 64,854 64,033 62,810 62,289 63,121 63,473 61,397 63,955 63,316 40 Total assets/total liabilities. 637,060 621,897 626,880 612,665 625,211 618,367 628,994 619,659 621,911 Deposits: Demand deposits.............................................. 212,329 191,762 191,751 185,763 192,013 183,778 194,657 183,368 186,646 Individuals, partnerships, and corps.......... 148,554 139,769 136,769 134,571 138,220 134,261 140,184 133,405 135,429 States and political subdivisions................. 6,546 5,932 5,905 5,884 6,632 5,643 6,007 5,484 5,536 U.S. Govt..................................................... 1,849 1,763 2,908 2,111 1,444 1,065 1,342 1,158 1,053 Domestic interbank: Commercial.............................................. 36,392 28,331 28,428 27,417 28,213 26,295 29,096 26,871 27,476 Mutual savings........................................ 1,234 957 921 838 913 816 871 753 783 Foreign: Governments, official institutions, etc... 1,105 889 1,495 1,167 1,273 1,060 1,031 1,264 1,253 Commerial banks.................................... 7,470 6,924 6,026 6,675 7,275 6,726 6,937 7,035 6,557 Certified and officers’ checks..................... 9,179 7,197 9,299 7,100 8,043 7,912 9,189 7,398 8,559 Time and savings deposits3............................. 266,706 266,969 267,044 267,329 267,169 268,002 267,895 269,280 269,499 Savings4....................................................... 93,179 92,695 92,436 92,134 91,862 91,879 91,858 91,898 91,686 Time: 173,527 174,274 174,608 175,195 175,307 176,123 176,037 177,382 177,813 Individuals, partnerships, and corps.... 134,194 135,163 135,441 135,838 135,914 136,351 136,466 136,923 136,996 States and political subdivisions............. 24,446 24,537 24,852 25,243 25,351 25,679 25,652 26,153 26,244 Domestic interbank................................ 6,326 6,301 6,172 6,015 6,071 6,187 6,054 6,371 6,276 Foreign govts., official institutions, etc.. 6,977 6,694 6,564 6,510 6,355 6,279 6,209 6,278 6,613 57 Federal funds purchased, etc.5............ 72,914 78,280 77,842 73,628 78,014 80,263 80,066 80,213 79,028 Borrowings from: 58 F.R. Banks......................................... 287 661 4,612 697 1,696 392 611 1,192 735 59 Others............................................... 6,825 6,082 6,104 6,154 6,544 6,300 6,185 6,106 6,663 60 Other liabilities, etc.6........................ 31,715 31,689 33,224 32,643 33,133 32,958 32,977 32,827 32,666 61 Total equity capital and subordinated notes/debentures7.......................... 46,284 46,454 46,303 46,451 46,642 46,674 46,603 46,673 46,674 1 Includes securities purchased under agreements to resell. 5 Includes securities sold under agreements to repurchase. 2 Federal agencies only. 6 Includes minority interest in consolidated subsidiaries and deferred 3 Includes time deposits of U.S. Govt, and of foreign banks, which are tax portion of reserves for loans. not shown separately. 7 Includes reserves for securities and contingency portion of reserves 4 For amounts of these deposits by ownership categories, see Table 1.30. for loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks All 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1978 Account July 5 July 12 July 19 July 26 Aug. 2p Aug. 9 p Aug. 16p Aug. 23p Aug. 30p 1 Total loans and investments................................ 96,623 93,627 92,993 94,499 95,187 95,211 97,832 93,929 94,099 Loans: 2 Federal funds sold1.......................................... 6,591 5,173 4,410 5,543 5,799 5,038 5,614 4,464 4,534 3 To commercial banks................................. 4,195 2,745 2,614 3,685 3,769 2,773 3,517 2,943 2,900 To brokers and dealers involving— 4 U.S. Treasury securities........................... 1,470 1,516 1,269 1,410 1,261 1,622 1,435 947 929 5 Other securities........................................ 3 1 5 19 19 11 3 6 10 6 To others...................................................... 923 911 522 429 750 632 659 568 695 7 Other gross...................................................... 72,183 70,314 70,590 70,842 70,871 71,513 72,973 70,728 71,156 8 Commercial and industrial......................... 35,610 35,396 35,514 35,207 35,721 35,361 35,816 35,586 35,745 9 Agricultural.................................................. 159 160 150 151 151 152 153 154 163 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities...................... 1,421 881 691 1,810 919 1,532 1,394 807 786 11 Other securities.................................... 4,742 4,515 4,613 4,164 4,406 4,309 a,in 4,147 4,605 To others: 12 U.S. Treasury securities...................... 25 25 25 25 24 25 25 26 28 13 Other securities.................................... 355 351 359 357 358 367 367 368 364 To nonbank financial institutions: 14 Personal and sales finance cos., etc........ 3,141 2,834 2,718 2,694 2,786 2,754 2,675 2,926 2,626 15 Other........................................................ 4,711 4,664 4,627 4,805 4,804 4,808 4,813 4,824 4,746 16 Real estate.................................................... 9,122 9,137 9,202 9,255 9,319 9,368 9,394 9,407 9,428 To commercial banks: 17 Domestic.................................................. 866 620 736 736 823 797 787 681 672 18 Foreign..................................................... 2,852 2,827 2,941 2,621 2,551 2,968 2,756 2,643 2,737 19 Consumer instalment.................................. 4,626 4,660 4,685 4,706 4,735 4,756 4,804 4,822 4,841 20 Foreign govts, official institutions, etc....... 246 235 271 354 320 357 330 345 375 21 All other loans............................................ 4,307 4,009 4,058 3,957 3,954 3,959 4,882 3,992 4,040 22 Less: Loan loss reserve and unearned income on loans.............................................. 1,747 1,761 1,772 1,784 1,806 1,824 1,838 1,839 1,847 23 Other loans, net............................................... 70,436 68,553 68,818 69,058 69,065 69,689 71,135 68,889 69,309 Investments: 24 U.S. Treasury securities................................... 8,984 9,129 9,109 9,324 9,761 9,783 10,275 9,866 9,477 25 Bills.............................................................. 1,064 1,173 1,285 1,569 1,771 1,777 1,714 1,935 1,893 Notes and bonds, by maturity: 26 Within 1 year........................................... 972 929 912 935 926 988 910 619 672 27 1 to 5 years.............................................. 6,022 5,906 5,844 5,797 6,123 6,099 6,065 5,887 5,629 28 After 5 years............................................ 926 1,121 1,068 1,023 941 919 1,586 1,425 1,283 29 Other securities............................................... 10,612 10,772 10,656 10,574 10,562 10,701 10,808 10,710 10,779 Obligations of States and political subdivisions: 30 Tax warrants, short-term notes, and bills 1,568 1,744 1,717 1,660 1,551 1,834 1,694 1,690 1,732 31 Allother................................................... 6,841 7,003 6,895 6,884 6,900 6,906 7,072 7,016 7,023 Other bonds, corporate stocks, and securities: 32 Certificates of participation 2.................. 476 476 479 496 516 502 500 521 517 33 All other, including corporate stocks 1,727 1,549 1,565 1,534 1,595 1,459 1,542 1,483 1,507 34 Cash items in process of collection................... 17,087 13,775 16,527 12,978 14,127 13,865 15,739 13,950 15,534 35 Reserves with F.R. Banks.................................. 4,896 6,701 8,359 3,957 6,300 5,869 5,509 4,884 4,683 36 Currency and coin.............................................. 881 923 942 934 906 899 920 933 973 37 Balances with domestic banks........................... 9,590 8,754 7,827 8,593 7,337 6,749 8,406 7,413 7,786 38 Investments in subsidiaries not consolidated... 1,688 1,700 1,714 1,715 1,715 1,707 1,701 1,716 1,722 39 Other assets.......................................................... 25,937 25,322 23,381 23,897 24,889 25,295 23,171 26,344 25,361 40 Total assets/total liabilities.................................. 156,702 150,802 151,743 146,573 150,461 149,595 153,278 149,169 150,158 Deposits: 41 Demand deposits................................................ 61,727 53,339 54,742 51,493 53,215 50,584 54,828 51,388 53,163 42 Individuals, partnerships, and corps............ 31,153 28,981 28,294 27,512 28,715 27,517 29,118 27,115 28,215 43 States and political subdivisions................. 490 458 548 569 549 412 416 509 388 44 U.S. Govt...................................................... 155 275 483 322 115 132 120 141 114 Domestic interbank: 45 Commercial............................................... 18,481 14,248 14,349 13,678 13,392 12,528 14,158 13,475 13,648 46 Mutual savings.......................................... 690 499 491 440 All 401 439 373 377 Foreign: 47 Governments, official institutions, etc.... 884 677 1,240 882 1,018 808 111 1,005 994 48 Commercial banks.................................... 5,678 5,237 4,349 5,005 5,505 5,154 5,194 5,329 4,924 49 Certified and officers’ checks....................... 4,196 2,964 4,988 3,085 3,449 3,632 4,606 3,441 4,503 50 Time and savings deposits3............................... 46,452 46,587 46,366 46,236 45,614 45,572 45,589 45,374 45,634 51 Savings4......................................................... 9,881 9,805 9,746 9,703 9,598 9,591 9,573 9,560 9,526 52 Time............................................................... 36,571 36,782 36,620 36,533 36,016 35,981 36,016 35,814 36,108 53 Individuals, partnerships and corps......... 28,169 28,385 28,269 28,262 27,843 27,798 27,963 27,640 27,681 54 States and political subdivisions.............. 1,595 1,648 1,695 1,706 1,741 1,759 1,806 1,831 1,790 55 Domestic interbank.................................. 2,066 2,169 2,112 2,039 2,003 2,027 1,945 1,965 1,919 56 Foreign govts., official institutions, etc... 4,051 3,873 3,824 3,795 3,695 3,670 3,592 3,646 3,956 57 Federal funds purchased, etc.5........................... 18,506 20,821 17,675 18,094 19,654 22,739 21,850 21,286 20,150 Borrowings from: 58 F.R. Banks........................................................ 0 0 2,420 65 878 0 285 175 460 59 Others....................j......................................... 3,033 2,926 2,879 3,012 3,029 2,996 3,112 3,180 3,379 60 Other liabilities, etc.6.L........................................ 13,870 13,986 14,534 14,542 14,890 14,490 14,387 14,542 14,143 61 Total equity capital and subordinated notes/ debentures7................................................... 13,114 13,143 13,127 13,131 13,181 13,214 13,227 13,224 13,229 1 Includes securities purchased under agreements to resell. 5 Includes securities sold under agreements to repurchase. 2 Federal agencies only. , , . , 6 Includes minority interest in consolidated subsidiaries and deferred 3 Includes time deposits of U.S. Govt, and of foreign banks, which tax portion of reserves for loans. are not shown separately. i 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 □ September 1978 1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS OUTSIDE NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1978 Account July 5 July 12 July 19 July 26 Aug. 2v Aug. 9p Aug. 16p Aug. 23p Aug. 30p 1 Total loans and investments.................................. 376,752 371,600 370,045 373,274 372,535 374,956 375,370 373,395 374,440 Loans: 2 Federal funds sold1............................................ 25,056 20,471 18,541 21,321 19,860 22,046 21,191 18,436 18,656 3 To commercial banks................................... 18,777 17,218 15,206 16,370 16,212 16,989 17,203 14,657 14,768 To brokers and dealers involving— 4 U.S. Treasury securities........................... 4,172 1,325 1,465 2,742 1,613 2,824 1,955 1,774 1,868 5 Other securities.......................................... 629 486 481 519 568 540 508 548 532 6 To others........................................................ 1,478 1,442 1,389 1,690 1,467 1,693 1,525 1,457 1,488 7 Other, gross........................................................ 270,266 269,733 270,058 270,431 271,543 271,688 272,716 273,350 273,997 8 Commercial and industrial........................... 99,978 99,716 99,459 99,457 99,657 99,201 99,312 99,384 99,193 9 Agricultural.................................................... 4,929 4,961 4,985 5,005 5,037 5,070 5,074 5,069 5,081 For purchasing or carrying securities: To brokers and dealers: 10 U.S. Treasury securities......................... 142 170 141 135 134 211 142 151 129 11 Other securities...................................... 4,154 4,103 4,041 3,998 3,986 3,967 4,089 3,971 4,265 To others: 12 U.S. Treasury securities........................ 75 75 75 75 82 81 81 79 78 13 Other securities...................................... 2,308 2,301 2,283 2,270 2,262 2,256 2,252 2,258 2,262 To nonbank financial institutions: 14 Personal and sales finance cos., etc.......... 5,474 5,366 5,324 5,215 5,311 5,290 5,294 5,348 5,268 15 Other.......................................................... 10,543 10,602 10,481 10,493 10,619 10,749 10,887 10,753 10,789 16 Real estate..................................................... 71,889 72,274 72,667 73,054 73,391 73,796 74,307 74,641 74,846 To commercial banks: 17 Domestic.................................................... 1,725 1,512 1,618 1,561 1,675 1,535 1,540 1,565 1,644 18 Foreign...................................................... 3,496 3,346 3,392 3,355 3,258 3,274 3,268 3,367 3,379 19 Consumer instalment.................................... 46,002 46,117 46,325 46,650 46,930 47,098 47,419 47,614 47,845 20 Foreign govts., official institutions, etc........ 1,254 1,250 1,242 1,182 1,324 1,314 1,261 1,219 1,248 21 All other loans.............................................. 18,297 17,940 18,025 17,981 17,877 17,846 17,790 17,931 17,970 22 Less: Loan reserve and unearned income on loans........................................................ 8,440 8,503 8,570 8,603 8,642 8,719 8,783 8,838 8,846 23 Other loans, net.................................................. 261,826 261,230 261,488 261,828 262,901 262,969 263,933 264,512 265,151 Investments: 24 U.S. Treasury securities.................................... 33,572 33,372 33,336 33,236 33,086 32,830 33,302 33,465 33,355 25 Bills................................................................ 3,068 2,957 2,774 2,752 2,726 2,641 2,564 2,802 2,728 Notes and bonds, by maturity: 26 Within 1 year............................................. 6,494 6,511 6,560 6,566 6,329 6,239 6,002 6,004 6,013 27 1 to 5 years................................................ 20,219 19,931 19,985 19,870 20,119 19,986 20,500 20,355 20,295 28 After 5 years.............................................. 3,791 3,973 4,017 4,048 3,912 3,964 4,236 4,304 4,319 56,298 56,527 56,680 56,889 56,688 57,111 56,944 56,982 57,278 Obligations of States and political sub­ divisions : 30 Tax warrants, short-term notes, and bills. 4,488 4,579 4,554 4,542 4,580 4,706 4,416 4,389 4,390 31 Allother.................................................... 37,569 37,648 37,818 37,916 37,864 38,041 38,280 38,366 38,709 Other bonds, corporate stocks, and securities: 32 Certificates of participation2.................... 2,381 2,370 2,373 2,390 2,354 2,345 2,296 2,315 2,320 33 All other, including corporate stocks.... 11,860 11,930 11,935 12,041 11,890 12,019 11,952 11,912 11,859 34 Cash items in process of collection..................... 36,937 30,740 30,031 28,145 31,274 26,887 31,586 27,747 27,975 35 Reserves with F.R. Banks.................................... 12,526 15,711 21,578 12,345 18,421 14,810 16,204 18,282 17,763 36 Currency and coin................................................ 5,042 5,754 5,711 5,714 5,350 5,292 5,434 5,573 5,744 37 Balances with domestic banks............................. 8,677 7,041 6,742 6,631 7,284 6,978 7,330 6,324 6,312 38 Investments in subsidiaries not consolidated.... 1,507 1,538 1,601 1,591 1,654 1,671 1,566 1,558 1,564 39 Other assets........................................................... 38,917 38,711 39,429 38,392 38,232 38,178 38,226 37,611 37,955 480,358 471,095 475,137 466,092 474,750 468,772 475,716 470,490 471,753 Deposits: 41 Demand deposits................................................ 150,602 138,423 137,009 134,270 138,798 133,194 139,829 131,980 133,483 42 Individuals, partnerships, and corps............ 117,401 110,788 108,475 107,059 109,505 106,744 111,066 106,290 107,214 6,056 5,474 5,357 5,315 6,083 5,231 5,591 4,975 5,148 44 U.S. Govt....................................................... 1,694 1,488 2,425 1,789 1,329 933 1,222 1,017 939 Domestic interbank: 17,911 14,083 14,079 13,739 14,821 13,767 14,938 13,396 13,828 544 458 430 398 441 415 432 380 406 Foreign: 47 Governments, official institutions, etc.... 221 212 255 285 255 252 254 259 259 48 Commercial banks..................................... 1,792/ 1,687 1,677 1,670 1,770 1,572 1,743 1,706 1,633 49 Certified and officers’ checks....................... 4,983 4,233 4,311 4,015 4,594 4,280 4,583 3,957 4,056 50 Time and savings deposits*............................... 220,254 220,382 220,678 221,093 221,555 222,430 222,306 223,906 223,865 51 Savings4......................................................... 83,298 82,890 82,690 82,431 82,264 82,288 82,285 82,338 82,160 136,956 137,492 137,988 138,662 139,291 140,142 140,021 141,568 141,705 53 Individuals, partnerships, and corps........ 106,025 106,778 107,172 107,576 108,071 108,553 108,503 109,283 109,315 54 States and political subdivisions.............. 22,851 22,889 23,157 23,537 23,610 23,920 23,846 24,322 24,454 55 Domestic interbank................................... 4,260 4,132 4,060 3,976 4,068 4,160 4,109 4,406 4,357 56 Foreign govts., official institutions, etc... 2,926 2,821 2,740 2,715 2,660 2,609 2,617 2,632 2,657 57 Federal funds purchased, etc. 5............................ 54,408 57,459 60,167 55,534 58,360 57,524 58,216 58,927 58,878 Borrowings from: 58 F.R. Banks....................................................... 287 661 2,192 632 818 392 326 1,017 275 59 Others................................................................ 3,792 3,156 3,225 3,142 3,515 3,304 3,073 2,926 3,284 60 Other liabilities, etc.6............................................ 17,845 17,703 18,690 18,101 18,243 18,468 18,590 18,285 18,523 61 Total equity capital and subordinated notes/debentures ?.......................................... 33,170 33,311 33,176 33,320 33,461 33,460 33,376 33,449 33,445 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 reserve* 4 For amounts of these deposits by ownership categories, see Table 1.30. for loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Banks A23 1.30 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda Millions of dollars, Wednesday figures 1978 Account July 5 July 12 July 19 July 26 Aug. 2p Aug. 9» Aug. 16p Aug. 23p Aug. 30p Total loans (gross) and investments adjusted1 1 Large Banks....................................................... 457,999 453,396 453,206 455,808 455,691 458,616 460,776 458,155 459,248 2 New York City banks................................... 93,309 92,023 91,415 91,862 92,401 93,465 95,366 92,144 92,374 3 Banks outside New York City..................... 364,690 361,373 361,791 363,946 363,290 365,151 365,410 366,011 366,874 Total loans (gross), adjusted 348,533 343,596 343,425 345,785 345,594 348,191 349,447 347,132 348,359 5 New York City banks................................... 73,713 72,122 71,650 71,964 72,078 72,981 74,283 71,568 72,118 6 Banks outside New York City..................... 274,820 271,474 271,775 273,821 273,516 275,210 275,164 275,564 276,241 Demand deposits, adjusted2 120,064 117,153 113,857 115,112 116,955 115,666 116,894 113,642 114,608 26,004 25,041 23,383 24,515 25,581 24,059 24,811 23,822 23,867 94,060 92,112 90,474 90,597 91,374 91,607 92,083 89,820 90,741 Large negotiable time CD’s included in time and savings deposits3 Total: 87,165 87,324 87,334 87,425 87,243 87,869 87,608 88,426 88,689 25,566 25,682 25,487 25,328 24,780 24,807 24,748 24,539 24,817 12 Banks outside New York City..................... 61,599 61,642 61,847 62,097 62,463 63,062 62,860 63,887 63,872 Issued to IPC’s: 61,898 62,319 62,432 62,474 62,227 62,562 62,448 62,823 62,848 18,384 18,616 18,424 18,405 17,945 17,999 18,073 17,761 17,794 15 Banks outside New York City..................... 43,514 43,703 44,008 44,069 44,282 44,563 44,375 45,062 45,054 Issued to others: 25,267 25,005 24,902 24,951 25,016 25,307 25,160 25,603 25,841 7,182 7,066 7,063 6,923 6,835 6,808 6,675 6,778 7,023 18 Banks outside New York City..................... 18,085 17,939 17,839 18,028 18,181 18,499 18,485 18,825 18,818 All other large time deposits4 Total: 32,731 33,254 33,330 33,671 33,808 33,999 34,018 34,496 34,585 6,199 6,280 6,286 6,352 6,301 6,288 6,304 6,307 6,328 21 Banks outside New York City..................... 26,532 26,974 27,044 27,319 27,507 27,711 27,714 28,189 28,257 Issued to IPC’s: 19,353 19,938 19,837 20,013 20,200 20,326 20,395 20,443 20,396 5,074 5,136 5,131 5,140 5,100 5,068 5,095 5,085 5,096 24 Banks outside New York City..................... 14,279 14,802 14,706 14,873 15,100 15,258 15,300 15,358 15,300 Issued to others: 13,378 13,316 13,493 13,658 13,608 13,673 13,623 14,053 14,189 1,125 1,144 1,155 1,212 1,201 1,220 1,209 1,222 1,232 12,253 12,172 12,338 12,446 12,407 12,453 12,414 12,831 12,957 Savings deposits, by ownership category Individuals and nonprofit organizations: 86,858 86,536 86,298 85,976 85,751 85,717 85,683 85,640 85,425 9,155 9,114 9,068 9,024 8,951 8,950 8,929 8,914 8,891 30 Banks outside New York City..................... 77,703 77,422 77,230 76,952 76,800 76,767 76,754 76,726 76,534 Partnerships and corporations for profit:5 5,031 4,933 4,926 4,965 4,948 5,020 4,979 5,072 5,120 32 New York City banks................................... 468 465 458 457 454 460 461 467 470 33 Banks outside New York City..................... 4,563 4,468 4,468 4,508 4,494 4,560 4,518 4,605 4,650 Domestic governmental units: 1,271 1,208 1,189 1,151 1,143 1,123 1,171 1,163 1,127 247 215 211 192 183 169 165 163 158 1,024 993 978 959 960 954 1,006 1,000 969 All other:6 19 18 23 42 20 19 25 23 14 11 11 9 30 10 12 18 16 7 8 7 14 12 10 7 7 7 7 Gross liabilities of banks to their foreign branches 4,692 4,908 5,948 5,507 5,970 5,453 5,352 5,306 4,927 2,378 2,356 3,628 3,094 3,138 2,450 3,151 2,766 2,631 42 Banks outside New York City..................... 2,314 2,552 2,320 2,413 2,832 3,003 2,201 2,540 2,296 Loans sold outright to selected institutions by all large banks7 2,314 2,302 2,307 2,317 2,381 2,472 2,424 2,481 2,479 259 258 261 246 249 245 249 251 247 45 All others.......................................................... 1,982 1,999 2,012 2,012 2,027 2,014 2,016 2,027 1,958 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 ihe 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 □ September 1978 1.31 LARGE WEEKLY REPORTING COMMERCIAL BANKS Commercial and Industrial Loans Millions of dollars Outstanding Net change during— Industry classification 1978 1978 1978 Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30? Ql Q2r June July Aug.P Total loans classified2 1 Total................................................ 110,193 109,377 109,810 109,609 109,633 2,059 5,381 550 -688 136 Durable goods manufacturing: 2 Primary metals............................. 2,719 2,711 2,713 2,702 2,715 -84 42 -98 -95 12 3 Machinery..................................... 5,410 5,385 5,384 5,363 5,325 491 170 -32 2 -81 4 Transportation equipment........... 2,662 2,679 2,683 2.696 2,714 447 76 77 -69 -16 5 Other fabricated metal products. 2,409 2,425 2,450 2,408 2,399 351 181 -25 -45 -9 6 Other durable goods.................... 3,903 3,943 3,933 3,922 3,936 52 376 117 -14 41 Nondurable goods manufacturing: Food, liquor, and tobacco......... 4,035 4,037 4,214 4,163 4,146 52 407 27 -186 72 Textiles, apparel, and leather... 4,301 4,377 4,427 4,394 4,428 280 567 228 129 160 Petroleum refining....................... 2,548 2,516 2,551 2,549 2,563 -221 159 48 -75 1 Chemicals and rubber................. 3,492 3,480 3,438 3,437 3,400 532 154 99 -55 -114 Other nondurable goods............ 2,343 2,382 2,407 2,417 2,408 -62 61 20 56 85 12 Mining, including crude petroleum and natural gas........................... 10,365 10,377 10,466 10,483 10,469 447 883 247 -33 97 Trade: 13 Commodity dealers........................ 1,941 1,820 1,783 1,734 1,782 303 -187 -473 -86 -199 14 Other wholesale.............................. 9,063 8,987 8,861 8,959 8,980 800 449 152 81 -39 15 Retail.............................................. 8,450 8,216 8,161 8,062 8,026 564 649 18 -14 -234 16 Transportation.................................... 5,295 5,260 5,291 5,320 5,333 364 -147 126 -178 70 17 Communication.................................. 1,754 1,736 1,752 1,732 1,678 11 249 -14 17 -4 18 Other public utilities.......................... 5,189 5,121 5,102 5,153 5,107 -563 38 -150 166 -69 19 Construction....................................... 5,182 5,169 5,163 5,158 5,207 201 475 111 86 11 20 Services............................................... 13,522 13,531 13,502 13,463 13,511 712 1,130 344 65 -25 21 All other domestic loans................... 8,100 8,064 8,208 8,135 8,057 -26 297 -124 162 140 22 Bankers acceptances........................... 2,889 2,573 2,743 2,763 2,813 -2,533 -429 -45 -627 179 23 Foreign commercial and industrial loans............................................ 4,621 4,588 4,578 4,596 4,636 -54 -219 -103 25 58 Memo Items: 24 Commercial paper included in total classified loans1........................... 45 -27 -60 -26 -7 -19 25 Total commercial and industrial loans of all large weekly re­ porting banks............................ 135,378 134,562 135,128 134,970 134,938 2,979 6,610 867 -755 274 1978 1978 1978 Apr. 26 May 31 June 28 July 26 Aug. 30p Qlr Q2 June July Aug.® “Term” loans classified3 50,159 51,204 r51,311 51,905 52,618 1,902 1,943 r107 594 713 Durable goods manufacturing: 27 Primary metals................................ 1,671 1,736 1,706 1,695 1,710 -13 127 -30 -11 15 28 Machinery....................................... 2,542 2,622 2,576 2,712 2,669 205 45 -46 136 -43 29 Transportation equipment............. rl,452 1,460 1,420 1,439 1,586 152 -69 -40 19 147 30 Other fabricated metal products... 960 968 994 1,000 990 50 92 26 6 -10 31 Other durable goods....................... 1,603 1,625 1,678 1,718 1,699 -105 106 53 40 -19 Nondurable goods manufacturing: 32 Food, liquor, and tobacco............. 1,649 1,676 1,671 1,691 1,740 69 149 -5 20 49 33 Textiles, apparel, and leather........ 1,083 1,097 1,122 1,138 1,133 40 84 25 16 -5 34 Petroleum refining...................... 1,850 1,962 1,947 1,882 1,882 -174 74 -15 -65 35 Chemicals and rubber..................... 2,147 2,229 2,412 2,418 2,322 215 296 183 6 -96 36 Other nondurable goods................ 1,093 1,093 1,091 1,103 1,156 2 -78 -2 12 53 37 Mining, including crude petroleum and natural gas........................... 7,443 7,604 7,760 7,660 7,759 530 676 156 -100 99 Trade: 38 Commodity dealers.................. 244 254 229 233 258 -18 -23 -25 4 25 2,084 2,141 2,176 2,233 2,282 201 184 35 57 49 2,703 2,855 2,835 2,782 2,811 59 276 -20 -53 29 41 Transportation.................................... 3,627 3,702 3,738 3,678 3,741 219 -133 36 -60 63 965 980 1,009 1,061 1,046 47 85 29 52 -15 3,723 3,770 3,529 3,714 3,860 -34 -293 -241 185 146 2,085 2,101 2,117 2,177 2,245 165 51 16 60 68 45 Services..........................................*.. 6,039 6,300 6,505 6,592 6,606 308 624 205 87 14 46 All other domestic loans.................... 2,576 2,525 >-2,320 2,436 2,616 -49 r—145 r—205 116 180 47 Foreign commercial and industrial 2,620 2,504 2,476 2,543 2,507 33 -185 -28 67 -36 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. Dec. Mar. June Sept. Dec. Mar. June 1 All holders, individuals, partnerships, and 220.1 225.0 236.9 250.1 242.3 253.8 252.7 274.4 262.5 271.2 2 Financial business.................................................. 19.1 19.0 20.1 22.3 21.6 25.9 23.7 25.0 24.5 25.7 3 Nonfinancial business............................................ 116.2 118.8 125.1 130.2 125.1 129.2 128.5 142.9 131.5 137.7 70.1 73.3 78.0 82.6 81.6 84.1 86.2 91.0 91.8 92.9 2.4 2.3 2.4 2.7 2.4 2.5 2.5 2.5 2.4 2.4 12.4 11.7 11.3 12.4 11.6 12.2 11.8 12.9 12.3 12.4 At weekly reporting banks 1978 1975 1976 1977 Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July 7 All holders, individuals, partnerships, and corporations.................................................... 124.4 128.5 139.1 137.1 132.5 131.9 135.6 134.3 136.9 139.9 15.6 17.5 18.5 18.3 18.1 18.2 17.9 18.1 19.0 19.4 9 Nonfinancial business............................................ 69.9 69.7 76.3 73.8 70.7 68.9 70.9 70.7 71.9 73.7 10 Consumer................................................................ 29.9 31.7 34.6 35.2 34.4 35.4 37.6 36.0 36.6 37.1 11 Foreign.................................................................... 2.3 2.6 2.4 2.4 2.4 2.3 2.2 2.4 2.3 2.3 12 Other....................................................................... 6.6 7.1 7.4 7.4 6.9 7.0 7.0 7.1 7.1 7.3 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 1978 1975 1976 1977 Instrument Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July Commercial paper (seasonally adjusted) 1All issuers................................................................ 48,459 53,025 "65,209 r65,582 '65,578 '67,476 '70,289 71,213 74,536 74,900 Financial companies:1 Dealer-placed paper:2 2 Total................................................................ 6,202 7,250 8,871 9,018 8,918 8,889 9,670 10,314 10,327 10,617 3 1,762 1,900 2,132 2,035 1,997 1,993 2,078 2,217 2,442 2,633 Directly-placed paper: 3 4 Total................................................................ 31,374 32,500 r40,496 r41,680 '42,238 '42,903 '44,326 44,664 47,315 46,594 5 Bank-related.................................................... 6,892 5,959 r7,102 r7,202 r7,718 '8,153 '7,995 9,258 9,585 10,030 6 Nonfinancial companies4...................................... 10,883 13,275 15,842 14,884 14,422 15,684 16,293 16,235 16,894 17,689 Dollar acceptances (not seasonally adjusted) 7 Total........................................................................ 18,727 22,523 25,654 25,252 25,411 26,181 26,256 26,714 28,289 27,579 Held by: 8 Accepting banks.................................................. 7,333 10,442 10,434 7,785 7,513 7,375 7,091 7,286 7,502 7,244 9 Own bills................................................... 5,899 8,769 8,915 6,772 6,583 6,375 6,117 6,365 6,520 6,345 10 Bills bought.................................................... 1,435 1,673 1,519 1,013 931 1,000 974 921 983 899 F.R. Banks: 11 Own account................................................... 1,126 991 954 1 '1 12 Foreign correspondents................................. ’293 375 362 371 456 522 550 679 625 568 13 Others.................................................................. 9,975 10,715 13,904 17,096 17,442 18,283 18,614 18,749 20,160 19,766 Based on: 14 Imports into United States............................... 3,726 4,992 6,532 6,637 6,842 6,979 7,108 7,027 7,578 7,415 15 Exports from United States............................... 4,001 4,818 5,895 5,840 5,739 6,034 6,216 6,494 6,906 6,565 16 All other.............................................................. 11,000 12,713 13,227 12,774 13,026 13,168 12,932 13,193 13,805 13,599 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 □ September 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 6 ft 1977_Oct. 7 7ft 1977—Jan.. 6.25 1977—Nov. 7.75 24 m Feb. 6.25 Dec. 7.75 Dec. 13, 6V4 Mar, 6.25 1978—Jan. 10. Apr. 6.25 1978—Jan.. 7.93 1977—May 13 6ft May, 6.41 Feb. 8.00 31, 6% May 5 W4 June, 6.75 Mar. 8.00 26 &ft July. 6.75 Apr. 8.00 Aug. 22, 7 Aug. 6.83 May, 8.27 June 16 m Sept. 7.13 June, 8.63 Sept. 16, 7V4 30 9 Oct.. 7.52 July. 9.00 Aug. 9.01 Aug. 31 9V4 1.35 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 1-6, 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)...................... 9,522,014 1,180,739 738,576 928,657 2,238,701 767,846 3,667,496 2 Number of loans............................................................. 217,426 165,335 22,850 14,211 12,443 1,211 1,376 3 Weighted-average maturity (months)............................ 2.7 2.7 2.9 2.3 2.8 3.0 2.6 4 Weighted-average interest rate (per cent per annum).. 9.01 9.82 9.63 9.37 9.04 8.90 8.53 5 Interquartile range 1................................................... 8.25-9.46 9.00-10.70 8.77-10.47 8.30-9.84 8.30-9.50 8.27-9.31 8.21-8.75 Percentage of amount of loans: 6 With floating rate........................................................ 54.7 31.9 33.0 51.2 60.1 52.0 64.6 7 Made under commitment........................................... 39.9 12.9 21.6 23.0 39.3 63.6 51.9 Long-term commercial and industrial loans 8 Amount of loans (thousands of dollars)..................... 1,897,435 474,261 421,282 92,982 908,911 9 Number of loans........................................................... 39,810 37,035 2,420 139 216 10 Weighted-average maturity (months).......................... 47.6 37.8 40.5 41.0 56.7 11 Weighted-average interest rate (per cent per annum). 9.67 10.23 10.29 9.11 9.15 12 Interquartile range i................................................. 8.75-10.47 9.00-10.47 8.75-10.47 8.50-9.92 8.50-10.00 Percentage of amount of loans: 13 With floating rate...................................................... 38.7 14.8 51.5 66.1 42.5 14 Made under commitment......................................... 42.9 24.3 39.4 66.7 51.8 Construction and land development loans 15 Amount of loans (thousands of dollars)................... 905,900 170,034 117,084 163,826 263,323 191,632 16 Number of loans......................................................... 26,806 19,511 3,330 2,263 1,551 152 17 Weighted-average maturity (months)........................ 10.2 5.7 8.6 13.6 10.1 11.7 18 Weighted-average interest rate (per cent per annum) 9.83 9.53 10.05 10.08 9.99 9.55 19 Interquartile range 1............................................... 9.24-10.21 9.03-9.92 9.00-10.60 9.27-11.85 9.95-10.04 8.75-10.73 Percentage of amount of loans: 20 With floating rate.................................................... 34.6 16.4 12.8 37.6 28.7 69.4 21 Secured by real estate............................................. 94.3 94.5 96.7 97.7 95.5 88.0 22 Made under commitment....................................... 60.0 60.9 41.6 21.8 86.9 66.2 23 Type of construction: 1-to 4-family................... 41.5 74.8 86.1 40.9 17.8 17.9 24 Multifamily........................ 6.4 2.8 1.2 3.2 5.3 16.7 25 Nonresidential.................. 52.1 22.4 12.7 55.9 76.8 65.5 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)............ 995,247 185,866 174,508 140,998 114,506 140,316 239,051 27 Number of loans.................................................. 70,014 51,013 11,734 4,239 1,766 968 293 28 Weighted-average maturity (months).................. 9.1 8.7 7.6 10.1 10.2 5.7 11.4 29 Weighted-average interest rate (per cent per annum).. 9.31 9.24 9.21 9.28 9.22 9.34 9.46 30 Interquartile range 1........................................ 8.71-9.73 8.75-9.73 8.75-9.58 8.75-9.58 8.75-9.54 8.71-9.76 8.68-10.16 By purpose of loan: 31 Feeder livestock............................................ 9.39 9.16 8.98 9.06 9.19 9.72 9.88 32 Other livestock.............................................. 9.08 9.33 9.46 9.12 9.72 9.51 2 33 Other current operating expenses............... 9.19 9.12 9.29 9.26 8.98 9.32 9.15 34 Farm machinery and equipment................. 9.37 9.47 9.28 9.04 9.29 9.86 2 35 Other.............................................................. 9.54 9.48 9.23 9.64 9.51 9.08 9.97 * Interest rate range that covers the middle 50 per cent of the total Note.—For more detail, see the Board’s 416 (G.14) statistical release, dollar amount of loans made. 2 Fewer than three loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets A27 1.36 INTEREST RATES Money and Capital Markets Averages, per cent per annum 1978 1978,week ending— Instrument 1975 1976 1977 May June July Aug. Aug. 5 Aug. 12Aug. 19Aug. 26 Sept. 2 Money market rates 1 Federal funds 1................... 5.82 5.05 5.54 7.36 7.60 7.81 8.04 7.89 7.83 7.87 8.14 8.28 Prime commercial paper 2 2 90-to 119-day................. 6.26 5.24 5.54 7.06 7.59 7.85 7.83 7.79 7.77 7.78 7.88 7.97 3 4- to 6-month................. 6.33 5.35 5.60 7.11 7.63 7.91 7.90 7.86 7.84 7.86 7.95 8.03 4 Finance company paper, directly placed, 3- to 6-month 3................................... 6.16 5.22 5.49 6.98 7.41 7.66 7.65 7.62 7.62 7.65 7.67 7.74 5 Prime bankers acceptances, 90-day 4. .. 6.30 5.19 5.59 7.32 7.75 8.02 7.98 7.89 7.83 7.93 8.07 8.19 Large negotiable certificates of deposit 6 3-month, secondary market 5............. 6.43 5.26 5.58 7.42 7.82 9.00 8.05 7.99 7.91 7.91 8.15 8.19 7 3-month, primary market ®.............. 5.15 5.52 7.24 7.68 8.00 7.86 7.88 7.81 7.76 7.95 7.90 8 Euro-dollar deposits, 3-month 7. 6.97 5.57 6.05 7.82 8.33 8.52 8.48 8.41 8.28 8.32 8.66 8.61 U.S. Government securities Bills: 8 Market yields: 9 3-month............................. 5.80 4.98 5.27 6.41 6.73 7.01 7.08 6.80 6.79 7.12 7.25 7.50 10 6-month............................. 6.11 5.26 5.53 7.02 7.23 7.44 7.37 7.24 7.18 7.40 7.46 7.65 11 1-year................................ 6.30 5.52 5.71 7.28 7.53 7.79 7.73 7.65 7.58 7.78 7.79 7.86 Rates on new issue:® 12 3-month............................ 5.838 4.989 5.265 6.430 6.707 7.074 7.036 6.895 6.808 6.887 7.267 7.323 13 6-month............................. 6.122 5.266 5.510 7.019 7.200 7.471 7.363 7.362 7.172 7.259 7.471 7.550 Capital market rates Government notes and bonds U.S. Treasury Constant maturities:10 1-yea r 6.76 5.8 6.09 7.82 8.09 8.39 8.31 8.23 8.13 8.38 8.40 8.47 2-yea r 6.45 8.01 8.24 8.49 8.37 8.37 8.21 8.41 8.44 8.46 3-yea r 7.49 6.77 6.69 8.07 8.30 8.54 8.33 8.36 8.21 8.37 8.35 8.37 5-year........................... 7.77 7.18 6.99 8.18 8.36 8.54 8.33 8.36 8.25 8.37 8.35 8.39 7-year........................... 7.90 7.42 7.23 8.25 8.40 8.55 8.38 8.40 8.32 8.43 8.36 8.39 10-year......................... 7.99 7.61 7.42 8.35 8.46 8.64 8.41 8.46 8.39 8.48 8.37 8.38 20-year......................... 8.19 7.86 7.67 8.44 8.53 8.69 8.45 8.49 8.41 8.52 8.42 8.43 30-year......................... 8.43 8.50 8.65 8.47 8.49 8.45 8.54 *8.45 8.45 Notes and bonds maturing in —1 22 3 to 5 years............................... 7.55 6.94 6.85 8.10 8.31 8.54 8.31 8.36 8.22 8.34 8.33 8.36 23 Over 10 years (long-term)....... 6.98 6.78 7.06 7.87 7.94 8.09 7.87 7.94 7.85 7.93 7.84 7.82 State and local: Moody’s series:12 24 Aaa........................ 6.42 5.66 5.20 5.57 5.73 5.80 5.56 5.65 5.55 5.50 5.60 5.50 25 Baa......................... 7.62 7.49 6.12 6.14 6.44 6.45 6.54 6.44 6.34 6.50 6.40 7.00 26 Bond Buyer series 13. 7.05 6.64 5.68 6.03 6.22 6.28 6.12 6.12 6.03 6.19 6.11 6.16 Corporate bonds Seasoned issues 14 All industries....... 9.57 9.01 8.43 9.02 9.13 9.22 9.08 9.16 9.07 9.08 9.07 9.05 By rating groups: Aaa.................... 8.83 8.43 8.02 8.69 8.76 8.88 8.69 8.76 8.66 8.70 8.69 8.67 Aa..................... 9.17 8.75 8.24 8.84 8.95 9.07 8.96 9.03 8.94 8.97 8.94 8.91 A....................... 9.65 9.09 8.49 9.05 9.18 9.33 9.18 9.28 9.19 9.17 9.16 9.15 Baa.................... 10.61 9.75 8.97 9.49 9.60 9.60 9.48 9.57 9.48 9.47 9.46 9.46 Aaa utility bonds:15 32 New issue..................... 9.40 8.48 8.19 8.95 9.09 9.14 8.82 8.90 8.81 8.80 8.80 33 Recently offered issues. 9.41 8.49 8.19 8.98 9.07 9.18 8.91 8.91 8.89 9.00 8.87 8.85 Dividend/price ratio 34 Preferred stocks. 8.38 7.97 7.60 8.11 8.31 8.42 8.26 8.26 8.21 8.18 8.22 8.41 35 Common stocks. 4.31 3.77 4.56 5.20 5.19 5.25 4.93 4.97 4.90 4.91 4.91 4.98 1 Weekly figures are 7-day averages of daily effective rates for the week 8 Except for new bill issues, yields are computed from daily closing ending Wednesday; the daily effective rate is an average of the rates on bid prices. Yields for all bills are quoted on a bank-discount basis. a given day weighted by the volume of transactions at these rates. 9 Rates are recorded in the week in which bills are issued. 2 Beginning Nov. 1977, unweighted average of offering rates quoted Yields on the more actively traded issues adjusted to constant by five dealers. Previously, most representative rate quoted by those maturities by the U.S. Treasury, based on daily closing bid prices. dealers. 11 Unweighted averages for all outstanding notes and bonds in maturity 3 Averages of the most representative daily offering rates published by ranges shown, based on daily closing bid prices. “Long-term” includes finance companies for varying maturities in this range. all bonds neither due nor callable in less than 10 years, including a num­ 4 Average of the midpoint of the range of daily dealer closing rates ber of very low yielding “flower” bonds. offered for domestic issues; prior data are averages of the most repre­ 12 General obligations only, based on figures for Thursday, from sentative daily offering rate quoted by 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 Apr. 5, 1978, 15 Compilation of the Board of Governors of the Federal Reserve weekly figures are simple averages of offering rates. System. 6 Posted rates, which are the annual interest rates most often quoted Issues included are long-term (20 years or more). New-issue yields are on new offerings of negotiable CD’s in denominations of $100,000 or based on quotations on date of offering; those on recently offered issues more by large New York City banks. Rates prior to 1976 not available. (included only for first 4 weeks after termination of underwriter price Weekly figures are for Wednesday dates. restrictions), on Friday close-of-business quotations. 7 Averages of daily quotations for the week ending Wednesday. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics □ September 1978 1.37 STOCK MARKET Selected Statistics 1978 Indicator 1975 1976 1977 Feb. Mar. Apr. May j June July Aug. 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 49.41 49.50 51.75 54.49 54.83 54.61 58.53 2 Industrial.......................................................... 51.88 60.44 57.84 52.80 52.77 55.48 59.14 59.63 59.35 64.07 3 Transportation................................................. 30.73 39.57 41.07 38.90 38.95 41.19 44.21 44.19 44.74 49.45 4 Utility............................................................... 31.45 36.97 40.91 39.02 39.26 39.69 39.47 39.41 39.28 40.20 5 Finance............................................................. 46.62 52.94 55.23 50.60 51.44 55.04 57.95 58.31 57.97 63.28 6 Standard & Poor’s Corporation (1941-43 = 10)1. 85.17 102.01 98.18 88.98 88.82 92.71 97.41 97.66 97.19 103.92 7 American Stock Exchange (Aug. 31,1973 = 100) 83.15 101.63 116.18 123.35 126.11 133.67 142.26 147.64 149.87 162.52 Volume of trading (thousands of shares)2 8 New York Stock Exchange............................. 18,568 21,189 20,936 19,400 22,617 34,780 35,261 30,514 27,074 37,603 9 American Stock Exchange.............................. 2,150 2,565 2,514 2,300 2,940 4,151 4,869 4,220 3,496 5,526 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 10,901 11,027 11,424 11 Brokers, total................................................ 5,540 8,166 9,993 10,024 10,172 10,510 10,910 11,332 12 Margin stock4.............................................. 5,390 7,960 9,740 9,780 9,920 10,260 10,660 11,090 13 Convertible bonds........................................ 147 204 250 242 250 248 245 242 14 Subscription issues...................................... 3 2 3 2 2 2 1 15 Banks, total.................................................. 960 845 873 877 855 914 16 Margin stocks........................................... 909 800 827 838 824 882 17 Convertible bonds....................................... 36 30 30 25 24 25 18 Subscription issues...................................... 15 15 16 14 7 7 19 Unregulated nonmargin stock credit at banks5 2,281 r2,283 2,568 2,544 2,544 2,560 Memo: Free credit balances at brokers6 20 Margin-account................................................ 475 585 640 635 630 715 755 700 21 Cash-account..................................................... 1,525 1,855 2,060 1,875 1,795 2,170 2,395 2,300 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 25.0 21.0 15.0 15.0 16.0 24 40-49.................................... 28.8 23.0 36.0 34.0 33.0 32.0 33.0 34.0 25 50-59.................................... 22.3 35.0 23.0 20.0 24.0 27.0 26.0 26.0 26 60-69.................................... 11.6 15.0 11.0 10.0 11.0 13.0 13.0 12.0 27 70-79.................................... 6.9 8.7 6.0 6.0 6.0 7.0 7.0 7.0 28 80 or more........................... 5.3 6.0 5.0 5.0 5.0 6.0 6.0 5.0 Special miscellaneous-account balances at brokers (end of period) 29 Total balances (millions of dollars)8... 7,290 8,776 9,910 10,150 10,190 10,212 10,516 Distribution by equity status (per cent) 30 Net credit status................................. 43.8 41.3 43.4 42.0 42.6 41.9 42.6 Debit status, equity of— 31 60 per cent or more........................ 40.8 47.8 44.9 43.0 43.7 46.2 46.0 32 Less than 60 per cent..................... 15.4 10.9 11.7 14.0 13.5 11.9 11.4 1 Effective July 1976, includes a new financial group, banks and in­ 5 Nonmargin stocks are those not listed on a national securities ex­ surance companies. With this change the index includes 400 industrial change and not included on the Federal Reserve System’s list of over-thestocks (formerly 425), 20 transportation (formerly 15 rail), 40 public counter margin stocks. At banks, loans to purchase or carry nonmargin utility (formerly 60), and 40 financial. stocks are unregulated; at brokers, such stocks have no loan value. 2 Based on trading for a 5%-hour day. 6 Free credit balances are in accounts with no unfulfilled commitments 3 Margin credit includes all credit extended to purchase or carry to the brokers and are subject to withdrawal by customers on demand. stocks or related equity instruments and secured at least in part by stock. 7 Each customer’s equity in his collateral (market value of collateral Credit extended by brokers is end-of-month data for member firms of less net debit balance) is expressed as a percentage of current collateral the New York Stock Exchange; June data for banks are universe totals; values. all other data for banks are estimates for all commercial banks based on 8 Balances that may be used by customers as the margin deposit re­ data from a sample of reporting banks. quired for additional purchases. Balances may arise as transfers based In addition to assigning a current loan value to margin stock generally, on loan values of other collateral in the customer’s margin account or Regulations T and U permit special loan values for convertible bonds deposits of cash (usually sales proceeds) occur. and stock acquired through exercise of subscription rights. 4 A distribution of this total by equity class is shown on lines 23-28. Note.—For table on “Margin Requirements” see p. A-10, Table 1.161. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Thrift Institutions A29 1.38 SAVINGS INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1977 1978 1974 1975 1976 Account Nov. Dec. Jan. Feb. Mar. Apr. May June Julyp Savings and loan associations 1 Assets..................................... 295,545 338,233 391,907 455,644 459,282 464,279 469,726 475,320 480,986 487,091 491,616 498,251 2 Mortgages............................. 249,301 278,590 323,005 376,468 381,216 384,235 387,644 392,479 397,335 402,356 408,019 412,018 3 Cash and investment securities1........................... 23.251 30,853 35,724 40,522 39,197 40,356 41,646 41,870 41,901 42,493 41,553 43,574 22,993 28,790 33,178 38,654 38,869 39,688 40,436 40,971 41,750 42,242 42,044 42,659 5 Liabilities and net worth........ 295,545 338,233 391,907 455,644 459,282 464,279 469,726 475,320 480,986 487,091 491,616 498,251 6 Savings capital....................... 242,974 285,743 335,912 381,333 386,875 389,620 391,917 399,070 399,628 402,008 408,665 411,747 7 Borrowed money.................... 24,780 20,634 19,083 25,540 27,796 27,899 28,666 29,274 31,838 32,689 34,183 35,521 8 FHLBB.............................. 21,508 17,524 15,708 18,275 19,945 20,129 20,602 21,030 22,692 23,323 24,875 26,075 3,272 3,110 3,375 7,265 7,851 7,770 8,064 8,244 9,146 9,366 9,308 9,446 10 Loans in process................... 3,244 5,128 6,840 9,924 9,932 9,849 9,924 10,435 10,959 11,408 11,650 11,571 11 Other...................................... 6,105 6,949 8,074 13,846 9,498 11,471 13,456 10,511 12,194 14,252 10,081 12,020 18,442 19,779 21,998 25,001 25,181 25,440 25,763 26,030 26,367 26,734 27,037 27,392 13 Memo: Mortgage loan com­ mitments outstanding3.. 7,454 10,673 14,826 21,270 19,886 19,534 20,625 22,320 23,409 23,951 22,936 22,394 Mutual savings banks 14 Assets..................................... 109,550 121,056 134,812 146,346 147,287 148,511 149,528 150,962 151,383 152,202 153,158 Loans: 15 Mortgage........................... 74,891 77,221 81,630 87,333 88,195 88,905 89,247 89,800 90,346 90,915 91,535 3,812 4,023 5,183 7,241 6,210 6,803 7,398 7,782 7,422 7,907 7,793 Securities: 17 U.S. Government.............. 2,555 4,740 5,840 6,071 5,895 5,785 5,737 5,677 5,670 5,491 5,268 18 State and local government. 930 1,545 2,417 2,809 2,828 2,886 2,808 2,850 2,915 2,994 3,007 19 Corporate and other4....... 22,550 27,992 33,793 37,221 37,918 38,360 38,605 38,964 39,146 39,225 39,447 20 Cash....................................... 2,167 2,330 2,355 1,887 2,401 1,889 1,838 1,990 1,940 1,798 2,188 21 Other assets........................... 2,645 3,205 3,593 3,783 3,839 3,882 3,895 3,899 3,945 3,873 3,921 22 Liabilities............................... 109,550 121,056 134,812 146,346 147,287 148,511 149,528 150,962 151,383 152,202 153,158 98,701 109,873 122,877 132,537 134,017 134,771 135,200 136,997 136,931 137,307 138,674 24 Regular:5........................... 98,221 109,291 121,961 131,319 132,744 133,370 133,846 135,558 135,349 135,785 137,062 25 Ordinary savings............ 64,286 69,653 74,535 77,460 78,005 77,754 77,837 78,783 78,170 78,273 77,269 26 Time and other.............. 33,935 39,639 47,426 53,859 54,739 55,616 56,009 56,775 57,179 57,512 59,793 27 Other.................................. 480 582 916 1,208 1,272 1,401 1,354 1,439 1,582 1,521 1,612 28 Other liabilities..................... 2,888 2,755 2,884 3,938 3,292 3,676 4,155 3,735 4,152 4,481 3,996 29 General reserve accounts.... 7,961 8,428 9,052 9,882 9,978 10,064 10,174 10,230 10,301 10,414 10,487 30 Memo: Mortgage loan com­ mitments outstanding6.. 2,040 1,803 2,439 4,458 4,066 3,998 4,027 4,185 4,342 4,606 4,958 Life insurance companies9 31 Assets..................... 263,349 289,304 321,552 348,770 351,722 354,020 356,266 359,110 363,269 366,938 369,879 Securities: 32 Government........ 10,900 13,758 17,942 19,738 19,553 19,714 19,692 19,573 19,330 19,489 19,401 33 United States7 3,372 4,736 5,368 5,704 5,315 5,376 5,373 5,229 5,087 5,206 4,984 34 State and local 3,667 4,508 5,594 5,962 6,051 6,102 6,071 6,041 5,923 5,915 5,943 35 Foreign »......... 3,861 4,514 6,980 8,072 8,187 8,236 8,248 8,303 8,320 8,368 8,474 36 Business.............. 119,637 135,317 157,246 174,998 175,654 177,864 179,547 181,441 184,917 187,126 188,500 37 Bonds............. 97,717 107,256 122,984 141,349 141,891 145,355 147,509 148,849 150,419 152,267 153,812 38 Stocks............. 21,920 28,061 34,262 33,649 33,763 32,509 32,038 32,592 34,498 34,859 34,688 39 Mortgages.............. 86,234 89,167 91,552 95,200 96,848 97,148 97,475 98,022 98,585 99,190 100,040 40 Real estate............. 8,331 9,621 10,476 11,010 11,060 11,138 11,218 11,213 11,269 11,537 11,540 41 Policy loans............ 22,862 24,467 25,834 27,413 27,556 27,693 27,839 28,024 28,246 28,431 28,649 42 Other assets............ 15,385 16,971 18,502 ^0,411 21,051 20,463 20,495 20,837 20,922 21,165 21,749 Credit unions 43 Total assets/liabilities and 31,948 38,037 45,225 53,141 54,084 53,982 54,989 56,703 56,827 58,018 59,381 59,152 16,715 20,209 24,396 28,954 29,574 29,579 30,236 31,274 31,255 31,925 32,793 32,679 15,233 17,828 20,829 24,187 24,510 24,403 24,753 25,429 25,572 26,093 26,588 26,473 46 Loans outstanding.................. 24,432 28,169 34,384 41,427 42,055 41,876 42,331 43,379 44,133 45,506 47,118 47,620 12,730 14,869 18,311 22,224 22,717 22,590 22,865 23,555 23,919 24,732 25,672 25,970 48 State.................................. 11,702 13,300 16,073 19,203 19,338 19,286 19,466 19,824 20,214 20,774 21,356 21,650 49 Savings................................... 27,518 33,013 39,173 45,977 46,832 47,317 48,093 49,706 49,931 50,789 52,076 51,551 50 Federal (shares)................. 14,370 17,530 21,130 25,303 25,849 26,076 26,569 27,514 27,592 28,128 28,903 28,627 51 State (shares and deposits). 13,148 15,483 18,043 20,674 20,983 21,241 21,524 22,192 22,339 22,661 23,173 22,924 For notes see bottom of page A30. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Financial Statistics □ September 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 1977 1978 1978 1976 Sept. 1977 1976) HI H2 HI May June July U.S. Budget 1 Receipts1........................................ 300,005 81,772 357,762 190,278 175,820 210,650 35,091 47,657 29,194 2 Outlays1,2,3................................... 366,451 94,742 402,803 200,350 216,781 222,518 36,800 38,602 36,426 3 Surplus, or deficit ( —)................ -66,446 -12,970 -45,041 -10,072 - 40.961 -11,870 -1,709 9,055 -7,232 4 Trust funds................................. 2,409 -1,952 7,833 7,332 4,293 4,334 5,970 1,597 -2,810 5 Federal funds 4........................... -68,855 -11,018 -52,874 -17,405 -45,254 -16,204 -7,679 7,458 -4,421 Off-budget entities surplus, or deficit (—) 6 Federal Financing Bank outlays.. -5,915 -2,575 -8,415 -2,075 -6,663 -5,105 -795 -499 -824 7 Other 2,5........................................ -1,355 793 -269 -2,086 428 -790 -245 -155 72 U.S. Budget plus off-budget, in­ cluding Federal Financing Bank 8 Surplus, or deficit ( —)................... -73,716 -14,752 - 53,725 -14,233 -47,196 -17,765 -2,749 8.401 -7,984 Financed by: 9 Borrowing from the public 3. . . 82,922 18,027 53,516 16,480 40,284 23,374 -555 5.401 3,195 10 Cash and monetary assets (de­ crease, or increase (—)).... -7,796 -2,899 -2,238 -4,666 4,317 -5,098 6,403 -14,091 5,824 11 Other 6........................................ -1,396 -373 2,440 2,420 2,597 -511 -3,099 289 -7,035 Memo items : 12 Treasury operating balance (level, end of period).................................... 14,836 17,418 19,104 16,255 12,274 17,526 3,726 17,526 13,078 13 F.R. Banks..................................... 11,975 13,299 15,740 15,183 7,114 11,614 2,398 11,614 12,068 14 Tax and loan accounts.................. 2,854 4,119 3,364 1,072 5,160 5,912 1,328 5,912 1,010 15 Other demand accounts 7.............. 7 1 Effective June 1978, earned income credit payments in excess of Electrification; Telephone Revolving Fund, Rural Telephone Bank; and an individual’s tax liability, formerly treated as income tax refunds, are Housing for the Elderly or Handicapped Fund until October 1977. classified as outlays 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 * 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. 9 Data for 1977 and 1978 have been revised by the American Council of Life Insurance. 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 1977 1978 1978 1976 Sept. 1977 1976) HI H2 HI May June July Receipts 1All sources1.......................................... 300,005 81,772 357,762 190,278 175,820 210,650 35,091 47,657 29,194 2 Individual income taxes, net................ 131,602 38,800 157,626 78,816 82,911 90,336 14,423 20,301 14,590 3 Withheld......................................... 123,408 32,949 144,820 73,303 75,480 82,784 14,808 14,490 14,182 4 Presidential Election Campaign Fund........................................ 34 1 37 37 1 36 6 5 2 5 Nonwithheld................................... 35,528 6,809 42,062 32,959 9,397 37,584 6,750 6,627 1,088 6 Refunds1.......................................... 27,367 958 29,293 27,482 1,967 30,068 7,142 820 682 7 Corporation income taxes: 8 Gross receipts................................. 46,783 9,808 60,057 37,133 25,121 38,496 1,624 15,054 2,127 9 Refunds........................................... 5,374 1,348 5,164 2,324 2,819 2,782 441 399 342 10 Social insurance taxes and contribu­ tions, net...................................... 92,714 25,760 108,683 58,099 52,347 66,191 16,092 9,287 9,518 11 Payroll employment taxes and contributions 2........................ 76,391 21,534 88,196 45,242 44,384 51,668 10,796 8,383 7,960 12 Self-employment taxes and contributions 3....................... 3,518 269 4,014 3,687 316 3,892 288 265 13 Unemployment insurance.............. 8,054 2,698 11,312 6,575 4,936 7,800 4,499 169 1,094 14 Other net receipts 4....................... 4,752 1,259 5,162 2,595 2,711 2,831 508 470 464 15 Excise taxes........................................ 16,963 4,473 17,548 8,432 9,284 8,835 1,670 1,651 1,707 16 Customs.............................................. 4,074 1,212 5,150 2,519 2,848 3,320 584 653 596 17 Estate and gift................................... 5,216 1,455 7,327 4,332 2,837 2,587 512 436 407 18 Miscellaneous receipts 5.................... 8,026 1,612 6,536 3,269 3,292 3,667 629 674 590 Outlays 9 19 All types1,6......................................... 366,451 94,742 402,803 200,350 216,781 222,518 36,800 38,602 36,426 20 National defense.............................. 89,430 22,307 97,501 48,721 50,873 52,979 9,107 9,120 8,495 21 International affairs 6..................... 5,567 2,180 4,831 2,522 2,896 2,904 60 1,099 231 22 General science, space, and technology................................. 4,370 1,161 4,677 2,108 2,318 2,395 428 393 368 23 Energy.............................................. 3,127 794 4,172 2,487 550 627 548 24 Natural resources and environment, 8,124 2,532 10,000 4,959 848 990 854 25 Agriculture....................................... 2,502 584 5,526 2,628 5,477 2,353 82 -165 183 26 Commerce and housing credit........ 3,795 1,391 -31 -946 216 -121 460 27 Transportation................................. 13,438 3,306 14,636 7,723 1,114 1,585 1,415 28 Community and regional development............................. 4,709 1,340 6,283 3,149 4,924 5,928 1,185 983 859 29 Education, training, employment, and social services.................... 18,737 5,162 20,985 9,775 10,800 12,792 2,389 2,222 2,099 30 Health................................................ 33,448 8,720 38,785 18,654 19,422 21,391 3,716 3,876 3,597 31 Income security1................................ 127,406 32,795 137,905 70,785 71,081 75,201 12,360 12,512 11,641 32 Veterans benefits and services.......... 18,432 3,962 18,038 9,382 9,864 9,603 1,726 2,433 610 33 Administration of justice................ 3,320 859 3.600 1,783 1,723 1,946 371 312 303 34 General government........................ 2,927 878 3,357 1,587 1,749 1,803 484 293 186 35 General-purpose fiscal assistance..., 7,235 2,092 9,499 4,333 4,926 4,665 153 50 1,964 36 Interest 7.......................................... 34,589 7,246 38,092 18,927 19,962 22,280 3,296 6,617 3,013 37 Undistributed offsetting receipts 7,8 -14,704 -2,567 -15,053 -6,803 -8,506 -7,945 -1.284 -4.225 -402 1 Effective June 1978, 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 income tax refunds, are issues for U.S. Govt, accounts from an accrual basis to a cash basis. classified as outlays 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 □ September 1978 1.41 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1975 1976 1977 1978 Item Dec. 31 June 30 Sept. 30 Dec. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 1 Federal debt outstanding..................... 587.6 631.9 2 646.4 665.5 685.2 709.1 729.2 747.8 758.8 2 Public debt securities........................... 576.6 620.4 634.7 653.5 674.4 698.8 718.9 738.0 749.0 3 Held by public................................. 437.3 470.8 488.6 506.4 523.2 543.4 564.1 585.2 587.9 4 Held by agencies.............................. 139.3 149.6 146.1 147.1 151.2 155.5 154.8 152.7 161.1 10.9 11.5 11.6 12.0 10.8 10.3 10.2 9.9 9.8 6 Held by public................................. 8.9 9.5 29.7 10.0 9.0 8.5 8.4 8.1 8.0 7 Held by agencies.............................. 2.0 2.0 1.9 1.9 1.8 1.8 1.8 1.8 1.8 8 Debt subject to statutory limit............ 577.8 621.6 635.8 654.7 675.6 700.0 720.1 ’'739.1 750.2 9 Public debt securities........................... 576.0 619.8 634.1 652.9 673.8 698.2 718.3 r737.3 748.4 10 Other debt1.......................................... 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.8 1.8 11 Memo: Statutory debt limit............... 595.0 636.0 636.0 682.0 700.0 700.0 752.0 752.0 752.0 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 Apr. May June July Aug. 1 Total gross public debt.......................................... 492.7 576.6 653.5 718.9 736.6 741.6 749.0 750.5 764.4 By type: 2 Interest-bearing debt.............................................. 491.6 575.7 652.5 715.2 733.1 740.6 748.0 749.5 763.4 3 Marketable........................................................ 282.9 363.2 421.3 459.9 472.2 473.7 477.7 481.0 485.6 4 Bills................................................................ 119.7 157.5 164.0 161.1 159.6 159.4 159.8 160.1 160.6 5 Notes.............................................................. 129.8 167.1 216.7 251.8 262.2 261.6 265.3 266.6 268.5 6 Bonds............................................................. 33.4 38.6 40.6 47.0 50.4 52.7 52.6 54.4 56.4 7 208.7 212.5 231.2 255.3 260.9 266.9 270.3 268.4 227.8 8 2.3 2.3 2.3 2.2 2.2 2.2 2.2 2.2 2.2 9 State and local government series............... .6 1.2 4.5 13.9 17.6 18.6 20.6 20.8 24.2 10 Foreign issues3.............................................. 22.8 21.6 22.3 22.2 23.4 22.4 21.5 20.8 22.2 11 Savings bonds and notes.............................. 63.8 67.9 72.3 77.0 78.6 79.0 79.4 79.7 79.9 12 Government account series4........................ 119.1 119.4 129.7 139.8 138.8 144.4 146.4 144.7 149.0 13 Non-interest-bearing debt..................................... 1.1 1.0 1.1 3.7 3.5 1.0 1.0 1.0 1.0 By holder:5 14 U.S. Government agencies and trust funds... 138.2 145.3 149.6 154.8 153.6 159.1 161.1 15 F.R. Banks........................................................ 80.5 84.7 94.4 102.5 103.1 102.8 110.1 16 Private investors................................................ 271.0 349.4 409.5 461.3 479.5 479.7 477.8 17 Commercial banks......................................... 55.6 85.1 103.8 r101.4 100.7 r98.4 98.5 18 Mutual savings banks............................... 2.5 4.5 r5.9 r5.9 5.7 5.6 5.5 19 Insurance companies..................................... 6.2 9.5 rl2.7 r15.1 r14.8 *•14.9 14.7 20 Other corporations....................................... 11.0 20.2 26.5 r22.7 *•19.9 '•19.7 19.0 21 State and local governments........................ 29.2 34.2 41.6 r55.2 r61.2 r60.2 62.7 Individuals: 22 Savings bonds............................................ 63.4 67.3 72.0 76.7 78.4 78.8 79.1 23 Other securities.......................................... 21.5 24.0 28.8 28.6 28.7 28.9 29.0 24 Foreign and international6...................... 58.8 66.5 78.1 109.6 120.4 119.7 119.3 25 Other miscellaneous investors7.................... 22.8 38.0 r38.9 *■46.1 *•49.8 *•53.5 50.3 1 Includes (not shown separately): Securities issued to the Rural 6 Consists of the investments of foreign balances and international Electrification Administration and to State and local governments, de­ accounts in the United States. Beginning with July 1974, the figures exclude positary bonds, retirement plan bonds, and individual retirement bonds. non-interest-bearing notes issued to the International Monetary Fund. 2 These nonmarketable bonds, also known as Investment Series B 7 Includes savings and loan associations, nonprofit institutions, cor­ Bonds, may be exchanged (or converted) at the owner’s option for 1 % porate pension trust funds, dealers and brokers, certain Govt, deposit per cent, 5-year marketable Treasury notes. Convertible bonds that have accounts, and Govt.-sponsored agencies. been so exchanged are removed from this category and recorded in the notes category above. Note.—Gross public debt excludes guaranteed agency securities and, 3 Nonmarketable foreign government dollar-denominated and foreign beginning in July 1974, includes Federal Financing Bank security issues. currency denominated series. Data by type of security from Monthly Statement of the Public Debt of 4 Held almost entirely by U.S. Govt, agencies and trust funds. the United States (U.S. Treasury Dept.); data by holder from Treasury 5 Data for F.R. Banks and U.S. Govt, agencies and trust funds are Bulletin. actual holdings; data for other groups are Treasury estimates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.43 U.S. GOVERNMENT MARKETABLE SECURITIES Ownership, by maturity Par value; millions of dollars, end of period 1978 1978 Type of holder 1976 1977 1976 1977 May June May June All maturities 1 to 5 years 1 All holders......................................... 421,276 459,927 473,684 477,699 141,132 151,264 170,122 174,302 2 U.S. Govt, agencies and trust funds 16,485 14,420 13,967 13,904 6,141 4,788 4,772 4,856 3 F. R. Banks....................................... 96,971 101,191 101,329 110,134 31,249 27,012 28,329 31,903 4 Private investors................................. 307,820 344,315 358,388 353,660 103,742 119,464 137,020 137,543 5 Commercial banks........................ 78,262 75,363 71,530 71,675 40,005 38,691 42,214 42,198 6 Mutual savings banks................... 4,072 4,379 4,004 3,736 2,010 2,112 2,257 2,077 7 Insurance companies.................... 10,284 12,378 11,855 11,531 3,885 4,729 5,149 5,316 8 Nonfinancial corporations........... 14,193 9,474 7,028 6,390 2,618 3,183 3,359 3,280 9 Savings and loan associations.... 4,576 4,817 4,540 4,342 2,360 2,368 2,569 2,503 10 State and local governments........ 12,252 15,495 14,646 15,446 2,543 3,875 4,453 4,792 11 All others....................................... 184,182 222,409 244,785 240,540 50,321 64,505 17,019 77,377 Total, within 1 year 5 to 10 years 12 All holders......................................... 211,035 230,691 219,559 220,683 43,045 45,328 45,690 44,443 13 U.S. Govt, agencies and trust funds 2,012 1,906 1,150 1,145 2,879 2,129 2,129 1,989 14 F. R. Banks....................................... 51,569 56,702 52,314 57,005 9,148 10,404 11,802 11,995 15 Private investors................................ 157,454 172,084 166,094 162,533 31,018 32,795 31,758 30,458 16 Commercial banks........................ 31,213 29,477 20,831 20,988 6,278 6,162 6,567 6,538 17 Mutual savings banks................... 1,214 1,400 934 903 567 584 537 527 18 Insurance companies.................... 2,191 2,398 1,623 1,455 2,546 3,204 3,017 2,616 19 Nonfinancial corporations............ 11,009 5,770 3,147 2,597 370 307 307 293 20 Savings and loan associations.... 1,984 2,236 1,765 1,656 155 143 133 112 21 State and local governments........ 6,622 7,917 5,953 6,235 1,465 1,283 1,305 1,257 22 All others....................................... 103,220 122,885 131,842 128,700 19,637 21,112 19,892 19,114 Bills, within 1 year 10 to 20 years 23 All holders......................................... 163,992 161,081 159,391 159,757 11,865 12,906 14,927 14,894 24 U.S. Govt, agencies and trust funds 449 32 2 1 3,102 3,102 3,273 3,273 25 F. R. Banks....................................... 41,279 42,004 39,867 44,597 1,363 1,510 1,806 1,855 26 Private investors......................... 122,264 119,035 119,522 115,158 7,400 8,295 9,847 9,766 27 Commercial banks........................ 17,303 11,996 6,773 7,010 339 456 811 798 28 Mutual savings banks................... 454 484 256 233 139 137 130 123 29 Insurance companies..................... 1,463 1,187 810 565 1,114 1,245 1,197 1,232 30 Nonfinancial corporations............ 9,939 4,329 1,797 1,309 142 133 153 130 31 Savings and loan associations.... 1,266 806 562 401 64 54 57 56 32 State and local governments........ 5,556 6,092 3,898 4,123 718 890 1,043 1,040 33 All others....................................... 86,282 94,152 105,426 101,516 4,884 5,380 6,456 6,387 Other, within 1 year Over 20 years 34 All holders......................................... 47,043 69,610 60,168 60,926 14,200 19,738 23,387 23,377 35 U.S. Govt, agencies and trust funds 1,563 1,874 1,149 1,144 2,350 2,495 2,642 2,641 36 F. R. Banks....................................... 10,290 14,698 12,447 12,408 3,642 5,564 7,077 7,376 37 Private investors................................ 35,190 53,039 46,572 47,375 8,208 11,679 13,668 13,360 38 Commercial banks........................ 13,910 15,482 14,058 13,978 427 578 1,107 1,153 39 Mutual savings banks................... 760 916 678 670 143 146 146 106 40 Insurance companies..................... 728 1,211 813 890 548 802 869 911 41 Nonfinancial corporations............ 1,070 1,441 1,350 1,288 55 81 62 89 42 Savings and loan associations.... 718 1,430 1,203 1,255 13 16 16 16 43 State and local governments........ 1,066 3,875 2,055 2,112 904 1,530 1,891 2,123 44 All others....................................... 16,938 28,733 26,416 27,184 6,120 8,526 9,577 8,962 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) 435 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 June 30, 1978; (1) 5,473 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 □ September 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 May June July June 21 June 28 July 5 July 12 July 19 July 26 1 U.S. Government securities.. 6,027 10,449 10,838 10,609 9,704 8,829 9,273 10,072 9,886 7,932 7,522 9,986 By maturity: 2 Bills.................................... 3,889 6,676 6,746 6,483 5,982 5,367 5,853 6,425 5,791 4,713 5,040 5,989 3 Other within 1 year.......... 223 210 237 388 386 428 419 339 364 272 259 561 4 1-5 years........................... 1,414 2,317 2,318 1,599 1,931 1,524 1,901 1,960 1,598 1,452 921 1,985 5 5-10 years.......................... 363 1,019 1,148 1,156 675 668 599 734 657 557 605 677 6 Over 10 years.................... 138 229 388 984 730 842 501 614 1,477 938 695 774 By type of customer: 7 U.S. Government securities dealers........................ 885 1,360 1,267 1,110 1,210 1,053 1,037 1,176 1,190 993 1,052 1,134 8 U.S. Government securities brokers....................... 1,750 3,407 3,709 4,002 3,393 3,299 3,624 3,467 3,567 3,008 2,791 3,654 9 Commercial banks............ 1,451 2,426 2,295 1,867 1,687 1,419 1,602 1,783 1,620 1,241 1,155 1,587 10 All others i......................... 1,941 3,257 3,567 3,631 3,414 3,058 3,010 3,645 3,510 2,689 2,524 3,612 11 Federal agency securities.... 1,043 1,548 693 1,587 1,828 1,918 1,401 2,003 1,584 1,592 2,276 1,704 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 May June July May 31 June 7 June 14 June 21 June 28 July 5 Positions2 1 U.S. Government securities.. 5,884 7,592 5,172 822 2,942 633 2,049 4,641 4,020 2,460 1,506 634 2 Bills.................................... 4,297 6,290 4,772 1,109 2,862 1,260 1,998 3,879 3,918 2,930 1,550 730 3 Other within 1 year.......... 265 188 99 312 477 330 409 554 551 435 451 231 4 1-5 years........................... 886 515 60 -622 38 -474 -369 369 -81 -260 206 -218 5 5-10 years.......................... 300 402 92 68 -85 -321 -4 18 -20 -170 -158 -156 6 Over 10 years.................... 136 198 149 -46 -350 -162 15 -178 -370 -475 -544 46 7 Federal agency securities.... 943 729 693 1,043 894 214 1,234 1,171 990 928 634 424 Sources of financing3 8 All sources............................. 6,666 8,715 9,877 8,397 11,120 8,213 8,494 11,832 12,613 11,865 8,843 8,576 Commercial banks: 1,621 1,896 1,313 249 995 13 434 1,499 1,563 1,277 -105 59 10 Outside New York City... 1,466 1,660 1,987 1,649 2,728 1,759 1,871 2,970 3,158 2,729 2,234 2,066 11 Corporations1....................... 842 1,479 2,358 1,823 2,276 1,981 1,910 2,284 2,782 2,290 1,896 1,779 12 All others.............................. 2,738 3,681 4,170 4,677 5,121 4,460 4,279 5,080 5,110 5,568 4,817 4,672 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 1978 Agency 1975 1976 1977 Jan. Feb. Mar. Apr. May June 1 Federal and Federally sponsored agencies........... 97,680 103,325 110,409 111,520 112,945 114,371 115,903 119,728 121,239 19,046 21,896 23,245 23,293 23,284 23,695 23,766 23,864 23,983 3 Defense Department1....................................... 1,220 1,113 983 974 963 954 949 935 926 4 7,188 7,801 9,156 9,156 9,156 9,416 9,416 9,416 9,455 5 564 575 581 599 602 607 607 608 606 6 Government National Mortgage Association participation certificates 5......................... 4,200 4,120 3,743 3,743 3,743 3,743 3,701 3,701 3,701 7 Postal Service6.................................................. 1,750 2,998 2,431 2,431 2,431 2,431 2,431 2,364 2,364 8 Tennessee Valley Authority............................. 3,915 5,185 6,015 6,045 6,045 6,195 6,310 6,485 6,575 9 United States Railway Association6............... 209 104 336 345 344 349 352 355 356 78,634 81,429 87,164 88,227 89,661 90,676 92,137 95,864 97,256 11 Federal home loan banks................................. 18,900 16,811 18,345 18,692 19,893 20,007 20,163 22,217 22,306 12 Federal Home Loan Mortgage Corporation.. 1,550 1,690 1,686 1,768 1,768 1,768 1,639 1,637 1,937 13 Federal National Mortgage Association........ 29,963 30,565 31,890 32,024 32,553 33,350 34,024 35,297 36,404 14 Federal land banks........................................... 15,000 17,127 19,118 19,498 19,350 19,350 19,686 19,686 19,686 15 Federal intermediate credit banks................... 9,254 10,494 11,174 11,103 10,958 10,881 10,977 11,081 11,257 16 Banks for cooperatives..................................... 3,655 4,330 4,434 4,625 4,622 4,728 5,046 5,264 4,974 17 Student Loan Marketing Association7............ 310 410 515 515 515 590 600 680 690 18 2 2 2 2 2 2 2 2 2 Memo items : 19 Federal Financing Bank debt6,8........................... 17,154 28,711 38,580 39,522 40,605 42,169 42,964 43,871 44,504 Lending to Federal and Federally sponsored agencies: 20 Export-import Bank3....................................... 4,595 5,208 5,834 5,834 5,834 6,094 6,094 6,094 6,132 21 Postal Service6.................................................. 1,500 2,748 2,181 2,181 2,181 2,181 2,181 2,114 2,114 22 Student Loan Marketing Association7........... 310 410 515 515 515 590 600 680 690 23 Tennessee Valley Authority............................. 1,840 3,110 4,190 4,220 4,220 4,370 4,485 4,660 4,750 24 United States Railway Association6............... 209 104 336 345 344 349 352 355 356 Other lending:9 25 Farmers Home Administration....................... 7,000 10,750 16,095 16,760 17,545 18,050 19,120 20,090 20,910 26 Rural Electrification Administration.............. 566 1,415 2,647 2,809 2,947 3,124 3,323 3,498 3,602 27 1,134 4,966 6,782 6,858 7,019 7,411 6,809 6,380 5,950 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 ot 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 □ September 1978 1.47 NEW SECURITY ISSUES of State and Local Governments Millions of dollars 1978 Type of issue or issuer, 1975 1976 1977 or use Feb.' Mar.r Apr.r Mayr June r July 30,607 35,313 46,769 2,750 4,754 3,811 5,440 4,244 3,719 By type of issue: 2 16,020 18,040 18,042 1,024 1,426 1,363 2,216 1,972 1,031 3 14,511 17,140 28,655 1,722 3,325 2,437 3,204 2,266 2,685 4 Housing Assistance Administration 2.............................. 5 U.S. Government loans..................................................... 76 133 72 4 3 11 20 6 3 By type of issuer: 6 State.................................................................................... 7,438 7,054 6,354 311 409 237 873 912 650 7 Special district and statutory authority............................ 12,441 15,304 21,717 1,268 2,606 1,861 2,186 1,383 2,023 8 Municipalities, counties, townships, school districts.... 10,660 12,845 18,623 1,165 1,735 1,702 2,360 1,944 1,043 9 Issues for new capital, total................................................... 29,495 32,108 36,189 2,005 3,068 2,595 3,134 3,816 3,389 By use of proceeds: 10 4,689 4,900 5,076 415 348 332 673 401 498 11 2,208 2,586 2,951 57 273 158 130 359 315 12 7,209 9,594 8,119 369 959 720 557 616 955 13 4,392 6,566 8,274 518 684 845 955 667 1,125 14 445 483 4,676 315 328 273 357 412 219 15 10,552 7,979 7,093 331 476 267 462 1,361 277 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 Nov. Dec. Jan. Feb. Mar. April 1 All issues 1.............................................................................. 53,619 53,488 54,205 5,331 6,531 3,013 2,657 4,442 3,285 2 Bonds...................................................................................... 42,756 42,380 42,193 3,411 5,362 2,380 2,131 3,620 2,811 By type of offering: 32,583 26,453 24,186 2,211 1,542 1,382 1,464 1,902 1,958 4 Private placement............................................................... 10,172 15,927 18,007 1,200 3,820 998 667 1,718 853 By industry group: 16,980 13,264 12,510 726 2,375 268 716 1,155 534 6 Commercial and miscellaneous................................. 2,750 4,372 5,887 546 753 280 87 428 421 3,439 4,387 2,033 178 345 123 101 217 291 8 Public utility....................................................................... 9,658 8,297 8,261 851 476 284 205 631 505 3,464 2,787 3,059 288 189 519 9 291 35 6,469 9,274 10,438 821 1,223 907 1,012 898 1,027 10,863 11,108 12,013 1,920 1,169 633 526 822 474 By type: 3,458 2,803 3,878 364 473 171 138 148 235 13 Common............................................................................. 7,405 8,305 8,135 1,556 696 462 388 674 239 By industry group: 14 Manufacturing................................................................... 1,670 2,237 1,265 56 166 5 74 15 15 Commercial and miscellaneous......................................... 1,470 1,183 1,838 122 124 138 91 94 183 16 Transportation.............................................................. 1 24 418 50 28 17 Public utility ...................................................................... 6,235 6,121 6,058 878 604 360 260 627 238 18 Communication.................................................................. 1,002 776 1,379 725 110 25 19 Real estate and financial.................................................... 488 771 1,054 88 165 130 150 28 10 i Figures, which represent gross proceeds of issues maturing in more companies other than closed-end, intracorporate transactions, and sales to than 1 year, sold for cash in the United States, are principal amount or foreigners, number of units multiplied by offering price. Excludes offerings of less than $100,000, secondary offerings, undefined or exempted issues as Source.—Securities and Exchange Commission, defined in the Securities Act of 1933, employee stock plans, investment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Corporate Finance A37 1.49 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1978 Item 1976 1977 Jan. Feb. Mar. Apr. May June July INVESTMENT COMPANIES excluding money market funds 1 4,226 6,401 638 451 613 625 558 487 474 2 Redemptions of own shares2.......................... 6,802 6,027 465 348 459 580 831 757 645 3 -2,496 357 173 103 154 45 -273 -270 -181 4 Assets 3.............................................................. 47,537 45,049 43,000 42,747 44,052 46,594 46,969 46,106 47,975 5 Cash position4.............................................. 2,747 3,274 3,608 4,258 4,331 4,592 '4,642 4,493 4,285 6 44,790 41,775 39,392 38,489 39,721 42,002 '42,327 41,613 43,690 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 Q4 Ql Q2 Q3 Q4 Ql Q2* 120.4 155.9 173.9 154.6 164.8 175.1 177.5 178.3 172.1 201.6 49.8 64.3 71.8 62.4 68.3 72.3 72.8 73.9 70.0 84.2 3 Profits after tax........................................................ 70.6 91.6 102.1 92.2 96.5 102.8 104.7 104.4 102.1 117.4 4 Dividends.................................................................. 31.9 37.9 43.7 41.4 41.5 42.7 44.1 46.3 47.0 48.1 5 Undistributed profits............................................... 38.7 53.7 58.4 50.8 55.0 60.1 60.6 58.1 55.1 69.3 6 Capital consumption allowances............................. 89.3 97.1 106.0 100.4 102.0 105.0 107.6 109.3 111.3 113.3 7 Net cash flow............................................................ 128.0 150.8 164.4 151.2 157.0 165.1 168.2 167.4 166.4 182.6 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 □ September 1978 1.51 NONFINANCIAL CORPORATIONS Current Assets and Liabilities Billions of dollars, except for ratio 1976 1977' 1978 Account 1974 1975 Q2 Q3 Q4 Q1 I Q2 Q3 Q4 Ql 1 Current assets......................................................... 734.6 756.3 801.7 817.4 823.1 842.0 856.4 880.3 900.1 921.8 2 Cash.................................................................... 73.0 80.0 80.7 79.5 86.8 80.8 83.1 83.4 94.2 88.3 3 U.S. Government securities.............................. 11.3 19.6 23.4 24.1 26.0 26.8 22.1 21.5 20.9 20.8 4 Notes and accounts receivable......................... 265.5 272.1 290.2 297.9 292.4 304.1 312.8 326.9 325.7 336.8 5 Inventories.......................................................... 318.9 314.7 333.7 342.2 341.4 352.1 358.8 367.5 375.0 389.5 6 Other................................................................... 65.9 69.9 73.6 73.6 76.4 78.3 79.6 81.0 84.3 86.4 451.8 446.9 470.3 484.0 487.5 502.6 509.5 528.9 543.2 564.6 8 Notes and accounts payable............................. 272.3 261.2 269.5 271.2 273.2 280.2 286.8 297.8 306.8 316.3 9 Other................................................................... 179.5 185.7 200.8 212.8 214.2 222.4 222.7 231.1 236.3 248.3 282.8 309.5 331.4 333.4 335.6 339.5 346.9 351.4 357.0 357.2 11 Memo: Current ratio1.......................................... 1.626 1.693 1.705 1.689 1.688 1.675 1.681 1.664 1.657 1.633 i (Total current assets)/(Total current liabilities). Source.—Federal Trade Commission. Note.—For a description of this series see “Working Capital of Non­ financial Corporations” in the July 1978 Bulletin, pp. 533-37. 1.52 BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1977 1978 Industry 1976 1977 Ql Q2 Q3 Q4 Ql Q2 Q3 Q42 120.15 135.72 130.16 134.24 140.38 138.11 144.25 148.88 153.83 156.84 Manufacturing 2 Durable goods industries................................... 23.57 27.75 26.30 27.26 29.23 28.19 28.72 30.42 31.99 32.45 3 Nondurable goods industries............................ 28.70 32.33 30.13 32.19 33.79 33.22 32.86 35.25 37.45 39.36 Nonmanufacturing 4 Mining................................................................ 4.00 4.49 4.24 4.49 4.74 4.50 4.45 4.95 4.84 4.90 Transportation: 5 Railroad.......................................................... 2.51 2.82 2.71 2.57 3.20 2.80 3.35 3.28 3.27 3.46 6 Air................................................................... 1.29 1.63 1.62 1.43 1.69 1.76 2.67 2.30 2.02 1.91 7 Other............................................................... 3.60 2.55 2.96 2.96 1.96 2.32 2.44 2.55 2.36 2.24 Public utilities: 8 Electric............................................................ 18.77 21.57 21.19 21.14 21.90 22.05 23.15 23.70 25.04 25.64 9 Gas and other................................................ 3.45 4.21 4.16 4.16 4.32 4.18 4.78 4.58 4.22 4.66 1 11 0 C C o 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 . . * .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1 0 3 . . 9 2 9 8 2 1 2 5 . . 9 4 5 3 2 1 2 4 . . 6 19 7 2 1 2 5 . . 7 3 3 2 2 1 3 6 . . 1 4 4 0 2 1 3 5 . . 2 8 7 2 2 1 4 7 . . 7 0 6 7 ) / 41•86 42.63 42.21 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 Q2 Q3 Q4 Ql Q2 ASSETS Accounts receivable, gross 31.9 35.4 36.1 36.0 38.6 40.7 42.3 44.0 44.5 47.1 2 Business.............................................................. 27.4 32.3 37.2 39.3 44.7 50.4 50.6 55.2 57.6 59.5 3 Total................................................................ 59.3 67.7 73.3 75.3 83.4 91.2 92.9 99.2 102.1 106.6 4 Less: Reserves for unearned income and losses 7.4 8.4 9.0 9.4 10.5 11.1 11.7 12.7 12.8 14.1 5 Accounts receivable, net....................................... 51.9 59.3 64.2 65.9 72.9 80.1 81.2 86.5 89.3 92.6 6 Cash and bank deposits......................................... 2.8 2.6 3.0 2.9 2.6 2.5 2.5 2.6 2.2 2.9 7 Securities................................................................. .9 .8 .4 1.0 1.1 1.2 1.8 .9 1.2 1.3 8 All other.................................................................. 10.0 10.6 12.0 11.8 12.6 13.7 14.2 14.3 15.0 16.2 65.6 73.2 79.6 81.6 89.2 97.5 99.6 104.3 107.7 112.9 LIABILITIES 10 Bank loans.............................................................. 5.6 7.2 9.7 8.0 6.3 5.7 5.4 5.9 5.8 5.4 11 Commercial paper.................................................. 17.3 19.7 20.7 22.2 23.7 27.5 25.7 29.6 29.9 31.3 Debt: 12 Short-term, n.e.c................................................. 4.3 4.6 4.9 4.5 5.4 5.5 5.4 6.2 5.3 6.6 13 Long-term, n.e.c................................................. 22 J 24.6 26.5 27.6 32.3 35.0 34.8 36.0 38.0 40.1 14 Other................................................................... 4.8 5.6 5.5 6.8 8.1 9.4 13.7 11.5 12.9 13.6 15 Capital, surplus, and undivided profits................ 10.9 11.5 12.4 12.5 13.4 14.4 14.6 15.1 15.7 16.0 16 Total liabilities and capital.................................... 65.6 73.2 79.6 81.6 89.2 97.5 99.6 104.3 107.7 112.9 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 June 30, 1978 1978 1978 19781 Apr. May June Apr. May June Apr. May June 1 Total.................................................................. 59,498 827 545 560 15,125 14,786 14,994 14,298 14,241 14,434 2 Retail automotive (commercial vehicles)....... 13,498 136 223 400 1,059 1,155 1,314 923 932 914 3 Wholesale automotive..................................... 12,249 357 1 -472 6,600 6,195 5,705 6,243 6,194 6,177 4 Retail paper on business, industrial, and farm equipment........................................ 15,112 148 182 283 1,024 1,153 1,194 876 971 911 5 Loans on commercial accounts receivable... 4,258 2 59 182 2,938 2,943 3,314 2,936 2,884 3,132 6 Factored commercial accounts receivable.... 2,406 125 51 104 1,811 1,663 1,743 1,686 1,612 1,639 7 All other business credit................................. 11,975 59 29 63 1,693 1,677 1,724 1,634 1,648 1,661 1 Not seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Financial Statistics □ September 1978 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1978 Item 1975 1976 1977 Feb. Mar. Apr. May June July 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 59.9 58.8 61.6 59.8 r62.6 60.6 2 Amount of loan (thous. dollars)............. 33.3 35.9 40.5 44.0 43.5 45.7 44.2 r45.9 44.5 3 Loan/price ratio (per cent)....................... 74.7 74.2 76.3 75.3 75.5 76.1 75.5 r75.6 75.5 4 Maturity (years)........................................ 26.8 27.2 27.9 27.3 27.4 28.4 27.7 28.3 28.2 5 Fees and charges (per cent of loan amount)2. 1.54 1.44 1.33 1.32 1.37 1.44 1.34 1.40 1.40 6 Contract rate (per cent per annum)........ 8.75 8.76 8.80 8.96 9.03 9.07 9.14 9.23 9.34 Yield (per cent per annum): 7 FHLBB series 3......................................... 9.01 8.99 9.01 9.18 9.26 9.30 9.37 9.46 9.57 8 HUD series4............................................ 9.10 8.99 8.95 9.25 9.30 9.40 9.60 9.75 9.80 SECONDARY MARKETS Yields (per cent per annum) on— 9 FHA mortgages (HUD series)5............... 9.19 8.82 7.96 9.29 9.37 9.67 9.92 10 GNMA securities6.................................... 8.52 8.17 8.04 8.64 8.60 8.71 8.71 9.05 9.16 FNMA auctions:7 11 Government-underwritten loans......... 9.26 8.99 8.73 9.31 9.35 9.44 9.66 9.91 10.01 12 Conventional loans.............................. 9.37 9.11 8.98 9.49 9.61 9.72 9.90 10.10 10.19 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 13 Total........................................................... 31,824 32,904 34,370 35,408 36,030 36,702 37,937 38,753 39,409 14 FHA-insured.......................................... 19,732 18,916 18,457 18,664 18,759 18,950 19,382 19,608 19,763 15 V A-guaranteed....................................... 9,573 9,212 9,315 9,599 9,727 9,905 10,255 10,398 10,457 16 Conventional.......................................... 2,519 4,776 6,597 7,146 7,543 7,847 8,300 8,747 9,189 Mortgage transactions (during period) 17 Purchases.................................................... 4,263 3,606 497 879 891 937 1,551 1,148 945 18 Sales............................................................ 2 86 4 Mortgage commitments:8 19 Contracted (during period)..................... 6,106 6,247 1,333 1.942 1,563 2,119 3,439 1,517 927 20 Outstanding (end of period)..................... 4,126 3,398 4,698 6,851 7,445 8,486 M0,271 '10,395 10,171 Auction of 4-month commitments to buy— Government-underwritten loans: 21 Offered9.................................................. 7,042.6 4,929.8 1,184.5 1,199.1 523.7 909.3 2.117.7 1,095.0 756.7 22 Accepted................................................ 3.848.3 2,787.2 794.0 623.1 334.9 529.2 1.093.7 636.6 471.5 Conventional loans: 23 Offered9.................................................. 1.401.3 2,595.7 591.6 1,214.1 823.5 974.2 1,935.8 574.5 316.0 24 Accepted................................................. 765.0 1,879.2 359.4 566.0 512.5 578.1 968.3 342.0 178.9 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)1 o 25 Total........................................................... 4,987 4,269 3,276 3,044 3,372 3,092 2,878 2,255 2,024 26 FHA/VA................................................ 1,824 1,618 1,395 1,381 1,387 1,373 1,356 1,338 1,321 27 Conventional.......................................... 3,163 2,651 1,881 1,663 1,985 1,719 1,522 917 702 Mortgage transactions (during period) 28 Purchases.................................................... 1,716 1,175 489 363 344 356 479 500 520 29 Sales............................................................ 1,020 1,396 477 470 120 466 651 1,093 725 Mortgage commitments:11 30 Contracted (during period)...................... 982 1,477 361 363 593 512 811 762 737 31 Outstanding (end of period)..................... 1/11 333 1,063 1,021 1,233 1,346 1,640 1,040 2,055 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 Q3 Q4 Ql Q2p 1All holders.................................................. 682,321 742,512 801,537 889,327 986,395 1,023,470 1,052,358 1,089,740 2 1- to 4-family......................................... 416,211 449,371 490,761 556,557 630,498 656,159 675,556 701,238 3 Multifamily............................................ 93,132 99,976 100,601 104,516 109,389 111,809 114,206 116,940 4 Commercial........................................... 131,725 146,877 159,298 171,223 182,510 189,834 194,550 200,668 5 Farm...................................................... 41,253 46,288 50,877 57,031 63,998 65,668 68,046 70,894 505,400 542,560 581,193 647,650 718,153 745,064 764,665 792,152 7 Commercial banks1............................... 119,068 132,105 136,186 151,326 171,166 178,979 184,423 193,223 8 1- to 4-family..................................... 67,998 74,758 77,018 86,234 100,474 105,115 108,699 113,886 9 Multifamily........................................ 6,932 7,619 5,915 8,082 8,815 9,215 9,387 9,816 10 Commercial....................................... 38,696 43,679 46,882 50,289 54,260 56,898 58,407 61,194 11 Farm.................................................. 5,442 6,049 6,371 6,721 7,617 7,751 7,930 8,327 12 Mutual savings banks...................... 73,230 74,920 77,249 81,639 86,079 88,104 89,800 91,382 13 1- to 4-family..................................... 48,811 49,213 50,025 53,089 56,313 57,637 58,747 59,782 14 Multifamily........................................ 12,343 12,923 13,792 14,177 14,952 15,304 15,398 15,873 15 Commercial....................................... 12,012 12,722 13,373 14,313 14,762 15,110 15,401 15,672 16 Farm.................................................. 64 62 59 60 52 53 54 55 17 Savings and loan associations................ 231,733 249,301 278,590 323,130 366,838 381,216 392,479 407,943 18 1- to 4-family..................................... 187,078 200,987 223,903 260,895 298,459 310,728 319,910 332,514 19 Multifamily........................................ 22,779 23,808 25,547 28,436 31,585 32,518 33,478 34,798 20 Commercial....................................... 21,876 24,506 29,140 33,799 36,794 37,969 39,091 40,631 21 Life insurance companies...................... 81,369 86,234 89,168 91,555 94,070 96,765 97,963 99,604 22 1- to 4-family..................................... 20,426 19,026 17,590 16,088 15,022 14,727 14,476 14,226 23 Multifamily........................................ 18,451 19,625 19,629 19,178 18,831 18,807 18,851 19,165 24 Commercial....................................... 36,496 41 ,256 45,196 48,864 51,742 54,388 55,426 56,631 26 Farm.................................................. 5,996 6,327 6,753 7,425 8,475 8,843 9,210 9,582 26 Federal and related agencies.................... 46,721 58,320 66,891 66,753 69,068 70,006 72,014 74,783 27 Government National Mortgage Assn... 4,029 4,846 7,438 4,241 3,599 3,660 3,291 3,200 28 1- to 4-family..................................... 1,455 2,248 4,728 1,970 1,522 1,548 948 922 29 Multifamily........................................ 2,574 2,598 2,710 2,271 2,077 2,112 2,343 2,278 30 1,366 1,432 1,109 1,064 1,292 1,353 1,179 1,429 31 1- to 4-family..................................... 743 759 208 454 548 626 202 245 32 Multifamily...................................... 29 167 215 218 192 275 408 495 33 Commercial....................................... 218 156 190 72 142 149 218 264 34 Farm.................................................. 376 350 496 320 410 303 351 425 35 Federal Housing and Veterans Admin... 3,476 4,015 4,970 5,150 5,130 5,212 5,219 5,289 36 1- to 4-family..................................... 2,013 2,009 1,990 1,676 1,566 1,627 1,585 1,607 37 Multifamily........................................ 1,463 2,006 2,980 3,474 3,564 3,585 3,634 3,682 38 24,175 29,578 31,824 32,904 34,148 34,369 36,029 38,753 39 1- to 4-family..................................... 20,370 23,778 25,813 26,934 28,178 28,504 30,208 32,91A 40 Multifamily........................................ 3,805 5,800 6,011 5,970 5,970 5,865 5,821 5,779 41 Federal land banks................................. 11,071 13,863 16,563 19,125 21,523 22,136 22,925 23,857 42 1- to 4-family..................................... 123 406 549 601 649 670 691 121 43 Farm.................................................. 10,948 13,457 16,014 18,524 20,874 21,466 22,234 23,130 44 Federal Home Loan Mortgage Corp.... 2,604 4,586 4,987 4,269 3,376 3,276 3,371 2,255 45 1- to 4-family..................................... 2,446 4,217 4,588 3,889 2,818 2,738 2,785 1,856 46 Multifamily........................................ 158 369 399 380 558 538 586 399 18,040 23,799 34,138 49,801 64,667 70,289 74,080 77,917 48 Government National Mortgage Assn... 7,890 11,769 18,257 30,572 41,089 44,896 46,357 48,032 49 1- to 4-family..................................... 7,561 11,249 17,538 29,583 39,865 43,555 44,906 46,515 50 Multifamily........................................ 329 520 719 989 1,224 1,341 1,451 1,517 51 Federal Home Loan Mortgage Corp... 766 757 1,598 2,671 5,332 6,610 7,471 9,134 52 1- to 4-family..................................... 617 608 1,349 2,282 4,642 5,621 6,286 7,685 53 Multifamily........................................ 149 149 249 389 690 989 1,185 1,449 54 Farmers Home Admin........................... 9,384 11,273 14,283 16,558 18,426 18,783 20,252 20,751 55 1- to 4-family..................................... 5,458 6,782 9,194 10,219 11,127 11,379 12,235 12,536 56 Multifamily........................................ 138 116 295 532 768 759 732 750 57 Commercial....................................... 1 ,124 1,473 1,948 2,440 2,824 2,945 3,528 3,615 58 Farm.................................................. 2,664 2,902 2,846 3,367 3,527 3,682 3,757 3,850 59 Individuals and others3............................. 112,160 117,833 119,315 125,123 134,507 138,111 141,599 144,888 60 1- to 4-family..................................... 51 ,112 53,331 56,268 62,643 69,315 71,665 73,878 75,763 61 Multifamily........................................ 23,982 24,276 22,140 20,420 20,163 20,501 20,732 20,939 62 Commercial....................................... 21,303 23,085 22,569 21,446 21,986 22,375 22,479 22,661 63 Farm.................................................. 15,763 17,141 18,338 20,614 23,043 23,570 24,510 25,525 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 o September 1978 1.55 CONSUMER INSTALMENT CREDIT Total Outstanding, and Net Change Millions of dollars 1978 Holder, and type of credit 1975 1976 1977 Jan. Feb. Mar. Apr. May June July Amounts outstanding (end of period) 1 164,955 185,489 216,572 215,925 216,297 219,203 112,mi 227,561 233,416 237,197 By holder: 2 78,667 89,511 105,291 105,466 105,663 107,166 109,336 111,673 114,756 117,110 3 35,994 38,639 44,015 43,970 44,107 44,486 45,182 46,136 47,147 47,967 4 25,666 30,546 37,036 36,851 37,217 38,185 38,750 39,951 41,388 41,802 5 18,002 19,052 21,082 20,525 20,060 19,920 19,941 20,141 20,310 20,432 6 6,626 7,741 9,149 9,114 9,250 9,446 9,528 9,660 9,815 9,886 By type of credit: 7 55,879 66,116 79,352 79,376 79,984 81,666 83,490 85,954 88,767 90,671 8 31,553 37,984 46,119 46,247 46,547 47,534 48,731 50,119 51,714 52,938 9 Indirect..................................... 18,353 21,176 25,370 25,476 25,696 26,327 27,049 27,854 28,773 29,496 10 13,200 16,808 20,749 20,771 20,851 21,207 21,682 22,265 22,941 23,442 11 11,155 12,489 14,263 14,260 14,374 14,577 14,921 15,382 15,863 16,327 12 12,741 15,163 18,385 18,293 18,475 18,955 19,239 19,835 20,549 20,754 13 430 480 585 576 588 600 599 618 641 652 14 14,423 14,572 15,014 14,978 14,973 15,062 15,156 15,220 15,309 15,438 15 Commercial banks...................... 8,649 8,734 8,862 8,819 8,807 8,845 8,876 8,912 8,967 9,061 16 3,451 3,273 3,109 3,115 3,098 3,085 3,095 3,098 3,103 3,123 17 Home improvement.......................... 9,405 10,990 12,952 12,904 12,968 13,162 13,375 13,691 14,037 14,260 18 Commercial banks...................... 4,965 5,554 6,473 6,445 6,436 6,479 6,598 6,782 6,971 7,129 Revolving credit: 19 Bank credit cards........................ 9,501 11,351 14,262 14,369 14,174 14,142 14,345 14,456 14,929 15,288 20 Bank check credit....................... 2,810 3,041 3,724 3,776 3,822 3,844 3,856 3,919 3,996 4,043 21 72,937 79,418 91,269 90,522 90,376 91,327 92,515 94,321 96,378 97,497 22 Commercial banks, total............ 21,188 22,847 25,850 25,809 25,877 26,322 26,930 27,485 28,179 28,651 23 Personal loans......................... 14,629 15,669 17,740 17,708 17,769 18,002 18,383 18,640 19,049 19,301 24 Finance companies, total............ 21,238 22,749 26,498 26,452 26,489 26,675 27,012 27,496 28,012 28,336 25 Personal loans......................... 17,263 18,554 21,302 21,248 21,283 21,416 21,700 22,110 22.547 22,906 26 Credit unions............................... 10,754 12,799 15,518 15,440 15,594 15,999 16,232 16,735 17,337 17,511 27 18,002 19,052 21,082 20,525 20,060 19,920 19,941 20,141 20,310 20,432 28 1,755 1,971 2,321 2,296 2,356 2,411 2,400 2,464 2,540 2,567 Net change (during period) 3 29 Total.................................................... 7,504 20,533 31,090 2,424 2,661 4,068 3,719 3,857 3,792 3,301 By holder: 30 Commercial banks.......................... 2,821 10,845 15,779 1,115 1,280 2,021 2,001 1,881 1,960 1,915 31 Finance companies......................... -90 2,644 5,376 460 418 662 781 763 553 605 32 Credit unions................................... 3,771 4,880 6,490 495 603 836 699 911 836 369 33 Retailers 1........................................ 69 1,050 2,032 309 202 367 129 170 282 364 34 Others 2............................................ 933 1,115 1,413 44 158 182 109 132 161 48 By type of credit: 35 Automobile....................................... 3,007 10,238 13,235 1,185 1,104 1,522 1,728 1,789 1,543 1,520 36 Commercial banks...................... 559 6,431 8,135 637 599 882 989 944 946 937 37 Indirect..................................... -334 2,823 4,194 407 389 564 603 575 554 553 38 Direct....................................... 894 3,608 3,941 230 210 318 386 369 392 384 39 Finance companies..................... 532 1,334 1,774 247 201 238 375 367 199 371 40 Credit unions............................... 1,872 2,422 3,222 244 300 406 343 465 383 206 41 Other............................................ 44 50 105 56 4 -4 21 13 15 6 42 Mobile homes................................... -195 150 441 52 23 108 95 58 15 104 43 Commercial banks...................... -323 85 128 2 2 46 28 33 -1 79 44 Finance companies.................... -73 -177 -164 36 -9 2 11 -3 -7 14 45 881 1,585 1,967 105 171 217 212 222 209 156 46 Commercial banks...................... 271 588 920 70 69 74 111 109 95 101 Revolving credit: 47 1,220 1,850 2,911 160 285 448 311 263 362 398 48 Bank check credit....................... 14 231 683 65 87 120 56 129 90 27 49 All other........................................... 2,577 6,479 11,853 857 991 1,653 1,317 1,396 1,573 1,096 50 Commercial banks, total............ 1,080 1,659 3,003 180 238 451 506 403 468 373 51 Personal loans......................... 858 1,040 2,070 81 167 263 333 207 303 220 52 Finance companies, total........... -348 1,509 3,749 177 223 419 387 395 358 210 53 Personal loans......................... 279 1,290 2,748 162 183 309 307 327 301 238 54 Credit unions............................... 1,580 2,045 2,719 205 252 358 301 371 383 133 55 69 1,050 2,032 309 202 367 129 170 282 364 56 196 217 350 -15 76 58 -6 57 82 16 1 Excludes 30-day charge credit held by retailers, oil and gas companies, Note.—Total consumer noninstalment credit outstanding—credit and travel and entertainment companies. scheduled to be repaid in a lump sum, including single-payment loans, 2 Mutual savings banks, savings and loan associations, and auto dealers. charge accounts, and service credit—amounted to $44.2 billion at the end 3 Net change equals extensions minus liquidations (repayments, charge- of 1977, $38.7 billion at the end of 1976, $35.7 billion at the end of 1975, offs, and other credits); figures for all months are seasonally adjusted. and $33.8 billion at the end of 1974. Comparable data for Dec. 31, 1978 will be published in the February 1979 Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Debt A43 1.56 CONSUMER INSTALMENT CREDIT Extensions and Liquidations Millions of dollars 1978 Holder, and type of credit 1975 1976 1977 Jan. Feb. Mar. Apr. May June July Extensions 3 1 164,169 193,328 225,645 19,586 20,179 21,595 22,117 22,336 22,680 22,332 By holder: 2 Commercial banks.......................... 77,312 94,220 110,777 9,625 9,905 10,608 11,120 11,004 11,329 11,315 3 Finance companies......................... 31,173 36,028 41,770 3,575 3,691 3,914 4,226 4,241 4,113 4,078 4 24,096 28,587 33,592 2,820 3,028 3,309 3,267 3,508 3,433 3,128 5 27,049 29,188 33,202 3,102 2,976 3,148 2,955 2,995 3,185 3,300 6 4,539 5,305 6,303 464 579 616 549 588 620 511 By type of credit: 7 51,413 62,988 72,888 6,263 6,400 6,822 7,248 7,387 7,241 7,156 8 Commercial banks...................... 28,573 36,585 42,570 3,650 3,700 3,924 4,212 4,189 4,178 4,267 9 Indirect..................................... 15,766 19,882 22,904 2,026 2,065 2,173 2,347 2,327 2,305 2,329 10 12,807 16,704 19,666 1,624 1,635 1,751 1,865 1,862 1,873 1,938 11 Finance companies..................... 9,674 11,209 12,635 1,088 1,080 1,173 1,314 1,337 1,278 1,208 12 12,683 14,675 17,041 1,421 1,565 1,679 1,654 1,798 1,721 1,624 13 Others........................................... 483 518 642 105 55 46 68 63 64 57 14 4,323 4,841 5,244 449 406 502 508 490 460 517 15 Commercial banks...................... 2,622 3,071 3,153 250 236 284 279 294 271 334 16 Finance companies..................... 764 690 651 101 62 74 85 74 69 81 17 5,556 6,736 8,066 618 710 770 753 798 801 736 18 Commercial banks...................... 2,722 3,245 3,968 327 338 352 382 395 390 390 Revolving credit: 19 Bank credit cards........................ 20,428 25,862 31,761 2,948 3,143 3,231 3,255 3,245 3,482 3,466 20 Bank check credit....................... 4,024 4,783 5,886 556 535 608 646 677 694 599 21 78,425 88,117 101,801 8,751 8,985 9,662 9,707 9,739 10,002 9,858 22 Commercial banks, total............ 18,944 20,673 23,439 1,893 1,953 2,209 2,346 2,204 2,314 2,259 23 Personal loans......................... 13,386 14,480 16,828 1,338 1,405 1,537 1,669 1,511 1,614 1,574 24 Finance companies, total............ 20,657 24,087 28,396 2,380 2,541 2,659 2,814 2,819 2,755 2,773 25 16,944 19,579 22,348 1,851 1,989 2,105 2,226 2,273 2,231 2,211 26 10,134 12,340 14,604 1,236 1,288 1,429 1,431 1,500 1,501 1,335 27 27,049 29,188 33,202 3,102 2,976 3,148 2,955 2,995 3,185 3,300 28 1,642 1,830 2,160 138 227 217 161 221 247 191 Liquidations 3 29 Total.................................................... 156,665 172,795 194,555 17,162 17,518 17,527 18,398 18,479 18,888 19,031 By holder: 30 74,491 83,376 94,998 8,509 8,625 8,587 9,119 9,123 9,369 9,400 31 Finance companies......................... 31,263 33,384 36,394 3,114 3,273 3,252 3,445 3,478 3,560 3,473 32 Credit unions................................... 20,325 23,707 27,103 2,325 2,425 2,473 2,568 2,597 2,597 2,759 33 26,980 28,138 31,170 2,793 2,774 2,781 2,826 2,825 .2,903 2,936 34 3,606 4,191 4,890 420 421 434 440 456 459 463 By type of credit: 35 48,406 52,750 59,652 5,078 5,296 5,300 5,520 5,598 5,698 5,636 36 Commercial banks...................... 28,014 30,154 34,435 3,013 3,101 3,042 3,223 3,245 3,232 3,330 37 16,101 17,059 18,710 1,619 1,676 1,609 1,744 1,752 1,751 1,776 38 11,913 13,095 15,726 1,394 1,425 1,433 1,479 1,493 1,481 1,554 39 Finance companies..................... 9,142 9,875 10,819 841 879 935 939 970 1,079 837 40 10,811 12,253 13,819 1,177 1,265 1,273 1,311 1,333 1,338 1,418 41 439 468 536 48 51 50 47 50 49 51 42 4,517 4,691 4,802 398 383 394 413 432 445 413 43 2,944 2,986 3,025 248 234 238 251 261 212 255 44 Finance companies..................... 837 867 806 65 71 72 74 77 76 67 45 4,675 5,151 6,098 514 539 553 541 576 592 580 46 2,451 2,657 3,048 257 269 278 271 286 295 289 Revolving credit: 47 19,208 24,012 28,851 2,788 2,858 2,783 2,944 2,982 3,120 3,068 48 4,010 4,552 5,202 491 448 488 590 548 604 572 49 75,849 81,638 89,948 7,894 7,994 8,009 8,390 8,343 8,429 8,762 50 17,864 19,014 20,436 1,713 1,715 1,758 1,840 1,801 1,846 1,886 51 Personal loans......................... 12,528 13,439 14,757 1,258 1,238 1,274 1,336 1,304 1,311 1,354 52 21,005 22,578 24,647 2,203 2,318 2,240 2, All 2,424 2,397 2,563 53 Personal loans......................... 16,665 18,289 19,600 1,688 1,806 1,796 1,919 1,946 1,930 1,973 54 8,554 10,295 11,884 1,031 1,036 1,071 1,130 1,129 1,118 1,202 55 26,980 28,138 31,170 2,793 2,774 2,781 2,826 2,825 2,903 2,936 56 1,446 1,613 1,811 153 151 159 167 164 165 175 i 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 □ September 1978 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-year data are at seasonally adjusted annual rates. 1977 1978 Transaction category, or sector 1972 1973 1974 1975 1976 1977 I II III IV I II Nonfinancial sectors 1 Total funds raised........................................ 176.0 203.5 188.0 208.5 272.1 340.5 303.8 300.6 390.6 367.1 380.6 370.5 2 Excluding equities..................................... 165.5 196.1 184.9 198.0 261.7 337.4 303.6 298.4 385.0 362.5 380.9 370.0 By sector and instrument: 3 U.S. Govt.................................................. 15.1 8.3 11.8 85.4 69.0 56.8 47.3 37.8 80.1 61.9 66.1 48.5 4 Public debt securities........................... 14.3 7.9 12.0 85.8 69.1 57.6 48.0 38.2 82.2 62.2 67.4 49.0 5 Agency issues and mortgages.............. .8 .4 -.2 -.4 -.1 -.9 -.7 -.4 -2.1 -.3 -1.4 -.5 6 All other nonfinancial sectors................... 160.9 195.2 176.2 123.1 203.0 283.8 256.5 262.8 310.5 305.2 314.6 322.0 7 Corporate equities................................ 10.5 7.4 3.1 10.5 10.4 3.1 .1 2.2 5.6 4.6 -.3 .5 8 Debt instruments................................. 150.4 187.9 173.1 112.6 192.6 280.6 256.3 260.6 304.9 300.6 314.9 321.6 9 Private domestic nonfinancial sectors. . 156.9 189.3 161.6 109.5 182.8 271.4 250.4 253.8 288.5 292.9 301.4 300.0 10 Corporate equities............................ 10.9 7.9 4.1 9.9 10.5 2.7 -.6 1.7 4.4 5.4 1.0 .7 11 Debt instruments............................... 146.0 181.4 157.5 99.6 172.3 268.7 251.0 252.1 284.1 287.5 300.4 299.3 12 Debt capital instruments............... 102.3 105.0 98.0 97.8 126.8 181.1 144.8 181.9 198.4 199.3 171.7 188.5 13 State and local obligations.... 14.7 14.7 16.5 15.6 19.0 29.2 20.5 38.2 33.0 25.0 22.3 35.8 14 Corporate bonds....................... 12.2 9.2 19.7 27.2 22.8 21.0 18.3 13.6 27.3 24.7 15.0 18.7 Mortgages : 15 Home..................................... 42.6 46.4 34.8 39.5 63.7 96.4 79.1 97.9 103.9 104.6 92.4 89.7 16 Multifamily residential......... 12.7 10.4 6.9 * 1.8 7.4 4.4 8.5 7.0 9.7 10.6 10.2 17 Commercial........................... 16.5 18.9 15.1 11.0 13.4 18.4 13.9 14.4 18.6 26.6 21.9 24.4 18 Farm....................................... 3.6 5.5 5.0 4.6 6.1 8.8 8.6 9.2 8.6 8.8 9.5 9.7 19 Other debt instruments................. 43.7 76.4 59.6 1.8 45.5 87.6 106.2 70.2 85.7 88.2 128.7 110.8 20 Consumer credit....................... 17.1 23.8 10.2 9.4 23.6 35.0 33.2 38.3 32.6 36.2 38.0 51.6 21 Bank loans n.e.c........................ 18.9 39.8 29.0 -14.0 3.5 30.6 48.9 19.0 33.8 20.7 61.3 45.9 22 Open market paper................... .8 2.5 6.6 -2.6 4.0 2.9 1.7 5.3 .5 4.2 5.3 5.1 23 Other.......................................... 6.9 10.3 13.7 9.0 14.4 19.0 22.5 7.6 18.8 27.1 24.1 8.2 24 By borrowing sector.......................... 156.9 189.3 161.6 109.5 182.8 271.4 250.4 253.8 288.5 292.9 301.4 300.0 25 State and local governments........ 14.5 13.2 15.5 13.2 18.5 25.9 19.6 25.9 34.8 23.2 20.9 24.4 26 Households................................... 64.3 80.9 49.2 48.6 89.9 139.6 127.7 134.7 150.0 145.9 143.0 141.1 27 Farm.............................................. 5.8 9.7 7.9 8.7 11.0 14.7 15.5 15.5 14.5 13.2 13.1 13.7 28 Nonfarm noncorporate................ 14.1 12.8 7.4 2.0 5.2 12.6 11.7 14.0 9.2 15.5 17.5 19.5 29 Corporate...................................... 58.3 72.7 81.8 37.0 58.2 78.7 75.9 63.7 80.1 95.2 107.0 101.3 30 Foreign.......................:......................... 4.0 5.9 14.6 13.6 20.2 12.3 6.1 9.0 22.0 12.3 13.2 22.0 31 Corporate equities............................ -.4 -.5 -1.0 .6 -.1 .4 .8 .5 1.2 -.8 -1.3 -.3 32 Debt instruments............................... 4.4 6.4 15.6 13.0 20.4 11.9 5.3 8.5 20.8 13.1 14.5 22.2 33 Bonds............................................ 1.0 1.0 2.1 6.2 8.5 5.0 2.2 6.6 7.5 3.7 5.1 4.0 34 Bank loans n.e.c............................ 2.9 2.8 4.7 3.7 6.6 1.6 -3.9 -2.6 7.2 5.6 7.4 8.0 35 Open market paper....................... -1.0 .9 7.3 .3 1.9 2.4 3.0 2.3 2.5 1.8 -.9 8.1 36 U.S. Govt, loans........................... 1.5 1.7 1.5 2.8 3.3 3.0 4.0 2.2 3.7 2.0 2.9 2.1 Financial sectors 37 Total funds raised......................................... 28.3 57.6 36.4 11.7 29.2 58.8 57.6 65.4 41.3 71.1 111.1 94.3 By instrument : 38 U.S. Govt, related..................................... 8.4 19.9 23.1 13.5 18.6 26.3 27.4 22.6 25.4 29.7 38.8 39.8 39 Sponsored credit agency securities.... 3.5 16.3 16.6 2.3 3.3 7.0 9.4 9.5 1.7 7.2 23.7 24.4 40 Mortgage pool securities..................... 4.9 3.6 5.8 10.3 15.7 20.5 22.6 13.1 23.7 22.5 15.2 15.3 41 Loans from U.S. Govt......................... .7 .9 -.4 -1.2 -4.7 42 Private financial sectors........................... 19.9 37.7 13.3 -1.9 10.6 32.6 30.2 42.8 15.9 41.4 72.2 54.5 43 Corporate equities................................ 2.8 1.5 .3 .6 1.0 .6 -1.4 2.5 -1.4 2.8 1.2 1.7 44 Debt instruments................................... 17.1 36.2 13.0 -2.5 9.6 32.0 31.6 40.3 17.3 38.7 71.1 52.8 45 Corporate bonds............................... 5.1 3.5 2.1 2.9 5.8 10.1 7.3 13.0 8.5 11.7 10.3 9.6 46 1.7 -1.2 -1.3 2.3 2.1 3.1 2.7 3.8 3.1 2.8 2.6 1.6 47 Bank loans n.e.c................................ 5.9 8.9 4.6 -3.6 -3.7 * 1.9 -6.5 -.1 4.7 -1.1 2.9 48 Open market paper and Rp’s.......... 4.4 17.8 .9 -.1 7.3 14.4 17.1 25.7 5.8 9.0 46.4 23.4 49 Loans from FHLB’s......................... * 7.2 6.7 -4.0 -2.0 4.3 2.6 4.3 -.1 10.4 12.8 15.3 By sector: 50 Sponsored credit agencies....................... 3.5 16.3 17.3 3.2 2.9 5.8 4.7 9.5 1.7 7.2 23.7 24.4 51 Mortgage pools........................................ 4.9 3.6 5.8 10.3 15.7 20.5 22.6 13.1 23.7 22.5 15.2 15.3 52 Private financial sectors........................... 19.9 37.7 13.3 -1.9 10.6 32.6 30.2 42.8 15.9 41.4 72.2 54.5 53 Commercial banks............................... 4.5 14.1 -5.6 -1.4 7.5 4.8 10.0 10.0 2.5 -3.4 31.1 3.6 54 Bank affiliates....................................... .7 2.2 3.5 .3 -.8 1.3 .4 2.3 1.5 .9 3.6 8.0 55 Savings and loan associations............. 2.0 6.0 6.3 -2.2 * 11.9 8.7 12.5 5.6 20.7 18.1 20.7 56 Other insurance companies................. .5 .5 .9 1.0 .9 .9 .9 .9 .9 1.0 1.0 1.0 57 Finance companies............................... 6.5 9.4 6.0 .6 6.4 16.9 15.1 19.8 11.1 21.6 14.0 16.9 58 REIT’s.................................................. 6.3 6.5 .6 -1.4 -2.4 -2.4 -2.7 -2.4 -2.6 -1.9 -1.9 -1.4 59 Open-end investment companies........ -.5 -1.2 -.7 -.1 -1.0 -1.0 -2.6 1.0 -3.3 .9 * .4 60 Money market funds........................... 2.4 1.3 * .2 .3 -1.3 .1 1.7 6.4 5.3 All sectors 6 6 1 2 To I t n a v l e f s u t n m d e s n r t a i c s o e m d, p b a y n y i n s s h tr a u r m es e . n . t . . . ■ 20 - 4 .5 .3 2 - 6 1 1 . . 2 1 22 - 4 .7 .4 22 - 0 .1 .2 3 - 0 1 1 . . 0 3 3 - 9 1 9 . . 0 4 3 - 6 2 1 . . 6 3 36 1 6 . . 0 0 4 - 3 3 1 . . 3 8 438 . . 9 2 49*1.7 464. . 8 4 63 Other corporate equities............ 13.8 10.1 4.1 11.2 12.4 4.8 1.3 3.7 7.5 6.5 .9 1.8 64 Debt instruments............................ 191.0 252.3 221.0 209.1 289.8 395.6 362.6 361.3 427.6 430.9 490.9 462.6 65 U.S. Govt, securities.............. 23.6 28.3 34.3 98.2 88.1 84.3 79.5 60.6 105.5 91.7 105.0 88.4 66 State and local obligations... 14.7 14.7 16.5 15.6 19.0 29.2 20.5 38.2 33.0 25.0 22.3 35.8 67 Corporate and foreign bonds. 18.4 13.6 23.9 36.4 37.2 36.1 27.7 33.2 43.3 40.1 30.3 32.3 68 Mortgages............................... 77.0 79.9 60.5 57.2 87.1 134.0 108.6 133.8 141.0 152.4 137.0 135.5 69 Consumer credit..................... 17.1 23.8 10.2 9.4 23.6 35.0 33.2 38.3 32.6 36.2 38.0 51.6 70 Bank loans n.e.c...................... 27.8 51.6 38.3 -13.9 6.4 32.2 46.9 9.9 40.9 30.9 67.6 56.8 71 Open market paper and Rp’s. 4.1 21.2 14.8 -2.4 13.3 19.8 21.9 33.3 8.8 15.0 50.8 36.6 72 Other loans............................. 8.4 19.1 22.6 8.7 15.3 25.1 24.4 14.0 22.4 39.6 39.9 25.6 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. 1977 1978 Transaction category, or sector 1972 1973 1974 1975 1976 1977 I II III IV I II 1 Total funds advanced in credit markets to nonfinancial sectors............................... 165.5 196.1 184.9 198.0 261.7 337.4 303.6 298.4 385.0 362.5 380.9 370.0 By public agencies and foreign : 2 Total net advances........................................ 19.8 34.1 52.6 44.3 54.5 85.4 59.2 79.3 81.4 121.8 116.3 83.0 3 U.S. Govt, securities................................ 7.6 9.5 11.9 22.5 26.8 40.2 14.8 39.7 40.8 65.6 48.7 33.9 4 Residential mortgages............................. 7.0 8.2 14.7 16.2 12.8 20.4 23.6 16.3 18.8 23.0 27.2 20.0 5 FHLB advances to S&L’s....................... * 7.2 6.7 -4.0 -2.0 4.3 2.6 4.3 -.1 10.4 1 .8 15.3 6 Other loans and securities....................... 5.1 9.2 19.4 9.5 16.9 20.5 18.2 19.1 21.9 22.8 27.5 13.8 Totals advanced, by sector 7 U.S. Govt.................................................. 1.8 2.8 9.7 15.1 8.9 11.8 10.3 1.8 17.4 17.8 28.7 8.5 8 Sponsored credit agencies....................... 9.2 21.4 25.6 14.5 20.6 26.9 28.4 24.9 25.7 28.7 39.9 43.6 9 Monetary authorities............................... .3 9.2 6.2 8.5 9.8 7.1 -5.8 26.1 2.1 6.2 -4.1 30.7 10 Foreign...................................................... 8.4 .6 11.2 6.1 15.2 39.5 26.2 26.5 36.2 69.2 51.8 .3 11 Agency borrowing not included in line 1.. 8.4 19.9 23.1 13.5 18.6 26.3 27 A 22.6 25.4 29.7 38.8 39.8 Private domestic funds advanced 12 Total net advances........................................ 154.1 182.0 155.3 167.3 225.7 278.2 271.8 241.7 328.9 270.4 303.5 326.8 13 U.S. Govt, securities................................ 16.0 18.8 22.4 75.7 61.3 44.1 64.7 20.9 64.8 26.1 56.3 54.5 14 State and local obligations...................... 14.7 14.7 16.5 15.6 19.0 29.2 20.5 38.2 33.0 25.0 22.3 35.8 15 Corporate and foreign bonds.................. 13.1 10.0 20.9 32.8 30.5 22.3 19.6 14.9 31.1 23.6 19.3 21.5 16 Residential mortgages............................. 48.2 48.4 26.9 23.2 52.7 83.2 59.7 90.0 92.0 91.2 75.6 79.8 17 Other mortgages and loans..................... 62.1 97.2 75.4 16.1 60.4 103.7 109.9 82.0 107.9 115.0 142.8 150.6 18 Less: FHLB advances............................. * 7.2 6.7 -4.0 -2.0 4.3 2.6 4.3 -.1 10.4 12.8 15.3 Private financial intermediation 19 Credit market funds advanced by private financial institutions.............................. 149.7 165.4 126.2 119.9 191.2 249.6 239.3 242.9 280.6 235.4 266.6 307.9 20 Commercial banking............................... 70.5 86.5 64.5 27.6 58.0 85.8 85.0 77.1 103.1 77.9 114.2 136.8 21 Savings institutions.................................. 48.2 36.9 26.9 52.0 71.4 84.8 85.5 85.1 89.1 79.6 79.1 81.6 22 Insurance and pension funds.................. 17.2 23.9 30.0 41.5 51.7 62.0 58.6 62.0 66.4 61.1 62.7 66.2 23 Other finance............................................ 13.9 18.0 4.7 -1.1 10.1 16.9 10.2 18.7 22.0 16.8 10.6 23.3 24 Sources of funds............................................ 149.7 165.4 126.2 119.9 191.2 249.6 239.3 242.9 280.6 235.4 266.6 307.9 25 Private domestic deposits........................ 100.6 86.6 69.4 90.6 121.5 136.0 140.3 113.7 165.4 124.5 112.3 124.0 26 Credit market borrowing......................... 17.1 36.2 13.0 -2.5 9.6 32.0 31.6 40.3 17.3 38.7 71.1 52.8 32.0 42.5 43.8 31.9 60.1 81.6 67.3 89.0 97.9 72.3 83.2 131.1 28 Foreign funds....................................... 4.6 5.8 16.8 .9 5.1 11.6 -7.6 9.1 20.4 24.4 -2.4 16.4 29 Treasury balances................................. .7 -1.0 -5.1 -1.7 -.1 4.3 4.3 -7.9 5.5 15.2 -14.1 12.3 30 Insurance and pension reserves.......... 11.6 18.4 26.0 29.6 34.8 48.0 40.6 50.4 51.9 48.9 47.7 50.1 31 Other, net............................................ 15.0 19.4 6.0 3.1 20.3 17.8 30.0 37.4 20.0 -16.2 52.0 52.3 Private domestic nonfinancial investors 32 Direct lending in credit markets.................. 21.5 52.8 42.2 44.9 44.1 60.6 64.1 39.1 65.6 73.6 108.0 71.8 33 U.S. Govt, securities................................ 3.9 19.2 17.5 23.0 19.6 24.6 34.3 -6.0 37.8 32.5 51.7 20.7 34 State and local obligations...................... 3.0 5.4 9.3 8.3 6.8 9.1 2.1 14.2 7.3 12.9 4.4 9.6 35 Corporate and foreign bonds.................. 4.4 1.3 4.7 8.0 2.1 1.1 .9 * 3.5 .2 -3.5 -2.1 36 Commercial paper.................................... 2.9 18.3 2.4 -.8 4.1 9.5 12.7 13.3 .5 11.5 37.2 22.6 37 Other.......................................................... 7.3 8.6 8.2 6.4 11.5 16.2 14.3 17.6 16.5 16.5 18.3 21.0 38 Deposits and currency................................... 105.0 90.6 75.7 96.8 128.8 144.3 146.9 118.3 182.2 129.7 123.2 133.9 39 Time and savings accounts....................... 83.8 76.1 66.7 84.8 112.2 120.1 119.6 101.5 151.4 108.0 110.5 110.5 40 Large negotiable CD’s......................... 7.7 18.1 18.8 -14.1 -14.4 9.3 -13.5 4.8 13.1 32.7 5.4 19.8 41 Other at commercial banks................. 30.6 29.6 26.1 39.4 58.1 41.7 62.9 27.7 60.0 16.3 52.8 33.6 42 At savings institutions......................... 45.4 28.5 21.8 59.4 68.5 69.1 70.2 69.0 78.3 59.0 52.3 57.0 21.2 14.4 8.9 12.0 16.6 24.2 27.3 16.8 30.8 21.7 12.7 23.5 44 Demand deposits.................................. 16.8 10.5 2.6 5.8 9.3 15.9 20.8 12.2 14.0 16.5 1.8 13.5 45 Currency................................................ 4.4 3.9 6.3 6.2 7.3 8.3 6.6 4.6 16.8 5.2 11.0 9.9 46 Total of credit market instruments, de­ posits and currency............................... 126.5 143.4 117.8 141.6 172.9 204.9 211.1 157.3 247.8 203.3 231.3 205.7 47 Public support rate (in per cent)............ 12.0 17.4 28.5 22.4 20.8 25.3 19.5 26.6 21.1 33.6 30.5 22.4 48 Private financial intermediation (in per 97.2 90.9 81.3 71.7 84.7 89.7 88.0 100.5 85.3 87.1 87.8 94.2 49 Total foreign funds................................... 13.0 6.4 28.0 7.1 20.3 51.1 18.6 35.6 56.6 93.5 49.4 16.6 Memo: Corporate equities not included above 50 Total net issues............................................. 13.3 8.9 3.4 11.1 11.4 3.8 -1.3 4.7 4.2 7.4 .9 2.1 51 Mutual fund shares.................................. -.5 -1.2 -.7 -.1 -1.0 -1.0 -2.6 1.0 -3.3 .9 * .4 52 Other equities........................................... 13.8 10.1 4.1 11.2 12.4 4.8 1.3 3.7 7.5 6.5 .9 1.8 53 Acquisitions by financial institutions......... 16.5 13.3 5.8 9.7 12.5 6.2 6.0 6.2 8.0 4.6 -1.5 .4 54 Other net purchases..................................... -3.3 -4.4 -2.4 1.4 -1.1 -2.4 -7.3 -1.5 -3.8 2.8 2.3 1.8 Notes by line number. 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. Sum of lines 39 and 44. 49. Sum of lines 10 and 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 □ September 1978 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures 1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1978 Measure 1975 1976 1977 Jan. Feb. Mar. Apr. May June July Aug. 1 Industrial production.................................................. 117.8 129.8 137.0 138.8 139.2 140.9 143.2 143.9 144.9 145.9 146.6 Market groupings: 2 Products, total.................................................... 119.3 129.3 137.1 138.5 139.6 141.6 143.0 143.1 143.9 144.9 145.6 3 Final, total...................................................... 118.2 127.2 134.9 134.9 136.4 138.9 140.5 140.5 140.9 141.9 142.5 4 Consumer goods......................................... 124.0 136.2 143.4 141.8 143.8 145.9 147.5 '147.0 146.9 147.2 147.3 5 Equipment................................................... 110.2 114.6 123.2 125.4 126.2 129.1 130.8 131.6 133.0 134.3 135.8 6 Intermediate.................................................... 123.1 137.2 145.1 151.6 151.4 151.4 152.1 '152.6 154.5 155.8 156.8 7 Materials............................................................. 115.5 130.6 136.9 139.2 138.6 139.9 143.7 '145.1 146.4 147.6 148.1 Industry groupings: 8 Manufacturing.................................................... 116.3 129.5 137.1 138.7 139.4 141.4 143.5 '144.3 145.4 146.4 147.3 Capacity utilization (per cent)1 in— 9 Manufacturing........................................................ 73.6 80.2 82.4 81.7 81.9 82.7 83.7 '83.9 84.2 84.6 84.8 10 Industrial materials industries............................... 73.6 80.4 81.9 81.9 81.3 81.9 84.0 '84.5 85.1 85.6 85.6 11 Construction contracts2........................................... 162.3 190.2 253.0 270.0 266.0 254.0 279.0 332.0 249.0 286.0 12 Nonagricultural employment, total3.......................... 117.0 120.6 124.7 127.1 127.6 128.4 129.4 129.8 130.3 130.6 130.8 13 Goods-producing, total.......................................... 97.1 100.3 104.1 105.7 106.3 107.2 109.0 109.3 109.8 110.1 109.8 14 Manufacturing, total.......................................... 94.3 97.5 100.6 102.7 103.2 103.7 104.0 104.2 104.3 104.5 104.2 15 Manufacturing, production-worker.................. 91.3 95.2 98.3 100.7 101.3 101.7 102.0 102.2 102.2 102.1 101.8 16 Service-producing.................................................. 127.8 131.7 136.0 138.8 139.3 140.0 140.6 140.9 141.5 141.8 142.2 17 Personal income. tntaH.............................................. 200.4 220.4 244.0 '257.8 259.3 262.7 '266.4 '268.4 '270.5 274.4 18 Wages and salary disbursements........................... 188.5 208.2 230.1 242.9 245.0 249.5 253.5 '254.6 '256.7 259.3 19 Manufactnrinff........................................................ 157.3 177.1 198.6 210.2 213.6 218.0 219.5 '220.7 '222.0 224.2 20 Disnosahle nersonal income.................................... 199.6 217.5 239.3 261.6 '265.5 21 Retail sales 5............................................................... 184.6 203.5 224.4 228.8 235.6 239.5 244.8 245.4 246.3 244.9 Prices:6 22 Consumer7............................................................ 161.2 170.5 181.6 187.2 188.4 189.8 191.5 193.3 195.3 196.7 23 Producer finished goods........................................ 174.9 183.0 194.2 '200.1 '202.1 '203.7 '206.5 207.9 209.4 210.6 210.4 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.............................................. 138.7 139.9 139.8 144.4 167.1 168.7 170.3 172.0 83.0 82.9 82.1 83.9 2 Primary processing................................... 147.3 148.2 148.2 154.0 173.5 175.1 176.8 178.5 84.9 84.6 83.8 86.3 3 Advanced processing............................... 129.3 135.6 135.4 139.4 163.8 165.3 166.9 168.5 81.9 82.0 81.1 82.7 4 Materials...................................................... 138.1 138.9 139.2 145.1 167.8 168.9 170.4 171.7 82.3 82.2 81.7 84.5 5 Durable goods.......................................... 136.0 137.7 137.9 143.9 171.6 172.8 174.0 175.2 79.2 79.6 79.3 82.2 6 Basic metal........................................... 109.4 109.4 110.5 117.5 145.3 145.5 145.8 146.1 75.3 75.2 75.8 80.4 7 Nondurable goods................................... 154.4 155.0 158.0 166.3 178.8 180.4 182.3 184.4 86.3 85.9 86.7 88.5 8 Textile, paper, and chemical............... 159.2 159.5 163.1 167.8 187.1 188.9 190.8 193.1 85.1 84.5 85.5 86.9 9 Textile............................................... 112.3 117.9 115.3 117.1 142.5 143.0 143.5 144.1 78.8 82.4 80.3 81.2 10 Paper................................................. 135.1 132.3 136.5 139.7 151.3 152.5 153.6 154.8 89.3 86.7 88.9 90.3 11 Chemical........................................... 189.5 188.9 194.9 201.4 221.2 223.6 226.6 230.1 85.7 84.5 86.0 87.5 12 Energy...................................................... 123.4 121.9 119.1 122.5 145.2 145.7 147.2 147.8 85.0 83.7 80.9 84.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Labor Market A47 2.12 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1978 Category 1975 1976 1977 Feb. Mar. Apr. May June*- Julyr Aug.P Household survey data 153,449 156,048 158,559 160,128 160,313 160,504 160,713 160,928 161,148 161,348 2 Labor force (including Armed 94,793 96,917 99,534 101,217 101,536 101,902 102,374 102,671 102,734 102,671 92,613 94,773 97,401 99,093 99,414 99,784 100,261 100,573 100,618 100,549 Employment: 4 Nonagricultural industries2........ 81,403 84,188 87,302 89,761 89,956 90,526 90,877 91,346 91,038 91,221 5 Agriculture................................... 3,380 3,297 3,244 3,242 3,310 3,275 3,235 3,473 3,387 3,360 Unemployment: 6 Number....................................... 7,830 7,288 6,855 6,090 6,148 5,983 6,149 5,754 6,193 5,968 7 Rate (per cent of civilian labor force)..................................... 8.5 7.7 7.0 6.1 6.2 6.0 6.1 5.7 6.2 5.9 58,655 59,130 59,025 58,911 58,776 58,602 58,340 58,257 58,414 58,677 Establishment survey data 9 Nonagricultural payroll employment3 77,051 79,443 82,142 84,046 84,555 85,223 85,466 85,820 86,003 86,116 10 Manufacturing................................. 18,347 18,956 19,554 20,075 20,164 20,216 20,258 20,287 20,316 20,270 11 Mining............................................. 745 783 831 711 728 898 903 912 919 922 12 Contract construction..................... 3,512 3,594 3,844 3,947 4,053 4,237 4,268 4,355 4,379 4,356 13 Transportation and public utilities. 4,498 4,509 4,589 4,651 4,672 4,709 4,714 4,728 4,696 4,730 14 Trade................................................ 17,000 17,694 18,292 18,744 18,849 18,891 18,967 19,064 19,126 19,205 15 Finance............................................ 4,223 4,316 4,508 4,647 4,670 4,683 4,712 4,737 4,754 4,774 16 Service.............................................. 14,006 14,644 15,333 15,791 15,875 15,962 15,970 16,031 16,153 16,212 17 Government.................................... 14,720 14,948 15,190 15,480 15,544 15,627 15,674 15,706 15,660 15,647 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 □ September 1978 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value Monthly data are seasonally adjusted. 1967 1977 1978 Grouping pro­ 1977 por­ aver­ tion age June July Aug. Jan. Feb. Mar. Apr. Mayr June July? Aug.® Index (1967 = 100) MAJOR MARKET 1 Total index................................................ 100.00 137.1 137.8 138.7 138.1 138.8 139.2 140.9 143.2 143.9 114444..99 114455..99 114466..66 2 Products..................................................... 60.71 137.1 137.3 138.7 138.4 138.5 139.6 141.6 143.0 143.1 143.9 144.9 145.6 3 Final products......................................... 47.82 134.9 135.4 136.8 136.3 134.9 136.4 138.9 140.5 140.5 140.9 141.9 142.5 4 Consumer goods............................... 27.68 143.4 143.8 145.4 144.7 141.8 143.8 145.9 147.5 147.0 146.9 147.2 147.3 5 Equipment......................................... 20.14 123.2 124.1 124.8 124.9 125.4 126.2 129.1 130.8 131.6 133.0 134.3 135.8 6 Intermediate products........................... 12.89 145.1 144.7 146.3 146.1 151.6 151.4 151.4 152.1 152.6 154.5 155.8 156.8 7 Materials.................................................... 39.29 136.9 138.7 138.9 137.6 139.2 138.6 139.9 143.7 145.1 146.4 147.6 148.1 Consumer goods 8 Durable consumer goods........................ 7.89 153.1 155.8 158.0 154.7 146.5 151.2 157.5 161.8 160.2 160.5 160.9 160.8 9 Automotive products........................ 2.83 174.2 179.8 184.8 177.2 157.5 162.8 175.8 184.3 180.0 179.6 181.7 181.0 10 Autos and utility vehicles............. 2.03 169.2 177.4 184.1 173.1 145.5 153.9 171.0 182.7 175.6 174.3 177.0 175.5 11 Autos.......................................... 1.90 148.4 156.8 161.4 150.9 127.4 131.5 149.7 159.1 151.6 149.8 152.7 152.0 12 Auto parts and allied goods......... .80 186.8 185.8 186.6 187.3 187.8 185.3 188.5 188.2 191.5 193.0 193.6 195.1 13 Home goods....................................... 5.06 141.3 142.3 142.9 142.1 140.3 144.6 147.2 149.2 148.9 149.9 149.3 149.5 14 Appliances, A/C, and TV............. 1.40 127.3 133.1 130.1 129.6 116.1 133.3 135.4 142.2 138.3 139.3 133.9 134.5 15 Appliances and TV.................... 1.33 130.5 136.8 134.4 133.0 117.4 135.7 137.9 144.7 140.7 141.4 136.9 16 Carpeting and furniture................ 1.07 152.2 151.2 154.1 154.8 159.1 160.2 159.3 158.9 163.4 166.0 168.5 17 Misc. home goods......................... 2.59 144.3 143.6 145.1 143.6 145.9 144.3 148.7 149.0 148.8 149.2 149.7 149.1 18 Nondurable consumer goods.................. 19.79 139.6 139.1 140.3 140.6 139.9 140.8 141.3 141.8 141.7 141.5 141.7 141.9 19 Clothing............................................. 4.29 125.2 125.7 124.1 126.4 118.3 121.1 122.4 124.9 125.4 125.0 20 Consumer staples............................... 15.50 143.6 142.9 144.8 144.6 145.9 146.3 146.4 146.6 146.2 146.0 146.5 146.7 21 Consumer foods and tobacco.... 8.33 135.5 135.4 137.1 137.9 136.5 138.3 138.7 140.8 139.9 139.1 139.2 22 Nonfood staples............................ 7.17 152.9 151.7 153.8 152.4 156.6 155.8 155.3 153.3 153.4 153.9 154.9 155.5 23 Consumer chemical products... 2.63 180.5 179.3 179.4 181.8 187.4 184.3 182.1 182.5 182.0 185.5 187.0 24 Consumer paper products........ 1.92 117.1 116.3 117.4 117.0 121.4 118.8 118.9 117.7 117.9 118.0 117.3 25 Consumer energy products....... 2.62 151.4 149.8 154.9 148.9 151.5 154.5 155.0 149.9 150.7 148.6 149.9 26 Residential utilities................ 1.45 159.0 159.9 167.5 156.1 161.7 167.6 166.9 159.0 157.2 Equipment 27 Business equipment................................. 12.63 149.2 150.1 151.2 151.1 152.6 154.2 157.4 159.3 160.2 161.8 163.5 165.3 28 Industrial equipment......................... 6.77 138.5 140.0 140.7 140.4 144.3 144.6 146.9 147.8 149.7 150.8 152.1 153.6 29 Building and mining equipment.. 1.44 202.5 208.1 210.6 203.9 211.1 214.9 221.7 225.1 226.0 227.3 229.8 232.1 30 Manufacturing equipment............ 3.85 113.9 115.0 114.3 115.3 118.8 117.7 118.3 119.0 121.3 122.8 123.7 124.9 31 Power equipment........................... 1.47 140.2 139.0 141.2 143.7 146.1 145.8 148.8 147.3 149.2 149.2 150.3 151.9 32 Commercial transit, farm equipment 5.86 161.6 161.9 163.3 163.4 162.2 165.5 169.4 172.6 172.3 174.7 176.8 179.0 33 Commerical equipment................. 3.26 191.6 191.4 191.7 193.0 198.5 200.9 202.0 203.8 204.2 207.4 209.9 212.2 34 Transit equipment......................... 1.93 117.8 118.5 121.5 121.9 111.1 115.9 126.1 133.7 132.2 132.4 133.4 135.3 35 Farm equipment............................ .67 142.3 143.2 144.6 139.2 131.4 134.8 137.0 132.9 131.9 137.3 140.7 36 Defense and space equipment................ 7.51 79.6 0.3 0.4 80.8 79.7 79.2 81.9 82.9 83.6 84.6 85.4 86.2 Intermediate products 37 Construction supplies............................ 6.42 140.8 139.9 141.2 141.7 149.2 148.6 147.9 148.5 150.4 152.1 153.8 155.0 38 Business supplies................................... 6.47 149.5 149.6 151.3 150.6 153.8 154.2 155.0 155.6 155.0 157.0 157.6 39 Commercial energy products............ 1.14 164.6 164.2 168.2 165.0 165.5 165.6 164.3 163.5 162.7 162.7 163.4 Materials 40 Durable goods materials........................ 20.35 134.5 136.4 136.8 135.4 138.2 137.0 138.6 142.7 143.9 145.2 148.1 149.1 41 Durable consumer parts.................... 4.58 132.0 134.5 137.2 135.2 133.0 131.1 133.1 136.8 137.9 138.6 142.0 142.4 42 Equipment parts................................ 5.44 143.1 143.0 145.0 145.6 148.7 146.6 151.3 154.8 155.8 157.4 161.2 162.5 4 43 4 Du B r a a s b i l c e m m e a ta te l r m ial a s t e n r . i e a . l c s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5 0 . . 5 3 7 4 1 13 1 1 0 . . 1 9 1 1 3 1 3 6. . 3 8 1 11 3 2 2 . . 6 4 1 1 3 0 0 8 . . 1 7 1 11 3 0 4. . 9 2 1 1 3 1 4 1 . . 6 0 1 1 1 34 0 . . 5 4 1 1 3 16 8 . . 7 9 1 1 1 4 7 0 . .3 5 1 1 4 1 1 8 . . 7 3 1 12 4 0 4 . . 8 0 145.0 45 Nondurable goods materials.................. 10.47 153.5 154.7 154.1 155.1 155.0 158.5 160.5 162.0 163.5 164.3 163.1 163.2 4 47 6 Te T xt e i x le ti , l e p a m p a e t r e , r a ia n l d s . c .. h .. e .. m ... . . .. m ... a .. t . . . . . . . . . . . . . . . . . . . . 7 1 . . 6 85 2 1 1 5 1 8 3 . . 3 0 1 1 6 0 0 9 . . 1 0 1 11 5 0 8 . . 1 9 1 1 5 1 9 2 . . 6 2 1 1 6 1 0 4 . . 7 9 1 1 6 1 2 5 . .8 8 1 1 6 15 5 . . 1 7 1 1 6 16 6 . . 5 4 1 1 6 16 7 . . 7 9 1 1 6 18 9 . . 0 0 1 1 6 1 8 8 . . 7 2 168.5 48 Paper materials.............................. 1.62 133.5 134.4 134.3 135.7 135.0 136.8 137.8 139.2 140.1 139.9 136.3 49 Chemical materials........................ 4.15 188.2 192.7 190.3 190.1 191.4 194.2 199.2 199.5 201.7 202.9 204.1 50 Containers, nondurable.................... 1.70 150.9 152.4 152.4 156.2 150.4 158.7 158.1 160.5 161.9 162.8 156.9 5 5 5 1 3 2 En N P e r r o i g m n y d a m u ry r a a t e b e n l r e e i a r m g ls y a .. . t . . e . . . r . . . i . . a . . . . l . . s . . . . . . n . . . . . . . e . . . . . . . . c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8 1 . . . 6 4 1 5 8 4 1 1 1 2 0 2 5 7 2 . . . 3 3 4 1 1 1 2 2 0 2 4 9. . . 7 3 9 1 1 1 2 2 0 4 5 8 . . . 9 2 9 1 1 1 2 2 06 2 1 . . . 8 4 4 1 1 1 2 0 2 3 5 2 . . . 6 2 2 1 1 1 2 1 0 8 7 1 . . . 7 9 0 1 1 1 2 1 0 9 7 4 . . . 5 5 3 1 1 1 3 2 1 4 3 5 . . . 6 9 5 1 1 1 3 2 1 5 5 4 . . . 8 2 4 1 1 1 2 1 3 7 5 4 . . . 3 5 9 1 1 1 2 1 3 4 7 5 . . . 7 0 0 126.9 54 Converted fuel materials................... 3.82 140.7 142.0 145.1 139.1 142.8 138.0 133.3 134.1 138.6 141.5 142.1 Supplementary groups 55 Home goods and clothing.................... 9.35 133.9 134.7 134.3 134.9 130.2 133.8 135.9 138.0 138.2 138.6 137.9 137.9 56 Energy, total.......................................... 12.23 132.5 133.5 135.6 131.4 132.5 130.0 129.8 133.1 134.2 135.1 135.2 135.5 5 5 7 8 P M ro at d e u ri c a t l s s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3 . .7 4 6 8 1 1 5 2 5 2 . . 4 4 1 1 5 2 4 4 . . 1 3 1 1 5 2 8 5 . . 9 2 1 1 5 2 3 1 . . 7 4 1 12 5 2 5. . 8 2 1 1 5 1 7 7. . 7 9 1 1 5 1 7 7 . . 9 5 1 1 5 2 4 3 . . 1 9 1 1 5 2 4 5 . . 3 2 1 1 5 27 2 . . 3 8 1 1 5 2 4 7 . . 0 0 12.6.9 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 June July Aug. Jan. Feb. Mar. Apr. May r June Julyp Aug.* Index (1967 = 100) MAJOR INDUSTRY 1 Mining and utilities. 12.05 136.2 138.8 139.4 134.4 137.4 137.7 138.2 140.9 140.9 142.0 141.7 141.8 2 Mining................. 6.36 117.8 122.8 119.8 115.4 115.0 114.4 119.3 111.2 126.7 128.0 126.6 126.1 3 Utilities................ 5.69 156.5 156.8 161.4 155.7 162.3 163.5 159.5 156.0 157.0 157.7 158.5 159.3 4 Electric............. 3.88 175.5 176.8 183.9 175.4 183.6 184.3 178.8 175.0 177.1 5 Manufacturing. 87.95 137.1 137.8 138.5 138.6 138.7 139.4 141.4 143.5 144.3 145.4 146.4 147.3 6 Nondurable., 35.97 148.1 148.4 148.6 149.4 149.8 150.6 151.4 153.2 154.0 154.8 154.7 155.2 7 Durable........ 51.98 129.5 130.5 131.6 131.3 131.1 131.5 134.4 136.9 137.6 138.8 140.8 141.9 Mining 8 Metal mining.................... 10 .51 105.4 121.3 101.9 70.0 121.4 119.9 127.6 122.3 120.0 121.1 118.2 9 Coal................................... 11,12 .69 118.0 133.4 120.7 113.6 54.8 56.5 78.4 129.5 131.7 136.4 132.1 126.1 10 Oil and gas extraction---- 13 4.40 118.0 121.3 120.6 119.3 121.1 120.4 123.3 127.3 126.3 127.0 126.1 126.3 11 Stone and earth minerals. 14 .75 124.9 122.5 126.7 125.0 130.0 129.1 128.2 128.9 130.1 130.7 130.6 Nondurable manufactures 12 Foods................................. 8.75 137.9 136.9 138.3 139.3 139.3 140.8 141.1 143.1 142.8 141.8 142.3 13 Tobacco products............. .67 114.3 119.2 114.5 117.0 113.4 117.7 115.6 121.0 120.2 122.7 14 Textile mill products........ 2.68 137.1 135.4 137.2 136.6 137.1 136.4 135.1 138.1 138.5 140.4 141.0 15 Apparel products.............. 3.31 124.2 122.1 121.1 124.1 118.6 121.1 122.8 126.1 125.8 126.8 16 Paper and products.......... 3.21 137.4 139.3 139.2 140.3 139.9 143.9 144.9 145.7 146.6 147.8 \A\A 138.5 17 Printing and publishing....... 4.72 124.9 124.1 124.9 125.0 129.9 128.3 129.1 128.6 128.2 128.7 130.4 131.4 18 Chemicals and products 7.74 180.7 183.5 182.6 182.6 184.4 183.7 185.2 185.5 188.1 190.8 191.4 19 Petroleum products............. 1.79 141.0 140.0 140.4 139.9 139.7 139.0 140.1 141.7 143.4 142.6 143.7 iii! 3 20 Rubber & plastic products. 2.24 232.2 235.2 235.2 237.4 238.7 240.0 243.1 249.1 252.7 255.5 258.6 21 Leather and products.......... .86 75.3 74.1 74.1 74.5 74.5 73.0 72.1 76.0 75.7 75.1 73.3 Durable manufactures 22 Ordnance, private & government. 19,91 3.64 73.9 74.1 75.0 75.5 72.3 71.2 72.7 73.0 74.3 74.7 75.3 76.0 23 Lumber and products.................... 24 1.64 133.4 132.4 132.9 131.8 138.5 135.5 136.5 136.9 136.5 138.5 139.0 24 Furniture and fixtures.................... 25 1.37 140.9 139.9 143.0 142.9 146.4 150.1 149.5 148.9 152.8 155.9 157.9 25 Clay, glass, stone products............ 32 2.74 146.1 147.7 148.0 148.8 152.2 152.6 154.2 156.7 157.9 159.3 160.1 26 Primary metals................... 33 6.57 110.2 114.7 114.4 112.5 107.4 106.2 106.1 114.3 115.5 117.6 122.5 124.4 27 Iron and steel.................. 331,2 4.21 103.4 109.2 110.9 110.6 99.5 96.3 96.4 109.0 110.5 114.5 118.9 28 Fabricated metal products. 34 5.93 130.9 130.8 132.0 134.0 136.9 136.9 138.1 139.5 140.4 142.3 143.5 144.7 29 Nonelectrical machinery... 35 9.15 144.8 144.0 145.7 145.2 150.1 150.1 151.5 152.2 152.9 154.4 157.2 158.8 30 Electrical machinery........... 36 8.05 141.9 142.6 143.6 143.9 144.0 146.4 149.5 152.3 152.9 154.1 155.0 156.0 31 Transportation equipment 37 9.27 121.1 123.7 125.6 124.3 116.2 118.4 126.5 130.5 130.1 130.1 132.1 132.9 32 Motor vehicles & parts........ 371 4.50 159.7 163.2 166.2 164.4 146.6 153.1 165.1 171.7 168.3 167.5 169.3 169.3 33 Aerospace & misc. trans. eq. 372-9 4.77 84.7 86.5 87.3 86.5 87.6 85.8 90.1 91.8 93.9 95.0 97.1 98.8 34 Instruments............................... 38 2.11 159.1 158.2 159.0 158.3 163.4 163.5 168.7 170.5 169.8 172.0 172.1 171.9 35 Miscellaneous mfrs.................. 39 1.51 149.1 148.4 150.4 147.5 153.0 151.8 153.7 152.9 152.7 153.5 153.6 153.1 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 36 Products, total........... . 1507.4 583.9 585.9 590.5 590.2 582.0 591.2 601.1 608.8 606.8 607.1 606.4 608.5 37 Final products......... ^390.9 452.1 453.7 457.8 456.9 445.1 454.4 463.5 470.7 468.2 467.8 465.6 466.4 38 Consumer goods. , m i. 5 317.5 318.9 321.5 320.0 311.2 318.6 321.6 326.3 324.0 322.0 320.4 320.0 39 Equipment.......... . U13.4 134.6 134.9 136.2 137.0 133.9 135.8 142.0 144.4 144.2 145.9 145.1 145.9 40 Intermediate products. . U16.6 131.9 131.8 132.8 133.1 136.7 137.0 137.5 138.3 138.6 139.7 140.8 142.0 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 □ September 1978 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1978 Item 1975 1976 1977 Jan. Feb. Mar. Apr. May' June' July Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized......................... 927 1,296 18,133 1,526 1,534 1,647 1,740 1,597 1,821 1,616 2 1-family...................................... 669 894 12,265 1,032 957 1,037 1,157 1,058 1,123 1,017 3 2-or-more-family....................... 278 402 5,861 494 577 610 583 539 698 599 4 Started........................................... 1,160 1,538 1,986 1,548 1,569 2,047 2,165 2,054 2,124 2,085 5 1-family..................................... 892 1,163 1,451 1,156 1,103 1,429 1,492 1,478 1,445 1,416 6 2-or-more-family....................... 268 377 535 392 466 618 673 576 679 669 7 Under construction, end of period 1 1,003 1,147 1,442 1,262 1,260 1,260 r 1,274 1,286 1,305 8 1-family..................................... 531 655 829 785 787 778 r774 772 782 9 2-or-more-family....................... 472 492 613 478 474 483 '500 513 523 10 Completed...................................... 1,297 1,362 1,652 1,759 1,696 c 1,821 r1,943 1,840 1,893 11 1-family..................................... 866 1,026 1,254 1,300 1,233 1,363 '1,515 1,409 1,338 12 2-or-more-family....................... 430 336 398 459 463 458 '428 431 555 13 Mobile homes shipped.................. 213 246 277 322 <265 284 252 258 263 252 Merchant builder activity in 1-family units: 14 Number sold................................. 544 639 819 813 774 793 '827 849 833 804 15 Number for sale, end of period i.. 383 433 407 405 404 404 '410 415 420 420 Price (thous. of dollars)2 Median: 16 Units sold.............................. 39.3 44.2 48.9 52.3 53.2 53.5 '53.3 55.6 56.8 55.6 17 Units for sale......................... 38.9 41.6 48.2 48.2 Average: 18 Units sold............................... 42.5 48.1 54.4 58.5 59.1 60.0 59.3 62.1 63.4 64.0 EXISTING UNITS (1-family) 19 Number sold................................. 2,452 3,002 3,572 3,780 3,460 3,770 3,880 3,770 3,780 3,890 Price of units sold (thous. of dollars):2 20 Median...................................... 35.3 38.1 42.9 45.5 46.3 46.5 48.2 47.8 48.4 49.4 21 Average..................................... 39.0 42.2 47.9 50.3 51.3 51.1 53.6 54.8 55.1 56.5 Value of new construction 4 (millions of dollars) CONSTRUCTION 22 Total put in place.............................. 134,293 147,481 170,685 171,705 177,936 184,817 192,871 198,167 203,284 206,891 23 Private............................................... 93,624 109,499 133,652 135,280 142,207 147,145 151,338 153,068 158,175 158,980 24 Residential..................................... 46,472 60,519 81,067 79,716 85,577 87,578 90,036 91,128 92,472 93,199 25 Nonresidential, total..................... 47,152 48,980 52,585 55,564 56,630 59,567 61,302 61,940 65,703 65.781 Buildings: 26 Industrial............................... 8,017 7,182 7,182 7,425 7,674 9,199 9,244 8,735 11,335 10,954 27 Commercial........................... 12,804 12,757 14,604 14,969 15,154 16,227 17,177 18,546 19,246 19,735 28 Other...................................... 5,585 6,155 6,226 6,012 5,867 6,358 6,806 6,935 6,761 7,311 29 Public utilities and other.......... 20,746 22,886 24,573 27,158 27,935 27,783 28,075 27,724 28,361 27.781 30 Public................................................ 40,669 37,982 37,033 36,425 35,729 37,672 41,532 45,099 45,109 47,912 31 Military.......................................... 1,392 1,508 1,478 1,430 1,478 1,405 1.500 1,446 1,358 1,489 32 Highway........................................ 10,861 9,756 9,170 7,472 6,418 7,399 7,977 10,313 33 Conservation and development.. 3,256 3,722 3,765 4,236 3,891 4,237 4,586 4,359 34 Others............................................ 25,160 22,996 22,620 23,287 23,942 24,631 27,469 28,981 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 July 1977 1978 1978 July July (1967 Sept. Dec. Mar. June Mar. Apr. May June July = 100)2 Consumer prices 3 1All items........................................................ 6.7 7.7 4.5 4.9 9.3 11.4 .8 .9 .9 .9 .5 196.7 2 Commodities................................................. 5.9 7.3 2.5 4.9 9.3 11.2 .8 .9 .9 .9 .4 188.6 3 Food.......................................................... 6.9 10.5 1.9 4.2 16.4 20.4 1.3 1.9 1.5 1.3 .0 215.0 4 Commodities less food............................. 5.4 5.9 2.7 5.4 6.1 7.2 .6 .5 .6 .6 .6 175.4 5 Durable................................................. 5.5 6.7 1.5 5.2 8.7 9.0 .5 .5 .8 .8 .7 175.3 6 Nondurable.......................................... 5.4 4.5 3.4 5.1 3.1 5.5 .6 .5 .4 .4 .5 174.1 7 Services.......................................................... 8.1 8.4 7.6 4.9 9.1 11.8 .8 .9 1.0 .9 .8 211.7 8 Rent.......................................................... 5.9 6.9 6.7 6.3 6.2 8.5 .6 .7 .7 .6 .5 164.2 9 Services less rent...................................... 8.3 8.7 8.0 4.8 9.6 12.2 .9 .9 1.0 .9 .9 220.4 Other groupings: 10 All items less food................................... 6.7 7.2 5.3 5.0 8.1 9.3 .7 .7 .8 .7 .7 192.0 11 All items less food and energy............... 6.4 7.3 5.1 5.3 8.0 9.9 .7 .7 .8 .9 .7 189.3 12 Homeownership....................................... 7.3 10.7 8.5 7.1 12.2 14.5 1.2 1.1 1.1 1.2 1.2 228.3 Producer prices, formerly Wholesale prices 13 Finished goods............................................. 6.3 8.1 2.9 7.2 r9.6 '11.2 .5 '1.2 .7 .7 .5 195.9 14 Consumer.................................................. 6.3 7.9 1.8 5.4 r10.9 '12.0 '.6 '1.5 .6 .7 .5 194.5 15 Foods.................................................... 5.4 9.7 -2.3 7.4 '21.2 '14.6 '.7 '1.8 .5 1.1 -.3 210.7 16 Excluding foods.................................... 6.7 7.0 4.0 4.7 5.1 10.7 .4 1.3 .8 .4 1.0 184.6 17 Capital Equiptment................................. 6.5 8.3 6.0 10.9 '7.1 '9.1 '.6 '.5 .9 .8 .5 199.1 18 Materials....................................................... 5.2 8.1 .4 8.3 14.2 8.4 .9 .9 .5 .6 .3 221.0 19 Intermediate1............................................ 7.2 6.3 7.1 4.2 9.0 6.2 .5 .5 .5 .5 .4 216.6 Crude: 20 Nonfood................................................ 5.2 14.1 -5.3 20.1 15.7 12.4 1.5 .9 .4 1.7 2.3 289.7 21 Food...................................................... -2.4 16.0 -19.6 27.6 43.6 25.2 1.8 3.7 .0 1.9 -2.5 222.0 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 □ September 1978 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1977 1978 1975 1976 1977 Account Ql Q2 Q3 Q4 Ql Q2 Gross national product 1 1,528.8 1,700.1 1,887.2 1,806.8 1,867.0 1,916.8 1,958.1 1,992.0 2,083.2 By source: 2 979.1 1,090.2 1,206.5 1,167.7 1,188.6 1,214.5 1,255.2 1,276.7 1,324.9 3 Durable goods............................................... 132.6 156.6 178.4 173.2 175.6 111 A 187.2 183.5 198.0 4 Nondurable goods........................................ 408.9 442.6 479.0 465.9 473.6 479.7 496.9 501.4 519.8 5 437.5 491.0 549.2 528.6 539.4 557.5 571.1 591.8 607.1 6 Gross private domestic investment.................... 190.9 243.0 297.8 272.5 295.6 309.7 313.5 322.7 344.0 7 Fixed investment........................................... 201.6 232.8 282.3 262.2 278.6 287.8 300.5 306.0 325.1 8 150.2 164.6 190.4 180.6 187.2 193.5 200.3 205.6 219.8 9 Structures............................................... 53.8 57.3 63.9 59.3 63.4 65.4 67.4 68.5 76.1 10 Producers’ durable equipment.............. 96.4 107.3 126.5 121.4 123.8 128.1 132.8 137.1 143.7 11 Residential structures............................... 51.5 68.2 91.9 81.6 91.4 94.3 100.2 100.3 105.3 12 49.5 65.8 88.9 78.6 88.4 91.2 97.5 97.3 102.1 13 Change in business inventories.................... -10.7 10.2 15.6 10.3 17.0 21.9 13.1 16.7 18.9 14 -14.3 12.2 15.0 11.1 16.5 22.0 10.4 16.9 20.9 15 Net exports of goods and services..................... 20.4 7.4 -11.1 -8.5 -5.9 — 7.0 -23.2 -24.1 -10.2 16 Exports.......................................................... 147.3 163.2 175.5 170.9 178.1 180.8 172.1 181.7 200.9 17 126.9 155.7 186.6 179.4 184.0 187.8 195.2 205.8 211.1 18 Govt, purchases of goods and services.............. 338.4 359.5 394.0 375.0 388.8 399.5 412.5 416.7 424.5 19 Federal........................................................... 123.1 129.9 145.1 138.3 142.9 146.8 152.2 151.5 147.2 20 State and local.............................................. 215.4 229.6 248.9 236.7 245.9 252.7 260.3 265.2 277.3 By major type of product: 21 1,539.6 1,689.9 1,871.6 1,796.5 1,850.0 1,894.9 1,945.0 1,975.3 2,064.3 22 686.6 760.3 832.6 800.2 825.8 844.7 859.6 861.8 911.2 23 259.0 304.6 341.3 332.2 339.1 346.5 347.4 351.2 375.1 24 Nondurable................................................ 427.5 455.7 491.3 468.0 486.7 498.2 512.2 510.6 536.1 25 697.6 778.0 862.8 832.3 850.0 875.3 893.6 926.4 949.4 26 144.7 161.9 191.8 174.3 191.3 196.8 204.9 203.8 222.5 27 Change in business inventories........................ -10.7 10.2 15.6 10.3 17.0 21.9 13.1 16.7 18.9 28 -8.9 5.3 8.4 6.1 9.1 11.9 6.3 14.8 9.9 29 Nondurable goods........................................ -1.8 4.9 7.2 4.2 7.9 10.0 6.8 1.9 9.0 30 Memo: Total GNP in 1972 dollars................... 1,202.3 1,271.0 1,332.7 1,306.7 1,325.5 1,343.9 1,354.5 1,354.2 1,380.5 National income 31 Total................................................................... 1,215.0 1,359.2 1.515.3 1,447.5 1,499.3 1,537.6 1,576.9 1,603.1 1,683.6 32 Compensation of employees............................. 931.1 1,036.8 1.153.4 1,107.9 1,140.5 1,165.8 1,199.7 1,241.0 1,287.5 33 Wages and salaries......................................... 805.9 890.1 983.6 946.4 973.4 993.6 1,021.2 1,050.8 1,089.9 34 Government and Government enterprises 175.4 187.6 200.8 195.2 198.1 201.7 208.1 211.4 213.9 35 Other.......................................................... 630.4 702.5 782.9 751.2 775.3 791.9 813.1 839.3 876.0 36 Supplement to wages and salaries................. 125.2 146.7 169.8 161.5 167.1 172.2 178.4 190.2 197.5 37 Employer contributions for social insurance............................................ 60.1 69.7 79.4 76.6 78.6 79.9 82.4 90.2 93.5 38 Other labor income................................... 65.1 77.0 90.4 84.9 88.5 92.2 96.1 100.0 104.0 39 Proprietors’ income1.......................................... 87.0 88.6 99.8 95.6 98.9 97.2 107.3 105.0 110.1 40 Business and professional1........................... 63.5 70.2 79.5 76.1 78.9 80.8 82.3 83.1 86.0 41 Farm1......................................................... 23.5 18.4 20.3 19.4 20.0 16.5 25.1 21.9 24.0 42 Rental income of persons2............................... 22.4 22.5 22.5 22.5 22.4 22.4 22.7 22.8 22.2 43 Corporate profits1............................................ 95.9 127.0 144.2 129.9 143.7 154.8 148.2 132.6 159.5 44 Profits before tax3........................................ 120.4 155.9 173.9 164.8 175.1 177.5 178.3 172.1 201.6 45 Inventory valuation adjustment................... -12.4 -14.5 -14.8 -20.3 -16.6 -7.7 -14.8 -23.5 -24.9 46 Capital consumption adjustment................. -12.0 -14.4 -14.9 -14.6 -14.8 -15.0 -15.3 -16.1 -17.2 47 Net interest........................................................ 78.6 84.3 95.4 91.7 93.7 97.3 99.0 101.7 104.5 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. 1977 1978 1975 1976 1977 Account Ql Q2 Q3 Q4 Ql Q2 Personal income and saving 1 Total personal income........................................... 1,255.5 1,380.9 1,529.0 1,470.7 1,508.6 1,543.7 1,593.0 1,628.9 1,682.2 2 805.9 890.1 983.6 946.4 973.4 993.6 1,021.2 1,050.8 1,089.9 3 Commodity-producing industries.................... 275.0 307.5 343.7 327.3 342.0 348.3 357.1 365.9 386.9 4 Manufacturing............................................... 211.0 237.5 266.3 254.6 264.1 269.3 277.3 286.9 296.0 5 Distributive industries....................................... 195.3 216.4 239.1 231.2 236.5 241.2 247.5 257.0 266.3 6 Service industries.............................................. 160.1 178.6 200.1 192.7 196.8 202.3 208.5 216.5 222.7 7 Government and government enterprises....... 175.4 187.6 200.8 195.2 198.1 201.7 208.1 211.4 213.9 8 Other labor income.............................................. 65.1 77.0 90.4 84.9 88.5 92.2 96.1 100.0 104.0 87.0 88.6 99.8 95.6 98.9 97.2 107.3 105.0 110.1 10 Business and professional1............................... 63.5 70.2 79.5 76.1 78.9 80.8 82.3 83.1 86.0 11 Farm1................................................................ 23.5 18.4 20.3 19.4 20.0 16.5 25.1 21.9 24.0 12 Rental income of persons2................................... 22.4 22.5 22.5 22.5 22.4 22.4 22.7 22.8 22.2 13 Dividends............................................................. 31.9 37.9 43.7 41.5 42.7 44.1 46.3 47.0 48.1 115.5 126.3 141.2 135.9 139.1 143.6 146.0 151.4 156.5 15 Transfer payments................................................ 178.2 193.9 208.8 203.4 204.0 211.9 215.9 219.2 200.6 16 Old-age survivors, disability, and health insurance benefits...................................... 81.4 92.9 105.0 99.7 101.8 108.5 110.1 112.1 113.7 17 Less: Personal contributions for social insurance.................................................... 50.5 55.5 61.0 59.4 60.5 61.4 62.6 67.2 69.1 18 Equals: Personal income.................................... 1,255.5 1,380.9 1,529.0 1,470.7 1,508.6 1,543.7 1,593.0 1,628.9 1,682.2 19 Less: Personal tax and nontax payments.... 168.8 196.5 226.0 222.7 223.3 224.6 233.3 237.3 248.9 20 Equals: Disposable personal income................ 1,086.7 1,184.4 1,303.0 1,248.0 1,285.3 1,319.1 1,359.6 1,391.6 1,433.3 21 Less: Personal outlays..................................... 1,003.0 1,116.3 1,236.1 1,195.8 1,217.8 1,244.8 1,285.9 1,309.2 1,358.7 22 Equals: Personal saving..................................... 83.6 68.0 66.9 52.2 67.5 74.3 73.7 82.4 74.6 Memo items : Per capita (1972 dollars): 23 5,629 5,906 6,144 6,044 6,120 6,191 6,226 6,215 6,324 24 Personal consumption expenditures................ 3,626 3,808 3,954 3,916 3,922 3,953 4,030 4,009 4,065 25 4,025 4,136 4,271 4,185 4,241 4,293 4,365 4,370 4,397 26 Saving rate (per cent)........................................... 7.7 5.7 5.1 4.2 5.3 5.6 5.4 5.9 5.2 Gross saving 259.8 270.7 290.8 259.6 288.6 310.7 304.3 305.4 315.0 28 Personal saving.................................................. 83.6 68.0 66.9 52.2 67.5 74.3 73.7 82.4 74.6 29 Undistributed corporate profits1..................... 14.2 24.8 28.7 20.1 28.7 38.0 28.0 15.6 27.1 30 Corporate inventory valuation adjustment.... -12.4 -14.5 -14.8 -20.3 -16.6 -7.7 -14.8 -23.5 -24.9 Capital consumption allowances: 31 Corporate....................................................... 101.3 111.5 120.9 116.6 119.8 122.6 124.6 127.4 130.5 32 Noncorporate................................................ 60.7 66.3 74.3 70.7 72.6 75.9 77.9 79.9 82.8 33 Wage accruals less disbursements................... 34 Government surplus, or deficit ( —), national -64.4 -33.2 -18.6 -7.8 -11.8 -25.2 -29.6 -21.1 4.6 35 Federal............................................................... -70.6 -53.8 -48.1 -37.3 -40.3 -56.4 -58.6 -52.6 -25.2 36 State and local.................................................. 6.2 20.7 9.6 29.5 28.5 31.2 29.0 31.5 29.8 37 Capital grants received by the United States, net.................................................................. 202.8 241.7 276.9 255.2 280.4 292.6 279.5 286.4 320.6 39 Gross private domestic..................................... 190.9 243.0 297.8 272.5 295.6 309.7 313.5 322.7 344.0 40 11.9 -1.2 -20.9 -17.3 -15.2 -17.1 -34.1 -36.3 -23.4 41 Statistical discrepancy.......................................... 7.4 4.2 4.7 3.4 3.7 7.1 4.8 2.2 .9 J 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 □ September 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 5 Investment income, net3.......... 12,795 15,933 17,507 4,599 4,487 4,610 3,812 4,161 6 Other service transactions, net. 2,095 2,469 1,705 229 412 583 482 428 7 Balance on goods and services3,4..................... 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. Government grants (excluding military). -2,894 -3,145 -2,776 -636 -763 -787 -591 -752 10 Balance on current account3. 18,445 4,339 -15,221 -2,749 -2,670 -2,868 -6,934 -6,954 11 Not seasonally adjusted3.. -2,339 -2,492 -5,179 -5,212 -6,466 12 Change in U.S. Government assets, other than official reserve assets, net (increase, —)................................... -3,470 -4,213 -3,679 -949 -795 -1,098 -838 -900 13 Change in U.S. official reserve assets (increase, —)............. -607 -2,530 -231 -388 151 246 14 Gold.................................................................................... -118 -58 -60 15 Special Drawing Rights (SDR’s)...................................... -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 Foreign currencies............................................................. -75 -240 302 59 169 27 47 -62 18 Change in U.S. private assets abroad (increase, —)3.......... -35,368 -43,865 -30,740 -11,214 -5,668 -13,862 -13,632 19 Bank-reported claims.......................................................... -13,532 -21,368 -11,427 3,684 -4,582 -1,779 -8,750 -6,270 20 Long-term....................................................................... -2,357 -2,362 -751 -306 18 -447 -16 -311 21 Short-term....................................................................... -11,175 -19,006 -10,676 3,990 -4,600 -1,332 -8,734 -5,959 22 Nonbank-reported claims......................... -1,357 -2,030 -1,700 -768 -1,137 1,389 -1,184 -2,015 23 Long-term............................................ -366 5 25 33 66 205 -219 -60 24 Short-term............................................ -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 U.S. direct investments abroad, net3 ... -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 crease; +)..................................................................... 6,907 18,073 37,124 5,451 7,884 8,246 15,543 15,691 28 U.S. Treasury securities................................................... 4,408 9,333 30,294 5,323 5,123 6,948 12,900 12,965 29 Other U.S. Government obligations............................... 905 573 2,308 98 610 627 973 117 30 Other U.S. Government 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 Other foreign official assets 6.......................................... 2,104 2,205 2,105 250 982 502 371 368 33 Change in foreign private assets in the United States (increase, -f)3................................................................ 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 U.S. nonbank-reported liabilities....................................... 319 -507 257 -346 -412 590 425 418 38 Long-term....................................................................... 406 -958 -620 -220 -176 18 -242 45 39 Short-term....................................................................... -87 451 877 -126 -236 572 667 373 40 Foreign private purchases of U.S. Treasury securities, net................................................................................ 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 Allocation of SDR’s.............................................................. 44 Discrepancy............................................................................. 5.449 9.300 -998 1,593 609 -4,769 1,569 3,423 45 Owing to seasonal adjustments........................................ 130 -111 -2,230 2,276 176 46 Statistical discrepancy in recorded data before seasonal adjustment...................................................................... 5.449 9.300 -998 1,463 786 -2,539 -707 3,247 Memo items:.......................................................................... Changes in official assets: 47 U.S. official reserve assets (increase, —).......................... -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 Coun­ tries (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 lines 1, 4, and 9 above).................................................. y2,207 373 194 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. 1978 Item 1975 1976 1977' Jan. Feb. Mar. Apr. May June July 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments......................................... 107,130 114,802 121,151 10,014 9,922 10,912 11,635 11,754 12,126 11,793 2 GENERAL IMPORTS including merchandise for immediate con­ sumption plus entries into bonded warehouses...................................... 96,115 120,678 147,685 12,381 14,440 13,699 14,496 13,992 13,723 14,779 3 Trade balance...................................... 11,014 -5,876 -26,534 -2,367 -4,518 -2,787 -2,861 -2,238 -1,597 -2,987 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 international-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 1978 Type 1975 1976 1977 Feb. Mar. Apr. May June July Aug. 1 Total.................................................... 16,226 18,747 19,312 19,373 19,192 18,842 18,966 18,864 18,832 3 18,784 2 Gold stock, including Exchange Stabilization Fund1........................ 11,599 11,598 11,719 11,718 11,718 11,718 11,718 11,706 11,693 11,680 3 Special Drawing Rights2................... 2,335 2,395 2,629 2i671 2,693 2,669 2,760 2,804 2,860 32,885 4 Reserve position in International Monetary Fund............................... 2,212 4,434 4,946 4,966 4,701 4,388 4,347 4,270 4,177 34,196 5 Convertible foreign currencies.......... 80 320 18 18 80 67 141 84 102 23 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 August amounted to $18,291; SDR holdings, $2,739; and reserve 1971; and $710 million on Jan. 1, 1972; plus net transactions in SDR’s. position in IMF $3,849. 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 □ September 1978 3.13 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data Millions of dollars, end of period 1978 Asset account 1974 1975 1976 1977 Jan. Feb. Mar. Apr. May2 June? All foreign countries 1Total, all currencies............................ 151,905 176,493 219,420 '258,897 '258,502 '256,779 263,468 '260,558 259,452 271,706 2 6,900 6,743 7,889 11,623 9,874 9,361 11,013 ' 13,754 8,727 10,843 3 Parent bank................................. 4,464 3,665 4,323 7,806 5,932 5,410 '6,708 9,348 4,863 6,744 4 Other............................................ 2,435 3,078 3,566 '3,817 3,942 3,951 '4,305 '4,406 3,864 4,099 5 Claims on foreigners........................ 138,712 163,391 204,486 *238,848 '.239,622 '238,658 243,316 '237,447 241,784 251,844 6 Other branches of parent bank.. 27,559 34,508 45,955 55,772 55,052 54,201 55,554 '51,817 52,719 55,357 7 Banks........................................... 60,283 69,206 83,765 91,883 92,229 92,341 95,348 '92,370 91,960 96,693 8 Public Borrowers1....................... 4,077 5,792 10,613 14,634 15,274 15,093 15,284 '15,207 21,112 22,468 9 Nonbank foreigners.................... 46,793 53,886 64,153 '76,560 '77,067 '77,023 77,130 '78,053 75,993 77,326 10 Other assets..................................... 6,294 6,359 7,045 '8,425 '9,007 '8,761 9,139 '9,357 8,941 9,019 105,969 132,901 167,695 '193,764 '192,795 '189,372 194,855 '194,168 192,467 202,792 12 Claims on United States................. 6,603 6,408 7,595 11,049 9,252 '8,629 10,320 '12,952 8,035 10,027 13 Parent bank................................. 4,428 3,628 4,264 7,692 5,781 5,162 '6,611 9,158 4,712 6,574 14 Other............................................ 2,175 2,780 3,332 3,357 '3,470 3,467 '3,709 '3,795 3,323 3,453 15 Claims on foreigners....................... 96,209 123,496 156,896 178,896 179,237 176,737 180,341 '176,877 180,332 188,673 16 Other branches of parent bank.. 19,688 28,478 37,909 44,256 43,618 42,664 43,502 '40,628 41,209 43,548 17 Banks........................................... 45,067 55,319 66,331 70,786 70,535 69,721 71,934 '70,504 70,144 74,919 18 Public borrowers1....................... 3,289 4,864 9,022 12,632 13,097 13,087 13,276 '13,232 18,248 19,488 19 Nonbank foreigners.................... 28,164 34,835 43,634 51,222 51,987 51,267 51,628 '52,513 50,731 50,718 20 Other assets..................................... 3,157 2,997 3,204 '3,820 '4,307 '4,005 4,195 '4,339 4,100 4,092 United Kingdom 21 Total, all currencies.......................... 69,804 74,883 81,466 90,933 90,789 89,626 90,162 87,100 89,645 93,538 22 Claims on United States............... 3,248 2,392 3,354 4,341 3,701 2,547 3,075 2,506 2,333 3,134 23 Parent bank............................... 2,472 1,449 2,376 3,518 2,928 1,775 2,274 1,548 1,476 2,279 24 Other.......................................... 776 943 978 823 773 771 802 958 857 855 25 Claims on foreigners.................... 64,111 70,331 75,859 84.016 84,346 84,423 84,648 81,871 84,700 87,816 26 Other branches of parent bank, 12,724 17,557 19,753 22.017 21,427 21,114 21,092 19,514 19,550 19,944 27 Banks......................................... 32,701 35,904 38,089 39,899 40,605 40,996 41,612 40,436 40,807 43,044 28 Public borrowers1..................... 788 881 1,274 2,206 2,303 2,100 2,192 2,020 4,150 4,400 29 Nonbank foreigners................. 17,898 15,990 16,743 19,895 20,010 20,213 19,753 19,901 20,193 20,428 30 Other assets.................................. 2,445 2,159 2,253 2,576 2,742 2,656 2,439 2,724 2,612 2,588 31 Total payable in U.S. dollars........... 49,211 57,361 61,587 66,635 65,744 63,870 64,565 62,330 63,565 67,016 32 Claims on United States............... 3,146 2,273 3,275 4,100 3,443 2,186 2,850 2,312 2,163 2,862 33 Parent bank............................... 2,468 1,445 2,374 3,431 2,815 1,558 2,236 1,520 1,452 2,178 34 Other.......................................... 678 828 902 669 628 628 614 793 711 684 35 Claims on foreigners..................... 44,694 54,121 57,488 61,408 61,094 60,521 60,610 58,845 60,277 63,051 36 Other branches of parent bank 10,265 15,645 17,249 18,947 18,102 17,782 17,603 16,531 16,406 17,025 37 Banks......................................... 23,716 28,224 28,983 28,530 28,661 28,641 28,947 28,177 28,324 30,686 38 Public borrowers1..................... 610 648 846 1,669 1,770 1,640 1,710 1,631 3,254 3,366 39 Nonbank foreigners................. 10,102 9,604 10,410 12,263 12,560 12,457 12,349 12,507 12,293 11,974 40 Other assets.................................. 1,372 967 824 1,126 1,208 1,163 1,104 1,173 1,125 1,103 Bahamas and Caymans 41 Total, all currencies............ 31,733 45,203 66,774 79,052 80,081 79,711 82,947 84,409 82,083 84,692 42 Claims on United States. 2,464 3,229 3,508 5,782 4,994 5,837 6,761 r9,908 5,237 6,400 43 Parent bank................ 1,081 1,477 1,141 3,051 2,097 2.918 '3,585 6,710 2,502 3,443 44 Other........................... 1,383 1,752 2,367 2,731 2,897 2.919 '3,176 '3,198 2,735 2,957 45 Claims on foreigners...................... 28,453 41,040 62,048 71,671 73,470 72,272 74,397 '72,720 74,846 76,321 46 Other branches of parent bank. 3,478 5,411 8,144 11,120 11,272 11,025 11,367 9,565 10,580 10,792 47 Banks......................................... 11,354 16,298 25,354 27,939 28,810 28,179 29,602 '28,712 29,065 30,363 48 Public borrowers1..................... 2,022 3,576 7,105 9,109 9,322 9,486 9,438 9,362 11,397 12,367 49 Nonbank foreigners.................. 11,599 15,756 21,445 23,503 24,067 23,583 23,990 '25,082 23,804 22,799 50 Other assets......................... 815 933 1,217 1,599 1,617 1,602 1,789 '1,781 2,000 1,971 51 Total payable in U.S. dollars. 28,726 41,887 62,705 73,987 74,831 74,283 77,521 79,324 76,661 79,277 For notes see opposite page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overseas Branches A57 3.13 Continued 1978 Liability account 1974 1975 1976 1977 Jan. Feb. Mar. Apr. May2 Junep All foreign countries 52 Total, all currencies........................ 151,905 176,493 219,420 '258,897 '258,502 '256,779 263,468 '260,558 259,452 271,706 53 To United States......................... 11,982 20,221 32,719 '■44,154 '45,810 '45,810 50,860 49,088 49,907 50,240 54 Parent bank............................. 5,809 12,165 19,773 24,542 28,311 26,999 27,650 '26,643 28,500 24,974 5 5 5 6 N Ot o h n e b r a b n a k n s k .. s . .. i . n .. . U ... n .. i .. t . e .. d .. . S ... t . a .. t . e .. s . . } 6,173 8,057 12,946 19,613 '17,499 18,811 23,209 22,445 ( ( 1 9 2 , , 1 2 2 87 0 1 1 0 4 , , 4 7 7 9 2 4 57 To foreigners............................... 132,909 149,815 179,954 206,579 204,471 203,041 204,629 '202,946 202,241 213,726 58 Other branches of parent bank 26,941 34.111 44,370 53,244 51,901 50,896 52,090 '48,850 50,373 53,547 59 Banks....................................... 65,675 72,259 83,880 94,140 90,744 90,904 90,557 '91,699 87,545 93,503 60 Official institutions.................. 20,185 22.111 25,829 28,110 28,677 28,850 28,018 '28,568 29,776 31,320 61 Nonbank foreigners................ 20,189 20,672 25,877 31,085 33,149 32,390 33,963 33,830 34,547 35,356 62 Other liabilities........................... 6,933 6,456 6,747 '8,163 '8,220 '7,929 7,980 '8,524 7,304 1,1 A0 63 Total payable in U.S. dollars......... 107,890 135,907 173,071 '198,572 '197,760 '194,537 199,879 '197,575 196,746 206,900 64 To United States......................... 11,437 19,503 31,932 '■42,881 '44,601 '44,472 49,248 47,811 48,278 48,546 65 Parent bank............................. 5,641 11,939 19,559 24,213 28,017 26,688 27,321 '26,348 27,865 24,272 6 6 6 7 N O o th n e b r a b n a k n s k .. s . .. i . n .. . U ... n .. i .. t . e .. d .. . S ... t . a .. t . e .. s .. . } 5,795 7,564 12,373 18,669 16,584 17,784 21,927 '21,463 i ( 1 8 1 , , 8 6 1 03 0 1 1 4 0 , , 0 1 9 7 5 9 68 To foreigners............................... 92,503 112,879 137,612 151,363 148,878 145,958 146,406 '145,350 144,758 154,343 69 Other branches of parent bank 19,330 28,217 37,098 43,268 41,812 40,720 41,636 '39,214 40,099 42,464 70 Banks....................................... 43,656 51,583 60,619 64,872 61,571 60,815 60,353 '61,665 57,854 62,525 71 Official institutions.................. 17,444 19,982 22,878 23,972 24,546 24,453 23,593 '23,865 25,124 26,493 72 Nonbank foreigners................ 12,072 13,097 17,017 19,251 20,949 19,970 20,824 20,606 21,681 22,861 73 Other liabilities........................... 3,951 3,526 3,527 '4,328 '4,282 '4,107 4,224 '4,414 3,710 4,011 United Kingdom i 74 Total, all currencies......................... 69,804 74,883 81,466 90,933 90,789 89,626 90,162 87,100 89,645 93,538 75 To United States......................... 3,978 5,646 5,997 7,753 6,008 6,785 7,609 7,266 6,758 8,174 76 Parent bank............................. 510 2,122 1,198 1,451 1,253 1,550 1,646 1,983 1,636 1,822 7 7 7 8 N O o th n e b r a b n a k n s k .. s . .. i . n .. . U ... n ... i . t . e .. d .. . S ... t . a .. t . e .. s .. . } 3,468 3,523 4,798 6,302 4,755 5,236 5,962 5,283 I r 2 2 , , 3 7 4 7 6 6 3 3 , , 2 0 6 9 1 1 79 To foreigners............................... 63,409 67,240 73,228 80,736 82,160 80,331 80,036 77,169 80,108 82,703 80 Other branches of parent bank 4,762 6,494 7,092 9,376 9,999 9,037 8,674 8,014 9,009 9,100 81 Banks....................................... 32,040 32,964 36,259 37,893 36,915 36,764 36,250 34,940 35,980 36,950 82 Official institutions................. 15,258 16,553 17,273 18,318 19,309 19,580 19,262 18,817 19,087 19,980 83 Nonbank foreigners................ 11,349 11,229 12,605 15,149 15,937 14,950 15,850 15,399 16,032 16,073 84 Other liabilities........................... 2,418 1,997 2,241 2,445 2,621 2,509 2,518 2,665 2,779 2,661 85 Total payable in U.S. dollars......... 49,666 57,820 63,174 67,573 66,619 65,021 65,477 62,662 64,025 67,718 86 To United States......................... 3,744 5,415 5,849 7,480 5,737 6,479 7,250 6,938 6,446 7,852 87 Parent bank............................. 484 2,083 1,182 1,416 1,222 1,524 1,598 1,953 1,609 1,794 8 8 8 9 O N t o h n e b r a b n a k n s k .. s . .. i . n .. . U ... n ... i . t . e .. d .. . S ... t . a .. t . e .. s .. . } 3,261 3,332 '4,667 '6,064 4,515 4,955 5,652 4,985 X ( 2 2 , , 2 5 8 5 1 6 2 3 , , 8 1 9 6 4 4 90 To foreigners............................... 44,594 51,447 56,372 58,977 59,671 57,386 57,045 54,498 56,274 58,638 91 Other branches of parent bank 3,256 5,442 5,874 7,505 8,164 7,211 6,747 6,202 6,696 7,041 92 Banks....................................... '20,526 '23,330 '25,527 '25,608 '24,015 '23,352 '23,075 '22,115 22,554 23,566 93 Official institutions................. '13,225 '14,498 '15,423 '15,482 '16,459 '16,541 '16,213 '15,672 15,908 16,772 94 Nonbank foreigners................ '7,587 '8,176 '9,547 '10,382 '11,033 '10,282 '11,009 '10,509 11,116 11,259 95 Other liabilities........................... '1,328 '959 '953 '1,116 '1,210 '1,156 '1,182 '1,227 1,305 1,228 Bahamas and Caymans 96 Total, all currencies....................... 31,733 45,203 66,774 79,052 80,081 79,711 82,947 84,409 82,083 84,692 97 To United States....................... 4,815 11,147 22,721 32,176 35,795 35,082 38,380 37,256 37,350 35,140 98 Parent bank........................... 2,636 7,628 16,161 20,956 24,713 23,374 23,854 '22,289 23,333 19,101 1 9 0 9 0 O N t o h n e b r a b n a k n s k .. s .. . i . n .. .. U ... n .. i . t . e .. d .. . S ... t . a .. t . e .. s 2,180 3,520 6,560 11,220 11,082 11,708 14,526 '14,967 f X 5 8, , 2 7 7 4 5 2 1 5 0 , , 6 41 2 1 8 101 To foreigners............................. 26,140 32,949 42,899 45,292 42,929 43,272 43,153 45,610 43,394 48,133 102 Other branches of parent bank. 7,702 10,569 13,801 12,816 11,642 11,598 10,839 10,288 11,250 11,657 103 Banks..................................... 14,050 16,825 21,760 24,717 22,264 22,840 23,374 25,847 21,435 25,746 104 Official institutions................ 2,377 3,308 3,573 3,000 3,183 3,207 3,060 3,489 4,419 4,583 105 Nonbank foreigners.............. 2,011 2,248 3,765 4,759 5,840 5,628 5,880 5,986 6,290 6,147 106 Other liabilities......................... 778 1,106 1,154 1,584 1,357 1,358 1,414 1,543 1,339 1,419 107 Total payable in U.S. dollars....... 28,840 42,197 63,417 74,463 75,479 75,253 78,467 80,243 78,254 80,651 1 In May 1978 a broader category of claims on foreign public borrowers, 2 In May 1978 the exemption level for branches required to report including corporations that are majority owned by foreign governments, was increased, which reduced the number of reporting branches. replaced the previous, more narrowly defined claims on foreign official institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics □ September 1978 3.14 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1978 Item 1975 1976 1977 Apr.r Jan. Feb.' Mar.r May Junep July* ▲ A. By type 1 Total1..................................................................... 82,572 95,634 131,049 134,905 137,909 145,998 142,430 140,723 140,430 143,872 2 Liabilities reported by banks in the United States2............................................................ 16,262 17,231 18,003 17,988 19,020 19,459 19,255 18,862 18,626 19,190 3 U.S. Treasury bills and certificates 3..................... 34,199 37,725 47,820 49,752 52,689 59,302 57,613 56,449 55,606 56,842 U.S. Treasury bonds and notes: 4 Marketable......................................................... 6,671 11,788 32,116 33,830 33,554 34,528 32,838 32,272 32,865 34,158 5 Nonmarketable4................................................ 19,976 20,648 20,443 20,473 19,602 19,513 19,444 19,355 19,284 19,214 6 U.S. securities other than U.S. Treasury securities5........................................................ 5,464 8,242 12,667 12,862 13,044 13,196 13,280 13,785 14,049 14,468 B. By area 7 Total....................................................................... 82,572 95,634 131,049 134,905 137,909 145,998 142,430 140,723 140,430 143,872 8 Western Europe1................................................... 45,701 45,882 70,707 72,557 74,401 76,238 73,666 72,735 74,493 75,711 9 Canada................................................................... 3,132 3,406 2,334 2,078 1,389 1,633 2,493 2,702 2,609 2,507 10 Latin America and Caribbean.............................. 4,461 4,926 4,649 4,591 5,179 5,773 5,554 5,426 4,667 4,630 11 Asia......................................................................... 24,411 37,767 50,693 53,207 54,385 59,587 57,750 57,008 56,004 57,826 12 Africa..................................................................... 2,983 1,893 1,742 1,706 1,899 1,756 1,872 1,945 1,689 2,220 13 Other countries6.................................................... 1,884 1,760 924 766 656 1,011 1,095 907 968 978 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 A For a description of the changes in the International Statistics bonds and notes payable in foreign currencies. tables, see July 1978 Bulletin, p. 612. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-reported Data A 59 3.15 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period Item 1975 1976 1977 Jan. Feb. Mar. Apr. A May June** July** A. By holder and type of liability 1 All foreigners............. 95,590 110,657 126,168 126,377 130,105 139,414 141,457 137,112 135,534 136,539 2 Banks’ own liabilities. 65,364 61,604 60,550 61,180 3 Demand deposits... 13,564 16,803 18,996 17,377 17,675 17,163 17,863 17,828 17,184 18,280 4 Time deposits1....... 10,267 11,347 11,521 11,518 12,038 11,274 11,665 11,821 11,635 11,927 5 Other2..................... 7,343 7,239 6,505 6,786 6 Own foreign offices3 28,493 24,727 25,225 24,188 7 Banks’ custody liabilities4..................................... 76,093 75,509 74,984 75,359 8 U.S. Treasury bills and certificates 5................. 37,414 40,744 48,906 51,094 54,233 61,071 59,104 58,262 57,138 57,629 9 Other negotiable and readily transferable instruments6................................................ 13,981 14,601 15,156 14,931 10 Other................................................................... 3,008 2,646 2,690 2,799 11 Nonmonetary international and regional organizations7................................................ 5,699 5,714 3,274 3,625 3,102 3,618 2.998 3,120 2,934 2,558 12 Banks’ own liabilities. 831 499 478 913 13 Demand deposits... 139 290 231 186 180 245 272 286 265 257 14 Time deposits1....... 148 205 139 129 120 109 143 59 117 112 15 Other2..................... 416 154 97 544 16 Banks’ custody liabilities4..................................... 2,166 2,621 2,455 1,645 17 U.S. Treasury bills and certificates................. 2,554 2,701 706 959 1,111 1,317 892 1,153 922 228 18 Other negotiable and readily transferable instruments6.............................................. 1,274 1,467 1,530 1,416 19 Other................................................................... 1 1 3 1 20 Official institutions8. 50,461 54,956 65,822 67,740 71,709 78,761 76,868 75,311 74,232 76,032 21 Banks’ own liabilities. 9,586 9,017 8,453 9,412 22 Demand deposits... 2,644 3,394 3,528 2,673 2,782 2,804 3,703 3,092 2,610 3,478 23 Time deposits1....... 3,423 2,321 1,797 1,788 2,570 1,777 1,884 1,982 1,981 2,277 24 Other2..................... 3.999 3,943 3,862 3,658 25 Banks’ custody liabilities4................................. 67.282 66,294 65,779 66,619 26 U.S. Treasury bills and certificates 5............. 34,199 37,725 47,820 49,752 52,689 59,302 57,613 56,449 55,606 56,842 27 Other negotiable and readily transferable instruments6............................................ 9,180 9,262 9,675 9,253 28 Other............................................................... 489 583 498 524 29 Banks9. 29,330 37,174 42,335 40,228 40,549 42,115 47.283 43,531 43,127 42,682 30 Banks’ own liabilities............ 42,841 39,251 38,703 38,215 31 Unaffiliated foreign banks. 14,348 14,524 13,478 14,027 32 Demand deposits............. 7,534 9,104 10,933 10,274 10,570 10,113 10,195 10,343 10,160 10,562 33 Time deposits1................. 1,873 2,297 2,040 1,995 1,823 1,734 1,643 1,595 1,255 1,322 34 Other2.............................. 2,511 2,585 2,062 2,143 35 Own foreign offices3 28,493 24,727 25,225 24,188 36 Banks’ custody liabilities4................................. 4,442 4,280 4,425 4,467 37 U.S. Treasury bills and certificates.............. 335 119 141 152 165 161 314 363 300 269 38 Other negotiable and readily transferable instruments6............................................ 1,991 2,174 2,260 2,331 39 Other............................................................... 2,137 1,744 1,865 1,867 40 Other foreigners............. 10,100 12,814 14,736 14,785 14,745 14,919 14,309 15,150 15,240 15,267 41 Banks’ own liabilities. 12,106 12,836 12,915 12,640 42 Demand deposits... 3,248 4,015 4,304 4,245 4,143 4,000 3,693 4,106 4,149 3,983 43 Time deposits1....... 4,823 6,524 7,546 7,606 7,526 7,654 7,995 8,173 8,282 8,216 44 Other2..................... 418 557 484 441 45 Banks’ custody liabilities4................................. 2,203 2,314 2,325 2,627 46 U.S. Treasury bills and certificates............... 325 198 231 268 291 286 297 310 290 47 Other negotiable and readily transferable instruments6............................................ 1,536 1,699 1,691 1,931 48 Other............................................................... 381 319 323 406 49 Memo: Negotiable time certificates of deposit held in custody for foreigners.......... 8,471| 8,940 9,058 8,760 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 central 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. A For a description of the changes in the International Statistics 5 Includes nonmarketable certificates of indebtedness (including those Tables, see July 1978 Bulletin, 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 □ September 1978 3.15 Continued 1978 Item 1975 1976 1977 Jan. Feb. Mar. Apr. A May June? JulyP B. By area and country 1 95,590 110,657 126,168 126,377 130,105 139,414 141,457 137,112 135,534 136,539 2 Foreign countries.................................................... 89,891 104,943 122,893 122,752 127,002 135,795 138,459 133,992 132,600 133,981 3 Europe..................................................................... 44,072 47,076 60,295 59,702 60,970 63,994 63,067 62,972 64,300 64,577 4 Austria................................................................ 759 346 318 294 302 419 322 350 349 372 5 Belgium-Luxembourg........................................ 2,893 2,187 2,531 2,629 2,765 2,992 3,109 2,893 2,718 2,250 6 Denmark............................................................ 329 356 770 1,044 1,050 1,044 1,063 1,110 1,335 1,542 7 Finland................................................................ 391 416 323 295 307 357 430 393 352 407 8 France................................................................. 7,726 4,876 5,269 5,153 4,668 5,033 5,499 6,278 6,562 7,353 9 Germany............................................................. 4,543 6,241 7,239 8,832 10,585 11,530 11,013 9,531 10,066 9,716 10 Greece................................................................. 284 403 603 538 548 571 588 563 597 657 11 Italy..................................................................... 1,059 3,182 6,857 6,199 5,943 5,626 5,987 6,365 6,870 7,037 12 Netherlands........................................................ 3,407 3,003 2,869 2,959 3,029 3,132 3,011 2,993 3,118 3,078 13 Norway............................................................... 994 782 944 987 888 1,211 1,465 1,643 1,869 1,737 14 Portugal.............................................................. 193 239 273 205 188 174 164 288 191 227 15 Spain................................................................... 423 559 619 707 648 717 659 717 688 708 16 Sweden............................................................... 2,277 1,692 2,712 2,711 2,826 2,816 3,177 3,302 3,385 3,340 17 Switzerland......................................................... 8,476 9,460 12,343 12,134 12,689 13,549 13,090 12,534 12,415 11,883 18 Turkey................................................................ 118 166 130 187 171 115 249 200 110 147 19 United Kingdom................................................ 6,867 10,018 14,125 12,576 11,929 12,274 11,021 11,609 11,471 11,771 20 Yugoslavia.......................................................... 126 189 232 219 196 138 192 168 229 192 21 Other Western Europe1..................................... 2,970 2,673 1,804 1,787 1,966 2,030 1,757 1,721 1,655 1,880 22 U.S.S.R............................................................... 40 51 98 63 98 72 62 96 66 55 23 Other Eastern Europe2...................................... 197 236 236 186 175 193 206 211 255 222 24 Canada................................................................... 2,9/9 4,659 4,607 5,279 4,758 4,564 5,923 6,600 5,816 5,621 25 Latin America and Caribbean............................... 15,028 19,132 23,670 23,263 24,286 25,338 28,764 24,995 25,367 24,638 26 Argentina............................................................ 1,146 1,534 1,416 1,746 1,928 1,801 1,861 2,260 1,692 1,549 27 Bahamas............................................................. 1,874 2,770 3,596 3,150 3,755 4,199 7,259 3,327 3,981 3,602 28 Bermuda............................................................. 184 218 321 269 286 322 364 340 399 393 29 Brazil................................................................... 1,219 1,438 1,396 1,113 977 1,327 1,414 1,298 1,220 1,295 30 British West Indies............................................ 1,311 1,877 3,998 4,081 3,993 4,097 4,814 3,949 4,742 4,009 31 Chile................................................................... 319 337 360 387 412 415 394 361 376 380 32 Colombia........................................................... 417 1,021 1,221 1,226 1,207 1,290 1,350 1,300 1,424 1,428 33 Cuba................................................................... 6 6 6 6 7 8 6 7 7 9 34 Ecuador.............................................................. 120 320 330 358 376 438 360 318 325 378 35 Guatemala3........................................................ 447 552 448 414 36 Jamaica3............................................................. 41 46 66 75 37 Mexico................................................................ 2,070 2,870 2,876 2,985 3,084 2,793 2,677 2,965 2,774 2,818 38 Netherlands Antilles4........................................ 129 158 196 205 203 212. 212 289 320 434 39 Panama............................................................... 1,115 1,167 2,331 2,189 2,121 2,132 2,176 2,559 2,336 2,570 40 Peru..................................................................... 243 257 287 265 267 262 309 274 282 309 41 Uruguav............................................................. 172 245 243 230 280 226 221 208 220 218 42 Venezuela............................................................ 3,309 3,118 2,929 3,016 3,246 3,438 3,225 3,298 3,147 3,228 43 Other Latin America and Caribbean............... 1,393 1,797 2,167 2,037 2,147 2,380 1,636 1,644 1,608 1,529 44 22,384 29,766 30,488 30,881 33,330 37,995 36,430 35,517 33,469 34,927 45 China, People’s Republic of (Mainland).......... 123 48 53 54 48 56 50 47 53 47 46 China, Republic of (Taiwan)............................ 1,025 990 1,013 1,041 995 1,014 1,208 1,043 1,053 1,195 47 Hong Kong........................................................ 605 894 1,094 1,037 1,121 1,174 1,118 1,489 1,085 1,191 48 India................................................................... 115 638 961 1,012 1,001 947 937 962 899 798 49 Indonesia............................................................ 369 340 410 896 506 492 649 451 330 597 50 Israel................................................................... 387 392 559 461 454 485 486 568 476 518 51 Japan................................................................... 10,207 14,363 14,616 14,488 17,024 21,725 20,392 19,998 19,018 20,374 52 Korea.................................................................. 390 438 602 606 737 682 753 817 748 714 53 Philippines.......................................................... 700 628 687 658 615 647 601 688 595 640 54 Thailand.............................................................. 252 277 264 258 309 317 258 304 297 320 55 Middle East oil-exporting countries5............... 7,355 9,360 8,979 9,193 9,329 9,165 8,671 7,863 7,699 7,025 56 Other Asia.......................................................... 856 1,398 1,250 1,178 1,190 1,291 1,307 1,287 1,216 1,508 57 Africa...................................................................... 3,369 2,298 2,535 2,507 2,645 2,469 2,699 2,641 2,360 3,013 58 Egypt................................................................... 342 333 404 346 357 341 455 461 402 594 59 Morocco............................................................. 68 87 66 100 79 51 31 29 28 28 60 South Africa...................................................... 166 141 174 191 251 183 167 185 226 175 61 Zaire................................................................... 62 36 39 41 50 45 46 49 44 73 62 Oil-exporting countries6.................................... 2,250 1,133 1,155 1,179 1,263 1,226 1,393 1,244 981 1,365 63 Other Africa....................................................... 481 568 698 649 645 623 607 673 679 778 64 Other countries....................................................... 2,119 2,012 1,297 1,121 1,014 1,434 1,575 1,267 1,288 1,204 65 Australia............................................................. 2,006 1,905 1,140 933 870 1,229 1,275 1,129 1,085 1,047 66 All other............................................................. 113 107 158 188 144 205 300 138 203 157 67 Nonmonetary international and regional organizations................................................... 5,699 5,714 3,274 3,625 3,102 3,618 2,998 3,120 2,934 2,558 68 International...................................................... 5,415 5,157 2,752 3,116 2,558 3,094 2,591 2,430 2,311 1,909 69 Latin American regional................................... 188 267 278 258 266 261 117 430 395 422 70 Other regional7.................................................. 96 290 245 250 279 262 290 260 228 227 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 1978. A For a description of the changes in the International Statistics 4 Includes Surinam through December 1975. tables, see July 1978 Bulletin, p. 612. 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 1978 Area and country 1975 1976 1977 Jan. Feb. Mar. Apr. ▲ May June? July* 1 58,308 79,301 90,206 91,874 91,040 96,449 88,387 87,876 87,223 87,339 58,275 79,261 90,163 91,830 91,005 96,406 88,339 87,842 87,190 87,295 11,109 14,776 18,114 17,034 17,197 18,690 15,318 15,825 16,379 15,735 4 Austria................................................................ 35 63 65 107 112 83 76 94 105 116 5 Belgium-Luxembourg......................................... 286 482 561 660 552 596 586 793 731 634 6 Denmark............................................................. 104 133 173 172 171 166 146 186 146 129 7 Finland................................................................ 180 199 172 179 184 189 180 184 182 190 8 France................................................................. 1,565 1,549 2,082 1,776 1,988 2,265 1,646 1,679 1,892 1,813 9 Germany............................................................. 380 509 644 640 615 783 698 752 789 690 10 Greece................................................................. 290 279 206 188 209 211 200 279 204 190 11 Italy..................................................................... 443 993 1,334 1,170 1,147 1,155 907 1,194 965 1,079 12 Netherlands........................................................ 305 315 338 374 382 470 419 468 384 436 13 Norway............................................................... 131 136 162 176 191 184 192 209 218 210 14 Portugal.............................................................. 30 88 175 137 155 155 131 132 126 140 15 424 745 722 732 735 741 597 700 706 670 16 Sweden................................................................ 198 206 218 230 200 171 206 185 219 244 17 Switzerland......................................................... 199 379 564 597 704 696 699 391 686 631 18 Turkey................................................................. 164 249 360 337 311 315 308 306 309 313 19 United Kingdom................................................ 5,170 7,033 8,964 8,133 8,200 9,204 6,823 6,951 ‘ 7,393 6,932 20 Yugoslavia.......................................................... 210 234 311 306 308 307 280 285 320 300 21 Other Western Europe1..................................... 76 85 86 142 74 49 268 137 153 165 22 406 485 413 424 383 370 337 362 319 305 23 Other Eastern Europe2..................................... 513 613 566 554 576 580 621 536 534 548 2,834 3,319 3,355 3,758 4,009 4,084 2,779 2,434 2,541 3,116 25 Latin America and Caribbean................................ 23,863 38,879 45,850 48,616 47,249 49,866 48,991 46,947 45,904 46,983 26 Argentina............................................................ 1,377 1,192 1,478 1,622 1,574 1,642 1,533 1,595 1,553 1,572 27 Bahamas.............................................................. 7,583 15,464 19,858 22,348 21,517 22,801 22,015 21,043 18,703 19,576 28 Bermuda.............................................................. 104 150 232 111 233 195 176 345 143 220 29 Brazil................................................................... 3,385 4,901 4,629 4,510 4,559 4,832 4,412 4,443 4,671 4,599 30 British West Indies............................................ 1,464 5,082 6,481 6,173 5,589 6,851 7,823 6,271 7,412 6,872 31 Chile.................................................................... 494 597 675 690 700 710 722 717 745 745 32 Colombia............................................................ 751 675 671 651 640 592 551 578 613 648 33 Cuba.................................................................... 14 13 10 14 4 3 1 1 2 1 34 Ecuador.............................................................. 252 375 517 518 530 544 525 530 560 546 35 Guatemala 3........................................................ 55 79 89 83 36 Jamaica 3.............................................................. 19 42 48 49 37 3,745 4,822 4,909 4,898 4,7i9 4,836 4,379 4,506 4,784 5,066 38 Netherlands Antilles4......................................... 72 140 224 220 208 215 202 206 212 206 39 Panama............................................................... 1,138 1,372 1,410 1,953 1,880 1,699 2,196 2,147 1,904 2,279 40 Peru..................................................................... 805 933 962 965 931 920 885 920 934 918 41 Uruguay........................................................... 57 42 80 67 65 65 51 58 52 52 42 1,319 1,828 2,318 2,205 2,421 2,367 2,146 2,233 2,243 2,338 43 Other Latin America and Caribbean................ 1,302 1,293 1,394 1,671 1,678 1,593 1,302 1,235 1,237 1,213 44 Asia.......................................................................... 17,706 19,204 19,236 18,830 18,985 20,039 18,064 19,453 19,243 18,325 45 China, People’s Republic of (Mainland).......... 22 3 10 15 13 11 15 22 13 5 46 China, Republic of (Taiwan)............................. 1,053 1,344 1,719 1,619 1,663 1,656 1,422 1,456 1,343 1,183 47 Hong Kong........................................................ 289 316 543 516 495 609 826 755 769 698 48 India.................................................................... 57 69 53 65 72 97 53 70 80 46 49 Indonesia............................................................ 246 218 232 210 222 202 165 137 146 139 50 Israel.................................................................... 721 755 584 501 498 491 434 494 465 444 51 Japan.................................................................. 10,944 11,040 9,839 9,626 9,767 10,266 9,532 9,745 10,020 9,779 52 Korea.................................................................. 1,791 1,978 2,336 2,458 2,315 2,090 1,850 1,800 2,303 1,936 53 Philippines.......................................................... 534 719 594 602 642 660 615 751 678 640 54 520 442 633 634 647 656 686 730 711 725 55 Middle East oil-exporting countries5............... 744 1,459 1,746 1,681 1,753 2,219 1,488 2,522 1,572 1,562 56 Other Asia.......................................................... 785 862 947 903 898 1,082 978 970 1,142 1,168 57 Africa...................................................................... 1,933 2,311 2,518 2,556 2,548 2,632 2,235 2,219 2,138 2,133 58 Egypt................................................................... 123 126 119 126 121 107 79 72 70 78 59 Morocco.............................................................. 8 27 43 61 44 39 35 37 38 36 60 South Africa....................................................... 657 957 1,066 1,095 1,106 1,169 1,052 1,055 1,055 1,036 61 181 112 98 98 98 101 77 80 79 79 62 Oil-exporting countries 6.................................... 382 524 510 499 531 493 416 441 377 341 63 Other................................................................... 581 565 682 677 648 723 575 533 519 563 64 Other countries....................................................... 830 772 1,090 1,037 1,017 1,095 953 964 984 1,002 65 Australia............................................................. 700 597 905 839 813 879 785 798 824 836 66 All other.............................................................. 130 175 186 198 204 216 168 166 160 167 67 Nonmonetary International and Regional Organizations7................................................ 33 40 43 44 35 43 48 34 33 45 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 ▲ Data for period prior to April 1978 include claims of banks’ domestic 1978. customers on foreigners. For a description of the changes in the Inter­ 4 Includes Surinam through December 1975. national Statistics tables, see July 1978 Bulletin, p. 612. 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

A62 International Statistics □ September 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 1978 Type of claim 1975 1976 1977 Jan. Feb. Mar. Apr. ▲ May June? JulyP 1 Total....................................................................... 58,308 79,301 90,206 91,874 91,040 96,449 2 Banks’ own claims on foreigners......................... 88,387 87,876 87,223 87,339 3 Foreign public borrowers................................. 4,584 5,283 5,786 6,350 4 Own foreign offices1.......................................... 35,513 35,714 31,407 33,580 5 Unaffiliated foreign banks................................. 28,660 27,805 30,130 27,500 6 Deposits......................................................... 4,869 4,658 5,134 4,616 7 Other............................................................... 23,791 23,147 24,996 22,885 8 All other foreigners................................................ 19,629 19,074 19,900 19,909 9 Claims of banks’ domestic customers2............... 10 Deposits.............................................................. 11 Negotiable and readily transferable in­ struments 3................................................... 12 Outstanding collections and other claims4.... 5,467 5,756 6,176 6,342 6,446 6,765 13 Memo: Customer liability on acceptances ■ ■ 1 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. ▲ For a description of the changes in the International Statistics tables, see July 1978 Bulletin, 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 IGURES UNTIL JUNE 1978 DATA ARE AVAILABLE A By area: Maturity of 1 year or less1......... 8 Europe...................................... 9 Canada..................................... 10 Latin America and Caribbean. 11 Asia.......................................... 12 Africa....................................... 13 All other2................................. Maturity of over 1 year1............ 14 Europe...................................... 15 Canada..................................... 16 Latin America and Caribbean. 17 Asia.......................................... 18 Africa........................................ 19 All other2................................. 1 Remaining time to maturity. ▲ For a description of the changes in the International Statistics 2 Includes nonmonetary international and regional organizations. tables, see July 1978 Bulletin, p. 612. 3.19 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in Foreign CurrenciesA 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 July 1978 Bulletin, p. 612. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics □ September 1978 3.20 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions Millions of dollars 1978 1978 Country or area 1976 1977 Jan.- JulyP Jan. Feb. Mar. Apr. May June? July? Holdings (end of period) 3 1 Estimated total... 15,799 38,620 40,101 40,380 41,230 39,661 39,367 40,707 41,500 2 Foreign countries ■ 12,765 33,874 35,648 35,479 36,475 34,812 34,345 35,014 36,336 Europe.............................. 2,330 13,916 15,044 14,895 15,206 13,607 12,946 13,156 14,256 Belgium-Luxembourg.. 14 19 19 19 19 19 19 19 19 Germany....................... 764 3,168 3,373 3,494 3,816 3,820 4,031 4,361 5,531 Netherlands................. 288 911 930 954 1,029 1,079 1,070 1,113 1,113 Sweden......................... 191 100 125 125 155 175 175 185 180 Switzerland................... 261 All 391 401 400 443 447 509 569 9 United Kingdom.......... 485 8,888 9,839 9,513 9,418 7,737 6,856 6,597 6,473 10 Other Western Europe. 323 349 362 384 363 330 346 370 368 11 Eastern Europe............ 4 4 4 4 4 4 4 4 4 12 Canada. 256 288 285 250 251 253 261 264 275 13 Latin America and Caribbean.................. 313 551 543 587 551 535 503 494 485 14 Venezuela................................................ 149 199 201 241 200 189 174 174 174 15 Other Latin American and Caribbean. 47 183 181 184 189 184 167 158 149 16 Netherlands Antilles............................ 118 170 162 162 162 162 162 162 162 17 Asia....... 9,323 18,745 19,413 19,378 20,120 20,070 20,137 20,605 20,831 18 Japan. 2,687 6,860 7,463 7,617 8,313 8,332 8,964 9,616 9,927 19 Africa........ 543 362 362 362 341 341 491 491 491 20 All other. * 11 2 7 6 6 8 4 -3 21 Nonmonetary international and regional organizations..................................... 3,034 4,746 4,453 4,901 4,755 4,849 5,022 5,693 5,164 22 International.................... 2,906 4,646 4,358 4,781 4,640 4,740 4,931 5,633 5,131 23 Latin American regional. 128 100 95 120 115 110 90 61 33 Transactions (net purchases, or sales (—), during period) 24 Total..................... 8,096 22,823 2,557 1,481 278 851 -1,569 -295 1,341 470 25 Foreign countries. 5,393 21,110 2,461 1,774 -169 996 -1,664 -467 669 1,322 26 Official institutions. 4,958 20,328 2,041 1,714 -277 975 -1,690 -566 592 1,293 27 Other foreign.......... 435 782 420 59 108 22 26 99 77 29 28 Nonmonetary international and regional organizations..................................... 2,704 1,713 95 -292 447 -145 94 171 671 -852 Memo: Oil-exporting countries 29 Middle East 1.......................... 3,887 4,451 -889 56 -184 72 -72 -563 -185 -85 30 Africa 2.................................... 221 -181 130 — 20 150 1 Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, 3 Estimated official and private holdings of marketable U.S. Treasury and United Arab Emirates (Trucial States). securities with an original maturity of more than 1 year. Data are based 2 Comprises Algeria, Gabon, Libya, and Nigeria. on a benchmark survey of holdings as of Jan. 31, 1971, and monthly 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 1978 Assets 1975 1976 1977 Feb. Mar. Apr. May June July Aug. 1 Deposits................................................................. 353 352 424 445 352 481 453 288 347 309 Assets held in custody: 2 U.S. Treasury securities1................................... 60,019 66,532 91,962 98,465 105,362 102,044 100,146 99,465 101,696 102,902 3 Earmarked gold2............................................... 16,745 16,414 15,988 15,735 15,727 15,686 15,667 15,620 15,594 15,572 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 1978 Transactions, and area or country 1976 1977 J Ju an ly . 2 - * Jan. Feb. Mar. Apr. May June** July** U.S. corporate securities Stocks 1 Foreign purchases.............................................. 18,227 14,155 10,843 1,024 825 1,413 1,864 2,391 2,035 1,290 2 Foreign sales...................................................... 15,475 11,479 8,919 909 762 921 1,151 1,963 1,925 1,287 3 Net purchases, or sales (—)............................... 2,753 2,676 1,924 115 63 492 713 427 110 3 4 Foreign countries................................................ 2,740 2,661 1,969 116 63 510 720 427 131 3 5 Europe............................................................ 336 1,006 1,242 30 41 319 508 323 31 -11 6 France.......................................................... 256 40 77 -12 -2 68 79 -2 -39 -15 7 Germany..................................................... 68 291 398 45 33 52 125 52 80 11 8 Netherlands................................................ -199 22 -11 -4 -13 -9 16 9 -18 9 9 Switzerland.................................................. -100 152 -62 -54 -16 7 103 31 -78 -55 10 United Kingdom........................................ 340 613 855 60 57 187 173 229 98 51 11 Canada............................................................ 324 65 -90 -19 -26 -3 44 -58 -12 -16 12 Latin America and Caribbean...................... 155 127 74 -9 -4 17 37 36 33 -35 13 Middle East1.................................................. 1,803 1,390 641 107 48 170 97 90 59 69 14 Other Asia...................................................... 119 59 104 6 1 5 35 39 23 -5 15 7 5 -4 • 2 1 -1 -4 -3 1 16 Other countries.............................................. -4 8 2 1 1 * * * * * 17 Nonmonetary international and regional organizations............................................... 13 15 -45 -1 1 -19 -7 1 -21 • Bonds2 18 Foreign purchases.............................................. 5,529 7,739 4,414 459 '574 600 312 780 678 1,011 19 Foreign sales...................................................... 4,322 3,404 2,860 377 348 621 343 333 301 537 20 Net purchases, or sales (—)............................... 1,207 4,335 1,554 83 '226 -21 -31 447 377 474 21 Foreign countries................................................ 1,248 4,239 1,458 101 '181 * -29 449 306 452 22 Europe............................................................ 91 2,006 542 133 32 -163 -93 41 159 433 23 France.......................................................... 39 -34 6 -4 1 5 -4 8 -3 2 24 Germany..................................................... -49, 59 84 1 7 19 10 21 14 12 25 Netherlands................................................ -29 72 -13 7 1 -20 3 -3 -7 4 26 Switzerland................................................ 158 157 -126 -7 3 -37 -33 -36 5 -20 27 23 1,705 641 125 22 -122 -54 75 154 443 28 Canada............................................................ 96 141 60 7 7 5 13 9 6 14 29 Latin America and Caribbean...................... 94 64 33 11 6 11 1 12 2 -9 30 Middle East1.................................................. 1,179 1,695 827 -59 '125 137 33 370 91 130 31 Other Asia...................................................... -165 338 -7 9 11 9 16 15 48 -115 32 Africa.............................................................. -25 -6 -1 * -1 * * * * * 33 Other countries.............................................. -21 * 2 * * * 1 1 • * 34 Nonmonetary international and regional organizations............................................... -41 96 98 -18 45 -20 -2 -1 72 22 Foreign securities 35 Stocks, net purchases, or sales (—)...................... -323 -410 407 103 113 114 143 -13 -59 6 36 Foreign purchases.............................................. 1,937 2,255 2,119 255 280 337 404 271 244 328 37 Foreign sales....................................................... 2,259 2,665 1,712 152 167 223 261 284 303 322 38 Bonds, net purchases, or sales (—)....................... *■-8,774 '-5,115 -2,739 '-572 ' — 181 '-526 '—501 -39 -648 -273 39 4,932 '8,052 6,092 691 522 797 1,169 1,017 1,012 885 40 Foreign sales...................................................... '13,706 '13,167 8,832 '1,263 '703 '1,322 '1,670 1,056 1,659 1,158 41 Net purchases, or sales (—) of stocks and bonds.. '-9,097 '-5,524 -2,332 '-469 '-69 '—412 '-358 -51 -707 -267 42 Foreign countries.................................................... '-7,199 '-3,967 -2,245 '-476 '12 '-263 '-428 -67 -752 -269 43 Europe................................................................ -850 '-1,145 -168 98 95 116 106 -194 -236 -152 44 Canada............................................................... -5,245 '-2,404 -2,086 -446 -4 -177 -807 -80 -420 -152 45 Latin America and Caribbean.......................... -3 -80 231 -6 37 69 120 72 -70 8 46 Asia..................................................................... '-733 '-73 -16 '—117 '—118 '-277 '143 131 178 44 47 Africa.................................................................. 48 2 -42 -2 * * 7 * -22 -25 48 Other countries.................................................. -416 -267 -164 -3 2 6 2 4 -182 7 49 Nonmonetary international and regional organizations................................................... -1,898 -1,557 -88 7 -80 -148 70 16 45 2 1 Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, 2 Includes State and local government securities, and securities of U.S. Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial Govt, agencies and corporations. Also includes issues of new debt securities States). sold abroad by U.S. corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics □ September 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 1977 1978 1977 1978 Type, and area or country Mar. June Sept. Dec. Mar.p Mar. June Sept. Dec. Mar.p Liabilities to foreigners Claims on foreigners 1 6,595 6,480 7,190 7,873 8,311 14,941 16,125 14,971 16,050 18,215 By type: 2 Payable in dollars............................................... 5,828 5,763 6,340 7,070 7,426 13,925 15,012 13,925 14,704 16,587 3 Payable in foreign currencies............................. 767 717 850 803 885 1,016 1,113 1,047 1,346 1,628 4 Deposits with banks abroad in reporter’s 431 448 414 620 670 5 585 665 632 726 958 By area or country: 6 Foreign countries.................................................... 6,403 6,310 7,036 7,658 8,164 14,938 16,124 14,970 16,049 18,214 7 Europe................................................................. 2,135 2,183 2,283 2,495 2,754 5,170 5,751 4,991 5,660 5,457 8 9 10 12 21 23 23 26 24 24 21 9 111 138 119 106 161 170 221 226 211 187 10 15 14 16 14 23 48 40 44 56 47 11 Finland............................................................ 2 10 11 9 12 40 90 59 13 13 12 France............................................................. 163 157 171 239 274 436 413 430 513 545 13 Germany......................................................... 175 163 226 284 335 367 377 393 453 410 14 Greece............................................................. 80 73 78 85 108 90 86 52 41 42 15 Italy................................................................. 135 138 107 128 104 473 440 352 387 384 16 Netherlands.................................................... 168 205 176 230 252 172 182 161 166 184 17 Norway........................................................... 37 33 35 7 9 42 42 38 42 42 18 Portugal.......................................................... 23 20 12 11 7 35 30 34 69 27 19 52 68 74 77 94 325 322 307 387 407 20 Sweden............................................................ 36 36 41 28 37 93 92 91 117 115 21 Switzerland..................................................... 214 236 257 263 229 154 179 146 220 238 22 12 21 97 108 99 32 37 32 39 48 23 United Kingdom............................................ 689 721 725 750 861 2,413 2,963 2,409 2,687 2,526 24 Yugoslavia...................................................... 113 110 92 90 82 30 28 20 20 24 25 Other Western Europe................................... 6 6 9 10 8 18 15 15 25 33 26 U.S.S.R........................................................... 15 16 11 24 15 105 76 62 55 44 27 Other Eastern Europe................................... 13 10 14 12 23 103 102 96 135 121 28 Canada................................................................ 427 448 451 504 530 2,426 2,574 2,509 2,600 3,347 29 Latin America.................................................... 1,121 1,020 1,027 1,178 1,359 4,448 4,965 4,567 4,476 5,885 30 Argentina........................................................ 42 50 50 40 53 46 51 53 53 53 31 Bahamas......................................................... 256 216 222 300 306 1,920 2,271 1,906 2,007 3,088 32 Brazil.............................................................. 49 37 76 49 62 535 457 414 517 496 33 Chile............................................................... 16 24 13 17 14 35 28 40 45 40 34 Colombia........................................................ 18 22 24 42 26 75 72 85 84 83 35 Cuba............................................................... * * * * * 1 1 * * * 36 Mexico............................................................ 121 120 103 114 177 317 301 302 314 312 37 Panama........................................................... 12 11 12 22 12 105 121 222 91 178 38 Peru................................................................. 24 21 13 15 22 32 28 30 32 30 39 Uruguay.......................................................... 4 3 4 3 5 6 5 5 5 7 40 Venezuela........................................................ 260 208 225 222 283 210 240 256 277 317 41 Other Latin American republics................... 148 141 122 118 107 237 237 257 281 270 42 Netherlands Antilles...................................... 11 17 9 25 41 14 8 8 12 24 43 Other Latin America..................................... 160 151 154 209 250 914 1,146 989 757 987 44 Asia..................................................................... 2,057 1,971 2,594 2,825 2,809 2,316 2,315 2,403 2,774 2,966 45 China, People’s Republic of (Mainland).... 3 2 1 8 4 1 1 12 9 22 46 China, Republic of (Taiwan)........................ 113 138 152 156 164 130 131 139 157 145 47 Hong Kong.................................................... 42 27 25 40 32 107 93 73 98 84 48 India............................................................... 39 41 44 37 26 35 51 42 38 85 49 Indonesia........................................................ 94 80 60 56 57 206 184 185 375 189 50 Israel............................................................... 37 45 58 63 68 51 70 46 38 47 51 Japan.............................................................. 172 183 604 695 767 969 927 1,026 1,068 1,372 52 Korea.............................................................. 96 95 81 108 104 130 158 153 174 135 53 Philippines...................................................... 59 73 78 74 99 86 90 111 99 94 54 Thailand.......................................................... 19 11 17 17 11 27 22 24 23 31 55 Other Asia...................................................... 1,383 ' 1,277 1,474 1,572 1,477 569 582 590 697 761 56 Africa.................................................................. 591 589 568 563 609 429 370 346 393 408 57 Egypt.............................................................. 29 33 45 13 19 70 24 22 38 33 58 Morocco......................................................... 30 72 105 112 130 12 11 10 21 20 59 South Africa................................................... 33 27 29 20 30 80 69 75 75 71 60 Zaire............................................................... 39 39 48 46 55 19 17 19 15 11 61 Other Africa................................................... 460 418 341 372 375 248 248 221 245 272 62 Other countries................................................... 72 98 111 93 104 150 149 153 146 150 63 Australia......................................................... 53 78 93 75 89 114 110 113 111 116 64 All other......................................................... 19 20 18 18 14 36 40 41 35 34 65 Nonmonetary international and regional organizations...................................................1 192 170 154 215 147 2 1 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 1978 Type and country 1974 1975 1976 1977 Jan. Feb. Mar. Apr. May June? 1Total....................................................................... 3,357 3,799 5,506 6,936 7,694 8,312 8,929 9,049 9,439 8,912 By type: 2 Payable in dollars.............................................. 2,660 3,042 4,823 5,999 6,680 7,321 7,791 7,953 8,420 7,771 3 2,591 2,710 4,450 5,597 6,226 6,836 7,213 7,310 7,814 7,218 4 Short-term investments 1............................... 69 332 373 402 454 485 578 643 606 553 5 Payable in foreign currencies............................. 697 757 683 955 1,015 991 1,137 1,096 1,018 1,142 6 Deposits.......................................................... 429 511 397 553 553 533 607 597 492 599 7 Short-term investments 1............................... 268 246 286 402 462 458 530 499 526 543 By country: 8 United Kingdom................................................ 1,350 1,306 1,817 2,006 1,757 1,908 1,810 1,746 1,595 1,683 9 Canada................................................................ 967 1,156 1,541 1,696 2,152 2,284 2,463 2,702 2,771 2,547 10 Bahamas.............................................................. 391 546 1,322 1,883 2,404 2,656 2,951 2,988 3,569 2,975 11 Japan................................................................... 398 343 113 153 205 267 405 290 258 273 12 All other.............................................................. 252 446 713 1,198 1,176 1,197 1,300 1,323 1,246 1,435 1 Negotiable and other readily transferable foreign obligations payable Note.—Data represent the assets abroad of large nonbanking con­ on demand or having a contractural maturity of not more than 1 year cerns in the United States. They are a portion of the total claims on from the date on which the obligation was incurred by the foreigner. foreigners reported by nonbanking concerns in the United States and are included in the figures shown in Table 3.26. 3.25 LONG-TERM LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Nonbanking Concerns in the United States Millions of dollars, end of period 1977 1978 1977 1978 Area and country Mar. June Sept. Dec. Mar.p Mar. June Sept. Dec. Mar.p Liabilities to foreigners Claims on foreigners 1Total....................................................................... 3,523 3,364 3,355 3,222 3,205 4,946 4,898 4,697 5,054 5,114 2 Europe.................................................................... 2,657 2,507 2,565 2,458 2,540 899 898 826 857 930 3 Germany............................................................ 391 370 407 255 295 84 76 76 70 73 4 Netherlands........................................................ 272 262 272 288 293 154 147 81 82 81 5 Switzerland........................................................ 178 177 224 241 241 53 43 42 49 48 6 United Kingdom................................................ 1,389 1,277 1,255 1,232 1,247 259 283 282 310 332 7 Canada................................................................... 80 79 76 71 67 1,475 1,486 1,462 1,776 1,792 8 Latin America........................................................ 292 301 294 289 253 1,489 1,457 1,371 1,406 1,387 9 Bahamas............................................................. 163 167 159 156 146 34 34 36 40 42 10 Brazil.................................................................. 5 7 7 7 6 125 125 134 144 154 11 Chile................................................................... 1 1 1 1 1 210 208 201 203 194 12 Mexico............................................................... 23 26 30 30 30 180 178 187 177 183 13 Asia......................................................................... 432 408 358 342 284 817 833 809 797 789 14 Japan.................................................................. 413 386 319 305 250 96 111 94 66 83 15 Africa..................................................................... 2 3 3 2 2 199 158 165 161 156 16 All other1............................................................... 59 67 59 60 60 67 67 63 59 60 1 Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics □ September 1978 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Per cent per annum Rate on Aug. 31, 1978 Rate on Aug. 31, 1978 Rate on Aug. 31, 1978 Country Country Country Per Month Per Month Per Month cent effective cent effective cent effective Argentina........................ 18.0 Feb. 1972 9.5 Aug. 1977 7.0 Feb. 1978 Austria............................. 4.5 June 1978 Germany, Fed. Rep. of. 3.0 Dec. 1977 6.5 July 1978 Belgium........................... 6.0 July 1978 10.5 Sept. 1978 1.0 Feb. 1978 Brazil............................... 30.0 Sept. 1977 3.5 Mar. 1978 United Kingdom......... 10.0 June 1978 Canada............................ 9.0 July 1978 4.5 June 1942 5.0 Oct. 1970 Denmark......................... 8.0 July 1977 Netherlands.................. 4.5 July 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 19•78 Country, or type 1975 1976 1977 Mar. Apr. May June July Aug. 1 Euro-dollars.......................................................... 7.02 5.58 6.03 7.27 7.38 7.82 8.33 8.52 8.48 2 United Kingdom.................................................. 10.63 11.35 8.07 6.72 7.47 9.17 10.02 10.13 9.42 3 Canada.................................................................. 8.00 9.39 7.47 7.44 8.14 8.01 8.12 8.23 8.77 4 Germany............................................................... 4.87 4.19 4.30 3.49 3.54 3.60 3.61 3.71 3.64 5 Switzerland............................................................ 3.01 1.45 2.56 .46 .40 1.18 1.38 1.74 0.67 6 Netherlands........................................................... 5.17 7.02 4.73 5.35 4.62 4.48 4.60 5.61 6.27 7 France................................................................... 7.91 8.65 9.20 9.86 8.35 8.21 7.94 7.61 7.39 8 Italy....................................................................... 10.37 16.32 14.26 O) 11.75 11.80 11.75 11.75 11.75 9 Belgium................................................................. 6.63 10.25 6.95 6.41 5.55 5.71 5.61 5.84 7.09 10 Japan..................................................................... 11.64 7.70 6.22 4.86 4.50 4.50 4.75 4.75 4.64 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 Mar. Apr. May June July Aug. 1 Australia/dollar.................. 130.77 122.15 110.82 113.83 113.97 112.76 113.83 114.94 115.41 2 Austria/shilling................... 5.7467 5.5744 6.0494 6.8221 6.8081 6.6031 6.6718 6.7547 6.9490 3 Belgium/franc..................... 2.7253 2.5921 2.7911 3.1589 3.1419 3.0463 3.0590 3.0864 3.1834 4 Canada/dollar..................... 98.30 101.41 94.112 88.823 87.592 89.397 89.143 88.921 87.690 5 Denmark/krone.................. 17.437 16.546 16.658 17.839 17.807 17.535 17.723 17.846 18.171 6 Finland/markka................. 27.285 25.938 24.913 24.013 23.900 23.430 23.390 23.809 24.381 7 France/franc....................... 23.354 20.942 20.344 21.256 21.803 21.513 21.841 22.531 22.998 8 Germany/deutsche mark... 40.729 39.737 43.079 49.181 48.964 47.497 47.984 48.647 50.084 9 India/rupee......................... 11.926 11.148 11.406 12.185 11.815 11.653 11.900 12.245 12.483 10 Ireland/pound..................... 222.16 180.48 174.49 190.55 184.97 181.81 183.72 189.49 194.06 11 Italy/lira.............................. .15328 .12044 .11328 .11692 .11644 .11488 .11634 .11804 .11952 12 Japan/yen........................... .33705 .33741 .37342 .43148 .45084 .44215 .46744 .50101 .53002 13 Malaysia/ringgit................. 41.753 39.340 40.620 42.428 42.057 41.462 41.964 42.447 43.433 14 Mexico/peso....................... 8.0000 6.9161 4.4239 4.3928 4.3945 4.3973 4.3840 4.3756 4.3758 15 Netherlands/guilder............ 39.632 37.846 40.752 45.994 45.865 44.407 44.716 45.076 46.203 16 New Zealand/dollar........... 121.16 99.115 96.893 102.20 101.92 100.69 101.90 103.85 105.42 17 Norway/krone.................... 19.180 18.327 18.789 18.775 18.621 18.360 18.450 18.524 19.018 18 Portugal/escudo................. 3.9286 3.3159 2.6234 2.4483 2.4075 2.2208 2.1857 2.1939 2.2042 19 South Africa/rand.............. 136.47 114.85 114.99 115.05 115.05 115.01 114.93 115.00 115.00 20 Spain/peseta....................... 1.7424 1.4958 1.3287 1.2497 1.2475 1.2317 1.2587 1.2885 1.3344 21 Sri Lanka/rupee................. 14.385 11.908 11.964 6.5000 6.4950 6.2945 6.2859 6.3245 6.3926 22 Sweden/krona..................... 24.141 22.957 22.383 21.693 21.731 21.491 21.690 22.012 22.523 23 Switzerland/franc............... 38.743 40.013 41.714 52.693 52.511 50.892 53.046 55.443 60.013 24 United Kingdom/pound... 222.16 180.48 174.49 190.55 184.97 181.81 183.72 189.49 194.06 Memo: 25 United States/dollar1......... *•98.34 r105.57 r103.31 r94.80 r94.56 >•96.31 r94.74 92.44 89.99 i Index of weighted average exchange value of U.S. dollar against cur- Note.—Averages of certified noon buying rates in New York for cable rencies of other G-10 countries plus Switzerland. March 1973 = 100. transfers. Weights are 1972-76 global trade of each of the 10 countries. Series revised as of August 1978. For description and back data, see “Index of the Weighted-Average Exchange Value of the U.S. Dollar: Revision” on page 700 of the August 1978 Bulletin. 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 1978 Industry 1976 1977 Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Total (170 corps.) Sales........................................................ 667,821 748,757 166,452 161,596 180,462 177,430 190,302 180,384 200,641 194,654 Total revenue.......................................... 676,596 758,013 168,958 164,631 181,546 179,496 192,996 182,488 203.033 197,039 Profits before taxes................................. 71,885 78,909 18,902 16,894 18,587 18,874 21,468 18,146 20,421 19,653 Profits after taxes................................... 34,707 37,854 9,532 8,442 8,113 9,056 10,472 9,337 8,989 9,654 Memo: PAT unadjusted1.................. 36,016 38,391 9,490 8,550 9,340 9,107 10,553 8,656 10,075 9,645 Dividends................................................ 14,491 '17,532 3,449 3,480 4,371 3,840 4,269 3,985 '5,438 4,295 Nondurable goods industries (86 corps.):2 Sales........................................................ 362,935 404,141 87,404 88,678 99,926 95,836 101,035 97,144 110,126 104,501 Total revenue.......................................... 368,184 409,601 88,864 90,967 100,174 96,948 102,807 98,232 111,614 105,849 Profits before taxes................................. 42,694 45,906 10,595 10,632 10,793 11,074 12,064 11,195 11,573 11,342 Profits after taxes................................... 18,571 22,284 4,833 4,871 4,058 4,837 5,160 5,144 '4,430 5,140 Memo: PAT unadjusted1.................. 19,468 19,768 4,809 4,962 4,868 4,880 5,224 5,234 '5,249 5,139 Dividends................................................ 7,910 '8,944 1,947 1,990 2,094 2,185 2,227 2,268 '2,264 2,406 Durable goods industries (84 corps.):3 Sales........................................................ 304,886 344,616 79,048 72,918 80,536 81,594 89,267 83,240 90,515 90,153 Total revenue.......................................... 308,412 348,412 80,094 73,664 81,372 82,548 90,189 84,256 91,419 91,190 Profits before taxes................................. 29,191 33,003 8,307 6,262 7,794 7,800 9,404 6,951 8,848 8,311 Profits after taxes................................... 16,136 18,283 4,699 3,571 4,055 4,219 5,312 4,193 4,559 4,514 Memo: PAT unadjusted1.................. 16,548 17,804 4,681 3,588 4,472 4,227 5,329 3,422 4,826 4,506 Dividends................................................ 6,577 '8,588 1,502 1,490 2,277 1,655 2,042 1,717 '3,174 1,889 Selected industries: Food and kindred products (28 corps.): Sales........................................................ 62,568 68,422 15,057 16,048 16,701 15,903 16,776 16,947 18,796 17,083 Total revenue.......................................... 63,142 69,168 15,395 16,221 16,533 16,155 17,136 17,239 18,638 17,467 Profits before taxes................................. 5,750 6,040 1,507 1,462 1,310 1,448 1,560 1,526 1,506 1,490 Profits after taxes................................... 2,890 3,172 778 817 630 739 825 826 782 802 Memo: PAT unadjusted1.................. 3,013 3,309 785 827 734 746 835 836 892 803 Dividends................................................ 1,259 '1,433 325 309 318 342 352 364 '375 401 Chemical and allied products (22 corps.): Sales........................................................ 64,125 70,251 16,081 15,878 16,410 17,103 17,347 17,586 18,215 19,296 Total revenue.......................................... 64,837 70,906 16,242 16,084 16,612 17,271 17,526 17,743 18,366 19,482 Profits before taxes................................. 8,197 8,530 2,117 2,008 1,893 2,112 2,290 2,062 2,066 2,353 Profits after taxes................................... 4,511 4,604 1,208 1,130 929 1,192 1,288 1,184 940 1,334 Memo: PAT unadjusted1.................. 4,622 4,831 1,153 1,163 1,081 1,181 1,289 1,178 1,183 1,317 Dividends................................................ 1,918 2,186 445 481 548 514 539 553 580 567 Petroleum refining (15 corps.): Sales........................................................ 196,154 221,694 46,065 46,923 56,510 52,344 55,903 51,593 61,854 56,996 Total revenue.......................................... 199,688 225,338 46,888 48,744 56,649 52,891 57,096 52,130 63,221 57,695 Profits before taxes................................. 25,857 28,144 6,210 6,559 6,834 6,746 7,396 6,818 7,184 6,832 Profits after taxes................................... 9,555 10,072 2,383 2,606 2,085 2,498 2,655 2,694 2,225 2,615 Memo: PAT unadjusted1.................. 10,168 10,684 2,404 2,635 2,617 2,546 2,708 2,756 2,674 2,627 Dividends................................................ 4,089 4,615 1,017 1,036 1,065 1,163 1,160 1,166 1,126 1,247 Primary metals and products (23 corps.): Sales........................................................ 54,044 58,713 14,441 13,751 13,119 13,773 15,573 14,454 14,913 15,632 Total revenue.......................................... 54,825 59,488 14,650 13,958 13,313 13,963 15,769 14,636 15,120 15,847 Profits before taxes................................. 2,834 1,476 924 701 576 460 100 239 677 408 Profits after taxes................................... 1,652 1,579 603 513 127 260 536 493 290 175 Memo: PAT unadjusted1.................. 1,947 1,474 610 521 400 274 553 287 360 185 Dividends................................................ 926 '1,088 227 230 251 234 246 266 '342 210 Machinery (27 corps.): Sales........................................................ 87,274 96,820 21,627 21,133 24,059 22,727 24,380 24,317 25,396 24,902 Total revenue.......................................... 88,519 98,380 22,072 21,280 24,460 23,051 24,702 24,767 25,860 25,261 Profits before taxes................................. 11,320 13,158 2,781 2,700 3,370 2,900 3,318 3,264 3,676 3,124 Profits after taxes................................... 6,181 7,158 1,528 1,461 1,837 1,573 1,805 1,771 2,009 1,705 Memo: PAT unadjusted1.................. 6,202 7,204 1,517 1,467 1,864 1,571 1,804 1,782 2,047 1,701 Dividends................................................ 2,383 '3,495 581 602 663 712 767 702 '1,314 824 Motor vehicles and equipment (9 corps.): 49 Sales........................................................ 107,563 127,049 28,710 24,250 28,208 31,069 33,502 28,835 33,643 33,713 50 Total revenue.......................................... 108,394 127,816 28,942 24,500 28,250 31,350 33,716 29,104 33,646 33,987 51 Profits before taxes................................. 8,909 10,738 3,056 1,272 2,087 2,988 3,489 1,575 2,686 2,986 52 Profits after taxes................................... 4,870 5,747 1,668 705 1,166 1,599 1,914 892 1,342 1,654 53 Memo: PAT unadjusted1.................. 4,918 5,861 1,658 704 1,219 1,603 1,926 898 1,434 1,648 54 Dividends................................................ 2,062 2,607 422 372 983 392 698 413 1,104 473 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. William Miller, Chairman Henry C. Wallich Stephen S. Gardner, Vice Chairman Philip E. Coldwell 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 Murray Altmann, Assistant to the Board Sidney L. Jones, Assistant to the Board Peter M. Keir, Assistant to the Board Jay Paul Brenneman, Special Assistant to the Stanley J. Sigel, Assistant to the Board Board Normand R. V. Bernard, Special Assistant to the Frank O’Brien, Jr., Special Assistant to the Board Board Joseph S. Sims, Special Assistant to the Board Donald J. Winn, Special Assistant to the Board DIVISION OF RESEARCH AND STATISTICS James L. Kichline, Director LEGAL DIVISION Joseph S. Zeisel, Deputy Director Edward C. Ettin, Associate Director Neal L. Petersen, General Counsel John H. Kalchbrenner, Associate Director Robert E. Mannion, Associate General Counsel John J. Mingo, Senior Research Division Officer Allen L. Raiken, Associate General Counsel Eleanor J. Stockwell, Senior Research Division Charles R. McNeill, Assistant to the General Officer Counsel James R. Wetzel, Senior Research Division Officer James M. Brundy, Associate 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 *John M. Wallace, Assistant Secretary J. Cortland G. Peret, Associate Research Richard H. Puckett, Manager, Regulatory Division Officer Improvement Project Michael J. Prell, Associate Research Division Officer Helmut F. Wendel, Associate Research Division DIVISION OF CONSUMER AFFAIRS Officer Robert M. Fisher, Assistant Research Division Janet O. Hart, Director Officer Nathaniel E. Butler, Associate Director Frederick M. Struble, Assistant Research Division Jerauld C. Kluckman, Associate Director Officer Stephen P. Taylor, Assistant Research Division Officer Levon H. Garabedian, Assistant Director DIVISION OF BANKING SUPERVISION AND REGULATION DIVISION OF INTERNATIONAL FINANCE John E. Ryan, Director tFREDERiCK C. Schadrack, Deputy Director Edwin M. Truman, Director Frederick R. Dahl, Associate Director John E. Reynolds, Counselor William W. Wiles, Associate Director Robert F. Gemmill, Associate Director Jack M. Egertson, Assistant Director George B. Henry, Associate Director Don E. Kline, Assistant Director Charles J. Siegman, Associate Director Robert S. Plotkin, Assistant Director Samuel Pizer, Senior International Division Thomas A. Sidman, Assistant Director Officer Samuel H. Talley, Assistant Director Jeffrey R. Shafer, Associate International Division William Taylor, Assistant Director Officer Dale W. Henderson, Assistant International Division Officer Larry J. Promisel, Assistant International Division Officer Ralph W. Smith, Jr., Assistant International Division Officer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 and Official Staff Philip C. Jackson, Jr. Nancy H. Teeters 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 Joseph W. Daniels, Sr., Assistant Director and BANK EXAMINATIONS AND BUDGETS Director of Equal Employment Opportunity Albert R. Hamilton, Director Clyde H. Farnsworth, Jr., 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 Uyless D. Black, Assistant Director DIVISION OF Glenn L. Cummins, Assistant Director FEDERAL RESERVE BANK OPERATIONS 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 Atlanta. tOn 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 □ September 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. Wallich Philip E. Coldwell Philip C. Jackson, Jr. Mark H. Willes David P. Eastburn ,J. Charles Partee Willis J. Winn Nancy H. Teeters M urray Altm ann, Secretary Richard G. Davis, Associate Economist Normand R. V. Bernard, Assistant Secretary Edward C. Ettin, Associate Economist Thomas J. O’C onnell, General Counsel Ira Kaminow, Associate Economist Edward G. Guy, Deputy General Counsel Peter M. Keir, Associate Economist Robert E. M annion, Assistant General Counsel James L. K ichline, 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. Stern light, Deputy Manager for Domestic Operations Scott E. Pardee, Deputy Manager for Foreign Operations FEDERAL ADVISORY COUNCIL G ilbert F. Bradley, tw elfth federal reserve district, President J. W. M cLean, tenth federal reserve district, Vice President Henry S. W oodbridge, first district Frank A. Plummer, sixth district Walter B. Wriston, second district Edward Byron Smith, seventh district William B. Eagleson, Jr., third district Clarence C. Barksdale, eighth district M. Brock Weir, fourth district Richard H. Vaughan, ninth district John H. Lumpkin, fifth district James D. Berry, eleventh district 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. K lein, New York, New York John G. B u ll, Fort Lauderdale, Florida Percy W. Loy, Portland, Oregon Robert V. B ullock, 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. H akala, Omaha, Nebraska Thomas R. Swan, Portland, Maine Joseph F. H olt III, Oxnard, California Anne Gary Taylor, Alexandria, Virginia Richard H. H olton, 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 Thomas E. Gainor Helena .................. 59601 Patricia P. Douglas John D. Johnson KANSAS CITY 64198 Harold W. Andersen Roger Guffey Joseph H. Williams Henry R. Czerwinski Denver ................. 80217 A. L. Feldman Wayne W. Martin Oklahoma City 73125 Christine H. Anthony William G. Evans Omaha ................. 68102 Durward B. Varner Robert D. Hamilton DALLAS ................. 75222 Irving A. Mathews Ernest T. Baughman Charles T. Beaird Robert H. Boykin El Paso ................ 79999 Josefina Salas-Porras Fredric W. Reed Houston ............... 77001 Alvin I. Thomas J. Z. Rowe San Antonio .......... 78295 Pete Morales, Jr. Carl H. Moore SAN FRANCISCO ....94120 Joseph F. Alibrandi John J. Balles Cornell C. Maier John B. Williams Los Angeles .......... 90051 Caroline L. Ahmanson Richard C. Dunn Portland ............... 97208 Loran L. Stewart Angelo S. Carella Salt Lake City ..... 84110 Sam Bennion A. Grant Holman Seattle .................. 98124 Lloyd E. Cooney Gerald R. Kelly ♦Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A 74 Federal Reserve Board Publications Available from Publications Services, Division of Ad­ request and be made payable to the order of the Board ministrative Services, Board of Governors of the Fed­ of Governors of the Federal Reserve System in a form eral Reserve System, Washington, D.C. 20551. Where collectible at par in U.S. currency. (Stamps and a charge is indicated, remittance should accompany coupons are not accepted.) The Federal Reserve System—Purposes and Bank Credit-Card and Check-Credit Plans. 1968. Functions. 1974. 125 pp. 102 pp. $1.00 each; 10 or more to one address, Annual Report $.85 each. Federal Reserve Bulletin. Monthly. $20.00 per Survey of Changes in Family Finances. 1968. 321 year or $2.00 each in the United States, its posses­ pp. $1.00 each; 10 or more to one address, $.85 sions, Canada, and Mexico; 10 or more of same each. issue to one address, $18.00 per year or $1.75 Report of the Joint Treasury-Federal Reserve each. Elsewhere, $24.00 per year or $2.50 each. Study of the U.S. Government Securities Banking and Monetary Statistics, 1914-1941. Market. 1969. 48 pp. $.25 each; 10 or more to (Reprint of Part 1 only) 1976. 682 pp. $5.00. one address, $.20 each. Banking and Monetary Statistics, 1941-1970. Joint Treasury-Federal Reserve Study of the 1976. 1,168 pp. $15.00. Government Securities Market: Staff Stud­ Annual Statistical Digest, 1971-75. 1976. 339 pp. ies—Part 1. 1970. 86 pp. $.50 each; 10 or more $4.00 per copy for each paid subscription to Fed­ to one address, $.40 each. Part 2. 1971. 153 pp. eral Reserve Bulletin. All others, $5.00 each. and Part 3. 1973. 131 pp. Each volume $1.00; Annual Statistical Digest, 1972-76. 1977. 388 pp. 10 or more to one address, $.85 each. $10.00 per copy. Federal Reserve Monthly Chart Book. Subscrip­ Open Market Policies and Operating Proce­ tion includes one issue of Historical Chart Book. dures—Staff Studies. 1971. 218 pp. $2.00 $12.00 per year or $1.25 each in the United States, each; 10 or more to one address, $1.75 each. its possessions, Canada, and Mexico; 10 or more Reappraisal of the Federal Reserve Discount of same issue to one address, $1.00 each. Else­ Mechanism. Vol. 1. 1971. 276 pp. Vol. 2. 1971. where, $15.00 per year or $1.50 each. 173 pp. Vol. 3. 1972. 220 pp. Each volume $3.00; Historical Chart Book. Issued annually in Sept. 10 or more to one address, $2.50 each. Subscription to Monthly Chart Book includes one The Econometrics of Price Determination Con­ issue. $1.25 each in the United States, its posses­ ference, October 30-31, 1970, Washington, D.C. sions, Canada, and Mexico; 10 or more to one 1972. 397 pp. Cloth ed. $5.00 each; 10 or more address, $1.00 each. Elsewhere, $1.50 each. to one address, $4.50 each. Paper ed. $4.00 each; Capital Market Developments. Weekly. $15.00 per 10 or more to one address, $3.60 each. year or $.40 each in the United States, its posses­ sions, Canada, and Mexico; 10 or more of same Federal Reserve Staff Study: Ways to Moderate issue to one address, $13.50 per year or $.35 each. Fluctuations in Housing Construction. Elsewhere, $20.00 per year or $.50 each. 1972. 487 pp. $4.00 each; 10 or more to one address, $3.60 each. Selected Interest and Exchange Rates—Weekly Series of Charts. Weekly. $15.00 per year or Lending Functions of the Federal Reserve $.40 each in the United States, its possessions, Banks. 1973. 271 pp. $3.50 each; 10 or more Canada, and Mexico; 10 or more of same issue to one address, $3.00 each. to one address, $13.50 per year or $.35 each. Improving the Monetary Aggregates (Report of the Elsewhere, $20.00 per year or $.50 each. Advisory Committee on Monetary Statistics). The Federal Reserve Act, as amended through De­ 1976. 43 pp. $1.00 each; 10 or more to one cember 1976, with an appendix containing provi­ address, $.85 each. sions of certain other statutes affecting the Federal Annual Percentage Rate Tables (Truth in Lend­ Reserve System. 307 pp. $2.50. ing—Regulation Z) Vol. I (Regular Transactions). Regulations of the Board of Governors of the 1969. 100 pp. Vol. II (Irregular Transactions). Federal Reserve System 1969. 116 pp. Each volume $1.00, 10 or more Published Interpretations of the Board of Gov­ of same volume to one address, $.85 each. ernors, as of June 30, 1977. $7.50. Industrial Production—1976 Edition. 1977. 304 Federal Reserve Measures of Capacity and Ca­ pp. $4.50 each; 10 or more to one address, $4.00 pacity Utilization. 44 pp. $1.75 each, 10 or each. more to one 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 Measures of Security Credit. 12/70. The Equal Credit Opportunity Act and . . . Revision of Bank Credit Series. 12/71. Credit Rights in Housing Assets and Liabilities of Foreign Branches of the Equal Credit Opportunity Act and . . . Doc­ U.S. Banks. 2/72. tors, Lawyers, Small Retailers, and Others Bank Debits, Deposits, and Deposit Turnover— Who May Provide Incidental Credit Revised Series. 7/72. the Equal Credit Opportunity Act and . Yields on Newly Issued Corporate Bonds. 9/72. Women Recent Activities of Foreign Branches of U.S. Fair Credit Billing Banks. 10/72. A Guide to Federal Reserve Regulations Revision of Consumer Credit Statistics. 10/72. How to File A Consumer Credit Complaint One-Bank Holding Companies Before the 1970 If You Borrow To Buy Stock Amendments. 12/72. Truth in Leasing Yields on Recently Offered Corporate Bonds. U.S. Currency 5/73. What Truth in Lending Means to You Rates on Consumer Instalment Loans. 9/73. New Series for Large Manufacturing 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 The Structure of Margin Credit. 4/75. research. New Statistical Series on Loan Commitments at Selected Large Commercial Banks. 4/75. Summaries Only Printed in the Bulletin Recent Trends in Federal Budget Policy. 7/75. (Limited supply of mimeographed copies of full text Recent Developments in International Financial available upon request for single copies. Markets. 10/75. The Performance of Bank Holding Company-Af­ MINNIE: A Small Version of the MIT-PENN-SSRC filiated Finance Companies, by Stephen A. Econometric Model, Staff Economic Study by Rhoades and Gregory E. Boczar. Aug. 1977. 19 Douglas Battenberg, Jared J. Enzler, and Arthur pp. M. Havenner. 11/75. Greeley in Perspective, by Paul Schweitzer and An Assessment of Bank Holding Companies, Staff Joshua Greene. Sept. 1977. 17 pp. Economic Study by Robert J. Lawrence and Sam­ Structure and Performance Studies in Banking: uel H. Talley. 1/76. A Summary and Evaluation, by Stephen A. Industrial Electric Power Use. 1/76. Rhoades. Dec. 1977. 45 pp. Revision of Money Stock Measures. 2/76. An Analysis of Federal Reserve Attrition Since Survey of Finance Companies, 1975. 3/76. 1960, by John T. Rose. Jan. 1978. 44 pp. Revised Series for Member Bank Deposits and Problems in Applying Discriminant Analysis in Aggregate Reserves. 4/76. Credit Scoring Models, by Robert A. Eisenbeis. Industrial Production—1976 Revision. 6/76. Jan. 1978. 28 pp. Federal Reserve Operations in Payment Mecha­ External Capital Financing Requirements of nisms: A Summary. 6/76. Commercial Banks: 1977-81, by Gerald A. Han- Recent Growth in Activities of U.S. Offices of weck and John J. Mingo. Feb. 1978. 34 pp. Banks. 10/76. Mortgage Borrowing Against Equity in Existing New Estimates of Capacity Utilization: Manu­ Homes: Measurement, Generation, and Im­ facturing and Materials. 11/76. plications for Economic Activity, by David F. Bank Holding Company Financial Developments Seiders. May 1978. 42 pp. in 1976. 4/77. Survey of Terms of Bank Lending—New Series. The Behavior of Member Bank Required Reserve 5/77. Ratios and the Effects of Board Action, The Commercial Paper Market. 6/77. 1968-77, by Thomas D. Simpson. July 1978. 39 Consumption and Fixed Investment in the Eco­ pp. nomic Recovery Abroad. 10/77. Foothold Acquisitions and Bank Market Struc­ Recent Developments in U.S. International ture, by Stephen A. Rhoades and Paul Schweit­ Transactions. 4/78. zer, July 1978. 8 pp. Survey of Time and Savings Deposits at All Com­ Printed in Full in the Bulletin mercial Banks, April 1978. 8/78. Staff Economic Studies shown under “Reprints.” The Federal Budget in the 1970’s. 9/78. 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 □ September 1978 A77 HOUSING, new and existing units, 50 REAL estate loans: Banks, by classes, 18, 20-23, 29, 41 INCOME, personal and national, 46, 52, 53 Life insurance companies, 29 Industrial production, 46, 48 Mortgage terms, yields, and activity, 3, 40 Instalment loans, 42, 43 Type of holder and property mortgaged, 41 Insurance companies, 29, 32, 33, 41 Reserve position, basic, member banks, 6 Insured commercial banks, 17, 18, 19 Reserve requirements, member banks, 9 Interbank deposits, 16, 17, 20, 21, 22 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 Minneapolis Chicago \Salt Lake City Omaha* Kansas City t. L \ o s) u i . s Louisville \Memphis Nashvilh \Little Rock BirminghaiI A ® tl anta > 11 Paso Houston i San Antonio February 1$78 LEGEND — Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities ----- Boundaries of Federal Reserve Branch • Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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