Federal Reserve Bulletin, 1985-09

VOLUME 71 • NUMBER 9 • SEPTEMBER 1985 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • Stephen H. Axilrod • Michael Bradfield • S. David Frost • Griffith L. Garwood • James L. Kichline • Edwin M. Truman Naomi P. Salus, Coordinator 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. It is assisted by the Economic Editing Unit headed by Mendelle T. Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 671 MONETARV POLICY REPORT cent years has been the dramatic apprecia- TO THE CONGRESS tion of the dollar, before the Subcommittee on Economic Stabilization of the House In working toward the goal of sustained Committee on Banking, Finance and Urban growth of the economy that is consistent Affairs, July 18, 1985. with progress toward price stability, developments with respect to the dollar and the 701 Chairman Volcker discusses the multilaterexternal position of the United States have al development institutions and their role necessarily assumed greater prominance. with respect to the debt and growth problems in the developing countries and says 685 INDUSTRIAL PRODUCTION that the International Monetary Fund and Output rose an estimated 0.1 percent in the World Bank, and to a lesser degree, the June. international development banks, have important roles to play in safeguarding inter- 687 STATEMENTS TO CONGRESS national stability and in promoting sound growth in the world economy, before the Paul A. Volcker, Chairman, Board of Gov- Subcommittee on International Developernors, presents the views of the Federal ment Institutions and Finance of the House Reserve on regulation of the market for Committee on Banking, Finance and Urban Treasury and federally sponsored agency Affairs, July 30, 1985. securities, before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Af- 706 ANNOUNCEMENTS fairs, July 9, 1985. Resignation of Lyle E. Gramley as a member of the Board of Governors. 690 Chairman Volcker reviews monetary policy in the context of recent and prospective Appointment of advisory panel to assist in development of a program to reduce risk on economic and financial developments and large-dollar transfer systems. amplifies some of the decisions of the Federal Open Market Committee set out in the Publication of revised list of OTC stocks semiannual "Monetary Policy Report to the subject to margin regulations. Congress," before the House Committee Extension of comment period on proposed on Banking, Finance and Urban Affairs, amendment to Regulation Z. July 17, 1985. [Chairman Volcker presented identical testimony before the Senate Com- Admission of eight state banks to membermittee on Banking, Housing, and Urban ship in the Federal Reserve System. Affairs on July 18, 1985.] 708 RECORD OF POLICY ACTIONS OF THE 697 Preston Martin, Vice Chairman, Board of FEDERAL OPEN MARKET COMMITTEE Governors, discusses developments in the external position of the United States and At its meeting on May 21, 1985, the Comrelated policies here and abroad, and says mittee adopted a directive that, against the that one of the most significant economic background of the recent reduction in the developments for the United States in re- discount rate, called for maintaining the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

current degree of reserve restraint, ab- 715 LEGAL DEVELOPMENTS stracting from special situation borrowing Various bank holding company, bank serby thrift institutions. The members expectvice corporation, and bank merger orders; ed such an approach to policy implementaand pending cases. tion to be consistent with growth of Ml at an annual rate of about 6 percent or a little Ai FINANCIAL AND BUSINESS STATISTICS higher for the period from March to June. Given the weakness in M2 and M3 in April, A3 Domestic Financial Statistics growth in these broader aggregates over the A44 Domestic Nonfinancial Statistics three-month period was now expected to be A53 International Statistics slower than had been anticipated at the time of the previous meeting. The members A69 GUIDE TO TABULAR PRESENTATION, agreed that somewhat lesser restraint on STATISTICAL RELEASES, AND SPECIAL reserve conditions would be acceptable in TABLES the context of substantially slower growth in the monetary aggregates, while some- A70 BOARD OF GOVERNORS AND STAFF what greater restraint might be appropriate if monetary growth were substantially fast- A72 FEDERAL OPEN MARKET COMMITTEE er. It was understood that the need for AND STAFF; ADVISORY COUNCILS lesser or greater restraint would be considered against the background of develop- A74 FEDERAL RESERVE BOARD ments relating to the strength of the busi- PUBLICATIONS ness expansion, inflationary pressures, and conditions in domestic credit and foreign A77 INDEX TO STATISTICAL TABLES exchange markets. The members agreed that the intermeeting range for the federal A79 FEDERAL RESERVE BANKS, BRANCHES, funds rate, which provides a mechanism for AND OFFICES initiating consultation of the Committee when its boundaries are persistently ex- A80 MAP OF FEDERAL RESERVE SYSTEM ceeded, should be left unchanged at 6 to 10 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on July 16, (FOMC) when they formulated their annual mon- 1985, pursuant to the Full Employment and etary policy plans in February. While the eco- Balanced Growth Act of 1978.1 nomic environment was conducive to the containment of inflation within the Vh to 4 percent MONETARY POLICY AND THE ECONOMIC range of the past few years, there has been no OUTLOOK FOR 1985 AND 1986 further progress toward full employment of the nation's labor resources or industrial capacity. The fundamental objective of the Federal Re- Indeed, the unemployment rate has remained at serve in charting a course for monetary and debt about 1V4 percent, well below the peak of the expansion remains unchanged—to foster a finan- 1981-82 recession, but still at a historically high cial environment conducive to sustained growth level. of the economy, consistent with progress over The slowing of output growth, which began in time toward price stability. In working toward the middle of 1984, has brought into sharper those goals, developments with respect to the focus the unevenness of this business expansion dollar and our external position have necessarily and the significance of some basic structural assumed greater prominence. More generally, imbalances in the economy. The federal budget while policy initiatives are stated in terms of deficit has remained in the neighborhood of $200 growth rates of certain monetary and credit billion, rather than moving in the direction of aggregates, the Federal Open Market Committee balance as might normally be expected in the has emphasized the need to interpret those ag- course of an upswing in economic activity. The gregates in the light of other information about heavy demands placed on the credit markets by the economy, prices, and financial markets. the Treasury's financing activities have, in turn, Moreover, the monetary targets for 1985 needed been one factor helping to hold real interest rates to be evaluated, and in the case of Ml adjusted, at historically high levels. And those high rates in light of the unusual and unexpected behavior have contributed to the strong demand of interof gross national product relative to money dur- national investors for dollar-denominated assets ing the first half of this year. and thus to the strength of the dollar on foreign exchange markets. Although the dollar was little changed on bal- Economic and Financial Background ance over the first half, with a spike in its value early in the year being subsequently reversed, Economic activity continued to expand during the adverse effects on the U.S. trade position of the first half of 1985, but at a relatively slow the appreciation of the preceding several years, pace. Real gross national product probably in- together with slow economic growth abroad, creased at an annual rate of less than 2 percent, were very much in evidence. U.S. firms continfalling short of the expectations of many fore- ued to face severe competitive pressures, and casters and of the rate anticipated for the year by our exports fell while our imports rose. The members of the Federal Open Market Committee widening current account deficit was mirrored in the continuing gap between the growth of domestic spending and domestic production. Moreover, the effects of this imbalance were felt with 1. The charts to the report are available on request from particular severity in the manufacturing, mining, Publications Services, Board of Governors of the Federal and agricultural sectors of the economy, in which Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

672 Federal Reserve Bulletin • September 1985 profitability was squeezed overall and employ- ances enhanced by the availability of explicit ment declined. interest on NOW accounts. There is evidence The lagging growth of production, relatively from recent experience, as well as from research well contained inflationary pressures on re- on the interest responsiveness of the demand for sources, and the high value of the dollar on money, suggesting that such episodes might be exchange markets provided the backdrop for the expected as the economy and financial markets conduct of monetary policy in the past several adjust over time to further progress toward price months. Reserves available to the banking sys- stability and as the inflation premium in interest tem expanded substantially over the first half of rates consequently diminishes. As this occurs, the year, and the discount rate was cut one-half probably in unpredictable spurts, the public's percent in the spring. With the economic expan- demand for Ml will tend to rise and the level of sion slowing, interest rates—which had declined Ml velocity could drop more or less "permasharply from the summer of 1984 to early 1985— nently." However, there will be uncertainty dropped somewhat further on balance by mid- about such a conclusion until it becomes apparyear. ent in the period ahead whether velocity is The declines in market interest rates in the returning toward trend or whether it is tending to latter part of last year and this year had substan- rise rapidly because the public is reducing its tial effects, lasting for a number of months, on "excess" money balances by spending or investthe demands for assets contained in Ml. Some ing them; in the latter case, the drop in velocity savings apparently were shifted into interest- in the past two quarters could be reversed to earning checking accounts (negotiable order of some extent. withdrawal accounts) from other instruments, The recent developments affecting Ml illusand demand deposits also rose, as the cost of trate the still considerable uncertainties about holding these accounts in terms of earnings for- the shorter-run behavior and trend of its velocigone was reduced. As a result of the shifts of ty. Over the past three and a half years, the funds, Ml expanded at an annual rate of about income velocity of Ml actually has declined IOV2 percent over the first half of the year (mea- slightly on balance. In contrast, over the precedsured from the fourth quarter of 1984 to the ing three decades, velocity had increased more second quarter of 1985), well above the range of than 3 percent per year, on average. Velocity 4 to 7 percent established by the FOMC in changes are influenced by the behavior of inter- February. At the same time, however, the broad- est rates, but the extent of interest rate impact is er monetary aggregates remained within their variable and may be changing as the public and designated ranges. Over the period, M2 and M3 depository institutions adjust to the new deposit expanded at annual rates of S3A and 8 percent instruments and deregulation of deposit ceiling respectively, as compared with their growth rates of recent years. Moreover, the underlying ranges of 6 to 9 and 6 to 9Vz percent. Growth in trend of velocity will also be influenced by the domestic nonfinancial sector debt over the first rate of financial innovation. While that may slow two quarters of the year was a little above its down once the adjustment is made to a deregulamonitoring range of 9 to 12 percent, as debt ted environment and with lower interest rates, issued to finance mergers and otherwise retire increased computerization could also work tostock issues continued stronger than had been ward a rise in velocity over time as the efficiency expected earlier. of the payments system increases. The rapid growth of Ml in the first half of the year was accompanied by a sharp drop in the velocity of the aggregate: Ml velocity—the ratio Ranges for Money and Debt Growth of nominal GNP to money—declined at an annu- in 1985 and 1986 al rate of about 5 percent. In some respects, that development is reminiscent of experience in In reexamining its Ml range for 1985 and in 1982-83, when a large drop in interest rates also setting a tentative range for 1986, the Committee was accompanied by a marked decline in Ml expected that velocity, after its sharp decline in velocity, with the attractiveness of Ml-type bal- the first half of this year, would cease falling Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 673 rapidly—while recognizing that much of the re- Ranges of growth for monetary and debt aggregates cent decline may not be reversed. Allowance Percent changes also needed to be made for the high degree of Tentative uncertainty surrounding the behavior of Ml ve- Aggregate 1985 for 1986 locity, given the experience of the past few Ml 3 to 81 4 to 7 years. To take account of these considerations, M2 6 to 9 6 to 9 M3 6 to 9 Vi 6 to 9 the base for the range of Ml was shifted forward Debt 9 to 12 8 to 11 to the second quarter of 1985, and the range was set to encompass growth at an annual rate of 3 to 1. Applies to period from second quarter to fourth quarter. 8 percent over the second half of this year. This range contemplates a substantial slowing in 1985 ranges for M2, M3, and domestic debt that growth from the pace of the first half, and the had been established in February. It is recoglower part of the range implies a willingness to nized, as at the start of the year, that actual see relatively slow growth should the recent growth over the four quarters of 1985 might be velocity decline be reversed and economic toward the upper parts of the ranges, and it was growth be satisfactory. felt that this would be acceptable, depending on The appropriateness of the new range will be developments in the velocities of the various under continuing review in light of evidence with measures, as long as inflationary pressures rerespect to economic and financial developments, mained subdued. including conditions in foreign exchange mar- The tentative ranges for 1986 for M3 and total kets. It was noted that, because of the burst of debt embody reductions from 1985—in the case money growth in June, the current level of Ml is of debt by a full percentage point and in the case high relative to the new range. The Committee of M3 by Vi percentage point on the upper limit. expected that the aggregate would move into the The range for M2 was left unchanged. In the case new range gradually over time as more usual of the monitoring range for debt, it was assumed behavior of velocity emerged. that, while debt might well continue its tendency For 1986, the Ml range was tentatively set at 4 of recent years to grow considerably faster than to 7 percent. The Committee recognized that GNP, its expansion would be tempered by a uncertainties about interest rates and other fac- drop-off in the net redemption of equity shares tors that could affect velocity would require that has boosted corporate credit use dramaticareful reappraisal of the range at the beginning cally in the past year or two. of that year. In addition, it was noted that actual experience with institutional and depositor behavior after the completion early next year of Economic Projections deposit-rate deregulation would need to be taken into account in judging the appropriateness of the All the monetary ranges specified were felt to be ranges. At the beginning of next year, regulatory consistent with somewhat more rapid economic minimum balance requirements on Super NOW growth than has characterized the first half of the accounts and money market deposit accounts year, as long as inflationary pressures remain will be removed, and at the end of March 1986, contained. At the same time, Committee memdeposit ceiling rates will be lifted entirely, affect- bers felt that the present circumstances in the ing savings deposits and regular NOW accounts. economy contain particular risks and uncertain- The accompanying table summarizes decisions ties that can imperil progress toward either with respect to the ranges of growth for the growth or price stability over the next year and a aggregates for 1985 and 1986. Except for Ml in half. Clearly, the serious imbalances referred to 1985, the growth ranges apply to one-year peri- earlier cannot be remedied through the actions of ods measured on a fourth-quarter-to-fourth-quar- the central bank alone. Attainment of fully satister basis. The Ml range for 1985 applies to the factory economic performance and minimization second half of the year, as noted above. of risks will require timely action in other areas With respect to the broader monetary and of policy, here and abroad. credit aggregates, the Committee reaffirmed the The economic projections of the members of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

674 Federal Reserve Bulletin • September 1985 the FOMC, as well as of the Reserve Bank The projections for a pickup in GNP growth Presidents who are not at present members of the over the reduced rate of the first half of this year Committee, are summarized in the accompany- are based in part on the expectation that the ing table. The central tendency of the forecasts declines in interest rates (and concomitant rise in for real GNP points to some pickup in the pace of stock prices) that have occurred over the past expansion in the second half of this year. The few quarters will be providing impetus to deexpected strengthening, given the slow growth in mand for goods and services in the months the first half, still would leave the GNP expan- ahead. Consumer attitudes toward spending apsion for the year as a whole short of the range pear favorable, and housing activity already has reported by the Federal Reserve in February and shown improvement, although the FOMC membelow the forecasts published by the administra- bers are somewhat concerned by the rising debt tion to date. burdens of households and the increasing pay- The FOMC members and the other Reserve ment problems suggested by figures on consumer Bank Presidents expect growth in the range of and mortgage loan delinquencies. In the business 2Vi to VA percent during 1986. Such a rise in sector, inventory overhangs appear to be limited output is seen as entailing substantial gains in in scope and degree, and fixed investment seems employment, enough to bring about a small de- to have picked up a little after exhibiting some crease in the civilian unemployment rate to weakness earlier this year; the lower cost of around 7 percent by the end of next year. With capital and desires to cut costs and maintain pressures in labor and product markets limited, competitiveness are expected to keep investment most FOMC members and other Presidents fore- on a moderate uptrend, even though pressures see only a marginal increase, if any, in the rate of on capacity may not be great. Spending by the inflation in 1986. It should be noted, however, federal government and by states and localities is that these projections are based on an assump- expected to grow rather slowly. tion that the exchange value of the dollar will not A key ingredient in many of the projections is deviate substantially from its recent levels. the expectation that there will be a tendency in the coming year for our external position to Economic projections for 1985 and 19861 stabilize, so that domestic production will more fully reflect the expansion of domestic demand. FOMC members and other FRB Presidents Developments in this area will, of course, depend in part on the course of economic expan- IIIttteeemmm Ranee Central Kange tendency sion abroad. Were the U.S. external position to continue deteriorating as it has been, the sectoral 1985 imbalances in the economy would be exacerbat- Percent change, fourth quarter to fourth quarter ed, creating further difficulties for many compa- Nominal GNP 66''//44 ttoo VVAA 66''//22 ttoo 77 nies, their employees, and their communities. Real GNP 22 VV** ttoo 33''//44 22VVAA ttoo 33 IIImmmpppllliiiccciiittt dddeeeffflllaaatttooorrr fffooorrr GGGNNNPPP 33''//22 ttoo 44''//44 3333AA ttoo 44 The draining off of income would jeopardize the AAAvvveeerrraaagggeee llleeevvveeelll iiinnn ttthhheee fffooouuurrrttthhh qqquuuaaarrrttteeerrr,,, sustainability of economic expansion, and the pppeeerrrccceeennnttt risks of economic and financial dislocations UUUnnneeemmmpppllloooyyymmmeeennnttt rrraaattteee 66VVAA ttoo 77''//44 77 ttoo 77''//44 would intensify. 1986 The FOMC members and other Presidents also PPPeeerrrccceeennnttt ccchhhaaannngggeee,,, fffooouuurrrttthhh qqquuuaaarrrttteeerrr tttooo assumed in their policy deliberations and in their fffooouuurrrttthhh qqquuuaaarrrttteeerrr NNNooommmiiinnnaaalll GGGNNNPPP 55''//22 ttoo 88''//22 77 ttoo IIVV22 projections that the Congress and the administra- RRReeeaaalll GGGNNNPPP 22 ttoo 44 22VVii ttoo 33''//44 tion would achieve deficit reductions in the range Implicit deflator for GNP 33 ttoo 55!!//22 3333//44 ttoo 4433//44 of those in the recent House and Senate budget Average level in the fourth quarter, percent resolutions. Failure to move forward with those Unemployment rate 6633//44 ttoo 77''//22 66%% ttoo IIVV** proposals would run a serious risk of reversing the favorable effects that congressional actions 1. The administration has yet to publish its mid-session budget review document, and consequently the customary comparison of to date have had on investor expectations and FOMC forecasts and administration economic goals has not been would create a real impediment to the solution of included in this report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 675 the structural problems plaguing our economy foreign exchange value of the U.S. dollar. The today. strong dollar has encouraged U.S. consumers and businesses to increase greatly the portion of THE PERFORMANCE OF THE ECONOMY their expenditures devoted to imports, and at the IN THE FIRST HALF OF 1985 same time has inhibited U.S. exports. Exports also have been restrained by slow growth in After a year and a half of extraordinarily rapid demand abroad. As a result, gains in domestic growth, economic activity decelerated abruptly demand have outstripped those in domestic proin the middle of 1984 and slowed somewhat duction by a wide margin throughout the expanfurther in the first half of 1985. Growth in real sion period. gross national product is estimated to have aver- The effects of the weakening trade balance in aged less than 2 percent at an annual rate so far the past few years have been felt keenly in the this year; the unemployment rate has remained manufacturing sector. Industrial production, flat at about IVA percent. Inflation has held at the which began to level off in the summer of 1984, lower pace reached during the 1981-82 reces- remained stagnant in the first half of 1985, and sion. employment in the manufacturing sector de- To some extent, the moderation in growth clined. The strong dollar also has exacerbated during the past year has reflected the slowing in the economic problems of farmers, many of household and business spending that often oc- whom face difficult adjustments because of fallcurs after the initial phase of cyclical recovery. ing product prices and the need to service a large Pent-up demand for housing and consumer dura- volume of debt accumulated during the inflationbles generally fades as an expansion period ary period of the 1970s and early 1980s. lengthens, and growth in business fixed invest- Thus far, however, the weakness in the manument often exhibits some cyclical deceleration facturing and agricultural areas has been more over time. However, the recent slowing in than offset by strong gains in other sectors. growth also reflects factors unique to this expan- Domestic final demand rose at an annual rate of sion. 3V2 percent in the first quarter of 1985, about the In particular, this expansion has taken place in same as in the second half of last year; secondthe context of a highly stimulative federal fiscal quarter gains also appear to have been substanpolicy. Real GNP grew more rapidly in 1983 and tial. Spending in such interest-sensitive areas as the first half of 1984 than in any previous recov- autos and housing was particularly strong in the ery since the Korean War. Ultimately, some first half of 1985, reflecting in part lower credit slowing in growth would have been required to costs that have emerged since mid-1984. avoid inflationary overheating of the economy. The strength of the dollar also has had a However, even before that point was reached, restraining influence on inflation, by reducing the initial effect of the fiscal stimulus began to import prices and by forcing U.S. producers to wane, dissipated in part through its contribution adopt more competitive pricing strategies. Inflato a worsening U.S. competitive position in tionary pressures have been limited, too, by the international trade and diversion of demand lack of pressure on resources here and the slack away from goods produced in the United States. abroad. Most measures of overall price increase The pronounced increases in the merchandise remained in the 4 percent range in the first half of trade and current account deficits have occurred 1985, but prices of manufactured goods rose little as enormous federal deficits and resultant heavy and significant downward pressures on prices borrowing by the federal government have added were evident in markets for oil and basic comto other factors helping to keep U.S. interest modities. rates at high levels, relative both to historical experience and to the rate of inflation. These The Household Sector credit demands have been met partly through a substantial inflow of foreign capital, which has Growth in real disposable income continued to been associated with a large appreciation in the slow in the first half of 1985, reflecting smaller Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

676 Federal Reserve Bulletin • September 1985 increases in interest income as well as weakness income has risen sharply in the past year, owing in manufacturing payrolls and in farm income. in part to the rapid rise in stock prices. Nonetheless, gains in household spending, espe- The incidence of payment difficulties on concially in the interest-sensitive sectors, were siz- sumer installment debt has risen somewhat in the able and supported by continued heavy borrow- past half year or so from relatively low levels. ing. As a result, the personal saving rate fell Delinquency and foreclosure rates on home appreciably below last year's level of 6 percent. mortgages have been at high levels for some Consumer spending for new cars was particu- time, and they rose further in early 1985. The larly strong in the first half. Total auto sales large number of defaulted mortgage loans partly averaged nearly 11 million units at an annual reflects rates of unemployment that are still high rate, with sales of domestic models around their and the weakness of home prices in many lohighest level for a six-month period since 1979. cales, which has left some homeowners with The strength in auto sales was partly attributable little equity to protect when they encounter to the improved availability of many popular financial difficulties. However, aggressive underdomestic models since the strike-related disrup- writing of some mortgages, including loans cartions in production last fall. In addition, auto rying lower payments in the first years, appears demand was bolstered by generally lower inter- to be a contributing factor. est rates compared with those of last year and by some special financing programs offered by manufacturers. Sales of foreign cars were held down The Business Sector in the first quarter because supplies of Japanese models were limited at the end of the annual Conditions in the business sector were mixed in period for the voluntary export restraint pro- the first half of 1985. Many industrial firms gram. Foreign car sales picked up in the spring experienced pressures on profit margins in an and early summer, however, when Japanese cars environment of intense price competition and shipped after the start of the new annual period declining capacity utilization, and widespread began to arrive at U.S. dealerships. financial strains continued to be present in the Meanwhile, activity in the housing market has agricultural and energy sectors. At the same rebounded since last fall. Housing starts rose to time, however, some other sectors of the econoan annual rate of 1.8 million units on average in my recorded good gains in sales and income. the first five months of 1985, retracing nearly all Economic profits for corporations in the aggreof the decline that occurred in the latter half of gate remained at the higher level reached after last year after rates on fixed-rate mortgages the sharp runup earlier in the expansion, with temporarily rose to the 14 percent range. Hous- after-tax profits as a percent of GNP at the ing activity generally has been quite robust in highest levels seen for any sustained period since this expansion period despite high real interest the late 1960s. rates. Demand for owner-occupied units has Growth in business spending for fixed capital been buoyed by the movement of the "baby began to slow in the latter half of 1984, after a boom" generation into its prime home-buying period of extraordinary expansion, and a further years, as well as by the beneficial effects of slowing occurred in the first part of 1985. The stable house prices and innovative financing weakening has been most pronounced in equiptechniques, such as adjustable-rate mortgages, ment outlays, affecting both the high-technology on the aflfordability of homes. categories and more traditional types of industri- The strong gains in household spending over al equipment. Nevertheless, surveys of capital the past two and a half years have been accompa- spending intentions taken in the first half of the nied by considerable alterations in balance year indicated that businesses still planned a sheets. The ratio of household debt to income healthy expansion in outlays for 1985 as a whole. has increased rapidly and is now well above its A relatively large proportion of these expendi- 1980 peak. Asset growth has been strong as well, tures reportedly was earmarked for replacement however, and the ratio of financial assets to and modernization rather than expansion of ca- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 677 pacity, reflecting a desire to cut costs and im- reduced exports, depressed land prices, and low prove competitiveness. Meanwhile, spending for incomes; many farmers face serious debt-servicnonresidential construction, particularly offices ing problems, causing problems in turn for agriand stores, continued at strong rates in the first cultural lenders. In the energy sector, continued half of 1985, and construction contracts rose downward pressure on world oil prices has further despite very high vacancy rates in many caused petroleum drilling to be curtailed, which parts of the country. has strained the earnings of many oilfield equip- The pace of inventory accumulation in the ment and servicing firms. business sector has been moderate in recent months. In real terms, business inventories rose about $19 billion at an annual rate in the first The Government Sector quarter of 1985, compared with an average gain of $25 billion in 1984; inventory accumulation Federal tax receipts continued to rise substanprobably was still lower in the second quarter. tially in the first half of 1985, but so too did Manufacturers, especially those facing intense outlays, and the deficit for fiscal year 1985 likely import competition, have continued to be cau- will be around $200 billion. This deficit repretious in adding to inventories. Total stocks in this sents about 5 percent of total GNP and more than sector declined in both April and May, and half of net private domestic saving. Federal inventory-sales ratios for the most part remain purchases of goods and services, the part of near historical lows. In the trade sector—with federal spending that enters directly into GNP the notable exception of the car industry—inven- and constitutes about a third of total outlays, tory-sales ratios have remained a bit high, rose comparatively moderately in the first half of though, and selected efforts to pare stocks have 1985; defense procurement, an area of rapid continued. growth in spending over the past few years, grew With slower growth in investment in the first at a reduced pace as outlays lagged more than is half of 1985, the gap between capital expendi- typical relative to appropriations. Real nondetures and internal funds of firms remained mod- fense purchases (excluding the Commodity erate. Nevertheless, businesses continued to Credit Corporation) continued to be relatively borrow heavily, reflecting a continued massive flat. amount of equity retirements by firms engaged in Purchases by state and local governments mergers and other corporate restructurings. As a were essentially unchanged in the first quarter result, debt-equity ratios have risen for a number but evidently rose in the second as construction of firms, especially in the petroleum industry in outlays increased significantly in the spring. which a major restructuring is currently taking States and localities, many of which had serious place. However, for most other firms, equity fiscal difficulties in the last recession, generally additions through retained earnings or sales of have been cautious in raising spending throughnew shares have been considerable. With rising out this expansion period, though they have been stock prices, debt-equity ratios for these firms, endeavoring to address the problem of an aging when their assets and liabilities are measured at infrastructure. The combination of spending recurrent market values, have shown some decline straint and improved revenues, owing both to in recent months. legislated tax increases and to rising incomes, Nonetheless, financial strains, in many cases has resulted in a substantial rise in the operating related to the high foreign exchange value of the and capital account surpluses of state and local dollar, persist in some areas of the economy. In governments since 1982. particular, low capacity utilization rates in a number of import-sensitive manufacturing industries, including machine tools, steel, some types The External Sector of chemicals, and textiles, have intensified pressures on profitability. In addition, large segments The external sector has come to play an increasof the farm sector continue to suffer greatly from ingly important role in the U.S. economy. Mer- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

678 Federal Reserve Bulletin • September 1985 chandise imports have risen rapidly in this ex- Labor Markets pansion, moving above 15 percent of real domestic expenditures on goods in the first half of 1985. Growth in labor demand generally remained The increase in import penetration has been strong in the first half of 1985, and the number of widespread, occurring in both the consumer and workers on nonfarm payrolls increased 1.4 milthe capital goods sectors as well as in industrial lion. The bulk of the job growth was in the supplies. service and trade sectors, in which employment Although U.S. exports increased in 1983 and in the past six months has expanded at rates 1984, they grew much less than imports and have similar to last year's rapid pace. Increases in the not yet regained their previous peak. In the first restaurant and business services areas have been half of 1985, exports, particularly of agricultural especially large. Construction employment also products, have declined somewhat. As a result of showed a sizable gain in the first half of 1985, these trends, the current account deficit has along with significant growth in both residential widened dramatically over the past few years, and nonresidential construction. In contrast, reaching an annual rate of $120 billion in the first manufacturing employment dropped about quarter of 1985. 220,000, with cutbacks in payrolls widespread Part of this imbalance reflects the stronger among industries. growth of demand in the U.S. economy since Despite the substantial gains in overall payroll 1982 relative both to the other industrial coun- employment, the unemployment rate has retries and to the debt-burdened developing coun- mained at about IV4 percent, the level that has tries. Although this influence has lessened with prevailed since last June. The labor force particithe slowing of the U.S. economic expansion pation rate was up appreciably on average during since the middle of last year, there has been no the first half; the rise occurred primarily among acceleration in growth in the other industrial adult women, who evidently were responding to countries, and many developing countries have the increase in job opportunities in the service continued to face financial constraints. The and trade sectors in which 80 percent of adult greater share of the imbalance, however, proba- women are now employed. bly is attributable to the substantial appreciation Wage inflation has remained restrained. Yearof the dollar over the past few years. On average over-year changes in the employment cost index during the first half of this year, the trade- for wages and salaries, a relatively comprehenweighted value of the dollar was roughly 70 sive measure for the private nonfarm business percent above its level five years earlier. economy, have held steady at just over 4 percent The appreciation of the dollar and the underly- for nearly a year. This is about 1 percentage ing demand of investors for dollar-denominated point less than in 1983 and early 1984, and assets and other claims on the United States substantially below the peak rate of about 9 have been partly associated with differentials percent reached in 1980. The slowing in union between real rates of return on U.S. and foreign wage increases over the past several years has assets. The enormous federal budget deficits been especially large. Union wage gains both in have been an important factor contributing to and out of manufacturing have been below the these differentials. The moderation in interest increases posted in nonunionized sectors for the rates that has accompanied the slowing of the past year and a half, causing a partial erosion of economic expansion in the United States since the differential that had built up over the years mid-1984 appears to have eased some of the before the last recession. Major collective barupward pressure on the dollar; after rising sharp- gaining agreements negotiated in early 1985 indily through the first two months of this year, the cate continued moderate wage growth in the exchange value of the dollar has trended down- unionized sectors. ward and is now around the level of late last Productivity in the nonfarm business sector summer. Nevertheless, the high level of the appears to have declined in the first half of 1985, dollar continues to limit the ability of U.S. proafter increases amounting to 4 percent in 1983 ducers to compete both at home and abroad. and 2Vi percent in 1984. Both the recent slowing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 679 in productivity and the substantial gains earlier in cent rate in the past six months, the same as in the recovery largely reflect the fact that employ- 1984. ment tends to respond more slowly than output Energy prices have been quite volatile over the to changes in demand. However, improvements past year, mainly reflecting movements in gasoin productivity appear to continue to be a major line prices. From the autumn of 1984 through priority of both workers and management, as February of this year, gasoline prices fell about evidenced by widespread reports of moderniza- Vh percent, as refiners sought to reduce excess tion of facilities as well as relaxation of work inventories. Production was adjusted downward rules and other steps to enhance efficiency and as well, resulting in a spurt in prices in the spring. hold down costs. However, gasoline prices appear to have stabi- The combination of improved productivity lized more recently, as inventory levels have growth and relatively restrained wage gains in returned to normal while crude oil supplies rethis expansion has resulted in a sizable decelera- main abundant. Food prices have risen only a tion in the average rate of increase in unit labor little this year, reflecting the moderate rate of costs relative to the previous several years. increase in processing costs as well as plentiful Although unit labor costs have risen this year in agricultural supplies. response to the downturn in productivity, they Prices of basic industrial commodities, which are still only about 3 percent above their year- rose markedly in the initial stages of this upswing ago level. in business activity, have been trending downward for the past year and a half. The demand for materials by U.S. manufacturers has been weak, Price Developments and world supplies have been ample, owing in part to the expansion of capacity in many devel- After slowing sharply in the recession, the broad- oping countries in the past decade and their need est measures of inflation have held fairly steady to maintain export revenues. at about 4 percent during much of the expansion. While the stability of the inflation rate during this expansion partly reflects some special factors, MONEY, CREDIT, AND FINANCIAL MARKETS significant progress appears to have been made IN THE FIRST HALF OF 1985 in reversing the underlying momentum of the inflationary process that sustained the wage- In February of this year, the FOMC established price spiral of previous years. Inflation expecta- target growth ranges for the year (measured from tions have been more subdued, and both labor the fourth quarter of 1984 to the fourth quarter of and management have exhibited a better appreci- 1985) of 4 to 7 percent for Ml, 6 to 9 percent for ation of the fact that gains in real incomes cannot M2, and 6 to 9Vi percent for M3. For domestic be achieved simply by marking up nominal nonfinancial sector debt, an associated monitorwages or prices. ing range was set at 9 to 12 percent. The Ml The strong dollar has reinforced other factors range for 1985 represented a reduction of 1 holding down inflation in this expansion period, percentage point at the upper end from the range both directly by reducing the prices of imported of the preceding year, while the range for M2 was goods and indirectly by forcing U.S. manufactur- unchanged. To reflect changes in the pattern of ers to restrain price increases in order to remain financial flows, the 1985 range for M3 was raised competitive. Retail prices of goods excluding Vi point at the upper end, and the whole range for food and energy rose about VA percent, at an the debt aggregate was raised 1 percentage point. annual rate, in the first half of 1985, about the It was expected that these ranges would be same as the average rate of change in the two adequate to encourage further real economic preceding years. Increases in prices of nonen- growth at a sustainable pace consistent with ergy services, which have not been affected containment of inflationary pressures and a nearly so much by import competition, have movement over time toward reasonable price continued to be substantial, averaging a 5VI per- stability. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

680 Federal Reserve Bulletin • September 1985 In implementing policy throughout the period, offerings and pricing behavior of depositories the FOMC emphasized the need to evaluate and the asset demands of households affect all growth in the monetary aggregates in the context the monetary aggregates to some extent. These of information available on economic activity, factors accounted in part for the need to interpret prices, and financial market conditions. Among movement in the aggregates in the light of other other factors, the strength of the dollar and the information, including evidence on shifts in verelated sluggishness of manufacturing activity locity. required attention. As an operational matter, the In the event, monetary policy during the first degree of pressure on reserve positions of depos- half of the year had to be adapted to a further itory institutions was relatively unchanged dur- slowing in economic growth as manufacturing ing the period, and the discount rate was reduced activity was essentially flat and the agricultural once. sector remained under pressure, to a continued high value of the dollar on exchange markets, and to a tendency for the velocity of money, Money, Credit, and Monetary Policy particularly of Ml, to fall. Price and wage pressures remained relatively well contained; indica- The unusually sharp drop in velocity in 1982 and tions of some acceleration in the early part of the early 1983, when growth of Ml greatly exceeded year were followed by more moderate increases that of nominal GNP, had led the FOMC to place in subsequent months. less reliance on Ml as an operational guide to In that context, monetary policy basically acpolicy. During the latter part of 1983 and in 1984, commodated the strong demands for reserves by however, the patterns of Ml growth relative to depository institutions that emerged during the other economic variables proved more consis- first half of the year. The total of adjustment plus tent with historical experience, and Ml was given seasonal borrowing varied within a generally more weight in the conduct of policy. Nonethe- narrow range over the period, though increasing less, considerable uncertainty remained, in part for a time in the spring as a result of special because of limited experience with the impact of situations affecting nonfederally insured thrift deposit deregulation and financial market inno- institutions in Ohio and Maryland. Reserve posivations on the behavior of Ml under varying tions had been eased considerably in the latter economic and financial circumstances. Similar part of 1984 and the early weeks of 1985. With an concerns about possible changes in the account easing of reserve pressures and a slowing in Growth of money and credit Percent changes Domestic Period Ml M2 M3 nonfinancial sector debt 1984:4 to 1985:2 ... 10.5 8.8 7.9 12.8® 1984:4 to June 1985 11.6 9.3 8.2 12.7® Fourth quarter to fourth quarter 197 9 7.5 8.1 10.3 12.1 198 0 7.5 9.0 9.6 9.6 198 1 5.1(2.5)' 9.2 12.4 10.0 1 1982 8.8 9.1 10.0 9.1 1983 10.4 12.2 10.0 10.8 1 1984 5.2 7.7 10.4 13.6 Quarterly growth rates 1984:1 6.2 7.2 9.2 13.0 2 6.5 7.1 10.5 13.0 3 4.5 6.8 9.5 12.6 3.2 9.1 11.0 13.4 10.6 12.0 10.7 13.4 10.1 5.3 5.0 11.8e 1. Ml figure in parentheses is adjusted for shifts to NOW accounts e Estimated. in 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 681 economic growth, interest rates had declined which took place in the context of continued sharply from their late summer peaks through the signs of economic weakness and against the very early weeks of this year. background of restrained inflationary pressures The decline of interest rates appeared to stimu- and a strong dollar on exchange markets. By late, with usual lags of some months, a sizable midyear, short-term rates were down to 3A to 1 lA increase in demands for assets contained in Ml, percentage points from levels around year-end, principally interest-bearing checking accounts while long-term rates had declined about 1 to 1 lA (NOW accounts). Shifts of long-term savings and percentage points. liquid funds out of market instruments and time Growth in Ml spurted once again in the late deposits into these accounts in the early months spring. To some extent, interest rate decreases of the year entailed a substantial rise in total contributed to a strengthening of demand for Mlreserves to support them. As the public's asset type assets during the latter part of the second preferences shifted toward components of Ml, quarter. Growth of NOW accounts, which had its income velocity declined sharply because moderated in late winter, picked up as offering holdings of these assets increased relative to the rates on Super NOW accounts adjusted sluggish- GNP. Only minimal effects on Ml growth likely ly to the renewed decline in market rates of resulted from shifts of funds into Super NOW interest. However, the strength of Ml also reaccounts after the minimum-balance requirement flected an unusual surge in demand deposit exwas reduced from $2,500 to $1,000 at the begin- pansion in May that extended into June at an ning of the year because the bulk of the funds even more rapid pace. The rise seems greater shifted appeared to come out of regular NOW than is explainable by usual reactions to the accounts. reduced opportunity cost of holding such funds Most market interest rates rose about a full or to adjustments in compensating balances and percentage point from their January lows in the may be partly related to sharp swings in U.S. course of the winter, though the level of rates Treasury balances. A question has been raised as remained well below the 1984 peaks. Demands to whether corporate cash management practices for credit remained strong. Economic growth have become less aggressive in recent months, had picked up in the fourth quarter and early data but there is no clear evidence on the point. for the first quarter, though mixed, seemed gen- With the sharp late-spring expansion of Ml, its erally consistent with moderate growth. While, velocity in the second quarter again declined at as noted, reserve growth was sizable during the about the same rate as in the first. The decline in quarter to accommodate shifts in the public's the velocity of Ml over the first half of this asset preference, reserves were provided some- year—as well as the lesser declines in the velociwhat more cautiously through open market oper- ty of M2 and M3—is reminiscent of experience in ations during the period of most rapid accelera- 1982-83. Indeed, both in the first half of this year tion of Ml growth in the first quarter. and over the one-year period from mid-1982 to By early spring, incoming economic data made mid-1983 the income velocity of Ml declined at it clear that the rate of economic expansion annual rates of about AVi to 5 percent. The drop remained limited. Inflation rates continued gen- in Ml velocity in both periods appears to have erally low, prospects for further oil price declines reflected, to a considerable degree and with helped damp inflation expectations, and the mar- usual lags, declines in market interest rates, ket responded positively to signs of possible although the magnitude of the declines was in congressional action to reduce the budget deficit. both cases somewhat more than could be expect- Growth of Ml moderated substantially, and the ed based on past relationships of money, income, aggregate began to decelerate toward its longer- and interest rates. run range in late winter and early spring. Interest Episodes of velocity decline may be inherent rates reversed their earlier rise as market expec- in the disinflationary process. As interest rates tations changed. Rate declines were also influ- adjust downward in reflection of lowering inflaenced by a cut in the Federal Reserve's discount tion rates, households and firms become increasrate in May of Vt percentage point to IVi percent, ingly less reluctant to tie up portions of their Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

682 Federal Reserve Bulletin • September 1985 funds in lower-earning transaction balances. The tions. Core deposit flows have accelerated while adjustment has not been steady. Yield declines the rate of loan expansion has held about steady. have been bunched in time, and the ensuing Furthermore, perhaps in response to new Federbunched additions to money balances have led to al Home Loan Bank Board regulations raising sudden drops in velocity. Unfortunately, the net worth requirements for fast-growing institutiming of such velocity changes is no easier to tions, thrift institutions have reduced net acquisipredict than is the timing of interest rate changes. tions of assets. In doing so, some institutions Deposit deregulation may have contributed to have taken advantage of declining yields by using the extent of velocity adjustments by making the the capital gains from asset sales to boost reportdemand for the group of assets in Ml more ed earnings. responsive to interest rate changes than it used to Growth in total debt remained extremely be. strong in the past two quarters, averaging a bit While growth of Ml was quite high relative to above its monitoring range, though below the its long-run range for 1985, the broader aggre- record pace of 1984. Federal government borgates remained generally within their ranges. rowing continued to absorb more than a fourth of Growth of M2 from the fourth quarter of 1984 to total funds made available to domestic nonfinanthe second quarter of 1985, at an 83A percent cial sectors. An increasing proportion of the annual rate, was a little below the upper limit of Treasury's debt carries distant maturity dates; 90 its range, expressed graphically as a cone based percent of net marketable borrowing this year in the fourth quarter of 1984. However, expan- has been in issues of notes and bonds maturing in sion of this aggregate in June brought its monthly 2 to 30 years. Issues of 20- and 30-year debt, in average a little above the upper end of the range. particular, are increasing and now dominate the Given the deregulation of bank deposit rates, new-issue market for taxable long-term bonds, the growth of M2 should be less affected over accounting for more than two-thirds of new periods of as long as a half year by interest rate offerings in that maturity class. This large voldevelopments because offering yields on most of ume of new long-term debt has changed the its components are adjusted in line with market makeup of the secondary market as well. The rates and many of the shifts of funds engendered supply of Treasury issues outstanding with 15 or by interest rate changes are among assets within more years remaining to maturity has doubled in this broader aggregate. But because the adjust- little more than 2 years, while the amount of ments in offering yields tend to lag market private issues in that maturity range has shown changes, M2 does show considerable short-term little net change. responsiveness to interest rate changes. Deposit Borrowing of state and local governments has rates, especially on money market deposit ac- been unexpectedly strong so far this year, but an counts (MMDAs), fell much less than market unusually high proportion has been for advance yields last fall, so M2 rose rapidly for several refunding of existing issues, as governments months. Then rising market yields in February have sought to take advantage of lower interest and March held back M2. The nontransaction rates. Because the funds borrowed in such operportion of M2 actually declined in April for the ations are reinvested in financial instruments, first time in 15 years, although this may have they have little net impact on credit market been partly the result of difficulties in seasonal pressures. Indeed, most of these funds are readjustment owing to the limited experience with quired by law to be invested in specially issued individual retirement accounts (IRAs), which are Treasury debt, thus reducing the Treasury's excluded from M2, and with tax payments made need for public offerings. Single-family housing out of MMDAs and money market funds. After revenue bonds have slowed from the second half rates fell back, M2 picked up again strongly in of last year. But last year's issues were heavily late spring. concentrated in the later part of the year because of delays in the reauthorization of such bonds; M3 growth, meanwhile, was comfortably withrecent volume has been close to the 1984 average in its target range during the first half of the year. rate. Issuance of large CDs has slowed substantially from last year at both banks and thrift institu- Business credit demands have remained strong Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 683 this year. Slowing growth of both profits and though the government securities market as a expenditures for fixed capital and inventories whole has been performing well, the failures of has, on balance, had little effect on total borrow- three secondary government securities dealers ing needs. Corporate borrowing has been heavier caused losses, sometimes substantial, for some in the short-term paper and loan categories than of their customers. A number of local governin bonds, but not to the same extent as in the ments and savings and loans were among those early part of 1984 when interest rates were rising. hurt, and losses by one large thrift institution in In addition, while new-issue bond volume has Ohio had further repercussions, threatening to picked up in response to the lowest long-term bankrupt the statewide private insurance system yields in five years, maturities of new bond and, for a time, generating some concerns here issues have been concentrated in the short- and and abroad about the safety of other financial intermediate-term areas, as they were last year. institutions. Runs on privately insured savings An unusual portion of the borrowing, also like and loans in Maryland, some of which also lost last year, has been used to finance equity retire- money as a result of the failure of securities ments of one sort or another. Mergers, buyouts, firms, followed the problems in Ohio. Privately share repurchases, and swaps with shareholders insured savings and loans in both states were of new debt for stock have continued on the closed or limited to small withdrawals for a time, same massive scale as last year. Borrowing initi- causing serious inconvenience to some deposiated with the purpose of financing these transac- tors, and some institutions remain closed or tions may have accounted in gross terms for restricted. more than a percentage point of the growth rate However, these various problems have been of total nonfinancial debt over the first half. But relatively well contained, without significant efsuch an estimate may overstate the net effects of fects on other institutions and markets. A numrecent corporate recapitalizations on debt ber of institutions have switched to federal insurgrowth. A number of firms involved in mergers ance. And the Federal Reserve, acting in its role or restructurings this year and last have recently as lender of last resort, made advances to noncompleted large asset sales, some for the explicit federally insured thrift institutions in Ohio and purpose of repaying debt. Furthermore, merger Maryland to help facilitate adjustments in the activity may be indirectly responsible for some face of large deposit outflows. For a while, the of the increased new equity offerings because of borrowing affected the amount of adjustment its generally stimulative effect on stock prices as credit at the discount window but because of the funds paid to shareholders are reinvested. special conditions did not add to reserve market Household borrowing also has remained pressures as perceived by other institutions. Afstrong. Demand for mortgage loans has been ter a time the borrowings were classified as buoyed by declining interest costs. At the lower extended credit. rates, households have found adjustable-rate The thrift industry as a whole continues to loans less attractive than last year, reducing from suffer from low net worth and mismatched baltwo-thirds to about one-half the proportion of ance sheets, but the recent declines in interest new conventional mortgages with these features. rates are improving earnings. The Federal Home Installment debt continued to rise faster than Loan Bank Board (FHLBB) has taken a number income in the first half of the year, but the of steps, including increased capital requiresecond-quarter data show some deceleration in ments for rapidly growing institutions, to encourline with signs of a slowing in the growth of age the stabilization of the industry over time. consumption spending on large-ticket items. Capital requirements also have been raised for banks, some of which have suffered from a high incidence of nonperforming loans and loan losses Other Developments in Financial Markets in recent quarters. The troubled loans are concentrated in energy, agriculture, and real estate Signs of strain in financial markets have persist- sectors and to borrowers of some foreign couned this year, but without causing major disrup- tries. Bad news about the loan portfolios of tions in general credit market conditions. Al- individual institutions and other reported losses Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

684 Federal Reserve Bulletin • September 1985 have produced some ripples in market rates has been only relatively limited use of seasonal generally, but spreads between borrowing rates credit owing to the easing of money market of financial institutions and the Treasury have conditions as the spring progressed. been quite low for the most part. To some extent, With regard to conditions among nonfinancial loan losses reflect overly aggressive lending deci- businesses, the prospects of some of those in the sions, but the problems of borrowers in the weaker industries—especially those most adhardest hit industries are partly a result of diffi- versely affected by the high dollar—are subject, cult adjustment to a higher value of the dollar and of course, to considerable uncertainty. But, in lower rates of inflation than were expected when addition, many firms have deliberately chosen a the loans were made. In the agricultural as in more precarious financial structure in order to other sectors, investors and borrowers have dis- enhance current market valuations of shares or covered that the inflation of land and commodity to fend off undesired takeover bids. Nevertheprices can no longer be taken for granted. less, financial markets have not shown general- In light of strains relating to agricultural credit, ized concern about corporate financial structure; the Federal Reserve liberalized its regular sea- notably, spreads between corporate and Treasonal borrowing program and initiated a tempo- sury debt are unusually narrow, having shrunk rary special seasonal program. However, there since the beginning of the year. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

685 Industrial Production Released for publication July 18 materials declined. Second-quarter industrial output was 0.5 percent above the first quarter. Industrial production edged up 0.1 percent in In market groups, production of consumer June following a similar rise in May. At 124.6 goods increased 0.2 percent in June, largely percent of 1977, the new base year, output is 1.8 reflecting a gain in nondurable consumer goods. percent above a year earlier. In June, gains in Autos were assembled at an annual rate of 8.0 production occurred in consumer goods, equip- million units—off slightly from the May rate. ment, and intermediate products; but output of Business equipment, one of the groups affected Seasonally adjusted, ratio scale, 1977= 100 140 TOTAL INDEX 120 Products 100 Materials 1 1 1 1 1 1 140 MANUFACTURING MATERIALS Durable _ N o n d u r a b l e^ _ 120 Nondurable & -J >*>«» * r ^ r^ 100 Energy Durable \y 1 1 1 1 1 I 80 i i i i 1 1 160 _ CONSUMER GOODS 140 _ INTERMEDIATE PRODUCTS Nondurable Business supplies 120 r / 100 / \ s J Durable s/ Construction supplies J | 240 140 MOTOR VEHICLES AND PARTS FINAL PRODUCTS Left scale Right scale 200 120 100 Defense and space 160 _ Business equipment 140 120 100 60 Consumer goods 1979 1981 1983 1985 1979 1981 1983 1985 All series are seasonally adjusted and are plotted on a ratio scale. Auto sales and stocks include imports. Latest figures: June. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

686 Federal Reserve Bulletin • September 1985 1977 = 100 Percentage change from preceding month PPPeeerrrccceeennntttaaagggeee ccchhhaaannngggeee,,, Group 1985 1985 JJJuuunnneee 111999888444 tttooo JJJuuunnneee May June Feb. Mar. Apr. May June 111999888555 Major market group Total industrial production 124.4 124.6 .1 .3 .2 .1 .1 1.8 Products, total 131.6 132.1 .1 .4 .5 .5 .4 3.6 Final products 132.1 132.6 .0 .3 .5 .5 .3 3.4 Consumer goods 120.6 120.8 .2 .6 .1 .6 .2 2.0 Durable 112.3 112.4 .1 .5 -.5 -.5 .1 .7 Nondurable 123.6 123.9 .3 .6 .3 .9 .2 2.5 Business equipment.. 142.1 142.6 -.3 .1 1.3 .0 .3 5.2 Defense and space... 172.6 174.3 1.2 1.1 6 1.5 1.0 10.9 Intermediate products.. 130.0 130.6 .7 .7 .4 .7 .5 4.2 Construction supplies 118.3 118.8 -.5 1.0 .2 1.0 .4 4.0 Materials 114.5 114.2 .0 .1 -.3 -.6 -.2 -.8 Major industry group Manufacturing 126.7 126.9 -.1 .4 .3 .0 .2 2.2 Durable 128.0 128.1 -.5 .6 .3 -.3 .1 2.7 Nondurable 124.9 125.3 .5 .1 .3 .5 .3 1.7 Mining 110.6 110.4 -.9 .9 .2 .0 -.2 -2.7 Utilities 113.0 112.8 2.5 -1.7 -.2 -.5 -.2 1.2 NOTE. Indexes are seasonally adjusted. by definitional changes, increased 0.3 percent 1. The reference year of the index was moved following no change in May and a large rise in from 1967 to 1977 = 100, changing the level of April. Output of defense equipment and of con- the index. struction and business supplies continued to in- 2. The weights used to combine the production crease in June. Materials production, however, indexes were updated through 1977. declined 0.2 percent, mainly reflecting further 3. The number of basic index series was inreductions in basic metals and in equipment creased from 235 to 252. parts. Nondurable goods materials and energy 4. The industry classification of the series now materials changed little. follows the 1977 Standard Industrial Classifica- In industry groups, manufacturing output tion (SIC); the old index used the 1967 SIC. Also, gained 0.2 percent in June, but mining and utility compositional changes have been made in the output was down 0.2 percent. aggregates for a number of groups. 5. Indexes were revised, using various The Revision of the Index' sources, including the 1972 and 1977 Census of Manufactures, the Annual Surveys of Manufac- The 1985 general revision of the index, the first tures through 1981, and others. since 1976 and the sixth since the 1920s, involves 6. New seasonal factors were calculated from the following major modifications: data through 1983 for the individual series and from data through 1984 for the aggregates. The July 1985 issue of the FEDERAL RESERVE 1. Historical data for the seasonally adjusted total index BULLETIN (pp. 487-501) contains an article proand for several main groups of the production index are viding a detailed description of the revision and included in the supplement to this release. A complete historical tape (order no. PB85-217602) of all published series its results. A technical manual, expected to be is available from the National Technical Information Service issued early in 1986, will describe the basic of the U.S. Department of Commerce, 5285 Port Royal Road, concepts; the estimating procedure of the month- Springfield, Virginia 22161; telephone (703) 487-4650. ly series; the benchmarking, aggregation, and Those interested in selected industrial production series may receive copies of printouts that contain up to ten series weighting techniques; and the method of seasonby writing the Industrial Output Section, Division of Re- al adjustment, as well as the uses, limitations, search and Statistics, Board of Governors of the Federal and history of the index. Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

687 Statements to Congress Statement by Paul A. Volcker, Chairman, Board rectly related to protecting the integrity of transof Governors of the Federal Reserve System, actions in the market. before the Subcommittee on Domestic Monetary Moreover, as depositors and taxpayers in Ohio Policy of the Committee on Banking, Finance and Maryland can attest, there have been considand Urban Affairs, U.S. House of Representa- erable costs growing out of recent market weaktives, July 9, 1985. nesses, extending even beyond losses to the parties directly involved in government securi- I appreciate this opportunity to present the views ties transactions. While regulation will not, and of the Federal Reserve on regulation of the can not, avoid all potential losses from fraud or market for Treasury and federally sponsored otherwise, we do believe that registration, inagency securities. My remarks will be relatively spection, and some regulation could help reduce brief, Mr. Chairman, because your subcommit- the risks to third parties. tee is already well informed about the develop- In our view, any structure of regulation for the ments that have prompted consideration of the Treasury market should embody—and be conneed for formal regulation of these markets. fined to—three principal elements. Indeed, you and your colleagues have played a First, it should provide for registration of leading and a very valuable role through the dealers and for authority to bar or limit the years in exploring the difficulties that have arisen participation of those who, through violations of in these markets and the efforts of the Federal securities laws or otherwise, have clearly dem- Reserve and others to deal with them. onstrated that they should not be allowed to Recently, in testimony before another sub- occupy a position of trust in the government committee of the House, I set forth the basic securities markets. While a registration requireposition of the Federal Reserve on the need for ment can raise difficult issues, including the regulation of the market for Treasury securities. necessity to define a dealer, it is important that We have concluded that legislation providing for those who have been disciplined in other markets registration, inspection, and limited regulation of not be allowed to find refuge in trading governgovernment security dealers would be desirable. ment securities—the very securities investors In arriving at this conclusion, we have noted turn to for assurance of relative safety and liquidthat the recent problems have not substantially ity. affected the core of the government securities Second, registration implies the need for cermarket—that is, dealers accounting for the bulk tain minimum guidelines for recordkeeping and of trading activity and marketmaking and for auditing so that continued adherence to the stanparticipating regularly in the distribution of new dards established for registered dealers can be Treasury securities. The market has continued to monitored. To assure the adequacy of these function with a high degree of efficiency and reports and the conformance to standards, legisliquidity. lation should include the authority to inspect We also recognize that any regulation inevita- registered dealers on a regular basis and when bly involves additional costs for at least some of problems are suspected. the participants in the market. However, we Finally, there should be some mechanism for believe that legislation can, and should, be writing and enforcing rules to foster the financial framed in a manner to avoid unnecessarily de- soundness of government securities dealers and tailed and costly regulation and supervision— to encourage, in a limited area, market practices that the mandate given to the regulatory body (or consistent with the safety and the efficiency of bodies) should provide only limited powers di- the market. Obvious cases in point are guidelines Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

688 Federal Reserve Bulletin • September 1985 with respect to capital and such practices as the embody other approaches. Although there are collateralization of repurchase agreements large differences between the two bills in the (RPs). Legislation might permit regulation of scope of regulation, both bills would center the certain other practices—such as appropriate responsibility for registration and regulation in margins or when-issued trading, if needed—but the Federal Reserve. authority should be confined to areas that in- The Federal Reserve does have a strong intervolve a direct threat to the integrity of the est in seeing that the job of overseeing the marketplace. government securities market is done well, that Let me underline this last point. The potential the integrity of the marketplace is reinforced, costs of highly detailed and expansive regula- and that regulation not be unduly burdensome. tions are real. Preserving the extraordinary li- Reflecting those interests, we expect to continue quidity and resiliency of this market is essential to play a key role in the surveillance of the to the conduct of monetary policy and to the primary dealers with whom we trade. We would management of the public debt. Official intrusion also want to work closely with those responsible into this market beyond that considered abso- for registration and for rulemaking authority genlutely essential to promote its safety and sound- erally. We have not felt it necessary or sought, ness—for example, imposing on this market the however, to have these latter responsibilities degree of regulation characteristic of other secu- directly under our authority. Alternative arrities markets—is unnecessary and could impair rangements would be consistent with the requireits basic efficiency and liquidity. Within the ments as we see them. limited framework that we would propose, costs For instance, an alternative arrangement to the of regulation would be quite modest relative to "joint proposal" with some appeal would fit the size of the market, and regulation could regulation and oversight within a framework of a reinforce the performance of, and confidence in, new SRO for dealers in Treasury and federally the market. sponsored agency issues. The SRO approach The framework that we have in mind for would involve directly in the rulemaking process regulation could be implemented through a num- those with the fullest knowledge of market pracber of different administrative structures to de- tices and the most intense interest in minimizing ploy effectively the expertise of the relevant the burden of regulation. The mandate for ruleregulatory bodies in the process of registration, writing provided that such an SRO should be supervision, and regulation. One such approach carefully prescribed and limited. The SRO is embodied in the joint proposal developed by would, of course, need to report to, and be the Treasury, the Securities and Exchange Com- subject to the jurisdiction of, a federal agency or mission, and the Federal Reserve. That propos- some combination of agencies. We believe that al, as you know, provides for registration with we should participate in that oversight process. the Treasury, or with the Securities and Ex- Your bill, H.R. 2521, captures some of the change Commission (SEC) if the preference of advantages of this approach by creating an advisthat agency were to be adopted, basic rulemak- ory council to work with the Federal Reserve, ing authority by the Treasury in consultation although the council would have no legal responwith the Federal Reserve, and enforcement by sibility for rulemaking. If rulemaking were in any banking agencies or by existing self-regulatory event narrowly circumscribed by law, an advisoorganizations (SRO) under supervision by the ry council might serve as an alternative to an SEC, depending on whether the dealer firm is a SRO. bank or a nonbank. That proposal encompasses The bill that was introduced by Congressmen all the elements that we consider necessary, Dingell and Wirth simply transformed an existing including limitation on the scope of regulation. SRO, the Municipal Securities Rulemaking Properly implemented, with ample consultation Board (MSRB), by providing it with authority between Federal Reserve and the Treasury, we over the entire government market. We have would find this approach acceptable. opposed this proposal because the two mar- The two bills under specific consideration by kets—for federal and municipal securities—are this subcommittee—H.R. 2521 and H.R. 1896— so different. The authority of the MSRB is con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 689 siderably broader in scope than we view as applicable, in their essentials, to all dealers. It necessary, growing out of the regulatory needs of would seem to us most practical in that context a market with a large number of small issuers, a to vest the basic rulemaking authority for the multiplicity of issues and financing techniques, dealer market in one federal authority (whether a and small investors. At the same time, the MSRB single agency or some combination). has no, or little, experience with one of the H.R. 2521 seems to rely on the Federal Reprincipal problems in the Treasury market, colla- serve to inspect the nonbank secondary dealers, teralization of repurchase agreements, since that rather than an existing SRO. No matter which instrument is not so widely employed in the authority registers these dealers or writes the municipal market. In addition, we question rules for their trading practices, I believe that whether the SEC, acting alone as provided for in routine enforcement could more efficiently be the Dingell-Wirth bill, is the most suitable agen- conducted through existing channels. That ency for exercising ultimate oversight for the Trea- forcement could be accomplished by having nonsury and the sponsored agency market. bank dealers who are not otherwise registered be With respect to the specific provisions of H.R. inspected by the National Association of Securi- 1896 and H.R. 2521, we can see problems with ties Dealers. each. The former is too sweeping; it simply In any event, as I have mentioned, we feel it grants the Federal Reserve Board the authority necessary and appropriate to continue our surto regulate government securities dealers with- veillance of all primary dealers through the Fedout specifying the nature of that regulation or its eral Reserve Bank of New York. I do not believe purpose. As I stated before, in our view any that we need any new or special legislative base regulatory authority over this market given to for that effort. any agency should be strictly limited to those We will continue to insist that primary dealers market practices that threaten the integrity of the play an active role in Treasury financing operamarket. tions and will continue to collect data from them Your bill is in some respects too narrow. For that we need on a regular and a frequent basis. one, regulation of trading practices appears to be And we would anticipate that they will continue limited to the segregation of customer securities to meet high financial standards, even beyond and to the delivery of collateral. These issues those required of other dealers. may be the most obvious ones now facing the In conclusion the Federal Reserve supports market, but I would hesitate to rule out the legislation providing for registration, inspection, possibility of problems emerging in other areas. and limited regulation of dealers in government It is for this reason that I would include authority and sponsored-agency securities. For the reato regulate when-issued trading and to set margin sons indicated, I do not believe that the provirequirements, with the clear understanding that sions of either H.R. 2521 or H.R. 1896, as such authority would not be used unless it were drafted, provide a wholly appropriate framework needed to deal with practices that posed clear for such regulation. threats to the integrity and efficient functioning We do find the joint Treasury-SEC-Federal of the market. Reserve plan acceptable for these purposes. At In addition, rules promulgated by the Federal the same time, we do not exclude the possibility Reserve under your structure would apply only that other regulatory structures could work as to nonbank, nonregistered, nonprimary dealers. well, or even better. Apparently depository institutions and dealers We would, of course, be glad to work further registered with other agencies would be subject with the subcommittee in developing these conto rules of those agencies. But we think that the cepts into appropriate legislation. • basic rules governing dealer behavior should be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

690 Federal Reserve Bulletin • September 1985 Statement by Paul A. Volcker, Chairman, Board production of goods. In contrast, exports have of Governors of the Federal Reserve System, stagnated and now account for only about 14 before the Subcommittee on Domestic Monetary percent of goods output. Policy of the Committee on Banking, Finance I can put the same point another way. Domesand Urban Affairs, U.S. House of Representa- tic final sales—to consumers, to businesses, and tives, July 17, 1985. to governments—appear to have been expanding at a relatively brisk rate of more than 4 percent I welcome the opportunity to review with you so far this year. Domestic output of goods and monetary policy in the context of recent and services has not nearly kept pace, rising at a rate prospective economic and financial develop- of about IV2 percent or perhaps less. That is ments. The economic setting and the decisions of partly because inventory accumulation has the Federal Open Market Committee with re- slowed. But it is mostly because more of the spect to the target ranges for the monetary and domestic demand is being satisfied by growing credit aggregates are set out in the semiannual imports. Humphrey-Hawkins report, which was transmit- That development was true earlier in the exted to you this morning. (See pages 671-84 of this pansion period as well. But we have felt it more BULLETIN.) As usual, I would like to amplify and as growth in demand has slowed to a more develop some aspects of those decisions in my sustainable rate. Another potentially disquieting testimony. development has been the apparent failure of productivity to maintain the strong gains that were achieved earlier in the expansion period. THE ECONOMIC AND FINANCIAL The implication is that the underlying trend may ENVIRONMENT not have increased as much as had been hoped from the poor record of the 1970s. The pattern of slower, and more lopsided, Against those crosscurrents in the economy growth in domestic output that developed during this year, the Federal Reserve, in conducting its the latter part of 1984 became even more pro- open market operations, has not appreciably nounced during the first half of 1985. Manufac- changed the degree of pressure on bank reserve turing activity overall has been essentially flat positions, which had already been substantially after exceptionally large gains earlier in the ex- eased by the end of 1984. In May, the discount pansion period. The farming and mining sectors rate was reduced from 8 percent to lxh percent. have remained under strong economic and finan- That action was consistent with the general tencial pressure. But consumption—supported di- dency of market interest rates to decline further rectly and indirectly by large increases in person- over the period, extending the rather sharp real and federal debt—has continued to rise fairly ductions during the autumn and early winter. strongly. Construction activity has also expand- Both the discount rate and short-term market ed, responding in part to lower interest rates. interest rates in May and June reached the lowest Despite recent losses of manufacturing jobs, levels since 1978. employment growth in services and trade has The relatively "accommodative" approach in been strong enough to keep the overall unem- the provision of reserves has been designed to ployment rate essentially unchanged at about 1V4 provide support for the sustained growth of percent. economic activity against a background of rela- The contrast between marked sluggishness in tively well-contained inflationary and cost presthe goods-producing sector of the economy and sures. Indeed, sensitive agricultural and industrirising domestic consumption and demand is re- al prices—including prices of crude petroleum— flected in continuing strong growth in merchan- have been declining appreciably, and prices at dise imports. Those imports in real terms are up the wholesale level have been almost flat. It is about 60 percent in three years; in manufactured somewhat reassuring that the trend in wage and goods alone the increase has been even more salary increases has, overall, remained at the rapid. Overall, imports have now reached a level sharply reduced pace established at the start of equivalent to 21 percent of the value of domestic the recovery period, although the slowdown in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 691 1. Ml target ranges and actual Ml 2. M2 target ranges and actual M2 Billions of dollars Billions of dollars 89b 9% 1984 1985 Monthly data. Monthly data. productivity has been reflected in higher unit through April was reasonably in line with FOMC labor costs and some pressures on profit mar- intentions and expectations. More recently, in gins. Clearly, even if reduced, some momentum May and June, a new surge in Ml carried that of inflation has persisted in the economy as a aggregate much further above the targeted range. whole, and expectations remain sensitive. But so At the same time, total nonfinancial debt has far this year, price increases have been concen- continued to expand substantially more rapidly trated largely in the service sectors. than the gross national product, propelled partic- Meanwhile, the broader measures of monetary ularly by the federal deficit and consumer credit. growth—M2 and M3—have remained generally As much as 1 percent of that debt expansion can within the target ranges established early in the be traced to a continuing—and, from a structural year. However, currency and checkable depos- point of view, disquieting—substitution of debt its, measured by Ml, have increased much more for equity as a result of mergers and other rapidly than envisaged. (See charts 1-4.) financial reorganization. More generally, these Until May, growth in that aggregate remained developments also point up the apparent depenin an area that was reasonably close to the upper dency of economic growth, under circumstances band of the target range. Given that the more existing this year, on a relatively high level of rapid growth during that period followed some debt and money creation. months of subdued expansion, the outcome Unduly prolonged, those developments would 3. M3 target ranges and actual M3 4. Debt monitoring ranges and actual debt Billions of dollars Billions of dollars 9'/2% t i I i I 1 i i 1 f I I I I 2,800 "I: ••'"•'I•'.•. 1- ^iI I I I I ! I I I 1984 1985 1984 1985 Monthly data. Monthly data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

692 Federal Reserve Bulletin • September 1985 not provide a satisfactory financial underpinning ness" of the unemployment rate nor the projectfor sustaining growth in a context of greater price ed inflation rate is entirely satisfactory, and a and financial stability. For the time being, how- substantial range of uncertainty must be associever, taking account of current and likely eco- ated with any economic projections at this time. nomic developments, the downward pressures As I emphasized earlier, there are sharp differon commodity prices, and the high level of the ences in the performance of different sectors of dollar that has prevailed in the foreign exchange the economy. Demand for and employment in markets, the growth in Ml and debt has not, in services, the sector in which most upward price itself, justified a more restrictive approach to- pressures have been concentrated, continue to ward the provision of reserves to the banking expand rather strongly. Most sectors more imsystem. mediately sensitive to interest rates and mone- After increasing sharply from already high tary conditions—including construction and levels in the early weeks of the year, the dollar automobile sales—have also been performing more recently has fallen back against the curren- relatively well. Other sectors exposed to strong cies of other leading industrial countries, drop- international competition are sluggish, and agriping abruptly over the past week or so to about culture remains under strong financial pressure. the average levels of last summer. At these exchange rates—still about 60 percent above the relatively depressed levels of 1979 and 1980— prospects for stemming the deterioration in our THE BROAD POLICY CHALLENGE trade accounts, much less achieving a turnabout, remain uncertain. Much depends upon the rate of The crosscurrents, dislocations, and uncertaingrowth in other countries that provide the princi- ties in the present situation point up one uncompal markets for our exports and are the source of fortable but inescapable fact. We are dealing our imports. In any event, the potential effects of with a situation marked by gross imbalances that interest rates and decisions with respect to mon- can neither be sustained indefinitely nor dealt etary policy on exchange rates and the external with successfully by monetary policy alone, sector of the economy have necessarily been a however conducted. significant ingredient in FOMC deliberations. • We are borrowing, as a nation, far more than we are willing to save internally. • We are buying abroad much more than we THE OUTLOOK FOR THE ECONOMY are able to sell. • We reconcile borrowing more than we save Members of the FOMC generally have projected and buying more than we sell by piling up debts a pickup in economic activity over the second abroad in amounts unparalleled in our history. half of 1985 and sustained growth through 1986. • Our key trading partners, directly or indirect- In those circumstances, while employment gains ly, have been relying on our markets to support should remain substantial, unemployment would their growth, and even so most of them remain be expected to drop only a little if at all. The mired in historically high levels of unemployoverall rate of price increase would be expected ment. to remain close to the recent pattern, assuming • Meanwhile, our high levels of consumption dollar exchange rates do not vary widely from and employment are not being matched by the recent levels. (See attached table for the numeri- expansion in the industrial base that we will need cal projections.1) as we restore external balance and service our Obviously, neither the anticipated "sticki- growing external debt. • And, after two and one-half years of economic expansion, too many borrowers at home and abroad remain under strain or are overextended. 1. The attachments to this statement are available on At their core, these major imbalances and request from Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. disequilibria may lie outside the reach of mone- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 693 tary policy—or in some instances, U.S. policy Pervasive uncertainty during the latter stages of generally. But they necessarily condition the the recession appeared to affect desires to hold environment in which the Federal Reserve acts, cash. Both circumstances made interpretation of along with all the current evidence about mone- the monetary data particularly difficult, and Ml tary growth, economic conditions, and prices. was de-emphasized. Those circumstances are In all our decisions, whether with respect to not present today, at least not in the same monetary or regulatory policies, we would like to degree. work in a direction that is consistent with reduc- However, one common factor, and an imporing the imbalances, or at the least to avoid tant factor, was at work during both periods. The aggravating them. That sounds obvious and rapid growth in Ml in 1982 and 1983 and this year straightforward. The difficulty is that, as things followed sizable interest rate declines, with a now stand, some policy actions that might seem, lagged response evident for some months. Analon their face, to contribute toward easing one ysis strongly suggests that, as market interest problem could aggravate others. Nor can we rates decline, individuals and businesses are inafford to apply a mere "poultice" at one point of clined to build up cash balances because they strain in the hope of temporary relief at the sacrifice less interest income in doing so. The expense of undermining basic objectives. possibility today of earning interest on checking Our monetary policy actions need to be con- accounts—and the fact that these interest rates ducted with a clear vision of the continuing change more sluggishly than market or marketlonger-term goals—a financial environment in oriented rates—probably increases that tenwhich we as a nation can enhance prospects for dency. sustained growth in a framework of greater sta- Moreover, as I have suggested in earlier testibility. To succeed fully in that effort, monetary mony, the payment of interest on checking acpolicy will need to be complemented by action counts may, over time, encourage more holdings elsewhere. of Ml relative to other assets, or relative to economic activity, than was the case earlier. Partly for that reason, the upward trend in Ml "velocity"—the ratio of GNP to Ml—character- THE 1985 AND 1986 TARGET RANGES istic of the earlier postwar period may be changing. As I indicated earlier, the recent surge in Ml in That trend was, of course, established during a May and June has carried that monetary aggre- period when inflation and interest rates were gate well above the target range set in February. trending upward. In contrast, over the past three M2 and M3, while also rising rather sharply in and one-half years, velocity has moved irregular- June, have remained generally within, or close ly lower, with the declines concentrated in perito, their targeted ranges. Against the background ods of declining interest rates. of a high dollar, the sluggishness of manufac- The earlier 1982-83 period of rapid growth in turing output, and relatively well-contained price Ml was correctly judged not to presage a resurpressures, quick and strong action to curtail the gence of inflationary pressures, contrary to some recent burst in Ml growth has not been appropri- expectations. I would emphasize in that connecate. The potential implications of the relatively tion, however, that Ml growth was moderated strong growth in Ml since last year nonetheless substantially after mid-1983 and that velocity had to be considered carefully in developing our rose during the period of strong economic expantarget ranges and policy approach. sion as anticipated. You may recall that somewhat similar high We simply do not have enough experience growth rates in Ml developed during the second with the new institutional framework surroundhalf of 1982 and during the first half of 1983. At ing Ml, which will be further changed next year that time, important regulatory changes involv- under existing law, to specify with any precision ing new accounts and affecting the payment of what new trend in velocity may be emerging or interest on checking accounts had taken place. the precise nature of the relationship between Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

694 Federal Reserve Bulletin • September 1985 fluctuations in interest rates and the money sup- No changes were made in the target ranges for ply. Moreover, while the surge in Ml, and the M2 and M3 and the associated monitoring range related drop in velocity, can be traced, at least in for debt this year. As was the case at the substantial part, to the interest rate declines of beginning of 1985, the committee would find the past year, the permanence of the change in growth in the upper part of these ranges acceptvelocity will be dependent on inflationary expec- able. The changes tentatively agreed for 1986 are tations and interest rates remaining subdued. For small, limited to a Vi percent reduction in the those reasons, the committee has continued to upper limit for M3 and a 1 percent reduction in take the view that, in the implementation of the monitoring range for debt. policy, developments with respect to Ml be These target ranges are felt to be fully consisjudged against the background of the other aggre- tent with sustained growth in the economy so gates and evidence about the behavior of the long as inflationary pressures are contained. I economy, prices, and financial markets, domes- should note again, however, that members of the tic and international. FOMC are concerned about the persistent debt None of that analysis contradicts the basic creation well in excess of the growth of the thrust of a proposition that we have emphasized economy and historical experience, and theremany times—that excessive growth of money, fore look toward some moderation in that growth sustained over time, will foster inflation. Certain- next year, as reflected in the monitoring range ly the burst in May and June cannot be explained set out. by trend or interest rate factors. But, it is also The uncertainties surrounding Ml, and to a true that monthly data are notoriously volatile, lesser extent the other aggregates, in themselves and sharp increases unrelated to more fundamen- imply the need for a considerable degree of tal factors are typically moderated or partly judgment rather than precise rules in the current reversed in following months. conduct of monetary policy—a need that, in my In all these circumstances, the FOMC, in its thinking, is reinforced by the strong crosscurmeeting last week, decided to "rebase" the Ml rents and imbalances in the economy and in the target at the second-quarter average and to wid- financial markets. That may not be an ideal en the range for the rest of the year to 3 percent situation for either the central bank or for those to 8 percent at an annual rate. That decision exercising oversight—certainly the forces that implies that some adjustment in the base of the give rise to it are not happy. But it is the world in Ml target range is appropriate to take account which, for the time being, we find ourselves. both of some change in trend velocity and a return of interest rates closer to levels that are historically normal. COMPLEMENTARY POLICIES We are, of course, conscious that, because of strong growth in June, Ml currently is high The massive trade deficit that has rapidly develrelative to the rebased range, and the committee oped over the period of economic expansion is contemplates that Ml will return within its range the most obvious and concrete reflection of only gradually as the year progresses. Consistent underlying economic imbalances. The trade defiwith the conviction that a marked slowing in the cit, in an immediate sense, has been primarily rate of Ml growth is appropriate over time, the related both to the strength of the dollar in the committee tentatively set the target range at 4 to exchange markets and to relatively slow growth 7 percent for next year—a decision that will be elsewhere in the world. In effect, much of the reassessed on the basis of the further evidence world has been dependent, directly or indirectly, available at that time. Meanwhile, the lower part on expanding demand in the United States to of the range set for the remainder of this year support its own growth. Put another way, growth reflects the willingness of the FOMC, in appro- in domestic demand in Japan, Canada, and Eupriate surrounding circumstances, to tolerate rope has been less than the growth in their GNP, substantially slower Ml growth for a time should the converse of our situation. And, even with the recent bulge in effect "wash out." surging exports to this market, output has been Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 695 increasing too slowly to cut into high rates of undermines confidence. But such a policy could unemployment in Europe and elsewhere. As a hardly be in our overall interest—it would in fact consequence, the demand of others for our prod- be destructive of all that has been achieved. ucts has been relatively weak. The hard fact remains that so long as we run The strong competition from abroad has, in an massive budgetary deficits, we will remain deimmediate sense, had benefits as well as costs for pendent on unprecedented capital inflows to help this country. It has been a powerful force re- finance, directly or indirectly, that deficit. The straining prices in the industrial sector and in net capital inflows will be mirrored in a trade encouraging productivity improvement. The re- deficit—they are Siamese twins. lated net capital inflow has eased pressures on As things now stand, if our trade deficit narour interest rates and capital markets. We have rowed sharply, both the budget deficit and inbeen able to readily satisfy the higher levels of vestment needs would have to be financed interconsumption driven in part by the budget deficit. nally, with new pressures on interest rates and a But those benefits cannot last. Sooner or later squeeze on other sectors of the economy—some our external accounts will have to come much of which are now doing relatively well, such as closer toward balance. Indeed, as our debts housing, and some, such as farmers and thrift increase, we will have to earn even more in our institutions, already under strong financial prestrade to help pay the interest. sure. The implications for our trading partners In the meantime, the flood of imports and the and for the heavily indebted developing counperceptions of unfairness that accompany it fos- tries would be severe as well. ter destructive protectionist forces. The domes- There has to be a way out of the impasse—a tic investment that we will ultimately need is way that would maintain, and even enhance, discouraged while our companies shift more of confidence in our own economy and prospects their planned expansion overseas. And the larger for stability, a way that would not simply shift the external deficits and the longer they are the pressures from one sector of the economy to prolonged, the more severe the subsequent ad- another, and a way consistent with the economic justments in the exchange rate and in our econo- growth of other countries. But that way cannot my are apt to be. We will have paid dearly indeed be found by U.S. monetary policy alone. for any short-term benefits. What we can do is reduce our dependence on These considerations have tempered the con- foreign capital and on the rising imports to meet duct of monetary policy for some time. Specifi- our domestic demands by curtailing the budget cally, our decisions with respect to providing deficits that importantly drive the process. In reserves and to reducing the discount rate have that sense, the choice is before you—in the been influenced to some extent by a desire to decisions you will make in the budgetary delibercurb excessive and ultimately unsustainable ations that have been so prolonged. strength in the foreign exchange value of the The needed adjustments would be eased as dollar. But we have also had to recognize the well if other industrialized countries became less clear limitations and the risks in such an ap- dependent on stimulus from the United States for proach. growth in their own economies. The possibility at some point that sentiment I am a central banker. I can well appreciate toward the dollar could change adversely, with and sympathize with the priority that those counsharp repercussions in the exchange rate in a tries have attached to budgetary restraint and downward direction, poses the greatest potential particularly to the need to restore a sense of price threat to the progress that we have made against stability in their own economies. They have had inflation. Those risks would be compounded by a large measure of success in those efforts in the excessive monetary and liquidity creation. face of depreciation of their currencies vis-a-vis As I have said to this committee before, there the dollar, which has made the process more is little doubt that the dollar could be driven difficult. The pull of capital into the United lower by "bad" monetary policy—a policy that States, and the reduced outflow from the United poses a clear inflationary threat of its own and States, has also had effects on their own financial Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

696 Federal Reserve Bulletin • September 1985 markets and interest rates, and thus on the all those efforts—most of all those by the borpossibilities for "home grown" expansion. But rowers themselves—will depend upon orderly as those adverse factors diminish in force or even growth, reasonable interest rates, and access to begin to be reversed, opportunities surely exist markets in the rest of the world, which will be for fostering more expansion at home, in their determined by our actions and those of our own interest as well as that of a better balanced trading partners. world economy. All of the industrialized countries, working with the International Monetary Fund, the World Bank, and by other means, need to continue to CONCLUSION support the efforts of much of the developing world to restore the financial and economic We have had a relatively strong economic expanfoundations for growth in their countries. That sion in the United States over the past two and process, under the pressure of the "debt crisis," one-half years as a whole. At the same time, the has been under way for some years. By its rate of inflation has remained at the lowest level nature, the fundamental adjustments required in more than fifteen years. That combination pose challenging questions of economic and po- should be a source of great satisfaction. But two litical management. There is a certain irony in and one-half years is not, in itself, terribly signifiobserving the enormous difficulties in our own cant in the economic life of the nation. What will political process in achieving—so far without count is whether we can build on that progress, success—deficit reductions equivalent to 1 to 2 and extend it over a long time ahead. percent of our GNP while much poorer countries The inherent strength of our economy and the with much greater demands upon them are cut- momentum of our expansion have carried us a ting their deficits by much larger relative long way. We have done a lot to lead the world to amounts. recovery. The longer-term opportunities are still That effort—along with others—is justified there for the taking. But we also do not need to only by its necessity to their own economic look far to see signs of strain, imbalance, and health. It is hardly surprising that progress has danger. been uneven, that from time to time setbacks are In these circumstances, monetary policy has encountered, and that impatience and frustration accommodated a sizable increase in monetary surface politically. But I know of no realistic and credit growth, and interest rates have shortcuts or substitutes for the effort to place dropped appreciably even though they are still their own economies on a sounder footing, any relatively high in real terms. In that way, ecomore than we can ultimately escape our own nomic growth has been supported at a time when responsibilities to put our budget in order. the dollar has been particularly strong and infla- What is so encouraging is that the strong effort tionary pressures, at least in contrast to the 1970s that has been made in most of the indebted and the early 1980s, quiescent. But there are countries is yielding some tangible results. A obvious limitations to the process of monetary measure of growth has been restored in Latin expansion without threatening the necessary America as a whole. With interest rates lower progress toward stability upon which so much and many debts restructured, debt burdens are rests. gradually but measurably being reduced. Plainly, there are implications for other poli- For the most part, the heavily indebted coun- cies as well. tries are still a long way from regaining easy The widely shared sense that other nations access to commercial credit markets. Extraordi- should do more to open markets, to deal with the nary cooperative efforts by the International structural rigidities in their economic systems, to Monetary Fund (IMF), the World Bank, and encourage growth—to get their own houses in commercial banks will continue to be required order—is certainly right. We can legitimately for a time to make sure that external financing cajole, and urge, and bargain to those ends. obligations are structured in a way that matches But there can also be no doubt that it all will ability to pay. As always, the ultimate success of come much easier as the United States does its Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 697 part. Monetary policy must be part of that effort. The success of the world economy—and of our But we also do need to come to grips with the fortunes within it—is in large measure dependent budget deficit. We do need to avoid a witch's on us. That is the inescapable consequence of brew of protectionism. size and leadership. • Chairman Volcker presented identical testimony before the Senate Committee on Banking, Housing, and Urban Affairs, July 18, 1985. Statement by Preston Martin, Vice Chairman, United States. Reductions in taxes in recent Board of Governors of the Federal Reserve Sys- years and increases in government spending tem, before the Subcommittee on Economic Sta- have enhanced the attractiveness of investment bilization of the Committee on Banking, Finance in this country and have raised overall demands and Urban Affairs, U.S. House of Representa- for goods and services. The federal government tives, July 18, 1985. has increased substantially its demands for credit to finance its huge deficits. With Federal Reserve I appreciate the opportunity to discuss with you policy designed to avoid monetizing the deficit, this morning, on behalf of the Federal Reserve real interest rates have been higher in the past Board, developments in the external position of five years than they were earlier in the postwar the United States and related policies here and period. These interest rates, relatively robust abroad. The openness of the U.S. economy is rates of economic growth in this country, both continuously being brought home to all sectors of actual and projected, as well as confidence and our economy. The value of the dollar, other more general "safe-haven" factors, have prodevelopments affecting our exports and imports, duced a record volume of capital inflow from and the inflow of capital from abroad play a abroad, a moderation in U.S. capital outflow, crucial role in determining the growth and the and a rise in the foreign exchange value of the composition of U.S. output and income. Thus dollar. our policies must be deliberate, constructive, The extreme volatility in exchange markets and farsighted; the costs over the long run of earlier this year and especially the dollar's subacting incautiously now are too great. stantial spurt in February provide convincing One of the most significant external economic evidence that expectational and other factors developments for the United States in recent have been at work, as well. However, the decline years has been the dramatic appreciation of the in the dollar since the end of February probably dollar. Since the end of 1980, the international was related again mainly to more fundamental value of the dollar against a weighted average of perceptions—for example, prospects for lower the other G-10 currencies has appreciated on real interest rates on dollar assets in response to balance about 60 percent, despite backing off weaker U.S. economic growth and the market's significantly from its peak earlier this year. The views of improved chances for reducing our appreciation has been great even after allowing budget deficit. Another factor may have been the for the somewhat faster rate of increase of prices situation of thrift institutions in Ohio and elseabroad than in the United States. The increase in where, which received widespread and, perhaps, the dollar's value has been greater against Euro- exaggerated attention abroad. pean currencies than against the Japanese yen or The rise in the international value of the dollar the Canadian dollar. In a sense, those latter two since 1980 has been a significant proximate faccurrencies have been strong, just not as strong as tor contributing to our unprecedented deficits on the U.S. dollar. trade and current accounts. From a balance near The factors underlying the dollar's rise are zero in 1980, the current account has moved to a complex. A great deal of the explanation centers deficit at an annual rate of about $125 billion so on a combination of a highly expansionary fiscal far this year and is likely to widen further. policy and a decline in the rate of inflation in the Our current account deficit has reflected pri- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

698 Federal Reserve Bulletin • September 1985 marily the unparalleled increase in our trade otherwise have been the case. As a consequence, deficit, which occurred despite the significant there has been less crowding out in the interestdecline in the value of oil imports from $80 billion sensitive sectors of the U.S. economy, and, in in 1980 to less than $50 billion at an annual rate in particular, there has been more private investthe first half of 1985. The rise in the international ment and housing activity. value of the dollar has reduced the competitive- At the same time, the sharp increase in our ness of U.S. goods, both in foreign markets and imports has provided needed stimulus to the here at home. Thus, the growth of our exports world economy and has helped improve the has been held down. At the same time, imports balance of payments of some heavily indebted into the United States have grown phenome- developing countries. nally—about 65 percent in volume since 1980. We also have experienced lower inflation rates The rise in the dollar has not been the only than we would have otherwise, given the vigor of factor underlying the deterioration in our trade the 1983-85 U.S. recovery and the robust inposition. Another factor has been that economic crease in U.S. employment. The cost of the growth in our trading partners generally has goods that we purchase has been lowered— lagged significantly behind growth in the United directly, because of the lower price and the ready States, and their demands for imports have for availability of imported goods and materials, and this reason grown more slowly. Among the in- indirectly, because U.S. producers have been dustrial countries, this has been especially true in forced to adopt more efficient techniques to Europe, where growth of real GNP has averaged modernize and to cut costs, to innovate, and to only about IV2 percent over the past three years. invest in productivity enhancements to compete Many developing countries, notably in Latin with foreign producers. The rate of increase in America, the Far East, and Eastern Europe, U.S. labor productivity has improved on balhave adopted adjustment programs to service ance, although it remains less than that in some their external debts, which temporarily have had of our major trading partners. an adverse effect on their imports. Weak global On the negative side, of course, have been demand and high real interest rates made the severely adverse effects on some sectors of the servicing of their external debts increasingly U.S. economy. These are the sectors that are difficult. most vulnerable to foreign competition—both Given the importance of these relative demand those whose sales abroad have been eroded and factors in the evolution of the U.S. trade posi- those who have lost shares of domestic markets tion, it is oversimplified but nevertheless instruc- to less expensive foreign products. Agriculture, tive, I believe, to characterize external develop- manufacturing, and even "high technology" ments over the past few years in the following goods producers have lost world and domestic way. There has been a shift in the demand for market shares. Whereas more than seven million claims on the U.S. economy by foreign, as well jobs have been created since the end of 1980 in as by U.S., investors that has bid up the value of the private service sectors—which, by their nathe dollar sufficiently to generate a current ac- ture, are less open to foreign competition—the count deficit that corresponds to the desired number of jobs in our manufacturing industries increase in net claims on the United States. This has actually declined. Indeed, there is some shift contrasts with earlier periods in which it evidence of U.S. firms beginning to shift some of was typically believed that the exchange value of their investment and production abroad. the dollar moved to equilibrate trade or current Without in any sense denying the social and account positions; when those positions became the economic costs that these adjustments entail, too large or too small, a change in exchange rates I should reiterate, however, that the high value was expected to correct the situation. of the dollar and the external developments that I The more recent evolution of our external have cited basically have shifted some of the situation has both positive and negative implica- burden of accommodating to the government tions for the U.S. and world economies. On the deficit away from traditional interest-sensitive positive side, our government budget deficit has sectors and toward sectors relatively sensitive to been financed at lower interest rates than would movements in exchange rates. The specific sec- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 699 toral impacts have been mitigated, but not avoid- financing current consumption—for example, by ed, by the strong overall recovery. the federal government—since in that case our The severe strains that were imposed on cer- ability to consume in the future will be adversely tain sectors of our economy have contributed to affected. However, I have argued already that serious pressures for more restrictive trade poli- we have had more investment in this country cies. I will come back to this issue in a few than we would have had without the inflow of minutes when I discuss alternative policy re- capital. While it is impossible to know precisely sponses. But it should be clear that such protec- how much more investment we have had, to tionist pressures must be resisted. This practice some extent at least the inflow of capital has had follows from our general policy of seeking to as its direct or indirect counterpart some inenhance the benefits of international trade for crease in the productive capacity of this country our citizens. Moreover, so long as we continue to that will facilitate the servicing of our debt. run a huge federal budget deficit, the inflow of Also worrisome is the inference, based on the capital from abroad and our access to foreign experience of several developing countries in goods provide welcome relief to our credit mar- recent years, that the vulnerability of an econokets. my to shocks can be very sensitive to the level of Let me turn now to one other implication of its net external debt. But there are two major our large and growing current account deficit, differences between our situation and that of namely, the continuing erosion of the net exter- many of the financially troubled developing nal financial position of the United States. Data countries. First, we are not building up large recently released by the Department of Com- debts denominated in foreign currencies. Secmerce suggest that the United States became a ond, creditor confidence in the ability of the net debtor to the rest of the world sometime in United States to service its debts is supported by spring 1985, falling from a peak position in which a healthy, flexible economy with a large and the United States had net claims on the rest of diversified tradable goods sector and a broad and the world of about $150 billion at the end of 1982. dynamic capital market. These statistics are subject to a variety of Nevertheless, we must recognize that foreigndefects. For example, our stock of gold— ers will not forever invest an increasing share of amounting to more than 260 million ounces—is their wealth in this country, and we might wonvalued in these statistics at about $42 per ounce, der whether it is appropriate for one of the compared with a market price now of more than richest countries in the world to be a net absorb- $300 per ounce. Similarly, the stock of U.S. er of capital from the rest of the world. direct investments overseas, as well as foreign- I want to emphasize that we must protect ers' direct investments here, are expressed only against the risk that the factors inducing invesat book value. At the same time, none of the tors to bid up the price of dollar assets could statistical discrepancy in our balance of pay- reverse abruptly. If that were to happen at a time ments accounts has been counted as net capital when credit demands in this country were still inflows, contrary to the conventional wisdom strong, especially those from the federal governthat much of the discrepancy takes that form; to ment, the resulting pressures on our financial that extent, net foreign claims on the United markets could have seriously harmful conse- States are understated. quences. Interest rates would be driven up, Notwithstanding these statistical issues, it re- private investment would be curtailed, and the mains clear that if the United States is not now a housing sector would be hard hit. net debtor country, we probably soon will be as It will come as no surprise to you, therefore, we continue to run current account deficits of that I believe prompt action to reduce the federal well over $100 billion a year. budget deficit is an essential aspect of the appro- One might ask, "How serious is this develop- priate policy response to the problem of our twin ment?" One answer is that an increasing burden deficits. Indeed, action in this area is long overwill be placed on current and future generations due. In particular, I believe that progress in to service that debt. This burden will be especial- controlling the growth of the spending side of the ly onerous to the extent that foreign funds end up budget is vital. Reductions in the government's Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

700 Federal Reserve Bulletin • September 1985 demand on savings and on resources tend to inputs in production processes. By raising reduce pressures on interest rates and to provide prices, these barriers threaten to reignite the scope for strong private investment and for em- inflation psychology we have struggled so painployment growth. Such a process would also fully to subdue. Import barriers distort the allotend to reduce upward pressures on the dollar cation of domestic resources and enable producand relieve some of the excessive burden on ers to postpone the investment and the many of our manufacturing firms and on our rationalization of production that ultimately is farmers. necessary. Barriers can involve significant eco- In contrast to the need to tighten the budget nomic setbacks from some of our friends and position in the United States, I am inclined to trading partners—again, including those in Latin believe that there is scope for more vigorous America—for whom access to markets in induseconomic expansion abroad. Authorities in other trial countries is vital in economic, social, and industrial countries have been reluctant to alter political terms. existing policies, which have been aimed at disin- Trade barriers often violate or undermine inflation and moderate economic growth over the ternational agreements. Especially in such cases, medium term. They apparently are concerned but surely not only then, they are likely to about the financing of government deficits, about provoke retaliation and so threaten the global the excessive role of the public sector in econom- trading order on which U.S. exporters and thereic decisionmaking, and about the potential that a fore the U.S. economy in general importantly lowering of interest rates could weaken the value depend. of their currencies and apply upward pressure on I have not so far explicity addressed the role of domestic prices. These are legitimate concerns, monetary policy in dealing with our external but they should be balanced by an awareness of situation. An aggressive policy by the Federal the costs and the dangers of continued high Reserve of massive money growth to bring down unemployment and continued international im- short-term interest rates to reduce the value of balances. Moreover, more rapid expansion in the dollar would set the stage for higher inflation several countries together would be mutually in the future. Excessively expansionary monesupportive. Tax revenues would be enhanced, tary policies obviously would not be a solution to and the value of their currencies would tend to the yawning trade deficit. The experience in the move together against the dollar. Indeed, the late 1970s taught us harsh lessons about the prospects of stronger economic growth actually disruptive influence of high and variable inflation could tend to raise the demand for investments in the United States on the domestic and world denominated in those currencies. economies. This experience also has demonstrat- A more vigorous expansion abroad—together ed the high costs for the economy of substantialwith an improvement in the U.S. fiscal posi- ly reducing inflation once it gains momentum. tion—would over time help to redress some of This is not to say that the Federal Reserve is the major distortions in the global economy indifferent or insensitive to the problems that we today. These distortions have adversely affected have discussed this morning. The Board and the not just the U.S. economy but the economies of Federal Open Market Committee take into acother industrial countries, as well, and have count the foreign exchange value of the dollar exacerbated the difficult adjustment process now and the international economic situation explicitunder way in many of the developing economies, ly in their policy deliberations. Moreover, to the especially in Latin America. extent that the dollar and the current account In the face of the basic imbalances in the U.S. deficit affect U.S. prices, growth, and employand world economy, resort to increased trade ment they are taken account of implicitly, as protection would be pointless and, in the long well. But the overriding task of monetary policy run, counterproductive. The list of reasons for is to ensure long-run price stability, and thereby opposing the imposition of additional import sustainable long-run economic growth. We canbarriers is well known. Import barriers raise not afford to jeopardize the successful accomprices facing U.S. consumers and U.S. produc- plishment of that task. ers who use imported goods and materials as We cannot deny that we have economic prob- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 701 lems. What I have argued this morning is that ances. But the most fundamental force behind those problems derive from fundamental imbal- the problems that I have discussed is the huge ances that must be corrected. The search for federal budget deficit, and thus substantial reeasy, short-term palliatives such as trade barriers ductions in this deficit offer the best long-run or overly expansionary monetary policy cannot solution to trade imbalances. Although the Fedultimately be successful, and will only distract us eral Reserve will continue to consider exchange from the tough decisions that must be made. rates and trade imbalances in its deliberations, There are, of course, a number of developments we should not be looked to as a main source of a that would help in a real way. I am optimistic that solution. As I mentioned earlier, any attempt by the rapid growth in the U.S. capital stock so far the Federal Reserve to bring exchange rates in this recovery and other productivity-enhanc- down through highly expansionary policies ing developments will improve the competitive- would inevitably lead to more inflation. Thus our ness of U.S. products in world markets. Moder- best hope for correcting international imbalances ately faster growth in industrial countries abroad lies with efforts by the Congress and the adminisalso would help to correct international imbal- tration to cut federal deficits. • Statement by Paul A. Volcker, Chairman, Board that seem to me very much in accord with the of Governors of the Federal Reserve System, larger interests of the United States. before the Subcommittee on International Devel- I believe that the constructive response of opment Institutions and Finance of the Commit- these institutions to the severe debt and adjusttee on Banking, Finance and Urban Affairs, ment problems that emerged in the early 1980s U.S. House of Representatives, July 30, 1985. illustrates these points. In the initial stages of the international debt crisis, the Fund played an I appreciate your invitation to appear before this essential and, in key respects, an innovative role. subcommittee to discuss the multilateral devel- It worked with borrowing countries to develop opment institutions and their role with respect to strong adjustment programs that could command the debt and growth problems in the developing international support. Concurrently, it helped countries. Over the years I have had some op- coordinate an unprecedented international coopportunity to observe the Bretton Woods institu- erative effort to provide sufficient external funds tions—the International Monetary Fund (IMF) to meet immediate needs and to support the and the World Bank—and, to a much lesser adjustment efforts of the countries. degree, the regional development banks. All The World Bank and the regional lending these institutions, in my judgment, have impor- institutions, geared toward a longer-range pertant ongoing roles to play in safeguarding inter- spective and project lending, could not, in the national stability and in promoting sound growth circumstances, at first respond so forcibly. Inin the world economy. deed, borrowing countries cut back on some In the process, these institutions necessarily investment projects that could have received have to adapt their programs and approaches to support by the World Bank. new circumstances as they emerge. That task is Now, many of the borrowing countries are, or not an easy one for large institutions, and partic- should be, moving into a second stage, looking ularly for those institutions that must operate beyond the immediate need for budgetary and within the framework of a wide international monetary adjustments to the essential need to consensus. At the same time, it is the fact that sustain growth within the constraints of servicing these institutions are international, with mem- existing debt and the less ready availability of berships drawn from all nations other than the private credit. In that context, the role of the USSR and most of its satellites, that provides a World Bank and of the regional development sense of cohesion and of political legitimacy that lending institutions is likely to become much is essential to the success of their efforts—efforts more critical. The need for innovative approach- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

702 Federal Reserve Bulletin • September 1985 es and for even closer cooperation with the Fund Restructuring of old debt and of some new seems to me evident. private credit would typically be necessary to There is a natural division of labor between the provide enough time for the adjustment process two Bretton Woods institutions that must be to be effective. By working with the Fund, respected. The Fund is concerned with monetary lenders could both be better assured that approstability, with balance of payments equilibrium, priate adjustment programs were undertaken and and with the broad economic policies necessary that financial needs were appropriately assessed. to support that equilibrium. The Bank is con- From the viewpoint of the Fund, orderly reficerned with longer-term development and with nancing of outstanding debt and the provision of projects and policies that are designed to support new private credit, substantially supplementing that development in particular sectors of the its own resources, provided essential financial economy. support during the period of economic adjust- These are valid distinctions. Essentially the ment. roles are complementary, not competitive. But in With its traditional emphasis on investment practice, both institutions serve as sources of planning and on project lending, the World Bank finance, as purveyors of policy analysis and was not in a position to react as quickly as the advice to their members, and as forums for IMF to the immediate adjustment needs of the economic consultations among governments. In major borrowing countries. Nor were borrowing specific areas, those functions can overlap and countries—faced with overwhelming short-term should be coordinated. Management of the "debt needs to cut back on budget deficits, to bring problem" provides apt illustrations. monetary expansion under control, and to adjust exchange rates—able to give priority attention to long-term development and investment pro- FIRST RESPONSES TO THE grams. Instead, cutbacks in overall investment INTERNATIONAL DEBT PROBLEM and consumption expenditures by governments became unavoidable. In these circumstances, Beginning in 1982, many foreign borrowers, prin- both existing and new investment projects assistcipally in Latin America but also in other areas of ed by the World Bank and other donors tended to the world, experienced an abrupt curtailment of slow down rather than increase. their access to new loans from the private mar- Even in the "crisis" stage, however, there ket. The Fund responded by assisting in the have been clear opportunities for mutually supdesign of stabilization programs to help restore portive approaches by the Fund and by the confidence and external balance. It also provided Bank. temporary financial assistance to many of the In advising countries about "adjustment" promost troubled borrowers. In one perspective, grams, the Fund is always concerned with meathat kind of work is a normal part of the Fund's sures that should help promote economic effibusiness. But it has been without precedent in ciency and long-term development. Flexible scope and challenge. More or less simultaneous pricing policies, more open and less discriminanegotiations have been required with a large tory trade practices, and appropriate exchange number of member countries in a highly charged rates are normal parts of Fund-sponsored proatmosphere. Not only were the fortunes of par- grams. Such approaches are consistent with, and ticular countries at stake, but also the perfor- typically crucial to, long-term growth. At the mance of the world economy and of the financial same time, the Bank was, in fact, able to increase or to speed up its disbursements of funds to system as a whole. several of the countries that were affected by the In that situation, the Fund became involved to debt crisis. an unusual degree in consultations with the borrowing countries' commercial bank and official That response was assisted by the capability creditors. Those lenders clearly recognized that that the World Bank has developed in 1979 for individual, uncoordinated responses to the crisis nonproject lending through so-called structural could not serve their mutual interest in the adjustment loans (SALs). The Bank's new comorderly adjustment and the servicing of loans. mitments for SALs and for broadly similar sec- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 703 toral adjustment loans expanded from less than LOOKING AHEAD $Vi billion in fiscal year 1980 to more than %2lh billion in fiscal year 1984, before declining some- The particular circumstances in Colombia are what in the fiscal year just ended. unique, and the arrangements in that country do The SALs and the sectoral adjustment loans not necessarily provide a precise prototype for have the advantage of being fast disbursing so others. However, all the heavily indebted counthat they can have an immediate effect on the tries in Latin America and elsewhere need to short-term balance of payments financing re- move from a situation of endemic financial crisis quirements. At the same time, they are strongly to another stage in development, looking toward linked to policy actions that are designed to what is necessary to sustain growth. As they do promote economic efficiency in particular sec- so, the particular skills and the resources of the tors and to support growth. The recipient gov- World Bank become increasingly relevant. ernment, in effect, commits itself to the changes Heavy reliance on the shorter-term tools of the in specific policies that will be sustained over IMF should then be phased down and out. time and that are expected to have a material Clearly, either or both of these institutions can positive impact on the effectiveness of its invest- only play a supporting role in the economic ment expenditures and on the growth of the development of a country. The borrowing couneconomy. tries themselves must maintain a disciplined bud- There is, by now, a record of accomplishment getary and financial environment, enabling them by these kinds of programs in some countries. to consolidate the essential gains that they have For example, Turkey has undertaken a series of made in achieving better balance in their external major reforms, including major steps toward accounts and to respect the tight constraints that import liberalization, decontrol of interest rates, still prevail with respect to their access to exterand reform of state economic enterprises with nal finance. I believe that these countries will the support of the World Bank. also have to encourage more open and competi- These efforts of the Bank overlap those of the tive economies that are able to sell into world Fund in two respects. The quick-disbursing Bank markets as well as to increase their productivity. loans help provide the necessary external financ- They will need well-conceived investment proing for the borrowing countries. And, at a sec- grams. More generally, they will need to encourtoral or "micro" level, the policies supported by age economic efficiency and well-functioning the Bank should reinforce and undergird the markets in agriculture, industry, and finance. efforts of the Fund to promote economic efficien- These are the kinds of things that the World cy and competitiveness. Bank and its affiliate, the International Finance The recent efforts by the Fund and by the Corporation (IFC), working especially with the Bank in Colombia exemplify these relationships, private sector, can support, but not impose. and could have implications for future cooper- Internal reform is critical in circumstances in ation. While that country has not requested or which access to new foreign bank and trade received IMF financial assistance, it has kept the credits seems bound to remain limited for the Fund fully informed in developing its economic time being. The hope that was occasionally exprogram. Just last Friday, the Fund, in turn, pressed for really major increases in long-term agreed to monitor progress in implementing the official lending on concessional terms to the economic adjustment program, that, in the judg- middle-income developing countries does not ment of the Fund, is broadly appropriate to the appear to be politically realistic. Moreover, I needs of Colombia. Meanwhile, the World Bank doubt that industrial countries are prepared to is a major lender to the country, both for specific ease debt burdens substantially by taking over projects and for sectoral adjustment. The size of and by writing off existing debt to private lendthat lending program has been facilitated by the ers. Nor do such approaches seem to me essenefforts of Colombia to implement suitable adjust- tial if well-conceived adjustment efforts are ment measures. The staffs of both institutions maintained. will work together in assessing Colombia's prog- In time, renewed confidence could end capital ress. flight and induce repatriation of capital by the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

704 Federal Reserve Bulletin • September 1985 citizens of the borrowing countries themselves as some resumption of private lending, through sowell as fresh flows from abroad. That process called cofinancing or otherwise. would be immensely helpful and the best possi- You are aware that the World Bank now has ble evidence of success. But it is, of course, under development a proposed Multilateral Independent upon a sense of sustained economic vestment Guarantee Agency (or MIGA). MIGA performance. would be designed to enhance prospects for The implication of these conditions is that it is foreign direct investment by providing guarantoo early for the major borrowers to plan on tees against noncommercial (that is, currency significant net private inflows of capital. Imports transfer and expropriation) risks. Here in the will not be able to grow over time at a rate United States the Overseas Private Investment substantially exceeding the growth in exports. Corporation has offered such guarantees to U.S. But that is not a recipe for stagnation, so long as investors in many countries for more than 20 exports, in fact, grow. years, with a considerable measure of success. One of the lessons of experience is that rapid Some other countries have comparable progrowth in developing countries, without exces- grams. But, properly structured, I believe that sive dependence on new debt, must go hand in the wider availability of such guarantees on a hand with participation in international trade. multilateral basis could help improve the climate That is why a competitive and a relatively open for direct investment in the developing countries. economy is so important. This theme is one that None of this suggests to me that the major the World Bank has stressed in its structural and focus of the World Bank on project lending will sectoral adjustment lending. not, or should not, continue. The inherent disci- Without doubt, there will be more opportuni- pline in project lending—the need to relate a loan ties for working with borrowing countries to help to tangible projected returns—is important. But encourage the process. In some countries, for it also is quite possible that, as a matter of instance, there are urgent needs to improve the relative priority, heavily capital-intensive, longefficiency and the effectiveness of agriculture, of lead-time projects, with returns deferred far into transport, and of domestic financial markets and the future, could give way to areas in which more institutions. Review of the structure, operation, effective use of the existing capital stock is and performance of state enterprises is sorely emphasized, with quicker and more evident reneeded, including the possibility of greater pri- turns. vate participation and of incentives in some I will not pretend to an expertise in these areas cases. Structural distortions that hamper or dis- that I do not possess. But certain broad conclucourage sectors of the economy that potentially sions do seem valid to me. could become the most dynamic and efficient • In the World Bank Group and the regional need to be eliminated. That in turn may require lending institutions the world has an enormously import liberalization so that companies that have valuable resource. That resource lies not just in high export potential can in fact make use of the their technical skills and financial resources. As most rational and efficient production tech- international institutions, they are in a uniquely niques. Much of this seems to be recognized, for advantageous position for working constructiveinstance, in the latest steps announced by Mexi- ly with developing countries in the common co only last week, in conjunction with actions to interest. reinforce budgetary discipline and to adjust ex- • The role of those institutions will be more change rates. important—indeed potentially crucial—in Latin In all these areas, there should be potential America and elsewhere if those countries are to opportunities for constructive collaboration by be able to restore strong and sustained growth in the World Bank, both in consultation as to the the wake of the debt crisis. design of programs and in financing, dependent • The development institutions can only be on effective implementation. That official financ- effective as they build on the stabilization efforts ing not only will help the borrowing countries to of the countries themselves—the effort that has cover external needs during a period when pri- been so strongly supported by the IMF. vate financing is so slack but also will encourage • As that implies, the efforts of the IMF and the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 705 World Bank in heavily indebted countries have mies in the industrialized world. Here and elsebecome increasingly intertwined, and the need where, we must maintain reasonably open for close cooperation and operating relationships markets for what others can produce more effibetween the institutions has greatly increased. ciently and economically. The developing coun- • The entire effort deserves the continued tries, in turn, can again become the most promisstrong support of the United States, including, as ing and the most rapidly expanding markets for and when the need is demonstrated, financial our products, as they were during much of the backing in the form of capital increases. 1960s and 1970s. Flourishing two-way trade will Perhaps I need not emphasize at length that be both the means for recovery and growth and a the success of all these efforts is also fundamen- measure of our success. • tally dependent on prosperous, growing econo- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

706 Announcements LYLEE. GRAMLEY: Federal Reserve wire transfer system in excess RESIGNATION AS A MEMBER of the balance in its reserve or clearing account, OF THE BOARD OF GOVERNORS or it has sent more funds over a private wire than it has received. Lyle E. Gramley resigned as a member of the In adopting its policy statement to reduce Board of Governors, effective September 1, daylight overdrafts, the Board agreed to set up 1985. Following is the text of Governor Gram- an Advisory Group to study any and all matters ley's letter of resignation to President Reagan: that could reduce risk on large dollar transfers. In addition to Bullard, the Advisory Group June 26, 1985 includes the following members: William P. Ballard, Executive Vice President Dear Mr. President: and Cashier, Citizens and Southern Georgia Corporation, Atlanta, Georgia. It has been a great privilege to serve as a Member of Nathan C. Collins, Executive Vice President, the Board of Governors of the Federal Reserve Sys- Valley National Bank of Arizona, Phoenix, Aritem during the past five years. For personal reasons, zona. however, I must submit my resignation eflFective Sep- Thomas A. Cooper, Executive Vice President, tember 1, 1985. Bank of America NT & SA, San Francisco, Sincerely yours, California. David L. Eyles, Executive Vice President and Lyle E. Gramley Chief Credit Officer, Chemical Bank, New York, New York. Donald R. Hollis, Senior Vice President, First APPOINTMENT OF LARGE DOLLAR Chicago Corporation, Chicago, Illinois. PAYMENT SYSTEMS ADVISORY GROUP Roger K. Lindland, Senior Executive Vice President, Great American First Savings Bank, The Federal Reserve Board has announced the San Diego, California. appointment of a 14-member panel to assist in David O. Nordby, Executive Vice President, the development of its program to reduce risk on Mellon Bank, N.A., Pittsburgh, Pennsylvania. large dollar transfer systems. Peter C. Palmieri, Vice Chairman, Irving Trust Roland K. Bullard III, Executive Vice Presi- Company, New York, New York. dent of The Philadelphia National Bank, has Seymour R. Rosen, Vice President, Citibank, agreed to serve as chairman of the panel, called N.A., New York, New York. the Large Dollar Payment Systems Advisory John W. Sapanski, President and Chief Oper- Group. ating Officer, Dime Savings Bank, New York, On May 17, 1985, the Board announced a New York. statement of policy to control and reduce risks to O.J. Tomson, Chairman of the Board and depository institutions that participate in large CEO, Citizens National Bank, Charles City, dollar wire transfer networks. Large dollar net- Iowa. works are an integral part of the payment and Flavian E. Zeugin, First Vice President, Swiss clearing mechanism and daylight overdrafts on Bank Corporation, New York, New York. these systems now total about $110 billion to William C. Dudley, Vice President, Economic $120 billion per day. Daylight overdrafts occur Analysis Department, Morgan Guaranty Trust when an institution has sent funds over the Company, New York, New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

707 REVISED LIST OF OTC STOCKS EXTENSION OF COMMENT PERIOD ON SUBJECT TO MARGIN REGULATIONS PROPOSED AMENDMENT TO REGULATION Z The Federal Reserve Board has published a The Federal Reserve Board extended the comrevised list of over-the-counter (OTC) stocks ment period from July 12, 1985, to August 30, that are subject to its margin regulations, effec- 1985, on a proposed amendment to Regulation Z tive August 13, 1985. (Truth in Lending) to require lenders to provide The list includes all OTC securities designated more information to consumers about adjustable by the Board pursuant to its established criteria rate mortgages. The proposal was originally pubas well as all securities qualified for trading in the lished May 10, 1985. national market system (NMS). This list includes all securities qualified for trading in tier 1 of the NMS through August 13 and those in tier 2 SYSTEM MEMBERSHIP through July 16, 1985. Additional OTC securities ADMISSION OF STATE BANKS may be designated as NMS securities in the interim between the quarterly publications of the The following banks were admitted to member- Board's list and will be immediately marginable. ship in the Federal Reserve System during the The next publication of the Board's list is sched- period July 1 through July 31, 1985: uled for November 1985. This List of Marginable OTC Stocks super- Colorado sedes the revised list that was effective on May Thornton City wide Bank of Thornton 14, 1985. Changes that have been made in the Florida list, which now includes 2,476 OTC stocks, are Miami Grovegate Bank as follows: 157 stocks have been included for the St. Petersburg Bank of St. Petersburg first time, 122 under NMS designation; 43 stocks Georgia previously on the list have been removed for Martinez First Columbia Bank substantially failing to meet the requirements for Pennsylvania continued listing; 44 stocks have been removed Ebensburg Laurel Bank for reasons such as listing on a national securities Texas exchange or involvement in an acquisition. San Antonio Mercantile Bank and In addition to NMS-designated securities, the Trust Company Board will continue to monitor the market activi- Virginia ty of other OTC stocks to determine which Fairfax ... Fairfax Bank and Trust Company stocks meet the requirements for inclusion and Virginia Beach Bank of Tidewater continued inclusion on the list. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

708 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MAY 21,1985 quarter. Production of defense and space equipment continued to advance, but output in most Domestic Policy Directive other major market sectors fell. Reflecting these widespread declines in output, the capacity utili- The information reviewed at this meeting sug- zation rate for total industry dropped Vi percentgested only a modest pickup in real GNP in the age point to 80.6 percent in April, its lowest level current quarter from the 0.7 percent annual rate since January 1984. of growth reported for the first quarter. Spending The decline in industrial production in April by domestic sectors has been relatively well was associated with further reductions in manumaintained, but a large share of the demand for facturing employment. The loss of 45,000 manugoods apparently has been met by imports rather facturing jobs in April brought the cumulative than through an expansion of domestic produc- loss in that sector to 130,000 thus far in 1985. tion. Broad measures of prices and wages gener- Outside of manufacturing, sizable job gains were ally were continuing to rise at rates close to those reported for April in the services industry and in recorded in 1984. construction. On balance, total nonfarm payroll After declining in March, total retail sales employment rose 215,000 in April compared with rebounded in April to a level nearly 3A percent average monthly gains of 285,000 since last fall. above the average for the first quarter. Gains The civilian unemployment rate remained at 7.3 were particularly strong at automotive outlets percent in April, little changed from the rates and at food and general merchandise stores. recorded over the previous three quarters. Sales of new domestic automobiles have been Information on business capital spending sugrunning at an annual rate of about 8V2 million gested that expansion was continuing at a much units since the beginning of April, in line with the less rapid rate than earlier in the economic strong pace posted in the first quarter and con- expansion, though trends in business equipment siderably above last year's average. Part of the orders placed with domestic producers have recent strength in car sales was attributable to been obscured lately by extreme volatility in below-market financing incentives offered by monthly data for orders of office and computing major manufacturers. equipment. Imports apparently have continued Total private housing starts increased about to account for a sizable share of outlays for 14V2 percent in March to an annual rate of 1.9 equipment, but shipments of capital goods by million units and continued at that advanced domestic producers picked up in February and level in April. Newly issued permits for residen- March. Spending on nonresidential construction tial building fell somewhat in April but, at an has continued at a relatively brisk pace in recent annual rate of nearly 1.7 million units, remained months. Moreover, according to recent surveys in the improved range recorded in the first quar- of business spending plans, firms still expect to ter. Sales of new and existing homes improved in increase nominal outlays for plant and equipment March, the latest month for which data were by 8V2 to 11 percent in 1985. available, as the general decline in mortgage The producer price index for finished goods credit costs continued to bolster demand. rose 0.3 percent in April, somewhat more than in The index of industrial production declined 0.2 other recent months. The rise was attributable to percent in April, after rising little in the first a surge in energy prices that apparently reflected Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

709 a temporary reduction in petroleum inventories; Growth in Ml, which had slowed markedly in prices of other finished goods changed little or March from the rapid pace of earlier months, declined. A sharp increase in prices of petroleum remained moderate in April at an annual rate of products was also the major factor in the 0.4 about 6 percent. M2 and M3, after slowing percent increase in the consumer price index in appreciably in March to annual rates of growth of April. Thus far in 1985 consumer prices had risen about 33A and 5'/2 percent respectively, were at an annual rate of about 4lA percent, close to little changed in April. Thus, while expansion in the 4 percent rate in 1984. On balance, recent Ml was about in line with the Committee's wage developments indicated little if any accel- expectations for the March-to-June period, eration in wage costs from the pace in 1984. growth in the broader aggregates was running While the index of average hourly earnings in- well below the rates anticipated. Weakness in creased at an annual rate of IVi percent in the these aggregates stemmed in large part from a first four months of this year compared with a substantial reversal of earlier increases in banks' rise of about 3 percent in 1984, the increase in managed liabilities, as banks obtained funds from hourly compensation in the nonfarm business a sharp rise in U.S. government deposits after sector thus far this year was running above its mid-April. Expansion in total domestic nonfinanyear-earlier pace. The rise in compensation re- cial debt continued relatively rapid at an annual flected in part legislated changes in social securi- rate of about 113A percent in April, the same as in ty taxes and higher employers' contributions for March. For the period from the fourth quarter of unemployment insurance. 1984 through April, growth in Ml was running Since the Committee's meeting in late March, above the Committee's range for the year 1985 the trade-weighted value of the dollar against while M2 and M3 were growing at rates within major foreign currencies had continued to fluctu- their long-term ranges; expansion in domestic ate widely in volatile market conditions and had nonfinancial debt was somewhat above the upper declined a little more than 4 percent on balance. limit of its monitoring range for the year. The U.S. merchandise trade deficit and the cur- The level of adjustment plus seasonal borrowrent account deficit widened in the first quarter ing averaged about $475 million over the three as a rebound in non-oil imports from the low complete reserve maintenance periods between fourth-quarter level extended the pattern of meetings, enlarged by borrowing by some nonsharp quarter-to-quarter swings experienced federally insured thrift institutions to meet desince the beginning of 1984. posit withdrawals. Over the last week or so, total At its meeting on March 26, 1985, the Commit- adjustment plus seasonal borrowing was running tee had adopted a directive that called for main- over $800 million, boosted in part by a further taining the existing degree of pressure on reserve increase in borrowing by thrifts and overnight positions. That action was expected to be con- borrowing by a few large banks faced with unexsistent with growth in Ml, M2, and M3 at annual pected needs for funds. rates of around 6, 7, and 8 percent respectively The federal funds rate had declined from the during the period from March to June. The 8V2 percent rate prevailing at the time of the members agreed that somewhat lesser restraint March meeting and had averaged just over 8Vs might be acceptable in the event of substantially percent in recent weeks. Other market rates had slower growth in the monetary aggregates while fallen by about 3A to 1 lA percentage points over somewhat greater restraint might be acceptable the period since the previous Committee meeting in the event of substantially higher growth. In until the announcement by the Federal Reserve either case, adjustments in the degree of reserve on May 17 of a reduction in the discount rate pressures would be considered in the context of from 8 to 7V2 percent. On the day before this appraisals of the strength of the business expan- meeting, when the new discount rate went into sion, progress against inflation, and conditions in effect, the federal funds rate moved lower, with domestic credit and foreign exchange markets. trading averaging around 13A percent, and most The intermeeting range for the federal funds rate other interest rates fell about 15 to 35 basis points was retained at 6 to 10 percent. further. The average rate on new commitments Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

710 Federal Reserve Bulletin • September 1985 for fixed-rate conventional home mortgage loans extractive businesses were being severely affectdeclined about 30 basis points over the inter- ed by foreign competition. The exchange value meeting period. of the dollar also appeared to be curbing expan- The staff projections presented at this meeting sion in domestic plant and equipment spending suggested that growth in real GNP, after a mod- and fostering decisions to establish or expand est pickup in the current quarter from the re- productive facilities abroad rather than in the duced pace in the first quarter, would be slightly United States. faster in the second half of the year. The unem- Members who were relatively optimistic about ployment rate was projected to edge down, and the economic outlook stressed the favorable imthe rate of increase in prices was expected to pact that recent declines in interest rates were remain close to that experienced in 1984 and likely to have on interest-sensitive sectors of the early 1985. economy. Housing had already responded to During their review of the economic situation earlier reductions in interest rates. Consumer and outlook, Committee members focused with spending was holding up well, with automobile concern on evidence that the economy, despite sales continuing to display notable strength, and elements of strength, was expanding at a rela- consumer sentiment remained favorable. Some tively sluggish pace; and they also stressed the members commented that the negative impact of uncertainties that surrounded the prospects for growing imports might diminish over the quarsome pickup in the rate of economic growth. The ters ahead, especially if the dollar fell further currently mixed pattern of developments greatly from its recent highs. Reference was also made complicated the forecasting process, especially to continuing indications that businesses were against the background of the distortions and planning further, if more moderate, increases in pressures associated with massive deficits in the their investment spending. One member exfederal budget and the balance of trade, together pressed the view that rapid growth in Ml during with persisting strains in financial markets. late 1984 and early 1985 would exert an expan- While acknowledging the considerable risks of sive influence on the economy over the months unexpected developments in these circum- ahead. stances, several members commented that im- Members who felt less comfortable with ecoprovement in the rate of economic growth re- nomic developments referred to the vulnerability mained the most reasonable expectation for the of the manufacturing sector and also agriculture second half of the year. Others gave more weight to the high value of the dollar on exchange to the downside risks in the economy and were markets. Moreover, business and consumer conconcerned that the expansion might well remain fidence could be adversely affected by ongoing relatively weak and considerably below the problems in financial sectors of the economy. economy's potential. Other potential areas of vulnerability in the econ- A number of members expressed particular omy included nonresidential construction and concern about the depressing impact that the multifamily housing; as they had at previous competition of foreign goods was having on meetings, members cited instances of apparent domestic production, and some commented that overbuilding of office structures and of multifamthe outlook for the dollar in the exchange mar- ily dwellings in various parts of the country. In kets constituted the major uncertainty in assess- addition, problems in agriculture and related ing economic prospects. While domestic final industries might worsen, with retarding consedemands were being reasonably well maintained, quences for overall economic activity. a strong dollar was diverting these demands With regard to the outlook for inflation, memtoward imports, which were growing rapidly, bers commented on the highly competitive pricand holding back domestic output. The strength ing situation in many industries, and reference of the dollar was also tending to curb the expan- was also made to favorable developments in sion of exports. Members cited examples of a recent labor negotiations. In general, price preswide range of manufacturing firms, including sures appeared to be relatively well contained in small firms, that along with some agricultural and goods-producing sectors of the economy. Most Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 711 commodity prices had fallen further to their and the recent behavior of the broader aggrelowest levels in about 2 years. At the same time, gates. It was also pointed out that much of the significant increases in prices and costs were increase in Ml thus far this year reflected expancontinuing to occur in the service industries. sion in interest-bearing checking accounts. Given the relatively low rates of capacity utiliza- Banks and thrifts had reduced interest rates on tion and the outlook for only limited growth in these accounts only slowly in response to deeconomic activity, members indicated that the clines in market yields that had begun in the risks of an acceleration in the rate of inflation latter part of last year, thereby making it relativeappeared to be low. Some members noted their ly more attractive for the public to hold savings concern, however, that current inflation rates in such instruments. Nonetheless, Ml was runwere too high—with recent tendencies in con- ning above the path associated with its long-run sumer prices worrisome—especially in light of target and some members stressed the desirabilthe inflationary implications of a possible decline ity of holding down near-term Ml growth, partly over time in the foreign exchange value of the because a rate of growth that appeared unduly dollar. high could risk having an adverse impact on At its meeting in February the Committee had inflationary sentiment. However, one member agreed on policy objectives that called for mone- also questioned whether the behavior of Ml tary growth ranges for the period from the fourth should be interpreted as in the past given the quarter of 1984 to the fourth quarter of 1985 of 4 present institutional environment and taking acto 7 percent for Ml, 6 to 9 percent for M2, and 6 count of such other factors as the very high level to 9V2 percent for M3. The associated range for of the dollar in foreign exchange markets. total domestic nonfinancial debt was set at 9 to Given the strength of Ml relative to its long- 12 percent for 1985. In keeping with the usual run target for the year, members indicated that procedures under the Humphrey-Hawkins Act, they were prepared to accept slower growth in these ranges would be reviewed at the July M2 and M3 for the quarter than they had expectmeeting and provisional ranges would be estab- ed earlier. One member observed, however, that lished for 1986. continued weakness in the broader aggregates In discussing policy implementation for the would be a matter of some concern and that weeks ahead, Committee members, taking ac- somewhat faster growth than was now expected count of the recent reduction in the discount for the quarter should not be resisted. A differing rate, generally favored maintaining about the view emphasized that the broader aggregates had same degree of pressure on bank reserve posi- less information content than Ml and that some tions as in recent weeks, abstracting from special aberration in their behavior should be tolerated. situation borrowing by thrift institutions. It was Another member highlighted the desirability of a recognized that the recent decline in market rates decline in long-term interest rates over time, but and the lower discount rate would tend to in- felt that further monetary ease at this point might crease the demands for money and credit under work against that objective by fostering inflationthose circumstances as compared with what they ary expectations. otherwise would be. Most members found this In keeping with the Committee's usual pracacceptable particularly in view of the recent tice, the members contemplated that operations weakness in the broader monetary aggregates might be adjusted during the intermeeting period and sluggishness in the overall economy. toward implementing somewhat lesser or some- In the course of discussion it was noted that what greater restraint on reserve positions if Ml had been growing about as expected at the monetary growth should appear to be substanprevious meeting, but that some pickup in tially slower or faster than was currently expectgrowth could develop in the period ahead. A ed for the quarter. While no member wanted to number of members indicated that they were rule out possible adjustments in either direction, prepared to accept a little more rapid expansion a majority believed that policy implementation against the background of relatively weak eco- should be alert to the potential need for some nomic performance, strains in financial markets, easing of reserve conditions. Other members, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

712 Federal Reserve Bulletin • September 1985 however, put more stress on the desirability of rate, which provides a mechanism for initiating moving promptly, if necessary, to curb unduly consultation of the Committee when its boundrapid monetary expansion. It was understood aries are persistently exceeded, should be left that any adjustment should not be made automat- unchanged at 6 to 10 percent. ically in response to the behavior of the mone- At the conclusion of the meeting, the following tary aggregates, but should be undertaken only domestic policy directive was issued to the Fedafter an appraisal of the strength of economic eral Reserve Bank of New York: activity and inflationary pressures and evaluations of conditions in domestic and international The information reviewed at this meeting suggests financial markets. only a modest pickup in real GNP in the current In light of recent declines in market interest quarter from the reduced rate of growth in the first quarter. Total retail sales rose in April to a level rates and the reduction in the discount rate, it somewhat above the average for the first quarter, and appeared likely that the degree of reserve rehousing starts increased further after rising substanstraint contemplated by most of the Committee tially in the first quarter. Information on business members would be associated with a lower feder- capital spending suggests further growth, though at a al funds rate, on average, than had prevailed much less rapid pace than earlier in the economic expansion. Industrial production declined slightly in until just before today's meeting. Nonetheless, April after rising little over the first quarter. Total the members anticipated that the rate would nonfarm payroll employment increased at a somewhat remain well within the 6 to 10 percent federal reduced pace in April with employment in manufacfunds range established earlier by the Commit- turing registering another decline. The civilian unemtee, and no sentiment in favor of changing that ployment rate remained at 7.3 percent in April. Broad measures of prices and wages appear to be rising at range was expressed. rates close to those recorded in 1984. At the conclusion of the Committee's discus- Since the Committee's meeting in late March, the sion, a majority of the members indicated their trade-weighted value of the dollar against major foracceptance of a directive that, against the back- eign currencies has continued to fluctuate widely in ground of the recent reduction in the discount often volatile market conditions and has declined moderately on balance. The trade and current account rate, called for maintaining the current degree of deficits widened in the first quarter as a rebound in reserve restraint, abstracting from special situanon-oil imports from their low fourth-quarter level tion borrowing by thrift institutions. The mem- extended the pattern of sharp quarter-to-quarter bers expected such an approach to policy imple- swings experienced since the beginning of 1984. mentation to be consistent with growth of Ml at Growth in Ml slowed markedly in March from the an annual rate of about 6 percent or a little higher rapid pace of earlier months and remained moderate in April. The broader aggregates showed little change in for the period from March to June. Given the April after their growth had slowed appreciably in weakness in M2 and M3 in April, growth in these March. Expansion in total domestic nonfinancial debt broader aggregates over the three-month period has remained relatively rapid. Interest rates have was now expected to be slower than had been declined considerably since the March meeting of the anticipated at the time of the previous meeting. Committee. On May 17, the Federal Reserve Board approved a reduction in the discount rate from 8 to LLA The members agreed that somewhat lesser repercent. straint on reserve conditions would be accept- The Federal Open Market Committee seeks to fosable in the context of substantially slower growth ter monetary and financial conditions that will help to in the monetary aggregates, while somewhat reduce inflation further, promote growth in output on a greater restraint might be appropriate if mone- sustainable basis, and contribute to an improved pattern of international transactions. In furtherance of tary growth were substantially faster. It was these objectives the Committee agreed at its meeting understood that the need for lesser or greater in February to establish ranges for monetary growth of restraint would be considered against the back- 4 to 7 percent for Ml, 6 to 9 percent for M2, and 6 to ground of developments relating to the strength 9Vi percent for M3 for the period from the fourth of the business expansion, inflationary pres- quarter of 1984 to the fourth quarter of 1985. The associated range for total domestic nonfinancial debt sures, and conditions in domestic credit and was set at 9 to 12 percent for the year 1985. The foreign exchange markets. The members agreed Committee agreed that growth in the monetary aggrethat the intermeeting range for the federal funds gates in the upper part of their ranges for 1985 may be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the FOMC 713 appropriate, depending on developments with respect expansion, progress against inflation, and conditions to velocity and provided that inflationary pressures in domestic credit and foreign exchange markets. The remain subdued. Chairman may call for Committee consultation if it The Committee understood that policy implementa- appears to the Manager for Domestic Operations that tion would require continuing appraisal of the relation- pursuit of the monetary objectives and related reserve ships not only among the various measures of money paths during the period before the next meeting is and credit but also between those aggregates and likely to be associated with a federal funds rate persisnominal GNP, including evaluation of conditions in tently outside a range of 6 to 10 percent. domestic credit and foreign exchange markets. In the implementation of policy for the immediate Votes for this action: Messrs. Volcker, Corrigan, future, and against the background of the recent Balles, Forrestal, Gramley, Keehn, Martin, Partee, reduction in the discount rate, the Committee seeks to Rice, Ms. Seger, and Mr. Wallich. Vote against this maintain about the same degree of pressure on bank action: Mr. Black. reserve positions. This action is expected to be consistent with growth in Ml at an annual rate of around 6 percent or a little higher during the period from March Mr. Black dissented because he preferred to to June, while M2 and M3, in the light of their direct policy implementation in the weeks immeweakness in April, are expected to grow more slowly over the quarter than the 7 and 8 percent annual rates, diately ahead toward achieving somewhat slower respectively, anticipated earlier. Somewhat lesser re- expansion in Ml. In his view, bringing Ml serve restraint would be acceptable in the event of growth more promptly within the Committee's substantially slower growth of the monetary aggrerange for the year would help guard against a gates while somewhat greater restraint might be acpossible worsening of inflationary expectations ceptable in the event of substantially higher growth. In either case such a change would be considered in the and would limit the risk of a potentially unsetcontext of appraisals of the strength of the business tling movement in interest rates later in the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

715 Legal Developments ORDERS ISSUED UNDER BANK HOLDING Company and Applicant do not operate subsidiary COMPANY ACT, BANK MERGER ACT, BANK banks in the same markets. Therefore, consummation SERVICE CORPORATION ACT, AND FEDERAL of the proposal would not eliminate existing competi- RESERVE ACT tion in any relevant geographic market. The Board has considered the effects of this propos- Orders Issued Under Section 3 of Bank Holding al on probable future competition and has examined Company Act the proposal in light of its proposed guidelines for assessing the competitive effects of market extension Commerce Union Corporation mergers and acquisitions2 in the six markets in which Nashville, Tennessee Company competes.3 In view of the fact that none of these markets is highly concentrated under the Order Approving Merger of Bank Holding Board's guidelines, the Board has concluded that Companies consummation of this proposal would not have any significant adverse effects on probable future competi- Commerce Union Corporation, Nashville, Tennessee, tion in any relevant market. a bank holding company within the meaning of the The financial and managerial resources of Applicant Bank Holding Company Act of 1956, as amended and Company are consistent with approval of the (12 U.S.C. § 1841, et seq.) ("Act"), has applied for proposal. Considerations relating to the convenience the Board's approval under section 3(a)(5) of the Act and needs of the community to be served are also (12 U.S.C. § 1842(a)(5)) to merge with Tennessee consistent with approval of the proposal. Eastern Bancshares, Inc., Oak Ridge, Tennessee Based on the foregoing and other facts of record, the ("Company"), and thereby indirectly to acquire Ener- Board has determined that the application under secgy Bank, Oak Ridge, Tennessee. tion 3(a)(5) should be, and hereby is, approved for the Notice of this application, affording an opportunity reasons set forth above. The transaction shall not be for interested persons to submit comments, has been consummated before the thirtieth calendar day followgiven in accordance with section 3 of the Act. The time ing the effective date of this Order, or later than three for filing comments has expired, and the Board has months after the effective date of this Order, unless considered the application and all comments received, such period is extended for good cause by the Board or in light of the factors set forth in section 3(c) of the Act the Federal Reserve Bank of Atlanta, acting pursuant (12 U.S.C. § 1842 (c)). to delegated authority. Applicant, the third largest commercial banking By order of the Board of Governors, effective organization in Tennessee, holds deposits of $2.0 July 30, 1985. billion, representing 7.6 percent of the total deposits in commercial banks in the state.1 Company, the tenth Voting for this action: Chairman Volcker and Governors largest commercial banking organization in Tennes- Martin, Wallich, Partee, Rice, and Seger. Absent and not voting: Governor Gramley. see, controls $180.9 million in deposits, representing 0.7 percent of the total deposits in commercial banks in the state. Upon consummation of the transaction JAMES MCAFEE Applicant would remain the third largest commercial [SEAL] Associate Secretary of the Board banking organization in Tennessee. Thus, the proposed transaction would have no significant effect on the concentration of banking resources in Tennessee. 2. "Policy Statement of the Board of Governors of the Federal Reserve System for Assessing Competitive Factors Under the Bank Merger Act and the Bank Holding Company Act," 47 Federal Register 9017 (1982). While the proposed policy statement has not been approved by the Board, the Board is using the policy guidelines as part of its analysis of the effect of a proposal on probable future competition. 1. Banking data are as of June 30, 1984 and market data are as of 3. These banking markets are the Athens, Kingsport/Bristol, Knox- June 30, 1983. ville, Roane, Scott, and Monroe markets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

716 Federal Reserve Bulletin • September 1985 First Central Bancorp, Inc. judgment that the proposed acquisition is in the public Phoenix, Arizona interest and that the application should be approved. On the basis of the record, the application is ap- Order Approving Formation of a Bank Holding proved for the reasons summarized above. The trans- Company action shall not be consummated before the thirtieth calendar day following the effective date of this Order First Central Bancorp, Inc., Phoenix, Arizona, has or later than three months after the effective date of applied for the Board's approval under section 3(a)(1) this Order, unless such period is extended for good of the Bank Holding Company Act ("Act") cause by the Board or by the Federal Reserve Bank of (12 U.S.C. § 1842(a)(1)) to become a bank holding San Francisco, acting pursuant to delegated authority. company by acquiring 100 percent of the voting shares By order of the Board of Governors, effective of First Central Bank, Phoenix, Arizona ("Bank"). July 8, 1985. Notice of the application, affording opportunity for interested persons to submit comments, has been Voting for this action: Vice Chairman Martin and Govergiven in accordance with section 3(b) of the Act. The nors Partee, Rice, Gramley, and Seger. Absent and not time for filing comments has expired, and the Board voting: Chairman Volcker and Governor Wallich. has considered the application and all comments received in light of the factors set forth in section 3(c) of JAMES MCAFEE the Act (12 U.S.C. § 1842(c)). [SEAL] Associate Secretary of the Board Applicant is a nonoperating corporation organized for the purpose of becoming a bank holding company by acquiring Bank, which holds deposits of $22.5 First City Bancorporation of Texas, Inc. million.1 Upon acquisition of Bank, Applicant would Houston, Texas be the 19th largest of 43 commercial banking organizations in Arizona and would control approximately 0.1 Order Approving Acquisition of a Bank percent of the total deposits in commercial banks in the state. The proposed acquisition would not have a First City Bancorporation of Texas, Inc., Houston, significant effect on the concentration of banking re- Texas, a bank holding company within the meaning of sources in Arizona. the Bank Holding Company Act ("Act"), has applied Bank, which operates in the Phoenix market,2 was for the Board's approval under section 3(a)(3) of the formed de novo by principals of Applicant in 1983, and Act (12 U.S.C. § 1842(a)(3)) to acquire all of the voting this application represents a reorganization into a shares of First City Bank-Sioux Falls, N.A., Sioux holding company structure. Applicant's principals are Falls, South Dakota ("Bank"), a proposed new bank. not affiliated with any other banking organizations in Notice of the application, affording interested perthe relevant market, and consummation of the pro- sons an opportunity to submit comments, has been posed transaction would not result in any adverse given in accordance with section 3(b) of the Act. The effects on competition or increase the concentration of time for filing comments has expired, and the Board banking resources in any relevant area. has considered the application and all comments re- In evaluating the financial factors in this case, the ceived, including the comments of the Independent Board notes that Bank has placed significant reliance Community Bankers Association of South Dakota, on large, high-cost certificates of deposit which have Inc., in light of the factors set forth in section 3(c) of had a somewhat adverse effect on Bank's earnings and the Act (12 U.S.C. § 1842(c)). liquidity. Based on Bank's efforts and plans to reduce Applicant, with consolidated assets of $17.3 billion,1 reliance on such certificates of deposit and based on is the 24th largest commercial banking organization in evaluation of other financial factors, the Board con- the nation. It operates 63 banking subsidiaries in Texas cludes that the financial and managerial resources and and is the fourth largest commercial banking organizafuture prospects of Applicant are consistent with ap- tion in the state, with total domestic deposits of proval. Considerations relating to convenience and approximately $12 billion. Applicant also engages needs of the community to be served also are consis- through subsidiaries in a variety of nonbanking activitent with approval. Accordingly, it is the Board's ties. Bank is a newly established national bank formed to engage primarily in offering bank credit card services 1. Statewide banking data are as of September 30, 1984. 2. The Phoenix market is approximated by the Phoenix Metropolitan Area. 1. Banking data are as of December 31, 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 717 to customers in Texas, Louisiana, Arkansas, Oklaho- Bank will also compete in the Sioux Falls, South ma, Colorado, and New Mexico. Upon consummation Dakota, banking market,5 where it will provide retail of the proposed transaction, Applicant would transfer and commercial deposit-taking, lending, and checking its existing credit card operations, now conducted services to the local community to the extent allowed through First City National Bank of Houston by South Dakota law. Because of the limitations ("FCNB"), to Bank.2 imposed on Bank's operations by South Dakota law, Section 3(d) of the Bank Holding Company Act Bank will not generally compete directly with com- (12 U.S.C. § 1842(d)) (the Douglas Amendment) pro- mercial banks in South Dakota; however, Bank will hibits the Board from approving any application by a engage de novo in offering certain banking services, bank holding company to acquire any bank located including the provision of overline banking services to outside the state in which the operations of the bank other banks in South Dakota. To the extent that Bank holding company's banking subsidiaries are principal- will offer banking services de novo, the effect of this ly conducted unless the acquisition is "specifically proposal will be procompetitive. Accordingly, the authorized by the statute laws of the State in which Board concludes that the competitive effects of this such bank is located, by language to that effect and not proposal are consistent with approval. merely by implication." South Dakota law permits an In evaluating this application, the Board has considout-of-state bank holding company to acquire a single ered the financial and managerial resources of Applide novo national bank and a single de novo state bank cant and the proposal's effect on these resources. The subject to the conditions that each such bank have proposed acquisition represents a relocation of existonly a single office and that it be operated in a manner ing activities that would provide Applicant with inand at a location that is "not likely to attract custom- creased income opportunities and have minimal effect ers from the general public in the state to the substanon Applicant's primary and total capital ratios, which tial detriment of existing banks in the state."3 would remain above the minimum levels specified for In addition, interstate acquisitions under the South bank holding companies under the Board's guidelines. Dakota statute are subject to approval by the South In this context, the Board concludes that approval of Dakota Banking Commission.4 In acting on an applica- the application is consistent with financial and manation under the statute, the Banking Commission may gerial considerations. Factors relating to the conveconsider the economic advantages to the state of the nience and needs of the community to be served also proposed acquisition, whether the acquisition may are consistent with approval. result in undue concentration of resources or substan- The Board has received comments in opposition to tial lessening of competition in South Dakota, whether this proposal, as well as a request for a hearing, from the convenience and benefits to the public outweigh the Independent Community Bankers Association of any adverse competitive effects, and whether the South Dakota, Inc. ("Protestant"). The Protestant proposed de novo bank is likely by its location to first argues that the Douglas Amendment to the Bank attract business from the general public to the substan- Holding Company Act does not authorize the states to tial detriment of existing banks. On July 25, 1984, the permit out-of-state bank holding companies to acquire South Dakota Banking Commission approved Applinational banks. The Protestant bases this argument on cant's formation and acquisition of Bank, concluding the state authorization clause of the Douglas Amendthat Applicant's proposal met the requirements for ment, which reads: "unless the acquisition of ... a approval under the South Dakota statute. Based on the State bank by an out-of-State bank holding company is foregoing, the Board has determined, as required by specifically authorized by the statute laws of the State section 3(d) of the Act, that the proposed acquisition in which such bank is located . . . ." 12 U.S.C. conforms to South Dakota law and is specifically § 1842(d). On the basis of this clause and the absence authorized by the statute laws of South Dakota. of any express mention of national banks in the Bank will engage primarily in offering consumer Douglas Amendment, the Protestant asserts that Senacredit card services in the regional market of Texas, tor Douglas "deliberately chose" to limit section 3(d) Louisiana, Arkansas, Oklahoma, Colorado, and New to acquisition of state banks. Mexico. Since the establishment of Bank represents Contrary to the Protestant's assertions, however, an internal reorganization of Applicant's credit card the Douglas Amendment applies to the interstate acoperations, the proposal will not alter the structure of quisition of any bank, national or state-chartered: its the market for bank credit card services. 2. Applicant has stated that it would transfer approximately $500 million of credit card receivables from FCNB to Bank. 5. The Sioux Falls market includes Moody, McCook, Minnehaha, 3. S.D. Codified Laws Ann. § 51-16-40, 51-16-41 (Supp. 1984). Turner, and Lincoln Counties and parts of Clay and Union Counties in 4. S.D. Codified Laws § 51-16-42. South Dakota, as well as Clay County in Minnesota. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

718 Federal Reserve Bulletin • September 1985 initial clause prohibits Federal Reserve Board approv- The Board finds no merit in the Protestant's position al of a bank holding company's acquisition of "voting because, as stated above, it is Congress through the shares of . . . any additional bank" (emphasis added) Douglas Amendment that imposes the conditions or in another state, while the following clause permits restrictions on the operation of a national bank by an that state to authorize such an acquisition.6 out-of-state bank holding company, or, at a minimum, In a conscious attempt to parallel the McFadden Act it is Congress that authorizes the states to impose such (12 U.S.C. § 36(c)), on which it was based,7 the Doug- restrictions. Where, as here, such restrictions are las Amendment permits the states to lift the Amend- within the scope of those authorized by Congress,8 ment's flat prohibition on the acquisition of state they cannot be said to impose unauthorized burdens banks by out-of-state bank holding companies and ties that conflict with the national banking laws. the degree to which bank holding companies can make Moreover, the restrictions are not so burdensome as interstate acquisitions of national banks to state autho- to conflict with federal banking laws. The Comptroller rizations for interstate acquisitions of state banks. of the Currency, the primary supervisor of national Clearly the intent of the Douglas Amendment, consis- banks and the agency charged with interpretation and tent with the policy of the McFadden Act, was to enforcement of the National Bank Act, reviewed the maintain competitive equality by allowing the acquisi- restrictions imposed by South Dakota in the course of tion of any similarly situated bank—whether national issuing a preliminary national bank charter for a bank or state-chartered—on an equal basis. Thus, it appears in South Dakota to Citicorp, New York, New York. In to have been Senator Douglas' intent that, when the an opinion issued November 11, 1980, the Comptroller flat prohibition on interstate bank acquisitions is lifted held that the South Dakota statute did not "so restrict by a state with respect to state banks, the Douglas the operations of the proposed bank as to be incompat- Amendment itself lifts the prohibition, to the same ible with the framework of federal law." Based upon degree, with respect to national banks. The Board the facts in the record and for the reasons stated, the concludes that the Douglas Amendment was not in- Board finds the Protestant does not present adequate tended to allow only state-chartered banks to be reasons to deny this application. acquired by out-of-state bank holding companies. In addition, the Protestant has requested a hearing The Protestant also argues that the Board should with respect to the legal and public policy issues raised deny this application in light of the "unauthorized by this proposal. The Board, however, has determined restriction" placed by the South Dakota statute on the that there are no material factual issues in dispute that operations of national banks acquired under the stat- would warrant a hearing on this application. Accordute. Specifically, the Protestant alleges that the statu- ingly, the Protestant's hearing request is denied. tory restrictions, such as those which limit Bank to a While it has decided to approve this application, the single office and require operation of that office in a Board wishes to reiterate the concerns it has exmanner and at a location so as to avoid attracting local pressed in previous orders9 about the proliferation of customers, impose burdens on national banks that statutes that, like South Dakota's, permit the entry of conflict with national banking laws. The Protestant out-of-state bank holding companies in order to shift argues, therefore, that the Board should not approve jobs and revenue from other states, while limiting the an application under such a restrictive state statute. in-state activities of banks owned by out-of-state holding companies so as to avoid competition with in-state banking organizations. These statutes do not appear to be based on appropriate public policy considerations 6. Senator Douglas' statements on the Senate floor indicate that he for assuring a stable and sound banking system locally did not intend the Amendment's authorization to the states to be limited to state banks. For example, in describing the effect of his and nationwide, and the end result of their adoption by Amendment, Senator Douglas stated that it: other states can only be a serious impairment of banking standards and no net gains in jobs or revenues "would prohibit bank holding companies from purchasing banks in other States unless such purchases by out-of-State bank holding companies were specifically because of the proliferation. permitted by law in such States." Based on the foregoing and other facts of record, the 102 Cong. Rec. 6860 (1956). application is approved for the reasons summarized 7. See Northeast Bancorp, Inc. v. Board of Governors of the above. The transaction shall not be consummated Federal Reserve System, 53 U.S.L.W. 4699, 4702 (1985). In debate on his amendment, Senator Douglas stated: before the thirtieth calendar day following the effective date of this Order, or later than three months after the [W]hat our amendment aims to do is to carry over into the field of holding companies the same provisions which already apply for branch banking under the McFadden Act—namely, our amendment will permit out-of-State holding companies to acquire banks in other States only to the degree that State laws expressly permit them. 8. See Northeast Bancorp, 53 U.S.L.W. at 4702-4703 (1985). 9. See Citicorp, 71 FEDERAL RESERVE BULLETIN 101 (1985); 102 Cong. Rec. 6858 (1956). MCorp, 71 FEDERAL RESERVE BULLETIN 642. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 719 effective date of this Order, and Bank shall be opened would not have any significant adverse effects upon for business not later than six months after the effec- the concentration of banking resources in the state. tive date of this Order. The latter two periods may be Bank operates in the Dallas banking market,2 where extended for good cause by the Board or by the it is the 79th largest of 122 banking organizations, Federal Reserve Bank of Dallas, acting pursuant to controlling 0.1 percent of the total deposits in commerdelegated authority. cial banks in the market. Neither Applicant nor any of By order of the Board of Governors, effective its principals is associated with any other banking July 12, 1985. organization in the relevant market. Accordingly, the Board concludes that consummation of this proposal Voting for this action: Chairman Volcker and Governors would have no significant adverse effect upon existing Martin, Wallich, Partee, Rice, Gramley, and Seger. competition in any relevant market. In evaluating this application, the Board has considered the financial and managerial resources of Appli- JAMES MCAFEE [SEAL] Associate Secretary of the Board cant and the effect on these resources of this proposal. The Board has stated and continues to believe that capital adequacy is an especially important factor in Haltom City Bancshares, Inc. the analysis of bank holding company proposals, and Dallas, Texas that it will consider the implications of a significant level of intangible assets in evaluating an application. Order Approving Acquisition of Bank Under the Board's Capital Adequacy Guidelines,3 the Board has stated that, in reviewing acquisition Haltom City Bancshares, Inc., Dallas, Texas, a bank proposals, the Board will take into consideration both holding company within the meaning of the Bank the stated primary capital ratio and the primary capital Holding Company Act (the "Act") (12 U.S.C. § 1841 ratio after deducting intangibles. In acting on applicaet seq.), has applied for the Board's approval under tions under the revised guidelines, the Board also will section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to take into account the nature and amount of intangible acquire all of the voting shares of American Bank of assets and will, as appropriate, adjust capital ratios to Commerce, Grapevine, Texas. include intangible assets on a case-by-case basis. Notice of the application, affording interested per- In its assessment of Applicant's capital adequacy, sons an opportunity to submit comments, has been the Board has considered the fact that at the time of given in accordance with section 3(b) of the Act. The consummation of this proposal, Applicant would meet time for filing comments has expired, and the Board the minimum capital required under the Board's guidehas considered the application and all comments re- lines without undue reliance on goodwill. Applicant ceived in light of the factors set forth in section 3(c) of has recently improved its tangible capital ratio. In the Act. addition, Applicant has submitted a capital plan which Applicant, a Texas corporation, owns one commer- would cause its tangible capital ratio to reach 5.5 cial banking subsidiary, Haltom City State Bank, Fort percent within twelve months following consumma- Worth, Texas, controlling deposits of $117.7 million.1 tion of the proposal. Based upon these facts, the Board Applicant is the 82nd largest commercial banking concludes that the financial and managerial resources organization in the state, controlling 0.09 percent of and future prospects of Applicant, its subsidiary bank, the total deposits in commercial banking organizations and Bank are consistent with approval, particularly in in the state. Applicant seeks to acquire Bank, which light of commitments made by Applicant in connection holds deposits of $27.8 million and is the 591st largest with this application. Considerations relating to the convenience and needs of the communities to be commercial banking organization in the state, controlserved also are consistent with approval. ling 0.2 percent of total deposits in commercial banking organizations in the state. Upon consummation of this proposal, Applicant would become the 61st largest commercial banking organization in the state, controlling deposits of $145.5 million, representing 0.1 per- 2. The Dallas banking market consists of Dallas County, the cent of total deposits in commercial banking organiza- southeast quadrant of Denton County, including Denton and Lewistions in the state. Consummation of this transaction ville, the southwest quadrant of Collin County, including McKinney and Piano, the northern half of Rockwell County, the communities of Forrey and Terrell in Kaufman County, the communities of Midlothian, Waxahachie and Ferris in Ellis County, and Grapevine and Arlington in Tarrant County, Texas. 3. Capital Adequacy Guidelines, 71 FEDERAL RESERVE BULLETIN 1. All banking data are as of June 30, 1984. 445 (1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

720 Federal Reserve Bulletin • September 1985 Based on the foregoing and other facts of record, the organizations, controlling approximately 25.6 percent Board has determined that the application should be of the total deposits in commercial banks in the and hereby is approved. The transaction shall not be market. Neither Applicant nor any of its principals is consummated before the thirtieth calendar day follow- associated with any other banking organization in the ing the effective date of this Order, or later than three relevant market, and consummation of the proposal months after the effective date of this Order, unless would not result in any adverse effects upon competisuch period is extended for good cause by the Board or tion or increase the concentration of banking reby the Federal Reserve Bank of Dallas pursuant to sources in any relevant area. Accordingly, the Board delegated authority. concludes that competitive considerations under the By order of the Board of Governors, effective Act are consistent with approval. July 31, 1985. The Board has indicated on previous occasions that a holding company should serve as a source of finan- Voting for this action: Chairman Volcker and Governors cial and managerial strength to its subsidiary bank and Martin, Wallich, Partee, and Rice. Absent and not voting: that the Board would closely examine the condition of Governors Gramley and Seger. an applicant in each case with this consideration in mind.3 JAMES MCAFEE In connection with this proposal, Applicant would [SEAL] Associate Secretary of the Board incur a sizeable amount of debt. Using projections based upon Bank's performance in recent years and other facts of record, the Board concludes that Appli- Malta Banquo, Inc. cant may not have sufficient financial flexibility to be Malta, Montana able to reduce its indebtedness in a satisfactory manner while maintaining adequate capital levels at Bank.4 Order Denying Formation of a Bank Holding Accordingly, based on these and other facts of record, Company including Bank's level of loan classifications, the Board concludes that considerations relating to Appli- Malta Banquo, Inc., Malta, Montana, has applied for cant's financial and managerial resources and future the Board's approval pursuant to section 3(a)(1) of the prospects are adverse and weigh against approval of Bank Holding Company Act (12 U.S.C. § 1842(a)(1)) this application. ("Act") to become a bank holding company by acquir- Applicant has proposed no new services for Bank ing at least 60 percent of the voting shares of First upon consummation of this proposal. Considerations Security Bank of Malta, Malta, Montana ("Bank"). relating to the convenience and needs of the communi- Notice of the application, affording interested per- ty to be served are consistent with, but lend no weight sons an opportunity to submit comments, has been toward, approval of this application. given in accordance with section 3(b) of the Act. The On the basis of all of the facts of record, the Board time for filing comments has expired, and the Board concludes that the banking considerations involved in has considered the application and all comments re- this proposal are adverse and are not outweighed by ceived in light of the factors set forth in section 3(c) of any relevant competitive or convenience and needs the Act. considerations. Accordingly, it is the Board's judg- Applicant, a nonoperating corporation with no sub- ment that approval of the application would not be in sidiaries, was organized under the laws of Montana for the public interest and that the application should be, the purpose of becoming a bank holding company by and hereby is, denied for the reasons summarized acquiring Bank, which holds deposits of $13.9 mil- above. lion.1 Upon acquisition of Bank, Applicant would control the 76th largest of 106 banking organizations in Montana, representing approximately 0.2 percent of the total deposits in commercial banks in the state. Bank operates in the Phillips County banking market2 and is the smaller of two commercial banking 3. See Northwest Wisconsin Banco, Inc., 71 FEDERAL RESERVE BULLETIN 105 (1985); Singer & Associates, Inc., 70 FEDERAL RE- SERVE BULLETIN 883 (1984); Central Minnesota Bancshares, Inc., 70 FEDERAL RESERVE BULLETIN 877 (1984). 4. The Board has previously stated that in small one-bank holding company formations, it expects, among other things, that the bank holding co-npany's debt-to-equity ratio will be reduced to no more 1. All banking data are as of September 30, 1984. than 30 percent within 12 years. Policy Statement for Formation of 2. The Phillips County banking market consists of Phillips County, Small One-Bank Holding Companies, 12 C.F.R. Part 225, Appen- Montana. dix B. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 721 By order of the Board of Governors, effective Under the Douglas Amendment to the Act, the July 17, 1985. Board is prohibited from approving any application by a bank holding company to acquire a bank located in Voting for this action: Vice Chairman Martin and Gover- another state unless that state specifically authorizes nors Wallich, Partee, Rice, Gramley, and Seger. Absent and the acquisition. In this case, Delaware has expressly not voting: Chairman Volcker. authorized by statute the acquisition of consumer credit banks, such as Bank, by any bank holding JAMES MCAFEE company, including out-of-state bank holding compa- [SEAL] Associate Secretary of the Board nies. In this regard, the Board notes that on February 28, 1985, the State Banking Commissioner of Delaware approved the formation of Bank by Appli- Manufacturers National Corporation cant. Based on the foregoing, the Board has deter- Detroit, Michigan mined that its approval of the proposed acquisition is not prohibited by the terms or policies of the Douglas Order Approving Acquisition of a Consumer Credit Amendment. Bank Although Bank is located in the Wilmington banking market,3 under the limitations imposed by Delaware Manufacturers National Corporation, Detroit, Michi- law on Bank's operations, Bank is not likely to began, a bank holding company within the meaning of come a significant competitor in the Wilmington bankthe Bank Holding Company Act ("Act"), has applied ing market.4 The financial and managerial resources of for the Board's approval under section 3(a)(3) of the Applicant and Bank are regarded as satisfactory and Act (12 U.S.C. § 1842(a)(3)) to acquire all of the voting consistent with approval. There is no evidence in the shares of Manufacturers Bank-Delaware, Wilmington, record indicating that the banking needs of the com- Delaware ("Bank"), a proposed consumer credit bank munities to be served are not being met. Considerchartered under Delaware law that will engage in ations relating to the convenience and needs of the credit card operations and accept time deposits.1 community to be served also are consistent with Notice of the application, affording an opportunity approval. for interested persons to submit comments, has been Although approving this application, the Board has duly published. (50 Federal Register 13,286 (1985)). previously expressed its concern about the prolifera- The time for filing comments has expired, and the tion of statutes of this type, which permit the entry of Board has considered the application and all com- out-of-state bank holding companies in order to shift ments received in light of the factors set forth in jobs and revenues from other states, while limiting the section 3(c) of the Act (12 U.S.C. § 1842(c)). in-state activities of out-of-state owned banks to avoid Applicant, the fourth largest commercial banking competition with in-state banking organizations.5 organization in Michigan, operating nine subsidiary These statutes do not appear to be based on appropribanks with total deposits of $4.4 billion, has applied to ate public policy considerations for assuring a stable acquire Bank, which will be located in Delaware.2 This and sound banking system locally and nationwide, and application involves the transfer of the credit card the end result of their adoption by other states can operations of Applicant's lead bank, Manufacturers only be a serious impairment of banking standards and National Bank of Detroit, Detroit, Michigan, to Bank no net gains in jobs or revenues because of the in order to take advantage of Delaware's less restric- proliferation. tive policy regarding interest rates. Because Bank's Based on the foregoing and other facts of record, the activities are limited by state law, the proposed trans- Board has determined that approval of the application action would have no significant effect on concentra- would be consistent with the public interest and that tion in Delaware. the application should be and hereby is approved. The 3. The Wilmington banking market is approximated by Cecil Coun- 1. Although Bank's deposit-taking and commercial lending author- ty in Maryland, Salem County in New Jersey, Chester County in ity is circumscribed under the Delaware statute (Del. Code Ann. tit. 5 Pennsylvania, and New Castle County in Delaware. §1051 (Supp. 1984)), the Board has accepted this application under 4. Del. Code Ann. tit. 5 § 1051 (Supp. 1984). In addition, Bank must section 3 of the Act and has considered the proposal under the be "operated in a manner and at a location that is not likely to attract standards of section 3 of the Act applicable to bank acquisitions. See, customers from the general public in [Delaware] to the material Florida Dep't of Banking and Finance v. Board of Governors of the detriment of existing banking institutions . . . located in this state." Federal Reserve System, 760 F.2d 1135 (11th Cir. 1985). Del. Code Ann. tit. 5 § 1053 (Supp. 1984). 2. Banking data are as of June 30, 1984. 5. See, Citicorp, 71 FEDERAL RESERVE BULLETIN 101 (1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

722 Federal Reserve Bulletin • September 1985 transaction shall not be consummated before the thirti- organizations in the market, controlling approximately eth calendar day following the effective date of this 1.8 percent of the total deposits in commercial banks Order, or later than three months after the effective in the market. Neither Applicant nor any of its princidate of this Order, and Bank shall be opened for pals is associated with any other banking organization business not later than six months after the effective in the relevant market, and consummation of the date of this Order. The latter two periods may be proposal would not result in any adverse effects upon extended for good cause by the Board or by the competition or increase the concentration of banking Federal Reserve Bank of Chicago, acting pursuant to resources in any relevant area. Accordingly, the Board delegated authority. concludes that competitive considerations under the By order of the Board of Governors, effective Act are consistent with approval. July 1, 1985. The financial and managerial resources and future prospects of Applicant and Bank are regarded as Voting for this action: Chairman Volcker and Governors consistent with approval, especially in light of a com- Martin, Partee, Rice, Gramley, and Seger. Absent and not mitment made by Applicant's principal in connection voting: Governor Wallich. with this application. Considerations relating to the convenience and needs of the community to be served JAMES MCAFEE are consistent with approval. [SEAL] Associate Secretary of the Board Based on the foregoing and other facts of record, the Board has determined that the proposed acquisition is in the public interest and that the application should be Montgomery Financial Corporation approved. Accordingly, the application is approved Darlington, Indiana for the reasons summarized above. The transaction shall not be consummated before the thirtieth calendar Order Approving Formation of a Bank Holding day following the effective date of this Order, or later Company than three months after the effective date of this Order, unless such period is extended for good cause Montgomery Financial Corporation, Darlington, Indi- by the Board or by the Federal Reserve Bank of ana, has applied for the Board's approval pursuant to Chicago, pursuant to delegated authority. section 3(a)(1) of the Bank Holding Company Act By order of the Board of Governors, effective (12 U.S.C. § 1842(a)(1)) ("Act") to become a bank July 29, 1985. holding company by acquiring 80.8 percent of the voting shares of Farmers & Merchants State Bank, Voting for this action: Chairman Volcker and Governors Darlington, Indiana ("Bank"). Martin, Wallich, Partee, Rice, and Seger. Absent and not voting: Governor Gramley. Notice of the application, affording interested persons an opportunity to submit comments, has been given in accordance with section 3(b) of the Act. The JAMES MCAFEE time for filing comments has expired, and the Board [SEAL] Associate Secretary of the Board has considered the application and all comments received in light of the factors set forth in section 3(c) of the Act. State Bond and Mortgage Company Applicant, a nonoperating corporation with no sub- New Ulm, Minnesota sidiaries, was organized under the laws of Indiana for the purpose of becoming a bank holding company by Order Denying Acquisition of Bank acquiring Bank, which holds deposits of $4.6 million.1 Upon acquisition of Bank, Applicant would control State Bond and Mortgage Company, New Ulm, Minone of the smaller banking organizations in Indiana, nesota, a bank holding company within the meaning of representing less than 0.1 percent of the total deposits the Bank Holding Company Act ("Act") (12 U.S.C. in commercial banks in the state. § 1841 et seq.), has applied for the Board's approval Bank operates in the Crawfordsville banking mar- under section 3(a)(3) of the Act (12 U.S.C. ket2 and is the smallest of five commercial banking § 1842(a)(3)) to acquire all of the voting shares of National Bank of Commerce, Mankato, Minnesota ("Bank"). Notice of the application, affording opportunity for 1. All banking data are as of June 30, 1984. interested persons to submit comments and views, has 2. The Crawfordsville banking market consists of Montgomery County, Indiana. been given in accordance with section 3(b) of the Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 723 The time for filing comments and views has expired, Applicant, its subsidiary bank and the bank to be and the Board has considered the application and all acquired are in satisfactory condition. The proposed comments received in light of the factors set forth in acquisition, however, involves a purchase premium section 3(c) of the Act (12 U.S.C. § 1842(c)). and would be funded almost entirely through debt, Applicant is a one bank holding company by virtue resulting in a substantial decline in Applicant's tangiof its control of State Bank and Trust Company of ble primary capital ratio. While Applicant's overall New Ulm, New Ulm, Minnesota ("New Ulm Bank"). capital ratios would be slightly above the minimum Applicant, the 34th largest banking organization in the levels required under the Board's Capital Adequacy state, with aggregate deposits of $61.2 million, and Guidelines, the Board is concerned with the effect of Bank, the 73rd largest banking organization in the the proposal on the capital adequacy of certain of state, with aggregate deposits of $41.4 million, are Applicant's component activities. A substantial majoramong the smaller commercial banking organizations ity of Applicant's assets are devoted to insurance in Minnesota.1 Upon consummation of the proposed underwriting and to the issuance and underwriting of transaction, Applicant would become the 17th largest securities, including face amount certificates issued by commercial banking organization in Minnesota, with Applicant and mutual fund shares, and to securities total deposits representing less than one percent of brokerage. The Board notes that, if the capital devoted total deposits in commercial banks in the state. Con- to support Applicant's banking activities at an acceptsummation of the proposal would not result in a able level is excluded, Applicant would not have significant increase in the concentration of banking adequate capital support for its nonbanking activities resources in Minnesota. consistent with the risk factors involved in Applicant's Applicant and Bank compete in separate but adja- nonbanking activities or generally accepted norms for cent banking markets in Minnesota.2 Neither New companies engaged in similar activities.5 Conversely, Ulm Bank nor Bank are market leaders. In the Board's if the capital devoted to support Applicant's nonbankjudgment, consummation of the transaction would not ing activities at such acceptable levels is excluded, the have a significant adverse effect upon existing or capital available to support Applicant's banking activipotential competition in any relevant market. ties would be below the levels specified in the Board's The Board has indicated on previous occasions that Capital Adequacy Guidelines. a bank holding company should be a source of finan- Consequently, in the Board's view, Applicant's cial and managerial strength to its subsidiaries, and overall capital position is not sufficient to allow for the that the Board will closely examine the condition of an proposed debt-financed expansion of its banking activapplicant in each case with these considerations in ities, while maintaining an adequate capitalization for mind. The Board has stated in several orders that it both its banking and nonbanking activities. views with concern proposals that would result in a Based on these and other facts of record, the Board significant decline in capital ratios.3 The Board has concludes that banking considerations involved in this also indicated that, as a matter of safety and soundness proposal present adverse factors bearing upon finanand competitive equity, the Board should, in analyzing cial resources and future prospects of Applicant and a bank holding company's consolidated capital posi- Bank. tion, consider the capital levels represented by non- Applicant has proposed no new services for Bank banking activities in light of industry norms and stan- upon consummation of this proposal. Considerations dards and the risk factors of a particular industry.4 relating to the convenience and needs of the community to be served are consistent with but lend no weight toward approval of this application. 1. Banking data are as of March 30, 1984. 2. New Ulm Bank operates in the New Ulm banking market, which is defined as the southern one-fourth of McLeod County, the western half of Nicollet County, all of Brown County, and the western two- 5. Applicant argues that, in analyzing its proposal, the Board thirds of Sibley County. Bank operates in the Mankato banking should reallocate part of the capital from an insurance subsidiary to market, which is defined as Blue Earth and Watonwan Counties, the other parts of the holding company. However, such a reallocation has eastern one-half of Nicollet County, the eastern one-third of Sibley not been made, and the record does not establish that such a County, the western one-third of Waseca County, and Le Sueur reallocation would clearly be permitted by the relevant State Author- County less Lanesburgh Township. ity or would be consistent with the maintenance of adequate capital in 3. See Security Banks of Montana, 71 FEDERAL RESERVE BULLE- the insurance subsidiary. TIN 246 (1985); National City CorpJBancOhio Corp., 70 FEDERAL The Board has also considered Applicant's contention that certain RESERVE BULLETIN 743 (1984); Manufacturers Hanover/CIT Finan- face amount certificates should not be considered debt. The Board, cial Corp., 70 FEDERAL RESERVE BULLETIN 452 (1984). however, believes that in evaluating capital adequacy, these certifi- 4. Capital Adequacy Guidelines, 50 Federal Register 16,057, 16,066 cates are appropriately considered liabilities and that the performance (1985), 71 FEDERAL RESERVE BULLETIN 445, 446 (1985); Manufactur- of this activity by Applicant must be supported by an adequate ers Hanover/CIT Financial Corp., 70 FEDERAL RESERVE BULLETIN at provision for capital, as in other business activities, in order to 453 (1984). provide appropriate protection for the risks of doing business. 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724 Federal Reserve Bulletin • September 1985 On the basis of the facts of record of this applica- the state. Applicant also engages in a variety of tion, the Board concludes that the banking consider- nonbanking activities, including mortgage banking and ations involved in this proposal are adverse and are insurance activities. not outweighed by any relevant competitive or conve- RepublicBank proposes to expand its current paynience and needs considerations. Accordingly, it is the ment instrument activities by engaging de novo in the Board's judgment that approval of the application issuance and sale of variably denominated payment would not be in the public interest and the application instruments with a face value of up to $10,000. These should be and hereby is denied for the reasons summa- instruments will include money orders and will be rized above. issued on a nationwide basis. These instruments will By order of the Board of Governors, effective be sold primarily by RepublicBank's subsidiaries, un- July 5, 1985. affiliated banks, savings and loan associations, and other financial institutions. Regulation Y includes on Voting for this action: Chairman Volcker and Governors the list of permissible nonbanking activities1 the issu- Martin, Partee, Rice, Gramley, and Seger. Absent and not ance or sale of money orders and other similar convoting: Governor Wallich. sumer-type payment instruments with a face value not exceeding $1,000. The Board has previously approved James McAfee applications to engage in the issuance of payment [SEAL] Associate Secretary of the Board instruments with a maximum face value of $10,000. In its Orders, the Board found that an increase in the denomination of such instruments would not affect the Orders Issued Under Section 4 of Bank Holding fundamental nature of the payment instruments, and Company Act the Board concluded that the issuance and sale of the proposed instruments is closely related to banking.2 RepublicBank Corporation In order to approve this application, the Board must Dallas, Texas also find that the performance of the proposed activity by a nonbank affiliate of RepublicBank "can reason- Order Approving the Issuance of and Sale of ably be expected to produce benefits to the public, Payment Instruments such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse RepublicBank Corporation, Dallas, Texas, a bank effects, such as undue concentration of resources, holding company within the meaning of the Bank decreased or unfair competition, conflicts of interests, Holding Company Act ("Act"), has applied for the or unsound banking practices." Board's approval under section 4(c)(8) of the Act Consumer-type payment instruments, such as tradi- (12 U.S.C. § 1843(c)(8)) and section 225.23 of the tional money orders, are marketed nationally on the Board's Regulation Y (12 C.F.R. § 225.23) to engage wholesale level by a few large organizations and de novo through its subsidiary, Republic Money Or- locally on the retail level by a wide variety of financial ders, Inc., Dallas, Texas ("RMO"), in the issuance and nonfinancial institutions. On the national scale, and sale of variably denominated payment instruments the market is concentrated, being dominated by only a with a maximum face value of $10,000. These instru- few large organizations.3 Entry into this business on a ments will be sold primarily by RepublicBank's sub- national scale involves overcoming significant barriers sidiaries and unaffiliated financial institutions through- because a potential entrant must possess the capability out the United States. for managing the extensive sales and servicing opera- Notice of the application, affording interested per- tion necessary for handling a low unit-price, highsons an opportunity to submit comments on whether volume product. Such capabilities frequently are assothe proposed activity is closely related to banking and ciated with banking organizations of significant size, on the balance of public interest factors regarding the such as RepublicBank. RepublicBank's entry into this application, has been published (50 Federal Register 21,353 (1985)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the public 1. 12 C.F.R. § 225.25(b)(12). interest factors set forth in section 4(c)(8) of the Act. 2. BankAmerica Corporation, 70 FEDERAL RESERVE BULLETIN 364 (1984); Citicorp, 71 FEDERAL RESERVE BULLETIN 58 (1985). RepublicBank, the third largest bank holding com- 3. Money orders are primarily used to transmit money by members pany in Texas, operates 38 commercial banks and of the consumer public who do not or cannot maintain checking accounts. Traditionally, money orders have a maximum face value controls total deposits of $12.4 billion, representing 9.2 printed on the instrument, which is generally at or lower than the limit percent of the total deposits in commercial banks in set by Regulation Y. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 725 market would result in increased competition in this The activity approved hereby shall be commenced industry and may be expected ultimately to result in not later than three months after the effective date of increased prospects for some deconcentration of the this Order, unless such period is extended for good industry in the future. Accordingly, the Board views cause by the Board or by the Federal Reserve Bank of RepublicBank's proposal as procompetitive and in the Dallas, acting pursuant to delegated authority. public interest insofar as it relates to the issuance of By order of the Board of Governors, effective instruments that are intended primarily for use by July 2, 1985. consumers. In its past consideration of the issuance of variably Voting for this action: Chairman Volcker and Governors denominated payment instruments, the Board has Martin, Partee, Rice, Gramley, and Seger. Absent and not been concerned that the issuance of such instruments voting: Governor Wallich. with a face value of over $1,000 would result in an adverse effect on the reserve base. Because reserve JAMES MCAFEE requirements serve as an essential tool of monetary [SEAL] Associate Secretary of the Board policy, the Board is concerned that this proposal may result in adverse effects due to the erosion of the reservable deposits of the banking system. The Wachovia Corporation In its BankAmerica Order, the Board decided that Winston-Salem, North Carolina BankAmerica and any other bank holding company that receives approval to engage in this activity would Order Approving Expansion of Student Loan be required to file with the Board weekly reports of Servicing Activities daily data on this activity for use in conjunction with measuring and interpreting the money stock and for The Wachovia Corporation, Winston-Salem, North assessing the effects of the proposal on the reserve Carolina, a bank holding company within the meaning base. The Board also determined to monitor closely of the Bank Holding Company Act ("Act"), the effects of such proposals by bank holding compa- 12 U.S.C. § 1841 et seq., has applied for the Board's nies on the Board's conduct of monetary policy. If it approval, pursuant to section 4(c)(8) of the Act later appears that the result of such proposals is a (12 U.S.C. § 1843(c)(8)) and section 225.23 of the significant reduction in the reserve base or other Board's Regulation Y (12 C.F.R. § 225.23), to expand adverse effect on the conduct of monetary policy, the the student loan servicing activities previously ap- Board may impose reserve requirements on such proved for its existing nonbank subsidiary, Wachovia transactions, pursuant to section 19 of the Federal Services, Inc. ("WSI"), Winston-Salem, North Caro- Reserve Act (12 U.S.C. § 461(a)) and the Board's lina.1 The prior approval included provision of such Regulation D (12 C.F.R. Part 204). servicing activities to a state student loan authority. The record shows that the sale of these larger- Applicant's current proposal would encompass the denominated money orders by RepublicBank would following expanded activities: increase competition in this field and enhance the (1) WSI will provide state student loan authorities convenience of the purchaser. The Board finds that (the "Authority") with regular reports that include these instruments, which will be issued by a large information in the aggregate and by individual lendfinancial organization and will enjoy ready acceptability, will provide benefits to the public. Based upon the foregoing and other considerations 1. WSI was organized de novo as a subsidiary of Wachovia Bank & reflected in the record, the Board has determined that Trust Company, N.A., Winston-Salem, North Carolina, in 1964 and became a wholly owned subsidiary of Applicant on January 1, 1969. the balance of the public interest factors it is required On October 27, 1977, the Federal Reserve Bank of Richmond apto consider under section 4(c)(8) is favorable with proved, under delegated authority, Applicant's notice to retain WSI, respect to the activity of issuing consumer-oriented pursuant to section 4(c)(8) of the Act, and to continue to engage, inter alia, "in rendering data processing services related to banking, payment instruments. This determination is subject to financial, or related economic data, and specifically in the following all of the conditions set forth in Regulation Y, includ- product areas: ing section 225.4(d) and 225.23(b), and to the Board's c) data processing services to financial institutions, colleges, and universities in authority to require such modification or termination the accounting and servicing of student loans." of the activities of a holding company or any of its On November 30, 1984, the Richmond Reserve Bank approved subsidiaries as the Board finds necessary to assure Applicant's notice to engage in certain additional student loan serviccompliance with the provisions and purposes of the ing activities on a nationwide basis, including provision of such Act and the Board's regulations and orders issued activities to a state student loan authority, and to establish an office of WSI in Baton Rouge, Louisiana, from which the proposed expanded thereunder, or to prevent evasion thereof. activities initially would be conducted. 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726 Federal Reserve Bulletin • September 1985 ers concerning the volume of loans being serviced may be found to be closely related to banking if it is by WSI for the Authority, and the volume of loan demonstrated: commitments outstanding; (1) that banks generally have, in fact, provided the (2) Based on the volume of loans being serviced and proposed service; commitments outstanding (and in consultation with (2) that banks generally provide services that are a bank trustee and the Authority), WSI will prepare operationally or functionally so similar to the proprojections for approval by the Authority of student posed services as to equip them particularly well to loans to be purchased and commitments to be issued provide the proposed service; or in the future, consistent with the amount of funds (3) that banks generally provide services that are so available to the Authority as a result of its sale of integrally related to the proposed services as to bonds; require their provision in a specialized form. The (3) WSI will advise eligible lenders, borrowers and Board also may consider other factors in determinother interested parties of the Authority's student ing what is closely related to banking and has stated loan purchase program, including the criteria used that it will consider evidence of any reasonable by the Authority in purchasing student loans, and connection to banking in making its analysis.4 the extent to which the Authority will be purchasing loans in the future based on the funds available; and Applicant believes that these activities are so close- (4) WSI will meet with the Authority on a regular ly related to banking or managing or controlling banks basis to keep the Authority apprised of WSI's efforts as to be a proper incident thereto, because the activiin connection with the above proposed (and those ties are, in Applicant's opinion, either provided by previously approved) student loan servicing activi- banks or functionally similar to services provided by ties. banks. Specifically, Applicant believes that these expanded activities, in addition to the previously ap- Under no circumstances would WSI be authorized proved student loan servicing activities, are permissito bind the Authority or its bank trustee to commit to ble under section 225.25(b) of Regulation Y because purchase or actually to purchase student loans from they are an integral part of: eligible lenders. These activities have not been speci- (1) making, acquiring and servicing loans for the fied by the Board in section 225.25 of Regulation Y as account of others, as permitted by section permissible for bank holding companies. 225.25(b)(1) of Regulation Y; Notice of the application, affording interested per- (2) rendering investment and financial advice, as sons an opportunity to submit comments, has been permitted by section 225.25(b)(4); and duly published. 50 Federal Register 23,360 (1985). The (3) data processing, as permitted by section time for filing comments has expired, and the Board 225.25(b)(7). has considered the application and all comments received in light of the public interest factors set forth in Utilizing the National Courier criteria, the Board section 4(c)(8) of the Act. believes that banks generally have, in fact, provided Applicant is the largest banking organization in services operationally and functionally similar to the North Carolina, with total consolidated assets of $8.5 services proposed by Applicant and that Applicant, in billion,2 and engages in numerous nonbanking activi- light of its considerable experience in student loan ties. servicing, is particularly well suited to provide these In order to approve an application under section expanded loan servicing activities. On this basis, the 4(c)(8) of the Act, the Board must determine that the Board concludes that the proposed services are closeproposed activity is "so closely related to banking or ly related to banking. managing or controlling banks as to a proper incident The proposed activities appear to be substantially thereto. . . ." 12 U.S.C. § 1843(c)(8). In determining equivalent to the activities of a mortgage banking whether an activity is closely related to banking under subsidiary of a bank holding company under section section 4(c)(8), the Board has relied on guidelines 225.25(b)(1) of Regulation Y, with respect to acquiring established by the federal courts to determine whether and servicing mortgage loans for institutional investors a particular activity meets the "closely related to or in connection with the secondary mortgage market. banking" test.3 Under these guidelines, an activity The facts of record indicate that the activities conducted and proposed by Applicant, to the extent they are 2. Asset data are as of March 31, 1985. 3. See National Courier Association v. Board of Governors, 516 F.2d 1229 (D.C. Cir. 1975). Accord, Securities Industry Ass'n v. Board of Governors, _ U.S. _ , 104 S. Ct. 3003, 3008 (1984). 4. See 49 Federal Register 9215 (1984). 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Legal Developments 727 different from the services performed by any institu- purchase program can be sold to the Authority any tion that services loans for others, appear to be time after origination, and that administration of the different only in that they relate to servicing student program would not be overly burdensome on the loans for a governmental authority. Banks and their participating lenders because the loan servicing renonbank subsidiaries have generally provided compre- sponsibilities would be performed by Applicant. hensive loan acquisition and servicing "packages" for By providing state authorities with expertise in investors in mortgage and other loans. In this regard, servicing such student loan programs and assisting in 1974 the Board approved the acquisition by a bank state authorities in establishing a secondary market in holding company of a company engaged in the activity such loans, WSI can ease the administration and of arranging, negotiating and acquiring, for the ac- enhance the liquidity of such programs. The record count of institutional investors, loans and other finan- reflects there may be as much as $148 million of unmet cial transactions secured by income-producing proper- need for student loans in Applicant's proposed initial ty.5 Moreover, as the nation's largest servicer of service area (Louisiana). That amount could be restudent loans, WSI provides similar services to more duced if the state authority, with Applicant's assisthan 250 banks and other investors. Thus, WSI ap- tance, were to increase the number of lenders providpears to be particularly well equipped to perform the ing student loans by ensuring a liquid secondary proposed services. market for such assets and relieving lenders of servic- Before approving a bank holding company's appli- ing responsibilities for such loans. Accordingly, concation to engage in an activity that the Board deter- summation of the proposal would provide substantial mines is closely related to banking, the Board must public benefits outweighing any possible adverse efalso find that consummation of the proposal can fects. reasonably be expected to produce benefits to the Financial and managerial considerations are consispublic that outweigh possible adverse effects. Under tent with approval of this proposal. Moreover, there is this proposal, WSI would assist state authorities par- no evidence in the record that consummation of this ticipating in the Guaranteed Student Loan Program proposal would result in adverse effects, such as ("GSLP") created by the Congress in the Higher unsound banking practices, unfair competition, con- Education Act of 1965, 20 U.S.C. § 1001 et seq. The flicts of interests, or undue concentration of resources. GSLP provides insured loans to post-secondary Based upon the foregoing and all the facts of record, school students through a complex delivery system the Board has determined that the balance of public that includes banks and other institutions that origi- interest factors it is required to consider under section nate the loans, state agencies and authorities that 4(c)(8) is favorable. Accordingly, the application is purchase the loans, state guaranty agencies that insure hereby approved. This determination is subject to all the loans, and the federal government, which guaran- of the conditions set forth in the Board's Regulation Y, tees or reinsures the loans. including those in sections 225.4(d) and 225.23(b). The Many financial institutions find it difficult to hold approval also is subject to the Board's authority to student loans from the point of origination to maturity require modification or termination of the activities of because of the ten-year repayment provisions and the a holding company or any of its subsidiaries as the necessity for compliance with a myriad of federal, Board finds necessary to assure compliance with the state and guaranty agency regulations. These regula- provisions and purposes of the Act and the Board's tions require the assumption of detailed servicing regulations and orders issued thereunder, or to preresponsibilities by the lending institution and the cor- vent evasion thereof. responding expense that those servicing responsibil- This transaction shall not be consummated later ities entail. By using the proceeds of a tax-exempt than three months after the effective date of this bond issue to create a secondary market for the loans Order, unless such period is extended for good cause and assuming the servicing responsibilities, a state by the Board, or by the Federal Reserve Bank of hopes to increase the number of bank and nonbank Richmond, pursuant to delegated authority. lenders who would make funds available for student By order of the Board of Governors, effective loans: Lenders would be assured that any student July 1, 1985. loans generated in reliance on an authority's loan Voting for this action: Chairman Volcker and Governors Martin, Partee, Rice, Gramley, and Seger. Absent and not voting: Governor Wallich. JAMES MCAFEE 5. Fidelity Corporation of Pennsylvania, 39 Federal Register 16,929 (1974). [SEAL] Associate Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

728 Federal Reserve Bulletin • September 1985 Citizens and Southern Georgia Corporation that engages in data processing and related activities Atlanta, Georgia for an electronic funds transfer interchange system. These activities have been determined by the Board to Order Approving Acquisition of Banks and be closely related to banking and permissible for bank Nonbanking Companies holding companies, 12 C.F.R. §§ 225.25(b)(1), (3), (5), (7), (8), and (13). The determination related to the Citizens and Southern Georgia Corporation, Atlanta, authority of bank holding companies to act as agent Georgia, a bank holding company within the meaning with respect to credit life insurance in connection with of the Bank Holding Company Act ("Act"), has extensions of credit has not been affected by amendapplied for the Board's approval under section 3(a)(3) ments to section 4(c)(8) of the Act limiting the permisof the Act (12 U.S.C. § 1842(a)(3)) to acquire the sible insurance investments of bank holding compasuccessor by merger to Landmark Banking Corpora- nies.3 tion of Florida, Fort Lauderdale, Florida ("Land- Notice of the applications, affording opportunity for mark").1 As a result of the acquisition, Applicant interested persons to submit comments and views, has would acquire indirectly 22 of Landmark's 23 subsid- been given in accordance with sections 3 and 4 of the iary banks.2 Act (50 Federal Register 18,314 (1985)). The time for Applicant has also applied for the Board's approval filing comments and views has expired, and the Board under section 4(c)(8) of the Act (12 U.S.C. has considered the applications and all comments § 1843(c)(8)) and section 225.23 of the Board's Regula- received in light of the factors set forth in section 3(c) tion Y (12 C.F.R. § 225.23) to acquire Landmark's of the Act (12 U.S.C. § 1842(c)) and the considernonbanking subsidiaries, all in Florida: Capital Group, ations specified in section 4(c)(8) of the Act.4 Inc., Fort Lauderdale, and its subsidiaries, Capital Applicant is the largest commercial banking organi- America, Inc., Fort Lauderdale, and Capital Asso- zation in Georgia, with six subsidiary banks that ciates, Inc., Pompano Beach, companies that engage control aggregate deposits of approximately $4.7 bilin equipment leasing; Landmark Financial Services, lion, representing 17.1 percent of the total deposits in Inc., Fort Lauderdale ("LFS"), a company that en- commercial banks in Georgia.5 Landmark is the sixth gages in real estate appraisal activities and acts as an largest commercial banking organization in Florida. Its agent with respect to the sale of credit life insurance 23 subsidiary banks control aggregate deposits of directly related to extensions of credit by Landmark's approximately $3 billion, representing 5.1 percent of subsidiary banks; Landmark Mortgage Corporation, the total deposits in commercial banks in Florida. Tampa ("Landmark Mortgage"), a company that en- Section 3(d) of the Act (12 U.S.C. § 1842(d)), the gages in making and servicing residential real estate Douglas Amendment, prohibits the Board from apmortgage loans; The National Trust Company, Fort proving any application by a bank holding company to Myers, a company that engages in trust activities; and acquire control of any bank located outside of the Florida Interchange Group, Inc., Orlando, a company 1. Applicant has also applied under section 3(a)(1) of the Act 3. See Garn-St Germain Depository Institutions Act of 1982, Pub. (12 U.S.C. § 1842(a)(1)) for approval for its wholly owned inactive L. No. 97-320, §601, 96 Stat. 1469, 1536-38 (1982) ("Garn-St subsidiary, Citizens and Southern Acquisition Corporation, Atlanta, Germain"). The Board received a comment on behalf of the National Georgia ("Acquisition Corporation"), to become a bank holding Association of Life Underwriters and the National Association of company through merger with Landmark. Acquisition Corporation Professional Insurance Agents in connection with Applicant's prowould be the surviving corporation in the merger and would change its posed acquisition of LFS. This comment urges the Board to ensure name to Landmark Banking Corporation of Florida. that LFS's insurance agency activities are conducted in accordance 2. Landmark controls the following banks, all in Florida: Land- with the standards established by section 4(c)(8) and, in particular, by mark Bank of Brevard, Melbourne; Landmark First National Bank, Garn-St Germain. In this regard, the Board notes that LFS's insur- Fort Lauderdale; Charlotte County National Bank, Port Charlotte; ance activities consist of acting as agent with respect to credit life First Bank of Marco Island, N.A., Marco Island; First National Bank insurance directly related to extensions of credit by Landmark's and Trust Company of Naples, Naples; First County Bank, River- subsidiary banks. Such activities are explicitly permitted by the terms view; Landmark Bank of Tampa, Tampa; Peoples Bank of Hillsbor- of section 4(c)(8)(A) of the Act. ough County, Tampa; East First National Bank, East Fort Myers; 4. The Board received a protest from Legal Services of Greater First Commercial Bank of Fort Myers, Fort Myers; The First Bank of Miami, Inc., Gulf Coast Legal Services, Inc., Greater Orlando Legal Fort Myers, Fort Myers; Gulf Coast First National Bank, Fort Myers; Services, Inc., and Central Florida Legal Services, Inc., alleging that North First Bank, North Fort Myers; The Palmetto Bank and Trust certain of Landmark's subsidiary banks are not fulfilling their respon- Company, Palmetto; Landmark Bank of Orlando, Orlando; Landmark sibility under the Community Reinvestment Act to help meet the Bank of Palm Beach County, Boca Raton; Peoples Bank of Pasco credit needs of their communities. The protestants withdrew their County, Elfers; Gulf Coast Bank of Pinellas, Madeira Beach; Land- protest following several meetings with Applicant and Applicant's mark Union Trust Bank of St. Petersburg, N.A., St. Petersburg; Palm adoption of a Statement of Policy setting forth its corporate commit- State Bank, Palm Harbor; Gulf Coast National Bank, Sarasota; ment to help meet community credit needs and its program for National Bank of Sarasota, Sarasota; and South County Bank, implementing this commitment in the markets served by Landmark. Venice. 5. Banking data are as of June 30, 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 729 holding company's home state,6 unless such acquisi- of the existence of numerous other potential entrants tion is "specifically authorized by the statute laws of from within the three-state interstate banking region of the State in which [the] bank is located, by language to Georgia, Florida, and North Carolina into each of the that effect and not merely by implication." The statute markets served by Landmark or Applicant,11 the laws of Florida authorize the acquisition of a bank in Board has concluded that the consummation of this Florida by a bank holding company that controls a proposal would not have any significant adverse efbank located in other states in a defined southeastern fects on probable future competition in any relevant region, including Georgia, if such other state autho- market. rizes on a reciprocal basis the acquisition of a bank in The financial and managerial resources of Applithe state by a Florida bank holding company.7 Georgia cant, Landmark, and their respective subsidiaries are has enacted such a reciprocal statute.8 Based on its considered satisfactory and their prospects appear review of the relevant Florida and Georgia statutes, favorable. Upon consummation of the proposed transthe Board has determined that Florida has by statute action, Applicant's primary and total capital ratios expressly authorized a Georgia bank holding compa- would exceed the minimum levels specified in the ny, such as Applicant, to acquire a Florida bank or Board's Capital Adequacy Guidelines.12 The Board bank holding company, such as Landmark.9 Further- concludes that banking factors are consistent with more, the United States Supreme Court has recently approval of this application. held, in Northeast Bancorp, Inc. v. Board of Gover- Considerations relating to the convenience and nors of the Federal Reserve System, 105 S. Ct. 2545 needs of the communities to be served also are consis- (1985), that regional reciprocal banking statutes, such tent with approval of the application, particularly in as those involved in this case, are authorized by the light of Applicant's adoption of a Statement of Policy Douglas Amendment to the Bank Holding Company regarding the Community Reinvestment Act obliga- Act and consistent with the United States Constitutions of its proposed subsidiary banks. tion. Accordingly, the Board concludes that Board Applicant has also applied, pursuant to section approval of Applicant's proposal to acquire banks in 4(c)(8) of the Act, to acquire five nonbanking subsid- Florida is not barred by the Douglas Amendment. iaries of Landmark that engage in equipment leasing, Landmark's banking subsidiaries operate in 14 mar- credit insurance, real estate appraisal, residential real kets in Florida. None of Applicant's subsidiary banks estate mortgage lending and servicing, trust, and data operates in Florida and, accordingly, consummation of processing activities. This proposal would eliminate a the proposal would have no effect on existing competi- small amount of existing competition in Florida betion in any relevant market. The Board has also tween Landmark's and Applicant's subsidiaries that examined the effect of Applicant's acquisition of engage in mortgage banking activities. Both Landmark Landmark on probable future competition in the rele- Mortgage and Landmark's bank subsidiaries offer resivant geographic markets in light of the Board's pro- dential mortgage lending and servicing through numerposed guidelines for assessing the competitive effects ous offices in Florida, while Applicant's subsidiary, of market-extension mergers or acquisitions.10 In view Citizens and Southern Mortgage Company ("C&S Mortgage") operates offices in Tampa, Tallahassee, and Maitland, Florida. C&S Mortgage's share of the mortgage banking market in Florida is not significant, 6. A bank holding company's home state is that state in which the and the product market in Florida is unconcentrated, operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the with numerous competitors and low barriers to entry. company became a bank holding company, whichever is later. Accordingly, the proposed acquisition would not have 7. Fla. Stat. Ann. § 658.295 (1984). The Florida statute also requires that all of the bank subsidiaries of a Florida bank holding a significant effect on competition for mortgage bankcompany sought to be acquired by a regional bank holding company ing services in any relevant market. In addition, Appliunder the statute must have been in existence and in continuous operation for more than two years. Fla. Stat. Ann. § 658.295(3)(a)(3). Applicant has one bank subsidiary, Landmark Bank of Palm Beach County, that has been in existence for less than two years. Applicant has committed that this bank will be divested before or contemporaneously with Applicant's consummation of the proposed acquisition. 8. Ga. Code Ann. §§ 7-1-620 to 7-1-625 (Supp. 1985). 9. See SunTrust Banks, Inc., 71 FEDERAL RESERVE BULLETIN 176, 11. North Carolina has in effect regional reciprocal interstate 177 (1985). banking legislation that is similar to the Georgia and Florida laws in 10. "Proposed Policy Statement of the Board of Governors of the permitting interstate acquisitions of North Carolina banks by banking Federal Reserve System for Assessing Competitive Factors Under the organizations located in certain Southern states, including Georgia Bank Merger Act and the Bank Holding Company Act," 47 Federal and Florida. N.C. Gen. Stat. § 53-229 (1984). North Carolina is a state Register 9017 (1982). While the proposed policy statement has not within the interstate banking regions defined by the Georgia and been adopted by the Board, the Board has applied the criteria set forth Florida statutes. in the proposed policy statement in its analysis of the effects of 12. Capital Adequacy Guidelines, 50 Federal Register 16,057 proposals on probable future competition. (1985). 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730 Federal Reserve Bulletin • September 1985 cant's discount brokerage subsidiary, First Southeast- Society Corporation ern Company, competes with Landmark's subsidiary Cleveland, Ohio banks in the market for discount brokerage services through its office in Tampa, Florida. However, in view Order Approving the Merger of Bank Holding of First Southeastern's de minimis market share in Companies and the Acquisition of Nonbank Florida and the unconcentrated nature of the product Subsidiaries market, the Board concludes that the proposed acquisition would not eliminate any significant competition Society Corporation, Cleveland, Ohio, a bank holding in the market for discount brokerage services. company within the meaning of the Bank Holding After consideration of the above facts and other Company Act ("Act"), has applied for the Board's facts of record, the Board concludes that Applicant's approval under section 3(a)(5) of the Act (12 U.S.C. acquisition of Landmark's nonbanking subsidiaries § 1842(a)(5)) to acquire Centran Corporation, Clevewould not significantly affect competition in any rele- land, Ohio ("Centran"). As a result of the acquisition, vant market. Furthermore, there is no evidence in the Applicant would acquire indirectly Centran's six subrecord to indicate that approval of this proposal would sidiary banks. result in undue concentration of resources, unfair Applicant has also applied for the Board's approval competition, conflicts of interests, unsound banking under section 4(c)(8) of the Act (12 U.S.C. practices, or other adverse effects on the public inter- § 1843(c)(8)) and section 225.23(a)(2) of the Board's est. Accordingly, the Board has determined that the Regulation Y (12 C.F.R. § 225.23(a)(2)), to acquire balance of the public interest factors it must consider Security Capital Leasing, Inc., Berea, Ohio, a compaunder section 4(c)(8) of the Act is favorable and ny that engages in the leasing of personal property ; consistent with approval of the applications to acquire CFS One, Inc. of Mississippi, Berea, Ohio, a company Landmark's nonbanking subsidiaries. that engages in the activity of making consumer loans; Based on the foregoing and other facts of record, the Protective Loan Corporation, Berea, Ohio, a company Board has determined that the applications under that has authority to engage in making and acquiring sections 3 and 4 of the Act should be and hereby are consumer loans and to act as an agent with respect to approved. The acquisition of Landmark's subsidiary the sale of credit life and credit health and accident banks shall not be consummated before the thirtieth insurance in connection with its extensions of credit; calendar day following the effective date of this Order, and Centran Life Insurance Company, Berea, Ohio, and neither the banking acquisition nor the nonbank- and Dallas, Texas, a company that engages in the ing acquisition shall occur later than three months activity of acting as a reinsurer with respect to credit after the effective date of this Order, unless such life insurance written in connection with extensions of period is extended for good cause by the Board or by credit by Centran's affiliate banks. These activities the Federal Reserve Bank of Atlanta, acting pursuant have been determined by the Board to be closely to delegated authority. The determination with respect related to banking and permissible for bank holding to Applicant's acquisition of Landmark's nonbanking companies, 12 C.F.R. §§ 225.25(b)(1),(5),(8) and (9), subsidiaries is subject to all of the conditions set forth and those determinations related to the authority of in Regulation Y, including sections 225.4(d) and bank holding companies to act as agent or reinsurer 225.23(b) (12 C.F.R. §§ 225.4(d) and 225.23(b)), and to with respect to credit life and credit health and accithe Board's authority to require such modifications or dent insurance in connection with extensions of credit, termination of activities of a holding company or any have not been affected by amendments to section of its subsidiaries as the Board finds necessary to 4(c)(8) of the Act limiting the permissible insurance assure compliance with the provisions and purposes of activities of bank holding companies.1 the Act and the Board's regulations and orders issued Applicant has also applied to acquire CFS One, thereunder, or to prevent evasion thereof. Inc., Berea, Ohio, another subsidiary of Centran, that By order of the Board of Governors, effective engages in the activity of making consumer and com- July 29, 1985. mercial loans, and has the authority to act as an agent with respect to the sale of credit life and credit health Voting for this action: Chairman Volcker and Governors and accident insurance in connection with its exten- Martin, Wallich, Partee, Rice, and Seger. Absent and not sions of credit, and with respect to the sale of fire voting: Governor Gramley. insurance and extended coverage insurance on real property, furniture and household goods taken as JAMES MCAFEE 1. See Garn-St Germain Depository Institutions Act of 1982, Pub. [SEAL] Associate Secretary of the Board L. No. 97-320, § 601, 96 Stat. 1469, 1536-38 (1982). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 731 collateral on loans made or purchased by CFS One, banking organizations in the state. However, Ohio's Inc., pursuant to section 4(c)(8)(D) of the Act. The banking structure is relatively unconcentrated, with scope of permissible activities under section 4(c)(8)(D) the state's four largest banking organizations holding is currently the subject of a rulemaking proceeding.2 approximately 46 percent of the total deposits in Applicant has committed that it will not exercise the commercial banks in the state. Upon consummation of authority of CFS One, Inc., to act as agent with the proposed merger, including the divestitures, the respect to the sale of property and casualty insurance four-firm concentration ratio would increase to 49.9 directly related to extensions of credit prior to the percent, and the state would not become highly conconclusion of the Board's adoption of final provisions centrated. Accordingly, the Board concludes that conof Regulation Y, 12 C.F.R. § 225 et seq., implement- summation of this transaction would not have a signifiing section 4(c)(8)(D) of the Act, and that it will do so cant adverse effect on the concentration of banking only in compliance with such final provisions, and resources in the state. only after consultation with the Federal Reserve Bank Applicant's subsidiary banks compete directly with of Cleveland. Centran's subsidiary banks in the Cleveland, Akron, Notice of the applications, affording an opportunity Columbus, and Seneca County banking markets. Apfor interested persons to submit comments and views, plicant is the fourth largest of 20 commercial banking has been given in accordance with sections 3 and 4 of organizations in the Cleveland banking market,5 with the Act (50 Federal Register 19,808 (1985)). The time $1.5 billion in deposits, representing 12.0 percent of for filing comments and views has expired, and the the total deposits in commercial banks therein.6 Cen- Board has considered the applications and all com- tran is the third largest banking organization in the ments received in light of the factors set forth in Cleveland banking market, with deposits of $1.5 bilsection 3(c) of the Act (12 U.S.C. § 1842(c)) and the lion, representing 12.4 percent of the total deposits in considerations specified in section 4(c)(8) of the Act.3 commercial banks therein. Upon consummation of Applicant is the fourth largest banking organization this proposal, absent any divestiture, Applicant would in Ohio, with ten subsidiary banks that control aggre- become the second largest commercial banking organigate deposits of approximately $4.7 billion, represent- zation in the market, controlling 24.4 percent of the ing 8.4 percent of the total deposits in commercial market's commercial banking deposits. The HHI in banks in the state.4 Centran is the seventh largest the market would increase by 298 points to 1978, and banking organization in Ohio, with six subsidiary the market would be considered highly concentrated.7 banks that control aggregate deposits of $2.2 billion, To minimize the competitive effects of the proposal representing 4.0 percent of the total deposits in com- in the Cleveland banking market, Applicant has commercial banks in the state. Upon consummation of the mitted to divest 18 of Centran's Cleveland market proposed merger, including divestitures proposed by offices and the deposit accounts associated with those Applicant, Applicant's share of the total deposits in facilities, to a financial institution not presently reprecommercial banks in Ohio would increase to 11.9 sented in the market.8 Upon consummation of the percent, and Applicant would become the third largest transaction, including the proposed divestiture, Applicommercial banking organization in the state. cant would control 22.1 percent of the total deposits in The Board has carefully considered the effects of the commercial banks in the Cleveland banking market, proposal on statewide banking structure. This propos- and the HHI would increase by 215 points to 1895. al involves the combination of sizeable commercial The effect of this transaction is further mitigated by banking organizations that are among the leading the extent of competition offered by thrift institutions 2. 49 Federal Register 9215 (1984). 3. The Board received a comment on behalf of the Independent 5. The Cleveland market is approximated by Cuyahoga, Lake, Insurance Agents of America, Inc., the National Association of Lorain, and Geauga Counties and parts of Summit, Medina, Portage, Casualty and Surety Agents, Inc., and the National Association of and Erie Counties. Surety Bond Producers ("Protestants"), in connection with Appli- 6. Market data are as of June 30, 1983. cant's acquisition under section 4(c)(8) of the Act of CFS One, Inc. 7. Under the revised Department of Justice Merger Guidelines (49 Protestants stated that the Board should limit its approval of the Federal Register 26,823 (1984), any market in which the post-merger acquisition of a subsidiary engaged in insurance-related activities to HHI is above 1800 is considered highly concentrated. In such marthose activities permissible under sections 4(c)(8)(A) and (B) of the kets, the Department is likely to challenge any merger that produces Act, 12 U.S.C. § 1843(c)(8)(A),(B). In view of Applicant's commit- an increase in the HHI of more than 50 points unless other factors ment, discussed above, the Board does not believe that the limitations indicate that the merger will not substantially lessen competition. suggested by Protestants are necessary. 8. The divestiture would be completed before or contemporaneous- 4. Unless otherwise indicated, banking data are as of December 31, ly with Applicant's consummation of the proposed merger with 1984. Centran. 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732 Federal Reserve Bulletin • September 1985 in the market.9 Thirty-three thrift institutions operate commercial real estate loans) and 14 offer commercial in the Cleveland banking market and control $11.0 checking accounts. Accordingly, in view of the facts billion in deposits representing 47 percent of total cited above and other facts of record, the Board deposits in the market. The thrift institutions in the concludes that consummation of this proposal would market currently offer a full range of consumer ser- not have a significantly adverse effect on existing vices and transaction accounts. Twenty-three of the 33 competition in the Akron banking market.12 thrift institutions offer commercial loans (other than Applicant is the fifth largest of nineteen commercial commercial real estate loans) and 21 offer commercial banking organizations in the Columbus banking marchecking accounts.10 In view of the extent of competi- ket,13 with $250.7 million in deposits, representing tion offered by thrift institutions and the proposed approximately 4.2 percent of the total deposits in divestiture the Board has determined that consumma- commercial banks in the market. Centran is the ninth tion of this proposal would not have a significantly largest banking organization in the Columbus banking adverse effect on existing competition in the Cleveland market, with $73.1 million in deposits, representing banking market. approximately 1.2 percent of the total deposits in Applicant is the fifth largest of nine commercial commercial banks in the market. After consummation banking organizations in the Akron banking market,11 of this proposal, Applicant would remain the fifth with $209.2 million in deposits, representing approxi- largest commercial banking organization in the marmately 7.5 percent of the total deposits in commercial ket, controlling approximately 5.4 percent of total banks in the market. Centran is the fourth largest deposits in commercial banks in the market. The HHI banking organization in the Akron banking market, in the market would increase by 10 points to 2182. with $257.0 million in deposits, representing approxi- Consummation of the proposal would eliminate existmately 9.2 percent of the total deposits in commercial ing competition in this market. However, in view of banks in the market. After consummation of this the small resulting market share and the fact that 17 proposal, Applicant would become the fourth largest commercial banking organizations would remain in the commercial banking organization in the market, con- market following consummation of the proposal, the trolling 16.6 percent of total deposits in commercial Board concludes that the acquisition would not have banks in the market. The HHI in the market would any significant effect on competition in the Columbus increase by 137 points to 2294, and the market would banking market. be considered highly concentrated. While consumma- Applicant is the second largest of eight banking tion of the proposal would eliminate some existing organizations in the Seneca County banking market,14 competition in the Akron banking market, the Board with $71.0 million in deposits, representing approxibelieves that the anticompetitive effects of this propos- mately 21.7 percent of the total deposits in commercial al are mitigated by the presence of 20 thrift institutions banks in the market. Centran is the fourth largest in the market, controlling $2.1 billion in deposits, banking organization in the Seneca County market, which represents approximately 42.3 percent of the with $21.9 million in deposits, representing approxitotal deposits in the market. The thrift institutions in mately 6.7 percent of the total deposits in commercial the market currently offer a full range of consumer banks in the market. The market is highly concentratservices and transaction accounts. Seventeen of the 20 ed, with a four-firm concentration ratio of 85 percent thrift institutions offer commercial loans (other than and an HHI of 2576. The combination of Applicant and Centran would increase Applicant's share of commercial bank deposits in the market to 28.3 percent. The HHI in the market would increase by 289 points to 2865. 9. The Board has previously determined that thrift institutions have become, or at least have the potential to become, major competitors of banks. NCNB Corporation, 70 FEDERAL RESERVE BULLETIN 225 (1984); Sun Banks, Inc., 69 FEDERAL RESERVE BULLETIN 934 (1983); Merchants Bancorp, Inc., 69 FEDERAL RESERVE BULLETIN 865 12. If 50 percent of the deposits held by thrift institutions were (1983); First Tennessee National Corporation, 69 FEDERAL RESERVE included in the calculation of market concentration, Applicant would BULLETIN 298 (1983). control 5.5 percent of deposits and Centran would control 6.7 percent. 10. Following Applicant's divestiture of 18 Cleveland offices, if 50 Consummation of the proposal would increase the HHI by 73 points, percent of the deposits held by thrift institutions were included in the from 1321 to 1394, and the four-firm concentration ratio would be 66.7 calculation of market concentration, Applicant would control 8.3 percent. percent of the total deposits in the market and Bank would control 8.6 13. The Columbus market is approximated by Franklin, Fairfield, percent. Consummation of the proposal would increase the HHI by Licking, Delaware, and Pickaway Counties and parts of Madison, 108 points, from 878 to 986, and the four-firm concentration ratio Perry, and Hocking Counties. would be 56.1 percent. 14. The Seneca County banking market is defined as Seneca 11. The Akron market is approximated by portions of Summit, County and those portions of the City of Fostoria that lie in adjacent Portage, Medina, Stark, and Wayne Counties. counties. 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Legal Developments 733 To minimize the competitive effects of the proposal Board does not view the elimination of Centran as a in the Seneca County market, Applicant proposes to probable future entrant into this market as substantialdivest Centran's sole banking office in the market to a ly anticompetitive. recently formed bank holding company that currently Of the remaining 19 markets in which only Applicant does not operate there. The divestiture would be now competes, 16 have numerous probable future completed before or contemporaneously with Appli- entrants, and the remaining three markets are not cant's consummation of the proposed merger with highly concentrated. Based on the foregoing and other Centran.15 Thus, upon consummation of the transac- facts of record, the Board concludes that consummation, including the proposed divestiture, Applicant's tion of the proposal would not have any significant share of commercial bank deposits and the number of adverse effect on probable future competition in any competitors in the market would remain unchanged. relevant market. Thus, competitive considerations are Accordingly, consummation of the proposal would not consistent with approval of the application. have any significant adverse effect on competition in The financial and managerial resources of Applicant the Seneca County market. and its subsidiaries are regarded as generally satisfac- There are 21 markets in Ohio in which either Appli- tory, and their future prospects appear favorable. cant or Centran, but not both, operates.16 The Board Banking factors are consistent with approval of the has considered the effect of this proposal on probable application. Considerations relating to the convefuture competition in these markets and has evaluated nience and needs of the communities to be served are the proposal in light of its guidelines for assessing the also consistent with approval of the application. competitive effects of market extension mergers and Applicant has also applied, pursuant to section acquisitions.17 4(c)(8) of the Act, to acquire Centran Life Insurance There are two markets in which Centran, but not Company, Security Capital Leasing, Inc., CFS One, Applicant, competes. Each market has numerous po- Inc., CFS One, Inc. of Mississippi, and Protective tential entrants. Accordingly, the Board finds that Loan Corporation. It does not appear that Applicant's consummation of the proposal would not have a acquisition of these subsidiaries would have any signifsubstantially adverse effect on probable future compe- icant adverse effect upon existing or potential competitition in these markets. tion. As noted above, Centran has a banking office in the Furthermore, there is no evidence in the record to Seneca County banking market that will be divested indicate that approval of this proposal would result in upon consummation of this proposal. While the dives- undue concentration of resources, decreased or unfair titure would eliminate any adverse effect the proposal competition, conflicts of interests, unsound banking may have upon existing competition, the Board has practices or other adverse effects on the public interalso examined the proposal for any adverse effect est. Accordingly, the Board has determined that the upon probable future competition in this market. Be- balance of the public interest factors it must consider cause of its size and financial resources and the fact under section 4(c)(8) of the Act is favorable and that it had already entered the Seneca County market, consistent with approval of the applications to acquire Centran is viewed as a likely probable future entrant Centran Life Insurance Company, Security Capital into this market. However, there are numerous proba- Leasing, Inc., CFS One, Inc., CFS One, Inc., of ble future entrants into the market. Therefore, the Mississippi, and Protective Loan Corporation. Based on the foregoing and other facts of record, the Board has determined that the applications under sections 3(a)(5) and 4(c)(8) of the Act should be, and hereby are, approved.18 The merger shall not be 15. In this respect, Applicant's proposed divestiture conforms to consummated before the thirtieth calendar day followthe requirement announced in Barnett Banks of Florida, Inc., 68 FEDERAL RESERVE BULLETIN 190 (1982); see alsoInterFirst Corpora- ing the effective date of this Order, and neither the tion, 68 FEDERAL RESERVE BULLETIN 243, 244 (1982). merger nor the acquisition of the nonbanking subsid- 16. The 19 markets in which only Applicant operates are: Ashtabuiaries shall occur later than three months after the la, Canton, Carrollton, Cincinnati, Crawford, Dayton, Findlay, Fremont, Huron, Mercer, Mt. Gilead, Oxford, Port Clinton, Salem, Sandusky, Springfield, Toledo, Wapakoneta, and Youngstown-Warren. The two markets in which only Centran operates are Ashland and Mansfield. 17. "Proposed Policy Statement of the Board of Governors of the 18. As part of this proposal, Marine Midland Banks, Inc., New Federal Reserve System for Assessing Competitive Factors Under the York, New York ("Marine"), will receive nonvoting shares of Appli- Bank Merger Act and the Bank Holding Company Act", 47 Federal cant in exchange for its existing nonvoting equity investment in Register 9017 (1982). Although the proposed policy statement has not Centran, together with cash and a warrant for the purchase of certain been approved by the Board, the Board is using the policy guidelines voting shares of Applicant. Applicant has committed that it will not as part of its analysis of the effect of proposals on probable future consummate this proposal until the Board has reviewed and approved competition. the terms of Marine's proposed investment in Applicant. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

734 Federal Reserve Bulletin • September 1985 effective date of this Order, unless such period is gaged in mortgage financing, an activity that the Board extended for good cause by the Board or by the has determined to be closely related to banking and Federal Reserve Bank of Cleveland pursuant to dele- permissible for bank holding companies. 12 C.F.R. gated authority. The determinations as to Applicant's § 225.25(b)(1). nonbanking activities are subject to the conditions set Notice of the applications, affording an opportunity forth in Regulation Y, including those in sections for interested persons to submit comments, has been 225.4(d) and 225.23(b), and to the Board's authority to given in accordance with sections 3 and 4 of the Act, require such modification or termination of the activi- 50 Federal Register 15,683 (1985). The time for filing ties of a holding company or any of its subsidiaries as comments has expired, and the Board has considered the Board finds necessary to assure compliance with the applications and all comments received in light of the provisions and purposes of the Act and the Board's the factors set forth in section 3(c) of the Act, regulations and orders issued thereunder, or to pre- 12 U.S.C § 1842(c), and the considerations specified vent evasion thereof. in section 4(c)(8) of the Act. By order of the Board of Governors, effective Applicant is a multibank holding company that July 15, 1985. currently controls 24 subsidiary banks.1 It is the fourth largest banking organization in Wisconsin and controls Voting for this action: Chairman Volcker and Governors total domestic deposits of $1.1 billion, representing Martin, Wallich, Partee, Rice, Gramley, and Seger. Governor approximately 4.0 percent of the total deposits in Wallich abstained from the insurance portion of these appli- commercial banks in the state.2 United Banks, the cations. 13th largest banking organization in the state, controls total domestic deposits of $258.0 million, representing JAMES MCAFEE approximately 0.9 percent of the total deposits in [SEAL] Associate Secretary of the Board commercial banks in the state. Upon consummation of the proposed transaction, Applicant would remain the Valley Bancorporation fourth largest banking organization in Wisconsin, con- Appleton, Wisconsin trolling 28 commercial banks with total deposits of $1.3 billion, representing 4.9 percent of the total Order Approving Acquisition of Banks and a deposits in commercial banks in the state. The pro- Mortgage Finance Company posed transaction would have no significant effect on the concentration of banking resources in Wisconsin. Valley Bancorporation, Appleton, Wisconsin, has ap- Applicant and United Banks compete directly in one plied for the Board's approval under section 3 of the market, the Madison banking market.3 Applicant's Bank Holding Company Act ("Act") (12 U.S.C. banking subsidiary in the Madison market, Bank of § 1842), to acquire United Banks of Wisconsin, Inc., Oregon, Oregon, Wisconsin, controls deposits of $30.5 Madison, Wisconsin ("United Banks"), a bank hold- million, representing approximately 1.8 percent of the ing company within the meaning of the Act, and total deposits in commercial banks in the market.4 thereby to acquire indirectly its four subsidiary banks: United Banks is the third largest commercial banking United Bank, Madison, Wisconsin ("United Madi- organization in the market, operating two banking son"); Farmers & Citizens United Bank, Sauk City, subsidiaries that together control deposits of approxi- Wisconsin ("United Sauk"); United Bank in Meno- mately $167.3 million, representing approximately 9.6 monie, Menomonie, Wisconsin ("United Meno- percent of the total deposits in commercial banks in monie"); and United Bank in Sun Prairie, Sun Prairie, the market.5 Upon consummation of the proposed Wisconsin ("United Sun Prairie"). Applicant pro- transaction, Applicant would control approximately poses to merge United Banks into Valley-Capital Corporation, Appleton, Wisconsin, a recently organized wholly owned subsidiary of Applicant that 1. This figure includes Applicant's recent acquisition of Banc Wis would be the surviving institution. The banks to be Corporation, Janesville, Wisconsin, and Bank of Oregon, Oregon, acquired will continue to operate under their existing Wisconsin, which were consummated, respectively, on March 31 and May 7, 1985. names and charters. 2. Banking data are as of June 30, 1984. Applicant has also applied under section 4(c)(8) of 3. The Madison banking market is defined as all of Dane County the Act (12 U.S.C. § 1843(c)(8)) and section except for the eastern tier, which includes the townships of York, Medina, Dearfield, Christiana and Albion, all in Wisconsin. 225.23(a)(2) of the Board's Regulation Y (12 C.F.R. 4. Deposit data are as of September 30, 1984. § 225.23(a)(2)), to acquire United Mortgage of Wiscon- 5. United Madison and United Sun Prairie control, respectively, sin, Inc., Madison, Wisconsin ("United Mortgage"), a deposits of $138.0 million and $29.3 million, representing 7.9 percent and 1.7 percent of total deposits in commercial banks in the Madison subsidiary of United Banks. United Mortgage is en- banking market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 735 11.4 percent of the total deposits in commercial banks a bank holding company should serve as a source of in the market. strength to its banking subsidiaries. In addition, the The share of deposits held by the four largest Board has stated that capital adequacy is an especially banking organizations in the Madison banking market important factor in the analysis of bank holding comis 57 percent and would increase to 58.8 percent upon pany proposals.9 While Applicant's existing primary consummation of this proposal. The market's Herfin- and total capital ratios are above the minimum levels dahl-Hirschman Index is 1103 and would increase by specified for bank holding companies in the Board's 35 points to 1138 upon consummation of the proposal.6 Capital Adequacy Guidelines,10 consummation of the Although the proposed acquisition would eliminate proposed transaction would result in a slight decline in some existing competition between Applicant and Applicant's tangible primary capital ratio to the mini- United Banks in the Madison banking market, the mum acceptable primary capital ratio under the market would not become highly concentrated as a Board's Guidelines. Furthermore, Applicant will incur result of this transaction and 25 competitors would additional debt in connection with this proposal. It remain in the market upon consummation. On the appears from the facts of record, however, that Applibasis of these and other facts of record, the Board cant is capable of improving its tangible capital ratio, concludes that the effects of consummation of the servicing its debt, and serving as a source of strength proposal on existing competition in the Madison bank- to its subsidiaries. Therefore, based on these and other ing market would not be significantly adverse. United facts of record, the Board concludes that the financial Banks operates in two other banking markets, the and managerial resources and future prospects of Sauk County and Dunn County banking markets,7 in Applicant and United Banks are generally satisfacwhich Applicant does not compete. Thus, consumma- tory, and that banking factors are consistent with tion of this proposal would not have any effect on approval of this application. existing competition in these markets. Considerations relating to the convenience and The Board has also examined the effect of the needs of the community to be served are also consisproposed acquisition upon probable future competi- tent with approval. Consummation of this proposal tion in the three geographic markets in which United would result in the expansion of banking services Banks operates and has evaluated the proposal in light offered by United Banks' subsidiaries, to include the of the Board's proposed guidelines for assessing the provision of trust and discount brokerage services. competitive effects of market extension mergers and Applicant has also applied under section 4(c)(8) of acquisitions.8 None of these markets is highly concen- the Act to acquire United Mortgage, a mortgage trated under the Board's Guidelines. Accordingly, the financing company that makes, acquires and services Board has concluded that consummation of this pro- mortgage loans for itself and for others. This activity posal would not have any significant adverse effects on has been determined by the Board to be closely related probable future competition in any relevant market. to banking under section 225.25(b)(1) of the Board's Accordingly, competitive considerations are consis- Regulation Y. 12 C.F.R. § 225.25(b)(1)). Consummatent with approval of this application. tion of this proposal would have no effect on competi- In evaluating this application, the Board has consid- tion or the concentration of resources in any relevant ered the financial and managerial resources of Appli- market. The record does not contain any evidence that cant and the effect on these resources of the proposed consummation of the proposal would result in any acquisition of United Banks. The Board has stated that other adverse factors, such as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices. Accordingly, the Board has determined that the balance of public 6. Under the revised Department of Justice Merger Guidelines (49 interest factors it must consider under section 4(c)(8) Federal Register 26,823 (1984)), a market in which the post-merger HHI is between 1000 and 1800 is considered only moderately concen- of the Act is favorable and consistent with approval of trated. In such a market, the Department is unlikely to challenge a the application. merger producing an increase in the HHI of less than 100 points. Based on the foregoing and other facts of record, the 7. The Sauk County banking market is approximated by Sauk County, Wisconsin, excluding Spring Green township, and includes Board has determined that the applications under the Westford and Wellon townships in Richland County, Wisconsin. sections 3 and 4 of the Act should be and hereby are The Dunn County banking market is defined as Dunn County, Wisconsin. 8. "Policy Statement of the Board of Governors of the Federal Reserve System for Assessing Competitive Factors Under the Bank Merger Act and the Bank Holding Company Act," 47 Federal Register 9017 (1982). While the proposed policy statement has not 9. See, e.g., National City Corporation, 70 FEDERAL RESERVE been adopted by the Board, the Board is using the policy Guidelines as BULLETIN 743 (1984). part of its analysis of the effect of a proposal on probable future 10. Capital Adequacy Guidelines, 50 Federal Register 16,057 competition. (1985). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

736 Federal Reserve Bulletin • September 1985 approved. The acquisition of banks shall not be con- tion or termination of activities of a holding company summated before the thirtieth calendar day following or any of its subsidiaries as the Board finds necessary the effective date of this Order, and neither the bank- to assure compliance with the provisions and purposes ing acquisition nor the nonbanking acquisition shall of the Act and the Board's regulations and orders occur later than three months after the effective date of issued thereunder, or to prevent evasion thereof. this Order, unless such period is extended for good By order of the Board of Governors, effective cause by the Board or by the Federal Reserve Bank of July 15, 1985. Chicago acting pursuant to delegated authority. The determination with respect to Applicant's acquisition Voting for this action: Chairman Volcker and Governors of United Mortgage is subject to all of the conditions Martin, Wallich, Partee, Rice, Gramley, and Seger. set forth in Regulation Y, including sections 225.4(d) and 225.23(b) (12 C.F.R. §§ 225.4(d) and 225.23(b)), JAMES MCAFEE and to the Board's authority to require such modifica- [SEAL] Associate Secretary of the Board ORDERS APPROVED UNDER BANK HOLDING COMPANY ACT By the Board of Governors During June and July 1985 the Board of Governors approved the applications listed below. Copies are available upon request to Publications Services, Division of Support Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Board action Applicant Bank(s) (effective date) Bankers Trust New York Corporation, Bankers Trust Delaware, July 19, 1985 New York, New York Wilmington, Delaware Barnett Banks of Florida, Inc., Niceville Bankshares Corporation, June 26, 1985 Jacksonville, Florida Niceville, Florida Fifth Third Bancorp, The Fifth Third Bank of Columbus, June 27, 1985 Cincinnati, Ohio Columbus, Ohio RepublicBank Corporation, RepublicBank Countryside, N.A., July 1, 1985 Dallas, Texas San Antonio, Texas By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies of the orders are available upon request to the Reserve Banks. Section 3 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date American National Bancshares, The American National Bank of Chicago July 16, 1985 Inc., Noblesville, Noblesville, Indiana Noblesville, Indiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 737 Section 3—Continued a i- Bank(s)/Nonbanking Reserve Effective t pp Company Bank date Amcorp Financial, Inc., American National Bank, Kansas City July 9, 1985 Ardmore, Oklahoma Ardmore, Oklahoma BancTenn Corp., Bank of Tennessee, Atlanta July 19, 1985 Kingsport, Tennessee Kingsport, Tennessee Barclays PLC, Barclays Bank PLC, New York June 20, 1985 London, England London, England Barclays USA, Inc., Wilmington, Delaware Barclays Bank of Delaware, N.A., Wilmington, Delaware BFW Financial Corporation, Shady Oaks National Bank, Dallas June 21, 1985 Burleson, Texas Lake Worth, Texas BoRC Financial Corporation, Bank of Roane County, Atlanta July 15, 1985 Harriman, Tennessee Harriman, Tennessee Carroll Financial Corporation, First Bank of Carroll County, Chicago July 18, 1985 Burlington, Indiana Burlington, Indiana Cascade Bancorporation, Inc., State Bank of Cascade, Chicago July 2, 1985 Cascade, Wisconsin Cascade, Wisconsin Citicorp, Quadstar Corporation, New York July 15, 1985 New York, New York Wilmington, Delaware Citizens Bancorporation of New Citizens Bank of New Ulm, Minneapolis July 10, 1985 Ulm, New Ulm, Minnesota New Ulm, Minnesota Commerce Bancshares of Ros- Valley Bank of Commerce, Dallas June 27, 1985 well, Inc., Roswell, New Mexico Roswell, New Mexico Community Financial Corpora- Community National Bank of Philadelphia July 11, 1985 tion, Southern Pennsylvania, Littlestown, Pennsylvania Littlestown, Pennsylvania Commonwealth Bancshares Commonwealth National Finan- Philadelphia July 19, 1985 Corp., cial Corporation, Williamsport, Pennsylvania Harrisburg, Pennsylvania Heritage Financial Services Corporation, Lewistown, Pennsylvania Cosmos Bancorporation, Inc., First State Bank of Cosmos, Minneapolis July 10, 1985 Cosmos, Minnesota Cosmos, Minnesota Darmen Financial of Wisconsin, The First State Bank, Chicago July 12, 1985 Inc., Fennimore, Wisconsin Fennimore, Wisconsin Edna Bancshares, Inc., First State Bank of Edna, Kansas City June 21, 1985 Edna, Kansas Edna, Kansas Elston Corporation, Lizton Financial Corporation, Chicago June 27, 1985 Crawfordsville, Indiana Lizton, Indiana Evergreen Bancshares, Inc., First State Bank, St. Louis July 3, 1985 Crossett, Arkansas Crossett, Arkansas Farmers & Merchants Bancorp, The Farmers & Merchants State Cleveland June 21, 1985 Inc., Bank, Archbold, Ohio Archbold, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

738 Federal Reserve Bulletin • September 1985 Section 3—Continued Bank (s)/Nonbanking Reserve Effective Applicant Company Bank date Farmers & Merchants Banc- The Farmers and Merchants Dallas July 18, 1985 shares, Inc., Bank of Mart, Mart, Texas Mart, Texas Financial Dominion of Ken- Farmers Deposit Bank, St. Louis July 12, 1985 tucky, Inc., Brandenburg, Kentucky Radcliff, Kentucky Financial Holdings, Inc., Boulder Valley National Bank, Kansas City July 5, 1985 Louisville, Colorado Boulder, Colorado Financial Management Services The Farmers & Merchants Bank Chicago July 3, 1985 of Jefferson, Inc., of Jefferson, Jefferson, Wisconsin Jefferson, Wisconsin F M Fincorp, Farmers & Merchants Bank, Chicago July 10, 1985 Laotto, Indiana Laotto, Indiana First Commonwealth Financial The Dale National Bank, Cleveland July 16, 1985 Corporation, Dale, Pennsylvania Indiana, Pennsylvania First Corinth Corp., National Bank of Commerce of St. Louis July 3, 1985 Corinth, Mississippi Corinth, Corinth, Mississippi First Crockett Bancshares, Inc., Allied First National Bank of Dallas June 28, 1985 Crockett, Texas Crockett, Crockett, Texas First Fidelity Bancorporation, First Fidelity Bank, New York July 1, 1985 Newark, New Jersey Princeton, West Windsor, New Jersey First National Shares of First National Bank of East Atlanta July 10, 1985 Louisiana, Baton Rouge, Baton Rouge, Louisiana Baton Rouge, Louisiana First National Bancorp, Peoples Bancorp, Atlanta July 3, 1985 Gainesville, Georgia Cleveland, Georgia First National Talladega Corpo- The First National Bank of Atlanta July 19, 1985 ration, Talladega, Talladega, Alabama Talladega, Alabama First Railroad & Banking Com- Washington Loan & Banking Atlanta July 1, 1985 pany of Georgia, Company, Augusta, Georgia Washington, Georgia First Railroad & Banking Com- Decimus Data Services Corpora- Atlanta July 11, 1985 pany of Georgia, tion, Augusta, Georgia Chicago, Illinois First Wyoming Bancorporation, First Wyoming Bank, N.A.-Ri- Kansas City June 18, 1985 Cheyenne, Wyoming verton, Riverton, Wyoming Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 739 Section 3—Continued .. Bank(s)/Nonbanking Reserve Effective p Company Bank date FirstPlace Financial Corp., First National Bank in Lincoln, Chicago July 3, 1985 Lincoln, Illinois Lincoln, Illinois Forsyth Bancshares, Inc., Forsyth County Bank, Atlanta June 21, 1985 Cumming, Georgia Cumming, Georgia Ft. Elliott Bancshares, Inc., The First State Bank of Dallas July 12, 1985 Mobeetie, Texas Mobeetie, Mobeetie, Texas Harris Bankcorp, Inc., Bankmont Financial Corp., Chicago June 28, 1985 Chicago, Illinois New York, New York First Canadian Financial U.S. Holdings, Inc., Montreal, Quebec, Canada First National Bank and Trust Company of Barrington, Barrington, Illinois Bank of Montreal, Montreal, Quebec, Canada Headland Capital Corporation, Wiregrass Bank & Trust, Atlanta June 28, 1985 Headland, Alabama Headland, Alabama In wood Holding Corporation, Inwood Bancshares, Inc., Dallas July 17, 1985 Irving, Texas Dallas, Texas Inwood National Bank of Dallas, Dallas, Texas KGG Ban Corp., Community State Bank, Chicago July 11, 1985 Hampton, Iowa Rockwell, Iowa Kingfisher Bancorp, Inc., Kingfisher Bank and Trust Kansas City June 28, 1985 Kingfisher, Oklahoma Company, Kingfisher, Oklahoma Kootenai Bancorp, First National Bank in Libby, Minneapolis June 20, 1985 Libby, Montana Libby, Montana Madison Bank Corp., Bank of Madison, Atlanta July 10, 1985 Madison, Georgia Madison, Georgia Marshall & Ilsley Corporation, M&I Bank of Dodgeville, Chicago June 18, 1985 Milwaukee, Wisconsin Dodgeville, Wisconsin NEB Corporation, American Bank of Fond du Lac, Chicago June 27, 1985 Fond du Lac, Wisconsin Fond du Lac, Wisconsin Old-First National Corporation, Old-First National Bank in Bluff- Chicago July 16, 1985 Bluffton, Indiana ton, Bluffton, Indiana Ontario Bancorporation, Inc., Genoa State Bank, Chicago July 11, 1985 Ontario, Wisconsin Genoa, Wisconsin PSB Bancshares, Ltd, Postville State Bank, Chicago July 3, 1985 Postville, Iowa Postville, Iowa Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

740 Federal Reserve Bulletin • September 1985 Section 3—Continued Bank(s)/Nonbanking Reserve Effective APPhcant Company Bank date River Bend Bancshares, Inc., Illinois State Bank of East Alton, St. Louis July 12, 1985 Wood River, Illinois East Alton, Illinois Rock Springs American Bancor- The American National Bank of Kansas City July 12, 1985 poration, Inc., Rock Springs, Rock Springs, Wyoming Rock Springs, Wyoming Rockford Bancorporation, Inc., State Bank, Minneapolis July 19, 1985 Rockford, Minnesota Rockford, Minnesota Ruston Bancshares, Inc., Security Bancshares, Inc., Dallas July 12, 1985 Ruston, Louisiana Monroe, Louisiana Security Bank, Monroe, Louisiana Sand Ridge Financial Corp., Bank of Highland, Chicago July 15, 1985 South Bend, Indiana Highland, Indiana Security Pacific Corporation, Vierling, Devaney & Maguire, San Francisco June 24, 1985 Los Angeles, California Inc., New York, New York Sequatchie County Bancorp, Sequatchie County Bank, Atlanta July 3, 1985 Inc., Dunlap, Tennessee Dunlap, Tennessee SouthTrust Corporation, Elba Exchange Bank, Atlanta June 27, 1985 Birmington, Alabama Elba, Alabama Southwest Banc Shares, Inc., Chatom State Bank, Atlanta June 27, 1985 Chatom, Alabama Chatom, Alabama State Financial Services Corpo- University National Bank, Chicago July 10, 1985 ration, Milwaukee, Wisconsin Hales Corners, Wisconsin Tolna Bancorp, Inc., The Farmers & Merchants State Minneapolis July 9, 1985 Tolna, North Dakota Bank, Tolna, North Dakota United Banks of Colorado, Inc., United Banks of Westminster, Kansas City July 12, 1985 Denver, Colorado Westminster, Colorado Wanamingo Bancshares, Inc., Security State Bank of Wana- Minneapolis July 16, 1985 Wanamingo, Minnesota mingo, Inc., Wanamingo, Minnesota Warrick Financial Corporation, Warrick National Bank of Boon- St. Louis July 12, 1985 Boonville, Indiana ville, Boonville, Indiana WGNB Corporation, West Georgia National Bank of Atlanta June 21, 1985 Carrollton, Georgia Carrollton, Carrollton, Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 741 Section 4 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date First Bank System, Inc., The John Fawcett Company, Minneapolis July 16, 1985 Minneapolis, Minnesota Duluth, Minnesota The Byers Company, Duluth, Minnesota Robert H. Heimbach Agency, Inc., Duluth, Minnesota Montana International Insurance, Inc., Helena, Montana First Eastern Corp., Ideal Consumer Discount Philadelphia June 28, 1985 Wilkes-Barre, Pennsylvania Company, Nanticoke, Pennsylvania Marion National Corporation, Gasque-Clemmons Agency, Inc., Richmond July 19, 1985 Marion, South Carolina Marion, South Carolina Marion Investment Corporation, Inc., Marion, South Carolina Sections 3 and 4 Bank(s)/Nonbanking Reserve Effective Applicant Company Bank date Barclays U.S. Holdings, Inc., BarclaysAmericanCorporation, New York June 20, 1985 New York, New York Charlotte, North Carolina Barclays Bank of Delaware, N.A., Wilmington, Delaware consumer finance, credit-related insurance, sale of money orders and travelers checks, data processing activities Key Bancshares of New York Several New York-domiciled sub- New York July 17, 1985 Inc., sidiary banks of Key Banks Albany, New York Inc., Albany, New York lending, leasing, data processing, investment advisory services, underwriting of credit-related insurance National Commerce Corpora- MetroBank, Atlanta July 17, 1985 tion, Birmingham, Alabama Birmingham, Alabama extension of credit Legal Developments continued on next page Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

742 Federal Reserve Bulletin • September 1985 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of Governors is not named a party. Florida Bankers Association v. Board of Governors, Melcher v. Federal Open Market Committee, No. 84- No. 84-3883 and No. 84-3884 (11th Cir., filed 1335 (D.D.C., filed, Apr. 30, 1984). Feb. 15, 1985). Florida Bankers Association, et al. v. Board of Gover- Florida Department of Banking v. Board of Gover- nors, No. 84-3269 and No. 84-3270 (11th Cir., filed nors, No. 84-3831 and No. 84-3832 (11th Cir., filed Apr. 20, 1984). Feb. 15, 1985). State of Ohio, v. Board of Governors, No. 84-1270 Dimension Financial Corporation v. Board of Gover- (10th Cir., filed Jan. 30, 1984). nors, No. 84-1274 (U.S., filed Feb. 6, 1985). Colorado Industrial Bankers Association v. Board of Lewis v. Paul A. Volcker and Arthur D. Merman, Governors, No. 84-1122 (10th Cir., filed Jan. 27, Bank of Ohio, No. C-1-85-0099 (S.D. Ohio, filed 1984). Jan. 14, 1985). First Bancorporation v. Board of Governors, No. 84- Brown v. United States Congress, et al., No. 84-2887- 1011 (10th Cir., filed Jan. 5, 1984). 6(IG) (filed Dec. 7, 1985). Oklahoma Bankers Association v. Federal Reserve Seattle Bancorporation, et al. v. Board of Governors, Board, No. 83-2591 (10th Cir., filed Dec. 13, 1983). No. 84-7535 (9th Cir., filed Aug. 15, 1984). Securities Industry Association v. Board of Gover- Citicorp v. Board of Governors, No. 84-4081 (2d Cir., nors, No. 80-2730 (D.C. Cir., filed Oct. 24, 1980). filed May 22, 1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS Assets and liabilities Domestic Financial Statistics A19 All reporting banks A20 Banks in New York City A21 Branches and agencies of foreign banks MONEY STOCK AND BANK CREDIT A22 Gross demand deposits—individuals, partnerships, and corporations A3 Reserves, money stock, liquid assets, and debt measures A4 Reserves of depository institutions, Reserve FINANCIAL MARKETS Bank credit A5 Reserves and borrowings—Depository A23 Commercial paper and bankers dollar institutions acceptances outstanding A5 Federal funds and repurchase agreements— A23 Prime rate charged by banks on short-term Large member banks business loans A24 Interest rates—money and capital markets A25 Stock market—Selected statistics POLICY INSTRUMENTS A26 Selected financial institutions—Selected assets and liabilities A6 Federal Reserve Bank interest rates A7 Reserve requirements of depository institutions A8 Maximum interest rates payable on time and FEDERAL FINANCE savings deposits at federally insured institutions A9 Federal Reserve open market transactions A28 Federal fiscal and financing operations A29 U.S. budget receipts and outlays A30 Federal debt subject to statutory limitation FEDERAL RESERVE BANKS A30 Gross public debt of U.S. Treasury—Types and ownership A10 Condition and Federal Reserve note statements A31 U.S. government securities dealers— All Maturity distribution of loan and security Transactions holdings A32 U.S. government securities dealers—Positions and financing A3 3 Federal and federally sponsored credit MONETARY AND CREDIT AGGREGATES agencies—Debt outstanding A12 Aggregate reserves of depository institutions and monetary base A13 Money stock, liquid assets, and debt measures A15 Bank debits and deposit turnover A16 Loans and securities—All commercial banks COMMERCIAL BANKING INSTITUTIONS A17 Major nondeposit funds A18 Assets and liabilities, last-Wednesday-of-month series Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 Federal Reserve Bulletin • September 1985 SECURITIES MARKETS AND International Statistics CORPORATE FINANCE SUMMARY STATISTICS A34 New security issues—State and local governments and corporations A53 U.S. international transactions—Summary A35 Open-end investment companies—Net sales and A54 U.S. foreign trade asset position A54 U.S. reserve assets A35 Corporate profits and their distribution A54 Foreign official assets held at Federal Reserve A36 Nonfinancial corporations—Assets and Banks liabilities A55 Foreign branches of U.S. banks—Balance sheet A36 Total nonfarm business expenditures on new data plant and equipment A57 Selected U.S. liabilities to foreign official A37 Domestic finance companies—Assets and institutions liabilities and business credit REPORTED BY BANKS IN THE UNITED STATES REAL ESTATE A57 Liabilities to and claims on foreigners A38 Mortgage markets A58 Liabilities to foreigners A39 Mortgage debt outstanding A60 Banks' own claims on foreigners A61 Banks' own and domestic customers' claims on foreigners CONSUMER INSTALLMENT CREDIT A61 Banks' own claims on unaffiliated foreigners A62 Claims on foreign countries—Combined A40 Total outstanding and net change domestic offices and foreign branches A41 Terms REPORTED BY NONBANKING BUSINESS FLOW OF FUNDS ENTERPRISES IN THE UNITED STATES A42 Funds raised in U.S. credit markets A63 Liabilities to unaffiliated foreigners A43 Direct and indirect sources of funds to credit A64 Claims on unaffiliated foreigners markets SECURITIES HOLDINGS AND TRANSACTIONS Domestic Nonfinancial Statistics A65 Foreign transactions in securities SELECTED MEASURES A66 Marketable U.S. Treasury bonds and notes— Foreign transactions A44 Nonfinancial business activity—Selected measures A45 Labor force, employment, and unemployment INTEREST AND EXCHANGE RATES A46 Output, capacity, and capacity utilization A47 Industrial production—Indexes and gross value A67 Discount rates of foreign central banks A49 Housing and construction A67 Foreign short-term interest rates A50 Consumer and producer prices A68 Foreign exchange rates A51 Gross national product and income A52 Personal income and saving A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A3 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Monetary and credit aggregates (annual rates of change, seasonally adjusted in percent)' IItteemm 1984 1985 1985 Q3 Q4 Q1 Q2 Feb. Mar. Apr.' May' June Reserves of depository institutions2 1 Total 6.9' 3.8' 17.4' 12.2 24.1' 1.1' 7.1 18.1 24.9 2 Required 6.7' 3.C 16.9"- 12.3 19.7' 5.4' 8.1 16.4 22.3 3 Nonborrowed -44.7' 36.3' 57.3' 14.1 28.3' -8.1' 15.7 18.3 29.6 4 Monetary base3 7.1' 4.7' 8.2' 7.5 11.(K 5.3' 3.6 10.6 13.5 Concepts of money, liquid assets, and debt4 5 Ml 4.5 3.2 10.6 10.2 14.3 5.7 5.9 14.0 19.8 6 M2 6.8 9.1 12.0 5.3 11.1 4.1 -.9 8.6 14.0 7 M3 9.5 11.0 10.7 5.2 8.1 5.6' .2 7.8 10.9 8 L 12.1' 9.5' 9.8 n.a. 10.1 8.7' .7 n.a. n.a. 9 Debt 12.6 13.4 13.4 11.7 11.1' 10.9<- 12.1 11.7 n.a. Nontransaction components 10 InM25 7.6 10.9 12.5 3.8 10.1 3.5 -3.0 6.9 12.2 11 In M3 only6 20.5 18.7 5.4' 4.8 -3.3 11.8' 5.0 4.6 -1.0 Time and savings deposits Commercial banks 12 Savings7 -5.6 -10.4 -8.7 -1.7 -2.0 -10.9 -7.0 8.0 14.9 13 Small-denomination time8 13.4 6.9 -1.8 6.5 -8.4 2.5 15.0 7.1 2.5 14 Large-denomination time9,10 19.3 12.2 2.6 8.3 9.6 23.1 15.1 -4.0 -19.0 Thrift institutions 15 Savings7 -6.5 -6.6 2.2 3.3 7.9 2.9 -.7 5.0 9.2 16 Small-denomination time 17.1 15.2 1.7 4.2 -3.9 .5 4.8 10.6 4.8 17 Large-denomination time9 37.8 29.8 21.0 2.3 2.3 -5.4 .8 13.2 2.3 Debt components4 18 Federal 14.7 15.6 15.9 13.1 13.7 10.6 13.2 14.8 n.a. 19 Nonfederal 12.0 12.7 12.6 11.2 10.3' 10^ 11.8 10.8 n.a. 20 Total loans and securities at commercial banks" 9.1 9.2 9.9 n.a. 12.7 11.4 n.a. 9.3 9.6 1. Unless otherwise noted, rates of change are calculated from average funds. Also excludes all balances held by U.S. commercial banks, money market amounts outstanding in preceding month or quarter. funds (general purpose and broker/dealer), foreign governments and commercial 2. Figures incorporate adjustments for discontinuities associated with the banks, and the U.S. government. Also subtracted is a consolidation adjustment implementation of the Monetary Control Act and other regulatory changes to that represents the estimated amount of demand deposits and vault cash held by reserve requirements. To adjust for discontinuities due to changes in reserve thrift institutions to service their time and savings deposits. requirements on reservable nondeposit liabilities, the sum of such required M3: M2 plus large-denomination time deposits and term RP liabilities (in reserves is subtracted from the actual series. Similarly, in adjusting for discontin- amounts of $100,000 or more) issued by commercial banks and thrift institutions, uities in the monetary base, required clearing balances and adjustments to term Eurodollars held by U.S. residents at foreign branches of U.S. banks compensate for float also are subtracted from the actual series. worldwide and at all banking offices in the United Kingdom and Canada, and 3. The monetary base not adjusted for discontinuities consists of total balances in both taxable and tax-exempt, institution-only money market mutual reserves plus required clearing balances and adjustments to compensate for float funds. Excludes amounts held by depository institutions, the U.S. government, at Federal Reserve Banks plus the currency component of the money stock less money market funds, and foreign banks and official institutions. Also subtracted is the amount of vault cash holdings of thrift institutions that is included in the a consolidation adjustment that represents the estimated amount of overnight RPs currency component of the money stock plus, for institutions not having required and Eurodollars held by institution-only money market mutual funds. reserve balances, the excess of current vault cash over the amount applied to L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term satisfy current reserve requirements. After the introduction of contemporaneous Treasury securities, commercial paper and bankers acceptances, net of money reserve requirements (CRR), currency and vault cash figures are measured over market mutual fund holdings of these assets. the weekly computation period ending Monday. Debt: Debt of domestic nonfinancial sectors consists of outstanding credit Before CRR, all components of the monetary base other than excess reserves market debt of the U.S. government, state and local governments, and private are seasonally adjusted as a whole, rather than by component, and excess nonfinancial sectors. Private debt consists of corporate bonds, mortgages, conreserves are added on a not seasonally adjusted basis. After CRR, the seasonally sumer credit (including bank loans), other bank loans, commercial paper, bankers adjusted series consists of seasonally adjusted total reserves, which include acceptances, and other debt instruments. The source of data on domestic excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt currency component of the money stock plus the remaining items seasonally data are on an end-of-month basis. Growth rates for debt reflect adjustments for adjusted as a whole. discontinuities over time in the levels of debt presented in other tables. 4. Composition of the money stock measures and debt is as follows: 5. Sum of overnight RPs and Eurodollars, money market fund balances Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults (general purpose and broker/dealer), MMDAs, and savings and small time of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits deposits less the estimated amount of demand deposits and vault cash held by at all commercial banks other than those due to domestic banks, the U.S. thrift institutions to service their time and savings deposit liabilities. government, and foreign banks and official institutions less cash items in the 6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents, process of collection and Federal Reserve float; and (4) other checkable deposits money market fund balances (institution-only), less a consolidation adjustment (OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer that represents the estimated amount of overnight RPs and Eurodollars held by service (ATS) accounts at depository institutions, credit union share draft institution-only money market mutual funds. accounts, and demand deposits at thrift institutions. The currency and demand 7. Excludes MMDAs. deposit components exclude the estimated amount of vault cash and demand 8. Small-denomination time deposits—including retail RPs—are those issued deposits respectively held by thrift institutions to service their OCD liabilities. in amounts of less than $100,000. All IRA and Keogh accounts at commercial M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) banks and thrifts are subtracted from small time deposits. issued by all commercial banks and overnight Eurodollars issued to U.S. residents 9. Large-denomination time deposits are those issued in amounts of $100,000 by foreign branches of U.S. banks worldwide, MMDAs, savings and small- or more, excluding those booked at international banking facilities. denomination time deposits (time deposits—including retail RPs—in amounts of 10. Large-denomination time deposits at commercial banks less those held by less than $100,000), and balances in both taxable and tax-exempt general purpose money market mutual funds, depository institutions, and foreign banks and and broker/dealer money market mutual funds. Excludes individual retirement official institutions. accounts (IRA) and Keogh balances at depository institutions and money market 11. Changes calculated from figures shown in table 1.23. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • September 1985 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of Weekly averages of daily figures for week ending daily figures 1985 1985 Apr. May June May 15 May 22 May 29 June 5 June 12 June 19 June 26 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit 187,124 189,001 188,651 188,009 186,050 185,768 187,266 188,845 188,490 188,052 2 U.S. government securities1 164,467 166,708 166,584 164,869 164,355 164,223 165,262 166,676 166,052 166,709 3 Bought outright 163,690 165,365 166,451 164,869 164,355 164,223 164,694 166,676 166,052 166,709 4 Held under repurchase agreements 777 1,343 133 0 0 0 568 0 0 0 5 Federal agency obligations 8,454 8,461 8,325 8,364 8,363 8.363 8,382 8,337 8,303 8,303 6 Bought outright 8,372 8,365 8,321 8,364 8,363 8,363 8,363 8,337 8,303 8,303 7 Held under repurchase agreements 82 96 4 0 0 0 19 0 0 0 8 Acceptances 0 0 0 0 0 0 0 0 0 0 9 Loans 1,316 1,178 1,227 1,393 1,474 1,174 1,861 819 1,427 735 10 Float 503 587 600 589 591 496 144 1,055 798 314 11 Other Federal Reserve assets 12,384 12,067 11,915 12,793 11,267 11,512 11,617 11,958 11,910 11,991 12 Gold stock 11,093 11,091 11,090 11,091 11,091 11,091 11,091 11,091 11,090 11,090 13 Special drawing rights certificate account 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 14 Treasury currency outstanding 16,634 16,696 16,749 16,687 16,701 16,715 16,728 16,739 16,750 16,761 ABSORBING RESERVE FUNDS 15 Currency in circulation 180,973 183,019 185,414 182,900 183,037 183,966 184,906 185,548 185,640 185,139 16 Treasury cash holdings 575 600 596 600 602 601 602 597 597 594 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,711 6,591 2,874 6,883 3,138 3,245 2,400 2,077 2,514 3,754 18 Foreign 218 227 229 241 233 226 217 211 240 210 19 Service-related balances and adjustments 1,556 1,549 1,657 1,516 1,618 1,507 1,494 1,669 1,768 1,608 20 Other 427 603 470 647 784 487 541 426 622 400 21 Other Federal Reserve liabilities and capital 6,424 6,310 6,301 6,290 6,328 6,258 6,254 6,275 6,357 6,307 22 Reserve balances with Federal Reserve Banks2 22,587 22,508 23,568 21,328 22,722 21,902 23,290 24,490 23,211 22,508 End-of-month figures Wednesday figures 1985 1985 Apr. May June May 15 May 22 May 29 June 5 June 12 June 19 June 26 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 197,652 185,262 191,442 186,438 190,176 186,578 189,908 188,647 190,224 188,027 24 U.S. government securities1 173,913 164,245 169,110 164,212 164,262 164,714 165,240 166,816 165,431 166,282 25 Bought outright 166,460 164,245 169,110 164,212 164,262 164,714 164,066 166,816 165,431 166,282 26 Held under repurchase agreements... 7,453 0 0 0 0 0 1,174 0 0 0 27 Federal agency obligations 8,903 8,363 8,303 8,363 8,363 8,363 8,373 8,303 8,303 8,303 28 Bought outright 8,372 8,363 8,303 8,363 8,363 8,363 8,363 8,303 8,303 8,303 29 Held under repurchase agreements... 531 0 0 0 0 0 10 0 0 0 30 Acceptances 0 0 0 0 0 0 0 0 0 0 31 Loans 1,525 1,765 1,338 1,484 4,769 1,419 3,549 688 3,806 776 32 Float 254 -816 262 743 1,336 162 774 961 517 391 33 Other Federal Reserve assets 13,057 11,705 12,429 11,636 11,446 11,920 11,972 11,879 12,167 12,275 34 Gold stock 11,091 11,091 11,090 11,091 11,091 11,091 11,091 11,090 11,090 11,090 35 Special drawing rights certificate account .. 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 36 Treasury currency outstanding 16,673 16,726 16,770 16,699 16,713 16,726 16,737 16,748 16,759 16,770 ABSORBING RESERVE FUNDS 37 Currency in circulation 180,858 184,691 185,886 183,114 183,325 184,853 185,233 185,818 185,478 185,414 38 Treasury cash holdings 586 602 588 602 601 602 598 597 594 588 Deposits, other than reserve balances with Federal Reserve Banks 39 Treasury 19,305 1,933 3,288 3,414 3,110 3,853 1,975 1,778 3,541 3,892 40 Foreign 348 205 310 319 213 223 211 207 168 243 41 Service-related balances and adjustments ... 1,302 1,337 1,348 1,326 1,327 1,336 1,337 1,422 1,423 1,348 42 Other 324 557 321 1,469 472 530 444 432 567 349 43 Other Federal Reserve liabilities and capital 6,652 6,242 6,291 6,123 6,119 6,086 6,091 6,067 6,186 6,144 44 Reserve balances with Federal Reserve Banks2 20,660 22,131 25,888 22,480 27,431 21,531 26,466 24,783 24,734 22,527 1. Includes securities loaned—fully guaranteed by U.S government securities 2. Excludes required clearing balances and adjustments to compensate for pledged with Federal Reserve Banks—and excludes (if any) securities sold and float. scheduled to be bought back under matched sale-purchase transactions. NOTE. For amounts of currency and coin held as reserves, see table 1.12. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.12 RESERVES AND BORROWINGS Depository Institutions Millions of dollars Monthly averages8 RReesseerrvvee ccllaassssiiffiiccaattiioonn 1982 1983 1984 1984 1985 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May' June 1 Reserve balances with Reserve Banks' 24,939 21,138 21,738 21,738 21,577 20,416 22,065 23,217 22,385 23,369 2 Total vault cash2 20,392 20,755 22,316 22,316 23,044 23,927 21,863 21,567 21,898 22,180 3 Vault cash used to satisfy reserve requirements3 . 17,049 17,908 18,958 18,958 19,547 19,857 18,429 18,435 18,666 18,984 4 Surplus vault cash4 3,343 2,847 3,358 3,358 3,497 4,070 3,434 3,132 3,231 3,196 5 Total reserves5 41,853 38,894 40,696 40,696 41,125 40,273 40,494 41,652 41,051 42,354 6 Required reserves 41,353 38,333 39,843 39,843 40,380 39,370 39,728 40,914 40,247 41,446 7 Excess reserve balances at Reserve Banks6 500 561 853 853 745 903 766 738 804 907 8 Total borrowings at Reserve Banks 697 774 3,186 3,186 1,395 1,289 1,593 1,323 1,334 1,205 9 Seasonal borrowings at Reserve Banks 33 96 113 113 62 71 88 135 165 151 10 Extended credit at Reserve Banks7 187 2 2,604 2,604 1,050 803 1,059 868 534 665 Biweekly averages of daily figures for weeks ending 1985 Feb. 27 Mar. 13 Mar. 27 Apr. 10 Apr. 24 May 8 May 22 June 5 June 19 July 3 11 Reserve balances with Reserve Banks' 20,731 22,407 21,458 23,073 23,520 22,751 22,032 22,610 23,861 23,087 12 Total vault cash2 23,203 21,518 22,353 21,274 21,880 21,327 22,357 21,692 21,688 23,029 13 Vault cash used to satisfy reserve requirements3 . 19,272 18,093 18,828 18,126 18,764 18,182 19,068 18,473 18,724 19,549 14 Surplus vault cash4 3,931 3,425 3,148 3,148 3,116 3,145 3,289 3,220 2,964 3,481 15 Total reserves5 40,002 40,500 40,286 41,199 42,284 40,933 41,100 41,082 42,585 42,637 16 Required reserves 39,191 39,719 39,477 40,642 41,400 40,234 40,248 40,260 41,861 41,458 17 Excess reserve balances at Reserve Banks6 812 782 810 557 884 699 852 823 724 1,179 18 Total borrowings at Reserve Banks 1,174 1,865 1,289 1,775 1,158 953 1,434 1,518 1,123 1,167 19 Seasonal borrowings at Reserve Banks 81 69' 98 121 131 169 160 171 171 142 20 Extended credit at Reserve Banks7 603 1,224 839 1,295 766 396 369 914 914 612 1. Excludes required clearing balances and adjustments to compensate for computation period by institutions having required reserve balances at Federal float. Reserve Banks plus the amount of vault cash equal to required reserves during the 2. Dates refer to the maintenance periods in which the vault cash can be used to maintenance period at institutions having no required reserve balances. satisfy reserve requirements. Under contemporaneous reserve requirements, 6. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy maintenance periods end 30 days after the lagged computation periods in which reserve requirements less required reserves. the balances are held. 7. Extended credit consists of borrowing at the discount window under the 3. Equal to all vault cash held during the lagged computation period by terms and conditions established for the extended credit program to help institutions having required reserve balances at Federal Reserve Banks plus the depository institutions deal with sustained liquidity pressures. Because there is amount of vault cash equal to required reserves during the maintenance period at not the same need to repay such borrowing promptly as there is with traditional institutions having no required reserve balances. short-term adjustment credit, the money market impact of extended credit is 4. Total vault cash at institutions having no required reserve balances less the similar to that of nonborrowed reserves. amount of vault cash equal to their required reserves during the maintenance 8. Before February 1984, data are prorated monthly averages of weekly period. averages; beginning February 1984, data are prorated monthly averages of 5. Total reserves not adjusted for discontinuities consist of reserve balances biweekly averages. with Federal Reserve Banks, which exclude required clearing balances and NOTE. These data also appear in the Board's H.3 (502) release. For address, see adjustments to compensate for float, plus vault cash used to satisfy reserve inside front cover. requirements. Such vault cash consists of all vault cash held during the lagged 1.13 FEDERAL FUNDS AND REPURCHASE AGREEMENTS Large Member Banks1 Averages of daily figures, in millions of dollars 1985 week ending Monday BByy mmaattuurriittyy aanndd ssoouurrccee May 20 May 27 June 3 June 10 June 17 June 24 July 1 July 8 July 15 One day and continuing contract 1 Commercial banks in United States 60,948 57,948 60,878 71,025' 67,155 60,567 58,209 68,283 64,586 2 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 28,373 29,995 28,822 32,686 33,019 32,298 31,173 33,003 32,320 3 Nonbank securities dealers 8,583 9,936 12,702 8,428 8,134 9,063 8,244 8,408 9,459 4 All other 27,378 26,803 26,897 25,487 26,465 25,282 24,718 22,106 25,570 All other maturities 5 Commercial banks in United States 9,626 9,547r 9,180' 8,870' 8,883 9,278 9,728 9,732 9,326 6 Other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies . 8,163 7,646' 7,572' 7,696' 7,517 7,671 7,890 7,861 8,397 7 Nonbank securities dealers 9,499 10,135 8,9% 9,214 8,870 9,238 9,517 9,139 9,004 8 All other 8,719 8,758 8,701 8,724 8,488 8,545 7,943 9,061 7,528 MEMO: Federal funds and resale agreement loans in maturities of one day or continuing contract 9 Commercial banks in United States 29,212 27,759 30,412 33,482' 31,755 30,618 31,795 34,998 30,423 10 Nonbank securities dealers 7,492 6,982 7,379 7,92C 7,505 7,671 7,108 6,456 7,335 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • September 1985 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per annum Current and previous levels Extended credit2 SShhoorrtt--tteerrmm aaddjjuussttmmeenntt ccrreeddiitt FFFeeedddeeerrraaalll RRReeessseeerrrvvveee aanndd sseeaassoonnaall ccrreeddiitt11 First 60 days Next 90 days BBBaaannnkkk of borrowing of borrowing After 150 days EEffffeeccttiivvee ddaattee ffoorr ccuurrrreenntt rraatteess Rate on Effective Previous Rate on Previous Rate on Previous Rate on Previous 7/29/85 date rate 7/29/85 rate 7/29/85 rate 7/29/85 rate Boston m 5/20/85 IVl m 9 9 Vi 10 5/20/85 New York 5/20/85 5/20/85 Philadelphia 5/24/85 5/24/85 Cleveland 5/21/85 5/21/85 Richmond 5/20/85 5/20/85 Atlanta 5/20/85 5/20/85 Chicago 5/20/85 5/20/85 St. Louis 5/21/85 5/21/85 Minneapolis 5/20/85 5/20/85 Kansas City 5/20/85 5/20/85 D Sa a n ll a F s rancisco... 1 Vi 5 5 / / 2 2 1 0 / / 8 8 5 5 m SV2 9 9Vi 10 5 5 / / 2 2 0 1 / / 8 8 5 5 Range of rates in recent years3 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. B o an f k Effective date A le l v l e F l) . — R. B o an f k Effective date A le l v l e F l) . — R. B o a f n k Banks N.Y. Banks N.Y. Banks N.Y. I 1 n 9 7 e 4 f — fec A t D pr e . c . 2 3 5 1 , 1973 7V 7V i- i 8 8 IV l July 1 3 0 7 7 -7 V '/ « 4 m 71/ 4 1981— N M o a v y . 2 8 13 1 - 4 1 4 1 1 4 3 3 0 Aug. 21 73/4 73/4 6 13 13 1975— D Ja e n c . . 1 1 9 6 6 0 7V 73 7 4 / V - » 7 - 4 V 8 4 7 7 7 7 V 3 3 3 / / / 4 4 4 4 S O N e c o p t v . t . . 2 2 1 3 2 0 1 6 8 8 V 9 m - 8 8 2 V - V 9 V i i 1 8 m 9 9 Z V V V i i i 1982— J A D u u e ly g c . . 2 2 2 4 0 3 l 1 l 1 V 1 - 1 1 i t 2 - l V V 1 2 i i u l i 1 m l 2 V i 24 7V4 m 3 11 11 Feb. 5 63/4-7!/4 63/4 July 20 10 10 16 lOVi 10 Vi Mar. 1 7 0 6'/ 6 4 3 -6 /4 3 /4 6 61 3/ / 4 4 Aug. 2 1 0 7 IO I -I O OV V 2 2 1 1 0 0 > ^ /2 2 3 0 7 10- 1 1 0 0 ^ 1 1 0 0 14 61/4 6V4 Sept. 19 10VV-11 11 Oct. 12 9Vi-10 9Vi May 16 6-61/4 6 21 11 11 13 9Vi 9 Vi 23 6 6 Oct. 8 11-12 12 Nov. 22 9-9 Vi 9 10 12 12 26 9 9 1976— Jan. 19 5Vi-6 5 Vi Dec. 14 8Vi-9 9 23 5 Vi 5Vi Feb. 15 12-13 13 15 8V4-9 8V5 Nov. 22 51/4-5'/! 5V4 19 13 13 17 SVi 8 >A 26 5V4 5'/4 May 29 12-13 13 30 12 12 1984— Apr. 9 m-9 9 1977— Aug. 30 5W53/4 5>/4 June 13 11-12 11 13 9 9 3 1 5^4-53/4 53/4 16 11 11 Nov. 21 8Vi-9 m Sept. 2 53/4 53/4 Julv 28 10-11 10 26 8Vi m Oct. 26 6 6 29 10 10 Dec. 24 8 8 Sept. 26 11 11 1978— Jan. 9 6-6 Vi 6Vi Nov. 17 12 12 1985— May 20 7W-8 7Vi 20 6Vi 6Vz Dec. 5 12-13 13 2 8 IVl IVI May 11 6Vi-7 7 13 13 12 7 7 5 13-14 14 In effect July 29, 1985 IVl IVl 1. A temporary simplified seasonal program was established on Mar. 8, 1985, Statistics, 1914-1941, and 1941-1970; Annual Statistical Digest, 1970-1979, 1980, and the interest rate was set at 8Vi percent at that time. On May 20 this rate was 1981, and 1982. lowered to 8 percent. In 1980 and 1981, the Federal Reserve applied a surcharge to short-term 2. Applicable to advances when exceptional circumstances or practices involve adjustment credit borrowings by institutions with deposits of $500 million or more only a particular depository institution and to advances when an institution is that had borrowed in successive weeks or in more than 4 weeks in a calendar under sustained liquidity pressures. As an alternative, for loans outstanding for quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, more than 150 days, a Federal Reserve Bank may charge a flexible rate that takes 1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was into account rates on market sources of funds, but in no case will the rate charged adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and be less than the basic rate plus one percentage point. Where credit provided to a to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective particular depository institution is anticipated to be outstanding for an unusually Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. 1, the formula for prolonged period and in relatively large amounts, the time period in which each applying the surcharge was changed from a calendar quarter to a moving 13-week rate under this structure is applied may be shortened. See section 201.3(b)(2) of period. The surcharge was eliminated on Nov. 17, 1981. Regulation A. 3. Rates for short-term adjustment credit. For description and earlier data see the following publications of the Board of Governors: Banking and Monetary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments Al 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS' Percent of deposits Member bank requirements Depository institution requirements before implementation of the after implementation of the TTyypp dd ee ee pp oo oo ff ss ii dd tt eepp iinn oo tt ss ee ii rr tt vv ,, aa aa ll nndd Monetary Control Act TTyy dd pp ee ee pp oo ooff ss iitt dd ee ii pp nn oo ttee ss rr ii vv tt,, aa ll aa 55 nn dd Monetary Control Act6 Percent Effective date Percent Effective date Net demand2 Net transaction accounts7,8 7 12/30/76 $0-$29.8 million 3 1/1/85 9l/2 12/30/76 Over $29.8 million 1122 11//11//8855 $10 million-$100 million 113/4 12/30/76 $100 million-$400 million 123/4 12/30/76 Nonpersonal time deposits9 Over $400 million 16'/4 12/30/76 By original maturity Less than l'/2 years 3 10/6/83 Time and savings2 3 l'/2 years or more 0 10/6/83 Savings 3 3/16/67 Eurocurrency liabilities Time4 All types 3 11/13/80 $0 million-$5 million, by maturity 30-179 days 3 3/16/67 180 days to 4 years m 1/8/76 4 years or more 1 10/30/75 Over $5 million, by maturity 30-179 days 6 12/12/74 180 days to 4 years 2Vi 1/8/76 4 years or more 1 10/30/75 1. For changes in reserve requirements beginning 1963, see Board's Annual week of May 14-21, 1980. In addition, beginning Mar. 19, 1980, the base was Statistical Digest, 1971-1975, and for prior changes, see Board's Annual Report reduced to the extent that foreign loans and balances declined. for 1976, table 13. Under provisions of the Monetary Control Act, depository 5. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 97institutions include commercial banks, mutual savings banks, savings and loan 320) provides that $2 million of reservable liabilities (transaction accounts, associations, credit unions, agencies and branches offoreign banks, and Edge Act nonpersonal time deposits, and Eurocurrency liabilities) of each depository corporations. institution be subject to a zero percent reserve requirement. The Board is to adjust 2. Requirement schedules are graduated, and each deposit interval applies to the amount of reservable liabilities subject to this zero percent reserve requirethat part of the deposits of each bank. Demand deposits subject to reserve ment each year for the next succeeding calendar year by 80 percent of the requirements were gross demand deposits minus cash items in process of percentage increase in the total reservable liabilities of ail depository institutions, collection and demand balances due from domestic banks. measured on an annual basis as of June 30. No corresponding adjustment is to be The Federal Reserve Act as amended through 1978 specified different ranges of made in the event of a decrease. Effective Dec. 9, 1982, the amount of the requirements for reserve city banks and for other banks. Reserve cities were exemption was established at $2.1 million. Effective with the reserve maintenance designated under a criterion adopted effective Nov. 9, 1972, by which a bank period beginning Jan. 1, 1985, the amount of the exemption is $2.4 million. In having net demand deposits of more than $400 million was considered to have the determining the reserve requirements of a depository institution, the exemption character of business of a reserve city bank. The presence of the head office of shall apply in the following order: (1) nonpersonal money market deposit accounts such a bank constituted designation of that place as a reserve city. Cities in which (MMDAs) authorized under 12 CFR section 1204.122; (2) net NOW accounts there were Federal Reserve Banks or branches were also reserve cities. Any (NOW accounts less allowable deductions); (3) net other transaction accounts; banks having net demand deposits of $400 million or less were considered to have and (4) nonpersonal time deposits or Eurocurrency liabilities starting with those the character of business of banks outside of reserve cities and were permitted to with the highest reserve ratio. With respect to NOW accounts and other maintain reserves at ratios set for banks not in reserve cities. transaction accounts, the exemption applies only to such accounts that would be Effective Aug. 24, 1978, the Regulation M reserve requirements on net balances subject to a 3 percent reserve requirement. due from domestic banks to their foreign branches and on deposits that foreign 6. For nonmember banks and thrift institutions that were not members of the branches lend to U.S. residents were reduced to zero from 4 percent and 1 percent Federal Reserve System on or after July 1, 1979, a phase-in period ends Sept. 3, respectively. The Regulation D reserve requirement of borrowings from unrelated 1987. For banks that were members on or after July 1, 1979, but withdrew on or banks abroad was also reduced to zero from 4 percent. before Mar. 31, 1980, the phase-in period established by Public Law 97-320 ends Effective with the reserve computation period beginning Nov. 16, 1978, on Oct. 24, 1985. For existing member banks the phase-in period of about three domestic deposits of Edge corporations were subject to the same reserve years was completed on Feb. 2, 1984. All new institutions will have a two-year requirements as deposits of member banks. phase-in beginning with the date that they open for business, except for those 3. Negotiable order of withdrawal (NOW) accounts and time deposits such as institutions that have total reservable liabilities of $50 million or more. Christmas and vacation club accounts were subject to the same requirements as 7. Transaction accounts include all deposits on which the account holder is savings deposits. permitted to make withdrawals by negotiable or transferable instruments, pay- The average reserve requirement on savings and other time deposits before ment orders of withdrawal, and telephone and preauthorized transfers (in excess implementation of the Monetary Control Act had to be at least 3 percent, the of three per month) for the purpose of making payments to third persons or others. minimum specified by law. However, MMDAs and similar accounts offered by institutions not subject to the 4. Effective Nov. 2, 1978, a supplementary reserve requirement of 2 percent rules of the Depository Institutions Deregulation Committee (DIDC) that permit was imposed on large time deposits of $100,000 or more, obligations of affiliates, no more than six preauthorized, automatic, or other transfers per month of which and ineligible acceptances. This supplementary requirement was eliminated with no more than three can be checks—are not transaction accounts (such accounts the maintenance period beginning July 24, 1980. are savings deposits subject to time deposit reserve requirements.) Effective with the reserve maintenance period beginning Oct. 25, 1979, a 8. The Monetary Control Act of 1980 requires that the amount of transaction marginal reserve requirement of 8 percent was added to managed liabilities in accounts against which the 3 percent reserve requirement applies be modified excess of a base amount. This marginal requirement was increased to 10 percent annually by 80 percent of the percentage increase in transaction accounts held by beginning Apr. 3, 1980, was decreased to 5 percent beginning June 12, 1980, and all depository institutions determined as of June 30 each year. Effective Dec. 31, was eliminated beginning July 24, 1980. Managed liabilities are defined as large 1981, the amount was increased accordingly from $25 million to $26 million; time deposits, Eurodollar borrowings, repurchase agreements against U.S. effective Dec. 30, 1982, to $26.3 million; effective Dec. 29, 1983, to $28.9 million; government and federal agency securities, federal funds borrowings from non- and effective Jan. 1, 1985, to $29.8 million. member institutions, and certain other obligations. In general, the base for the 9. In general, nonpersonal time deposits are time deposits, including savings marginal reserve requirement was originally the greater of (a) $100 million or (b) deposits, that are not transaction accounts and in which a beneficial interest is the average amount of the managed liabilities held by a member bank, Edge held by a depositor that is not a natural person. Also included are certain corporation, or family of U.S. branches and agencies of a foreign bank for the two transferable time deposits held by natural persons, and certain obligations issued reserve computation periods ending Sept. 26, 1979. For the computation period to depository institution offices located outside the United States. For details, see beginning Mar. 20, 1980, the base was lowered by (a) 7 percent or (b) the decrease section 204.2 of Regulation D. in an institution's U.S. office gross loans to foreigners and gross balances due from foreign offices of other institutions between the base period (Sept. 13-26, NOTE. Required reserves must be held in the form of deposits with Federal 1979) and the week ending Mar. 12, 1980, whichever was greater. For the Reserve Banks or vault cash. Nonmembers may maintain reserve balances with a computation period beginning May 29, 1980, the base was increased by iVi Federal Reserve Bank indirectly on a pass-through basis with certain approved percent above the base used to calculate the marginal reserve in the statement institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • September 1985 1.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions1 Percent per annum Commercial banks mut S ua a l v i s n a g v s i n a g n s d b l a o n a k n s a ( s t s h o r c if i t a t i i n o s n t s it u a t n io d n s)1 In effect July 31, 1985 In effect July 31, 1985 Type of deposit Percent Effective date Percent Effective date 1 Savings 5 Vi 1/1/84 5Vi 7/1/79 2 Negotiable order of withdrawal accounts 5V4 12/31/80 5!/4 12/31/80 3 Negotiable order of withdrawal accounts of $1,000 or more2 1/5/83 1/5/83 4 Money market deposit account2 (3) 12/14/82 (3) 12/14/82 Time accounts 5 7-31 days of less than $1,0004 5Vi 1/1/84 5Vi 9/1/82 6 7-31 days of $1,000 or more2 1/5/83 1/5/83 7 More than 31 days 10/1/83 10/1/83 1. Effective Oct. 1, 1983, restrictions on the maximum rates of interest payable the minimum denomination and average maintenance balance requirements was by commercial banks and thrift institutions on various categories of deposits were lowered to $1,000. No minimum maturity period is required for this account, but removed. For information regarding previous interest rate ceilings on all catego- depository institutions must reserve the right to require seven days, notice before ries of accounts see earlier issues of the FEDERAL RESERVE BULLETIN, the withdrawals. When the average balance is less than $1,000, the account is subject Federal Home Loan Bank Board Journal, and the Annual Report of the Federal to the maximum ceiling rate of interest for NOW accounts; compliance with the Deposit Insurance Corporation. average balance requirement may be determined over a period of one month. 2. Effective Dec. 1, 1983, IRA/Keogh (HR10) Plan accounts are not subject to Depository institutions may not guarantee a rate of interest for this account for a minimum deposit requirements. Effective Jan. 1, 1985, the minimum denomina- period longer than one month or condition the payment of a rate on a requirement tion requirement was lowered from $2,500 to $1,000. that the funds remain on deposit for longer than one month. 3. Effective Dec. 14, 1982, depository institutions are authorized to offer a new 4. Effective Jan. 1, 1985, the minimum denomination requirement was lowered account with a required initial balance of $2,500 and an average maintenance from $2,500 to $1,000. Deposits of less than $1,000 issued to governmental units balance of $2,500 not subject to interest rate restrictions. Effective Jan. 1, 1985, continue to be subject to an interest rate ceiling of 8 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS Millions of dollars 1984 1985 TTyyppee ooff ttrraannssaaccttiioonn 11998822 11998833 11998844 Nov. Dec. Jan. Feb. Mar. Apr. May U.S. GOVERNMENT SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 17,067 18,888 20,036 4,463 3,410 0 22,,997766 916 66,,002266 274 2 Gross sales 8,369 3,420 8,557 0 0 2,668 214 554 0 417 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 3,000 2,400 7,700 0 0 1,600 400 500 0 800 Others within 1 year 5 Gross purchases 312 484 1,126 146 182 0 0 961 224455 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shift 17,295 18,887 16,354 1,348 771 596 1,987 1,299 1,129 2,443 8 Exchange -14,164 -16,553 -20,840 -3,363 -966 -625 -2,739 0 -1,463 -2,945 9 Redemptions 0 87 0 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 1,797 1,896 1,638 830 0 0 0 446655 884466 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shift -14,524 -15,533 -13,709 594 -771 -5% -1,902 -1,299 -1,114 -2,101 13 Exchange 11,804 11,641 16,039 1,763 966 625 1,645 0 1,463 1,940 5 to 10 years 14 Gross purchases 388 890 536 335 0 0 0 0 110088 0 15 Gross sales 0 0 300 0 0 100 0 0 0 0 16 Maturity shift -2,172 -2,450 -2,371 -1,893 0 0 -54 0 -16 42 17 Exchange 2,128 2,950 2,750 850 0 0 600 0 0 600 Over 10 years 18 Gross purchases 307 383 441 116644 0 0 00 00 00 00 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift -601 -904 -275 -49 0 0 -30 0 0 -384 21 Exchange 234 1,962 2,052 750 0 0 493 0 0 405 All maturities 22 Gross purchases 19,870 22,540 23,476 5,938 3,591 0 2,976 2,343 77,,332211 274 23 Gross sales 8,369 3,420 7,553 0 0 2,768 214 554 0 417 24 Redemptions 3,000 2,487 7,700 0 0 1,600 400 500 0 800 Matched transactions 25 Gross sales 543,804 578,591 808,986 51,904 63,674 66,668 57,076 54,718 65,845 78,870 26 Gross purchases 543,173 576,908 810,432 55,516 61,537 66,367 57,283 57,288 64,001 77,597 Repurchase agreements 27 Gross purchases 130,774 105,971 139,441 12,063 3,888 20,225 1199,,558844 44,,992222 1111,,554400 21,716 28 Gross sales 130,286 108,291 139,019 12,063 2,261 21,852 17,077 7,429 4,088 29,168 29 Net change in U.S. government securities 8,358 12,631 8,908 9,549 3,080 -6,295 5,077 1,351 12,931 -9,668 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 0 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 189 292 256 90 0 0 17 * 8 Repurchase agreements 18,957 8,833 1,205 698 506 1,463 22,,442288 445 998833 1,336 34 Gross sales 18,638 9,213 817 698 119 1,851 2,048 825 452 1,867 35 Net change in federal agency obligations 130 -672 132 -90 388 388 363 -380 531 -540 BANKERS ACCEPTANCES 36 Repurchase agreements, net 1,285 -1,062 -418 0 0 0 0 0 0 0 37 Total net change in System Open Market Account 9,773 10,897 6,116 9,459 3,468 -6,683 5,440 997711 1133,,446622 -10,208 NOTE: Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Details may not add to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • September 1985 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1985 1985 May 29 June 5 June 12 June 19 June 26 Apr. May June Consolidated condition statement ASSETS 1 Gold certificate account 11,091 11,091 11,090 11,090 11,090 11,091 11,091 11,090 2 Special drawing rights certificate account 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 3 Coin 491 481 489 482 481 561' 490 474 Loans 4 To depository institutions 1,419 3,549 688 3,806 776 1,525 1,765 1,338 5 Other 0 0 0 0 0 0 0 0 Acceptances—Bought outright 6 Held under repurchase agreements 0 00 00 00 00 00 00 00 Federal agency obligations 7 Bought outright 8,363 8,363 8,303 88,,330033 88,,330033 88,,337722 88,,336633 88,,330033 8 Held under repurchase agreements 0 10 0 0 0 531 0 0 U.S. government securities Bought outright 9 Bills 73,905 73,257 76,007 74,622 75,473 75,651 73,436 78,301 10 Notes 67,066 67,066 67,066 67,066 67,066 67,269 67,066 67,066 11 Bonds 23,743 23,743 23,743 23,743 23,743 23,540 23,743 23,743 12 Total bought outright1 164,714 164,066 166,816 165,431 166,282 166,460 164,245 169,110 13 Held under repurchase agreements 0 1,174 0 0 0 7,453 0 0 14 Total U.S. government securities 164,714 165,240 166,816 165,431 166,282 173,913 164,245 169,110 15 Total loans and securities 174,496 177,162 175,807 177,540 175,361 184,341 174,373 178,751 16 Cash items in process of collection 8,278 7,557 7,304 7,782 6,316 9,730 6,865 6,277 17 Bank premises 581 581 582 584 583 577 581 585 Other assets 18 Denominated in foreign currencies2 4,026 4,058 4,069 4,072 4,075 4,007 4,058 4,149 19 All other3 7,313 7,333 7,228 7,511 7,617 8,473 7,066 7,695 20 Total assets 210,894 212,881 211,187 213,679 210,141 223,398' 209,142 213,639 LIABILITIES 21 Federal Reserve notes 169,219 169,574 170,155 169,795 169,713 165,331' 169,056 170,178 Deposits 22 To depository institutions 22,867 27,803 26,205 26,157 23,875 21,962 23,468 27,236 23 U.S. Treasury—General account 3,853 1,975 1,778 3,541 3,892 19,305 1,933 3,288 24 Foreign—Official accounts 223 211 207 168 243 348 205 310 25 Other 530 444 432 567 349 324 557 321 26 Total deposits 27,473 30,433 28,622 30,433 28,359 41,939 26,163 31,155 27 Deferred availability cash items 8,116 6,783 6,343 7,265 5,925 9,476 7,681 6,015 28 Other liabilities and accrued dividends4 2,335 2,320 2,305 2,423 2,381 2,614 2,359 2,315 29 Total liabilities 207,143 209,110 207,425 209,916 206,378 219,360r 205,259 209,663 CAPITAL ACCOUNTS 30 Capital paid in 1,714 1,713 1,717 1,716 1,721 1,702 1,713 1,721 31 Surplus 1,626 1,626 1,626 1,626 1,626 1,626 1,626 1,626 32 Other capital accounts 411 432 419 421 416 710 544 629 33 Total liabilities and capital accounts 210,894 212,881 211,187 213,679 210,141 223,398' 209,142 213,639 34 MEMO: Marketable U.S. government securities held in custody for foreign and international account 120,328 122,203 120,826 122,401 121,759 116,712 119,753 121,276 Federal Reserve note statement 35 Federal Reserve notes outstanding 198,229 198,487 198,882 199,819 200,227 196,490 198,021 200,234 36 LESS: Held by bank 29,010 28,913 28,727 30,024 30,514 31,159' 28,965 30,056 37 Federal Reserve notes, net 169,219 169,574 170,155 169,795 169,713 165,331' 169,056 170,178 Collateral held against notes net: 38 Gold certificate account 11,091 11,091 11,090 11,090 11,090 11,091 11,091 11,090 39 Special drawing rights certificate account 4,618 4,618 4,618 4,618 4,618 4,618 4,618 4,618 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. government and agency securities 153,510 153,865 154,447 154,087 154,005 149,622' 153,347 154,470 42 Total collateral 169,219 169,574 170,155 169,795 169,713 165,331' 169,056 170,178 1. Includes securities loaned—fully guaranteed by U.S. government securities 4. Includes exchange-translation account reflecting the monthly revaluation at pledged with Federal Reserve Banks—and excludes (if any) securities sold and market exchange rates of foreign-exchange commitments. scheduled to be bought back under matched sale-purchase transactions. 2. Assets shown in this line are revalued monthly at market exchange rates. NOTE: Some of these data also appear in the Board's H.4.1 (503) release. For 3. Includes special investment account at Chicago of Treasury bills maturing address, see inside front cover. within 90 days. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1985 1985 May 29 June 5 June 12 June 19 June 26 Apr. 30 May 31 June 28 1 Loans—Total 1,419 3,549 688 3,806 776 1,525 1,765 1,338 2 Within 15 days 1,363 3,465 620 3,792 759 1,438 1,700 937 3 16 days to 90 days 56 84 68 14 17 87 65 401 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Acceptances—Total 0 0 0 0 0 0 0 0 6 Within 15 days 0 0 0 0 0 0 0 0 7 16 days to 90 days 0 0 0 0 0 0 0 0 8 91 days to 1 year 0 0 0 0 0 0 0 0 9 U.S. government securities—Total 164,714 165,240 166,816 165,431 166,282 173,913 164,245 169,110 10 Within 15 days1 7,975 8,784 7,585 5,042 7,230 12,305 4,256 7,604 11 16 days to 90 days 35,578 35,562 39,303 38,375 37,122 38,406 38,379 39,719 1? 91 days to 1 year 47,935 47,758 46,792 48,878 48,794 50,568 48,474 48,651 n Over 1 year to 5 years 37,132 37,042 37,042 37,042 37,042 37,204 37,042 37,042 14 Over 5 years to 10 years 15,281 15,281 15,281 15,281 15,281 14,638 15,281 15,281 15 Over 10 years 20,813 20,813 20,813 20,813 20,813 20,792 20,813 20,813 16 Federal agency obligations—Total 8,363 8,373 8,303 8,303 8,303 8,903 8,363 8,303 17 Within 15 days1 162 89 0 120 159 613 162 159 18 16 days to 90 days 566 678 778 658 619 533 566 677 19 91 days to 1 year 1,918 1,931 1,871 1,871 1,871 1,991 1,918 1,813 20 Over 1 year to 5 years 4,089 4,053 4,023 4,023 4,023 4,083 4,089 4,023 21 Over 5 years to 10 years 1,229 1,223 1,232 1,232 1,232 1,284 1,229 1,232 22 Over 10 years 399 399 399 399 399 399 399 399 1. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • September 1985 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE Billions of dollars, averages of daily figures 1984 1985 1981 1982 1983 1984 IItteemm Dec. Dec. Dec. Dec. Nov. Dec. Jan. Feb. Mar. Apr. May' June Seasonally adjustec ADJUSTED FOR 1 Total reserves2 32.10 34.28 36.14 39.08r 38.47' 39.08' 39.64' 40.43' 40.47' 40.71' 41.32 42.18 2 Nonborrowed reserves 31.46 33.65 35.36 35.90' 33.85' 35.9<y 38.24' 39.14' 38.88' 39.39' 39.99 40.97 3 Nonborrowed reserves plus extended credit3 31.61 33.83 35.37 38.5C 37.69' 38.5(y 39.29' 39.95' 39.94' 40.26' 40.52 41.64 4 Required reserves 31.78 33.78 35.58 38.23' 37.77' 38.23' 38.89' 39.53' 39.71' 39.97' 40.52 41.27 5 Monetary base4 158.10 170.14 185.49 199.03' 197.67' 199.03' 200.21' 202.05' 202.95' 203.56' 205.35 207.66 Not seasonally adjusted 6 Total reserves2 32.82 35.01 36.86 40.13 38.69 40.13 40.70 39.88 40.07 41.25 40.64 41.96 7 Nonborrowed reserves 32.18 34.37 36.09 36.94 34.07 36.94 39.31 38.59 38.47 39.93 39.31 40.76 8 Nonborrowed reserves plus extended credit3 32.33 34.56 36.09 39.55 37.91 39.55 40.36 39.39 39.53 40.80 39.84 41.42 9 Required reserves 32.50 34.51 36.30 39.28 37.99 39.28 39.% 38.97 39.30 40.52 39.84 41.05 10 Monetary base4 160.94 173.17 188.76 202.02 198.22 202.02 200.93 199.54 200.86 203.42 204.54 207.99 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS5 11 Total reserves2 41.92 41.85 38.89 40.70 39.23 40.70 41.12 40.27 40.49 41.65 41.05 42.35 12 Nonborrowed reserves 41.29 41.22 38.12 37.51 34.62 37.51 39.73 38.98 38.90 40.33 39.72 41.15 13 Nonborrowed reserves plus extended credit3 41.44 41.41 38.12 40.09 38.54 40.09 40.88 39.83 40.03 40.77 40.45 41.88 14 Required reserves 41.61 41.35 38.33 39.84 38.54 39.84 40.38 39.37 39.73 40.91 40.25 41.45 15 Monetary base4 170.47 180.52 192.36 202.59 198.77 202.59 201.35 199.94 201.29 203.81 204.94 208.39 1. Figures incorporate adjustments for discontinuities associated with the of vault cash holdings of thrift institutions that is included in the currency implementation of the Monetary Control Act and other regulatory changes to component of the money stock plus, for institutions not having required reserve reserve requirements. To adjust for discontinuities due to changes in reserve balances, the excess of current vault cash over the amount applied to satisfy requirements on reservable nondeposit liabilities, the sum of such required current reserve requirements. After the introduction of contemporaneous reserve reserves is subtracted from the actual series. Similarly, in adjusting for discontin- requirements (CRR), currency and vault cash figures are measured over the uities in the monetary base, required clearing balances and adjustments to weekly computation period ending Monday. compensate for float also are subtracted from the actual series. Before CRR, all components of the monetary base other than excess reserves 2. Total reserves not adjusted for discontinuities consist of reserve balances are seasonally adjusted as a whole, rather than by component, and excess with Federal Reserve Banks, which exclude required clearing balances and reserves are added on a not seasonally adjusted basis. After CRR, the seasonally adjustments to compensate for float, plus vault cash used to satisfy reserve adjusted series consists of seasonally adjusted total reserves, which include requirements. Such vault cash consists of all vault cash held during the lagged excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted computation period by institutions having required reserve balances at Federal currency component of the money stock and the remaining items seasonally Reserve Banks plus the amount of vault cash equal to required reserves during the adjusted as a whole. maintenance period at institutions having no required reserve balances. 5. Reflects actual reserve requirements, including those on nondeposit liabil- 3. Extended credit consists of borrowing at the discount window under the ities, with no adjustments to eliminate the effects of discontinuities associated terms and conditions established for the extended credit program to help with implementation of the Monetary Control Act or other regulatory changes to depository institutions deal with sustained liquidity pressures. Because there is reserve requirements. not the same need to repay such borrowing promptly as there is with traditional NOTE. Latest monthly and biweekly figures are available from the Board's short-term adjustment credit, the money market impact of extended credit is H.3(502) statistical release. Historical data and estimates of the impact on similar to that of nonborrowed reserves. required reserves of changes in reserve requirements are available from the 4. The monetary base not adjusted for discontinuities consists of total reserves Banking Section, Division of Research and Statistics, Board of Governors of the plus required clearing balances and adjustments to compensate for float at Federal Federal Reserve System, Washington, D.C. 20551. Reserve Banks and the currency component of the money stock less the amount Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Billions of dollars, averages of daily figures 1985 item DD 19 ee 8 cc 1 .. DD 19 ee 8 cc 2 .. DD 19 ee 8 cc 3 .. DD 19 ee 8 cc 4 .. MMaarr.. Apr. May June Seasonally adjusted 1 Ml 441.8 480.8 528.0 558.5 572.1 574.9' 581.6 591.2 2 M2 1,794.4 1,954.9 2,188.8 2,371.7 2,429.2 2,427.3' 2,444.6' 2,473.1 3 M3 2,235.8 2,446.8 2,701.8 2,995.0 3,055.3r 3,055.9' 3,075.7' 3,103.7 4 L 2,596.5 2,857.4 3,176.4 3,543.8 3,624.1' 3,626.3' n.a. n.a. 5 Debt 4,309.5 4,709.7 5,224.6 5,953.2 6,129.6' 6,191.4' 6,251.9 n.a. Ml components 6 Currency2 124.0 134.3 148.4 158.7 161.3 161.7 163.1' 164.5 7 Travelers checks3 4.4 4.3 4.9 5.2 5.4 5.5 5.5 5.7 8 Demand deposits4 235.2 238.6 243.5 248.6 251.9 252.5 255.7 260.7 9 Other checkable deposits5 78.2 103.5 131.3 146.0 153.6 155.3 157.3 160.3 Nontransactions components 10 In M26 1,352.6 1,474.0 1,660.8 1,813.2 1,857.0 1,852.3' 1,863.(K 1,882.0 11 In M3 only7 441.4 492.0 512.9 623.3 626.1' 628.7' 631.1' 630.6 Savings deposits9 12 Commercial Banks 158.6 163.5 133.4 122.6 120.3 119.6 120.4 121.9 13 Thrift institutions 185.8 194.4 173.6 166.0 168.4 168.3 169.0 170.3 Small denomination time deposits9 14 Commerical Banks 347.8 379.8 350.7 387.0 382.8 387.6 389.9 390.7 15 Thrift institutions 475.8 471.7 433.8 498.6 495.8 497.8 502.2' 504.2 Money market mutual funds 16 General purpose and broker/dealer 150.6 185.2 138.2 167.5 177.6 176.2' 172.2 175.4 17 Institution-only 38.0 51.1 43.2 62.7 59.5 59.5 63.5 67.1 Large denomination time deposits10 18 Commercial Banks" 247.5 262.0 228.9 264.4 269.5 272.9' 272.0' 267.7 19 Thrift institutions 54.6 66.2 101.9 151.8 154.2 154.3 156.0 156.3 Debt components 20 Federal debt 825.9 979.3 1,172.8 1,367.0 1,413.5 1,429.0 1,446.6 n.a. 21 Non-federal debt 3,483.6 3,730.4 4,051.8 4,586.2' 4,716.2' 4,762.4' 4,805.3 n.a. Not seasonally adjusted 22 Ml 452.2 491.8 539.7 570.4 564.9 581.6 576.2 592.2 23 M2 1,798.7 1,959.6 2,194.0 2,376.7 2,429.4' 2,439.2' 2,440.7' 2,476.8 24 M3 2,243.4 2,454.4 2,709.2 3,002.2 3,057.0' 3,067.8' 3,073.6' 3,106.4 25 L 2,604.7 2,862.1 3,180.1 3,545.1 3,631.5' 3,639.5' n.a. n.a. 26 Debt 4,304.7 4,703.8 5,218.8 5,947.3' 6,100.8' 6,160.9' 6,223.1 n.a. Ml components 27 Currency2 126.2 136.5 150.5 160.9 159.8 161.2 163.2' 165.2 28 Travelers checks3 4.1 4.0 4.6 4.9 5.1 5.2 5.4 6.0 29 Demand deposits4 243.4 247.2 252.2 257.4 246.3 255.1 251.4 259.7 30 Other checkable deposits5 78.5 104.1 132.4 147.2 153.6 160.1 156.2 161.3 Nontransactions components 31 M26 1,346.5 1,467.8 1,654.2 1,806.2 1,864.6 1,857.6' 1,864.5' 1,884.6 32 M3 only7 444.7 494.8 515.2 625.5 627.6' 628.7' 632.9' 629.6 Money market deposit accounts 33 Commercial banks n.a. 26.3 230.5 267.1 294.0 295.9 298.2' 307.3 34 Thrift institutions .0 16.9 148.7 147.9 163.9 164.4 165.4' 167.6 Savings deposits8 35 Commercial Banks 157.5 162.1 132.2 121.4 120.6 120.9 121.7 123.2 36 Thrift institutions 184.7 193.2 172.5 164.9 168.2 169.3 170.2 172.7 Small denomination time deposits9 37 Commercial Banks 347.7 380.1 351.1 387.6 383.7 383.9 385.2 386.3 38 Thrift institutions 475.5 471.7 434.2 499.4 496.2 495.6 495.7' 497.5 Money market mutual funds 39 General purpose and broker/dealer 150.6 185.2 138.2 167.5 177.6 176.2' 172.2 175.4 40 Institution-only 38.0 51.1 43.2 62.7 59.5 59.5 63.5 67.1 Large denomination time deposits10 41 Commercial Banks11 251.7 265.2 230.8 265.9 269.8 270.4' 269.9' 267.2 42 Thrift institutions 54.4 65.9 101.4 151.1 153.3 153.4 156.0' 155.8 Debt components 43 Federal debt 823.0 976.4 1,170.2 1,364.7 1,412.0 1,427.1 1,443.8 n.a. 44 Non-federal debt 3,481.7 3,727.4 4,048.6 4,582.5 4,688.8' 4,733.8' 4,779.4 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • September 1985 NOTES TO TABLE 1.21 1. Composition of the money stock measures and debt is as follows: 2. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults commercial banks. Excludes the estimated amount of vault cash held by thrift of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits institutions to service their OCD liabilities. at all commercial banks other than those due to domestic banks, the U.S. 3. Outstanding amount of U.S. dollar-denominated travelers checks of nongovernment, and foreign banks and official institutions less cash items in the bank issuers. Travelers checks issued by depository institutions are included in process of collection and Federal Reserve float; and (4) other checkable deposits demand deposits. (OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer 4. Demand deposits at commercial banks and foreign-related institutions other service (ATS) accounts at depository institutions, credit union share draft than those due to domestic banks, the U.S. government, and foreign banks and accounts, and demand deposits at thrift institutions. The currency and demand official institutions less cash items in the process of collection and Federal deposit components exclude the estimated amount of vault cash and demand Reserve float. Excludes the estimated amount of demand deposits held at deposits respectively held by thrift institutions to service their OCD liabilities. commercial banks by thrift institutions to service their OCD liabilities. M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) 5. Consists of NOW and ATS balances at all depository institutions, credit issued by all commercial banks and overnight Eurodollars issued to U.S. residents union share draft balances, and demand deposits at thrift institutions. Other by foreign branches of U.S. banks worldwide, MMDAs, savings and small- checkable deposits seasonally adjusted equals the difference between the seasondenomination time deposits (time deposits—including retail RPs—in amounts of ally adjusted sum of demand deposits plus OCD and seasonally adjusted demand less than $100,000), and balances in both taxable and tax-exempt general purpose deposits. Included are all ceiling free "Super NOWs," authorized by the and broker/dealer money market mutual funds. Excludes individual retirement Depository Institutions Deregulation committee to be offered beginning Jan. 5, accounts (IRA) and Keogh balances at depository institutions and money market 1983. funds. Also excludes all balances held by U.S. commercial banks, money market 6. Sum of overnight RPs and overnight Eurodollars, money market fund funds (general purpose and broker/dealer), foreign governments and commercial balances (general purpose and broker/dealer), MMDAs, and savings and small banks, and the U.S. government. Also subtracted is a consolidation adjustment time deposits, less the consolidation adjustment that represents the estimated that represents the estimated amount of demand deposits and vault cash held by amount of demand deposits and vault cash held by thrift institutions to service thrift institutions to service their time and savings deposits. their time and savings deposits liabilities. M3: M2 plus large-denomination time deposits and term RP liabilities (in 7. Sum of large time deposits, term RPs and term Eurodollars of U.S. amounts of $100,000 or more) issued by commercial banks and thrift institutions, residents, money market fund balances (institution-only), less a consolidation term Eurodollars held by U.S. residents at foreign branches of U.S. banks adjustment that represents the estimated amount of overnight RPs and Eurodolworldwide and at all banking offices in the United Kingdom and Canada, and lars held by institution-only money market funds. balances in both taxable and tax-exempt, institution-only money market mutual 8. Savings deposits exclude MMDAs. funds. Excludes amounts held by depository institutions, the U.S. government, 9. Small-denomination time deposits—including retail RPs— are those issued money market funds, and foreign banks and official institutions. Also subtracted is in amounts of less than $100,000. All individual retirement accounts (IRA) and a consolidation adjustment that represents the estimated amount of overnight RPs Keogh accounts at commercial banks and thrifts are subtracted from small time and Eurodollars held by institution-only money market mutual funds. deposits. L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term 10. Large-denomination time deposits are those issued in amounts of $100,000 Treasury securities, commercial paper and bankers acceptances, net of money or more, excluding those booked at international banking facilities. market mutual fund holdings of these assets. 11. Large-denomination time deposits at commercial banks less those held by Debt: Debt of domestic nonfinancial sectors consists of outstanding credit money market mutual funds, depository institutions, and foreign banks and market debt of the U.S. government, state and local governments, and private official institutions. nonfinancial sectors. Private debt consists of corporate bonds, mortgages, con- NOTE: Latest monthly and weekly figures are available from the Board's H.6 sumer credit (including bank loans), other bank loans, commercial paper, bankers (508) release. Historical data are available from the Banking Section, Division of acceptances, and other debt instruments. The source of data on domestic Research and Statistics, Board of Governors of the Federal Reserve System, nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt Washington, D.C. 20551. data are on an end-of-month basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 1.22 BANK DEBITS AND DEPOSIT TURNOVER Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates. 1984 1985 Dec. Jan. Feb. Mar. Apr/ May DEBITS TO Seasonally adjusted Demand deposits2 1 All insured banks 80,858.7 90,914.4 109,642.3 137,512.0 140,678.6 143,281.5 139,608.3 156,513.2 149,252.8 2 Major New York City banks 34,108.1 37,932.9 47,769.4 62,341.0 64,474.7 63,157.0 62,523.7 70,621.4 66,394.3 3 Other banks 46,966.5 52,981.5 61,873.1 75,171.0 76,203.9 80,124.5 77,084.6 85,891.8 82,858.4 4 ATS-NOW accounts3 761.0 1,036.2 1,405.5 1,677.5 1,552.0 1,618.6 1,567.0 1,689.3 1,771.1 5 Savings deposits4 679.6 720.3 741.4 486.0 501.3 499.8 539.2 589.0 636.4 DEPOSIT TURNOVER Demand deposits2 6 All insured banks 285.8 324.2 379.7 453.4 468.6 471.4 456.3 515.4 484.6 7 Major New York City banks 1,116.7 1,287.6 1,528.0 1,903.0 2,008.6 1,902.2 1,967.0 2,183.9 2,079.6 8 Other banks 185.9 211.1 240.9 277.8 284.2 295.9 281.1 316.5 300.2 9 ATS-NOW accounts3 14.4 14.5 15.6 16.3 14.6 15.0 14.4 15.4 16.1 10 Savings deposits4 4.1 4.5 5.4 4.0 4.2 4.2 4.6 5.0 5.4 DEBITS TO Not seasonally adjusted Demand deposits2 11 All insured banks 81,197.9 91,031.8 109,517.6 140,166.0 148,880.1 129,297.2 143,154.3 151,536.1 151,342.3 12 Major New York City banks 34,032.0 38,001.0 47,707.4 64,498.9 68,203.1 57,337.4 64,188.9 67,422.3 67,249.3 13 Other banks 47,165.9 53,030.9 64,310.2 75,667.1 80,677.0 71,959.8 78,965.4 84,113.8 84,093.0 14 ATS-NOW accounts3 737.6 1,027.1 1,397.0 1,625.4 1,838.9 1,524.4 1,624.7 1,946.1 1,775.5 15 MMDA5 567.4 899.7 1,103.9 980.9 1,032.5 1,221.4 1,146.7 16 Savings deposits4 672.9 720.0 742.0 470.6 544.7 455.5 552.9 644.4 621.1 DEPOSIT TURNOVER Demand deposits2 17 All insured banks 286.4 325.0 379.9 447.1 486.0 437.2 480.9 498.1 505.5 18 Major New York City banks 1,114.2 1,295.7 1,510.0 1,910.8 2,025.9 1,780.6 1,990.7 2,138.6 2,205.8 19 Other banks 186.2 211.5 240.5 270.5 295.9 273.0 297.5 308.4 312.7 20 ATS-NOW accounts3 14.0 14.4 15.5 15.4 17.1 14.3 14.9 17.2 16.2 71 MMDA5 2.8 3.4 4.0 3.4 3.5 4.2 3.9 22 Savings deposits4 4.1 4.5 5.4 3.9 4.6 3.9 4.7 5.4 5.2 1. Annual averages of monthly figures. NOTE. Historical data for demand deposits are available back to 1970 estimated 2. Represents accounts of individuals, partnerships, and corporations and of in part from the debits series for 233 SMSAs that were available through June states and political subdivisions. 1977. Historical data for ATS-NOW and savings deposits are available back to 3. Accounts authorized for negotiable orders of withdrawal (NOW) and ac- July 1977. Back data are available on request from the Banking Section, Division counts authorized for automatic transfer to demand deposits (ATS). ATS data of Research and Statistics, Board of Governors of the Federal Reserve System, availability starts with December 1978. Washington, D.C. 20551. 4. Excludes ATS and NOW accounts, MMDA and special club accounts, such These data also appear on the Board's G.6 (406) release. For address, see inside as Christmas and vacation clubs. front cover. 5. Money market deposit accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • September 1985 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1984 1985 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted 1 Total loans and securities2 1,652.6 1,662.1 1,674.8 1,682.8 1,701.0 1,714.8 1,724.0 1,742.3 1,758.9 1,765.8 1,785.3 1,799.1 2 U.S. government securities 256.4 257.1 258.0 257.0 259.4 260.2 260.1 265.8 266.9 261.1 265.9 266.6 3 Other securities 139.5 140.8 141.9 141.5 141.1 139.9 142.4 140.8 138.7 140.1 142.1 144.5 4 Total loans and leases2 1,256.7 1,264.2 1,274.9 1,284.3 1,300.6 1,314.7 1,321.5 1,335.6 1,353.3 1,364.6 1,377.3 1,388.0 5 Commercial and industrial 455.0 458.1 460.0 463.0 467.1 468.1 468.4 473.4 480.4 480.9 483.3 483.6 6 Bankers acceptances held3.. 6.2 5.8 5.4 5.6 6.0 5.2 5.0 6.1 6.4 5.4 44..99 4.7 7 Other commercial and industrial 448.8 452.3 454.6 457.3 461.1 462.9 463.4 467.2 474.1 475.5 478.4 478.9 8 U.S. addressees4 437.2 440.6 443.5 446.7 450.7 453.3 453.8 457.1 463.8 465.3 468.7 469.8 9 Non-U.S. addressees4.... 11.7 11.6 11.1 10.6 10.3 9.6 9.7 10.2 10.3 10.3 9.6 9.1 10 Real estate 358.3 361.2 364.7 367.7 371.8 375.6 377.9 382.1 385.8 389.9 393.8 397.4 11 Individual 236.3 238.5 241.3 243.5 246.7 251.0 254.6 257.7 261.9 265.5 268.7 271.4 12 Security 28.0 26.1 28.8 30.3 30.2 31.5 31.9 31.6 32.8 35.1 3377..55 4400..00 13 Nonbank financial institutions 31.4 30.8 31.2 31.1 31.2 31.4 31.2 30.9 30.6^ 31.2 31.5 31.2 14 Agricultural 40.6 40.6 40.7 40.6 40.5 40.3 40.2 40.2 40.3 40.1 3399..88 3399..33 15 State and political subdivisions 40.4 41.2 41.7 41.2 42.1 44.0 46.9 46.6 46.8 47.1 47.4 47.4 16 Foreign banks 12.5 12.2 11.7 11.7 11.9 11.5 11.4 11.5 11.2 10.8 10.6 10.3 17 Foreign official institutions ... 9.3 9.4 8.9 8.5 8.4 8.3 7.9 7.9 7.7 7.8 7.8 7.6 18 Lease financing receivables... 14.5 14.8 15.0 15.1 15.3 15.5 15.6 15.8 16.1 16.4 16.7 16.9 19 All other loans 30.6 31.4 30.9 31.6 35.5 37.4 35.4 38.0 39.5 39.8 40.1 42.7 Not seasonally adjusted 20 Total loans and securities2 1,646.7 1,656.1 1,673.2 1,684.0 1,701.9 1,725.8 1,732.0 1,740.4 1,755.0 1,766.0 1,781.4 1,800.0 21 U.S. government securities 256.2 255.5 255.7 254.1 255.2 256.9 260.1 266.8 269.0 266.6 268.0 270.3 2 2 2 3 T O o th ta e l r l s o e a c n u s r i a t n ie d s leases2 1,2 1 5 3 2 8 . . 4 2 1,2 1 6 4 0 0 . . 2 4 1,2 1 7 4 6 1 . . 2 3 1,2 1 8 4 9 0 . . 0 9 1,3 1 0 4 5 1 . . 5 2 1,3 1 2 4 7 1 . . 4 5 1,3 1 2 4 8 3 . . 7 3 1,3 1 3 4 2 1 . . 6 0 1,3 1 4 3 7 8 . . 1 9 1,3 1 5 3 9 9 . . 7 8 1,3 1 7 4 0 2 . . 7 7 1,3 1 8 4 5 4 . . 5 2 2 2 4 5 Co B m a m nk e e rc rs ia l a c a c n e d p t i a n n d c u es s t h ri e a l l d . 3 . . . . . 45 6 4 . . 0 3 456 5 . . 1 6 45 5 9 . . 3 9 46 5 3 . . 5 8 46 55 7 .. . 99 3 47 5 1 . . 7 2 47 55 0 .. . 11 3 47 66 2 .. . 00 9 48 66 0 .. . 33 0 481 55 . .. 2 55 48 44 1 .. . 99 9 48 44 2. .. 1 88 26 Other commercial and 22 2 77 8 U No . i S n n . d - U a u d s . t S d r . r i a e l a s s d e d e r s e 4 ssees4.... 4 4 3 4 1 6 8 1 . . . 5 2 7 4 4 3 5 1 8 0 1 . . . 8 4 6 4 4 4 5 1 3 4 1 . . . 3 6 3 4 4 4 5 1 7 8 1 . . . 2 3 1 4 4 5 6 1 0 1 1 . . . 5 4 0 4 4 5 6 1 5 5 0 . . . 0 5 5 4 4 5 6 9 5 5 . . . 8 4 2 4 4 5 6 9 7 6 . . . 7 2 9 4 4 6 7 9 3 3 . . . 8 9 7 4 4 6 7 9 6 5 . . . 5 2 7 4 4 6 7 9 7 7 . . . 2 8 0 4 4 7 6 8 7 8 . . . 9 2 3 29 Real estate 357.7 361.4 365.8 368.9 372.8 376.2 378.6 381.7 384.7 388.6 392.8 396.9 30 Individual 234.7 238.3 242.3 245.3 248.4 254.0 257.0 257.4 259.7 263.2 266.5 269.5 31 Security 26.6 25.4 27.7 30.2 31.7 35.2 33.0 30.8 3322..22 3355..00 3366..00 3399..99 32 Nonbank financial institutions 31.4 30.9 31.3 31.0 31.1 31.5 31.3 30.7 30.6 31.3 31.3 31.2 3333 Agricultural 41.4 41.4 41.5 41.2 40.6 40.0 39.6 39.4 39.3 39.4 39.7 39.8 34 State and political 40.4 41.2 41.7 41.2 42.1 44.0 46.9 46.6 4466..88 4477..11 4477..44 4477..44 subdivisions 35 Foreign banks 12.3 11.9 11.9 12.0 12.2 12.2 11.7 11.4 11.0 10.5 10.3 10.0 36 Foreign official institutions ... 9.3 9.4 8.9 8.5 8.4 8.3 7.9 7.9 7.7 7.8 7.8 7.6 i/ Lease financing receivables... 14.4 14.7 14.9 15.0 15.1 15.5 15.8 16.0 16.3 16.4 16.7 16.9 38 All other loans 30.0 29.5 30.3 31.8 35.6 39.3 36.6 37.8' 38.7 39.2 40.3 44.3 1. Data are prorated averages of Wednesday estimates for domestically char- 2. Excludes loans to commercial banks in the United States. tered insured banks, based on weekly sample reports and quarterly universe 3. Includes nonfinancial commercial paper held. reports. For foreign-related institutions, data are averages of month-end estimates 4. United States includes the 50 states and the District of Columbia. based on weekly reports from large U.S. agencies and branches and quarterly NOTE. These data also appear in the Board's G.7 (407) release. For address, see reports from all U.S. agencies and branches, New York investment companies inside front cover. majority owned by foreign banks, and Edge Act corporations owned by domestically chartered and foreign banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A17 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1984 1985 SSoouurrccee July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Total nondeposit funds 1 Seasonally adjusted2 100.3 103.5 106.5 107.9 112.0 108.5 102.2' 113.8 116.8 105.0 111.7' 112.4 2 Not seasonally adjusted 99.9 105.7 107.0 109.6 117.5 111.1 104.6 117.2 119.2 108.2 116.9' 114.7 Federal funds, RPs, and other borrowings from nonbanks3 3 Seasonally adjusted 134.5 139.3 141.6 141.4 145.0 140.5 138.8' 146.8' 147.2 138.8' 142.0 146.9 4 Not seasonally adjusted 134.0 141.5 142.1 143.1 150.5 143.1 141.1 150.2 149.7' 141.9 147.2 149.2 5 Net balances due to foreign-related institutions, not seasonally adjusted -34.2 -35.8 -35.1 -33.5 -33.1 -32.0 -36.5 -33.0 -30.4 -33.7 -30.3' -34.4 MEMO 6 Domestically chartered banks' net positions with own foreign branches, not seasonally adjusted4 -33.1 -35.0 -35.2 -34.2 -32.7 -31.4 -35.0 -31.7 -29.7 -32.6 -29.7' -32.6 7 Gross due from balances 71.2 72.8 71.5 69.8 68.3 69.0 71.4 70.5 71.4 75.0 7A.& 76.6 8 Gross due to balances 38.1 37.7 36.3 35.6 35.6 37.6 36.5 38.8 41.7 42.4 44.9' 43.9 9 Foreign-related institutions' net positions with directly related institutions, not seasonally adjusted3 -1.1 -.8 .1 .7 -.4 -.6 -1.6' -1.2' -.8' -1.2' -.6' -1.8 10 Gross due from balances 51.9 51.6 51.7 50.8 50.7 52.0 53.C 54^ 53.4' 51.8' 52.4 53.7 11 Gross due to balances 50.8 50.8 51.8 51.5 50.4 51.4 51.4 52.7 52^ 50.7' 51.8 51.9 Security RP borrowings 12 Seasonally adjusted® 77.5 79.9 81.4 82.0 84.0 81.1 82.3 90.1 92.0 85.4 85.5 86.5 13 Not seasonally adjusted 74.6 79.6 79.4 81.2 87.0 81.1 82.2 91.1 92.0 86.0 88.3 86.3 U.S. Treasury demand balances7 14 Seasonally adjusted 12.8 13.1 16.0 8.0 17.3 16.1 14.7 13.0 11.8 14.6 22.6 17.4 15 Not seasonally adjusted 11.9 10.3 17.5 11.0 10.4 12.5 18.5 15.8 12.8 15.4 20.9 14.9 Time deposits, $100,000 or more8 16 Seasonally adjusted 314.8 314.2 315.4 321.4 323.0 325.8 324.8 325.4 329.9 332.6' 331.0 326.6 17 Not seasonally adjusted 313.7 315.6 316.8 322.2 322.9 327.3 325.6 324.9 330.3 330.0 328.9 326.1 1. Commercial banks are those in the 50 states and the District of Columbia banks, term federal funds, overdrawn due from bank balances, loan RPs, and with national or state charters plus agencies and branches of foreign banks, New participations in pooled loans. York investment companies majority owned by foreign banks, and Edge Act 4. Averages of daily figures for member and nonmember banks. corporations owned by domestically chartered and foreign banks. 5. Averages of daily data. 2. Includes seasonally adjusted federal funds, RPs, and other borrowings from 6. Based on daily average data reported by 122 large banks. nonbanks and not seasonally adjusted net Eurodollars. Includes averages of 7. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at Wednesday data for domestically chartered banks and averages of current and commercial banks. Averages of daily data. previous month-end data for foreign-related institutions. 8. Averages of Wednesday figures. 3. Other borrowings are borrowings on any instrument, such as a promissory NOTE. These data also appear in the Board's G. 10 (411) release. For address see note or due bill, given for the purpose of borrowing money for the banking inside front cover. business. This includes borrowings from Federal Reserve Banks and from foreign Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • September 1985 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series Billions of dollars 1984 1985 AAccccoouunntt Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June ALL COMMERCIAL BANKING INSTITUTIONS1 1 Loans and securities 1,784.5 1,798.3 1,822.7 1,822.7 1,864.0 1,853.8 1,873.4 1,880.5 1,895.9 1,905.1' 1,921.2 2 Investment securities 376.2 377.2 375.2 374.4 377.5 381.0 382.0 383.3 383.4 389.8' 391.1 3 U.S. government securities 243.5 243.4 241.2 240.4 242.5 244.9 248.0 250.9 250.0 254.0 254.6 4 Other 132.7 133.8 134.0 133.9 134.9 136.1 134.1 132.5 133.4 135.8' 136.5 5 Trading account assets 20.0 20.9 22.5 21.9 22.9 24.2 27.6 23.7 23.5 23.5 23.1 6 Total loans 1,388.4 1,400.2 1,424.9 1,426.4 1,463.7 1,448.7 1,463.7 1,473.5 1,489.0 1,491.8 1,507.0 7 Interbank loans 127.1 123.3 126.1 122.6 126.9 125.2 128.6 125.9 130.7 123.8 123.7 8 Loans excluding interbank 1,261.2 1,276.9 1,298.8 1,303.8 1,336.8 1,323.4 1,335.1 1,347.6 1,358.3 1,368.0 1,383.2 9 Commercial and industrial 455.2 459.8 467.7 468.7 476.8 469.8 476.5 482.7 481.5 482.8 482.2 10 Real estate 361.8 366.6 369.8 374.4 377.7 380.2 382.5 386.0 389.8 394.9' 398.7 11 Individual 240.0 243.3 247.1 249.6 255.5 257.4 258.1 260.4 264.2 267.3' 270.9 12 All other 204.2 207.3 214.2 211.1 226.8 216.1 218.0 218.4 222.8 223.0 231.4 13 Total cash assets 177.3 181.0 188.0 188.4 201.9 187.8 189.2 183.4 187.3 202.(K 190.0 14 Reserves with Federal Reserve Banks 17.4 18.0 18.1 20.4 20.5 20.9 19.6 19.8 22.9 20.7 22.0 15 Cash in vault 22.2 21.6 21.4 23.9 23.3 21.9 21.8 21.3 21.3 23.3 22.2 16 Cash items in process of collection ... 60.7 63.2 70.2 66.5 75.9 66.9 68.8 63.9 64.1 76.5 68.5 17 Demand balances at U.S. depository institutions 29.5 30.8 32.0 30.9 34.5 30.9 32.2 31.6 30.1 35.1' 31.2 18 Other cash assets 47.5 47.4 46.3 46.7 47.7 47.3 46.7 46.8 48.9 46.5' 46.2 19 Other assets 190.6 196.8 201.6 190.1 196.8 191.7 195.4 188.5 188.7 183.4' 189.7 20 Total assets/total liabilities and capital ... 2,152.4 2,176.1 2,212.2 2,201.2 2,262.6 2,233.3 2,257.9 2,252.4 2,272.0 2,290.5' 2,300.9 21 Deposits 1,539.0 1,549.9 1,578.9 1,578.2 1,631.2 1,604.3 1,617.8 1,625.6 1,636.4 1,659.2 1,657.7 22 Transaction deposits 440.0 442.3 462.7 453.1 491.1 456.8 459.2 457.6 465.3 479.9 473.8 23 Savings deposits 365.1 364.9 371.1 378.1 386.3 400.0 406.8 409.8 409.4 418.0 424.7 24 Time deposits 734.0 742.7 745.0 747.0 753.8 747.5 751.8 758.2 761.7 761.3' 759.2 25 Borrowings 301.5 307.1 314.3 298.8 304.1 306.5 308.8 300.6 309.8 304.9 312.6 26 Other liabilities 169.7 172.9 175.1 179.4 181.1 173.7 182.2 176.9 175.3 175.6' 179.3 27 Residual (assets less liabilities) 142.1 146.2 144.0 144.8 146.2 148.8 149.2 149.2 150.5 150.8' 151.3 MEMO 28 U.S. government securities (including trading account) 255.1 255.4 256.3 255.2 256.9 261.9 269.5 268.4 266.4 268.9 270.3 29 Other securities (including trading account) 141.0 142.7 141.5 141.1 143.4 143.2 140.2 138.7 140.6 144.3' 143.9 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 1,688.4 1,707.4 1,728.5 1,726.7 1,765.4 1,759.6 1,774.6 1,781.9 1,796.4 1,809.2' 1,825.3 31 Investment securities 369.1 369.8 367.9 367.5 370.5 373.7 374.7 376.6 376.7 383.3 384.6 32 U.S. government securities 238.5 238.4 236.1 235.8 237.9 240.2 243.2 246.6 246.0 250.3 250.9 33 Other 130.7 131.5 131.8 131.6 132.6 133.5 131.5 130.0 130.6 133.0' 133.7 34 Trading account assets 20.0 20.9 22.5 21.9 22.9 24.2 27.6 23.7 23.5 23.5 23.1 35 Total loans 1,299.4 1,316.6 1,338.0 1,337.3 1,372.1 1,361.7 1,372.3 1,381.6 1,396.2 1,402.5 1,417.6 36 Interbank loans 97.6 99.9 103.3 96.1 102.8 100.6 100.9 99.9 103.1 100.4 100.3 37 Loans excluding interbank 1,201.8 1,216.7 1,234.7 1,241.2 1,269.3 1,261.2 1,271.4 1,281.6 1,293.1 1,302.1 1,317.3 38 Commercial and industrial 414.5 418.7 423.0 424.7 430.2 425.7 431.5 435.5 436.0 435.9 435.3 39 Real estate 358.0 362.3 365.5 369.1 372.1 375.1 377.3 380.9 384.5 389.4 393.3 40 Individual 239.8 243.1 246.9 249.4 255.3 257.2 257.9 260.2 263.9 267.1 270.6 41 All other 189.6 192.5 199.3 198.0 211.7 203.1 204.8 205.0 208.7 209.6 218.1 42 Total cash assets 165.9 169.0 176.6 176.8 190.3 175.7 177.8 172.5 175.7 191.C 179.0 43 Reserves with Federal Reserve Banks 16.7 17.4 17.1 19.7 19.2 20.2 18.7 19.2 22.3 19.6 20.9 44 Cash in vault 22.2 21.6 21.4 23.9 23.3 21.9 21.8 21.3 21.3 23.2 22.2 45 Cash items in process of collection ... 60.5 63.0 69.9 66.3 75.6 66.7 68.5 63.7 63.9 76.2 68.1 46 Demand balances at U.S. depository institutions 28.2 29.4 30.7 29.4 32.9 29.5 30.9 30.3 28.7 33.7' 29.7 47 Other cash assets 38.3 37.7 37.5 37.5 39.3 37.5 37.9 38.0 39.5 38.2 38.0 48 Other assets 140.6 141.2 147.9 139.7 142.1 137.6 139.0 137.2 137.6 131.6' 137.8 49 Total assets/total liabilities and capital... 1,995.0 2,017.6 2,053.1 2,043.2 2,097.8 2,072.9 2,091.4 2,091.7 2,109.7 2,131.8' 2,142.1 50 Deposits 1,500.3 1,510.9 1,539.1 1,538.0 1,587.8 1,561.8 1,573.7 1,580.5 1,591.7 1,616.0 1,614.5 51 Transaction deposits 433.7 435.9 456.2 446.8 484.5 450.6 452.9 451.4 458.9 473.5 467.3 52 Savings deposits 364.2 363.9 370.1 377.1 385.2 398.9 405.6 408.6 408.3 416.8' 423.5 53 Time deposits 702.4 711.1 712.8 714.1 718.1 712.3 715.2 720.5 724.5 725.8 723.7 54 Borrowings 236.0 243.5 251.3 240.9 243.1 246.5 247.0 239.9 247.9 245.6 253.3 55 Other liabilities 119.3 119.7 120.5 122.3 123.5 118.4 124.2 124.7 122.3 122.(K 125.7 56 Residual (assets less liabilities) 139.3 143.4 142.1 142.0 143.4 146.1 146.5 146.6 147.8 148.1' 148.6 1. Commercial banking institutions include insured domestically chartered NOTE. Figures are partly estimated. They include all bank-premises subsidiarcommercial banks, branches and agencies of foreign banks. Edge Act and ies and other significant majority-owned domestic subsidiaries. Loan and securi- Agreement corporations, and New York State foreign investment corporations. ties data for domestically chartered commercial banks are estimates for the last 2. Data are not comparable with those of later dates. See the Announcements Wednesday of the month based on a sample of weekly reporting banks and section of the March 1985 BULLETIN for a description of the differences. quarter-end condition report data. Data for other banking institutions are esti- 3. Insured domestically chartered commercial banks include all member banks mates made for the last Wednesday of the month based on a weekly reporting and insured nonmember banks. sample of foreign-related institutions and quarter-end condition reports. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A19 1.26 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of $1.4 Billion or More on December 31, 1982, Assets and Liabilities Millions of dollars, Wednesday figures 1985 AAccccoouunntt May 8 May 15' May 22 May 29 June 5 June 12 June 19 June 26 July 3 Cash and balances due from depository institutions 90,371 98,309 94,106' 98,124' 97,189' 95,014 92,874 92,218 100,547 2 Total loans, leases and securities, net 838,857' 853,778 844,944' 838,7%' 857,652' 848,180 860,666 848,227 863,734 3 U.S. Treasury and government agency 85,607 87,905 88,037 87,417 88,146 86,043 87,992 86,212 87,993 4 Trading account 15,533 15,999 15,854 14,918 16,327 16,075 18,343 15,657 16,339 5 Investment account, by maturity 70,073 71,906 72,183 72,499 71,819 69,%8 69,650 70,555 71,654 6 One year or less 20,937' 20,898 20,434' 20,689' 20,718' 20,868 21,172 21,812 21,930 7 Over one through five years 35,211' 37,083 37,015' 37,097' 35,606' 34,189 34,084 34,765 35,590 8 Over five years 13,925 13,925 14,734 14,713 15,494 14,911 14,393 13,978 14,134 9 48,533 48,492 48,891' 49,552 49,094 49,179 49,337 49,387 48,902 10 Trading account 4,263 4,393 4,475 4,984 4,304 4,084 4,266 4,388 4,455 11 Investment account 44,270 44,099 44,416 44,568 44,790 45,095 45,071 44,998 44,446 12 States and political subdivisions, by maturity 39,213 39,323 39,398 39,566 39,822 40,048 39,957 39,949 39,360 13 One year or less 4,998 5,000 4,946 5,220 5,255 5,422 5,287 5,192 4,824 14 Over one year 34,214 34,323 34,451' 34,346 34,567 34,626 34,670 34,757 34,536 IS Other bonds, corporate stocks, and securities 5,057 4,776 5,018 5,002 4,968 5,046 5,114 5,049 5,086 16 Other trading account assets . 3,061 3,371 2,866 3,55C 4,205 4,078 2,986 3,095 4,362 17 Federal funds sold1 51,786' 59,522 54,476 50,918 63,878 56,653 60,729 55,004 62,530 18 To commercial banks 35,045' 40,568 37,052 34,128 44,665 37,933 43,143 36,350 43,720 19 To nonbank brokers and dealers in securities 10,904 12,887 11,605 11,298 12,347 11,303 11,656 12,583 12,521 70 To others 5,837 6,067 5,818 5,491 6,866 7,417 5,929 6,071 6,290 21 Other loans and leases, gross2 666,795' 671,444 667,65C 664,311' 669,451' 669,422 676,828 671,742 677,209 V Other loans, gross2 653,248' 657,886 653,988' 650,709' 655,767' 655,708 663,103 657,984 663,256 ?3 Commercial and industrial2 255,635' 254,718 254,202' 253.45C 253,938' 253,173 253,436 252,237 253,957 24 Bankers acceptances and commercial paper 2,234 2,256 2,200 2,287 2,448 2,277 2,025 2,335 2,656 25 All other 253,401' 252,461 252,002' 251,162' 251,489' 250,8% 251,411 249,902 251,302 76 U.S. addressees 248,000' 246,972 246,556' 246,149' 246,391' 245,885 246,441 244,900 246,234 27 Non-U.S. addressees 5,400 5,490 5,446 5,014 5,098 5,010 4,970 5,002 5,068 28 Real estate loans2 166,277' 167,149 167,164' 167,272' 167,236' 167,880 168,295 168,713 168,811 29 To individuals for personal expenditures 119,000' 119,248 119,536' 119,983' 120,231' 120,444 120,964 121,669 122,282 30 To depository and financial institutions 40,845' 40,917 40,569 39,974' 40,146 39,576 40,537 39,879 40,403 31 Commercial banks in the United States 11,513' 11,342 11,232' 10,783' 10,45C 10,416 10,975 11,018 10,534 32 Banks in foreign countries 5,575' 5,530 5,489 5,157' 5,369' 5,113 5,229 5,110 5,409 33 Nonbank depository and other financial institutions 23,756' 24,044 23,848' 24,035' 24,326' 24,048 24,333 23,750 24,460 34 For purchasing and carrying securities 17,502 20,504 17,871 14,924 19,466 19,741 24,736 19,618 21,977 35 To finance agricultural production 7,099' 7,164 7,185' 7,188' 7,238 7,238 7,234 7,282 7,351 36 To states and political subdivisions 30,002' 30,070 30,064' 30.03C 29,933' 30,156 29,970 30,008 30,015 37 To foreign governments and official institutions 3,706' 4,143 3,819' 3,745' 3,602 3,613 3,598 3,609 3,473 38 All other 13,182' 13,974 13,577 14,142 13,978' 13,887 14,333 14,969 14,986 39 Lease financing receivables 13,546 13,557 13,662 13,601 13,683 13,714 13,725 13,758 13,953 40 LESS: Unearned income 5,165 5,179 5,190 5,194 5,147 5,165 5,178 5,219 5,193 41 Loan and lease reserve2 11,76c 11,777 11,786 11,759 11,975' 12,030 12,028 11,993 12,070 4? Other loans and leases, net2 649,870' 654,488 650,674' 647,358' 652,329' 652,226 659,622 654,530 659,946 43 All other assets 127,871' 128,7% 127,532' 124,347' 131,828' 130,237 131,818 129,772 138,158 44 Total assets 1,057,099 1,080,883 1,066,583' 1,061,267 1,086,669' 1,073,432 1,085,358 1,070,218 1,102,439 45 Demand deposits 182,513' 200,380 184,706' 192,625' 197,483' 194,403 196,171 190,798 206,263 46 Individuals, partnerships, and corporations 138,662' 150,563 140,673' 146,211' 148,239' 148,839 146,598 143,760 153,774 47 States and political subdivisions 4,718 5,735 4,809 5,169 5,378 4,814 5,705 5,268 5,550 48 U.S. government 2,595 3,388 2,271 1,047 4,133 2,560 4,422 2,350 4,456 49 Depository institutions in United States 21,731' 24,253 22,336' 25,257' 23.56C 21,948 24,102 22,159 25,513 50 Banks in foreign countries 5,712 5,813 5,449 5,347 6,008' 5,202 5,448 5,701 5,114 51 Foreign governments and official institutions 918 1,089 789 813 787 1,057 842 772 898 52 Certified and officers' checks 8,179 9,539 8,379 8,780 9,378 9,983 9,054 10,788 10,956 53 Transaction balances other than demand deposits 37,129 36,905 36,408 36,401' 38,887 38,400 37,943 36,671 39,412 54 Nontransaction balances 465,111' 466,160 467,152 467,566' 469,398 470,367 471,175 469,761 471,662 55 Individuals, partnerships and corporations 428,595' 429,373 429,835' 430,697' 433,045' 434,061 434,986 433,818 436,616 56 States and political subdivisions 24,478 24,678 25,051 24,813 24,219 24,161 23,939 23,781 23,017 57 U.S. government 338 345 357 376 340 376 366 397 402 58 Depository institutions in the United States 9,243' 9,334 9,523' 9,373' 9,395' 9,415 9,541 9,466 9,392 59 Foreign governments, official institutions and banks 2,458 2,430 2,386 2,307 2,398 2,354 2,342 2,299 2,235 60 Liabilities for borrowed money 203,636' 206,946 208,024' 194,905' 210,271' 199,467 210,439 201,470 216,998 61 Borrowings from Federal Reserve Banks 70 830 3,831 730 2,919 123 3,212 118 3,472 6? Treasury tax-and-loan notes 15,946 12,104 11,126 7,575 2,563' 2,130 12,659 14,467 15,230 63 All other liabilities for borrowed money3 187.62C 194,012 193,068' 186,600' 204,788' 197,215 194,568 186,885 198,2% 64 Other liabilities and subordinated note and debentures 94,391' %,204 95,993' 95,416' 95,645' 95,521 94,478 96,613 92,800 65 Total liabilities 982,781 1,006,596 992,284' 986,913 1,011,684' 998,158 1,010,205 995,314 1,027,135 66 Residual (total assets minus total liabilities)4 74,318 74,287 74,299 74,354 74,985 75,274 75,152 74,904 75,304 MEMO 67 Total loans and leases (gross) and investments adjusted5 809,224' 818,824 813,636' 810,838' 819,659' 817,027 823,754 818,071 826,742 68 Total loans and leases (gross) adjusted2'5 672,023' 679,056 673,842' 670,318' 678,214' 677,726 683,439 679,377 685,485 69 Time deposits in amounts of $100,000 or more 155,906 155,579 155,972' 155,572' 155,276' 155,405 155,595 154,441 154,085 70 Loans sold outright to affiliates—total6 2,768 2,605 2,586 2,601 2,448 2,413 2,300 2,221 2,200 71 Commercial and industrial 1,875 1,786 1,758 1,721 1,591 1,593 1,492 1,402 1,412 72 Other 894 820 827 880 857 819 808 819 788 73 Nontransaction savings deposits (including MMDAs) 177,377 178,723 179,052 179,792 181,912' 182,728 183,050 182,876 184,832 1. Includes securities purchased under agreements to resell. 5. Exclusive of loans and federal funds transactions with domestic commercial 2. Levels of major loan items were affected by the Sept. 26, 1984 transaction banks. between Continental Illinois National Bank and the Federal Deposit Insurance 6. Loans sold are those sold outright to a bank's own foreign branches, Corporation. For details see the H.4.2 statistical release dated Oct. 5, 1984. nonconsolidated nonbank affiliates of the bank, the bank's holding company (if 3. Includes federal funds purchased and securities sold under agreements to not a bank), and nonconsolidated nonbank subsidiaries of the holding company. repurchase; for information on these liabilities at banks with assets of $1 billion or NOTE. These data also appear in the Board's H.4.2 (504) release. For address, more on Dec. 31, 1977, see table 1.13. see inside front cover. 4. This is not a measure of equity capital for use in capital adequacy analysis or for other analytic uses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 DomesticN onfinancial Statistics • September 1985 1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities Millions of dollars, Wednesday figures 1985 AAccccoouunntt May 8 May 15 May 22 May 29 June 5 June 12 June 19 June 26 July 3 1 Cash and balances due from depository institutions 23,542 25,981 24,995 24,824 24,404 23,722 21,524 24,448 23,061 2 Total loans, leases and securities, net1 178,735 184,914 179,165 176,578 183,282 179,667 185,111 182,871 185,193 Securities 33 4 5 Investment account, by maturity 12,295 12,639 12,383 12,352 10,657 9,925 10,167 10,660 10,614 6 One year or less 1,664 1,681 1,428 1,416 1,304 1,301 1,758 2,021 2,005 7 Over one through five years 8,840 9,217 9,218 9,222 7,450 6,915 6,702 6,933 6,868 8 Over five years 1,791 1,741 1,737 1,713 11,,990033 11,,770088 11,,770077 11,,770077 11,,774411 9 10 11 Investment account 9,674 9,739 9,764 9,769 9,934 9,921 9,914 9,989 9,933 12 States and political subdivisions, by maturity 8,643 8,689 8,670 8,671 8,805 8,820 8,825 8,891 8,827 13 One year or less 1,227 1,243 1,119 1,248 1,236 1,222 1,213 1,160 1,203 14 Over one year 7,416 7,446 7,550 7,423 7,570 7,598 7,611 7,731 7,624 15 Other bonds, corporate stocks and securities 1,031 1,050 1,094 1,098 1,129 1,101 1,090 1,098 1,106 1166 Loans and leases 17 Federal funds sold3 21,200 24,037 21,578 21,590 25,905 23,527 23,583 25,256 26,126 18 To commercial banks 11,461 12,137 11,736 11,282 13,890 11,588 12,466 13,910 14,326 19 To nonbank brokers and dealers in securities 5,744 7,818 5,694 6,289 7,081 6,315 6,785 6,872 7,500 20 To others 3,9% 4,082 4,147 4,019 4,934 5,625 4,332 4,474 4,300 21 Other loans and leases, gross 140,473 143,419 140,365 137,789 141,727 141,301 146,464 141,997 143,565 22 Other loans, gross 138,007 140,950 137,781 135,275 139,209 138,782 143,934 139,460 140,906 23 Commercial and industrial 62,552 62,048 61,765 61,419 61,794 61,277 61,245 60,662 60,907 24 Bankers acceptances and commercial paper 656 712 720 755 813 646 543 721 948 25 All other 61,897 61,336 61,045 60,664 60,981 60,630 60,702 59,941 59,959 26 U.S. addressees 61,227 60,611 60,350 59,956 60,273 59,932 60,036 59,277 59,281 27 Non-U.S. addressees 670 725 695 708 708 699 666 664 678 28 Real estate loans 25,800 25,986 26,043 26,030 26,012 26,202 26,296 26,261 26,351 29 To individuals for personal expenditures 16,789 16,770 16,795 16,870 16,853 16,861 16,976 17,052 17,143 30 To depository and financial institutions 11,938 11,607 11,704 11,506 11,502 10,974 11,797 11,354 11,1% 31 Commercial banks in the United States 2,493 2,188 2,150 2,297 2,346 2,123 2,503 2,515 2,110 32 Banks in foreign countries 2,169 2,013 2,025 1,743 1,892 1,638 1,898 1,749 1,924 33 Nonbank depository and other financial institutions 7,276 7,406 7,528 7,466 7,264 7,213 7,3% 7,090 7,162 34 For purchasing and carrying securities 8,680 11,397 8,704' 6,551 10,446 10,593 14,895 10,642 12,189 35 To finance agricultural production 435 426 439 434 421 394 396 405 388 36 To states and political subdivisions 7,944 7,973 8,009 7,911 7,869 7,890 7,855 7,897 7,828 37 To foreign governments and official institutions 816 1,191 891 848 769 822 851 888 789 38 All other 3,051 3,552 3,431 3,704 3,543 3,769 3,622 4,299 4,116 39 Lease financing receivables 2,466 2,468 2,583 2,514 2,518 2,519 2,530 2,537 2,659 40 LESS: Unearned income 1,446 1,450 1,455 1,453 1,419 1,424 1,426 1,460 1,450 41 Loan and lease reserve 3,462 3,469 3,470 3,469 3,521 3,584 3,591 3,571 3,595 42 Other loans and leases, net 135,566 138,499 135,440 132,866 136,787 136,294 141,447 136,966 138,520 43 All other assets4 64,733 66,882 66,732 64,185 69,640 68,200 70,480 65,644 73,245 44 Total assets 267,010 277,777 270,892 265,587 277,326 271,590 277,116 272,963 281,499 Deposits 45 Demand deposits 44,634 52,418 47,262 48,147 48,651 48,319 49,956 49,793 49,806 46 Individuals, partnerships, and corporations 29,691 34,536 31,708 32,921 32,183 32,066 32,957 32,459 32,944 47 States and political subdivisions 780 1,431 835 771 1,037 930 990 933 1,014 48 U.S. government 537 646 513 120 825 455 870 442 931 49 Depository institutions in the United States 4,624 5,701 5,176 5,303 4,938 4,703 6,073 5,029 5,400 50 Banks in foreign countries 4,425 4,577 4,268 4,110 4,674 3,956 4,269 4,510 3,820 51 Foreign governments and official institutions 746 933 612 640 582 890 675 575 693 52 Certified and officers' checks 3,832 4,594 4,149 4,283 4,413 5,319 4,121 55,,884444 55,,000011 53 Transaction balances other than demand deposits ATS, NOW, Super NOW, telephone transfers) 3,919 3,933 3,850 3,864 4,044 4,076 4,108 3,931 4,172 54 Nontransaction balances 85,688 86,125 85,950 85,700 86,158 85,925 85,676 84,775 86,207 55 Individuals, partnerships and corporations 77,508 77,997 77,717 77,711 78,378 78,246 77,912 77,224 78,817 56 States and political subdivisions 4,440 4,457 4,553 4,459 4,373 4,373 4,334 4,266 4,178 57 U.S. government 66 76 80 78 50 56 54 58 52 58 Depository institutions in the United States 2,454 2,404 2,436 2,380 2,336 2,263 2,406 2,273 2,225 59 Foreign governments, official institutions and banks 1,220 1,191 1,163 1,071 1,020 988 %9 953 935 60 Liabilities for borrowed money 68,889 70,348 69,653 62,852 73,830 68,686 72,281 68,277 76,096 61 2,615 1,980 2,615 1 465 62 Treasury tax-and-loan notes 4,144 2,895 2,486 1,746 645 477 3,425 3,669 3,582 63 All other liabilities for borrowed money5 64,744 67,454 64,552 61,107 71,205 68,209 66,241 64,608 71,049 64 Other liabilities and subordinated note and debentures 40,341 41,390 40,529 41,485 40,887 40,732 41,201 42,510 41,366 65 Total liabilities 243,470 254,216 247,244 242,048 253,570 247,739 253,221 249,287 257,647 66 Residual (total assets minus total liabilities)6 23,539 23,562 23,647 23,538 23,757 23,851 23,894 23,676 23,852 MEMO 67 Total loans and leases (gross) and investments adjusted1-7 169,689 175,509 170,204 167,922 171,986 170,964 175,159 171,477 173,803 68 Total loans and leases (gross) adjusted7 147,720 153,131 148,056 145,800 151,395 151,118 155,077 150,828 153,256 69 Time deposits in amounts of $100,000 or more 33,842 34,001 33,829 33,267 33,500 33,010 32,694 32,010 32,815 1. Excludes trading account securities. 6. Not a measure of equity capital for use in capital adequacy analysis or for 2. Not available due to confidentiality. other analytic uses. 3. Includes securities purchased under agreements to resell. 7. Exclusive of loans and federal funds transactions with domestic commercial 4. Includes trading account securities. banks. 5. Includes federal funds purchased and securities sold under agreements to NOTE. These data also appear in the Board's H.4.2 (504) release. For address, repurchase. see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS WITH ASSETS OF $750 MILLION OR MORE ON JUNE 30, 1980 Assets and Liabilities • Millions of dollars, Wednesday figures 1985 AAccccoouunntt May 8 May 15 May 22 May 29 June 5 June 12 June 19 June 26 July 3 1 Cash and due from depository institutions. 6,950 6,606 6,436 6,302 6,969 6,521 6,808 6,347 6,638 2 Total loans and securities 44,862 44,426 45,989 44,614 45,283 44,856 46,093 46,111 47,538 3 U.S. Treasury and govt, agency securities 3,439 3,375 3,324 3,143 3,269 3,386 3,238 3,413 3,413 4 Other securities 1,642 1,629 1,630 1,632 1,687 1,723 1,751 1,779 1,764 5 Federal funds sold1 4,246 3,302 4,389 3,925 3,772 3,037 4,231 3,419 4,276 6 To commercial banks in the United States 3,837 3,066 4,075 3,553 3,385 2,653 3,769 3,001 4,061 7 To others 409 236 314 372 388 383 461 418 215 8 Other loans, gross 35,535 36,120 36,645 35,914 36,554 36,710 36,874 37,500 38,085 9 Commercial and industrial 20,639 20,670 21,351 21,261 21,697 21,954 21,513 21,959 22,320 10 Bankers acceptances and commercial paper 1,776 1,663 1,628 1,819 2,029 2,020 1,902 1,813 1,994 11 All other 18,863 19,006 19,723 19,442 19,669 19,934 19,611 20,146 20,326 12 U.S. addressees 17,743 17,885 18,429 18,389 18,569 18,873 18,473 18,962 19,096 13 Non-U.S. addressees 1,119 1,122 1,294 1,053 1,099 1,061 1,138 1,184 1,230 14 To financial institutions 10,832 11,175 11,209 10,714 10,604 10,441 10,618 10,713 10,794 15 Commercial banks in the United States . 8,552 8,853 9,062 8,444 8,251 8,196 8,287 8,639 8,429 16 Banks in foreign countries 1,024 1,070 1,023 1,112 1,137 1,164 1,096 1,079 1,080 17 Nonbank financial institutions 1,255 1,252 1,124 1,158 1,216 1,081 1,235 995 1,285 18 To foreign govts, and official institutions.. 680 667 670 667 707 700 703 690 703 19 For purchasing and carrying securities .. 1,275 1,264 1,089 938 1,195 1,275 1,687 1,791 1,856 20 All other 2,108 2,345 2,326 2,334 2,350 2,340 2,352 2,348 2,412 21 Other assets (claims on nonrelated parties).. 18,734 18,774 18,723 18,911 18,408 18,478 18,455 18,261 18,174 22 Net due from related institutions 10,368 11,106 9,998 9,290' 10,503 9,720 10,184 9,668 9,788 23 Total assets 80,914 80,913 81,146 79,11V 81,162 79,575 81,541 80,387 82,138 24 Deposits or credit balances due to other than directly related institutions.... 24,127 23,715 23,606 23,645' 23,525 23,357 23,354 23,438 23,350 25 Credit balances 135 158 172 193 157 168 223 166 187 26 Demand deposits 1,581 1,789 1,556 1,627' 1,670 1,713 1,777 1,716 1,815 27 Individuals, partnerships, and corporations 829 877 843 866 854 883 910 906 999988 28 Other 752 912 714 76C 816 830 866 810 817 29 Time and savings deposits 22,410 21,768 21,878 21,825 21,699 21,477 21,354 21,556 21,348 30 Individuals, partnerships, and corporations 17,774 17,274 17,458 17,390 16,969 16,888 16,745 16,928 1166,,774499 31 Other 4,636 4,493 4,420 4,435 4,730' 4,588 4,609 4,628 4,599 32 Borrowings from other than directly related institutions 29,874 30,695 30,230 27,894 30,664 29,762 30,839 29,344 3311,,556666 33 Federal funds purchased2 12,484 13,093 12,384 10,645 13,598 12,284 13,216 11,611 13,231 34 From commercial banks in the United States 10,166 11,103 10,313 8,425 11,340 9,987 10,642 9,022 10,634 35 From others 2,318 1,990 2,071 2,220 2,258 2,298 2,574 2,590 2,597 36 Other liabilities for borrowed money.... 17,390 17,603 17,846 17,249 17,066 17,478 17,623 17,733 18,335 37 To commercial banks in the United States 16,080 16,288 16,412 16,044 15,850 16,127 16,254 16,333 16,982 38 To others 1,309 1,315 1,434 1,205 1,215 1,350 1,368 1,401 1,352 39 Other liabilities to nonrelated parties 20,749 20,777 20,659 20,866 20,317 20,376 20,374 20,129 20,224 40 Net due to related institutions 6,164 5,726 6,651 6,712 6,657 6,080 6,974 7,476 6,998 41 Total liabilities 80,914 80,913 81,146 79,117' 81,162 79,575 81,541 80,387 82,138 MEMO 42 Total loans (gross) and securities adjusted3 32,472 32,506 32,851 32,617 33,646 34,007 34,037 34,470 35,049 43 Total loans (gross) adjusted3 27,391 27,502 27,897 27,842 28,690 28,898 29,048 29,279 29,872 • Levels of many asset and liability items were revised beginning Oct. 31, 3. Exclusive of loans to and federal funds sold to commercial banks in the 1984. For details, see the H.4.2 (504) statistical release dated Nov. 23, 1984. United States. 1. Includes securities purchased under agreements to resell. NOTE. These data also appear in the Board's H.4.2 (504) release. For address, 2. Includes securities sold under agreements to repurchase. see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • September 1985 1.31 GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations' Billions of dollars, estimated daily-average balances Commercial banks TTyyppee ooff hhoollddeerr 1983 1984 1985 1199779922 11998800 11998811 11998822 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Dec. Mar. June' Sept. Dec. Mar.5' p 1 All holders—Individuals, partnerships, and corporations 302.3 315.5 288.9 291.8 293.5 279.3 286.3 288.8' 302.7' 288.3 2 Financial business 27.1 29.8 28.0 35.4 32.8 31.7 30.8 30.4' 31.7' 28.3 3 Nonfinancial business 157.7 162.8 154.8 150.5 161.1 150.3 156.7 158.9^ 166.3 159.7 4 Consumer 99.2 102.4 86.6 85.9 78.5 78.1 78.7 19.9* 81.5' 77.3 5 Foreign 3.1 3.3 2.9 3.0 3.3 3.3 3.5 3.3 3.6 3.5 6 Other 15.1 17.2 16.7 17.0 17.8 15.9 16.7 16.3' 19.7' 19.6 Weekly reporting banks 1983 1984 1985 1199779933 11998800 11998811 11998822 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Dec.4 Mar. June Sept. Dec. Mar.5- P 7 All holders—Individuals, partnerships, and corporations 139.3 147.4 137.5 144.2 146.2 139.2 145.3 145.3 157.1 147.9 8 Financial business 20.1 21.8 21.0 26.7 24.2 23.5 23.6 23.7 25.3 22.6 9 Nonfinancial business 74.1 78.3 75.2 74.3 79.8 76.4 79.7 79.2 87.1 82.8 10 Consumer 34.3 35.6 30.4 31.9 29.7 28.4 29.9 29.8 30.5 29.3 11 Foreign 3.0 3.1 2.8 2.9 3.1 3.2 3.2 3.2 3.4 3.3 12 Other 7.8 8.6 8.0 8.4 9.3 7.7 8.9 9.3 10.9 9.9 1. Figures include cash items in process of collection. Estimates of gross estimates in billions of dollars for December 1978 have been constructed for the deposits are based on reports supplied by a sample of commercial banks. Types of new large-bank panel; financial business, 18.2; nonfinancial business, 67.2; depositors in each category are described in the June 1971 BULLETIN, p. 466. consumer, 32.8; foreign, 2.5; other, 6.8. 2. Beginning with the March 1979 survey, the demand deposit ownership 4. In January 1984 the weekly reporting panel was revised; it now includes 168 survey sample was reduced to 232 banks from 349 banks, and the estimation banks. Beginning with March 1984, estimates are constructed on the basis of 92 procedure was modified slightly. To aid in comparing estimates based on the old sample banks and are not comparable with earlier data. Estimates in billions of and new reporting sample, the following estimates in billions of dollars for dollars for December 1983 based on the newly weekly reporting panel are: December 1978 have been constructed using the new smaller sample; financial financial business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; business, 27.0; nonfinancial business, 146.9; consumer, 98.3; foreign, 2.8; and other, 9.5. other, 15.1. 5. Beginning March 1985, financial business deposits and, by implication, total 3. After the end of 1978 the large weekly reporting bank panel was changed to gross demand deposits have been redefined to exclude demand deposits due to 170 large commercial banks, each of which had total assets in domestic offices thrift institutions. Historical data have not been revised. The estimated volume of exceeding $750 million as of Dec. 31, 1977. Beginning in March 1979, demand such deposits for December 1984 is $5.0 billion at all insured commercial banks deposit ownership estimates for these large banks are constructed quarterly on the and $3.0 billion at weekly reporting banks. basis of 97 sample banks and are not comparable with earlier data. The following Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 19843 1985 IInnssttrruummeenntt 1 D 9 e 7 c 9 . ' D 19 e 8 c 0 . D 19 e 8 c 1 . D 1 e 9 c 8 . 2 2 D 19 e 8 c 3 . Dec. Jan. Feb. Mar. Apr. May Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 112,803 124,374 165,829 166,436 188,312 239,117 245,322 247,095 250,575 255,236 258,943 Financial companies4 Dealer-placed paper5 2 Total 17,359 19,599 30,333 34,605 44,622 56,917 59,713 60,186 60,895 63,405 6611,,228822 3 Bank-related (not seasonally adjusted) 2,784 3,561 6,045 2,516 2,441 2,035 2,137 2,265 2,304 2,180 2,295 Directly placed paper6 4 Total 64,757 67,854 81,660 84,393 96,918 110,474 113,101 114,824 118,029 111177,,884411 111199,,997755 5 Bank-related (not seasonally adjusted) 17,598 22,382 26,914 32,034 35,566 42,105 43,046 42,759 43,334 42,405 43,126 6 Nonfinancial companies7 30,687 36,921 53,836 47,437 46,772 71,726 72,508 72,085 71,651 73,990 77,686 Bankers dollar acceptances (not seasonally adjusted)8 7 Total 45,321 54,744 69,226 79,543 78,309 75,470 72,273 76,109 73,726 72,825 69,689 Holder 8 Accepting banks 9,865 10,564 10,857 10,910 9,355 10,255 10,060 10,623 10,473 9,666 9,265 9 Own bills 8,327 8,963 9,743 9,471 8,125 9,065 8,839 9,726 9,166 8,263 7,578 10 Bills bought 1,538 1,601 1,115 1,439 1,230 1,191 1,220 897 1,340 1,403 1,687 Federal Reserve Banks 11 Own account 704 776 195 1,480 418 0 0 0 0 0 0 12 Foreign correspondents 1,382 1,791 1,442 • 949 729 671 679 761 737 728 575 13 Others 33,370 41,614 56,731 66,204 68,225 64,543 61,603 64,779 65,865 65,965 58,739 Basis 14 Imports into United States 10,270 11,776 14,765 17,683 15,649 16,975 16,733 17,115 16,124 16,417 16,670 15 Exports from United States 9,640 12,712 15,400 16,328 16,880 15,859 15,445 15,881 15,179 14,875 14,214 16 All other 25,411 30,257 39,060 45,531 45,781 42,635 40,095 43,113 42,423 41,533 38,805 1. A change in reporting instructions results in offsetting shifts in the dealer- financing; factoring, finance leasing, and other business lending; insurance placed and directly placed financial company paper in October 1979. underwriting; and other investment activities. 2. Effective Dec. 1, 1982, there was a break in the commercial paper series. The 5. Includes all financial company paper sold by dealers in the open market. key changes in the content of the data involved additions to the reporting panel, 6. As reported by financial companies that place their paper directly with the exclusion of broker or dealer placed borrowings under any master note investors. agreements from the reported data, and the reclassification of a large portion of 7. Includes public utilities and firms engaged primarily in such activities as bank-related paper from dealer-placed to directly placed. communications, construction, manufacturing, mining, wholesale and retail trade, 3. Correction of a previous misclassification of paper by a reporter has created transportation, and services. a break in the series beginning December 1983. The correction adds some paper to 8. Beginning October 1984, the number of respondents in the bankers acceptnonfinancial and to dealer-placed financial paper. ance survey will be reduced from 340 to 160 institutions—those with $50 million or 4. Institutions engaged primarily in activities such as, but not limited to, more in total acceptances. The new reporting group accounts for over 95 percent commercial, savings, and mortgage banking; sales, personal, and mortgage of total acceptances activity. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per annum Effective Date Average Month rate 11.00 1984—Oct. 17 12.50 1983—Jan. 11.16 1984—Apr. 10.50 29 12.00 Feb. 10.98 May 11.00 Nov. 9 11.75 Mar. 10.50 June 28 11.25 Apr. 10.50 July 11.50 Dec. 20 10.75 May 10.50 Aug. 12.00 June 10.50 Sept 12.50 1985—Jan. 15 10.50 July 10.50 Oct. 13.00 May 20 10.00 Aug. 10.89 Nov. 12.75 June 18 9.50 Sept 11.00 Dec. Oct. 11.00 Nov. 11.00 1985—Jan. Dec. 11.00 Feb. Mar. 1984—Jan.. 11.00 Apr. Feb. 11.00 May Mar. 11.21 June NOTE. These data also appear in the Board's H.15 (519) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • September 1985 1.35 INTEREST RATES Money and Capital Markets Averages, percent per annum; weekly and monthly figures are averages of business day data unless otherwise noted. 1985 1985, week ending IInnssttrruummeenntt 11998822 11998833 11998844 Mar. Apr. May June May 31 June 7 June 14 June 21 June 28 MONEY MARKET RATES 1 Federal funds1'2 12.26 9.09 10.22 8.58 8.27 7.97 7.53 7.60 7.75 7.62 7.13 7.46 2 Discount window borrowing1'2-3 11.02 8.50 8.80 8.00 8.00 7.81 7.50 7.50 7.50 7.50 7.50 77..5500 Commercial paper4-5 3 1-month 11.83 8.87 10.05 8.74 8.31 7.80 7.34 7.46 7.37 7.41 7.13 7.45 4 3-month 11.89 8.88 10.10 8.90 8.37 7.83 7.35 7.48 7.33 7.40 7.16 7.49 5 6-month 11.89 8.89 10.16 9.23 8.47 7.88 7.38 7.54 7.31 77..4400 77..2211 77..6600 Finance paper, directly placed4'5 6 1-month 11.64 8.80 9.97 8.70 8.29 7.74 7.31 7.44 7.34 7.38 7.07 7.47 7 3-month 11.23 8.70 9.73 8.67 8.26 7.71 7.19 7.42 7.19 7.22 7.00 7.36 8 6-month 11.20 8.69 9.65 8.65 8.27 7.69 7.16 7.39 7.17 7.21 6.99 77..2266 Bankers acceptances5'6 9 3-month 11.89 8.90 10.14 8.88 8.33 7.77 7.32 7.43 7.30 7.36 7.19 7.42 10 6-month 11.83 8.91 10.19 9.20 8.42 7.81 7.34 7.47 7.25 77..3388 77..2233 77..5522 Certificates of deposit, secondary market7 11 1-month 12.04 8.96 10.17 8.73 8.35 7.83 7.38 7.49 7.38 7.45 7.22 7.47 12 3-month 12.27 9.07 10.37 9.02 8.49 7.91 7.44 1.5V 7.39 7.49 7.29 7.60 13 6-month 12.57 9.27 10.68 9.60 8.75 8.08 7.58 7.74 7.46 7.59 7.44 7.83 14 Eurodollar deposits, 3-month8 13.12 9.56 10.73 9.32 8.74 8.13 7.60 7.86 7.63 77..5588 77..5500 77..7700 U.S. Treasury bills5 Secondary market9 15 3-month 10.61 8.61 9.52 8.52 7.95 7.48 6.95 7.19 7.01 7.03 6.81 6.97 16 6-month 11.07 8.73 9.76 8.90 8.23 7.65 7.09 7.32 7.10 7.15 6.97 7.16 17 1-year 11.07 8.80 9.92 9.06 8.44 7.85 7.27 7.53 7.25 7.31 7.14 77..3377 Auction average10 18 3-month 10.66 8.64 9.56 8.56 7.99 7.56 7.01 7.22 7.03 7.21 6.73 7.06 19 6-month 10.80 8.76 9.79 8.92 8.31 7.75 7.16 7.39 7.16 7.35 6.90 7.24 20 1-year 11.10 8.85 9.91 9.24 8.44 7.94 7.18 n.a. n.a. 7.18 n.a. n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities12 21 1-year 12.27 9.57 10.89 9.86 9.14 8.46 7.80 8.09 7.80 7.85 7.66 7.91 22 2-vear 12.80 10.21 11.65 10.71 10.09 9.39 8.69 9.01 8.63 8.72 8.55 8.85 23 2-Vi-year13 9 15 n SL 8 80 n a 24 3-year 12.92 10.45 11.89 11.05 10.49 9.75 9.05 9.36 8.97 9.06 8.90 9.27 2b 5-year 13.01 10.80 12.24 11.52 11.01 10.34 9.60 9.84 9.45 9.60 9.50 9.85 26 7-year 13.06 11.02 12.40 11.82 11.34 10.72 10.08 10.25 9.93 10.06 10.01 10.32 21 10-year 13.00 11.10 12.44 11.86 11.43 10.85 10.16 10.39 10.00 10.12 10.08 10.43 28 20-year 12.92 11.34 12.48 12.06 11.69 11.19 10.57 10.79' 10.46 10.53 10.50 10.77 29 30-year 12.76 11.18 12.39 11.81 11.47 11.05 10.45 10.68' 10.37 10.43 10.38 1100..6600 Composite14 30 Over 10 years (long-term) 12.23 10.84 11.99 11.78 11.42 10.96 10.36 10.58 10.27 10.33 10.29 10.56 State and local notes and bonds Moody's series15 31 Aaa 10.86 8.80 9.61 9.18 8.95 8.52 8.24 8.30 8.15 8.25 8.25 8.30 32 Baa 12.46 10.17 10.38 10.18 9.95 9.54 9.03 9.30 8.90 9.05 9.05 9.10 33 Bond Buyer series16 11.66 9.51 10.10 9.77 9.42 9.01 8.69 8.81 8.60 88..6666 88..6699 88..8800 Corporate bonds Seasoned issues17 34 All industries 14.94 12.78 13.49 13.13 12.89 12.47 11.70 12.01 11.71 11.66 11.63 11.80 35 Aaa 13.79 12.04 12.71 12.56 12.23 11.72 10.94 11.27 10.93 10.88 10.86 11.09 36 Aa 14.41 12.42 13.31 12.91 12.69 12.30 11.46 11.82 11.50 11.48 11.36 11.52 37 A 15.43 13.10 13.74 13.36 13.14 12.70 11.98 12.24 12.04 11.97 11.91 12.02 38 Baa 16.11 13.55 14.19 13.69 13.51 13.15 12.40 12.69 12.36 12.32 12.37 1122..5566 39 A-rated, recently-offered utility bonds18 15.49 12.73 13.81 13.17 12.75 12.25 11.62 11.78 11.57 11.50 11.71 11.62 MEMO: Dividend/price ratio19 40 Preferred stocks 12.53 11.02 11.59 10.97 10.75 10.60 10.05 10.25 10.07 10.10 9.95 10.07 41 Common stocks 5.81 4.40 4.64 4.37 4.37 4.31 4.21 4.23 4.17 4.23 4.26 4.19 1. Weekly and monthly figures are averages of all calendar days, where the 11. Yields are based on closing bid prices quoted by at least five dealers. rate for a weekend or holiday is taken to be the rate prevailing on the preceding 12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields business day. The daily rate is the average of the rates on a given day weighted by are read from a yield curve at fixed maturities. Based on only recently issued, the volume of transactions at these rates. actively traded securities. 2. Weekly figures are averages for statement week ending Wednesday. 13. Each biweekly figure is the average of five business days ending on the 3. Rate for the Federal Reserve Bank of New York. Monday following the date indicated. Until Mar. 31, 1983, the biweekly rate 4. Unweighted average of offering rates quoted by at least five dealers (in the determined the maximum interest rate payable in the following two-week period case of commercial paper), or finance companies (in the case of finance paper). on 2-'/2-year small saver certificates. (See table 1.16.) Before November 1979, maturities for data shown are 30-59 days, 90-119 days, 14. Averages (to maturity or call) for all outstanding bonds neither due nor and 120-179 days for commercial paper; and 30-59 days, 90—119 days, and 150- callable in less than 10 years, including several very low yielding "flower" bonds. 179 days for finance paper. 15. General obligations based on Thursday figures; Moody's Investors Service. 5. Yields are quoted on a bank-discount basis, rather than an investment yield 16. General obligations only, with 20 years to maturity, issued by 20 state and basis (which would give a higher figure). local governmental units of mixed quality. Based on figures for Thursday. 6. Dealer closing offered rates for top-rated banks. Most representative rate 17. Daily figures from Moody's Investors Service. Based on yields to maturity (which may be, but need not be, the average of the rates quoted by the dealers). on selected long-term bonds. 7. Unweighted average of offered rates quoted by at least five dealers early in 18. Compilation of the Federal Reserve. This series is an estimate of the yield the day. on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of 8. Calendar week average. For indication purposes only. call protection. Weekly data are based on Friday quotations. 9. Unweighted average of closing bid rates quoted by at least five dealers. 19. Standard and Poor's corporate series. Preferred stock ratio based on a 10. Rates are recorded in the week in which bills are issued. Beginning with the sample of ten issues: four public utilities, four industrials, one financial, and one Treasury bill auction held on Apr. 18, 1983, bidders were required to state the transportation. Common stock ratios on the 500 stocks in the price index. percentage yield (on a bank discount basis) that they would accept to two decimal NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. places. Thus, average issuing rates in bill auctions will be reported using two For address, see inside front cover. rather than three decimal places. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.36 STOCK MARKET Selected Statistics 1984 1985 IInnddiiccaattoorr 11998822 11998833 11998844 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 68.93 92.63 92.46 95.09 95.85 94.85 99.11 104.73 103.92 104.66 107.00 109.52 2 Industrial 78.18 107.45 108.01 110.44 110.91 109.05 113.99 120.71 119.64 119.93 121.88 124.11 3 Transportation 60.41 89.36 85.63 86.82 87.37 88.00 94.88 101.76 98.30 96.47 99.66 105.79 4 Utility 39.75 47.00 46.44 49.02 49.93 50.58 51.95 53.44 53.91 55.51 57.32 59.61 5 Finance 71.99 95.34 89.28 92.94 95.28 95.29 101.34 109.58 107.59 109.39 115.31 118.44 6 Standard & Poor's Corporation (1941-43 = 10)1 ... 119.71 160.41 160.50 164.82 166.27 164.48 171.61 180.88 179.42 180.62 180.94 188.89 7 American Stock Exchange2 (Aug. 31, 1973 = 100) 282.62' 216.48 207.96 210.39 209.47 202.28 211.82 228.40 225.62 229.46 228.75 227.48 Volume of trading (thousands of shares) 8 New York Stock Exchange 64,617 85,418 91,084 91,676 83,692 89,032 121,545 115,489 102,591 94,387 106,827 105,849 9 American Stock Exchange 5,283 8,215 6,107 5,587 6,008 7,254 9,130 10,010 8,677 7,801 7,171 7,128 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 13,325 23,000 22,470 22,330 22,350 22,470 22,090 22,970 23,230 23,900 24,300 • 11 Margin stock 12,980 22,720 t t t t t I I 12 Convertible bonds 344 279 n.a. n.a. n.a. 13 Subscription issues 1 1 Free credit balances at brokers4 14 Margin-account 5,735 6,620 7,015 6,580 6,7(XK 7,015 6,770 6,680 6,780 6,910 6,865' 15 Cash-account 8,390 8,430 10,215 8,650 8,420 10,215 9,725 9,840 10,155r 9,230 9,230 Margin-account debt at brokers (percentage distribution, end of period) 16 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 By equity class (in percentJs 17 Under 40 21.0 41.0 46.0 44.0 47.0 46.0 35.0 36.0 38.0 39.0 36.0 37.0 18 40-49 24.0 22.0 18.0 21.0 19.0 18.0 19.0 20.0 20.0 19.0 19.0 19.0 19 50-59 24.0 16.0 16.0 14.0 13.0 16.0 20.0 18.0 18.0 18.0 19.0 19.0 20 60-69 14.0 9.0 9.0 9.0 9.0 9.0 11.0 11.0 10.0 10.0 11.0 10.0 21 70-79 9.0 6.0 5.0 6.0 6.0 5.0 7.0 8.0 7.0 7.0 7.0 7.0 22 80 or more 8.0 6.0 6.0 6.0 6.0 6.0 8.0 8.0 7.0 7.0 8.0 8.0 Special miscellaneous-account balances at brokers (end of period) 23 Total balances (millions of dollars)6 35,598 58,329 75,840 73,500r 73,904 75,840 79,600 81,830 81,930^ 82,990 87,120 86,910 Distribution by equity status (percent) 24 Net credit status 62.0 63.0 59.0 59.0 59.0 59.0 59.0 59.0 60.0 60.0 60.0 59.0 Debt status, equity of 25 60 percent or more 29.0 28.0 29.0 30.0 29.0 29.0 30.0 31.0 30.0 30.0 30.0 31.0 26 Less than 60 percent 9.0 9.0 11.0 11.0 12.0 11.0 10.0 10.0 10.0 10.0 10.0 10.0 Margin requirements (percent of market value and effective date)7 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 27 Margin stocks 70 80 65 55 65 50 28 Convertible bonds 50 60 50 50 50 50 29 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance 5. Each customer's equity in his collateral (market value of collateral less net companies. With this change the index includes 400 industrial stocks (formerly debit balance) is expressed as a percentage of current collateral values. 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 6. Balances that may be used by customers as the margin deposit required for financial. additional purchases. Balances may arise as transfers based on loan values of 2. Beginning July 5, 1983, the American Stock Exchange rebased its index other collateral in the customer's margin account or deposits of cash (usually sales effectively cutting previous readings in half. proceeds) occur. 3. Beginning July 1983, under the revised Regulation T, margin credit at 7. Regulations G, T, and U of the Federal Reserve Board of Governors, broker-dealers includes credit extended against stocks, convertible bonds, stocks prescribed in accordance with the Securities Exchange Act of 1934, limit the acquired through exercise of subscription rights, corporate bonds, and govern- amount of credit to purchase and carry margin stocks that may be extended on ment securities. Separate reporting of data for margin stocks, convertible bonds, securities as collateral by prescribing a maximum loan value, which is a specified and subscription issues was discontinued in April 1984, and margin credit at percentage of the market value of the collateral at the time the credit is extended. broker-dealers became the total that is distributed by equity class and shown on Margin requirements are the difference between the market value (100 percent) lines 17-22. and the maximum loan value. The term "margin stocks" is defined in the 4. Free credit balances are in accounts with no unfulfilled commitments to the corresponding regulation. brokers and are subject to withdrawal by customers on demand. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • September 1985 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1984 1985 AAccccoouunntt 11998822 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Savings and loan associations 1 Assets 707,646 773,417 850,780 860,088 877,642 881,627 887,696 902,449 898,537 898,086 904,827 906,995' 911,696 2 Mortgages 483,614 494,789 535,814 540,644 550,129 552,516 556,229 555,277 558,276 556,184 559,263 563,376' 566,396 3 Cash and investment securities1 .... 85,438 104,274 108,456 108,820 112,350 112,023 114,879 125,358 119,673 119,724 119,713 114,641' 116,432 4 Other 138,594 174,354 206,510 210,624 215,163 217,088 216,588 221,814 220,588 222,178 225,851 228,978' 228, S68 5 Liabilities and net worth 707,646 773,417 850,780 860,088 877,642 881,627 887,696 902,449 898,537 898,086 904,827 906,995' 911,696 6 Savings capital 567,961 634,455 687,817 691,704 704,558 708,846 714,780 724,301 730,709 726,308 732,406 731,914' 737,704 7 Borrowed money 97,850 92,127 110,238 114,747 121,329 119,305 117,775 126,169 114,806 116,879 119,461 118,655' 115,391 8 FHLBB 63,861 52,626 57,115 60,178 63,627 63,412 63,383 64,207 63,152 63,452 63,187 63,941' 65,239 9 Other 33,989 39,501 53,123 54,569 57,702 55,893 54,392 61,962 51,654 53,427 56,274 54,714' 50,152 10 Loans in process2 9,934 21,117 26,122 26,773 27,141 26,754 26,683 26,959 26,546 26,636 27,004 27,406' 27,404 11 Other 15,602 15,968 19,970 20,599 18,050 19,894 21,302 17,215 18,358 19,857 17,471 20,539' 21,671 12 Net worth3 26,233 30,867 32,755 33,038 33,705 33,582 33,839 34,764 34,664 35,042 35,489 35,887' 36,930 13 MEMO: Mortgage loan commitments outstanding4 18,054 32,996 43,878 41,182 40,089 38,530 37,856 34,841 33,305 34,217 35,889 36,269' 36,953 Mutual savings banks5 14 Assets 174,197 193,535 199,128 200,722 201,445 203,274 204,499 203,898 204,859 206,175 210,568' 210,469 212,509 Loans 15 Mortgage 94,091 97,356 100,091 101,211 101,621 102,704 102,953 102,895 103,393 103,654 104,340' 105,102 105,869 16 Other 16,957 1199,,112299 23,213 24,068 24,535 24,486 24,884 24,954 25,747 26,456 27,798' 28,000 28,530 Securities 17 U.S. government6 9,743 15,360 15,457 15,019 14,965 15,295 15,034 14,643 14,628 14,917 15,098r 14,504 14,895 18 State and local government 2,470 2,177 2,037 2,055 2,052 2,080 2,077 2,077 2,067 2,069 2,092' 2,097 2,094 19 Corporate and other7 36,161 43,580 42,682 42,632 42,605 43,003 43,361 42,962 43,351 43,063 43,888' 43,889 43,871 20 Cash 6,919 6,263 4,8% 4,981 4,795 4,605 4,795 4,954 4,140 4,423 4,864' 4,679 5,004 21 Other assets 7,855 9,670 10,752 10,756 10,872 11,101 11,395 11,413 11,533 11,593 12,488' 12,288 12,246 22 Liabilities 174,197 193,535 199,128 200,722 201,445 203,274 204,499 203,898 204,859 206,175 210,568' 210,469 212,509 23 Deposits 155,196 172,665 174,823 176,085 177,345 178,624 180,073 180,616 181,062 181,849 185,197' 184,478 185,802 24 Regular8 152,777 170,135 171,740 172,990 174,296 175,727 177,130 177,418 177,954 178,791 181,742' 180,804 182,113 25 Ordinary savings 46,862 38,554 35,511 34,787 34,564 34,221 34,009 33,739 33,413 33,413 33,715' 33,211 33,457 96,369 95,129 98,410 101,270 102,934 104,151 104,849 104,732 104,098 103,536 105,204' 104,527 104,843 27 Other 2,419 2,530 3,083 3,095 3,049 2,897 2,943 3,198 3,108 3,058 3,455' 3,689 3,674 28 Other liabilities 8,336 10,154 13,269 13,604 12,979 13,853 13,453 12,504 12,931 13,387 14,393' 14,959 15,546 29 General reserve accounts 9,235 10,368 10,495 10,498 10,488 10,459 10,535 10,510 10,619 10,670 10,72C 10,803 10,913 30 MEMO: Mortgage loan commitments outstanding9 1,285 2,387 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Life insurance companies 31 Assets 588,163 654,948 684,573 694,082 699,996 705,827 712,271 720,807 730,120 734,920 741,442 747,683 Securities 36,499 50,752 54,688 56,263 57,552 59,825 62,678 64,683 65,367 67,111 66,641 67,265 33 United States10 16,529 28,636 32,654 33,886 35,586 37,594 40,288 41,970 42,183 43,929 43,317 43,840 34 State and local 8,664 9,986 9,236 9,357 9,221 9,344 9,385 9,757 9,895 9,956 9,770 9,772 35 Foreign11 11,306 12,130 12,798 13,020 12,745 12,887 13,005 12,956 13,289 13,226 13,554 13,653 287,126 322,854 341,802 348,614 350,512 352,059 354,815 354,902 364,617 367,411 370,582 374,904 n.a. 37 Bonds 231,406 257,986 281,113 283,673 285,543 287,607 291,021 290,731 297,666 298,381 302,072 305,945 38 Stocks 55,720 64,868 60,689 64,941 64,969 64,452 63,794 64,171 66,951 69,030 68,510 68,959 39 Mortgages 141,989 150,999 154,299 155,438 155,802 156,064 156,691 157,283 157,583 158,052 158,956 160,250 40 Real estate 20,264 22,234 24,019 24,117 24,685 24,947 25,467 25,985 26,343 26,567 26,911 27,202 41 Policy loans 52,961 54,063 54,441 54,517 54,551 54,574 54,571 54,610 54,442 54,523 54,466 54,472 42 Other assets 48,571 54,046 55,324 55,133 56,894 58,358 58,049 63,344 61,768 61,256 63,886 63,590 Credit unions12 43 Total assets/liabilities and capital .... 69,585 81,961 90,145 90,503 91,651 91,619 92,521 93,036 94,646 96,183 98,646 101,268 104,992 45,493 54,482 61,163 61,500 62,107 61,935 62,690 63,205 64,505 65,989 67,799 68,903 71,342 45 State 24,092 27,479 28,982 29,003 29,544 29,684 29,831 29,831 30,141 30,194 30,847 32,365 33,650 43,232 50,083 57,286 58,802 59,874 60,483 62,170 62,561 62,662 62,393 62,936 64,341 65,298 27,948 32,930 38,490 39,578 40,310 40,727 41,762 42,337 42,220 42,283 42,804 43,414 44,042 48 State 15,284 17,153 18,796 19,224 19,564 19,756 20,408 20,224 20,442 20,110 20,132 20,927 21,256 62,990 74,739 82,402 82,135 83,172 83,129 84,000 84,348 86,047 86,048 88,560 91,275 95,278 50 Federal (shares) 41,352 49,889 56,278 56,205 56,734 56,655 57,302 57,539 58,820 59,914 61,758 62,867 66,680 51 State (shares and deposits) 21,638 24,850 26,124 25,930 26,438 26,474 26,698 26,809 27,227 26,134 26,802 28,408 28,598 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A27 1.37 Continued 1984 1985 AAccccoouunntt 11998822 11998833 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May FSLIC-insured federal savings banks 52 Assets 6,859 64,969 83,989 87,209 82,174 87,743 94,536 98,559 98,747 106,657 109,720 110,511' 113,739 53 Mortgages 3,353 38,698 49,996 52,039 48,841 51,554 55,861 57,429 57,667 60,938 62,608 63,519' 64,822 54 Cash and investment securities' 10,436 13,184 13,331 12,867 13,615 14,826 16,001 15,378 17,511 18,237 17,923' 18,886 55 Other 15,835 20,809 21,839 20,466 22,574 23,849 25,129 25,702 28,208 28,875 29,069' 30,031 56 Liabilities and net worth 6,859 64,969 83,989 87,209 82,174 87,743 94,536 98,559 98,747 106,657 109,720 110,511' 113,739 57 Savings and capital 5,877 53,227 66,227 68,443 65,079 70,080 76,167 79,572 80,091 85,632 88,001 88,205' 90,414 58 Borrowed money 7,477 12,060 12,863 11,828 11,935 11,937 12,798 12,372 14,079 14,860 15,187' 15,220 59 FHLBB 4,640 6,897 7,654 6,600 6,867 7,041 7,515 7,361 8,023 8,491 8,849' 8,925 60 Other 2,837 5,163 5,209 5,228 5,068 4,896 5,283 5,011 6,056 6,369 6,338' 6,295 61 Other 1,157 1,807 1,912 1,610 1,896 2,259 1,903 1,982 2,356 2,174 2,400' 3,032 62 Net worth3 3,108 3,895 3,991 3,657 3,832 4,173 4,286 4,302 4,590 4,685 4,719' 5,073 MEMO 63 Loans in process2 1,264 1,901 1,895 1,505 1,457 1,689 1,738 1,685 1,747 1,919 2,010' 2,068 64 Mortgage loan commitments outstanding4 2,151 3,988 3,860 2,970 2,925 3,298 3,234 3,510 3,646 3,752 3,937' 4,229 1. Holdings of stock of the Federal Home Loan Banks are in "other assets." 11. Issues of foreign governments and their subdivisions and bonds of the 2. Beginning in 1982, loans in process are classified as contra-assets and are International Bank for Reconstruction and Development. not included in total liabilities and net worth. Total assets are net of loans in 12. As of June 1982, data include only federal or federally insured state credit process. unions serving natural perons. 3. Includes net undistributed income accrued by most associations. NOTE. Savings and loan associations: Estimates by the FHLBB for all 4. Excludes figures for loans in process. associations in the United States. Data are based on monthly reports of federally 5. The National Council reports data on member mutual savings banks and on insured associations and annual reports of other associations. Even when revised, savings banks that have converted to stock institutions, and to federal savings data for current and preceding year are subject to further revision. banks. Mutual savings banks: Estimates of National Council of Savings Institutions for 6. Beginning April 1979, includes obligations of U.S. government agencies. all savings banks in the United States. Before that date, this item was included in "Corporate and other." Life insurance companies: Estimates of the American Council of Life Insurance 7. Includes securities of foreign governments and international organizations for all life insurance companies in the United States. Annual figures are annualand, before April 1979, nonguaranteed issues of U.S. government agencies. statement asset values, with bonds carried on an amortized basis and stocks at 8. Excludes checking, club, and school accounts. year-end market value. Adjustments for interest due and accrued and for 9. Commitments outstanding (including loans in process) of banks in New differences between market and book values are not made on each item separately York State as reported to the Savings Banks Association of the State of New but are included, in total, in "other assets." York. Credit unions: Estimates by the National Credit Union Administration for a 10. Direct and guaranteed obligations. Excludes federal agency issues not group of federal and federally insured state credit unions serving natural persons. guaranteed, which are shown in the table under "Business" securities. Figures are preliminary and revised annually to incorporate recent data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • September 1985 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year Fiscal FFiissccaall FFiissccaall Type of account or operation year yyeeaarr yyeeaarr 1983 1984 1985 1982 11998833 11998844 HI H2 HI Apr. May June U.S. budget 1 Receipts1 617,766 600,562 666,457 306,331 306,584 341,808 94,593 39,794 72,151 2 Outlays1 728,375 795,917 841,800 396,477 406,849 420,700 82,228 80,245 71,506 3 Surplus, or deficit (-) -110,609 -195,355 -175,343 -90,146 -100,265 -78,892 12,365 -40,451 645 4 Trust funds 5,456 23,056 30,565 22,680 7,745 18,080 5.182 6,699 10,268 5 Federal funds2 3 -116,065 -218,410 -205,908 -112,822 -108,005 -96,971 7.183 -47,149 -9,623 Off-budget entities (surplus, or deficit (-)) 6 Federal Financing Bank outlays -14,142 -10,404 -7,277 -5,418 -3,199 -2,813 -1,108 -1,192 -1,573 7 Other3 4 -3,190 -1,953 -2,719 -528 -1,206 -838 128 -354 -441 U.S. budget plus off-budget, including Federal Financing Bank 8 Surplus, or deficit (-) -127,940 -207,711 -185,339 -96,094 -104,670 -84,884 11,386 -41,997 -1,369 Source of financing 9 Borrowing from the public 134,993 212,425 170,817 102,538 84,020 80,592 17,036 16,333 11,857 10 Cash and monetary assets (decrease, or increase (-))4 -11,911 -9,889 5,636 -9,664 -16,294 -3,127 -27,927 -29,808 -12,697 11 Other5 4,858 5,176 8,885 3,222 4,358 7,418 -495 -4,143 2,209 MEMO 12 Treasury operating balance (level, end of period) 29,164 37,057 22,345 27,997 11,817 13,567 40,022 11,138 24,013 13 Federal Reserve Banks 10,975 16,557 3,791 19,442 3,661 4,397 19,305 1,933 3,288 14 Tax and loan accounts 18,189 20,500 18,553 8,764 8,157 9,170 20,717 9,204 20,725 1. Effective Feb. 8, 1982, supplemental medical insurance premiums and 5. Includes accrued interest payable to the public; allocations of special voluntary hospital insurance premiums, previously included in other insurance drawing rights; deposit funds; miscellaneous liability (including checks outstandreceipts, have been reclassified as offsetting receipts in the health function. ing) and asset accounts; seigniorage; increment on gold; net gain/loss for U.S. 2. Half-year figures are calculated as a residual (total surplus/deficit less trust currency valuation adjustment; net gain/loss for IMF valuation adjustment; and fund surplus/deficit). profit on the sale of gold. 3. Other off-budget includes Postal Service Fund; Rural Electrification and Telephone Revolving Fund; Rural Telephone Bank; and petroleum acquisition SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. and transportation and strategic petroleum reserve effective November 1981. Government" Treasury Bulletin, and the Budget of the U.S. Government, Fiscal 4. Includes U.S. Treasury operating cash accounts; SDRs; gold tranche Year 1985. drawing rights; loans to International Monetary Fund; and other cash and monetary assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A3 3 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll SSSooouuurrrccceee ooorrr tttyyypppeee yyyeeeaaarrr yyyeeeaaarrr 1983 1984 1985 111999888333 111999888444 HI H2 HI H2 Apr. May June RECEIPTS 1 All sources 600,563 666,457 306,331 305,122 341,808 341,392 94,593 39,794 72,151 2 Individual income taxes, net 288,938 295,955 144,551 147,663 144,691 157,229 51,602 3,611 34,764 3 Withheld 266,010 279,345 135,531 133,768 140,657 145,210 26,343 27,640 23,448 4 Presidential Election Campaign Fund ... 36 35 30 6 29 5 9 88 3 5 Nonwithheld 83,586 81,346 63,014 20,703 61,463 19,403 43,235 11,,994455 13,579 6 Refunds 60,692 64,771 54,024 6,815 57,458 7,387 17,986 25,982 2,226 Corporation income taxes 7 Gross receipts 61,780 74,179 33,522 31,064 40,328 35,190 1111,,226655 22,,220055 1111,,337733 8 Refunds 24,758 17,286 13,809 8,921 10,045 6,847 2,409 975 585 9 Social insurance taxes and contributions, net 209,001 241,902 110,520 100,832 131,372 118,690 28,032 28,423 21,049 10 Payroll employment taxes and contributions1 179,010 203,476 90,912 88,388 106,436 104,540 1188,,882222 1199,,220044 1188,,992244 11 Self-employment taxes and contributions2 6,756 8,709 6,427 398 7,667 1,086 55,,775577 559900 11,,229988 12 Unemployment insurance 18,799 25,138 10,984 8,714 14,942 10,706 3,062 8,192 501 13 Other net receipts3 4,436 4,580 2,197 2,290 2,329 2,360 391 437 367 14 Excise taxes 35,300 37,361 16,904 19,586 18,304 18,961 2,700 3,235 2,733 15 Customs deposits 8,655 11,370 4,010 5,079 5,576 6,329 939 946 997 16 Estate and gift taxes 6,053 6,010 2,883 3,050 3,102 3,029 671 566 428 17 Miscellaneous receipts4 15,594 16,965 7,751 7,811 8,481 8,812 1,793 1,783 1,391 OUTLAYS 18 All types 795,917 841,800 396,477 406,849 420,700 446,943 82,228 80,245 71,506 19 National defense 210,461 227,405 105,072 108,967 114,639 118,286 20,239 22,198 20,815 20 International affairs 8,927 13,313 4,705 6,117 5,426 8,550 946 1,201 974 21 General science, space, and technology ... 7,777 8,271 3,486 4,216 3,981 4,473 743 722 656 22 Energy 4,035 2,464 2,073 1,533 1,080 1,423 355 408 -874 23 Natural resources and environment 12,676 12,677 5,892 6,933 5,463 7,370 1,006 1,016 1,073 24 Agriculture 22,173 12,215 10,154 5,278 7,129 8,524 2,822 903 822 25 Commerce and housing credit 4,721 5,198 2,164 2,648 2,572 2,663 1,128 -187 266 26 Transportation 21,231 24,705 9,918 13,323 10,616 13,673 2,045 2,124 2,130 27 Community and regional development .... 7,302 7,803 3,124 4,327 3,154 4,836 683 508 652 28 Education, training, employment, social services 25,726 26,616 12,801 13,246 13,445 13,737 22,,334444 22,,444488 11,,994499 29 Health 28,655] 30,435 41,206 42,150 15,748 15,692 2,909 3,016 2,735 30 Social security and medicare 223,311f 235,764 143,001 119,613 21,355 21,378 23,074 31 Income security 106,21 lj 96,714 135,579 65,212 57,411 13,347 10,740 7,809 32 Veterans benefits and services 24,845 25,640 11,334 13,621 12,849 13,317 2,293 3,207 907 33 Administration of justice 5,014 5,616 2,522 2,628 2,807 2,992 572 492 443 34 General government 4,991 4,836 2,434 2,479 2,462 2,552 8800 884488 643 35 General-purpose fiscal assistance 6,287 6,577 3,124 3,290 2,943 3,458 11,,225588 9911 -131 36 Net interest" 89,774 111,007 42,358 47,674 53,729 61,293 10,858 11,536 9,972 37 Undistributed offsetting receipts7 -21,424 -15,454 -8,887 -7,262 -7,333 -12,914 -2,754 -2,403 -2,410 1. Old-age, disability, and hospital insurance, and railroad retirement accounts. function. Before February 1984, these outlays were included in the income 2. Old-age, disability, and hospital insurance. security and health functions. 3. Federal employee retirement contributions and civil service retirement and 6. Net interest function includes interest received by trust funds. disability fund. 7. Consists of rents and royalties on the outer continental shelf and U.S. 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous government contributions for employee retirement. receipts. 5. In accordance with the Social Security Amendments Act of 1983, the SOURCE. "Monthly Treasury Statement of Receipts and Outlays of the U.S. Treasury now provides social security and medicare outlays as a separate Government" and the Budget of the U.S. Government, Fiscal Year 1985. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Financial Statistics • September 1985 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1983 1984 1985 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 1,249.3 1,324.3 1,381.9 1,415.3 1,468.3 1,517.2 1,576.7 1,667.4 1,715.1 2 Public debt securities 1,244.5 1,319.6 1,377.2 1,410.7 1,463.7 1,512.7 1,572.3 1,663.0 1,710.7 3 Held by public 1,043.3 1,090.3 1,138.2 1,174.4 1,223.9 1,255.1 1,309.2 1,373.4 1,415.2 4 Held by agencies 201.2 229.3 239.0 236.3 239.8 257.6 263.1 289.6 295.5 5 Agency securities 4.8 4.7 4.7 4.6 4.6 4.5 4.5 4.5 4.4 6 Held by public 3.7 3.6 3.6 3.5 3.5 3.4 3.4 3.4 3.3 7 Held by agencies 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 8 Debt subject to statutory limit 1,245.3 1,320.4 1,378.0 1,411.4 1,464.5 1,513.4 1,573.0 1,663.7 1,711.4 9 Public debt securities 1,243.9 1,319.0 1,376.6 1,410.1 1,463.1 1,512.1 1,571.7 1,662.4 1,710.1 10 Other debt1 1.4 1.4 1.3 1.3 1.3 1.3 1.3 1.3 1.3 11 MEMO: Statutory debt limit 1,290.2 1,389.0 1,389.0 1,490.0 1,490.0 1,520.0 1,573.0 1,823.8 1,823.8 1. Includes guaranteed debt of government agencies, specified participation NOTE. Data from Treasury Bulletin (U.S. Treasury Department), certificates, notes to international lending organizations, and District of Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1984 1985 TTyyppee aanndd hhoollddeerr 11998800 11998811 11998822 11998833 Q3 Q4 Q1 Q2 1 Total gross public debt 930.2 1,028.7 1,197.1 1,410.7 1,572.3 1,663.0 1,710.7 1,774.6 By type 2 Interest-bearing debt 928.9 1,027.3 1,195.5 1,400.9 1,559.6 1,660.6 1,695.2 1,759.8 3 Marketable 623.2 720.3 881.5 1,050.9 1,176.6 1,247.4 1,271.7 1,310.7 4 Bills 216.1 245.0 311.8 343.8 356.8 374.4 379.5 381.9 5 Notes 321.6 375.3 465.0 573.4 661.7 705.1 713.8 740.9 6 Bonds 85.4 99.9 104.6 133.7 158.1 167.9 178.4 187.9 7 Nonmarketable1 305.7 307.0 314.0 350.0 383.0 413.2 423.6 449.1 8 State and local government series 23.8 23.0 25.7 36.7 41.4 44.4 47.7 53.9 9 Foreign issues2 24.0 19.0 14.7 10.4 8.8 9.1 9.1 8.3 10 17.6 14.9 13.0 10.4 8.8 9.1 9.1 8.3 11 Public 6.4 4.1 1.7 .0 .0 .0 .0 .0 12 Savings bonds and notes 72.5 68.1 68.0 70.7 73.1 73.3 74.4 75.7 13 Government account series3 185.1 196.7 205.4 231.9 259.5 286.2 292.2 311.0 14 Non-interest-bearing debt 1.3 1.4 1.6 9.8 12.7 2.3 15.5 14.8 By holder4 15 U.S. government agencies and trust funds 192.5 203.3 209.4 236.3 263.1 289.6 295.5 16 Federal Reserve Banks 121.3 131.0 139.3 151.9 155.0 160.9 161.0 17 616.4 694.5 848.4 1,022.6 1,154.1 1,212.5 1,254.1 18 Commercial banks 112.1 111.4 131.4 188.8 183.0 183.4 195.0 19 Money market funds 3.5 21.5 42.6 22.8 13.6 25.9 26.6 20 Insurance companies 24.0 29.0 39.1 56.7 73.2 82.3 84.0 21 Other companies 19.3 17.9 24.5 39.7 47.7 51.1 51.9 n.a. 22 State and local governments 87.9 104.3 127.8 155.1 n.a. n.a. n.a. Individuals 23 Savings bonds 72.5 68.1 68.3 71.5 73.7 74.5 75.4 74 Other securities 44.6 42.7 48.2 61.9 68.7 69.3 69.9 25 Foreign and international5 129.7 136.6 149.5 166.3 175.5 192.8 186.3 26 Other miscellaneous investors6 122.8 163.0 217.0 259.8 n.a. n.a. n.a. 1. Includes (not shown separately): Securities issued to the Rural Electrifica- 5. Consists of investments of foreign and international accounts. Excludes nontion Administration; depository bonds, retirement plan bonds, and individual interest-bearing notes issued to the International Monetary Fund. retirement bonds. 6. Includes savings and loan associations, nonprofit institutions, credit unions, 2. Nonmarketable dollar-denominated and foreign currency-denominated se- mutual savings banks, corporate pension trust funds, dealers and brokers, certain ries held by foreigners. U.S. government deposit accounts, and U.S. government-sponsored agencies. 3. Held almost entirely by U.S. government agencies and trust funds. SOURCES. Data by type of security, U.S. Treasury Department, Monthly 4. Data for Federal Reserve Banks and U.S. government agencies and trust Statement of the Public Debt of the United States; data by holder. Treasury funds are actual holdings; data for other groups are Treasury estimates. Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A3 3 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions Par value; averages of daily figures, in millions of dollars 1985 week ending Wednesday 1982 1983 Apr.' May' May 22 May 29 June 5 June 12 June 19 June 26 Immediate delivery1 1 U.S. government securities.. 42,135 52,786 72,507 83,324 86,999 0,340' 71,499' 97,539 80,176 88,813 80,373 By maturity 2 Bills 18,392 22,393 26,040 35,900 34,179 34,591 30,498 27,109' 39,748 35,662 36,591 28,575 3 Other within 1 year 810 708 1,305 1,971 1,933 1,664 2,172 1,296 2,031 1,515 1,531 1,582 4 1-5 years 6,271 8,758 11,734 17,007 23,116 23,482 25,202' 23,146' 22,718 17,941 24,554 27,761 5 5-10 years 3,555 5,279 7,607 10,899 13,088 15,600 10,814' 11,434' 19,685 14,719 15,065 13,051 6 Over 10 years 3,232 4,997 6,100 6,729 11,008 11,662 11,655' 8,515' 13,356 10,340 11,072 9,405 By type of customer 7 U.S. government securities dealers 1,770 2,257 2,920 3,895 3,050 2,947 2,595 2,357 3,751 2,904 2,371 2,062 8 U.S. government securities brokers 15,794 21,045 25,584 34,705 40,053 42,822 38,351 34,870' 45,452 40,373 44,469 40,340 9 All others2 14,697 18,832 24,282 33,907 40,222 41,230 39,395' 34,273' 48,336 36,899 41,973 37,971 10 Federal agency securities.... 4,140 5,576 7,846 10,176 10,954 12,876 11,127 7,619' 13,513 11,349 16,177 10,165 11 Certificates of deposit 5,000 4,333 4,947 4,355 4,693 4,661 4,69C 4,130 5,418 3,937 5,236 4,099 12 Bankers acceptances 2,502 2,642 3,244 3,499 3,923 4,001 3,998' 4,231 4,490 3,659 4,550 3,648 13 Commercial paper 7,595 8,036 10,018 12,019 11,378 12,714 10,832 11,020 13,062 11,606 13,541 12,222 Futures transactions3 14 Treasury bills 5,055 6,655 6,947 6,662 4,572 6,416 3,770 4,050 7,332 6,163 7,539 5,223 15 Treasury coupons 1,487 2,501 4,503 5,517 5,730 7,627 5,906 4,627 7,506 7,870 8,536 6,388 16 Federal agency securities.... 261 265 262 120 148 222 311 121 202 300 99 347 Forward transactions4 17 U.S. government securities.. 835 1,493 1,364 1,017 1,719 1,319 1,735' 1,399 1,387 666 1,922 1,317 18 Federal agency securities.... 978 1,646 2,843 2,632 3,268 3,747 3,820 2,032 3,394 3,912 4,809 2,974 1. Data for immediate transactions does not include forward transactions. from the date of the transaction for government securities (Treasury bills, notes, 2. Includes, among others, all other dealers and brokers in commodities and and bonds) or after 30 days for mortgage-backed agency issues. securities, nondealer departments of commercial banks, foreign banking agencies, NOTE. Averages for transactions are based on number of trading days in the and the Federal Reserve System. period. 3. Futures contracts are standardized agreements arranged on an organized Transactions are market purchases and sales of U.S. government securities exchange in which parties commit to purchase or sell securities for delivery at a dealers reporting to the Federal Reserve Bank of New York. The figures exclude future date. allotments of, and exchanges for, new U.S. government securities, redemptions 4. Forward transactions are agreements arranged in the over-the-counter of called or matured securities, purchases or sales of securities under repurchase market in which securities are purchased (sold) for delivery after 5 business days agreement, reverse repurchase (resale), or similar contracts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • September 1985 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing Averages of daily figures, in millions of dollars 1985 1985 week ending Wednesday IItteemm 11998822 11998833 11998844 Apr. May June May 29 June 5 June 12 June 19 June 26 Positions Net immediate1 1 U.S. government securities 13,663 10,701 5,538 8,531 5,481' 1,886 -125' 5,810 4,643 2,564 -3,462 2 Bills 7,297 8,020 5,500 11,538 8,004' 4,588 3,832' 7,193 7,132 5,379 1,155 3 Other within 1 year 972 394 63 1,203 1,083' 845 913 1,014 1,083 745 585 4 1-5 years 3,256 1,778 2,159 2,235 3,797 5,698 3,802 5,783 5,744 5,681 5,125 5 5-10 years -318 -78 -1,119 -4,464' -5,687 -7,179 -7,165 -7,218 -7,088 -7,065 -7,928 6 Over 10 years 2,026 528 -1,174 -2,307r -2,075 -2,394 -1,858 -1,302 -2,563 -2,515 -2,731 7 Federal agency securities 4,145 7,232 15,294 18,049 19,815' 22,746 20,721' 22,165 23,420 22,541 22,628 8 Certificates of deposit 5,532 5,839 7,369 8,652 9,368' 9,492 9,226' 9,821 10,241 9,491 8,908 9 Bankers acceptances 2,832 3,332 3,874 3,949 4,476' 4,544 4,949' 5,218 5,267 4,204 3,875 10 Commercial paper 3,317 3,159 3,788 4,959 5,469 5,232 5,204 6,512 5,989 4,425 4,616 Futures positions 11 Treasury bills -2,507 -4,125 -4,525 -2,885' -5,927' -4,925 -7,887 -7,451 -6,009 -5,672 -3,411 12 Treasury coupons -2,303 -1,032 1,794 6,316' 6,589 4,239' 5,284 4,842 4,617 4,736 3,664 13 Federal agency securities -224 171 233 38 -99 -469 -421 -175 -252 -330 -776 Forward positions 14 U.S. government securities -788 -1,936 -1,643 -818' -344' 225 813 -123 -998 -76 1,318 15 Federal agency securities -1,432 -3,561 -9,205 -7,881 -7,803' -9,144 -7,634' -8,683 -9,830 -9,342 -8,908 Financing2 Reverse repurchase agreements3 16 Overnight and continuing 26,754 29,099 44,078 62,325 64,824 66,347 66,126 67,633 68,551 67,572 65,057 17 Term agreements 48,247 52,493 68,357 77,440 74,562 75,308 72,491 73,949 71,940 75,144 78,893 Repurchase agreements4 18 Overnight and continuing 49,695 57,946 75,717 94,055 97,989 146,450 97,482 97,714 99,708 98,638 298,069 19 Term agreements 43,410 44,410 57,047 65,621 67,542 66,486 65,%2 66,185 63,166 64,648 65,772 1. Immediate positions are net amounts (in terms of par values) of securities 2. Figures cover financing involving U.S. government and federal agency owned by nonbank dealer firms and dealer departments of commercial banks on a securities, negotiable CDs, bankers acceptances, and commercial paper. commitment, that is, trade-date basis, including any such securities that have 3. Includes all reverse repurchase agreements, including those that have been been sold under agreements to repurchase (RPs). The maturities of some arranged to make delivery on short sales and those for which the securities repurchase agreements are sufficiently long, however, to suggest that the securi- obtained have been used as collateral on borrowings, that is, matched agreements. ties involved are not available for trading purposes. Before 1984, securities 4. Includes both repurchase agreements undertaken to finance positions and owned, and hence dealer positions, do not include all securities acquired under "matched book" repurchase agreements. reverse RPs. After January 1984, immediate positions include reverses to maturi- NOTE. Data for positions are averages of daily figures, in terms of par value, ty, which are securities that were sold after having been obtained under reverse based on the number of trading days in the period. Positions are shown net and are repurchase agreements that mature on the same day as the securities. Data for on a commitment basis. Data for financing are based on Wednesday figures, in immediate positions does not include forward positions. terms of actual money borrowed or lent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A3 3 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1984 1985 AAggeennccyy 11998811 11998822 11998833 Dec. Jan. Feb. Mar. Apr. May 1 Federal and federally sponsored agencies 221,946 237,085 239,716 271,564 270,965 271,479 275,093 275,209 278,901P r Federal agencies 31,806 33,055 33,940 35,145 35,235 35,360 35,140 35,182 35,282 3 Defense Department' 484 354 243 142 133 122 116 107 102 4 Export-Import Bank2'3 13,339 14,218 14,853 15,882 15,882 15,881 15,709 15,707 15,706 5 Federal Housing Administration4 413 288 194 133 132 129 127 123 122 6 Government National Mortgage Association participation certificates5 2,715 2,165 2,165 2,165 2,165 2,165 2,165 2,165 2,165 7 Postal Service6 1,538 1,471 1,404 1,337 1,337 1,337 1,337 1,337 1,337 8 Tennessee Valley Authority 13,115 14,365 14,970 15,435 15,535 15,675 15,635 15,776 15,776 9 United States Railway Association6 202 194 111 51 51 51 51 74 74 10 Federally sponsored agencies7 190,140 204,030 205,776 236,419 235,730 236,120 239,953 240,027 243,619'' 11 Federal Home Loan Banks 54,131 55,967 48,930 65,085 64,705 64,706 65,700 65,257 67,765 12 Federal Home Loan Mortgage Corporation 5,480 4,524 6,793 10,270 10,195 11,237 11,882 12,004 n.a. 13 Federal National Mortgage Association8 58,749 70,052 74,594 83,720 84,612 84,701 86,297 86,913 88,170 14 Farm Credit Banks 71,359 71,896 72,409 71,255 70,642 70,012 70,161 69,882 69,321 15 Student Loan Marketing Association 421 1,591 3,050 5,369 5,576 5,464 5,913 5,971 6,359 MEMO 16 Federal Financing Bank debt 110,698 126,424 135,791 145,217 146,034 146,611 147,507 148,718' 149,597 Lending to federal and federally sponsored 17 Export-Import Bank3 12,741 14,177 14,789 15,852 15,852 15,852 15,690 15,690 15,690 18 Postal Service6 1,288 1,221 1,154 1,087 1,087 1,087 1,087 1,087 720 19 Student Loan Marketing Association 5,400 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 20 Tennessee Valley Authority 11,390 12,640 13,245 13,710 13,810 13,950 13,910 14,051 14,154 21 United States Railway Association6 202 194 111 51 51 51 51 74 74 Other Lending10 22 Farmers Home Administration 48,821 53,261 55,266 58,971 59,066 59,041 5599,,775566 6600,,664411 6611,,446611 23 Rural Electrification Administration 13,516 17,157 19,766 20,693 20,653 20,804 20,730 20,894 21,003 24 12,740 22,774 26,460 29,853 30,515 30,826 31,283 31,281' 31,495 1. Consists of mortgages assumed by the Defense Department between 1957 7. Includes outstanding noncontingent liabilities: Notes, bonds, and debenand 1963 under family housing and homeowners assistance programs. tures. 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. 8. Before late 1981, the Association obtained financing through the Federal 3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. Financing Bank. 4. Consists of debentures issued in payment of Federal Housing Administration 9. The FFB, which began operations in 1974, is authorized to purchase or sell insurance claims. Once issued, these securities may be sold privately on the obligations issued, sold, or guaranteed by other federal agencies. Since FFB securities market. incurs debt solely for the purpose of lending to other agencies, its debt is not 5. Certificates of participation issued before fiscal 1969 by the Government included in the main portion of the table in order to avoid double counting. National Mortgage Association acting as trustee for the Farmers Home Adminis- 10. Includes FFB purchases of agency assets and guaranteed loans; the latter tration; Department of Health, Education, and Welfare; Department of Housing contain loans guaranteed by numerous agencies with the guarantees of any and Urban Development; Small Business Administration; and the Veterans particular agency being generally small. The Farmers Home Administration item Administration. consists exclusively of agency assets, while the Rural Electrification Administra- 6. Off-budget. tion entry contains both agency assets and guaranteed loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 DomesticN onfinancial Statistics • September 1985 1.45 NEW SECURITY ISSUES State and Local Governments Millions of dollars 1984 1985 Type of issue or issuer, or use 11998822 11998833 11998844 Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. 1 All issues, new and refunding1 79,138 86,421 106,641 7,967 12,558 13,548 17,713 6,275 8,109 9,647 10,962 Type of issue 2 General obligation 21,094 21,566 26,485 1,433 3,770 2,611 2,185 1,804 3,463 2,875 3,187 3 U.S. government loans2 225 96 16 4 1 3 2 7 0 5 0 4 Revenue 58,044 64,855 80,156 6,534 8,788 10,937 15,528 4,471 4,646 6,772 7,775 5 U.S. government loans2 461 253 17 1 3 1 0 3 0 0 2 Type of issuer 6 State 8,438 7,140 9,129 596 1,110 405 725 367 1,542 252 958 7 Special district and statutory authority 45,060 51,297 63,550 5,202 7,087 7,265 11,894 3,847 4,282 5,644 6,540 8 Municipalities, counties, townships, school districts 25,640 27,984 33,962 2,169 4,361 5,878 5,094 2,061 2,285 3,751 3,464 9 Issues for new capital, total 74,804 72,441 94,050 7,454 11,105 12,352 16,354 4,904 5,580 8,042 8,096 Use of proceeds 10 Education 6,482 8,099 7,553 333 755 999 671 661 930 1,045 863 11 Transportation 6,256 4,387 7,552 590 1,018 2,151 1,339 341 472 153 92 12 Utilities and conservation 14,259 13,588 17,844 2,013 2,784 534 4,133 1,315 912 1,483 2,286 13 Social welfare 26,635 26,910 29,928 3,018 3,500 3,701 3,598 1,567 1,847 3,017 2,738 14 Industrial aid 8,349 7,821 15,415 679 1,522 3,866 5,572 376 185 565 293 15 Other purposes 12,822 11,637 15,758 821 1,526 1,101 1,041 644 1,234 1,779 1,824 1. Par amounts of long-term issues based on date of sale. SOURCE. Public Securities Association. 2. Consists of tax-exempt issues guaranteed by the Farmers Home Administration. 1.46 NEW SECURITY ISSUES Corporations Millions of dollars 1984 1985 Type of i o s r s u u e s e o r issuer, 11998822 11998833 11998844 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 AU issues1 84,638 120,074 132,311 12,350 11,931 6,940 7,294 6,743 14,005 11,462' 13,285 2 Bonds2 54,076 68,495 109,683 10,403 9,524 5,918 5,739 4,027 11,641 8,850' 9,738 Type of offering 3 Public 44,278 47,369 73,357 10,403 9,524 5,918 5,739 4,027 11,641 8,850' 9,738 4 Private placement 9,798 21,126 36,326 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 5 Manufacturing 12,822 16,851 24,607 2,989 1,447 1,741 1,326 1,476 5,660 922 1,500 6 Commercial and miscellaneous 5,442 7,540 13,726 988 1,198 555 144 469 974 1,317 899 7 Transportation 1,491 3,833 4,694 161 19 110 297 30 130 334 357 8 Public utility 12,327 9,125 10,679 1,150 555 575 309 80 500 860 1,136 9 Communication 2,390 3,642 2,997 240 1,557 169 375 353 300 0 150 10 Real estate and financial 19,604 27,502 52,980 4,875 4,749 2,768 3,288 1,619 4,077 5,418' 5,696 11 Stocks3 30,562 51,579 22,628 1,947 2,407 1,022 1,555 2,716 2,364 2,612 3,547 Type 12 Preferred 5,113 7,213 4,118 555 655 91 170 218 311 208 634 13 Common 25,449 44,366 18,510 1,392 1,752 931 1,385 2,498 2,053 2,404 2,913 Industry group 14 Manufacturing 5,649 14,135 4,054 712 227 137 172 229 224 283 504 15 Commercial and miscellaneous 7,770 13,112 6,277 489 1,025 112 234 760 472 978 616 16 Transportation 709 2,729 589 16 66 71 0 153 32 419 30 17 Public utility 7,517 5,001 1,624 146 150 66 225 283 197 157 185 18 Communication 2,227 1,822 419 69 3 26 271 101 15 5 119 19 Real estate and financial 6,690 14,780 9,665 515 936 610 653 1,190 1,424 770 2,093 1. Figures, which represent gross proceeds of issues maturing in more than one 2. Monthly data include only public offerings. year, sold for cash in the United States, are principal amount or number of units 3. Beginning in August 1981, gross stock offerings include new equity volume multiplied by offering price. Excludes offerings of less than $100,000, secondary from swaps of debt for equity. offerings, undefined or exempted issues as defined in the Securities Act of 1933, SOURCE. Securities and Exchange Commission and the Board of Governors of employee stock plans, investment companies other than closed-end, intracorpo- the Federal Reserve System. rate transactions, and sales to foreigners. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A35 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position Millions of dollars 1984 1985 IItteemm 11998833 11998844 Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May INVESTMENT COMPANIES1 1 Sales of own shares2 84,345 107,485 9,517 9,458 10,006 19,152 14,786 14,582 18,049 16,394 2 Redemptions of own shares3 57,100 77,033 6,766 6,343 8,948 9,183 8,005 9,412 13,500 10,070 3 Net sales 27,245 30,452 2,751 3,115 1,058 9,969 6,781 5,170 4,549 6,324 4 Assets4 113,599 137,126 131,539 132,709 137,126 151,534 154,707 157,065 164,087 178,265 5 Cash position5 8,343 11,978 11,417 11,518 11,978 13,114 14,567 13,082 15,444 14,326 6 Other 105,256 125,148 120,122 121,191 125,148 138,420 140,140 143,983 148,643 163,939 1. Excluding money market funds. 5. Also includes all U.S. government securities and other short-term debt 2. Includes reinvestment of investment income dividends. Excludes reinvest- securities. ment of capital gains distributions and share issue of conversions from one fund to another in the same group. NOTE. Investment Company Institute data based on reports of members, which 3. Excludes share redemption resulting from conversions from one fund to comprise substantially all open-end investment companies registered with the another in the same group. Securities and Exchange Commission. Data reflect newly formed companies after 4. Market value at end of period, less current liabilities. their initial offering of securities. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1983 1984 1985 AAccccoouunntt 11998822 11998833 11998844 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 1 Corporate profits with inventory valuation and capital consumption adjustment 159.1 225.2 285.7 216.7 245.0 260.0 277.4 291.1 282.8 291.6 292.3 2 Profits before tax 165.5 203.2 235.7 198.2 227.4 225.5 243.3 246.0 224.8 228.7 222.3 3 Profits tax liability 60.7 75.8 89.8 74.8 84.7 84.5 92.7 95.8 83.1 87.7 85.3 4 Profits after tax 104.8 127.4 145.9 123.4 142.6 141.1 150.6 150.2 141.7 141.0 137.0 5 Dividends 69.2 72.9 80.5 71.7 73.3 75.4 77.7 79.9 81.3 83.1 84.5 6 Undistributed profits 35.6 54.5 65.3 51.7 69.3 65.6 72.9 70.2 60.3 58.0 52.5 7 Inventory valuation -9.5 -11.2 -5.6 -12.1 -19.3 -9.2 -13.5 -7.3 -.2 -1.6 .9 8 Capital consumption adjustment 3.1 33.2 55.7 30.6 36.9 43.6 47.6 52.3 58.3 64.5 69.1 SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 DomesticN onfinancial Statistics • September 1985 1.49 NONFINANCIAL CORPORATIONS Assets and Liabilities Billions of dollars, except for ratio 1984 1985 AAccccoouunntt 11997799 11998800 11998811 11998822 11998833 Q1 Q2 Q3 Q4 Ql 1 Current assets 1,214.8 1,327.0 1,418.4 1,432.7 1,557.3 1,599.6 1,630.1 1,666.1 1,682.0 1,694.2 2 Cash 118.0 126.9 135.5 147.0 165.8 159.0 154.7 150.0 160.9 153.8 3 U.S. government securities 16.7 18.7 17.6 22.8 30.6 35.0 36.9 33.2 36.6 35.3 4 Notes and accounts receivable 459.0 506.8 532.0 519.2 577.8 599.7 615.4 630.6 622.3 634.8 5 Inventories 505.1 542.8 583.7 578.6 599.3 619.6 629.8 656.9 655.6 664.6 6 Other 116.0 131.8 149.5 165.2 183.7 186.3 193.4 195.4 206.6 205.7 7 Current liabilities 807.3 889.3 970.0 976.8 1,043.0 1,077.0 1,111.9 1,142.2 1,150.7 1,159.1 8 Notes and accounts payable 460.8 513.6 546.3 543.0 577.8 584.0 605.1 623.9 627.4 614.7 9 Other 346.5 375.7 423.7 433.8 465.3 493.0 506.9 518.2 523.3 544.4 10 Net working capital 407.5 437.8 448.4 455.9 514.3 522.6 518.1 523.9 531.3 535.1 11 MEMO: Current ratio1 1.505 1.492 1.462 1.467 1.493 1.485 1.466 1.459 1.462 1.462 1. Ratio of total current assets to total current liabilities. Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. NOTE. For a description of this series, see "Working Capital of Nonfinancial 20551. Corporations" in the July 1978 BULLETIN, pp. 533-37. SOURCE. Federal Trade Commission and Bureau of the Census. All data in this table reflect the most current benchmarks. Complete data are available upon request from the Flow of Funds Section, Division of Research and 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment • Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1983 1984 1985 IInndduussttrryy 11998833 11998844 11998855'' Q4 Ql Q2 Q3 Q4 Ql Q21 Q3' 1 Total nonfarm business 304.78 353.74 386.10 325.45 337.48 348.34 361.12 367.21 371.16 385.31 392.61 Manufacturing 2 Durable goods industries 53.08 6655..9955 75.24 57.56 61.26 63.12 68.31 71.13 69.87 75.72 77.83 3 Nondurable goods industries 63.12 72.43 80.74 66.19 68.71 72.21 73.72 75.07 75.78 79.83 82.96 Nonmanufacturing 4 Mining 15.19 16.88 16.06 16.27 17.61 16.01 16.96 16.93 15.66 16.47 16.19 Transportation 5 Railroad 4.88 6.77 7.35 6.04 5.76 7.46 7.47 6.40 6.02 7.44 8.30 6 Air 4.36 3.55 4.09 3.75 3.23 3.52 3.73 3.73 4.20 3.60 4.54 7 Other 4.72 6.17 6.21 5.48 5.96 6.06 6.50 6.16 6.01 6.12 6.47 Public utilities 8 Electric 37.27 37.09 35.23 37.79 38.36 37.82 36.82 35.37 36.65 35.35 33.93 9 Gas and other 7.70 10.30 12.51 8.07 8.77 10.07 11.07 11.31 11.81 12.36 12.83 10 Commercial and other2 114.45 134.39 148.68 124.30 127.83 132.07 136.55 141.10 145.17 148.42 149.56 •Trade and services are no longer being reported separately. They are included 2. "Other" consists of construction; wholesale and retail trade; finance and in Commercial and other, line 10. insurance; personal and business services; and communication. 1. Anticipated by business. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A37 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities A Billions of dollars, end of period 1983 1984 1985 AAccccoouunntt 11998800 11998811 11998822 Q3 Q4 Ql Q2 Q3 Q4 QL ASSETS Accounts receivable, gross 1 Consumer 63.2 72.4 78.1 85.4 87.4 87.4 90.5 95.6 96.7 99.1 2 Business 90.3 100.3 101.4 106.3 113.4 120.5 124.4 124.5 135.2 141.4 Real estate 13.8 17.9 20.2 21.8 22.5 22.2 23.0 25.2 26.3 27.2 4 Total 167.3 190.5 199.7 213.5 223.4 230.1 238.0 245.3 258.3 267.8 Less: 5 Reserves for unearned income 23.6 30.0 31.9 32.7 33.0 32.8 33.9 36.0 36.5 36.5 6 Reserves for losses 2.8 3.2 3.5 3.8 4.0 4.1 4.4 4.3 4.4 4.8 7 Accounts receivable, net 140.9 157.3 164.3 177.0 186.4 193.2 199.6 205.0 217.3 226.5 8 All other 23.1 27.1 30.7 33.7 34.0 35.7 35.8 36.4 35.4 36.2 9 Total assets 164.0 184.4 195.0 210.7 220.4 228.9 235.4 241.3 252.7 262.6 LIABILITIES 10 Bank loans 14.3 16.1 18.3 17.5 18.7 16.2 18.3 19.7 21.3 19.8 11 Commercial paper 47.7 57.2 51.1 56.5 59.7 64.8 68.5 66.8 72.5 79.1 Debt 12 Other short-term 10.4 11.3 12.7 12.7 13.9 14.1 15.5 16.1 16.2 16.8 N Long-term 52.4 56.0 64.4 66.9 68.1 70.3 69.7 73.8 77.2 78.4 14 All other liabilities 15.9 18.5 21.2 26.8 30.1 32.4 32.1 32.6 33.1 35.2 15 Capital, surplus, and undivided profits 23.3 25.3 27.4 30.3 29.8 31.1 31.4 32.3 32.3 33.3 16 Total liabilities and capital 164.0 184.4 195.0 210.7 220.4 228.9 235.4 241.3 252.7 262.6 A Finance company asset and liability data have been revised from June 1980 NOTE. Components may not add to totals due to rounding, forward. Revised quarterly data will appear in the Board's forthcoming Annual These data also appear in the Board's G.20 (422) release. For address, see Statistical Digest. inside front cover. 1.52 DOMESTIC FINANCE COMPANIES Business Credit Millions of dollars, seasonally adjusted except as noted Changes in accounts Extensions Repayments receivable AAAccccccooouuunnntttsss rrreeeccceeeiiivvvaaabbbllleee TTTyyypppeee ooouuutttssstttaaannndddiiinnnggg 1985 1985 1985 MMMaaayyy 333111,,, 111999888555''' Mar. Apr. May Mar. Apr. May Mar. Apr. May 1 Total 143,269 l,499r 692 27,588' 26,098' 26,710 26,089' 24,932' 26,018 Retail financing of installment sales 2 Automotive (commercial vehicles) 12,214 298 119 354 1,060 889 1,135 762 770 781 3 Business, industrial, and farm equipment 20,251 84 -102 4 1,427 1,063 1,238 1,343 1,165 1,234 Wholesale financing 4 Automotive 20,846 476 417 -462 10,201 9,090 9,493 9,725 8,673 9,955 5 Equipment 4,887 105 -213 34 540 479 588 435 692 554 6 All other 6,705 86 -59 -249 1,652 1,627 1,569 1,566 1,686 1,818 Leasing 7 Automotive 14,592 271 538 363 872 1,093 1,034 601 555 671 8 Equipment 36,877 -252 628 141 1,222 1,313 992 1,474 685 851 9 Loans on commercial accounts receivable and factored commercial accounts receivable 15,719 207r -44' 243 9,567' 9,448' 9,396 9,36C 9,492' 9,153 10 All other business credit 11,178 224 -118 264 1,047 1,096 1,265 823 1,214 1,001 1. Not seasonally adjusted. NOTE. These data also appear in the Board's G.20 (422) release. For address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Financial Statistics • September 1985 1.53 MORTGAGE MARKETS Millions of dollars; exceptions noted. 1984 1985 Dec. Jan. Feb. Mar. Apr. May June Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 94.6 92.8 96.8 102.6 94.8 101.8 91.3 101.4 106.4' 102.4 2 Amount of loan (thousands of dollars) 69.8 69.5 73.7 76.9 71.4 76.5 69.9 76.9 78.4' 79.7 3 Loan/price ratio (percent) 76.6 77.1 78.7 77.9 77.9 77.6 79.8 78.9 76.1' 79.9 4 Maturity (years) 27.6 26.7 27.8 28.0 27.7 28.1 27.2 27.4 26.8' 27.7 5 Fees and charges (percent of loan amount)2 2.95 2.40 2.64 2.65 2.65 2.58 2.65 2.65 2.49' 2.40 6 Contract rate (percent per annum) 14.47 12.20 11.87 12.05 11.77 11.74 11.42 11.55 1 1.55' 11.31 Yield (percent per annum) 7 FHLBB series5 15.12 12.66 12.37 12.55 12.27 12.21 11.92 12.05 12.01' 11.75 8 HUD series4 15.79 13.43 13.80 13.05 12.88 13.06 13.26 13.01 12.49 12.06 SECONDARY MARKETS Yield (percent per annum) 9 FHA mortgages (HUD series)5 15.30 13.11 13.81 12.99 13.01 13.27 13.43 12.97 12.28 1.89 10 GNMA securities6 14.68 12.25 13.13 12.54 12.26 12.23 12.68 12.31 11.93 11.54 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 66,031 74,847 83,339 87,940 89,353 90,369 91,975 92,765 93,610 94,777 12 FHA/VA-insured 39.718 37,393 35,148 34,711 34,602 34,553 34,585 34,516 34,428 34,307 13 Conventional 26,312 37,454 48,191 53,229 54,751 55,816 57,391 58,250 59,182 60,470 Mortgage transactions (during period) 14 Purchases 15,116 17,554 16,721 1,962 1,943 1,559 2,256 1,515 1,703 1,904 15 Sales 2 3,528 978 0 0 0 100 0 0 0 Mortgage commitments1 16 Contracted (during period) 22,105 18,607 21,007 2,758 1,230 1,895 1,636 1,921 2,074 1,593 17 Outstanding (end of period) 7,606 5,461 6,384 6,384 5,678 5,665 5,019 5,361 5,589 5,062 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 18 Total 5,131 5,996 9,283 10,399 10,362 11,118 11,549 11,615 19 FHA/VA 1,027 974 910 881 876 859 854 850 20 Conventional 4,102 5,022 8,373 9,518 9,485 10,259 10,694 10,765 Mortgage transactions (during period) 21 Purchases 23,673 23,089 21,886 4,137 2,197 3,247 3,232 2,201 22 Sales 24,170 19,686 18,506 3,635 2,162 2,428 2,751 1,973 Mortgage commitments9 23 Contracted (during period) 28,179 32,852 32,603 4,174 4,264 3,622 3,453 4,141 24 Outstanding (end of period) 7,549 16,964 13,318' 13,318' 29,654 30,135 30,436 n.a. 1. Weighted averages based on sample surveys of mortgages originated by 6. Average net yields to investors on Government National Mortgage Associamajor institutional lender groups; compiled by the Federal Home Loan Bank tion guaranteed, mortgage-backed, fully modified pass-through securities, assum- Board in cooperation with the Federal Deposit Insurance Corporation. ing prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying the 2. Includes all fees, commissions, discounts, and "points" paid (by the prevailing ceiling rate. Monthly figures are averages of Friday figures from the borrower or the seller) to obtain a loan. Wall Street Journal. 3. Average effective interest rates on loans closed, assuming prepayment at the 7. Includes some multifamily and nonprofit hospital loan commitments in end of 10 years. addition to 1- to 4-family loan commitments accepted in FNMA's free market 4. Average contract rates on new commitments for conventional first mort- auction system, and through the FNMA-GNMA tandem plans. gages; from Department of Housing and Urban Development. 8. Includes participation as well as whole loans. 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing 9. Includes conventional and government-underwritten loans. FHLMC's mort- Administration-insured first mortgages for immediate delivery in the private gage commitments and mortgage transactions include activity under mortgage/ secondary market. Any gaps in data are due to periods of adjustment to changes in securities swap programs, while the corresponding data for FNMA exclude swap maximum permissible contract rates. activity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A39 1.54 MORTGAGE DEBT OUTSTANDING Millions of dollars, end of period 1984 1985 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998822 11998833 11998844 Q1 Q2 Q3 Q4 Q1 1 All holders 1,658,450 1,825,647' 2,027,818' 1,869,278' 1,928,619' 1,980,361' 2,027,818' 2,070,982' ? 1- to 4-family 1,110,315 1,217,439' 1,346,017' 1,247,468' 1,284,075' 1,315,544' 1,346,017' 1,376,918' 3 Multifamily 140,063 149,733' 163,701' 152,962' 157,655' 159,965' 163,701' 167,394' 4 Commercial 301,362 349,102' 407,236' 359,231' 376,397' 393,784' 407,236' 415,408' 5 106,710 109,373' 110,864' 109,617' 110,492' 111,068' 110,864' 111,262' 6 Major financial institutions 1,024,680 1,108,249' 1,241,690' 1,133,720' 1,177,662' 1,215,047' 1,241.69C 1,261,329' 7 Commercial banks' 301,272 330,521 374,689 339,653 352,258 363,043 374,689 383,187 8 1- to 4-family 173,804 182,514 196,112 185,213 190,185 193,138 196,112 200,024 9 Multifamily 16,480 18,410 21,395 19,836 20,501 20,040 21,395 22,033 10 Commercial 102,553 120,210 146,653 124,890 131,533 139,663 146,653 150,401 11 Farm 8,435 9,387 10,529 9,714 10,039 10,202 10,529 10,729 1? Mutual savings banks 97,805 131,940' 154,441' 139,113' 143,387' 146,073' 154,441' 160,696' 13 1- to 4-family 66,777 93,649' 109,890' 98,975' 102,122' 103,824' 109,89C 114,507' 14 Multifamily 15,305 17,247' 19,385' 17,917' 18,227' 18,58c 19,385' 20,03C 15 Commercial 15,694 21,016' 25,136' 22,192' 23,009' 23,639' 25,136' 26,129' 16 Farm 29 28' 3C 29' 29r 3C 3C 3C 17 Savings and loan associations 483,614 494,789 555,277 503,509 528,172 550,129 555,277 559,263 18 1- to 4-family 393,323 390,883 431,450 397,017 414,087 429,101 431,450 433,429 19 Multifamily 38,979 42,552 48,309 43,553 45,951 47,861 48,309 48,936 20 Commercial 51,312 61,354 75,518 62,939 68,134 73,167 75,518 76,898 ?1 Life insurance companies 141,989 150,999 157,283 151,445 153,845 155,802 157,283 158,183 ?? 1- to 4-family 16,751 15,319 14,180 14,917 14,437 14,204 14,180 14,153 23 Multifamily 18,856 19,107 19,017 19,083 19,028 18,828 19,017 19,114 74 Commercial 93,547 103,831 111,642 104,890 107,796 110,149 111,642 112,641 25 Farm 12,835 12,742 12,444 12,555 12,584 12,621 12,444 12,275 26 Federal and related agencies 138,138 147,370 157,377 150,784 152,669 153,355 157,377 162,416 27 Government National Mortgage Association 4,227 3,395 2,301 2,900 2,715 2,389 2,301 1,964 78 1- to 4-family 676 630 585 618 605 594 585 576 29 Multifamily 3,551 2,765 1,716 2,282 2,110 1,795 1,716 1,388 30 Farmers Home Administration 1,786 2,141 1,276 2,094 1,344 738 1,276 1,062 31 1- to 4-family 783 1,159 213 1,005 281 206 213 156 3? Multifamily 218 173 119 303 463 126 119 82 33 Commercial 377 409 497 319 81 113 497 421 34 Farm 408 400 447 467 519 293 447 403 35 Federal Housing and Veterans Administration 5,228 4,894 4,782 4,832 4,753 4,749 4,782 44,,993388 36 1- to 4-family 1,980 1,893 2,007 1,956 1,894 1,982 2,007 2,113 37 Multifamily 3,248 3,001 2,775 2,876 2,859 2,767 2,775 2,825 38 Federal National Mortgage Association 71,814 78,256 87,940 80,975 83,243 84,850 87,940 91,975 39 1- to 4-family 66,500 73,045 82,175 75,770 77,633 79,175 82,175 86,129 40 Multifamily 5,314 5,211 5,765 5,205 5,610 5,675 5,765 5,846 41 Federal Land Banks 50,350 51,052 50,679 51,004 51,136 51,182 50,679 50,929 4? 1- to 4-family 3,068 3,000 2,948 2,982 2,958 2,954 2,948 2,998 43 Farm 47,282 48,052 47,731 48,022 48,178 48,228 47,731 47,931 44 Federal Home Loan Mortgage Corporation 4,733 7,632 10,399 8,979 9,478 9,447 10,399 11,548 45 1- to 4-family 4,686 7,559 9,654 8,847 8,931 8,841 9,654 10,642 46 Multifamily 47 73 745 132 547 606 745 906 47 Mortgage pools or trusts2 216,654 285,073 332,057 2%,481 305,051 317,548 332,057 347,793 48 Government National Mortgage Association 118,940 159,850 179,981 166,261 170,893 175,770 179,981 185,954 49 1- to 4-family 115,831 155,801 175,084 161,943 166,415 171,095 175,084 180,878 50 Multifamily 3,109 4,049 4,897 4,318 4,478 4,675 4,897 5,076 51 Federal Home Loan Mortgage Corporation 42,964 57,895 70,822 59,376 61,267 63,964 70,822 76,759 5? 42,560 57,273 70,253 58,776 60,636 63,352 70,253 75,781 53 Multifamily 404 622 569 600 631 612 569 978 54 Federal National Mortgage Association3 14,450 25,121 36,215 28,354 29,256 32,888 36,215 39,370 55 1- to 4-family 14,450 25,121 35,965 28,354 29,256 32,730 35,965 38,772 56 Multifamily n.a. n.a. 250 n.a. n.a. 158 250 598 57 Farmers Home Administration 40,300 42,207 45,039 42,490 43,635 44,926 45,039 45,710 58 1- to 4-family 20,005 20,404 21,813 20,573 21,331 21,595 21,813 21,928 59 Multifamily 4,344 5,090 5,841 5,081 5,081 5,618 5,841 6,041 60 7,011 7,351 7,559 7,456 7,764 7,844 7,559 7,681 61 8,940 9,362 9,826 9,380 9,459 9,869 9,826 10,060 6? Individual and others4 278,978 284,955 296,694 288,293 293,237 294,411 296,694 299,444 63 189,121 189,189 193,688 190,522 193,304 192,753 193,688 194,832 64 Multifamily 30,208 31,433 32,918 31,776 32,169 32,624 32,918 33,541 65 30,868 34,931 40,231 36,545 38,080 39,209 40,231 41,237 66 Farm 28,781 29,402 29,857 29,450 29,684 29,825 29,857 29,834 1. Includes loans held by nondeposit trust companies but not bank trust 5. Includes estimate of residential mortgage credit provided by individuals. departments. NOTE. Based on data from various institutional and governmental sources, with 2. Outstanding principal balances of mortgages backing securities insured or some quarters estimated in part by the Federal Reserve in conjunction with the guaranteed by the agency indicated. Federal Home Loan Bank Board and the Department of Commerce. Separation of 3. Outstanding balances on FNMA's issues of securities backed by pools of nonfarm mortgage debt by type of property, if not reported directly, and conventional mortgages held in trust. Implemented by FNMA in October 1981. interpolations and extrapolations when required, are estimated mainly by the 4. Other holders include mortgage companies, real estate investment trusts, Federal Reserve. Multifamily debt refers to loans on structures of five or more state and local credit agencies, state and local retirement funds, noninsured units. pension funds, credit unions, and U.S. agencies for which amounts are small or for which separate data are not readily available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • September 1985 1.55 CONSUMER INSTALLMENT CREDIT' Total Outstanding, and Net Change Millions of dollars 1984 1985 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998833 11998844 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Amounts outstanding (end of period) 1 Total 383,701 460,500 437,469 441,358 447,783 460,500 461,530 463,628 471,567 479,935 488,666 By major holder 2 Commercial banks 171,978 212,391 202,452 204,582 206,635 212,391 213,951 215,778 219,970 223,850 226,973 3 Finance companies .... 87,429 96,747 95.594 95,113 95,753 96,747 96,732 97,360 99,133 101,324 104,130 5 4 C R r e e ta d i i l t e u rs n 2 i ons 3 5 7 3 , ,4 4 7 7 1 0 4 6 0 7 , , 9 8 1 5 3 8 6 35 3 . , 5 8 9 0 5 8 3 6 5 4 , , 9 7 0 1 8 6 6 37 6 , , 1 5 2 2 4 8 4 6 0 7 , , 9 8 1 5 3 8 6 38 8 , , 9 5 7 3 8 8 6 37 8 , , 4 9 8 3 3 9 7 37 0 , , 0 4 8 3 2 2 3 7 7 1 , , 0 4 9 1 1 8 3 7 7 2 , , 4 3 7 8 2 1 6 Savings and loans 23,108 29,945 27,880 28,781 29,358 29,945 30,520 31,405 32,349 33,514 34,754 7 Gasoline companies ... 4,131 4,315 4,328 4,290 4,217 4,315 4,329 4,012 3,820 3,834 3,918 8 Mutual savings banks.. 6,114 8,331 7,812 7,968 8,168 8,331 8,482 8,651 8,781 8,904 9,038 By major type of credit 9 Automobile 143,114 172,589 167,231 168,923 170,731 172,589 173,769 175,491 179,661 183,558 187,795 10 Commercial banks... 67,557 85,501 82,706 83,620 84,326 85,501 86,223 87,333 89,257 90,915 92,403 11 Credit unions 25,574 32,456 30,519 30,953 31,820 32,456 32,781 32,973 33,687 34,159 34,620 12 Finance companies .. 49,983 54,632 54,006 54,350 54,585 54,632 54,765 55,185 56,717 58,484 60,772 13 Revolving 81,977 101,555 90,231 91,505 93,944 101,555 100,565 99,316 100,434 101,887 103,492 14 Commercial banks... 44,184 60,549 54,258 55,276 56,641 60,549 61,445 61,978 63,684 65,127 66,311 15 Retailers 33,662 36,691 31,645 31,939 33,086 36,691 34,791 33,326 32,930 32,926 33,263 16 Gasoline companies . 4,131 4,315 4,328 4,290 4,217 4,315 4,329 4,012 3,820 3,834 3,918 17 Mobile home 23,862 24,556 25,198 24,573 24,439 24,556 24,281 24,379 24,456 24,675 24,925 18 Commercial banks... 9,842 9,610 9,761 9,627 9,613 9,610 9,498 9,456 9,425 9,432 9,445 19 Finance companies .. 9,547 9,243 10,065 9,470 9,235 9,243 9,053 9,044 8,981 8,992 9,016 20 Savings and loans ... 3,906 4,985 4,697 4,791 4,887 4,985 5,005 5,150 5,305 5,496 5,699 21 Credit unions 567 718 675 685 704 718 725 729 745 755 765 22 Other 134,748 161,800 154,809 156,357 158,669 161,800 162,915 164,442 167,016 169,815 172,454 23 Commercial banks... 50,395 56,731 55,727 56,059 56,055 56,731 56,785 57,011 57,604 58,376 58,814 24 Finance companies .. 27,899 32,872 31,523 31,293 31,933 32,872 32,914 33,131 33,435 33,848 34,342 25 Credit unions 27,330 34,684 32,614 33,078 34,004 34,684 35,032 35,237 36,000 36,504 36,996 26 Retailers 3,808 4,222 3,950 3,969 4,038 4,222 4,187 4,157 4,152 4,165 4,209 27 Savings and loans ... 19,202 24,960 23,183 23,990 24,471 24,960 25,515 26,255 27,044 28,018 29,055 28 Mutual savings banks 6,114 8,331 7,812 7,968 8,168 8,331 8,482 8,651 8,781 8,904 9,038 Net change (during period) 29 Total 48,742 76,799 4,982 5,631 6,080 6,819 7,223 9,041 8,342 8,270 9,042 By major holder 30 Commercial banks 19,488 40,413 1,384 2,756 2,483 3,028 3,799 5,071 4,847 3,853 4,108 31 Finance companies .... 18,572 18,636 1,571 398 778 1,196 901 1,203 2,048 1,885 2,373 3 3 2 3 R Cr e e ta d i i l t e u rs n 2 i ons 6 5 , , 2 0 1 7 8 5 1 3 4 , , 4 3 4 8 3 7 8 2 7 2 1 5 1,2 1 2 2 4 8 1,7 2 3 7 1 8 1,3 3 3 8 6 9 1,2 25 9 1 0 1, 2 42 6 3 9 79 9 7 1 1,2 1 1 6 5 8 6 3 7 4 3 1 34 Savings and loans 7,285 6,837 770 864 546 576 922 997 715 1,063 1,327 35 Gasoline companies ... 68 184 -38 98 86 117 -91 -102 -142 -45 59 36 Mutual savings banks .. 1,322 2,217 199 163 178 177 151 180 -14 131 161 By major type of credit 37 Automobile 16,856 29,475 1,513 2,504 2,549 2,687 2,887 3,198 3,391 3,488 3,792 38 Commercial banks... 8,002 17,944 434 1,057 1,019 1,275 1,616 1,790 1,767 1,546 1,589 39 Credit unions 2,978 6,882 416 587 828 640 598 696 381 580 325 40 Finance companies .. 11,752 9,298 663 860 702 772 673 712 1,243 1,362 1,878 41 Revolving 12,353 19,578 1,484 1,488 1,614 1,445 1,957 2,527 2,631 2,126 2,429 42 Commercial banks 7,518 16,365 1,323 1,279 1,289 1,001 1,809 2,429 2,698 2,003 2,095 43 Retailers 4,767 3,029 199 111 239 327 239 200 75 168 275 44 Gasoline companies . 68 184 -38 98 86 117 -91 -102 -142 -45 59 45 Mobile home 1,452 694 127 -392 -91 117 -159 282 -11 218 186 46 Commercial banks 237 -232 4 -91 -1 29 -89 41 -50 19 -21 47 Finance companies .. 776 -608 19 -381 -192 -13 -144 33 -63 13 -19 48 Savings and loans 763 1,079 95 67 84 88 60 192 92 175 219 49 Credit unions 64 151 9 13 18 13 14 16 10 11 7 50 Other 18,081 27,052 1,858 2,031 2,008 2,570 2,538 3,034 2,331 2,438 2,635 51 Commercial banks.... 3,731 6,336 -377 511 176 723 463 811 432 285 445 52 Finance companies .. 6,044 9,946 889 -81 268 437 372 458 868 510 514 53 Credit unions 3,176 7,354 446 624 885 683 678 711 406 624 341 54 Retailers 308 414 26 17 39 62 12 69 16 00 66 55 Savings and loans 6,522 5,758 675 797 462 488 862 805 623 888888 1,108 56 Mutual savings banks 1,322 2,217 199 163 178 177 151 180 -14 131 161 1. The Board's series cover most short- and intermediate-term credit extended NOTE. Total consumer noninstallment credit outstanding—credit scheduled to to individuals through regular business channels, usually to finance the purchase be repaid in a lump sum, including single-payment loans, charge accounts, and of consumer goods and services or to refinance debts incurred for such purposes, service credit—amounted to, not seasonally adjusted, $85.9 billion at the end of and scheduled to be repaid (or with the option of repayment) in two or more 1982, $96.9 billion at the end of 1983, and $116.6 billion at the end of 1984. installments. These data also appear in the Board's G.19 (421) release. For address, see 2. Includes auto dealers and excludes 30-day charge credit held by travel and inside front cover. entertainment companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Consumer Installment Credit A41 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT Percent unless noted otherwise 1984 1985 IItteemm 11998822 11998833 11998844 Nov. Dec. Jan. Feb. Mar. Apr. May INTEREST RATES Commercial banks1 1 48-month new car2 16.82 13.92 13.71 13.91 n.a. n.a. 13.37 n.a. n.a. 13.16 2 24-month personal 18.64 16.50 16.47 16.63 n.a. n.a. 16.21 n.a. n.a. 16.09 3 120-month mobile home2 18.05 16.08 15.58 15.60 n.a. n.a. 15.42 n.a. n.a. 15.03 4 Credit card 18.51 18.78 18.77 18.82 n.a. n.a. 18.85 n.a. n.a. 18.64 Auto finance companies 5 New car 16.15 12.58 14.62 15.24 15.24 15.11 13.78 12.65 11.92 11.87 6 Used car 20.75 18.74 17.85 18.30 18.34 17.88 17.91 17.78 17.78 17.84 OTHER TERMS3 Maturity (months) 7 New car 45.9 45.9 48.3 50.0 50.2 50.7 51.4 52.2 51.5 50.9 8 Used car 37.0 37.9 39.7 39.9 39.8 41.3 41.1 41.3 41.3 41.4 Loan-to-value ratio 9 New car 85 86 88 89 89 90 90 91 91 91 10 Used car 90 92 92 93 93 93 93 93 93 94 Amount financed (dollars) 11 New car 8,178 8,787 9,333 9,577 9,707 9,654 9,196 9,232 9,305 9,775 12 Used car 4,746 5,033 5,691 5,900 5,975 5,951 5,968 5,976 6,043 6,117 1. Data for midmonth of quarter only. 3. At auto finance companies. 2. Before 1983 the maturity for new car loans was 36 months, and for mobile NOTE. These data also appear in the Board's G.19 (421) release. For address, home loans was 84 months. see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • September 1985 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS Billions of dollars; half-yearly data are at seasonally adjusted annual rates. 1982 1983 1984 11997799 11998800 11998822 HI H2 HI H2 HI H2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .... 386.0 344.6 380.4 404.1 526.4 734.2 358.1 450.1 448.9 563.8 688.9 779.4 By sector and instrument 2 U.S. government 37.4 79.2 87.4 161.3 186.6 198.8 104.1 218.4 222.0 151.1 177.4 220.2 i Treasury securities 38.8 79.8 87.8 162.1 186.7 199.0 105.5 218.8 222.1 151.2 177.6 220.3 4 Agency issues and mortgages -1.4 -.6 -.5 -.9 -.1 -.2 -1.4 -.4 -.1 -.1 -.2 -.1 5 Private domestic nonfinancial sectors 348.6 265.4 293.1 242.8 339.8 535.4 254.0 231.7 266.9 412.7 511.5 559.2 6 Debt capital instruments 211.2 192.0 159.1 158.9 239.3 300.7 140.7 177.2 214.4 264.2 262.4 338.9 V Tax-exempt obligations 30.3 30.3 22.7 53.8 56.3 58.9 43.9 63.7 62.8 49.7 21.7 96.1 8 Corporate bonds 17.3 26.7 21.8 18.7 15.7 37.0 12.0 25.3 23.0 8.4 28.9 45.1 9 Mortgages 163.6 135.1 114.6 86.5 167.3 204.7 84.8 88.2 128.6 206.0 211.8 197.7 10 Home mortgages 120.0 96.7 76.0 52.5 108.7 129.9 53.6 51.3 83.8 133.6 137.5 122.2 11 Multifamily residential 7.8 8.8 4.3 5.5 8.4 14.3 5.1 5.8 2.8 13.9 16.7 12.0 12 Commercial 23.9 20.2 24.6 23.6 47.3 59.0 19.7 27.5 40.3 54.3 56.0 62.0 13 Farm 11.8 9.3 9.7 5.0 2.9 1.5 6.5 3.5 1.6 4.1 1.6 1.4 14 Other debt instruments 137.5 73.4 134.0 83.9 100.5 234.7 113.2 54.6 52.5 148.5 249.1 220.3 15 Consumer credit 45.4 6.3 26.7 21.0 51.3 96.5 20.6 21.4 35.9 66.6 102.1 90.9 16 Bank loans n.e.c 51.2 36.7 54.7 55.5 27.3 77.4 69.0 42.0 13.3 41.2 91.2 63.6 17 Open market paper 11.1 5.7 19.2 -4.1 -1.2 23.8 10.0 -18.2 -10.6 8.3 31.5 16.0 18 Other 29.7 24.8 33.4 11.5 23.1 37.1 13.6 9.4 13.9 32.3 24.3 49.8 19 By borrowing sector 348.6 265.4 293.1 242.8 339.8 535.4 254.0 231.7 266.9 412.7 511.5 559.2 20 State and local governments 17.6 17.2 6.2 31.3 36.7 36.8 24.1 38.5 41.9 31.6 3.0 70.5 21 Households 179.3 122.1 127.5 94.5 175.4 241.7 94.7 94.3 134.8 216.0 240.8 242.5 22 Farm 21.4 14.4 16.3 7.6 4.3 2.3 9.6 5.6 .8 7.9 .9 3.8 23 Nonfarm noncorporate 34.4 33.7 40.2 39.5 63.9 78.8 36.6 42.3 50.1 77.6 83.1 74.4 24 Corporate 96.0 78.1 102.9 70.0 59.5 175.8 89.0 51.0 39.3 79.6 183.7 167.9 25 Foreign net borrowing in United States 20.2 27.2 27.2 15.7 18.9 .6 10.2 21.2 15.3 22.5 19.2 -18.0 26 Bonds 3.9 .8 5.4 6.7 3.8 4.1 2.4 11.0 4.6 2.9 1.1 7.0 21 Bank loans n.e.c 2.3 11.5 3.7 -6.2 4.9 -7.8 -7.6 -4.7 11.3 -1.5 -6.0 -9.6 28 Open market paper 11.2 10.1 13.9 10.7 6.0 .4 12.5 9.0 -4.6 16.5 18.9 -18.1 29 U.S. government loans 2.9 4.7 4.2 4.5 4.3 4.0 3.0 6.0 3.9 4.6 5.2 2.7 30 Total domestic plus foreign 406.2 371.8 407.6 419.8 545.3 734.8 368.3 471.4 504.2 586.3 708.1 761.4 Financial sectors 31 Total net borrowing by financial sectors 82.4 62.9 84.1 69.0 90.7 131.1 84.2 53.8 74.0 107.3 123.4 138.8 By instrument 32 U.S. government related 47.9 44.8 47.4 64.9 67.8 74.4 60.0 69.7 66.2 69.4 69.1 79.6 33 Sponsored credit agency securities 24.3 24.4 30.5 14.9 1.4 30.4 22.4 7.5 -4.1 6.9 30.8 30.1 34 Mortgage pool securities 23.1 19.2 15.0 49.5 66.4 43.9 36.8 62.2 70.3 62.5 38.3 49.5 <5 .6 1.2 1.9 .4 .8 36 Private financial sectors 34.5 18.1 36.7 4.1 22.9 56.8 24.2 -16.0 7.8 38.0 54.3 59.2 37 Corporate bonds 7.8 7.1 -.8 2.5 17.1 18.8 -2.5 7.6 15.2 18.9 17.0 20.6 38 Mortgages * -.1 -.5 .1 * * .1 .1 * * * 39 Bank loans n.e.c -.5 -.9 .9 1.9 -.2 1.0 3.2 .6 -2.5 2.2 .1 1.8 40 Open market paper 18.0 4.8 20.9 -1.2 13.0 21.3 12.3 -14.7 7.2 18.8 21.5 21.1 41 Loans from Federal Home Loan Banks 9.2 7.1 16.2 .8 -7.0 15.7 11.1 -9.5 -12.1 -2.0 15.7 15.7 By sector 42 Sponsored credit agencies 24.8 25.6 32.4 15.3 1.4 30.4 23.2 7.5 -4.1 6.9 30.8 30.1 43 Mortgage pools 23.1 19.2 15.0 49.5 66.4 43.9 36.8 62.2 70.3 62.5 38.3 49.5 44 Private financial sectors 34.5 18.1 36.7 4.1 22.9 56.8 24.2 -16.0 7.8 38.0 54.3 59.2 45 Commercial banks 1.6 .5 .4 1.2 .5 4.4 .7 1.7 .8 .2 4.8 3.9 46 Bank affiliates 6.5 6.9 8.3 1.9 8.6 10.9 9.7 -5.8 6.1 11.1 20.0 1.8 47 Savings and loan associations 12.6 7.4 15.5 2.5 -2.7 22.7 14.3 -9.3 -10.0 4.5 19.1 26.2 48 Finance companies 16.5 5.8 12.8 -.9 17.0 19.5 * -1.9 11.4 22.7 10.9 28.1 49 REITs -1.3 -2.2 .2 .1 .2 .1 .1 .1 .2 .2 .1 .1 All sectors 50 Total net borrowing 488.7 434.7 491.8 488.8 635.9 865.9 452.5 525.1 578.2 693.6 831.5 900.2 51 U.S. government securities 84.8 122.9 133.0 225.9 254.4 273.3 163.5 288.3 288.4 220.5 246.7 299.8 52 State and local obligations 30.3 30.3 22.7 53.8 56.3 58.9 43.9 63.7 62.8 49.7 21.7 96.1 33 Corporate and foreign bonds 29.0 34.6 26.4 27.8 36.5 59.9 11.8 43.8 42.8 30.3 46.9 72.8 54 Mortgages 163.5 134.9 113.9 86.5 167.2 204.6 84.8 88.2 128.5 206.0 211.7 197.6 53 Consumer credit 45.4 6.3 26.7 21.0 51.3 96.5 20.6 21.4 35.9 66.6 102.1 90.9 56 Bank loans n.e.c 52.9 47.3 59.3 51.2 32.0 70.6 64.6 37.9 22.1 41.9 85.3 55.8 57 Open market paper 40.3 20.6 54.0 5.4 17.8 45.4 34.8 -23.9 -8.0 43.6 71.8 19.0 58 Other loans 42.4 37.8 55.8 17.2 20.3 56.7 28.5 5.9 5.7 35.0 45.2 68.2 External corporate equity funds raised in United States 59 Total new share issues -3.8 22.2 -4.1 35.3 67.8 -35.4 23.3 47.2 83.5 52.0 -43.3 -27.5 60 Mutual funds .1 5.2 6.3 18.4 32.8 37.5 12.5 24.3 36.8 28.9 39.0 35.9 61 All other -3.9 17.1 -10.4 16.9 34.9 -72.9 10.9 22.9 46.8 23.1 -82.3 -63.4 62 Nonfinancial corporations -7.8 12.9 -11.5 11.4 28.3 -77.0 7.0 15.8 38.2 18.4 -84.5 -69.4 63 Financial corporations 3.2 2.1 .8 4.0 2.7 3.0 3.9 4.1 2.8 2.5 2.9 3.2 64 Foreign shares purchased in United States .8 2.1 .3 1.5 4.0 1.1 -.1 3.0 5.7 2.2 -.1 2.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A43 1.58 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates. 1982 1983 1984r TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11997799 11998800 11998811 11998822 11998833 11998844rr HI H2 HI H2 HI H2 1 Total funds advanced in credit markets to domestic nonfinancial sectors 386.0 344.6 380.4 404.1 526.4 734.2 358.1 450.1 488.9 563.8 688.9 779.4 By public agencies and foreign ? Total net advances 75.2 97.0 97.7 109.1 117.1 142.3 100.8 117.3 119.7 111144..66 112255..00 115599..55 3 U.S. government securities -6.3 15.7 17.2 18.0 27.6 36.0 9.7 26.2 40.5 14.6 33.4 38.5 4 Residential mortgages 35.8 31.7 23.5 61.0 76.1 56.0 47.6 74.4 80.1 72.0 52.0 60.0 5 FHLB advances to savings and loans 9.2 7.1 16.2 .8 -7.0 15.7 11.1 -9.5 -12.1 -2.0 15.7 15.7 6 Other loans and securities 36.5 42.4 40.9 29.3 20.5 34.6 32.4 26.2 11.1 29.9 23.9 45.3 Total advanced, by sector 7 U.S. government 19.0 23.7 24.1 16.0 9.7 18.8 14.8 17.1 9.1 10.3 7.4 30.2 8 Sponsored credit agencies 53.0 45.6 48.2 65.3 69.5 72.1 61.8 68.7 68.2 70.7 73.0 71.2 9 Monetary authorities 7.7 4.5 9.2 9.8 10.9 8.4 3.8 15.7 15.6 6.2 17.1 -.3 10 Foreign -4.6 23.2 16.3 18.1 27.1 42.9 20.4 15.8 26.8 27.4 27.5 58.4 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 47.9 44.8 47.4 64.9 67.8 74.4 6600..00 6699..77 6666..22 6699..44 6699..11 7799..66 12 Foreign 20.2 27.2 27.2 15.7 18.9 .6 10.2 21.2 15.3 22.5 19.2 -18.0 Private domestic funds advanced n Total net advances 379.0 319.6 357.3 375.6 495.9 666.9 327.5 423.8 450.8 541.1 652.2 668811..55 14 U.S. government securities 91.1 107.2 115.8 207.9 226.9 237.3 153.7 262.0 247.8 205.9 213.2 261.3 15 State and local obligations 30.3 30.3 22.7 53.8 56.3 58.9 43.9 63.7 62.8 49.7 21.7 96.1 16 Corporate and foreign bonds 18.5 19.3 18.8 14.8 14.6 25.1 -.1 29.6 22.9 6.3 22.8 27.5 17 Residential mortgages 91.9 73.7 56.7 -3.2 40.9 88.1 11.0 -17.4 6.4 75.5 102.2 74.1 18 Other mortgages and loans 156.3 96.2 159.5 103.2 150.2 273.1 130.2 76.3 98.7 201.7 308.0 238.1 19 LESS: Federal Home Loan Bank advances 9.2 7.1 16.2 .8 -7.0 15.7 11.1 -9.5 -12.1 -2.0 15.7 15.7 Private financial intermediation 20 Credit market funds advanced by private financial institutions 313.9 281.5 323.4 285.6 376.7 544.8 274.4 296.7 323.2 430.1 535.1 554.6 71 Commercial banking 123.1 100.6 102.3 107.2 136.1 179.9 99.9 114.5 121.6 150.6 193.0 166.8 2? Savings institutions 56.5 54.5 27.8 31.3 136.8 145.1 25.2 37.4 128.9 144.6 163.9 126.3 23 Insurance and pension funds 85.9 94.3 97.4 108.8 98.8 113.0 111.4 106.3 89.5 108.1 96.8 129.1 24 Other finance 48.5 32.1 96.0 38.3 5.0 106.8 37.9 38.6 -16.8 26.8 81.2 132.3 25 Sources of funds 313.9 281.5 323.4 285.6 376.7 544.8 274.4 296.7 323.2 430.1 535.1 554.6 26 Private domestic deposits and RPs 137.4 169.6 211.9 174.7 203.5 288.6 147.6 201.9 192.7 214.2 283.5 293.6 27 Credit market borrowing 34.5 18.1 36.7 4.1 22.9 56.8 24.2 -16.0 7.8 38.0 54.3 59.2 78 Other sources 142.0 93.9 74.8 106.7 150.4 199.5 102.6 110.8 122.8 177.9 197.3 201.7 29 Foreign funds 27.6 -21.7 -8.7 -26.7 22.1 16.6 -28.3 -25.1 -14.2 58.5 15.7 17.5 30 Treasury balances .4 -2.6 -1.1 6.1 -5.3 4.0 -2.0 14.1 10.1 -20.8 .9 7.1 31 Insurance and pension reserves 72.8 83.9 90.4 104.6 99.2 106.2 111.4 97.8 90.0 108.4 107.6 104.8 32 Other, net 41.2 34.2 -5.9 22.8 34.4 72.7 21.5 24.1 36.8 31.9 73.1 72.3 Private domestic nonfinancial investors 33 Direct lending in credit markets 99.6 56.1 70.6 94.2 142.1 178.8 77.3 111.0 135.3 148.9 171.5 186.1 34 U.S. government securities 52.5 24.6 29.3 37.4 88.7 121.7 35.3 39.5 95.9 81.4 131.3 112.2 35 State and local obligations 9.9 7.0 10.5 34.4 42.5 33.3 30.1 38.7 52.7 32.3 5.6 61.0 36 Corporate and foreign bonds -1.4 -5.7 -8.1 -5.2 2.0 3.6 -17.7 7.3 -1.7 5.7 15.3 -8.2 37 Open market paper 8.6 -3.1 2.7 -.1 3.9 -.8 3.5 -3.7 -8.1 15.9 -.3 -1.3 38 Other 30.0 33.3 36.3 27.8 5.0 21.0 26.2 29.3 -3.4 13.5 19.6 22.4 39 Deposits and currency 146.8 181.1 221.9 181.9 222.6 290.3 152.1 211.7 214.5 230.7 294.9 285.7 40 Currency 8.0 10.3 9.5 9.7 14.3 8.6 6.7 12.7 14.8 13.8 17.7 -.5 41 Checkable deposits 18.3 5.2 18.0 15.7 21.7 22.8 1.9 29.5 48.0 -4.7 36.6 8.9 42 Small time and savings accounts 59.3 82.9 47.0 138.2 219.1 149.2 83.2 193.1 278.6 159.7 123.0 175.5 43 Money market fund shares 34.4 29.2 107.5 24.7 -44.1 47.2 39.4 10.0 -84.0 -4.2 30.2 64.2 44 Large time deposits 18.8 45.8 36.9 -7.7 -7.5 76.2 21.9 -37.3 -61.0 45.9 92.4 59.9 45 Security RPs 6.6 6.5 2.5 3.8 14.3 -6.8 1.1 6.6 11.0 17.5 1.3 -15.0 46 Deposits in foreign countries 1.5 1.1 .5 -2.5 4.8 -6.9 -2.2 -2.9 7.0 2.7 -6.3 -7.5 47 Total of credit market instruments, deposits and currency 246.5 237.2 292.5 276.1 364.7 469.1 229.4 322.7 349.8 379.6 466.4 471.8 48 Public holdings as percent of total 18.5 26.1 24.0 26.0 21.5 19.4 27.4 24.9 23.7 19.5 17.6 21.0 49 Private financial intermediation (in percent) 82.8 88.1 90.5 76.0 76.0 81.7 83.8 70.0 71.7 79.5 82.0 81.4 50 Total foreign funds 23.0 1.5 7.6 -8.6 49.2 59.5 -7.9 -9.3 12.6 85.9 43.1 75.9 MEMO: Corporate equities not included above 51 Total net issues -3.8 22.2 -4.1 35.3 67.8 -35.4 23.3 47.2 83.5 52.0 -43.3 -27.5 52 Mutual fund shares .1 5.2 6.3 18.4 32.8 37.5 12.5 24.3 36.8 28.9 39.0 35.9 53 Other equities -3.9 17.1 -10.4 16.9 34.9 -72.9 10.9 22.9 46.8 23.1 -82.3 -63.4 54 Acquisitions by financial institutions 12.9 24.9 20.1 39.2 57.5 21.9 11.0 67.3 75.9 39.2 7.6 36.2 55 Other net purchases -16.7 -2.7 -24.2 -3.9 10.2 -57.2 12.3 -20.1 7.6 12.8 -50.8 -63.6 NOTES BY LINE NUMBER. 32. Mainly retained earnings and net miscellaneous liabilities. 1. Line 1 of table 1.58. 33. Line 12 less line 20 plus line 27. 2. Sum of lines 3-6 or 7-10. 34-38. Lines 14-18 less amounts acquired by private finance. Line 38 includes 6. Includes farm and commercial mortgages. mortgages. 11. Credit market funds raised by federally sponsored credit agencies, and net 40. Mainly an offset to line 9. issues of federally related mortgage pool securities. 47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46. 13. Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. Also 48. Line 2/line 1. sum of lines 28 and 47 less lines 40 and 46. 49. Line 20/line 13. 18. Includes farm and commercial mortgages. 50. Sum of lines 10 and 29. 26. Line 39 less lines 40 and 46. 51. 53. Includes issues by financial institutions. 27. Excludes equity issues and investment company shares. Includes line 19. NOTE. Full statements for sectors and transaction types in flows and in amounts 29. Foreign deposits at commercial banks, bank borrowings from foreign outstanding may be obtained from Flow of Funds Section, Division of Research branches, and liabilities of foreign banking agencies to foreign affiliates. and Statistics, Board of Governors of the Federal Reserve System, Washington, 30. Demand deposits at commercial banks. D.C. 20551. 31. Excludes net investment of these reserves in corporate equities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • September 1985 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures' 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1984 1985 MMeeaassuurree 11998822 11998833 11998844 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June 1 Industrial production 103.1 109.2 121.8 122.7 123.4 123.3 123.6 123.7 124.0 124.3 124.4 124.6 Market groupings 2 Products, total 107.8 113.9 127.1 129.0 129.9 129.8 129.6 129.8 130.3 130.9 131.6 132.1 3 Final, total 109.5 114.7 127.8 129.9 130.7 130.6 130.4 130.4 130.8 131.5 132.1 132.6 4 Consumer goods 101.4 109.3 118.2 118.5 119.6 119.7 118.8 119.1 119.8 119.9 120.6 120.8 5 Equipment 120.2 121.7 140.5 145.0 145.5 144.9 145.7 145.3 145.4 146.9 147.5 148.2 6 Intermediate 101.7 111.2 124.9 126.2 127.2 127.3 126.8 127.7 128.6 129.1 130.0 130.6 7 Materials 96.7 102.8 114.6 114.2 114.6 114.6 115.4 115.4 115.5 115.1 114.5 114.2 Industry groupings 8 Manufacturing 102.2 110.2 123.9 125.5 126.0 125.8 125.9 125.8 126.3 126.7 126.7 126.9 Capacity utilization (percent)2 9 Manufacturing 70.3' 74.<Y 80.8' 81.1' 81.2' 80.9' 80.7 80.4 80.5 80.5 80.3 80.3 10 Industrial materials industries 71.7' 15 y 82.3' 81.3' 81.5' 81.3' 81.7 81.5 81.4 81.0 80.3 80.0 11 Construction contracts (1977 = 100)3 111.0 137.0 149.0 145.0 151.0 150.0 150.0 145.0 162.0 161.0 162.0 142.0 12 Nonagricultural employment, total4 136.1 137.1' 143.6' 145.2 145.7 146.0 146.5 146.8 147.3 147.6 148.0 148.1 13 Goods-producing, total 102.2 100.1' 106.1' 106.9 107.1 107.5 107.7 107.5 107.5 107.6' 107.5 107.3 14 Manufacturing, total 96.6 94.8' 99.8' 100.5 100.5 100.8 100.8 100.6 100.4 100.1 99.9 99.7 15 Manufacturing, production-worker ... 89.1 87.9 94.0 93.5 93.5 93.7 93.6 93.3 93.0 92.6 92.3 92.2 16 Service-producing 154.7 157.3' 164.1' 166.3 166.9 167.2 167.8 168.3 169.1 169.5 170.2 170.5 17 Personal income, total 410.3 435.6 478.1 488.8 491.7 493.9 496.7 499.4 501.0 506.C 503.2 505.9 18 Wages and salary disbursements 367.4 388.6 422.5 428.8 432.6 436.7 438.5 440.5 443.7 445.7' 447.1 450.0 19 Manufacturing 285.5 294.7 323.6 326.7 330.0 333.2 334.4 332.9 334.8 333.5' 333.9 334.2 20 Disposable personal income5 398.0 427.1 470.3 480.6 482.9 484.5 487.6 484.7 481.3 496.8' 505.7 494.8 21 Retail sales (1977 = 100)6 148. 1' 162.0" 179.0' 180.9' 183.0' 183.4' 184.2' 186.1' 185.7' 191.5' 190.6 189.1 Prices7 22 Consumer 289.1 298.4 311.1 315.3 315.3 315.5 316.1 317.4 318.8 320.1 321.3 322.3 23 Producer finished goods 280.7 285.2 291.2 291.5 292.3 292.0 292.1' 292.6' 292.4 293.1 294.2 294.0 1. A major revision of the industrial production index and the capacity 5. Based on data in Survey of Current Business (U.S. Department of Comutilization rates was released in July 1985. See "A Revision of the Index of merce). Industrial Production" and accompanying tables that contain revised indexes 6. Based on Bureau of Census data published in Survey of Current Business. (1977=100) through December 1984 in the FEDERAL RESERVE BULLETIN, vol. 71 7. Data without seasonal adjustment, as published in Monthly Labor Review. (July 1985), pp. 487-501. The revised indexes for January through June 1985 will Seasonally adjusted data for changes in the price indexes may be obtained from be shown in the September BULLETIN. the Bureau of Labor Statistics, U.S. Department of Labor. 2. Ratios of indexes of production to indexes of capacity. Based on data from Federal Reserve, McGraw-Hill Economics Department, Department of Com- NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5, and 6, merce, and other sources. and indexes for series mentioned in notes 3 and 7 may also be found in the Survey 3. Index of dollar value of total construction contracts, including residential, of Current Business. nonresidential and heavy engineering, from McGraw-Hill Information Systems Figures for industrial production for the last two months are preliminary and Company, F. W. Dodge Division. estimated, respectively. 4. Based on data in Employment and Earnings (U.S. Department of Labor). Series covers employees only, excluding personnel in the Armed Forces. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1984 1985 CCaatteeggoorryy 11998822 11998833'' 11998844'' Nov. Dec. Jan. Feb. Mar. Apr. May' June HOUSEHOLD SURVEY DATA 1 Noninstitutional population' 174,450 176,414 178,602 179,353 179,524 179,600 179,742 179,891 180,024 180,171 180,322 2 Labor force (including Armed Forces)1 112,383 113,749 115,763 116,292 116,682 117,091 117,310 117,738 117,596 117,600 117,009 3 Civilian labor force 110,204 111,550 113,544 114,074 114,464 114,875 115,084 115,514 115,371 115,373 114,783 Employment 4 Nonagricultural industries2 96,125 97,450 101,685 102,598 102,888 103,071 103,345 103,757 103,517 103,648 103,232 5 Agriculture 3,401 3,383 3,321 3,334 3,385 3,320 3,340 3,362 3,428 3,312 3,138 Unemployment 6 Number 10,678 10,717 8,539 8,142 8,191 8,484 8,399 8,3% 8,426 8,413 8,413 7 Rate (percent of civilian labor force) ... 9.7 9.6 7.5 7.1 7.2 7.4 7.3 7.3 7.3 7.3 7.3 8 Not in labor force 62,067 62,665 62,839 63,061 62,842 62,509 62,432 62,153 62,428 62,571 63,313 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 89,566 90,196 94,461 95,882 96,092 96,419 96,591 96,910 97,120' 97,386 97,466 10 Manufacturing 18,781 18,434 19,412 19,553 19,603 19,604 19,561 19,526 19,467' 19,427 19,382 11 Mining 1,128 952 974 978 973 974 976 977 982' 981 976 12 Contract construction 3,905 3,948 4,345 4,424 4,469 4,534 4,525 4,553 4,641' 4,655 4,649 13 Transportation and public utilities 5,082 4,954 5,171 5,229 5,246 5,259 5,272 5,269 5,278' 5,305 5,318 14 Trade 20,457 20,881 22,134 22,641 22,691 22,776 22,857 22,963 23,013 23,137 23,201 IS Finance 5,341 5,468 5,682 5,755 5,776 5,790 5,809 5,835 5,858 5,890 5,909 16 Service 19,036 19,694 20,761 21,184 21,252 21,382 21,480 21,644 21,723 21,808 21,891 17 Government 15,837 15,870 15,987 16,118 16,082 16,100 16,111 16,143 16,158' 16,183 16,140 1. Persons 16 years of age and over. Monthly figures, which are based on 3. Data include all full- and part-time employees who worked during, or sample data, relate to the calendar week that contains the 12th day; annual data received pay for, the pay period that includes the 12th day of the month, and are averages of monthly figures. By definition, seasonality does not exist in exclude proprietors, self-employed persons, domestic servants, unpaid family population figures. Based on data from Employment and Earnings (U.S. Depart- workers, and members of the Armed Forces. Data are adjusted to the March 1984 ment of Labor). benchmark and only seasonally adjusted data are available at this time. Based on 2. Includes self-employed, unpaid family, and domestic service workers. data from Employment and Earnings (U.S. Department of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • September 1985 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION Seasonally adjusted 1984' 1985' 1984' 1985' 1984' 1985' SSeerriieess Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 123.4 123.1 123.8 124.4 150.6 151.7 152.8 154.0 81.9 81.2 81.0 80.8 2 Mining 113.8 108.3 110.1 110.6 132.9 133.1 133.4 133.6 85.6 81.3 82.6 82.8 3 Utilities 109.8 111.1 114.2 113.1 132.6 133.0 133.7 134.5 82.8 83.5 85.5 84.1 4 Manufacturing 125.6 125.8 126.0 126.8 153.9 155.2 156.5 157.7 81.6 81.0 80.5 80.4 5 Primary processing ... 107.6 107.0 107.5 107.7 131.2 131.4 131.6 132.0 82.0 81.5 81.6 81.6 6 Advanced processing , 136.3 137.0 137.1 138.3 167.6 169.6 171.4 173.2 81.3 80.8 80.0 79.8 7 Materials 116.0 114.5 115.4 114.6 139.8 140.7 141.6 142.5 83.0 81.4 81.5 80.4 8 Durable goods 124.0 123.7 123.6 121.6 153.1 154.4 155.9 157.4 81.0 80.1 79.3 77.2 9 Metal materials .... 82.0 80.4 80.6 79.2 118.8 117.8 117.3 117.3 69.0 68.2 68.7 67.5 10 Nondurable goods.... 111.6 110.9 110.9 110.3 136.3 136.8 137.3 137.8 81.9 81.0 80.7 80.1 11 Textile, paper, and chemical.. 112.2 110.7 111.6 110.9 135.7 136.2 136.7 137.0 82.7 81.3 81.7 80.9 12 Paper 127.7 126.2 126.3 n.a. 133.7 135.3 136.1 n.a. 95.5 93.3 92.8 n.a. 13 Chemical 110.2 110.9 113.2 n.a. 140.8 141.1 141.5 n.a. 78.3 78.6 80.0 n.a. 14 Energy materials 105.7 101.3 105.0 106.1 119.3 119.7 120.0 120.3 88.6 84.6 87.5 88.2 Previous cycle1' Latest cycle2' 1984' 1984' 1985' High Low High Low June Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 81.6 81.1 81.3 81.1 81.1 80.9 81.0 80.9 80.8 80.7 16 Mining 92.8 87.8 95.2 76.9 85.5 80.6 81.7 81.7 82.9 82.1 82.8 82.9 82.8 82.6 17 Utilities 95.6 82.9 88.5 78.0 84.2 82.4 84.3 83.8 84.7 86.7 85.0 84.6 84.0 83.6 18 Manufacturing 87.7 69.9 86.5 68.0 81.1 81.1 81.2 80.9 80.7 80.4 80.5 80.5 80.3 80.3 19 Primary processing ... 91.9 68.3 89.1 65.1 81.8 81.8 81.7 80.9 81.6 81.5 81.8 82.1 81.4 81.3 20 Advanced processing . 86.0 71.1 85.1 69.5 80.7 80.7 80.9 80.8 80.2 79.8 79.8 79.8 79.9 79.8 21 Materials 92.0 70.5 89.1 68.4 82.8 81.3 81.5 81.3 81.7 81.5 81.4 81.0 80.3 80.0 22 Durable goods 91.8 64.4 89.8 60.9 80.4 80.3 80.2 79.7 79.9 79.1 78.9 78.1 77.1 76.5 23 Metal materials 99.2 67.1 93.6 45.7 70.0 68.1 68.6 68.0 68.1 68.2 69.8 68.8 67.3 66.4 24 Nondurable goods .... 91.1 66.7 88.1 70.6 81.8 81.4 80.9 80.8 80.9 81.1 80.2 80.1 80.1 80.0 25 Textile, paper, and chemical 92.8 64.8 89.4 68.6 82.8 82.0 81.1 80.7 81.7 82.0 81.4 80.9 80.8 81.1 26 Paper 98.4 70.6 97.3 79.9 96.2 93.7 92.5 93.7 93.7 92.6 92.1 89.9 90.2 n.a. 27 Chemical 92.5 64.4 87.9 63.3 78.2 78.6 78.8 78.3 80.1 80.2 79.5 79.2 79.1 n.a. 28 Energy materials 94.6 86.9 94.0 82.2 89.0 83.5 84.8 85.5 86.6 87.4 88.4 88.4 88.1 88.0 1. Monthly high 1973; monthly low 1975. NOTE. These data also appear in the Board's G.3 (402) release. For address, see 2. Monthly highs 1978 through 1980; monthly lows 1982. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value A Monthly data are seasonally adjusted 1977 11998844 1985 pro- 11998844 Grouping por- avg. tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 121.8 122.3 123.2 123.5 123.3 122.7 123.4 123.3 123.6 123.7 124.0 124.3 124.4 124.6 2 Products 57.72 127.1 127.5 128.6 129.0 128.8 129.0 129.9 129.8 129.6 129.8 130.3 130.9 131.6 132.1 3 Final products 44.77 127.8 128.2 129.2 129.7 129.8 129.9 130.7 130.6 130.4 130.4 130.8 131.5 132.1 132.6 4 Consumer goods 25.52 118.2 118.5 119.1 118.4 118.3 118.5 119.6 119.7 118.8 119.1 119.8 119.9 120.6 120.8 5 Equipment 19.25 140.5 141.0 142.5 144.5 145.0 145.0 145.5 144.9 145.7 145.3 145.4 146.9 147.5 148.2 6 Intermediate products 12.94 124.9 125.4 127.0 126.9 125.6 126.2 127.2 127.3 126.8 127.7 128.6 129.1 130.0 130.6 7 Materials 42.28 114.6 115.2 115.8 116.1 115.9 114.2 114.6 114.6 115.4 115.4 115.5 115.1 114.5 114.2 Consumer goods 8 Durable consumer goods 6.89 112.6 111.7 113.8 113.3 111.5 111.4 113.3 113.1 112.8 112.8 113.5 112.9 112.3 112.4 9 Automotive products 2.98 109.8 110.4 110.4 111.6 107.4 104.2 110.2 111.6 114.2 115.4 115.1 116.4 114.4 114.9 10 Autos and trucks 1.79 103.0 102.7 102.8 106.0 98.7 95.0 103.1 104.7 112.5 111.7 110.5 114.4 109.6 109.7 11 Autos, consumer 1.16 93.2 93.7 92.8 92.7 85.1 84.0 89.7 95.6 102.5 100.7 101.3 100.5 98.1 97.0 12 Trucks, consumer .63 121.2 119.3 121.5 130.8 124.1 115.4 127.8 121.5 131.1 132.0 127.5 140.2 130.9 13 Auto parts and allied goods 1.19 120.1 122.1 121.9 120.0 120.6 118.1 121.1 122.1 116.8 121.1 122.0 119.4 121.5 122.6 14 Home goods 3.91 114.8 112.7 116.4 114.6 114.7 116.9 115.8 114.3 111.6 110.9 112.2 110.2 110.7 110.5 15 Appliances, A/C and TV 1.24 136.2 131.0 140.9 138.7 138.0 140.5 137.4 137.2 126.1 127.1 131.8 126.9 129.9 129.0 16 Appliances and TV 1.19 137.5 131.8 143.0 140.6 140.1 142.2 138.4 138.2 126.6 127.2 131.8 127.1 129.3 17 Carpeting and furniture .96 117.6 118.0 119.3 117.5 118.8 118.1 118.1 114.1 112.7 117.9 117.7 118.1 117.1 18 Miscellaneous home goods 1.71 97.8 96.6 97.2 95.7 95.6 99.3 99.0 97.9 100.6 95.1 95.0 93.7 93.2 19 Nondurable consumer goods 18.63 120.2 120.9 120.9 120.2 120.7 121.0 121.8 122.1 121.1 121.4 122.1 122.5 123.6 123.9 20 Consumer staples 15.29 125.0 125.7 125.9 125.4 126.3 126.7 127.4 127.7 126.6 126.9 127.9 128.5 129.8 130.3 21 Consumer foods and tobacco 7.80 126.2 126.8 126.9 126.6 127.7 128.2 127.6 129.1 127.1 127.8 128.0 129.3 129.8 22 Nonfood staples 7.49 123.9 124.8 125.0 124.3 125.0 125.4 127.5 126.5 126.0 126.0 127.7 127.7 129.7 130.1 23 Consumer chemical products . 2.75 137.4 138.1 139.0 138.3 140.4 141.3 143.3 142.7 142.9 143.2 145.1 145.1 147.8 24 Consumer paper products 1.88 138.4 140.5 143.0 141.2 140.7 140.0 141.5 141.8 141.2 138.1 141.7 142.2 146.0 25 Consumer energy 2.86 101.4 101.6 99.7 99.8 100.0 100.5 103.0 100.7 99.9 101.5 101.9 101.5 101.7 26 Consumer fuel 1.44 89.3 89.5 87.4 88.5 88.1 88.8 89.9 87.7 85.1 84.9 87.0 90.0 89.2 27 Residential utilities 1.42 113.7 113.9 112.2 111.2 112.1 112.4 116.3 113.9 115.0 118.4 117.1 113.7 Equipment 28 Business and defense equipment 18.01 139.6 139.9 141.4 143.5 144.1 144.1 144.6 143.9 145.5 145.6 146.1 147.7 148.3 149.0 29 Business equipment 14.34 134.9 135.5 137.0 139.1 139.2 139.1 139.8 138.4 140.4 140.0 140.2 142.0 142.1 142.6 30 Construction, mining, and farm ., 2.08 66.6 66.6 68.9 68.1 67.9 69.5 68.2 68.5 68.8 68.3 67.1 68.4 67.5 31 Manufacturing 3.27 109.4 109.7 110.6 113.4 113.3 112.7 112.4 111.5 111.6 112.3 112.0 112.4 113.9 113.5 32 Power 1.27 79.2 79.8 80.3 80.3 82.4 83.7 83.8 84.5 82.5 81.8 79.6 81.8 82.0 82.1 33 Commercial 5.22 209.2 212.1 213.5 216.5 216.9 216.4 217.1 214.5 217.4 217.0 218.9 221.7 222.8 223.8 34 Transit 2.49 98.6 95.3 97.6 100.6 99.3 98.5 102.9 100.9 106.7 104.9 104.5 106.4 103.1 103.2 35 Defense and space equipment 3.67 157.9 157.2 158.5 160.7 163.4 163.5 163.3 165.3 165.3 167.3 169.0 170.1 172.6 174.3 Intermediate products 36 Construction supplies 5.95 114.0 114.3 114.3 115.3 114.7 114.6 115.7 114.7 116.2 115.7 116.9 117.1 118.3 118.8 37 Business supplies 6.99 134.2 134.9 137.8 136.9 134.9 136.1 137.1 138.0 135.9 137.9 138.6 139.3 139.9 38 General business supplies 5.67 137.9 138.4 142.0 141.3 138.7 140.1 140.9 141.4 140.2 141.1 141.9 143.2 144.5 39 Commercial energy products 1.31 118.0 119.5 119.5 117.4 118.2 118.8 120.4 122.9 117.1 124.1 124.5 122.4 Materials 40 Durable goods materials 20.50 122.3 122.4 123.5 124.4 124.0 123.7 123.9 123.4 124.2 123.3 123.3 122.5 121.3 120.8 41 Durable consumer parts 4.92 98.0 97.2 97.5 99.0 98.8 98.9 99.1 99.8 102.6 102.2 102.1 101.8 101.1 101.1 42 Equipment parts 5.94 164.5 164.8 168.6 170.1 169.9 168.6 169.1 168.8 166.7 164.2 163.3 161.4 158.0 157.2 43 Durable materials n.e.c 9.64 108.6 109.1 108.8 109.2 108.5 108.7 108.7 107.4 109.1 109.0 109.6 109.2 109.1 108.5 44 Basic metal materials 4.64 86.4 87.2 86.5 85.6 85.0 84.8 85.2 84.0 83.5 84.1 85.1 85.0 88.5 45 Nondurable goods materials 10.09 111.2 111.2 111.6 111.6 111.4 111.2 110.7 110.7 110.9 111.4 110.3 110.3 110.4 110.4 46 Textile, paper, and chemical materials 7.53 111.6 112.0 111.8 112.5 112.3 111.5 110.5 110.1 111.5 112.1 111.3 110.7 110.8 111.2 47 Textile materials 1.52 101.5 102.1 103.2 104.5 99.2 98.5 93.7 91.2 90.3 93.5 93.0 94.1 93.8 48 Pulp and paper materials 1.55 126.5 127.6 128.5 127.0 127.7 126.2 125.1 127.2 127.5 126.0 125.4 122.4 122.9 49 Chemical materials 4.46 109.9 110.0 109.1 110.1 111.5 110.8 111.1 110.6 113.3 113.5 112.7 112.3 112.4 50 Miscellaneous nondurable materials 2.57 109.8 108.7 110.8 109.0 108.4 109.9 111.1 112.1 109.2 109.4 107.2 109.0 109.2 51 Energy materials 11.69 104.0 106.0 106.0 105.5 105.5 99.9 101.5 102.4 103.9 104.9 106.2 106.4 106.0 106.0 52 Primary energy 7.57 107.5 110.1 110.7 109.3 110.0 101.4 104.1 106.0 107.0 107.6 110.2 109.5 108.3 53 Converted fuel materials 4.12 97.6 98.5 97.3 98.5 97.2 97.1 96.8 96.0 98.2 100.0 99.0 100.6 99.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1985 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued 1977 1984 1985 SIC pro- 1984 GGrroouuppiinngg code por- avg. tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Index (1977 = 100) MAJOR INDUSTRY 15.79 110.9 112.7 112.9 111.9 112.1 108.0 110.1 109.9 111.4 111.9 111.8 111.8 111.5 111.3 9.83 110.9 113.5 114.8 113.0 113.6 107.2 108.8 108.9 110.5 109.5 110.5 110.7 110.6 110.4 5.96 110.9 111.4 109.8 110.0 109.7 109.4 112.1 111.6 113.0 115.8 113.9 113.6 113.0 112.8 84.21 123.9 124.1 125.4 125.9 125.6 125.5 126.0 125.8 125.9 125.8 126.3 126.7 126.7 126.9 35.11 122.5 123.2 123.9 123.2 123.1 123.3 123.8 123.4 123.2 123.8 123.9 124.3 124.9 125.3 4499..1100 112244..88 124.7 112266..44 127.7 127.2 127.0 127.5 127.4 127.8 127.2 128.0 128.4 128.0 128.1 Mining 7 Metal 10 .50 77.0 79.0 79.6 72.2 73.6 75.3 75.5 69.3 70.5 74.5 8833..66 8811..55 7755..99 8 Coal 11.12 1.60 127.6 137.9 141.7 136.4 144.2 102.0 113.1 116.2 118.5 121.5 131.9 128.5 128.7 129.0 9 Oil and gas extraction 13 7.07 109.1 110.2 110.9 110.2 109.2 110.1 109.8 109.8 110.7 108.2 106.8 108.0 108.3 108.1 10 Stone and earth minerals 14 .66 116.1 117.0 118.3 118.4 117.6 114.2 115.3 113.2 118.5 119.8 118.7 118.5 117.9 Nondurable manufactures 20 7.96 127.1 127.4 127.8 127.7 128.2 129.1 128.7 129.0 128.2 129.4 112288..55 130.8 113311..22 12 Tobacco products 21 .62 100.7 102.0 100.9 97.3 99.6 103.1 102.7 107.4 97.2 103.8 103.4 98.4 13 Textile mill products 22 2.29 103.7 105.0 105.7 103.5 100.9 100.3 97.1 94.7 93.6 98.5 99.4 99.7 98.5 14 Apparel products 23 2.79 102.8 102.9 102.3 101.3 100.1 100.5 101.1 102.5 102.6 103.1 101.3 100.2 100.0 15 Paper and products 26 3.15 127.3 127.2 128.2 128.2 128.9 127.6 127.7 128.8 128.3 126.4 126.9 125.3 125.1 16 Printing and publishing 27 4.54 147.9 149.4 152.3 151.5 148.8 149.5 153.5 151.2 150.4 150.3 152.6 153.9 156.8 157.7 17 Chemicals and products 28 8.05 121.7 122.1 122.9 122.0 124.2 123.5 124.3 123.4 125.7 125.8 126.5 125.6 126.3 18 Petroleum products 29 2.40 87.4 88.4 87.0 87.5 85.7 85.4 86.2 84.7 84.1 84.0 84.7 87.3 85.5 8844..99 19 Rubber and plastic products 30 2.80 143.2 144.9 146.0 144.5 144.1 146.0 146.6 146.6 145.9 145.7 144.1 144.9 145.4 20 Leather and products 31 .53 76.7 77.3 77.0 74.2 73.4 70.9 71.5 71.4 69.1 69.2 69.4 69.1 70.2 Durable manufactures 21 Lumber and products 24 2.30 109.1 109.8 107.9 109.4 110.4 110.2 110099..55 109.4 110099..22 109.1 110099..55 111100..99 22 Furniture and fixtures 25 1.27 136.7 138.6 139.4 140.0 140.9 139.9 139.8 138.0 136.5 139.0 139.2 141.0 142.4 23 Clay, glass, stone products 32 2.72 112.3 112.5 113.8 113.7 112.6 113.3 113.6 111.8 112.7 110.5 111.4 113.3 114.9 24 Primary metals 33 5.33 82.4 80.4 80.6 84.0 82.9 81.3 80.9 78.4 81.7 80.2 81.8 81.5 77.1 76.7 25 Iron and steel 331.2 3.49 73.5 71.0 69.0 74.6 73.6 71.0 71.1 68.9 71.0 68.5 73.2 71.9 67.3 26 Fabricated metal products 34 6.46 102.8 103.3 103.7 104.1 104.8 104.8 105.4 105.9 106.4 107.6 108.6 109.1 108.5 108.6 27 Nonelectrical machinery 35 9.54 142.0 143.7 146.1 147.8 146.5 146.6 145.8 144.6 145.0 144.9 146.5 148.9 149.2 150.4 28 Electrical machinery 36 7.15 172.4 171.4 175.3 176.2 176.8 178.4 178.9 180.2 176.0 173.2 173.1 168.9 168.9 168.0 29 Transportation equipment 37 9.13 113.6 112.4 114.2 116.2 114.3 113.4 116.0 117.8 120.4 120.5 120.8 121.9 121.2 121.5 30 Motor vehicles and parts 371 5.25 105.6 104.3 105.4 108.3 104.6 103.1 107.5 109.5 113.0 112.5 111.3 112.9 110.6 110.3 31 Aerospace and miscellaneous transportation equipment 372-6.9 3.87 124.4 123.4 126.0 126.9 127.5 127.3 127.5 129.0 130.5 131.4 113333..77 113344..11 113355..66 113366..88 32 Instruments 38 2.66 136.9 138.0 139.4 139.8 140.2 138.6 138.6 138.9 138.7 138.7 139.0 138.5 139.6 138.8 3399 11..4466 9988..00 9966..44 9999..77 9977..88 9955..99 9988..66 9988..66 9977..22 9999..00 9966..44 96.0 98.3 9988..99 Utilities 44..1177 111166..88 118.0 116.1 116.8 116.2 116.8 118.7 117.5 118.9 121.9 119.5 119.1 118.1 111188..11 Gross value (billions of 1972 dollars, annual rates) MAJOR MARKET 35 Products, total 596.0 745.6 749.5 748.1 752.4 749.2 753.7 759.2 756.5 761.3 764.2 769.5 774.3 776.3 36 Final 472.7 593.7 596.7 593.7 598.0 596.8 600.4 605.2 601.8 606.5 608.7 613.3 617.4 618.1 620.1 37 Consumer goods. 309.2 356.5 357.7 355.0 354.1 352.5 355.5 359.0 360.0 358.8 360.9 364.6 366.1 366.6 367.3 38 Equipment 163.5 237.6 239.4 239.1 244.3 244.8 245.4 246.7 242.3 39 Intermediate 123.3 151.8 152.7 154.3 154.3 152.3 153.2 154.0 154.6 154.9 155.5 156.3 156.9 158.1 158.9 • A major revision of the industrial production index and the capacity (July 1985), pp. 487-501. The revised indexes for January through June 1985 will utilization rates was released in July 1985. See "A Revision of the Index of be shown in the September BULLETIN. Industrial Production" and accompanying tables that contain revised indexes NOTE. These data also appear in the Board's G. 12.3 (414) release. For address, (1977=100) through December 1984 in the FEDERAL RESERVE BULLETIN, vol. 71 see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1984 1985 IItteemm 11998822 11998833 11998844 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,000 1,605 1,682 1,542 1,517 1,477 1,616 1,599 1,635 1,624 1,741 1,704 1,778 2 1-family 546 902 922 853 866 827 846 843 903 927 993 948 933 3 2-or-more-family 454 703 759 689 651 650 770 756 732 697 748 756 845 4 Started 1,062 1,703 1,749 1,590 1,669 1,564 1,600 1,630 1,849 1,647 1,889 1,933 1,673 5 1-family 663 1,067 1,084 962 1,009 979 1,043 1,112 1,060 1,135 1,168 1,155 1,041 6 2-or-more-family 400 635 665 628 660 585 557 518 789 512 721 778 632 7 Under construction, end of period1 720 1,003 1,051 1,091 1,088 1,081 1,077 1,073 1,071 1,066 1,063 1,093 1,095 8 1-family 400 524 556 574 568 571 574 579 572 580 578 586 589 9 2-or-more-family 320 479 494 517 520 510 503 495 499 485 485 507 506 10 Completed 1,005 1,390 1,652 1,681 1,657 1,614 1,587 1,635 1,719 1,794 1,685 1,630 1,627 11 1-family 631 924 1,025 1,035 1,040 972 1,001 985 1,107 1,082 1,043 1,073 1,007 12 2-or-more-family 374 466 627 646 617 642 586 650 612 712 642 557 620 13 Mobile homes shipped 240 296 295 302 282 302 291 282 273 276 283 287 287 Merchant builder activity in I-family units 14 Number sold 413 622 639 557 670 652 596 604 634 676' 696 616 676 15 Number for sale, end of period1 255 304 358 343 343 346 349 356 356 360 359 363 362 PPrriiccee ((tthhoouussaannddss ooff ddoollllaarrss))22 MMeeddiiaann 1166 UUnniittss ssoolldd 69.3 75.5 80.0 82.0 81.3 80.1 82.5 78.3 82.5 82.<Y 84.5 85.8 81.0 AAvveerraaggee 1177 UUnniittss ssoolldd 83.8 89.9 97.5 96.9 101.3 95.7 101.4 96.3 98.3 96.2' 100.9 105.4 99.4 EXISTING UNITS (1-family) 18 Number sold 1,991 2,719 2,868 2,770 2,730 2,740 2,830 2,870 3,000 2,880 3,030 3,040 3,040 Price of units sold (thousands of dollars)2 19 Median 67.7 69.8 72.3 73.5 71.9 71.9 71.9 72.1 73.8 73.5 74.2 74.5 75.0 20 Average 80.4 82.5 85.9 87.6 85.4 86.2 85.1 85.9 87.7 87.2 88.6 89.7 90.1 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 236,935' 268,730' 312,989' 321,248' 320,957' 318,179' 313,076' 310,062' 341,038' 334,254' 333,723 338,281 343,525 77 Private 186,091' 218,016' 257,802' 265,384' 264,348' 261,963' 257,469' 254,547' 283,688' 276,452' 274,575 279,013 282,563 73 Residential 80,609' 121,309' 145,058' 149,834' 149,366' 144,043' 137,880' 134,296' 155,260' 146,042' 146,195 144,467 146,827 24 Nonresidential, total 105,482' 96,707' 112,744' 115,550' 114,982' 117,920' 119,589' 120,251' 128,428' 130,410' 128,380 134,546 135,736 Buildings ?5 Industrial 17,346 12,863 13,746' 13,962' 14,663' 14,333' 14,645' 14,440' 15,195' 15,815' 14,585 17,155 17,463 ?6 Commercial 37,281 35,787 48,102' 49,084' 50,778' 52,092' 52,541' 54,528' 58,524' 58,922' 59,382 61,292 61,554 ?7 Other 10,507 11,660 12,298' 11,852' 12,052' 11,916' 11,771' 12,15c 11,889' 12,054' 11,245 12,745 13,297 28 Public utilities and other 40,348' 36,397' 38,598' 40,652' 37,489' 39,579' 40,632' 39,133' 42,820' 43,619' 43,168 43,354 43,422 ?9 Public 50,843' 50,715' 55,186' 55,863' 56,609' 56,215' 55,608' 55,514' 57,350' 57,802' 59,148 59,268 60,962 30 Military 2,205 2,544 2,839' 2,864' 3,569' 2,902' 3,107' 2,952' 2,969' 3,036' 3,078 3,038 3,083 31 Highway 13,293' 14,143' 16,295' 16,608' 16,475' 16,210' 16,939' 16,888' 17,759' 18,416' 19,176 19,674 20,239 V Conservation and development 5,029 4,822 4,656' 4,590' 4,851' 4,748' 5,127' 4,654' 4,645' 4,674' 4,727 4,377 5,091 33 Other 30,316' 29,206' 31,396' 31,801' 31,714' 32,355' 30,435' 31,020' 31,977' 31,676' 32,167 32,179 32,549 1. Not at annual rates. NOTE. Census Bureau estimates for all series except (a) mobile homes, which 2. Not seasonally adjusted. are private, domestic shipments as reported by the Manufactured Housing 3. Value of new construction data in recent periods may not be strictly Institute and seasonally adjusted by the Census Bureau, and (b) sales and prices of comparable with data in prior periods because of changes by the Bureau of the existing units, which are published by the National Association of Realtors. All Census in its estimating techniques. For a description of these changes see back and current figures are available from originating agency. Permit authoriza- Construction Reports (C-30-76-5), issued by the Bureau in July 1976. tions are those reported to the Census Bureau from 16,000 jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • September 1985 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 Change from 3 months earlier months earlier (at annual rate) Change from 1 month earlier IIInnndddeeexxx llleeevvveeelll IIIttteeemmm JJJuuunnneee 1984 1985 1985 111999888555 11998844 11998855 (((111999666777 JJuunnee JJuunnee === 111000000)))''' Sept. Dec. Mar. June Feb. Mar. Apr. May June CONSUMER PRICES2 1 All items 4.2 3.7 4.5 3.0 4.1 3.3 .3 .5 .4 .2 .2 322.3 2 Food 3.4 2.4 3.9 3.7 2.6 -.9 .5 .0 -.2 -.1 .1 309.3 3 Energy items .3 1.9 .1 -.7 -.8 9.6 -1.4 1.9 1.8 .3 .2 436.8 4 All items less food and energy 5.1 4.4 5.3 3.5 5.5 3.4 .6 .4 .3 .3 .3 313.4 5 Commodities 4.7 2.5 3.8 .9 6.6 -1.4 .8 .3 .0 -.2 -.2 259.0 6 Services 5.4 5.6 6.2 5.0 5.0 6.4 .4 .4 .4 .7 .5 374.6 PRODUCER PRICES 7 Finished goods 2.1 1.1 .0 1.1 1.0 1.9 .1' .2 .3 .2 .0 294.0 8 Consumer foods 3.7 -.8 4.5 3.3 -2.4 -8.8 .1' -.3' -1.0 -1.1 -.1 268.5 9 Consumer energy -3.3 -3.0 -19.7 5.6 -21.0 32.1 -2.5' -.8' 5.8 3.4 -2.0 741.9 10 Other consumer goods 2.5 2.6 2.5 -.2 6.6 1.8 .4 .6 -.2 .2 .4 251.9 11 Capital equipment 2.5 2.3 2.3 -1.1 6.5 1.6 .8' .4 .0 .0 .4 300.7 12 Intermediate materials3 3.2 .1 -1.1 1.2 -2.5 2.7 -.5 -.1 .3 .3 .0 326.6 13 Excluding energy 3.4 .6 .9 1.5 -1.0 1.2 -.2 -.1 .0 .2 .2 306.0 Crude materials 14 Foods 3.3 -10.1 -1.7 10.6 -24.1 -20.7 -2 .(X -2.5' -3.0 -2.4 -.3 234.0 1 1 6 5 O En th e e rg r y - 9 .4 .3 - - 9 4 . . 2 6 -15.3 .4 -1 -7 0 . . 6 7 - - 1 1 3 2 . . 4 7 3 2. . 4 6 --3..4'V - 1 . . 9 4 ' ' 2. . 1 1 -1 2 .5 .0 -1.5 .2 7 2 5 4 1 7 . . 7 6 1. Not seasonally adjusted. 3. Excludes intermediate materials for food manufacturing and manufactured 2. Figures for consumer prices are those for all urban consumers and reflect a animal feeds. rental equivalence measure of homeownership after 1982. SOURCE. Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A51 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1984 1985 AAccccoouunntt 11998822 11998833 11998844 Q2 Q3 Q4 Q1 Q2 GROSS NATIONAL PRODUCT 1 3,069.3 3,304.8 3,662.8 3,644.7 3,694.6 3,758.7 3,810.6 3,853.5 By source 2 Personal consumption expenditures 1,984.9 2,155.9 2,341.8 2,332.7 2,361.4 2,396.5 22,,444466..55 22,,449966..11 3 245.1 279.8 318.8 320.7 317.2 326.3 334.8 340.7 4 Nondurable goods 757.5 801.7 856.9 858.3 861.4 866.5 877.3 894.7 5 Services 982.2 1,074.4 1,166.1 1,153.7 1,182.8 1,203.8 1,234.4 1,260.7 6 Gross private domestic investment 414.9 471.6 637.8 627.0 662.8 637.8 646.8 638.7 7 Fixed investment 441.0 485.1 579.6 576.4 591.0 601.1 606.1 626.1 8 Nonresidential 349.6 352.9 425.7 420.8 435.7 447.7 450.9 466.5 9 Structures 142.1 129.7 150.4 150.0 151.4 157.9 162.9 171.5 10 Producers' durable equipment 207.5 223.2 275.3 270.7 284.2 289.7 288.0 295.0 11 Residential structures 91.4 132.2 153.9 155.6 155.3 153.5 155.2 159.6 12 Nonfarm 86.6 127.6 148.8 150.5 150.1 148.3 150.0 153.8 13 Change in business inventories -26.1 -13.5 58.2 50.6 71.8 36.6 40.7 12.6 14 Nonfarm -24.0 -3.1 49.6 47.0 63.7 27.2 34.1 8.8 IS Net exports of goods and services 19.0 -8.3 -64.2 -58.7 -90.6 -56.0 -74.5 -91.1 16 Exports 348.4 336.2 364.3 362.4 368.6 367.2 360.7 349.5 17 Imports 329.4 344.4 428.5 421.1 459.3 423.2 435.2 440.7 18 Government purchases of goods and services 650.5 685.5 747.4 743.7 761.0 780.5 791.9 809.8 19 258.9 269.7 295.4 296.4 302.0 315.7 319.9 325.2 20 State and local 391.5 415.8 452.0 447.4 458.9 464.8 472.0 484.6 By major type of product 71 33,,009955..44 3,318.3 33,,660044..66 33,,559944..11 33,,662222..88 33,,772222..11 33,,777700..00 33,,884400..99 7? Goods 1,276.7 1,355.7 1,542.9 1,544.8 1,549.1 1,579.8 1,583.8 1,574.6 73 Durable 499.9 555.3 655.6 647.9 654.7 687.7 677.1 658.3 74 Nondurable 776.9 800.4 887.3 896.9 894.4 892.1 906.7 916.3 ?5 1,510.8 1,639.3 1,763.3 1,742.6 1,783.3 1,813.7 1,857.2 1,891.7 26 281.7 309.8 356.5 357.2 362.1 365.2 369.6 387.3 71 Change in business inventories -26.1 -13.5 58.2 50.6 71.8 36.6 40.7 12.6 78 -18.0 -2.1 30.4 18.2 41.7 26.7 29.0 -3.8 29 Nondurable goods -8.1 -11.3 27.8 32.4 30.1 9.9 11.7 16.4 30 MEMO: Total GNP in 1972 dollars 1,480.0 1,534.7 1,639.3 1,638.8 1,645.2 1,662.4 1,663.5 1,670.7 NATIONAL INCOME 31 2,446.8 2,646.7 2,959.9 2,944.8 2,984.9 3,036.3 3,076.5 n.a. 32 Compensation of employees 1,864.2 1,984.9 2,173.2 2,159.2 2,191.9 2,228.1 2,272.7 2,306.5 33 1,568.7 1,658.8 1,804.1 1,793.3 1,819.1 1,848.2 1,882.8 1,910.2 34 Government and government enterprises 306.6 328.2 349.8 347.5 352.0 357.2 365.5 370.7 35 Other 1,262.2 1,331.1 1,454.2 1,445.8 1,467.1 1,490.9 1,517.3 1,539.5 36 Supplement to wages and salaries 295.5 326.2 369.0 365.9 372.8 380.0 389.8 396.3 37 Employer contributions for social insurance 140.0 153.1 173.5 172.4 174.7 177.5 183.6 186.1 38 Other labor income 155.5 173.1 195.5 193.5 198.1 202.5 206.3 210.2 39 Proprietors' income1 111.1 121.7 154.4 149.8 153.7 159.1 159.8 161.7 40 Business and professional1 89.2 107.9 126.2 126.3 126.4 129.7 134.0 138.5 41 21.8 13.8 28.2 23.4 27.3 29.4 25.7 23.2 42 Rental income of persons2 51.5 58.3 62.5 62.0 63.0 64.1 64.8 67.1 43 Corporate profits' 159.1 225.2 285.7 291.1 282.8 291.6 292.3 n.a. 44 Profits before tax3 165.5 203.2 235.7 246.0 224.8 228.7 222.3 n.a. 45 Inventory valuation adjustment -9.5 -11.2 -5.7 -7.3 -.2 -1.6 .9 ..11 46 Capital consumption adjustment 3.1 33.2 55.7 52.3 58.3 64.5 69.1 7766..44 47 Net interest 260.9 256.6 284.1 282.8 293.5 293.4 287.0 280.0 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • September 1985 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1984 1985 Account 1982 Q2 Q3 Q4 Q1 PERSONAL INCOME AND SAVING 1 Total personal income 2.584.6 2,744.2 3,012.1 2,984.6 3,047.3 3,096.2 3,143.8 2 Wage and salary disbursements 1.568.7 1,659.2 1.804.0 1,793.1 1,819.5 1,847.6 1.882.7 3 Commodity-producing industries 509.3 519.3 569.3 567.0 573.3 580.9 590.9 4 Manufacturing 382.9 395.2 433.9 432.2 436.4 442.4 447.9 5 Distributive industries 378.6 398.6 432.0 429.5 436.4 443.1 449.0 6 Service industries 374.3 413.1 452.9 449.3 457.3 466.9 477.4 7 Government and government enterprises 306.6 328.2 349.8 347.3 352.4 356.7 365.4 8 Other labor income 155.5 173.1 195.5 193.5 198.1 202.5 206.3 9 Proprietors' income1 111.1 121.7 154.4 149.8 153.7 159.1 159.8 10 Business and professional1 89.2 107.9 126.2 126.3 126.4 129.7 134.0 11 Farm1 21.8 13.8 28.2 23.4 27.3 29.4 25.7 12 Rental income of persons2 51.5 58.3 62.5 62.0 63.0 64.1 64.8 13 Dividends 66.5 70.3 77.7 77.2 78.5 80.2 81.4 14 Personal interest income 366.6 376.3 433.7 425.6 449.3 456.1 456.0 15 Transfer payments 376.1 405.0 416.7 415.2 418.6 421.8 439.2 16 Old-age survivors, disability, and health insurance benefits. 204.5 221.6 237.3 235.2 238.2 243.5 249.6 17 LESS: Personal contributions for social insurance 111.4 119.6 132.5 131.8 133.4 135.2 146.4 18 EQUALS: Personal income 2,584.6 2,744.2 3.012.1 2,984.6 3.047.3 3,0%.2 3.143.8 19 LESS: Personal tax and nontax payments 404.1 404.2 435.3 430.3 440.9 451.7 489.0 20 EQUALS: Disposable personal income 2,180.5 2,340.1 2,576.8 2,554.3 2.606.4 2,644.5 2,654.8 21 LESS: Personal outlays 2,044.5 2,222.0 2,420.7 2,409.5 2,442.3 2,481.5 2,536.2 22 EQUALS: Personal saving 136.0 118.1 156.1 144.8 164.1 163.0 118.6 MEMO Per capita (1972 dollars) 23 Gross national product 6,369.7 6,543.4 6,926.1 6.933.2 6,943.2 6,998.3 6,989.0 24 Personal consumption expenditures 4,145.9 4,302.8 4,488.7 4.502.3 4,498.4 4,527.1 4,575.7 25 Disposable personal income 4,555.0 4,670.0 4,939.0 4,930.0 4,965.0 4,996.0 4,965.0 26 Saving rate (percent) 6.2 5.0 6.1 5.7 6.3 6.2 4.5 GROSS SAVING 27 Gross saving. 408.8 437.2 551.8 551.0 556.4 556.0 550.7 28 Gross private saving 524.0 571.7 674.8 660.2 689.4 698.2 662.1 29 Personal saving 136.0 118.1 156. 144.8 164.1 163.0 118.6 30 Undistributed corporate profits1 29.2 76.5 115.4 115.3 118.4 120.8 122.5 31 Corporate inventory valuation adjustment -9.5 -11.2 -5.7 -7.3 -.2 -1.6 .9 Capital consumption allowances 32 Corporate 221.8 231.2 246.2 244.1 248.1 252.8 257.4 33 Noncorporate 137.1 145.9 157.0 156.0 158.8 161.5 163.7 34 Wage accruals less disbursements .0 .0 .0 .0 .0 .0 .0 35 Government surplus, or deficit (-), national income and product accounts -115.3 -134.5 -122.9 -109.2 -133.0 -142.2 -111.4 36 Federal -148.2 -178.6 -175.8 -163.7 -180.6 -197.8 -165.1 37 State and local 32.9 44.1 52.9 54.5 47.6 55.6 53.7 38 Capital grants received by the United States, net .0 .0 .0 .0 .0 .0 39 Gross investment 437.7 544.4 542.0 543.4 546.1 542.6 40 Gross private domestic 414.9 471.6 637.8 627.0 662.8 637.8 646.8 41 Net foreign -6.6 -33.9 -93.4 -85.0 -119.4 -91.6 -104.2 42 Statistical discrepancy. -7.4 -9.0 -13.0 -9.9 -8.1 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A53 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1984 Item credits or debits 1982 1984 Ql Q2 Q3 Q4 Q1P 1 Balance on current account -8,051 -40,790 -101,532 -19,064 -24,493 -32,500 -25,477 -29,997 2 Not seasonally adjusted.. -18,395 -24,654 -35,724 -22,759 -29,079 3 Merchandise trade balance2 ... -36,444 -62,012 -108,281 -25,569 -25,649 -32,507 -24,557 -29,437 4 Merchandise exports 211,198 200,745 220,316 53,753 54,677 55,530 56,355 55,811 5 Merchandise imports -247,642 -262,757 -328,597 -79,322 -80,326 -88,037 -80,912 -85,248 6 Military transactions, net -318 -163 -1,765 -346 -593 -250 -575 -89 7 Investment income, net3 29,493 25,401 19,109 8,234 3,618 3,256 4,003 2,626 8 Other service transactions, net. 7,353 4,837 819 829 363 -123 -253 78 9 Remittances, pensions, and other transfers -2,633 -2,566 -2,891 -732 -710 -669 -782 -857 10 U.S. government grants (excluding military) -5,501 -6,287 -8,522 -1,480 -1,522 -2,207 -3,313 -2,318 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -6,131 -5,006 -5,516 -2,059 -1,353 -1,369 -734 -795 12 Change in U.S. official reserve assets (increase, -) -4,965 -1,196 -3,130 -657 -565 -799 -1,109 -233 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -1,371 -66 -979 -226 -288 -271 -194 -264 15 Reserve position in International Monetary Fund -2,552 -4,434 -995 -200 -321 -331 -143 281 16 Foreign currencies -1,041 3,304 -1,156 -231 44 -197 -772 -250 17 Change in U.S. private assets abroad (increase, -)3. -108,121 -48,842 -11,800 -2,260 -17,070 20,532 -13,003 -2,165 18 Bank-reported claims -111,070 -29,928 -8,504 -1,110 -20,186 17,725 -4,933 -285 19 Nonbank-reported claims 6,626 -6,513 6,266 1,289 1,908 2,099 970 n.a. 20 U.S. purchase of foreign securities, net -8,102 -7,007 -5,059 673 -756 -1,313 -3,663 -2,461 21 U.S. direct investments abroad, net3 4,425 -5,394 -4,503 -3,112 1,964 2,021 -5,377 581 22 Change in foreign official assets in the United States (increase, +) 3,672 5,795 3,424 -2,786 -224 -686 7,119 -11,402 23 U.S. Treasury securities 5,779 6,972 4,690 -275 -274 -575 5,814 -7,227 24 Other U.S. government obligations -694 -476 167 3 146 85 -67 -307 25 Other U.S. government liabilities4 684 552 453 233 555 -139 -197 -532 26 Other U.S. liabilities reported by U.S. banks -1,747 545 663 -2,147 328 430 2,052 -3,219 27 Other foreign official assets5 -350 -1,798 -2,549 -600 -979 -487 -483 -117 28 Change in foreign private assets in the United States (increase, +)3 90,775 78,527 93,895 22,063 41,816 3,825 26,191 27,923 29 U.S. bank-reported liabilities 65,922 49,341 31,674 11,348 20,970 -5,125 4,481 13.011 30 U.S. nonbank-reported liabilities -2,383 -118 4,284 4,520 4,566 -2,939 -1,863 n.a. 31 Foreign private purchases of U.S. Treasury securities, net 7,052 8,721 22,440 1,396 6,485 5,058 9,501 2,677 32 Foreign purchases of other U.S. securities, net 6,392 8,636 12,983 1,494 506 1,603 9,380 9,522 33 Foreign direct investments in the United States, net3 13,792 11,947 22,514 3,305 9,289 5,228 4,692 2,713 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 32,821 11,513 24,660 4,763 1,889 10,997 7,013 16,669 36 Owing to seasonal adjustments -422 -606 -3,170 -4,200 -343 37 Statistical discrepancy in recorded data before seasonal adjustment 32,821 11,513 24,660 5,185 17.012 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -4,965 -1,196 -3,131 -657 -566 -799 -1,110 -233 39 Foreign official assets in the United States (increase, +) 2,988 5,243 2,971 -3,019 -779 -547 7,316 -10,870 40 Change in Organization of Petroleum Exporting Countries official assets in the United States (part of line 22 above) 7,291 -8,283 -4,143 -2,405 -2,097 -453 812 -2,013 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 585 194 190 41 44 45 61 15 1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 4. Primarily associated with military sales contracts and other transactions 38-41. arranged with or through foreign official agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing; military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Includes reinvested earnings. (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • September 1985 3.11 U.S. FOREIGN TRADE Millions of dollars; monthly data are seasonally adjusted. 1984 1985 IItteemm 11998811 11998822 11998833 Nov. Dec. Jan. Feb. Mar. Apr. May 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments 233,677 212,193 200,486 18,395 19,142 19,401 17,853 18,446 17,779 17,414 2 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 261,305 243,952 258,048 27,331 25,933 28,297 27,985 28,129 28,295 28,685 3 Trade balance -27,628 -31,759 -57,562 -8,936 -6,791 -8,896 -10,131 -9,683 -10,516 -11,271 NOTE. The data through 1981 in this table are reported by the Bureau of Census not covered in Census statistics, and (2) the exclusion of military sales (which are data of a free-alongside-ship (f.a.s.) value basis—that is, value at the port of combined with other military transactions and reported separately in the "service export. Beginning in 1981, foreign trade of the U.S. Virgin Islands is included in account" in table 3.10, line 6). On the import side, additions are made for gold, the Census basis trade data; this adjustment has been made for all data shown in ship purchases, imports of electricity from Canada, and other transactions; the table. Beginning with 1982 data, the value of imports are on a customs military payments are excluded and shown separately as indicated above. valuation basis. SOURCE. FT900 "Summary of U.S. Export and Import Merchandise Trade" The Census basis data differ from merchandise trade data shown in table 3.10, (Department of Commerce, Bureau of the Census). U.S. International Transactions Summary, for reasons of coverage and timing. On the export side, the largest adjustments are: (1) the addition of exports to Canada 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1984 1985 TTyyppee 11998811 11998822 11998833 Dec. Jan. Feb. Mar. Apr. May June 1 Total 30,075 33,958 33,747 34,934 34,380 34,272 35,493 35,493 35,782 36,088 2 Gold stock, including Exchange Stabilization Fund1 11,151 11,148 11,121 11,0% 11,095 11,093 11,093 11,091 11,091 11,091 3 Special drawing rights2-3 4,095 5,250 5,025 5,641 5,693 5,781 5,973 5,971 6,163 6,1% 4 Reserve position in International Monetary Fund2 5,055 7,348 11,312 11,541 11,322 11,097 11,386 11,382 11,370 11,394 5 Foreign currencies4 9,774 10,212 6,289 6,656 6,270 6,301 7,041 7,049 7,158 7,408 1. Gold held under earmark at Federal Reserve Banks for foreign and interna- 3. Includes allocations by the International Monetary Fund of SDRs as follows: tional accounts is not included in the gold stock of the United States; see table $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, 3.13. Gold stock is valued at $42.22 per fine troy ounce. 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093 2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based million on Jan. 1, 1981; plus transactions in SDRs. on a weighted average of exchange rates for the currencies of member countries. 4. Valued at current market exchange rates. From July 1974 through December 1980, 16 currencies were used; from January 1981, 5 currencies have been used. The U.S. SDR holdings and reserve position in the IMF also are valued on this basis beginning July 1974. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS Millions of dollars, end of period 1984 1985 AAsssseettss 11998811 11998822 11998833 Dec. Jan. Feb. Mar. Apr. May June 1 Deposits 505 328 190 253 244 331 253 348 204 310 Assets held in custody 2 U.S. Treasury securities1 104,680 112,544 117,670 118,267 117,330 115,179 113,532 115,184 116,989 121,755 3 Earmarked gold2 14,804 14,716 14,414 14,265 14,261 14,260 14,264 14,264 14,265 14,262 1. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S. NOTE. Excludes deposits and U.S. Treasury securities held for international Treasury securities payable in dollars and in foreign currencies. and regional organizations. Earmarked gold is gold held for foreign and interna- 2. Earmarked gold is valued at $42.22 per fine troy ounce. tional accounts and is not included in the gold stock of the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A55 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1 Millions of dollars, end of period 1984 1985 AAsssseett aaccccoouunntt 11998811 11998833 Nov. Dec. Jan. Feb. Mar. Apr. May P All foreign countries 1 Total, all currencies 462,847 469,712 477,090 452,914 452,205 445,041 452,883 462,098 460,428 458,198 ? Claims on United States 63,743 91,805 115,542 112,815 113,435 115,501 119,034' 119,927' 121,376 120,234 Parent bank 43,267 61,666 82,026 77,958 78,151 79,318 84,084' 86,809' 86,472 84,702 4 Other banks in United States2 13,313 13,664 13,686 13,737 13,092 14,199 14,101 5 Nonbanks2 21,544 21,620 22,497 21,213 20,026 20,705 21,431 6 Claims on foreigners 378,954 358,493 342,689 319,431 318,710 309,193 314,247' 321,759' 318,991 317,283 7 Other branches of parent bank 87,821 91,168 96,004 91,313 94,717' 87,351' 89,184' 92,990' 91,329 91,341 8 Banks 150,763 133,752 117,668 103,050 100,328r 99,871' 104,373' 105,258' 104,303 102,249 9 Public borrowers 28,197 24,131 24,517 22,907 22,872 22,441 22,219 22,492 22,844 22,783 10 Nonbank foreigners 112,173 109,442 107,785 102,161 100,793 99,530 98,471 101,019 100,515 100,910 11 Other assets 20,150 19,414 18,859 20,668 20,060 20,347 19,602' 20,412 20,061 20,681 12 Total payable in U.S. dollars 350,735 361,982 371,508 345,511 349,342 343,461 351,7% 354,570' 351,280 349,433 n Claims on United States 62,142 90,085 113,436 110,442 111,468 113,250 116,730' 117,562' 118,786 117,786 1 1 4 5 P O a t r h e e n r t b b a a n n k k s in United States2 42,721 61_,0 10 80,909 7 1 6 3 , , 7 1 6 2 3 1 7 1 7 3 , , 2 5 7 0 1 0 7 1 8 3 , , 3 4 9 9 2 3 8 1 3 3 , , 0 46 7 4 4 ' 8 1 5 2 , , 7 79 2 0 7 ' 8 1 5 3 , , 3 8 3 4 9 4 8 1 5 3 , , 7 7 3 0 3 8 16 Nonbanks2 20,558 20,697 21,365 20,192 19,045 19,603 20,345 17 Claims on foreigners 276,937 259,871 247,406 224,251 227,303 219,768 224,714' 226,966' 222,693 221,738 18 Other branches of parent bank 69,398 73,537 78,431 74,600 78,279' 72,326' 74,248' 77,229' 75,085 75,582 19 Banks 122,110 106,447 93,332 77,096 76,872' 75,756' 79,217' 78,755' 76,874 75,642 20 Public borrowers 22,877 18,413 17,890 17,374 17,160 16,994 16,754 17,001' 16,976 16,999 21 Nonbank foreigners 62,552 61,474 60,977 55,181 54,992 54,692 54,495 53,981 53,758 53,515 22 Other assets 11,656 12,026 10,666 10,818 10,571 10,443 10,352' 10,042 9,801 9,909 United Kingdom 23 Total, all currencies 157,229 161,067 158,732 149,377 144,385 146,130 149,534 150,705 148,711 148,285 24 Claims on United States 11,823 27,354 34,433 29,502 27,731 28,783 31,910 29,675 29,497 29,424 75 Parent bank 7,885 23,017 29,111 23,773 21,918 22,296 25,313 23,250 22,803 22,647 76 Other banks in United States2 -» 1,484 1,429 1,540 1,561 1,511 1,649 1,613 77 Nonbanks2 4,245 4,384 4,947 5,036 4,914 5,045 5,164 28 Claims on foreigners 138,888 127,734 119,280 114,264 111,772 112,284 112,937 115,889 114,122 113,720 29 Other branches of parent bank 41,367 37,000 36,565 37,395 37,897 36,367 35,381 35,857 34,469 34,868 30 Banks 56,315 50,767 43,352 39,262 37,443 39,063 40,961 40,812 41,253 39,910 31 Public borrowers 7,490 6,240 5,898 5,424 5,334 5,345 5,306 5,186 4,959 4,921 32 Nonbank foreigners 33,716 33,727 33,465 32,183 31,098 31,509 31,289 34,034 33,441 34,021 33 Other assets 6,518 5,979 5,019 5,611 4,882 5,063 4,687 5,141 5,092 5,141 34 Total payable in U.S. dollars 115,188 123,740 126,012 114,895 112,809 112,953 116,232 114,122 111,497 111,303 35 Claims on United States 11,246 26,761 33,756 28,610 26,924 27,807 30,945 28,839 28,570 28,504 36 Parent bank 7,721 22,756 28,756 23,378 21,551 21,960 24,911 22,910 22,472 22,354 3 3 7 8 O N t o h n e b r a b n a k n s k 2 s in United States2 1 5,UUU 3 1 , , 7 4 9 3 5 7 4 1 , , 0 3 1 6 0 3 4 1 , , 3 4 5 % 1 4 1 , , 5 4 3 9 6 8 4 1 , , 4 4 6 6 3 6 4 1 , , 5 5 2 7 2 6 4 1 , , 6 4 5 9 9 1 39 Claims on foreigners 99,850 92,228 88,917 82,971 82,889 82,161 82,268 82,437 79,938 79,917 40 Other branches of parent bank 35,439 31,648 31,838 32,669 33,551 31,899 31,099 31,331 29,489 30,148 41 Banks 40,703 36,717 32,188 27,290 26,805 27,465 28,523 27,982 27,808 27,188 47 Public borrowers 5,595 4,329 4,194 4,094 4,030 4,021 3,964 3,804 3,533 3,527 43 Nonbank foreigners 18,113 19,534 20,697 18,918 18,503 18,776 18,682 19,320 19,108 19,054 44 Other assets 4,092 4,751 3,339 3,314 2,996 2,985 3,019 2,846 2,989 2,882 Bahamas and Caymans 45 Total, all currencies 149,108 145,156 152,083 141,610 146,811 141,834 144,665 147,041 145,0% 144,033 46 Claims on United States 46,546 59,403 75,309 75,655 77,296 76,856 76,446 78,886 79,150 78,849 47 Parent bank 31,643 34,653 48,720 48,202 49,449 48,892 50,043 53,937 53,008 51,902 48 Other banks in United States2 1 11,043 11,544 11,326 11,305 10,761 11,647 11,723 49 Nonbanks2 16,410 16,303 16,638 15,098 14,188 14,495 15,224 50 Claims on foreigners 98,057 81,450 72,868 62,024 65,598 61,204 64,408 64,339 62,164 61,604 51 Other branches of parent bank 12,951 18,720 20,626 13,837 17,661' 14,382' 16,235' 15,685' 14,716 15,271 5? Banks 55,151 42,699 36,842 30,529 30,246' 29,230' 30,927' 31,481' 29,887 28,942 53 Public borrowers 10,010 6,413 6,093 6,075 6,089 6,162 6,081 6,349 6,683 6,604 54 Nonbank foreigners 19,945 13,618 12,592 11,583 11,602 11,430 11,165 10,824 10,878 10,787 55 Other assets 4,505 4,303 3,906 3,931 3,917 3,774 3,811 3,816 3,782 3,580 56 Total payable in U.S. dollars 143,743 139,605 145,641 136,211 141,562 137,090 139,543 141,543 139,926 138,724 1. Beginning with June 1984 data, reported claims held by foreign branches 2. Data for assets vis-a-vis other banks in the United States and vis-a-vis have been reduced by an increase in the reporting threshold for "shell" branches nonbanks are combined for dates before June 1984. from $50 million to $150 million equivalent in total assets, the threshold now applicable to all reporting branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • September 1985 3.14 Continued 1984 1985 Nov. Dec. Jan. Feb. Mar. Apr. MayP All foreign countries 57 Total, all currencies 462,847 469,712 477,090 452,914 452,205 445,041 452,883 462,098 460,428 458,198 58 Negotiable CDs3 n.a. n.a. n.a. 37,915 37,725 38,804 41,798 40,889 38,940 37,188 59 To United States 137,767 179,015 188,070 138,498 146,955 143,680 140,914 145,%9' 144,%5 145,278 60 Parent bank 56,344 75,621 81,261 70,284 78,111 75,230 72,338 76,038' 75,844 77,869 61 Other banks in United States 19,197 33,405 29,453 18,679 18,409 18,125 17,831 18,021' 18,841 18,782 62 Nonbanks 62,226 69,989 77,356 49,535 50,435 50,325 50,745 51,910 50,280 48,627 63 To foreigners 305,630 270,853 269,685 254,099' 247,122' 241,595' 249,675' 253,635' 254,953 253,653 64 Other branches of parent bank 86,396 90,191 90,615 90,681 93,206 87,722 89,872 93,978' 91,856 91,332 65 Banks 124,906 96,860 92,889 86,822 78,203 79,291 84,013 82,611 83,607 81,557 66 Official institutions 25,997 19,614 18,896 20,883 20,281 19,484 19,356 20,831 21,854 21,657 67 Nonbank foreigners 68,331 64,188 68,845 55,713' 55,432' 55,098' 56,434' 56,215' 57,636 59,107 68 Other liabilities 19,450 19,844 19,335 22,402' 20,403' 20, %2' 20,496' 21,605' 21,570 22,079 69 Total payable in U.S. dollars 364,447 379,270 388,291 361,875 365,859 357,853 366,054 369,049 365,257 363,416 70 Negotiable CDs3 n.a. n.a. n.a. 35,608 35,227 36,295 39,544 38,197 35,958 34,216 71 To United States 134,700 175,528 184,305 134,303 142,943 139,811 137,154 141,614' 140,288 140,549 72 Parent bank 54,492 73,295 79,035 67,761 75,626 72,892 70,084 73,597' 73,229 75,233 73 Other banks in United States 18,883 33,040 28,936 18,128 17,935 17,587 17,302 17,472' 18,270 18,209 74 Nonbanks 61,325 69,193 76,334 48,414 49,382 49,332 49,768 50,545 48,789 47,107 75 To foreigners 217,602 192,510 194,139 180,841 177,638 171,479 178,745 179,007' 178,787 178,815 76 Other branches of parent bank 69,299 72,921 73,522 74,552 77,222 72,648 74,926 78,441' 76,024 75,595 77 Banks 79,594 57,463 57,022 50,509 45,131 44,948 48,734 44,812 45,167 44,433 78 Official institutions 20,288 15,055 13,855 16,068 15,773 14,861 14,653 16,049 17,178 17,237 79 Nonbank foreigners 48,421 47,071 51,260 39,712 39,512 39,022 40,432 39,705 40,418 41,550 80 Other liabilities 12,145 11,232 9,847 11,123 10,051 10,268 10,611 10,231 10,224 9,836 United Kingdom 81 Total, all currencies 157,229 161,067 158,732 149,377 144,385 146,130 149,534 150,705 148,711 148,285 82 Negotiable CDs3 n.a. n.a. n.a. 34,269 34,413 35,455 38,281 37,350 35,326 33,661 83 To United States 38,022 53,954 55,799 25,338 25,250 27,757 23,439 23,982 23,920 24,909 84 Parent bank 5,444 13,091 14,021 15,060 14,651 16,714 13,763 14,509 13,%9 14,159 85 Other banks in United States 7,502 12,205 11,328 3,074 3,125 3,569 2,948 2,918 2,665 2,735 86 Nonbanks 25,076 28,658 30,450 7,204 7,474 7,474 6,728 6,555 7,286 8,015 87 To foreigners 112,255 99,567 95,847 81,217 77,424 75,039 80,418 80,722 80,977 80,940 88 Other branches of parent bank 16,545 18,361 19,038 20,846 21,631 20,199 22,146 23,699 21,951 21,908 89 Banks 51,336 44,020 41,624 34,739 30,436 31,216 33,789 32,003 32,259 31,593 90 Official institutions 16,517 11,504 10,151 10,505 10,154 9,084 9,374 10,305 11,590 11,090 91 Nonbank foreigners 27,857 25,682 25,034 15,127 15,203 14,540 15,141' 14,715 1155,,117777 16,349 92 Other liabilities 6,952 7,546 7,086 8,553 7,298 7,879 7,364 8,651 88,,448888 8,775 93 Total payable in U.S. dollars 120,277 130,261 131,167 119,287 117,497 117,198 120,623 117,984 116,128 115,740 94 Negotiable CDs3 n.a. n.a. n.a. 33,168 33,070 34,084 37,033 35,719 33,763 32,140 95 To United States 37,332 53,029 54,691 24,024 24,105 26,587 22,386 22,481 22,219 23,244 % Parent bank 5,350 12,814 13,839 14,688 14,339 16,349 13,506 14,129 13,507 13,755 97 Other banks in United States 7,249 12,026 11,044 2,862 2,980 3,420 2,804 2,748 2,500 2,550 98 Nonbanks 24,733 28,189 29,808 6,474 6,786 6,818 6,076 5,604 6,212 6,939 99 To foreigners 79,034 73,477 73,279 58,163 56,923 52,954 57,654 56,327 56,535 56,849 100 Other branches of parent bank 12,048 14,300 15,403 17,562 18,294 16,940 18,772 20,127 18,513 18,494 101 Banks 32,298 28,810 29,320 20,262 18,356 17,889 20,022 17,191 17,497 17,437 102 Official institutions 13,612 9,668 8,279 9,072 8,871 7,748 7,854 8,734 9,989 9,517 103 Nonbank foreigners 21,076 20,699 20,277 11,267 11,402 10,377 11,006 10,275 10,536 11,401 104 Other liabilities 3,911 3,755 3,197 3,932 3,399 3,573 3,550 3,457 3,611 3,507 Bahamas and Caymans 105 Total, all currencies 149,108 145,156 152,083 141,610 146,811 141,834 144,665 147,041 145,0% 144,033 106 Negotiable CDs3 n.a. n.a. n.a. 898 615 734 953 779 634 436 107 To United States 85,759 104,425 111,299 95,975 102,955 98,466 99,200 103,0% 100,480 99,370 108 Parent bank 39,451 47,081 50,980 40,517 47,162 43,783 43,358 45,441 43,750 45,557 109 Other banks in United States 10,474 18,466 16,057 14,187 13,938 13,320 13,590 13,959 15,112 14,545 110 Nonbanks 35,834 38,878 44,262 41,271 41,855 41,363 42,252 43,696 41,618 39,268 111 To foreigners 60,012 38,274 38,445 41,764 40,320 39,785 41,529 40,308 41,102 41,437 112 Other branches of parent bank 20,641 15,7% 14,936 16,455 16,782 16,014 17,111 16,744 17,179 17,759 113 Banks 23,202 10,166 11,876 13,993 12,405 12,274 12,976 12,503 13,469 12,879 114 Official institutions 3,498 1,967 1,919 2,376 2,054 2,020 1,992 1,884 1,598 2,194 115 Nonbank foreigners 12,671 10,345 11,274 8,940 9,079 9,477 9,450 9,177 8,856 8,605 116 Other liabilities 3,337 2,457 2,339 2,973 2,921 2,849 2,983 2,858 2,880 2,790 117 Total payable in U.S. dollars 145,284 141,908 148,278 137,874 143,590 138,200 140,973 143,223 140,945 139,909 3. Before June 1984, liabilities on negotiable CDs were included in liabilities to the United States or liabilities to foreigners, according to the address of the initial purchaser. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A57 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1984 1985 IItteemm 11998822 11998833 Nov. Dec. Jan. Feb. Mar/ Apr. May'' 1 Total1 172,718 177,950 178,468 180,640 176,828 173,334 169,816 170,555 173,314 By type 2 Liabilities reported by banks in the United States2 24,989 25,534 25,986 26,197 23,310 23,420 22,991 22,711 22,940 3 U.S. Treasury bills and certificates3 46,658 54,341 59,570 59,976 56,662 52,474 54,685 57,226 56,691 U.S. Treasury bonds and notes 4 Marketable 67,733 68,514 67,076 68,995 71,522 72,846 67,601 67,003 70,310 5 Nonmarketable4 8,750 7,250 5,800 5,800 5,800 5,300 5,300 4,900 4,500 6 U.S. securities other than U.S. Treasury securities5 24,588 22,311 20,036 19,672 19,534 19,294 19,239 18,715 18,873 By area 7 Western Europe1 61,298 67,645 70,510 69,756 68,260 67,354 63,746 65,650 67,799 8 Canada 2,070 2,438 1,466 1,528 1,491 1,136 1,715 1,403 1,558 9 Latin America and Caribbean 6,057 6,248 8,904 8,645 7,450 7,278 7,518 7,528 7,897 10 Asia 96,034 92,572 90,115 93,951 93,044 91,030 90,721 89,968 90,142 11 Africa 1,350 958 1,423 1,290 1,120 1,397 1,200 1,403 1,262 12 Other countries6 5,909 8,089 6,050 5,470 5,463 5,139 4,916 4,603 4,656 1. Includes the Bank for International Settlements. 5. Debt securities of U.S. government corporations and federally sponsored 2. Principally demand deposits, time deposits, bankers acceptances, commer- agencies, and U.S. corporate stocks and bonds. cial paper, negotiable time certificates of deposit, and borrowings under repur- 6. Includes countries in Oceania and Eastern Europe. chase agreements. NOTE. Based on Treasury Department data and on data reported to the 3. Includes nonmarketable certificates of indebtedness (including those pay- Treasury Department by banks (including Federal Reserve Banks) and securities able in foreign currencies through 1974) and Treasury bills issued to official dealers in the United States. institutions of foreign countries. 4. Excludes notes issued to foreign official nonreserve agencies. Includes bonds and notes payable in foreign currencies. 3.16 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in Foreign Currencies Millions of dollars, end of period 1984 1985 IItteemm 11998811 11998822 11998833 June Sept. Dec. Mar. 1 Banks'own liabilities 3,523 4,844 5,219 6,459 6,227 7,501 8,012 2 Banks' own claims 4,980 7,707 7,231 9,687 9,334 10,956 12,639 3 Deposits 3,398 4,251 2,731 4,284 3,685 4,119 6,148 4 Other claims 1,582 3,456 4,501 5,404 5,649 6,837 6,491 5 Claims of banks' domestic customers1 971 676 1,059 227 281 569 440 1. Assets owned by customers of the reporting bank located in the United NOTE. Data on claims exclude foreign currencies held by U.S. monetary States that represent claims on foreigners held by reporting banks for the accounts authorities, of their domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • September 1985 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States Payable in U.S. dollars Millions of dollars, end of period 1984 1985 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998811AA 11998822 11998833 Nov. Dec. Jan. Feb. Mar. Apr. Mayf 1 All foreigners 243,889 307,056 369,607 399,681 406,381 398,987 405,198 413,225' 410,701 410,940 2 Banks' own liabilities 163,817 227,089 279,087 297,857 306,758 301,398 311,627 317,097' 312,743 315,250 3 Demand deposits 19,631 15,889 17,470 18,351 19,542 17,975 19,369 18,131' 18,294 17,680 4 Time deposits1 29,039 68,797 90,632 112,218 110,235 114,145 117,065 119,228' 117,761 120,666 Other2 17,647 23,184 25,874 23,684 26,332 23,542 24,991 25,127' 24,228 25,597 6 Own foreign offices3 97,500 119,219 145,111 143,604 150,650 145,736 150,202 154,611' 152,460 151,307 7 Banks' custody liabilities4 80,072 79,967 90,520 101,824 100,074 97,588 93,572 96,128 97,958 95,690 8 U.S. Treasury bills and certificates5 55,315 55,628 68,669 76,531 75,838 73,635 69,189 71,552 73,077 71,597 9 Other negotiable and readily transferable instruments6 18,788 20,636 17,467 19,703 18,775 18,141 18,068 18,099 18,338 17,530 10 Other 5,970 3,702 4,385 5,590 5,460 5,812 6,315 6,477 6,543 6,563 11 Nonmonetary international and regional organizations7 2,721 4,922 5,957 5,852 4,083 6,929 5,812 5,905 6,112 6,694 12 Banks' own liabilities 638 1,909 4,632 2,779 1,644 3,571 2,092 2,333 3,083 4,389 13 Demand deposits 262 106 297 354 263 417 341 191 167 264 14 Time deposits1 58 1,664 3,584 2,114 1,093 2,682 936 1,488 2,276 3,747 15 Other2 318 139 750 311 288 472 815 654 640 377 16 Banks' custody liabilities4 2,083 3,013 1,325 3,073 2,440 3,358 3,719 3,572 3,029 2,305 17 U.S. Treasury bills and certificates 541 1,621 463 1,448 916 1,921 2,258 2,082 1,434 775 18 Other negotiable and readily transferable instruments6 1,542 1,392 862 1,604 1,524 1,429 1,461 1,490 1,593 1,531 19 Other 0 0 0 21 0 8 1 0 2 0 20 Official institutions8 79,126 71,647 79,876 85,556 86,173 79,972 75,894 77,675' 79,937 79,631 21 Banks' own liabilities 17,109 16,640 19,427 18,790 19,065 16,970 17,249 16,777' 16,571 17,439 22 Demand deposits 2,564 1,899 1,837 2,133 1,823 1,780 1,881 1,923 1,975 1,596 23 Time deposits1 4,230 5,528 7,318 9,457 9,391 8,371 8,673 8,469' 9,126 8,564 24 Other2 10,315 9,212 10,272 7,201 7,852 6,818 6,694 6,385' 5,471 7,279 25 Banks' custody liabilities4 62,018 55,008 60,448 66,766 67,108 63,002 58,645 60,898 63,366 62,192 26 U.S. Treasury bills and certificates5 52,389 46,658 54,341 59,570 59,976 56,662 52,474 54,685 57,226 56,691 27 Other negotiable and readily transferable instruments6 9,581 8,321 6,082 7,010 7,038 6,277 6,086 6,109 6,007 5,291 28 Other 47 28 25 186 94 63 85 105 133 210 29 Banks9 136,008 185,881 226,887 239,806 248,360 241,515 250,039 257,565' 252,944 251,723 30 Banks' own liabilities 124,312 169,449 205,347 214,240 225,512 218,980 227,703 235,132' 230,511 229,806 31 Unaffiliated foreign banks 26,812 50,230 60,236 72,635 74,862 73,244 77,501 80,521' 78,052 78,499 32 Demand deposits 11,614 8,675 8,759 9,430 10,526 9,030 9,656 9,154' 9,266 8,722 33 Time deposits1 8,720 28,386 37,439 47,717 47,059 48,612 50,982 54,222' 51,613 52,770 34 Other2 6,477 13,169 14,038 15,488 17,278 15,602 16,862 17,144' 17,173 17,007 35 Own foreign offices3 97,500 119,219 145,111 143,604 150,650 145,736 150,202 154,611' 152,460 151,307 36 Banks' custody liabilities4 11,696 16,432 21,540 23,566 22,848 22,535 22,336 22,433 22,432 21,917 37 U.S. Treasury bills and certificates 1,685 5,809 10,178 11,409 10,927 10,933 10,493 10,602 10,446 10,216 38 Other negotiable and readily transferable instruments6 4,400 7,857 7,485 7,360 7,156 6,487 6,254 6,206 6,235 6,095 39 Other 5,611 2,766 3,877 4,797 4,766 5,114 5,589 5,625 5,751 5,606 40 Other foreigners 26,035 44,606 56,887 68,467 68,215 70,571 73,454 72,079' 71,708 72,891 41 Banks' own liabilities 21,759 39,092 49,680 60,048 60,537 61,877 62,855' 62,577 63,616 42 Demand deposits 5,191 5,209 6,577 6,433 6,930 6,747 7,491 6,863' 6,887 7,098 43 Time deposits 16,030 33,219 42,290 52,930 52,693 54,481 56,473 55,049' 54,746 55,585 44 Other2 537 664 813 685 914 650 619 943' 945 934 45 Banks' custody liabilities4 4,276 5,514 7,207 8,419 7,678 8,693 8,871 9,224 9,131 9,275 46 U.S. Treasury bills and certificates 699 1,540 3,686 4,103 4,020 4,118 3,964 4,182 3,971 3,915 47 Other negotiable and readily transferable instruments6 3,265 3,065 3,038 3,730 3,058 3,948 4,267 4,294 4,503 4,613 48 Other 312 908 483 586 601 628 640 748 657 746 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 10,747 14,307 10,346 10,437 10,476 9,287 9,169 9,412 9,145 9,081 A Liabilities and claims of banks in the United States were increased, 4. Financial claims on residents of the United States, other than long-term beginning in December 1981, by the shift from foreign branches to international securities, held by or through reporting banks. banking facilities in the United States of liabilities to, and claims on, foreign 5. Includes nonmarketable certificates of indebtedness and Treasury bills residents. issued to official institutions of foreign countries. 1. Excludes negotiable time certificates of deposit, which are included in 6. Principally bankers acceptances, commercial paper, and negotiable time "Other negotiable and readily transferable instruments." certificates of deposit. 2. Includes borrowing under repurchase agreements. 7. Principally the International Bank for Reconstruction and Development, and 3. U.S. banks: includes amounts due to own foreign branches and foreign the Inter-American and Asian Development Banks. subsidiaries consolidated in "Consolidated Report of Condition" filed with bank 8. Foreign central banks and foreign central governments, and the Bank for regulatory agencies. Agencies, branches, and majority-owned subsidiaries of International Settlements. foreign banks: principally amounts due to head oflice or parent foreign bank, and 9. Excludes central banks, which are included in "Official institutions." foreign branches, agencies or wholly owned subsidiaries of head office or parent foreign bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.17 Continued 1984 1985 AArreeaa aanndd ccoouunnttrryy 11998811AA 11998822 11998833 Nov. Dec. Jan. Feb. Mar. Apr. MayP 1 Total 243,889 307,056 369,607 399,681 406,831 398,987 405,198 413,225r 410,701 410,940 2 Foreign countries 241,168 302,134 363,649 393,829 402,748 392,057 399,387 407,320' 404,589 404,246 3 Europe 91,275 117,756 138,072 150,659 152,395 149,264 152,221 151,660' 149,218 151,001 4 Austria 596 519 585 627 615 734 625 670 537 627 5 Belgium-Luxembourg 4,117 2,517 2,709 3,613 4,114 4,000 4,638 4,797 4,795 4,619 6 Denmark 333 509 466 434 438 452 530 452 557 494 7 Finland 296 748 531 487 418 425 735 804 476 604 8 France 8,486 8,171 9,441 11,935 12,701 11,908 12,430 12,782' 13,627 14,179 9 Germany 7,645 5,351 3,599 3,425 3,353 3,586 3,258 2,923' 3,539 3,727 10 Greece 463 537 520 602 699 615 583 730 649 586 11 Italy 7,267 5,626 8,462 11,056 10,757 9,477 9,108 8,412 7,895 8,464 12 Netherlands 2,823 3,362 4,290 5,077 4,799 4,663 4,622 4,934 4,448 4,550 13 Norway 1,457 1,567 1,673 1,693 1,548 1,712 1,635 1,889 2,138 1,995 14 Portugal 354 388 373 552 597 570 614 715 698 665 15 Spain 916 1,405 1,603 1,873 2,082 2,016 1,887 2,079' 2,000 2,030 16 Sweden 1,545 1,390 1,799 1,839 1,676 2,133 1,486 1,667 1,901 1,689 17 Switzerland 18,716 29,066 32,246 31,494 31,054 31,397 31,580 30,421' 30,059 29,742 18 Turkey 518 296 467 457 584 495 501 527 506 384 19 United Kingdom 28,286 48,172 60,683 67,964 68,553 68,039 70,269 70,289' 68,350 69,708 20 Yugoslavia 375 499 562 565 602 545 602 671 648 585 21 Other Western Europe1 6,541 7,006 7,403 6,429 7,184 5,855 6,628 6,286' 5,790 5,828 22 U.S.S.R 49 50 65 54 79 66 60 94 125 67 23 Other Eastern Europe2 493 576 596 481 542 575 431 517 480 461 24 Canada 10,250 12,232 16,026 16,549 16,048 16,233 18,263 17,228' 17,006 16,214 25 Latin America and Caribbean 85,223 114,163 140,088 149,794 153,985 151,229 154,787 157,708' 156,766 157,050 26 Argentina 2,445 3,578 4,038 4,558 4,424 4,523 4,354 4,551' 4,664 4,912 27 Bahamas 34,856 44,744 55,818 55,470 56,955 55,398 56,928 59,60c 59,069 58,195 28 Bermuda 765 1,572 2,266 3,222 2,370 2,706 3,410 2,799' 3,159 3,192 29 Brazil 1,568 2,014 3,168 4,997 5,332 4,920 6,143 4,656' 4,743 5,376 30 British West Indies 17,794 26,381 34,545 34,385 36,949 35,269 35,157 36,593' 35,765 35,483 31 Chile 664 1,626 1,842 2,063 2,001 1,948 1,916 1,897' 1,909 1,922 32 Colombia 2,993 2,594 1,689 2,057 2,514 2,356 2,453 2,540' 2,401 2,452 33 Cuba 9 9 8 8 10 26 8 6' 6 7 34 Ecuador 434 455 1,047 1,029 1,092 912 981 1,024' 1,022 987 35 Guatemala 479 670 788 884 896 920 915 950 955 979 36 Jamaica 87 126 109 110 183 157 182 163 154 146 37 Mexico 7,235 8,377 10,392 13,422 12,695 13,298 13,000 13,240' 13,165 13,658 38 Netherlands Antilles 3,182 3,597 3,879 4,180 4,153 4,346 4,662 4,576 4,383 4,439 39 Panama 4,857 4,805 5,924 6,847 6,928 6,873 7,149 7,488 7,584 7,554 40 Peru 694 1,147 1,166 1,209 1,247 1,151 1,064 1,132 1,077 1,162 41 Uruguay 367 759 1,244 1,309 1,394 1,485 1,413 1,443 1,461 1,492 42 Venezuela 4,245 8,417 8,632 10,013 10,545 10,667 10,740 10,649' 10,791 10,696 43 Other Latin America and Caribbean 2,548 3,291 3,535 4,030 4,297 4,275 4,311 4,401 4,458 4,3% 44 Asia 49,822 48,716 58,570 66,952 71,139 66,536 64,981 72,095' 73,205 71,543 China 45 Mainland 158 203 249 844 1,153 1,075 1,068 980 912 698 46 Taiwan 2,082 2,761 4,051 5,142 4,975 5,098 5,187 5,306 5,242 5,381 47 Hong Kong 3,950 4,465 6,657 6,535 7,240 6,558 6,648 6,937 7,091 7,360 48 India 385 433 464 606 507 554 725 738 554 546 49 Indonesia 640 857 997 893 1,033 1,136 914 1,052 1,104 1,031 50 Israel 592 606 1,722 1,023 1,268 1,003 994 941 873 990 51 Japan 20,750 16,078 18,079 20,750 20,929 21,662 22,551 24,540' 22,755 22,754 57, Korea 2,013 1,692 1,648 1,609 1,691 1,560 1,584 1,526 1,595 1,598 53 Philippines 874 770 1,234 1,252 1,396 1,327 1,113 1,102 1,223 1,305 54 Thailand 534 629 747 1,458 1,257 1,161 1,050 1,384' 1,141 1,167 55 Middle-East oil-exporting countries3 12,992 13,433 12,976 13,399 16,804 15,965 15,202 16,391 16,273 16,316 56 Other Asia 4,853 6,789 9,748 13,442 12,886 9,437 7,945 11,200' 14,441 12,396 57 Africa 3,180 3,124 2,827 3,599 3,506 3,170 3,561 3,476 3,517 3,429 58 Egypt 360 432 671 739 757 541 637 715 747 618 59 Morocco 32 81 84 117 118 115 116 167 155 189 60 South Africa 420 292 449 460 328 376 371 244 339 273 61 Zaire 26 23 87 163 153 76 79 100 128 124 62 Oil-exporting countries4 1,395 1,280 620 1,141 1,189 1,186 1,450 1,346 1,177 1,114 63 Other Africa 946 1,016 917 978 961 876 910 903 969 1,112 64 Other countries 1,419 6,143 8,067 6,277 5,674 5,624 5,574 5,152 4,877 5,009 65 Australia 1,223 5,904 7,857 5,598 5,290 5,248 5,017 4,743' 4,456 4,608 66 All other 196 239 210 679 384 377 557 409 422 401 67 Nonmonetary international and regional organizations 2,721 4,922 5,957 5,852 4,083 6,929 5,812 5,905 6,112 6,694 68 International 1,661 4,049 5,273 5,055 3,376 6,165 4,935 5,132 5,247 5,636 69 Latin American regional 710 517 419 593 587 600 580 632 706 834 70 Other regional5 350 357 265 204 120 165 296 141 159 224 • Liabilities and claims of banks in the United States were increased, beginning 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and in December 1981, by the shift from foreign branches to international banking United Arab Emirates (Trucial States). facilities in the United States of liabilities to, and claims on, foreign residents. 4. Comprises Algeria, Gabon, Libya, and Nigeria. 1. Includes the Bank for International Settlements. Beginning April 1978, also 5. Asian, African, Middle Eastern, and European regional organizations, includes Eastern European countries not listed in line 23. except the Bank for International Settlements, which is included in "Other 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German Western Europe." Democratic Republic, Hungary, Poland, and Romania. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • September 1985 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1984 1985 AArreeaa aanndd ccoouunnttrryy 11998811AA 11998822 11998833 Nov. Dec. Jan. Feb. Mar. Apr. May 1 Total 251,589 355,705 391,312 384,634 398,722 386,911 393,182 3%,898' 389,647 390,440 2 Foreign countries 251,533 355,636 391,148 384,072 398,048 385,986 392,882 3%,658' 389,567 390,342 3 Europe 49,262 85,584 91,927 97,930 97,%2 %,044 97,995 101,759' 99,500 100,004 4 Austria 121 229 401 532 433 339 367 484 519 552 5 Belgium-Luxembourg 2,849 5,138 5,639 4,988 4,794 4,683 5,097 5,233 5,161 5,264 b Denmark 187 554 1,275 520 648 589 589 638 601 560 7 Finland 546 990 1,044 1,098 898 817 907 826 804 700 8 France 4,127 7,251 8,766 9,299 9,085 8,617 9,602 10,042' 10,273 10,462 9 Germany 940 1,876 1,284 1,261 1,305 1,001 945 1,072 1,008 1,018 10 Greece 333 452 476 819 817 896 840 848' 907 921 11 Italy 5,240 7,560 9,018 8,854 9,079 8,040 8,481 8,711' 8,256 7,798 12 Netherlands 682 1,425 1,267 1,229 1,351 1,480 1,490 1,348' 1,401 1,040 13 Norway 384 572 690 602 675 651 808 621' 748 753 14 Portugal 529 950 1,114 1,262 1,243 1,212 1,286 1,186' 1,151 1,158 15 Spain 2,095 3,744 3,573 3,017 2,884 2,858 3,135 2,978' 2,890 2,587 16 Sweden 1,205 3,038 3,358 2,313 2,220 2,497 2,586 2,342 2,338 2,177 17 Switzerland 2,213 1,639 1,863 2,275 2,201 2,308 2,110 1,921' 1,853 1,631 18 Turkey 424 560 812 1,097 1,130 1,232 1,155 1,172 1,147 1,162 19 United Kingdom 23,849 45,781 47,364 54,637 55,184 54,843 54,648 58,381' 56,264 57,820 20 Yugoslavia 1,225 1,430 1,718 1,866 1,886 1,862 1,783 1,793 1,892 1,940 21 Other Western Europe1 211 368 477 625 5% 671 679 642 640 760 22 U.S.S.R 377 263 192 169 142 118 178 203' 245 312 23 Other Eastern Europe2 1,725 1,762 1,598 1,467 1,391 1,329 1,308 1,317 1,402 1,390 24 Canada 9,193 13,678 16,341 15,778 16,057 16,343 19,082 18,766' 18,155 17,883 25 Latin America and Caribbean 138,347 187,969 205,491 199,058 207,577 199,378 200,730 202,808' 198,827 201,320 26 Argentina 7,527 10,974 11,749 10,983 11,043 11,453 11,280 11,162' 11,163 11,346 27 Bahamas 43,542 56,649 59,633 54,084 58,027 54,369 54,548 57,608' 55,526 56,843 28 Bermuda 346 603 566 635 592 5% 448 464' 633 776 29 Brazil 16,926 23,271 24,667 26,275 26,307 25,886 26,146 26,124' 26,207 26,477 30 British West Indies 21,981 29,101 35,527 33,727 38,105 35,358 36,806 36,299' 35,377 35,873 31 Chile 3,690 5,513 6,072 6,703 6,839 6,746 6,713 6,775 6,676 6,634 32 Colombia 2,018 3,211 3,745 3,406 3,499 3,369 33,,440066 3,313' 3,246 3,270 33 Cuba 3 3 0 0 0 0 11 0 0 0 34 Ecuador 1,531 2,062 2,307 2,431 2,420 2,477 2,489 2,470 2,467 2,487 35 Guatemala3 124 124 129 148 158 154 157 154 154 149 36 Jamaica3 62 181 215 222 252 242 253 233 223 237 37 Mexico 22,439 29,552 34,802 35,288 34,697 34,021 33,655 33,410 32,473 32,747 38 Netherlands Antilles 1,076 839 1,154 1,337 1,350 1,273 1,393 1,254 1,319 1,386 39 Panama 6,794 10,210 7,848 7,360 7,707 6,864 7,071 7,083 7,039 6,751 40 Peru 1,218 2,357 2,536 2,358 2,384 2,414 2,337 2,345 2,353 2,310 41 Uruguay 157 686 977 990 1,088 1,053 1,021 1,019 1,014 1,013 42 Venezuela 7,069 10,643 11,287 10,994 11,017 10,968 10,929 10,956' 10,804 10,947 43 Other Latin America and Caribbean 1,844 1,991 2,277 2,118 2,091 2,135 2,077 2,139' 2,154 2,072 44 49,851 60,952 67,837 61,398 6666,,338800 6644,,338877 6655,,335511 6633,,559955'' 6633,,338833 6611,,773399 China 45 Mainland 107 214 292 543 710 507 741 65C 572 545 46 Taiwan 2,461 2,288 1,908 1,679 1,849 1,745 1,827 1,954' 1,976 1,639 47 Hong Kong 4,132 6,787 8,489 6,945 7,368 6,801 7,351 6,639 6,844 7,290 48 India 123 222 330 381 425 299 354 284 307 270 49 Indonesia 352 348 805 797 734 710 780 780 704 701 50 Israel 1,567 2,029 1,832 1,938 2,088 1,993 2,041 1,941 2,004 2,038 51 Japan 26,797 28,379 30,354 26,421 29,059 28,495 29,092 28,008' 26,591 25,477 52 Korea 7,340 9,387 9,943 8,8% 9,285 8,799 8,813 9,298' 9,406 9,120 53 Philippines 1,819 2,625 2,107 2,487 2,550 2,499 2,560 2,435 2,360 2,384 54 Thailand 565 643 1,219 1,112 1,125 1,123 1,076 1,005 939 852 55 Middle East oil-exporting countries4 1,581 3,087 4,954 4,687 5,054 5,004 4,856 4,708 5,509 5,546 56 Other Asia 3,009 4,943 5,603 5,512 6,133 6,411 5,860 5,895 6,171 5,878 57 Africa 3,503 5,346 6,654 6,719 6,615 6,536 6,376 6,221 6,299 6,203 58 Egypt 238 322 747 693 728 668 584 674 629 612 59 Morocco 284 353 440 536 583 552 582 584 595 577 60 South Africa 1,011 2,012 2,634 2,960 2,795 2,791 2,666 2,420 2,508 2,497 61 Zaire 112 57 33 19 18 41 29 24 24 24 62 Oil-exporting countries5 657 801 1,073 911 842 812 791 8^ 893 871 63 Other 1,201 1,802 1,727 1,600 1,649 1,672 1,724 1,700' 1,651 1,621 64 Other countries 1,376 2,107 2,898 3,189 3,456 3,297 3,348 3.51C 3,403 3,192 65 Australia 1,203 1,713 2,256 2,487 2,778 2,593 2,635 2,824 2,755 2,533 66 All other 172 394 642 702 678 704 713 686' 648 658 67 Nonmonetary international and regional organizations6 56 68 164 562 674 925 300 240 80 98 • Liabilities and claims of banks in the United States were increased, 3. Included in "Other Latin America and Caribbean" through March 1978. beginning in December 1981, by the shift from foreign branches to international 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and banking facilities in the United States of liabilities to, and claims on, foreign United Arab Emirates (Trucial States). residents. 5. Comprises Algeria, Gabon, Libya, and Nigeria. 1. Includes the Bank for International Settlements. Beginning April 1978, also 6. Excludes the Bank for International Settlements, which is included in includes Eastern European countries not listed in line 23. "Other Western Europe." 2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German NOTE. Data for period before April 1978 include claims of banks' domestic Democratic Republic, Hungary, Poland, and Romania. customers on foreigners. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A61 3.19 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 1984 1985 TTyyppee ooff ccllaaiimm 11998811AA 11998822 11998833 Nov. Dec. Jan. Feb. Mar/ Apr. MayP 1 Total 222222288888887777777,,,,,,,555555555555557777777 333333399999996666666,,,,,,,000000011111115555555 444444422222226666666,,,,,,,222222211111115555555 444444433333331111111,,,,,,,666666633333339999999 444444433333330000000,,,,,,,555555544444444444444 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 222222255555551111111,,,,,,,555555588888889999999 333333355555555555555,,,,,,,777777700000005555555 333333399999991111111,,,,,,,333333311111112222222 384,634 333333399999998888888,,,,,,,777777722222222222222 386,911 393,182 3333333%%%%%%%,,,,,,,888888899999998888888 389,647 390,440 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 33333331111111,,,,,,,222222266666660000000 44444445555555,,,,,,,444444422222222222222 55555557777777,,,,,,,555555566666669999999 61,443 66666661111111,,,,,,,333333377777771111111 61,364 61,860 66666661111111,,,,,,,666666677777776666666 60,910 60,974 44 OOwwnn ffoorreeiiggnn ooffffiicceess11 99999996666666,,,,,,,666666655555553333333 111111122222227777777,,,,,,,222222299999993333333 111111144444446666666,,,,,,,333333399999993333333 144,809 111111155555556666666,,,,,,,444444499999997777777 153,586 154,500 111111155555557777777,,,,,,,999999933333333333333 154,905 156,768 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 77777774444444,,,,,,,777777700000004444444 111111122222221111111,,,,,,,333333377777777777777 111111122222223333333,,,,,,,888888833333337777777 120,890 111111122222223333333,,,,,,,777777777777775555555 116,903 121,340 111111122222222222222,,,,,,,111111144444445555555 119,255 119,171 66 DDeeppoossiittss 22222223333333,,,,,,,333333388888881111111 44444444444444,,,,,,,222222222222223333333 44444447777777,,,,,,,111111122222226666666 45,788 44444448888888,,,,,,,111111111111112222222 45,070 47,685 44444449999999,,,,,,,666666677777772222222 47,636 48,096 77 OOtthheerr 55555551111111,,,,,,,333333322222222222222 77777777777777,,,,,,,111111155555553333333 77777776666666,,,,,,,777777711111111111111 75,102 77777775555555,,,,,,,666666666666663333333 71,832 73,655 77777772222222,,,,,,,444444477777773333333 71,619 71,074 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444448888888,,,,,,,999999977777772222222 66666661111111,,,,,,,666666611111114444444 66666663333333,,,,,,,555555511111114444444 57,492 55555557777777,,,,,,,000000088888880000000 55,058 55,481 55555555555555,,,,,,,111111144444443333333 54,577 53,526 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss22 .... 33333335555555,,,,,,,999999966666668888888 44444440000000,,,,,,,333333311111110000000 33333334444444,,,,,,,999999900000003333333 33333332222222,,,,,,,999999911111116666666 33333333333333,,,,,,,666666644444446666666 1111111,,,,,,,333333377777778888888 2222222,,,,,,,444444499999991111111 2222222,,,,,,,999999966666669999999 3333333,,,,,,,333333388888880000000 3333333,,,,,,,888888877777771111111 11 Negotiable and readily transferable 22222226666666,,,,,,,333333355555552222222 33333330000000,,,,,,,777777766666663333333 22222226666666,,,,,,,000000066666664444444 22222223333333,,,,,,,888888800000005555555 22222224444444,,,,,,,555555577777776666666 12 Outstanding collections and other 8888888,,,,,,,222222233333338888888 7777777,,,,,,,000000055555556666666 5555555,,,,,,,888888877777770000000 5555555,,,,,,,777777733333332222222 5555555,,,,,,,111111199999998888888 13 MEMO: Customer liability on 22222229999999,,,,,,,999999955555552222222 33333338888888,,,,,,,111111155555553333333 33333337777777,,,,,,,777777711111115555555 33333336666666,,,,,,,555555577777775555555 33333335555555,,,,,,,222222200000004444444 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States4 40,369 42,499 46,217R 44,322 40,096 41,8% 39,916 39,593 39,079 n.a. 1. U.S. banks: includes amounts due from own foreign branches and foreign 4. Includes demand and time deposits and negotiable and nonnegotiable subsidiaries consolidated in "Consolidated Report of Condition" filed with bank certificates of deposit denominated in U.S. dollars issued by banks abroad. For regulatory agencies. Agencies, branches, and majority-owned subsidiaries of description of changes in data reported by nonbanks, see July 1979 BULLETIN, foreign banks: principally amounts due from head office or parent foreign bank, p. 550. and foreign branches, agencies, or wholly owned subsidiaries of head office or • Liabilities and claims of banks in the United States were increased, parent foreign bank. beginning in December 1981, by the shift from foreign branches to international 2. Assets owned by customers of the reporting bank located in the United banking facilities in the United States of liabilities to, and claims on, foreign States that represent claims on foreigners held by reporting banks for the account residents. of their domestic customers. NOTE. Beginning April 1978, data for banks' own claims are given on a monthly 3. Principally negotiable time certificates of deposit and bankers acceptances. basis, but the data for claims of banks' own domestic customers are available on a quarterly basis only. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States Payable in U.S. Dollars Millions of dollars, end of period 1984 1985 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 119988!! AA 11998822 11998833 June Sept. Dec. Mar. 1 Total 154,590 228,150 243,715 249,904 240,595 243,049 239,222 By borrower 2 Maturity of 1 year or less1 116,394 173,917 176,158 172,474 162,863 165,200 164,883 3 Foreign public borrowers 15,142 21,256 24,039 21,066 21,059 22,076 23,4% 4 All other foreigners 101,252 152,661 152,120 151,407 141,804 143,124 141,387 5 Maturity of over 1 year1 38,197 54,233 67,557 77,430 77,731 77,849 74,339 6 Foreign public borrowers 15,589 23,137 32,521 37,747 38,410 39,620 38,088 7 All other foreigners 22,608 31,095 35,036 39,683 39,321 38,229 36,251 By area Maturity of 1 year or less1 8 Europe 28,130 50,500 56,117 59,924 56,773 58,170 60,269 9 Canada 4,662 7,642 6,211 6,959 5,841 5,978 7,481 10 Latin America and Caribbean 48,717 73,291 73,660 65,136 61,479 60,692 60,071 11 Asia 31,485 37,578 34,403 34,012 32,252 33,450 30,651 12 Africa 2,457 3,680 4,199 4,790 4,798 4,442 4,109 13 All other2 943 1,226 1,569 1,652 1,720 2,468 2,301 Maturity of over 1 year1 14 Europe 8,100 11,636 13,576 12,778 11,249 9,590 8,545 15 Canada 1,808 1,931 1,857 2,203 1,801 1,890 2,181 16 Latin America and Caribbean 25,209 35,247 43,888 54,249 56,568 57,834 55,372 17 1,907 3,185 4,850 5,098 5,106 5,386 5,235 18 Africa 900 1,494 2,286 1,865 1,857 2,033 1,963 19 All other2 272 740 1,101 1,237 1,150 1,116 1,043 • Liabilities and claims of banks in the United States were increased, 1. Remaining time to maturity, beginning in December 1981, by the shift from foreign branches to international 2. Includes nonmonetary international and regional organizations, banking facilities in the United States of liabilities to, and claims on, foreign residents. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • September 1985 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1 Billions of dollars, end of period 1982 1983 1984 1985 AArreeaa oorr ccoouunnttrryy 11998800 11998811 Dec. June Sept. Dec. Mar. June7 Sept. Dec. Mar.P 1 Total 352.0 415.2 438.7 439.9 431.0 437.3 435.1 430.6 410.1 407.7 409.2 2 G-10 countries and Switzerland 162.1 175.5 179.7 177.1 168.8 168.0 166.0 157.7 148.0 147.6 152.0 3 Belgium-Luxembourg 13.0 13.3 13.1 13.3 12.6 12.4 11.0 10.9 9.8 8.8 9.4 4 France 14.1 15.3 17.1 17.1 16.2 16.3 15.9 14.2 14.3 14.1 14.5 5 Germany 12.1 12.9 12.7 12.6 11.6 11.3 11.7 10.9 10.0 9.0 8.9 6 Italy 8.2 9.6 10.3 10.5 9.9 11.4 11.2 11.5 9.7 10.1 10.0 7 Netherlands 4.4 4.0 3.6 4.0 3.6 3.5 3.4 3.0 3.4 3.9 3.7 8 Sweden 2.9 3.7 5.0 4.7 4.9 5.1 5.2 4.3 3.5 3.2 3.1 9 Switzerland 5.0 5.5 5.0 4.8 4.2 4.3 4.3 4.2 3.9 3.9 4.2 10 United Kingdom 67.4 70.1 72.1 70.8 67.8 65.4 65.1 60.5 57.4 59.8 64.4 11 Canada 8.4 10.9 10.4 10.8 8.9 8.3 8.6 8.9 8.1 7.8 9.0 12 Japan 26.5 30.2 30.2 28.5 29.0 29.9 29.7 29.3 27.9 27.2 24.8 13 Other developed countries 21.6 28.4 33.7 34.5 34.3 36.1 35.7 37.1 36.3 33.8 33.0 14 Austria 1.9 1.9 1.9 2.1 1.9 1.9 2.0 1.9 1.8 1.6 1.6 15 Denmark 2.3 2.3 2.4 3.4 3.3 3.4 3.4 3.1 2.9 2.2 2.1 16 Finland 1.4 1.7 2.2 2.1 1.8 2.4 2.1 2.3 1.9 1.9 1.8 17 Greece 2.8 2.8 3.0 2.9 2.9 2.8 3.0 3.3 3.2 2.9 2.9 18 Norway 2.6 3.1 3.3 3.4 3.2 3.3 3.2 3.2 3.2 3.0 2.9 19 Portugal .6 1.1 1.5 1.4 1.4 1.5 1.4 1.7 1.6 1.4 1.4 20 Spain 4.4 6.6 7.5 7.2 7.1 7.1 7.1 7.3 6.9 6.5 6.4 21 Turkey 1.5 1.4 1.4 1.4 1.5 1.7 1.9 2.0 2.0 1.9 1.9 22 Other Western Europe 1.7 2.1 2.3 2.0 2.1 1.8 1.8 1.9 1.7 1.7 1.7 23 South Africa 1.1 2.8 3.7 3.9 4.7 4.7 4.8 4.7 5.0 4.5 4.2 24 Australia 1.3 2.5 4.4 4.5 4.4 5.5 5.2 5.7 6.2 6.1 6.2 25 OPEC countries2 22.7 24.8 27.4 28.3 27.2 28.9 28.6 26.7 25.0 25.6 25.3 26 Ecuador 2.1 2.2 2.2 2.2 2.1 2.2 2.1 2.1 2.1 2.2 2.2 27 Venezuela 9.1 9.9 10.5 10.4 9.8 9.9 9.7 9.5 9.2 9.3 9.2 28 Indonesia 1.8 2.6 3.2 3.2 3.4 3.8 4.0 4.0 3.8 3.7 3.6 29 Middle East countries 6.9 7.5 8.7 9.5 9.1 10.0 9.8 8.4 7.4 8.2 7.8 30 African countries 2.8 2.5 2.8 3.0 2.8 3.0 3.0 2.7 2.5 2.3 2.4 31 Non-OPEC developing countries 77.4 96.3 107.1 108.8 109.8 111.6 112.2 112.8 111.9 112.2 111.3 Latin America 32 Argentina 7.9 9.4 8.9 9.4 9.5 9.5 9.5 9.2 9.1 8.7 8.6 33 Brazil 16.2 19.1 22.9 22.7 23.1 23.1 25.1 25.4 26.3 26.3 26.4 34 Chile 3.7 5.8 6.3 5.8 6.3 6.4 6.5 6.7 7.1 7.0 7.0 35 Colombia 2.6 2.6 3.1 3.2 3.2 3.2 3.1 3.0 2.9 2.9 2.8 36 Mexico 15.9 21.6 24.5 25.3 25.9 26.1 25.6 26.0 26.1 25.8 25.7 37 Peru 1.8 2.0 2.6 2.6 2.4 2.4 2.3 2.3 2.2 2.2 2.2 38 Other Latin America 3.9 4.1 4.0 4.3 4.2 4.2 4.4 4.1 3.9 3.9 3.8 Asia China 39 Mainland .2 .2 .2 .2 .2 .3 .3 .6 .5 .7 .7 40 Taiwan 4.2 5.1 5.3 5.1 5.2 5.3 4.9 5.3 5.2 5.1 5.3 41 India .3 .3 .6 .7 .8 1.0 1.0 1.0 1.1 1.0 1.0 42 Israel 1.5 2.1 2.3 2.3 1.7 1.9 1.6 1.9 1.7 1.8 1.7 43 Korea (South) 7.1 9.4 10.9 10.9 10.9 11.3 11.1 11.2 10.3 10.7 10.5 44 Malaysia 1.1 1.7 2.1 2.6 2.8 2.9 2.8 2.7 3.0 2.8 2.8 45 Philippines 5.1 6.0 6.3 6.4 6.2 6.2 6.7 6.3 5.9 6.0 6.1 46 Thailand 1.6 1.5 1.6 1.8 1.8 2.2 2.1 1.9 1.8 1.8 1.7 47 Other Asia .6 1.0 1.1 1.2 1.0 1.0 .9 1.1 1.0 1.1 1.1 Africa 48 Egypt .8 1.1 1.2 1.3 1.4 1.5 1.4 1.4 1.2 1.2 1.1 49 Morocco .7 .7 .7 .8 .8 .8 .8 .8 .8 .8 .8 50 Zaire .2 .2 .1 .1 .1 .1 .1 .1 .1 .1 .1 51 Other Africa3 2.1 2.3 2.4 2.2 2.4 2.3 2.2 1.9 1.9 2.1 2.1 52 Eastern Europe 7.4 7.8 6.2 5.8 5.3 5.3 4.9 4.9 4.5 4.4 4.5 53 U.S.S.R .4 .6 .3 .4 .2 .2 .2 .2 .2 .1 .4 54 Yugoslavia 2.3 2.5 2.2 2.3 2.3 2.4 2.3 2.3 2.3 2.3 2.2 55 Other 4.6 4.7 3.7 3.0 2.8 2.8 2.5 2.4 2.1 2.0 1.9 56 Offshore banking centers 47.0 63.7 66.8 69.3 68.7 70.5 71.4 74.1 66.9 66.8 66.3 57 Bahamas 13.7 19.0 19.0 20.7 21.6 21.8 24.6 27.5 23.7 21.5 21.5 58 Bermuda .6 .7 .9 .8 .8 .9 .7 .7 1.0 .9 .7 59 Cayman Islands and other British West Indies 10.6 12.4 12.9 12.7 10.5 12.2 12.0 12.2 11.1 11.7 12.6 60 Netherlands Antilles 2.1 3.2 3.3 2.6 4.1 4.2 3.3 3.3 3.1 3.4 3.3 61 Panama4 5.4 7.7 7.6 6.6 5.7 6.0 6.3 6.6 5.7 6.8 5.7 62 Lebanon .2 .2 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 8.1 11.8 13.9 14.5 15.2 15.0 14.4 13.5 12.7 12.5 12.4 64 Singapore 5.9 8.7 9.2 11.2 10.5 10.3 10.0 10.2 9.5 9.8 10.0 65 Others5 .3 .1 .0 .0 .1 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated6 14.0 18.8 17.9 16.2 16.9 17.0 16.3 17.3 17.3 17.3 16.9 1. The banking offices covered by these data are the U.S. offices and foreign Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. as Bahrain and Oman (not formally members of OPEC). Offices not covered include (1) U.S. agencies and branches of foreign banks, and 3. Excludes Liberia. (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are 4. Includes Canal Zone beginning December 1979. adjusted to exclude the claims on foreign branches held by a U.S. office or another 5. Foreign branch claims only. foreign branch of the same banking institution. The data in this table combine 6. Includes New Zealand, Liberia, and international and regional organizaforeign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims tions. of U.S. offices in table 3.18 (excluding those held by agencies and branches of 7. Beginning with June 1984 data, reported claims held by foreign branches foreign banks and those constituting claims on own foreign branches). have been reduced by an increase in the reporting threshold for "shell" branches 2. Besides the Organization of Petroleum Exporting Countries shown individ- from $50 million to $150 million equivalent in total assets, the threshold now ually, this group includes other members of OPEC (Algeria, Gabon, Iran, Iraq, applicable to all reporting branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A63 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1983 1984 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998800 11998811 11998822 Dec. Mar. June Sept. Dec. 1 Total 29,434 28,618 27,512 25,215' 29,551' 34,248' 30,738 28,808 2 Payable in dollars 25,689 24,909 24,280 22,195' 26,314' 31,050' 27,934 25,935 3 Payable in foreign currencies 3,745 3,709 3,232 3,020 3,237 3,198 2,804 2,873 By type 4 Financial liabilities 11,330 12,157 11,066 10,441' 14,247' 18,574' 15,879 13,951 5 Payable in dollars 8,528 9,499 8,858 8,662' 12,229' 16,532' 14,082 12,084 6 Payable in foreign currencies 2,802 2,658 2,208 1,779 2,018 2,043 1,797 1,868 7 Commercial liabilities 18,104 16,461 16,446 14,774 15,304 15,674 14,859 14,857 8 Trade payables 12,201 10,818 9,438 7,765 7,893 7,897 6,900 6,990 9 Advance receipts and other liabilities 5,903 5,643 7,008 7,009 7,411 7,776 7,959 7,867 10 Payable in dollars 17,161 15,409 15,423 13,533 14,085 14,518 13,852 13,851 11 Payable in foreign currencies 943 1,052 1,023 1,241 1,219 1,155 1,007 1,006 By area or country Financial liabilities 12 Europe 6,481 6,825 6,501 5,71C 7,158' 7,335' 6,679 6,798 13 Belgium-Luxembourg 479 471 505 302 428 359 428 471 14 France 327 709 783 843 956 900 910 995 15 Germany 582 491 467 502' 524' 571' 521 489 16 Netherlands 681 748 711 589' 537' 595 595 578 17 Switzerland 354 715 792 486 641 563 514 569 18 United Kingdom 3,923 3,565 3,102 2,839 3,841' 4,097' 3,463 3,389 19 Canada 964 963 746 764 795 735 825 863 70 Latin America and Caribbean 3,136 3,356 2,751 2,607 4,912 9,017' 6,780 4,576 21 Bahamas 964 1,279 904 751 1,419 3,642' 2,606 1,423 2? Bermuda 1 7 14 13 51 13 11 13 73 Brazil 23 22 28 32 37 25 33 35 24 British West Indies 1,452 1,241 1,027 1,018 2,635 4,546' 3,250 2,103 ?5 Mexico 99 102 121 213 243 237 260 367 26 Venezuela 81 98 114 124 121 124 130 137 77 Asia 723 976 1,039 1,332 1,355 1,462 1,566 1,682 78 Japan 644 792 715 898 947 1,013 1,085 1,121 29 Middle East oil-exporting countries2 38 75 169 170 170 180 144 147 30 Africa 11 14 17 19 19 16 16 14 31 Oil-exporting countries3 1 0 0 0 0 0 1 0 32 All other4 15 24 12 10 9 9 14 19 Commercial liabilities 33 Europe 4,402 3,770 3,831 3,245 3,567 3,409 3,961 3,987 34 Belgium-Luxembourg 90 71 52 62 40 45 34 48 35 France 582 573 598 437 488 525 430 438 36 Germany 679 545 468 427 417 501 558 619 37 Netherlands 219 220 346 268 259 265 239 245 38 Switzerland 499 424 367 241 477 246 405 257 39 United Kingdom 1,209 880 1,027 732 847 794 1,133 1,082 40 Canada 888 897 1,495 1,841 1,776 1,840 1,906 1,975 41 Latin America and Caribbean 1,300 1,044 1,570 1,473 1,807 1,705 1,758 1,871 42 Bahamas 8 2 16 1 14 17 1 7 43 Bermuda 75 67 117 67 158 124 110 114 44 Brazil 111 67 60 44 68 31 68 124 45 British West Indies 35 2 32 6 33 5 8 32 46 Mexico 367 340 436 585 682 568 641 586 47 Venezuela 319 276 642 432 560 630 628 636 48 10,242 9,384 8,144 6,741 6,620 6,989 5,569 5,307 49 Japan 802 1,094 1,226 1,247 1,291 1,235 1,429 1,256 50 Middle East oil-exporting countries2-5 8,098 7,008 5,503 4,178 3,735 4,190 2,364 2,372 51 Africa 817 703 753 553 539 684 597 588 52 Oil-exporting countries3 517 344 277 167 243 217 251 233 53 All other4 456 664 651 921 995 1,046 1,068 1,128 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 BULLETIN, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 5. Revisions include a reclassification of transactions, which also affects the United Arab Emirates (Trucial States). totals for Asia and the grand totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • September 1985 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1983 1984 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998800 11998811 11998822 Dec. Mar. June Sept. Dec. 1 Total 34,482 36,185 28,725 34,951' 33,767' 31,977' 30,545' 29,505 2 Payable in dollars 31,528 32,582 26,085 31,856' 30,919' 28,996' 27,754' 26,908 3 Payable in foreign currencies 2,955 3,603 2,640 3,0%' 2,848' 2,982' 2,792 2,597 By type 4 Financial claims 19,763 21,142 17,684 23,821' 22,904' 21,529' 20,157' 18,940 5 Deposits 14,166 15,081 13,058 18,375' 17,657' 16.41C 15,376' 14,307 6 Payable in dollars 13,381 14,456 12,628 17,872' 17,225' 15,888' 14,936' 13,887 7 Payable in foreign currencies 785 625 430 503' 432' 522' 439 420 8 Other financial claims 5,597 6,061 4,626 5,445 5,247' 5,12C 4,781 4,633 9 Payable in dollars 3,914 3,599 2,979 3,489 3,502' 3,359' 3,088 3,190 10 Payable in foreign currencies 1,683 2,462 1,647 1,956 1,745' 1,761 1,693 1,442 11 Commercial claims 14,720 15,043 11,041 11,131 10,864 10,448 10,389 10,565 12 Trade receivables 13,960 14,007 9,994 9,721 9,540 9,105 8,885 9,084 13 Advance payments and other claims 759 1,036 1,047 1,410 1,323 1,343 1,503 1,481 14 Payable in dollars 14,233 14,527 10,478 10,494 10,193 9,749 9,729 9,830 15 Payable in foreign currencies 487 516 563 637 671 699 659 735 By area or country Financial claims 16 Europe 6,069 4,596 4,873 6,448' 6,351' 6,434' 5,679' 5,604 17 Belgium-Luxembourg 145 43 15 37 30 37 15 15 18 France 298 285 134 150 171 151 146 114 19 Germany 230 224 178 159 144' 161 187 224 20 Netherlands 51 50 97 71 32' 158 62 66 21 Switzerland 54 117 107 38 115' 61 64 66 22 United Kingdom 4,987 3,546 4,064 5,781' 5,651' 5,613' 4,973' 4,721 23 Canada 5,036 6,755 4,377 6,166 5,684' 5,29C 4,48C 4,006 24 Latin America and Caribbean 7,811 8,812 7,546 10,15c 9,871' 8,562' 8,825' 8,045 25 Bahamas 3,477 3,650 3,279 4,745 3,953' 3,255' 3,382' 3,270 26 Bermuda 135 18 32 102' 3 11' 5 6 27 Brazil 96 30 62 53 87 83 84 100 28 British West Indies 2,755 3,971 3,255 4,163 4,925' 4,394' 4,488' 3,905 29 Mexico 208 313 274 291 279 230 232 215 30 Venezuela 137 148 139 134 130 124 128 125 31 Asia 607 758 698 764 757' 977' 900 %1 32 Japan 189 366 153 297 313' 321' 371 353 33 Middle East oil-exporting countries2 20 37 15 4 7 8 7 13 34 Africa 208 173 158 147 144 158 160 210 35 Oil-exporting countries3 26 46 48 55 42 35 37 85 36 All other4 32 48 31 145 %' ltW 113 114 Commercial claims 37 Europe 5,544 5,405 3,826 3,670 3,610 3,555 3,570 3,805 38 Belgium-Luxembourg 233 234 151 135 173 142 128 138 39 France 1,129 776 474 459 413 408 411 439 40 Germany 599 561 357 349' 365' 447' 370 374 41 Netherlands 318 299 350 334 310 306 303 340 42 Switzerland 354 431 360 317 336 250 289 271 43 United Kingdom 929 985 811 809 787 812 891 1,061 44 Canada 914 967 633 829 1,061 933 1,026 1,020 45 Latin America and Caribbean 3,766 3,479 2,526 2,695 22,,441199 2,042 1,976 11,,997722 46 Bahamas 21 12 21 8 88 4 14 88 47 Bermuda 108 223 261 190 216 89 88 115 48 Brazil 861 668 258 493 357 310 219 214 49 British West Indies 34 12 12 7 7 8 10 7 50 Mexico 1,102 1,022 775 884 745 577 595 583 51 Venezuela 410 424 351 272 268 241 245 206 52 Asia 3,522 3,959 3,050 3,063 2,997 3,085 2,884 3,070 53 Japan 1,052 1,245 1,047 1,114 1,186 1,178 1,080 1,180 54 Middle East oil-exporting countries2 825 905 751 737 701 710 703 687 55 Africa 653 772 588 588 497 536 595 470 56 Oil-exporting countries3 153 152 140 139 132 128 135 134 57 All other4 321 461 417 286 280 297 338 228 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 BULLETIN, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Holdings and Transactions A65 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1985 1984 1985 TTrraannssaaccttiioonnss,, aanndd aarreeaa oorr ccoouunnttrryy 11998833 11998844 Jan.- Nov. Dec. Jan. Feb. Mar. Apr. May May U.S. corporate securities STOCKS 1 Foreign purchases 69,770 60,462 30,016 4,838 4,487 5,005 7,125 6,303 5,106 6,476 2 Foreign sales 64,360 63,388 31,071 4,746 5,049 5,701 7,180 6,748 5,071 6,371 3 Net purchases, or sales (-) 5,410 -2,926 -1,055 92 -562 -696 -56 -445 36 106 4 Foreign countries 5,312 -3,041 -989 81 -461 -713 -51 -402 28 149 5 Europe 3,979 -2,986 -1,786 -90 -359 -558 -215 -582 -161 -269 6 France -97 -405 -33 -46 -54 -19 -41 -13 24 17 7 Germany 1,045 -50 -296 11 -105 -134 -109 -113 23 38 8 Netherlands -109 -315 -314 -15 -29 -44 -108 -129 16 -48 9 Switzerland 1,325 -1,490 -543 -34 -249 -159 -133 -122 -48 -81 10 United Kingdom 1,799 -658 -650 17 91 -178 129 -195 -191 -216 11 Canada 1,151 1,673 255 47 134 46 168 -2 33 9 12 Latin America and Caribbean 529 493 757 30 67 103 158 80 169 247 13 Middle East1 -808 -1,998 -89 -12 -196 -52 -101 116 -96 44 14 Other Asia 395 -372 -212 74 -91 -264 -99 -41 91 101 15 Africa 42 -23 -31 -8 -6 -7 -2 -13 -1 -8 16 Other countries 24 171 117 39 -11 19 40 39 -6 25 17 Nonmonetary international and regional organizations 98 115 -66 11 -101 17 -5 -43 8 --4444 BONDS2 18 Foreign purchases 24,000 39,341 30,869 4,902 6,403 5,937 8,219 5,484 4,501 6,729 19 Foreign sales 23,097 26,071 16,089 2,556 2,900 3,106 3,649 2,598 3,068 3,667 20 Net purchases, or sales (-) 903 13,269 14,781 2,346 3,503 2,831 4,570 2,886 1,432 3,062 21 Foreign countries 888 12,972 14,918 2,133 3,527 2,835 4,489 2,936 1,408 3,250 22 Europe 909 11,792 14,140 1,954 3,338 2,635 4,143 2,952 1,634 2,776 23 France -89 207 47 -11 24 55 -17 -10 18 0 24 Germany 344 1,731 2 139 184 67 -153 -112 174 26 25 Netherlands 51 93 41 -1 15 9 44 8 -9 -11 26 Switzerland 583 644 946 159 276 12 315 483 65 72 27 United Kingdom 434 8,520 12,681 1,603 2,776 2,441 4,018 2,550 1,294 2,378 28 Canada 123 -71 86 13 14 59 -11 -5 0 43 29 Latin America and Caribbean 100 390 305 44 78 90 50 69 -82 178 30 Middle East1 -1,161 -1,011 -954 -45 -179 -123 -84 -127 -507 -112 31 Other Asia 865 1,862 1,319 169 276 140 337 89 381 372 32 Africa 0 1 1 -2 1 0 0 0 0 1 33 Other countries 52 10 21 2 0 35 54 -41 -19 -8 34 Nonmonetary international and regional organizations 15 297 -137 213 -24 -4 81 -50 25 -188 Foreign securities 35 Stocks, net purchases, or sales (-) -3,765 -1,077 -1,851 -177 -221 -781 -652 -457' -101 140 36 Foreign purchases 13,281 14,591 7,271 1,147 1,169 1,149 1,562 1,379' 1,437 1,744 37 Foreign sales 17,046 15,668 9,122 1,324 1,390 1,930 2,215 1,836' 1,538 1,604 38 Bonds, net purchases, or sales (-) -3,239 -3,931 -1,977 -578 -1,159 168 198 -95C -670 -723 39 Foreign purchases 36,333 57,338 29,506 6,601 5,134 5,396 5,294 5,673' 5,674 7,469 40 Foreign sales 39,572 61,270 31,483 7,179 6,293 5,228 5,096 6,623' 6,345 8,191 41 Net purchases, or sales (—), of stocks and bonds .... -7,004 -5,008 -3,829 -755 -1,379 -613 -454 -1,407' -772 -583 42 Foreign countries -6,559 -4,619 -4,140 -908 -671 -742 -754 -1,217' -680 -747 43 Europe -5,492 -8,532 -4,663 -707 -1,086 -732 -91 -1,208' -798 -1,833 44 Canada -1,328 413 -320 -23 254 75 -422 -68 23 71 45 Latin America and Caribbean 1,120 2,472 1,111 207 104 194 -47 7 136 822 46 Asia -855 1,345 -362 88 -115 -394 -255 99 -13 201 47 Africa 141 -107 -37 -16 3 -4 -3 -26 -5 2 48 Other countries -144 -210 130 -457 169 120 64 -21 -23 -9 49 Nonmonetary international and regional organizations -445 -389 312 153 -709 129 300 -190 -91 164 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, ties sold abroad by U.S. corporations organized to finance direct investments Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). abroad. 2. Includes state and local government securities, and securities of U.S. government agencies and corporations. Also includes issues of new debt securi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • September 1985 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1985 1984 1985 11998833 11998844 Country or area M Ja a n y . - Nov. Dec. Jan. Feb. Mar. Apr. May Transactions, net purchases or sales (-) during period1 1 Estimated total2 3,693 21,412 7,365 2,197 7,508 2,312 2,319 -4,401 -4,324 2,812 2 Foreign countries2 3,162 16,432 7,482 2,293 5,066 3,797 2,163 -4,756 2,249 4,029 3 Europe2 6,226 11,070 1,304 776 1,300 532 -81 -1,435 1,818 470 4 Belgium-Luxembourg -431 289 303 41 46 104 18 0 80 101 5 Germany2 2,450 2,958 -711 36 336 -120 -129 -1,538 299 777 6 Netherlands 375 454 -330 -7 16 -71 11 -201 -7 -62 7 Sweden 170 46 328 1 -88 150 -10 1 30 157 8 Switzerland2 -421 635 686 -288 26 -35 358 313 183 -133 9 United Kingdom 1,966 5,223 -464 244 716 419 -342 293 188 -1021 10 Other Western Europe 2,118 1,465 1,492 748 248 86 12 -303 1,045 652 11 Eastern Europe 0 0 0 0 0 0 0 0 0 0 12 Canada 699 1,526 163 193 249 -92 -231 38 334 115 13 Latin America and Caribbean -212 1,413 1,838 965 380 149 735 -82 465 570 14 Venezuela -124 14 -2 7 -10 5 -11 2 10 -9 15 Other Latin America and Caribbean 60 528 763 57 213 -2 71 65 177 452 16 Netherlands Antilles -149 871 1,077 902 177 146 674 -149 278 127 17 -3,535 2,377 4,140 369 3,218 3,093 1,726 -3,289 -331 2,941 18 Japan 2,315 6,062 4,086 1,287 1,585 578 559 177 1,717 1,054 19 Africa 3 -67 74 -5 2 2 1 1 13 57 20 All other -17 114 -38 -5 -83 113 14 11 -50 -125 21 Nonmonetary international and regional organizations 535 4,982 -118 -96 2,442 -1,485 154 355 2,075 -1,217 22 International 218 4,612 -98 -188 2,361 -1,675 504 338 1,792 -1,057 23 Latin American regional 0 0 3 0 0 0 1 0 -3 5 MEMO 24 Foreign countries2 3,162 16,432 7,482 2,293 5,066 3,797 2,163 -4,756 2,249 4,029 25 Official institutions 779 481 1,282 -602 1,919 2,527 1,324 -5,278 -598 3,307 26 Other foreign2 2,382 15,951 6,201 2,895 3,147 1,270 840 521 2,847 723 Oil-exporting countries 27 Middle East3 -5,419 -6,277 -515 -1,284 -200 27 -372 554 -827 102 28 Africa4 -1 -101 0 0 0 0 0 0 0 0 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 1 year. Data are based on United Arab Emirates (Trucial States). monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and 4. Comprises Algeria, Gabon, Libya, and Nigeria, notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A67 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per annum Rate on June 30, 1985 Rate on June 30, 1985 Rate on June 30, 1985 Country Country Country Per- Month Per- Month Per- Month cent effective cent effective cent effective Austria.. 4.5 June 1984 France1 10.13 May 1985 Norway 8.0 June 1983 Belgium. 11.0 Feb. 1984 Germany, Fed. Rep. of 4.5 June 1984 Switzerland 4.0 Mar. 1983 Brazil... 49.0 Mar. 1981 Italy 15.5 Jan. 1985 United Kingdom2. Canada.. 9.58 June 1985 Japan 5.0 Oct. 1983 Venezuela 11.0 May 1983 Denmark 7.0 Oct. 1983 Netherlands 5.5 Feb. 1985 1. As of the end of February 1981, the rate is that at which the Bank of France or makes advances against eligible commercial paper and/or government commerdiscounts Treasury bills for 7 to 10 days. cial banks or brokers. For countries with more than one rate applicable to such 2. Minimum lending rate suspended as of Aug. 20, 1981. discounts or advances, the rate shown is the one at which it is understood the NOTE. Rates shown are mainly those at which the central bank either discounts central bank transacts the largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per annum, averages of daily figures 1984 1985 CCoouunnttrryy,, oorr ttyyppee 11998822 11998833 11998844 Dec. Jan. Feb. Mar. Apr. May June 1 Eurodollars 12.24 9.57 10.75 8.90 8.37 9.05 9.32 8.74 8.13 7.60 2 United Kingdom 12.21 10.06 9.91 9.74 11.63 13.69 13.52 12.70 12.61 12.38 3 Canada 14.38 9.48 11.29 10.41 9.70 10.63 11.42 10.15 9.77 9.58 4 Germany 8.81 5.73 5.96 5.81 5.84 6.13 6.36 5.99 5.87 5.66 5 Switzerland 5.04 4.11 4.35 4.% 5.13 5.66 5.77 5.35 5.15 5.14 6 Netherlands 8.26 5.58 6.08 5.77 5.87 6.90 7.14 6.82 6.90 6.58 7 France 14.61 12.44 11.66 10.66 10.43 10.60 10.71 10.49 10.15 10.18 8 19.99 18.95 17.08 16.86 15.82 15.79 15.82 15.15 14.91 15.00 9 Belgium 14.10 10.51 11.41 10.75 10.75 10.75 10.75 10.09 9.35 8.96 10 Japan 6.84 6.49 6.32 6.33 6.27 6.29 6.30 6.26 6.26 6.30 NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • September 1985 3.28 FOREIGN EXCHANGE RATES Currency units per dollar 1985 CCoouunnttrryy//ccuurrrreennccyy 11998822 11998833 11998844 Jan. Feb. Mar. Apr. May June 1 Australia/dollar1 101.65 90.14 87.937 81.51 73.74 69.70 65.84 67.68 66.51 2 Austria/schilling 17.060 17.968 20.005 22.267 23.190 23.247 21.717 21.868 21.532 3 Belgium/franc 45.780 51.121 57.749 63.455 66.310 66.308 62.283 62.572 61.719 4 Brazil/cruzeiro 179.22 573.27 1841.50 3346.67 3768.17 4158.19 4511.58 5239.00 5786.00 5 Canada/dollar 1.2344 1.2325 1.2953 1.3240 1.3547 1.3840 1.3658 1.3756 1.3676 6 China, P.R./yuan 1.8978 1.9809 2.3308 2.8160 2.8347 2.8533 2.8480 2.8556 2.8693 7 Denmark/krone 8.3443 9.1483 10.354 11.330 11.807 11.797 11.114 11.2244 10.9962 8 Finland/markka 4.8086 5.5636 6.0007 6.6368 6.8616 6.8464 6.4652 6.4641 6.3660 9 France/franc 6.5793 7.6203 8.7355 9.7036 10.093 10.078 9.4427 9.4829 9.3414 10 Germany/deutsche mark 2.428 2.5539 2.8454 3.1706 3.3025 3.2982 3.0946 3.1093 3.0636 11 Greece/drachma 66.872 87.895 112.73 129.38 134.73 140.62 134.86 137.239 136.00 12 Hong Kong/dollar 6.0697 7.2569 7.8188 7.8110 7.8017 7.8009 7.7902 7.7766 7.7698 13 India/rupee 9.4846 10.1040 11.348 12.612 12.922 12.861 12.400 12.5004 12.441 14 Ireland/pound1 142.05 124.81 108.64 98.23 94.23 94.58 101.17 100.71 102.19 15 Israel/shekel 24.407 55.865 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16 Italy/lira 1354.00 1519.30 1756.10 1948.76 2042.00 2078.50 1975.89 1984.45 1953.92 17 Japan/yen 249.06 237.55 237.45 254.18 260.48 257.92 251.84 251.73 248.84 18 Malaysia/ringgit 2.3395 2.3204 2.3448 2.4804 2.5513 2.5734 2.4922 2.4759 2.4685 19 Mexico/peso 72.990 155.01 192.31 227.56 236.06 246.15 246.57 254.8182 294.22 20 Netherlands/guilder 2.6719 2.8543 3.2083 3.5819 3.7387 3.7290 3.4981 3.5097 3.4535 21 New Zealand/dollar1 75.101 66.790 57.837 47.040 45.223 45.276 45.520 45.197 45.949 22 Norway/krone 6.4567 7.3012 8.1596 9.1765 9.4695 9.4608 8.9314 8.9442 8.8255 23 Philippines/peso 8.5324 11.0940 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 24 Portugal/escudo 80.101 111.610 147.70 172.56 183.24 183.98 174.56 177.545 176.15 25 Singapore/dollar 2.1406 2.1136 2.1325 2.2011 2.2557 2.2582 2.2199 2.2228 2.2291 26 South Africa/rand1 92.297 89.85 69.534 46.34 50.57 50.33 51.50 50.18 50.54 27 South Korea/won 731.93 776.04 807.91 832.16 839.16 850.71 861.21 792.56 875.00 28 Spain/peseta 110.09 143.500 160.78 175.13 182.35 183.13 172.85 175.397 173.42 29 Sri Lanka/rupee 20.756 23.510 25.428 26.392 26.605 26.836 27.113 27.404 27.433 30 Sweden/krona 6.2838 7.6717 8.2706 9.0716 9.3364 9.4135 8.9946 8.9895 8.8565 31 Switzerland/franc 2.0327 2.1006 2.3500 2.6590 2.8045 2.8033 2.5948 2.6150 2.5721 32 Taiwan/dollar n.a. n.a. 39.633 39.209 39.228 39.542 39.728 39.906 39.857 33 Thailand/baht 23.014 22.991 23.582 27.330 27.961 28.097 27.466 27.554 27.433 34 United Kingdom/pound1 174.80 151.59 133.66 112.71 109.31 112.53 123.77 124.83 128.08 35 Venezuela/bolivar 4.2981 10.6840 n.a. n.a. n.a. n.a. n.a. n.a. n.a. MEMO 36 United States/dollar2 116.57 125.34 138.19 152.83 158.43 158.14 149.56 149.92 147.71 1. Value in U.S. cents. NOTE. Averages of certified noon buying rates in New York for cable transfers. 2. Index of weighted-average exchange value of U.S. dollar against currencies Data in this table also appear in the Board's G.5 (405) release. For address, see of other G-10 countries plus Switzerland. March 1973 = 100. Weights are 1972-76 inside front cover. 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 p. 700 of the August 1978 BULLETIN. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 SMSAs Standard metropolitan statistical areas when the smallest unit given is millions) Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other politi- "U.S. government securities" may include guaranteed cal subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables details do not add to totals because of also include not fully guaranteed issues) as well as direct rounding. STATISTICAL RELEASES List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases June 1985 A83 SPECIAL TABLES Published Irregularly, with Latest Bulletin Reference Assets and liabilities of commercial banks, March 31, 1983 August 1983 A70 Assets and liabilities of commercial banks, June 30, 1983 December 1983 A68 Assets and liabilities of commercial banks, September 30, 1983 March 1984 A68 Assets and liabilities of commercial banks, December 31, 1983 June 1984 A66 Assets and liabilities of U.S. branches and agencies of foreign banks, March 31, 1984 November 1984 A4 Assets and liabilities of U.S. branches and agencies of foreign banks, June 30, 1984 April 1985 A70 Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1984 April 1985 A74 Assets and liabilities of U.S. branches and agencies of foreign banks, December 31, 1984. August 1985 A76 Terms of lending at commercial banks, February 1985 June 1985 A70 Terms of lending at commercial banks, May 1985 August 1985 A70 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Board of Governors PAUL A. VOLCKER, Chairman HENRY C. WALLICH PRESTON MARTIN, Vice Chairman J. CHARLES PARTEE OFFICE OF BOARD MEMBERS OFFICE OF STAFF DIRECTOR FOR MONETARY AND FINANCIAL POLICY JOSEPH R. COYNE, Assistant to the Board DONALD J. WINN, Assistant to the Board STEPHEN H. AXILROD, Staff Director STEVEN M. ROBERTS, Assistant to the Chairman DONALD L. KOHN, Deputy Staff Director ANTHONY F. COLE, Special Assistant to the Board STANLEY J. SIGEL, Assistant to the Board NAOMI P. SALUS, Special Assistant to the Board NORMAND R.V. BERNARD, Special Assistant to the Board LEGAL DIVISION DIVISION OF RESEARCH AND STATISTICS MICHAEL BRADFIELD, General Counsel JAMES L. KICHLINE, Director J. VIRGIL MATTINGLY, JR., Deputy General Counsel EDWARD C. ETTIN, Deputy Director RICHARD M. ASHTON, Associate General Counsel MICHAEL J. PRELL, Deputy Director OLIVER IRELAND, Associate General Counsel JOSEPH S. ZEISEL, Deputy Director RICKI TIGERT, Assistant General Counsel JARED J. ENZLER, Associate Director MARYELLEN A. BROWN, Assistant to the General Counsel DAVID E. LINDSEY, Associate Director ELEANOR J. STOCKWELL, Associate Director THOMAS D. SIMPSON, Deputy Associate Director OFFICE OF THE SECRETARY LAWRENCE SLIFMAN, Deputy Associate Director HELMUT F. WENDEL, Deputy Associate Director WILLIAM W. WILES, Secretary MARTHA BETHEA, Assistant Director BARBARA R. LOWREY, Associate Secretary ROBERT M. FISHER, Assistant Director JAMES MCAFEE, Associate Secretary DAVID B. HUMPHREY, Assistant Director SUSAN J. LEPPER, Assistant Director RICHARD D. PORTER, Assistant Director DIVISION OF CONSUMER PETER A. TINSLEY, Assistant Director AND COMMUNITY AFFAIRS LEVON H. GARABEDIAN, Assistant Director (Administra tion) GRIFFITH L. GARWOOD, Director JERAULD C. KLUCKMAN, Associate Director GLENN E. LONEY, Assistant Director DIVISION OF INTERNATIONAL FINANCE DOLORES S. SMITH, Assistant Director EDWIN M. TRUMAN, Director LARRY J. PROMISEL, Senior Associate Director DIVISION OF BANKING CHARLES J. SIEGMAN, Senior Associate Director SUPERVISION AND REGULATION DALE W. HENDERSON, Associate Director ROBERT F. GEMMILL, Staff Adviser WILLIAM TAYLOR, Director PETER HOOPER III, Assistant Director THOMAS E. CIMENO, JR., Deputy Director' DAVID H. HOWARD, Assistant Director FREDERICK R. DAHL, Associate Director RALPH W. SMITH, JR., Assistant Director DON E. KLINE, Associate Director FREDERICK M. STRUBLE, Associate Director HERBERT A. BIERN, Assistant Director ANTHONY CORNYN, Assistant Director ROBERT S. PLOTKIN, Assistant Director STEPHEN C. SCHEMERING, Assistant Director RICHARD SPILLENKOTHEN, Assistant Director SIDNEY M. SUSSAN, Assistant Director LAURA M. HOMER, Securities Credit Officer 1. On loan from the Federal Reserve Bank of Boston. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 and Official Staff EMMETT J. RICE MARTHA R. SEGER LYLE E. GRAMLEY OFFICE OF OFFICE OF STAFF DIRECTOR FOR STAFF DIRECTOR FOR MANAGEMENT FEDERAL RESERVE BANK ACTIVITIES S. DAVID FROST, Staff Director THEODORE E. ALLISON, Staff Director EDWARD T. MULRENIN, Assistant Staff Director JOSEPH W. DANIELS, SR., Adviser, Equal Employment CHARLES L. HAMPTON, Senior Technical Adviser Opportunity Programs, Federal Reserve System PORTIA W. THOMPSON, Equal Employment Opportunity Programs Officer DIVISION OF FEDERAL RESERVE BANK OPERATIONS DIVISION OF COMPUTING SERVICES CLYDE H. FARNSWORTH, JR., Director BRUCE M. BEARDSLEY, Director ELLIOTT C. MCENTEE, Associate Director THOMAS C. JUDD, Assistant Director DAVID L. ROBINSON, Associate Director ELIZABETH B. RIGGS, Assistant Director C. WILLIAM SCHLEICHER, JR., Associate Director ROBERT J. ZEMEL, Assistant Director WALTER ALTHAUSEN, Assistant Director CHARLES W. BENNETT, Assistant Director ANNE M. DEBEER, Assistant Director DIVISION OF INFORMATION SERVICES JACK DENNIS, JR., Assistant Director EARL G. HAMILTON, Assistant Director WILLIAM R. JONES, Director WILLIAM E. PASCOE III, Assistant Director2 STEPHEN R. MALPHRUS, Assistant Director FLORENCE M. YOUNG, Adviser RICHARD J. MANASSERI, Assistant Director WILLIAM C. SCHNEIDER, JR., Assistant Director DIVISION OF PERSONNEL DAVID L. SHANNON, Director JOHN R. WEIS, Assistant Director CHARLES W. WOOD, Assistant Director OFFICE OF THE CONTROLLER GEORGE E. LIVINGSTON, Controller BRENT L. BOWEN, Assistant Controller DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director WALTER W. KREIMANN, Associate Director GEORGE M. LOPEZ, Assistant Director 2. On loan from the Federal Reserve Bank of Richmond (Baltimore Branch). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin • September 1985 Federal Open Market Committee FEDERAL OPEN MARKET COMMITTEE PAUL A. VOLCKER, Chairman E. GERALD CORRIGAN, Vice Chairman JOHN J. BALLES SILAS KEEHN EMMETT J. RICE ROBERT P. BLACK PRESTON MARTIN MARTHA R. SEGER ROBERT P. FORRESTAL J. CHARLES PARTEE HENRY C. WALLICH STEPHEN H. AXILROD, Staff Director and Secretary J. ALFRED BROADDUS, Associate Economist NORMAND R.V. BERNARD, Assistant Secretary RICHARD G. DAVIS, Associate Economist NANCY M. STEELE, Deputy Assistant Secretary DONALD L. KOHN, Associate Economist MICHAEL BRADFIELD, General Counsel DAVID E. LINDSEY, Associate Economist JAMES H. OLTMAN, Deputy General Counsel MICHAEL J. PRELL, Associate Economist JAMES L. KICHLINE, Economist KARL A. SCHELD, Associate Economist EDWIN M. TRUMAN, Economist (International) CHARLES J. SIEGMAN, Associate Economist JOSEPH R. BISIGNANO, Associate Economist SHEILA L. TSCHINKEL, Associate Economist PETER D. STERNLIGHT, Manager for Domestic Operations, System Open Market Account SAM Y. CROSS, Manager for Foreign Operations, System Open Market Account FEDERAL ADVISORY COUNCIL LEWIS T. PRESTON, President PHILIP F. SEARLE, Vice President WILLIAM H. BOWEN, E. PETER GILLETTE, AND N. BERNE HART, Directors ROBERT L. NEWELL, First District HAL C. KUEHL, Seventh District LEWIS T. PRESTON, Second District WILLIAM H. BOWEN, Eighth District GEORGE A. BUTLER, Third District E. PETER GILLETTE, JR., Ninth District JULIEN L. MCCALL, Fourth District N. BERNE HART, Tenth District JOHN G. MEDLIN, JR., Fifth District NAT S. ROGERS, Eleventh District PHILIP F. SEARLE, Sixth District G. ROBERT TRUEX, JR., Twelfth District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

and Advisory Councils CONSUMER ADVISORY COUNCIL TIMOTHY D. MARRINAN, Minneapolis, Minnesota, Chairman THOMAS L. CLARK, JR., New York, New York, Vice Chairman RACHEL G. BRATT, Medford, Massachusetts LAWRENCE S. OKINAGA, Honolulu, Hawaii JONATHAN BROWN, Washington, D.C. JOSEPH L. PERKOWSKI, Centerville, Minnesota JEAN A. CROCKETT, Philadelphia, Pennsylvania ELVA QUIJANO, San Antonio, Texas THERESA FAITH CUMMINGS, Springfield, Illinois BRENDA L. SCHNEIDER, Detroit, Michigan STEVEN M. GEARY, Jefferson City, Missouri PAULA A. SLIMAK, Cleveland, Ohio RICHARD M. HALLIBURTON, Kansas City, Missouri GLENDA G. SLOANE, Washington, D.C. CHARLES C. HOLT, Austin, Texas HENRY J. SOMMER, Philadelphia, Pennsylvania EDWARD N. LANGE, Seattle, Washington TED L. SPURLOCK, New York, New York KENNETH V. LARKIN, Berkeley, California MEL STILLER, Boston, Massachusetts FRED S. MCCHESNEY, Atlanta, Georgia CHRISTOPHER J. SUMNER, Salt Lake City, Utah FREDERICK H. MILLER, Norman, Oklahoma WINNIE F. TAYLOR, Gainesville, Florida MARGARET M. MURPHY, Columbia, Maryland MICHAEL M. VAN BUSKIRK, Columbus, Ohio ROBERT F. MURPHY, Detroit, Michigan MERVIN WINSTON, Minneapolis, Minnesota HELEN NELSON, Mill Valley, California MICHAEL ZOROYA, St. Louis, Missouri THRIFT INSTITUTIONS ADVISORY COUNCIL THOMAS R. BOMAR, Miami, Florida, President RICHARD H. DEIHL, LOS Angeles, California, Vice President ELLIOTT G. CARR, Harwich Port, Massachusetts JOHN A. HARDIN, Rock Hill, South Carolina M. TODD COOKE, Philadelphia, Pennsylvania FRANCES LESNIESKI, East Lansing, Michigan J. MICHAEL CORNWALL, Dallas, Texas JOHN T. MORGAN, New York, New York HAROLD W. GREENWOOD, JR., Minneapolis, Minnesota SARAH R. WALLACE, Newark, Ohio MICHAEL R. WISE, Denver, Colorado Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Board Publications Copies are available from PUBLICATIONS SERVICES, THE ECONOMETRICS OF PRICE DETERMINATION CONFER- Mail Stop 138, Board of Governors of the Federal Reserve ENCE, October 30-31, 1970, Washington, D.C. 1972. 397 System, Washington, D.C. 20551. When a charge is indicat- pp. Cloth ed. $5.00 each; 10 or more to one address, ed, remittance should accompany request and be made $4.50 each. Paper ed. $4.00 each; 10 or more to one payable to the order of the Board of Governors of the Federal address, $3.60 each. Reserve System. Remittance from foreign residents should ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— be drawn on a U.S. bank. Stamps and coupons are not Regulation Z) Vol. I (Regular Transactions). 1969. 100 accepted. pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each volume $2.25; 10 or more of same volume to one THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- address, $2.00 each. TIONS. 1984. 120 pp. FEDERAL RESERVE MEASURES OF CAPACITY AND CAPACITY ANNUAL REPORT. UTILIZATION. 1978. 40 pp. $1.75 each; 10 or more to one FEDERAL RESERVE BULLETIN. Monthly. $20.00 per year or address, $1.50 each. $2.00 each in the United States, its possessions, Canada, THE BANK HOLDING COMPANY MOVEMENT TO 1978: A and Mexico; 10 or more of same issue to one address, COMPENDIUM. 1978. 289 pp. $2.50 each; 10 or more to $18.00 per year or $1.75 each. Elsewhere, $24.00 per one address, $2.25 each. year or $2.50 each. FLOW OF FUNDS ACCOUNTS. 1949-1978. 1979. 171 pp. $1.75 BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint each; 10 or more to one address, $1.50 each. of Part I only) 1976. 682 pp. $5.00. INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; BANKING AND MONETARY STATISTICS. 1941-1970. 1976. 10 or more to one address, $1.25 each. 1,168 pp. $15.00. PUBLIC POLICY AND CAPITAL FORMATION. 1981. 326 pp. ANNUAL STATISTICAL DIGEST $13.50 each. 1974-78. 1980. 305 pp. $10.00 per copy. NEW MONETARY CONTROL PROCEDURES: FEDERAL RE- 1980. 1981. 241 pp. $10.00 per copy. SERVE STAFF STUDY. 1981. 1981. 1982. 239 pp. $ 6.50 per copy. SEASONAL ADJUSTMENT OF THE MONETARY AGGREGATES: 1982. 1983. 266 pp. $ 7.50 per copy. REPORT OF THE COMMITTEE OF EXPERTS ON SEASONAL 1983. 1984. 264 pp. $11.50 per copy. ADJUSTMENT TECHNIQUES. 1981. 55 pp. $2.75 each. FEDERAL RESERVE CHART BOOK. Issued four times a year in FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updat- February, May, August, and November. Subscription ed at least monthly. (Requests must be prepaid.) includes one issue of Historical Chart Book. $7.00 per Consumer and Community Affairs Handbook. $60.00 per year or $2.00 each in the United States, its possessions, year. Canada, and Mexico. Elsewhere, $10.00 per year or Monetary Policy and Reserve Requirements Handbook. $3.00 each. $60.00 per year. HISTORICAL CHART BOOK. Issued annually in Sept. Subscrip- Securities Credit Transactions Handbook. $60.00 per year. tion to the Federal Reserve Chart Book includes one Federal Reserve Regulatory Service. 3 vols. (Contains all issue. $1.25 each in the United States, its possessions, three Handbooks plus substantial additional material.) Canada, and Mexico; 10 or more to one address, $1.00 $175.00 per year. each. Elsewhere, $1.50 each. Rates for subscribers outside the United States are as SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- follows and include additional air mail costs: RIES OF CHARTS. Weekly. $15.00 per year or $.40 each in Federal Reserve Regulatory Service, $225.00 per year. the United States, its possessions, Canada, and Mexico; Each Handbook, $75.00 per year. 10 or more of same issue to one address, $13.50 per year THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A or $.35 each. Elsewhere, $20.00 per year or $.50 each. MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50 each. THE FEDERAL RESERVE ACT, as amended through August 30, WELCOME TO THE FEDERAL RESERVE. 1984. with an appendix containing provisions of certain PROCESSING BANK HOLDING COMPANY AND MERGER APPLIother statutes affecting the Federal Reserve System. 576 CATIONS. pp. $7.00. THE MONETARY AUTHORITY OF THE FEDERAL RESERVE, REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- May 1984. (High School Level.) ERAL RESERVE SYSTEM. WRITING IN STYLE AT THE FEDERAL RESERVE. August 1984. REAPPRAISAL OF THE FEDERAL RESERVE DISCOUNT MECHA- 93 pp. $2.50 each. NISM. Vol. 1. 1971. 276 pp. Vol. 2. 1971. 173 pp. Each REMARKS BY CHAIRMAN PAUL A. VOLCKER, AT XIII AMERIvolume, $3.00; 10 or more to one address, $2.50 each. CAN-GERMAN BIENNIAL CONFERENCE, March 1985. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 CONSUMER EDUCATION PAMPHLETS 130. EFFECTS OF EXCHANGE RATE VARIABILITY ON IN- Short pamphlets suitable for classroom use. Multiple copies TERNATIONAL TRADE AND OTHER ECONOMIC VARIAavailable without charge. BLES: A REVIEW OF THE LITERATURE, by Victoria S. Farrell with Dean A. DeRosa and T. Ashby McCown. January 1984. 21 pp. Alice in Debitland 131. CALCULATIONS OF PROFITABILITY FOR U.S. DOLLAR- Consumer Handbook on Adjustable Rate Mortgages DEUTSCHE MARK INTERVENTION, by Laurence R. Consumer Handbook to Credit Protection Laws Jacobson. October 1983. 8 pp. The Equal Credit Opportunity Act and . . . Age 132. TIME-SERIES STUDIES OF THE RELATIONSHIP BE- The Equal Credit Opportunity Act and . . . Credit Rights in TWEEN EXCHANGE RATES AND INTERVENTION: A Housing REVIEW OF THE TECHNIQUES AND LITERATURE, by The Equal Credit Opportunity Act and . . . Doctors, Law- Kenneth Rogoff. October 1983. 15 pp. yers, Small Retailers, and Others Who May Provide Inci- 133. RELATIONSHIPS AMONG EXCHANGE RATES, INTERdental Credit VENTION, AND INTEREST RATES: AN EMPIRICAL IN- The Equal Credit Opportunity Act and . . . Women VESTIGATION, by Bonnie E. Loopesko. November Fair Credit Billing 1983. 20 pp. Federal Reserve Glossary 134. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET Guide to Federal Reserve Regulations INTERVENTION: A REVIEW OF THE LITERATURE, by How to File A Consumer Credit Complaint Ralph W. Tryon. October 1983. 14 pp. If You Borrow To Buy Stock 135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET If You Use A Credit Card INTERVENTION: APPLICATIONS TO CANADA, GERMA- Instructional Materials of the Federal Reserve System NY, AND JAPAN, by Deborah J. Danker, Richard A. Series on the Structure of the Federal Reserve System Haas, Dale W. Henderson, Steven A. Symansky, and The Board of Governors of the Federal Reserve System Ralph W. Tryon. April 1985. 27 pp. The Federal Open Market Committee 136. THE EFFECTS OF FISCAL POLICY ON THE U.S. ECONO- Federal Reserve Bank Board of Directors MY, by Darrell Cohen and Peter B. Clark. January Federal Reserve Banks 1984. 16 pp. Monetary Control Act of 1980 137. THE IMPLICATIONS FOR BANK MERGER POLICY OF Organization and Advisory Committees FINANCIAL DEREGULATION, INTERSTATE BANKING, Truth in Leasing AND FINANCIAL SUPERMARKETS, by Stephen A. U.S. Currency Rhoades. February 1984. 8 pp. What Truth in Lending Means to You 138. ANTITRUST LAWS, JUSTICE DEPARTMENT GUIDE- LINES, AND THE LIMITS OF CONCENTRATION IN LO- CAL BANKING MARKETS, by James Burke. June 1984. 14 pp. STAFF STUDIES.- Summaries Only Printed in the 139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN Bulletin THE UNITED STATES, by Thomas D. Simpson and Studies and papers on economic and financial subjects that Patrick M. Parkinson. August 1984. 20 pp. are of general interest. Requests to obtain single copies of 140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF the full text or to be added to the mailing list for the series THE LITERATURE, by John D. Wolken. November may be sent to Publications Services. 1984. 38 pp. 141. A COMPARISON OF DIRECT DEPOSIT AND CHECK PAY- MENT COSTS, by William Dudley. November 1984. 15 Staff Studies 115-125 are out of print. pp. 142. MERGERS AND ACQUISITIONS BY COMMERCIAL BANKS, 1960-83, by Stephen A. Rhoades. December 114. MULTIBANK HOLDING COMPANIES: RECENT EVI- 1984. 30 pp. DENCE ON COMPETITION AND PERFORMANCE IN 143. COMPLIANCE COSTS AND CONSUMER BENEFITS OF BANKING MARKETS, by Timothy J. Curry and John T. THE ELECTRONIC FUND TRANSFER ACT: RECENT Rose. Jan. 1982. 9 pp. SURVEY EVIDENCE, by Frederick J. Schroeder. April 126. DEFINITION AND MEASUREMENT OF EXCHANGE MAR- 1985. 23 pp. KET INTERVENTION, by Donald B. Adams and Dale 144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CON- W. Henderson. August 1983. 5 pp. SUMER CREDIT REGULATIONS: THE TRUTH IN LEND- 127. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- ING AND EQUAL CREDIT OPPORTUNITY LAWS, by VENTION: JANUARY-MARCH 1975, by Margaret L. Gregory E. Elliehausen and Robert D. Kurtz. May Greene. August 1984. 16 pp. 1985. 10 pp. 128. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- 145. SERVICE CHARGES AS A SOURCE OF BANK INCOME VENTION: SEPTEMBER 1977-DECEMBER 1979, by Mar- AND THEIR IMPACT ON CONSUMERS, by Glenn B. garet L. Greene. October 1984. 40 pp. Canner and Robert D. Kurtz. August 1985. 31 pp. 129. U.S. EXPERIENCE WITH EXCHANGE MARKET INTER- VENTION: OCTOBER I98O-OCTOBER 1981, by Margaret L. Greene. August 1984. 36 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 REPRINTS OF BULLETIN ARTICLES A Financial Perspective on Agriculture. 1/84. Most of the articles reprinted do not exceed 12 pages. Survey of Consumer Finances, 1983. 9/84. Bank Lending to Developing Countries. 10/84. Survey of Consumer Finances, 1983: A Second Report. The Commercial Paper Market since the Mid-Seventies. 6/82. 12/84. Applying the Theory of Probable Future Competition. 9/82. Union Settlements and Aggregate Wage Behavior in the International Banking Facilities. 10/82. 1980s. 12/84. Foreign Experience with Targets for Money Growth. 10/83. The Thrift Industry in Transition. 3/85. Intervention in Foreign Exchange Markets: A Summary of U.S. International Transactions in 1984. 5/85. Ten Staff Studies. 11/83. A Revision of the Index of Industrial Production. 7/85. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 Index to Statistical Tables References are to pages A3-A68 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 19, 20 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 22 Banks, by classes, 18-20 Turnover, 15 Domestic finance companies, 37 Depository institutions Federal Reserve Banks, 10 Reserve requirements, 7 Financial institutions, 26 Reserves and related items, 3, 4, 5, 12 Foreign banks, U.S. branches and agencies, 21 Deposits (See also specific types) Nonfinancial corporations, 36 Banks, by classes, 3, 18-20, 21 Automobiles Federal Reserve Banks, 4, 10 Consumer installment credit, 40, 41 Turnover, 15 Production, 47, 48 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) BANKERS acceptances, 9, 23, 24 Discounts and advances by Reserve Banks (See Loans) Bankers balances, 18-20 (See also Foreigners) Dividends, corporate, 35 Bonds (See also U.S. government securities) New issues, 34 EMPLOYMENT, 45 Rates, 24 Eurodollars, 24 Branch banks, 21, 55 Business activity, nonfinancial, 44 FARM mortgage loans, 39 Business expenditures on new plant and equipment, 36 Federal agency obligations, 4, 9, 10, 11, 31, 32 Business loans (See Commercial and industrial loans) Federal credit agencies, 33 Federal finance Debt subject to statutory limitation, and types and CAPACITY utilization, 46 ownership of gross debt, 30 Capital accounts Receipts and outlays, 28, 29 Banks, by classes, 18 Treasury financing of surplus, or deficit, 28 Federal Reserve Banks, 10 Treasury operating balance, 28 Central banks, discount rates, 67 Federal Financing Bank, 28, 33 Certificates of deposit, 24 Federal funds, 5, 17, 19, 20, 21, 24, 28 Commercial and industrial loans Federal Home Loan Banks, 33 Commercial banks, 16, 19 Federal Home Loan Mortgage Corporation, 33, 38, 39 Weekly reporting banks, 19-21 Federal Housing Administration, 33, 38, 39 Commercial banks Federal Land Banks, 39 Assets and liabilities, 18-20 Federal National Mortgage Association, 33, 38, 39 Commercial and industrial loans, 16, 18, 19, 20, 21 Federal Reserve Banks Consumer loans held, by type, and terms, 40, 41 Condition statement, 10 Loans sold outright, 19 Discount rates (See Interest rates) Nondeposit funds, 17 U.S. government securities held, 4, 10, 11, 30 Real estate mortgages held, by holder and property, 39 Federal Reserve credit, 4, 5, 10, 11 Time and savings deposits, 3 Federal Reserve notes, 10 Commercial paper, 23, 24, 37 Federally sponsored credit agencies, 33 Condition statements (See Assets and liabilities) Finance companies Construction, 44, 49 Assets and liabilities, 37 Consumer installment credit, 40, 41 Business credit, 37 Consumer prices, 44, 50 Loans, 19, 40, 41 Consumption expenditures, 51, 52 Paper, 23, 24 Corporations Financial institutions Nonfinancial, assets and liabilities, 36 Loans to, 19, 20, 21 Profits and their distribution, 35 Selected assets and liabilities, 26 Security issues, 34, 65 Float, 4 Cost of living (See Consumer prices) Flow of funds, 42, 43 Credit unions, 26, 40 (See also Thrift institutions) Foreign banks, assets and liabilities of U.S. branches and Currency and coin, 18 agencies, 21 Currency in circulation, 4, 13 Foreign currency operations, 10 Customer credit, stock market, 25 Foreign deposits in U.S. banks, 4, 10, 19, 20 Foreign exchange rates, 68 DEBITS to deposit accounts, 15 Foreign trade, 54 Debt (See specific types of debt or securities) Foreigners Demand deposits Claims on, 55, 57, 60, 61, 62, 64 Banks, by classes, 18-21 Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 GOLD REAL estate loans Certificate account, 10 Banks, by classes, 16, 19, 20, 39 Stock, 4, 54 Financial institutions, 26 Government National Mortgage Association, 33, 38, 39 Terms, yields, and activity, 38 Gross national product, 51 Type of holder and property mortgaged, 39 Repurchase agreements, 5, 17, 19, 20, 21 HOUSING, new and existing units, 49 Reserve requirements, 7 Reserves INCOME, personal and national, 44, 51, 52 Commercial banks, 18 Industrial production, 44, 47 Depository institutions, 3, 4, 5, 12 Installment loans, 40, 41 Federal Reserve Banks, 10 Insurance companies, 26, 30, 39 U.S. reserve assets, 54 Interest rates Residential mortgage loans, 38 Bonds, 24 Retail credit and retail sales, 40, 41, 44 Consumer installment credit, 41 Federal Reserve Banks, 6 SAVING Foreign central banks and foreign countries, 67 Flow of funds, 42, 43 Money and capital markets, 24 National income accounts, 51 Mortgages, 38 Savings and loan associations, 8, 26, 39, 40, 42 (See also Prime rate, 23 Thrift institutions) Time and savings deposits, 8 Savings deposits (See Time and savings deposits) International capital transactions of United States, 53-67 Securities (See specific types) International organizations, 57, 58, 60, 63, 64 Federal and federally sponsored credit agencies, 33 Inventories, 51 Foreign transactions, 65 Investment companies, issues and assets, 35 New issues, 34 Investments (See also specific types) Prices, 25 Banks, by classes, 18, 19, 20, 21, 26 Special drawing rights, 4, 10, 53, 54 Commercial banks, 3, 16, 18-20, 39 State and local governments Federal Reserve Banks, 10, 11 Deposits, 19, 20 Financial institutions, 26, 39 Holdings of U.S. government securities, 30 New security issues, 34 LABOR force, 45 Ownership of securities issued by, 19, 20, 26 Life insurance companies (See Insurance companies) Rates on securities, 24 Loans (See also specific types) Stock market, 25 Banks, by classes, 18-20 Stocks (See also Securities) Commercial banks, 3, 16, 18-20 New issues, 34 Federal Reserve Banks, 4, 5, 6, 10, 11 Prices, 25 Financial institutions, 26, 39 Student Loan Marketing Association, 33 Insured or guaranteed by United States, 38, 39 TAX receipts, federal, 29 MANUFACTURING Capacity utilization, 46 Thrift institutions, 3 (See also Credit unions, Mutual Production, 46, 48 savings banks, and Savings and loan associations) Margin requirements, 25 Time and savings deposits, 3, 8, 13, 17, 18, 19, 20, 21 Member banks (See also Depository institutions) Trade, foreign, 54 Federal funds and repurchase agreements, 5 Treasury cash, Treasury currency, 4 Reserve requirements, 7 Treasury deposits, 4, 10, 28 Mining production, 48 Treasury operating balance, 28 Mobile homes shipped, 49 UNEMPLOYMENT, 45 Monetary and credit aggregates, 3, 12 U.S. government balances Money and capital market rates, 24 Commercial bank holdings, 18, 19, 20 Money stock measures and components, 3, 13 Treasury deposits at Reserve Banks, 4, 10, 28 Mortgages (See Real estate loans) U.S. government securities Mutual funds, 35 Bank holdings, 18-20, 21, 30 Mutual savings banks, 8, 26, 39, 40 (See also Thrift Dealer transactions, positions, and financing, 32 institutions) Federal Reserve Bank holdings, 4, 10, 11, 30 Foreign and international holdings and transactions, 10, 30, 66 NATIONAL defense outlays, 29 National income, 51 Open market transactions, 9 Outstanding, by type and holder, 26, 30 Rates, 24 OPEN market transactions, 9 U.S. international transactions, 53-67 Utilities, production, 48 PERSONAL income, 52 Prices VETERANS Administration, 38, 39 Consumer and producer, 44, 50 Stock market, 25 WEEKLY reporting banks, 19-21 Prime rate, 23 Wholesale (producer) prices, 44, 50 Producer prices, 44, 50 Production, 44, 47 YIELDS (See Interest rates) Profits, corporate, 35 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 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 Joseph A. Baute Frank E. Morris Thomas I. Atkins Robert W. Eisenmenger NEW YORK* 10045 John Brademas E. Gerald Corrigan Clifton R. Wharton, Jr. Thomas M. Timlen Buffalo 14240 M. Jane Dickman John T. Keane PHILADELPHIA 19105 Robert M. Landis Edward G. Boehne Nevius M. Curtis Richard L. Smoot CLEVELAND* 44101 William H. Knoell Karen N. Horn E. Mandell de Windt William H. Hendricks Cincinnati 45201 Robert E. Boni Charles A. Cerino Pittsburgh 15230 Milton G. Hulme, Jr. Harold J. Swart RICHMOND* 23219 Leroy T. Canoles, Jr. Robert P. Black Robert A. Georgine Jimmie R. Monhollon Baltimore 21203 Robert L. Tate Robert D. McTeer, Jr. Charlotte 28230 Wallace J. Jorgenson Albert D. Tinkelenberg Culpeper Communications John G. Stoides and Records Center 22701 ATLANTA 30301 John H. Weitnauer, Jr. Robert P. Forrestal Bradley Currey, Jr. Jack Guynn Birmingham 35283 Martha Mclnnis Fred R. Herr Jacksonville 32231 E. William Nash, Jr. James D. Hawkins Miami 33152 Eugene E. Cohen Patrick K. Barron Nashville 37203 Condon S. Bush Jeffrey J. Wells New Orleans 70161 Leslie B. Lampton Henry H. Bourgaux CHICAGO* 60690 Stanton R. Cook Silas Keehn Robert J. Day Daniel M. Doyle Detroit 48231 Russell G. Mawby Roby L. Sloan ST. LOUIS 63166 W.L. Hadley Griffin Thomas C. Melzer Mary P. Holt Joseph P. Garbarini Little Rock 72203 Sheffield Nelson John F. Breen Louisville 40232 Henry F. Frigon James E. Conrad Memphis 38101 Donald B. Weis Paul I. Black, Jr. MINNEAPOLIS 55480 John B. Davis, Jr. Gary H. Stern Michael W. Wright Thomas E. Gainor Helena 59601 Gene J. Etchart Robert F. McNellis KANSAS CITY 64198 Irvine O. Hockaday, Jr. Roger Guffey Robert G. Lueder Henry R. Czerwinski Denver 80217 James E. Nielson Wayne W. Martin Oklahoma City 73125 Patience Latting William G. Evans Omaha 68102 Kenneth L. Morrison Robert D. Hamilton DALLAS 75222 Robert D. Rogers Robert H. Boykin Bobby R. Inman William H. Wallace El Paso 79999 John R. Sibley Joel L. Koonce, Jr. Houston 77252 Robert T. Sakowitz J.Z. Rowe San Antonio 78295 Robert F. McDermott Thomas H. Robertson SAN FRANCISCO 94120 Alan C. Furth John J. Balles Fred W. Andrew Richard T. Griffith Los Angeles 90051 Richard C. Seaver Robert M. McGill Portland 97208 Paul E. Bragdon Angelo S. Carella Salt Lake City 84125 Don M. Wheeler E. Ronald Liggett Seattle 98124 John W. Ellis 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 at Oriskany, 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

A80 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories HAWAII • H HQ 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

Publications of Interest FEDERAL RESERVE CONSUMER CREDIT sumer credit protections. This 44-page booklet ex- PUBLICATIONS plains how to use the credit laws to shop for credit, apply for it, keep up credit ratings, and complain about an unfair deal. The Federal Reserve Board publishes a series of Protections offered by the Electronic Fund Transfer pamphlets covering individual credit laws and topics, Act are explained in Alice in Debitland. This booklet as pictured below. The series includes such subjects as offers tips for those using the new "paperless" syshow the Equal Credit Opportunity Act protects wom- tems for transferring money. en against discrimination in their credit dealings, how Copies of consumer publications are available free to use a credit card, and how to use Truth in Lending of charge from Publications Services, Mail Stop 138, information to compare credit costs. Board of Governors of the Federal Reserve System, The Board also publishes the Consumer Handbook Washington, D.C. 20551. Multiple copies for classto Credit Protection Laws, a complete guide to con- room use are also available free of charge. IMSS The Equal Credit Opportunity Act LE4SINO and . .. \The LE4SMG ll Equal Credit LE4SMG I Opportunity Act and TRUTH IN LE45IN6 Credit Rights In Housing What Thith In Lending Means To You Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE REGULATORY SERVICE The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with exten- To promote public understanding of its regulatory sions of credit for the purchase of securities, together functions, the Board publishes the Federal Reserve with all related statutes, Board interpretations, rul- Regulatory Service, a three-volume looseleaf service ings, and staff opinions. Also included is the Board's containing all Board regulations and related statutes, list of OTC margin stocks. interpretations, policy statements, rulings, and staff The Consumer and Community Affairs Handbook opinions. For those with a more specialized interest in contains Regulations B, C, E, M, Z, AA, and BB and the Board's regulations, parts of this service are associated materials. published separately as handbooks pertaining to mon- For domestic subscribers, the annual rate is $175 for etary policy, securities credit, and consumer affairs. the Federal Reserve Regulatory Service and $60 for These publications are designed to help those who each handbook. For subscribers outside the United must frequently refer to the Board's regulatory materi- States, the price including additional air mail costs is als. They are updated at least monthly, and each $225 for the Service and $75 for each Handbook. All contains conversion tables, citation indexes, and a subscription requests must be accompanied by a check subject index. or money order payable to Board of Governors of the The Monetary Policy and Reserve Requirements Federal Reserve System. Orders should be addressed Handbook contains Regulations A, D, and Q plus to Publications Services, Mail Stop 138, Federal Rerelated materials. For convenient reference, it also serve Board, 20th Street and Constitution Avenue, contains the rules of the Depository Institutions N.W., Washington, D.C. 20551. Deregulation Committee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis