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FEDERAL RESERVE BANK of KANSAS CITY L,lt -3 MAY 19 1958 RESEARCH LIBRARY BANKING ASP MONETARY DEVELOPMENTS HT APRIL 1958 Summary. Commercial bank credit rose s u b s t a n t i a l l y further In April r e f l e c t i n g largely Increased holdings of tf. S. Government s e c u r i t i e s . Seasonally adjusted demand deposit and currency holdings of businesses and Individuals continued t o r i s e . Time deposits Increased further. Free reserves of member banks Increased s l i g h t l y further, averaging over $500 m i l l i o n . In midApr 11, the discount rate a t most Reserve Banks was reduced t o 1 - 3 / 4 per c e n t . Subsequently, the prime rate was reduced t o 3 - 1 / 2 per c e n t . Reserves required t o be maintained against net demand deposits were reduced further by 1 per cent a t central reserve c i t y banks and by l / 2 per cent a t reserve c i t y banks. Bank c r e d i t . Total loans and Investments a t a l l commercial banks ,Increased $3.4 b i l l i o n further during A p r i l , considerably more than in any other recent year> as shown In Table 1. Most of the increase was in holdings of U. S . Government s e c u r i t i e s which rose $3.2 b i l l i o n , much more than In p a s t y e a r s . On April 15, commercial banks i n i t i a l l y acquired $2.5 b i l l i o n of the $4 b i l l i o n issue of 2 - 5 / 8 per cent Treasury notes of 1963. Holdings of "other s e c u r i t i e s " a l s o rose much more than usual. Total loans declined s l i g h t l y whereas In most other recent years except 1954 and 1949 they had increased. Reductions In business loans were o f f s e t In large part by growth in other loan categories e s p e c i a l l y loans t o security dealers. In the April reporting period l a s t year, t o t a l credit increased $2.4 b i l l i o n , of which three-quarters was In holdings of U. S. Government s e c u r i t i e s and most of the remainder In loans. On March 28, commercial banks i n i t i a l l y acquired $3.2 b i l l i o n of the $3.4 b i l l i o n Issues of new Treasury notes and c e r t i f i c a t e s but subsequently reduced t h e i r holdings of Governments. Business loans were about unchanged while most other loan categories increased. Business loans decreased $ 8 6 5 m i l l i o n a t c i t y banks during the f i v e weeks ending April 30, as shown i n Table 2 . This more than o f f s e t the March increase and brought the t o t a l reduction thus f a r t h i s year t o more than $ 2 . 1 b i l l i o n . The A p r i l decline was s l i g h t l y l e s s than In 1949 but much more than i n any other postwar year. Twot h i r d s of the decline was in loans t o s a l e s finance companies and metals manufacturers, both of which had increased t h e i r borrowings appreciably during the March tax period. However, i n a l l other recent years, loans t o s a l e s finance companies have Increased i n A p r i l . Seasonal reductions by food processors and commodity dealers Hot f o r publication 1.4.3, ~ 2 • Table 1 Estimated Changes In Loans and Investments at A l l Commercial Banks ~~ (In b i l l i o n s of d o l l a r s ) Item Total loans (excluding interbank) Business Beal e s t a t e Security Agricultural Consumer A l l other 1958: 1957: 1958: 1957: Mar. 28Mar. 27Jan. 1— Jan. 1 Apr. 30 Apr. 24 Apr. 30 Apr. 24 - 0.2 + + + 0.9 0.1 0.7 0.1 0.1 0.1 + 0.6 + + + 1/ 0.2 0.1 0.3 0.1 Year ending: Apr. 30, Apr. 24, 1958 1957 - 1.8 + 0.1 + 1.6 + 5.8 + + + - 0.3 + 0.3 1/ - 0.5 - 0.1 + 0.4 - 0.1 + + + + + + + + 2.2 0.2 0.9 0.2 - 0.5 0.7 0.8 1.1 0.2 0.4 1/ 4.2 1.1 0.6 0.2 1.2 0.3 + 1.8 + 4.6 - 1.1 + 5.3 - 0.7 Other s e c u r i t i e s + 0.4 + 0.2 + 1.4 + 0.4 + 2.6 + 0.1 + 3.4 + 2.4 + 4.0 - 0.7 + 9.5 + 5.1 1956 1955 Mar. 31Apr. 27 1954 A p r . 1A p r . 28 2/ 1953 1952 1951 Total loans and investments ( l e s s Interbank) Total loans (excluding interbank) Business Beal e s t a t e Security Agricultural Consumer A l l other U. S. Government s e c u r i t i e s Other s e c u r i t i e s Total loans and Investments ( l e s s interbank) 2/ Mar. 2 9 Apr. 25 2/ CVJ CVJ Item vo o\ + 3.2 u % 36 U, S. Government s e c u r i t i e s Mar. 2 7 - Mar. 29Apr. 30 Apr. 25 + 0.6 + 0.6 - 0.5 + 0.3 + 0.4 + + + - + + + + - 0.5 + 0.1 1/ - 0.3 - 0.6 + 0.1 + + + + 0.6 0.1 0.1 0.1 - 0.6 0.3 0.2 0.1 0.1 + 0.3 1/ - 0.4 1/ + 0.2 0.2 0.2 0.2 0.5 0.3 + 0.1 1/ + 0.1 - 0.1 + 0.1 1/ - 0.1 + 0.3 + 0.2 + 1.4 + 1.4 - + 0.1 + 0*1 + 0.1 + 1.1 -1.3 - 1/ + 2.0 1.6 0.2 1/ + - 0.1 0.1 0.2 0.9 1/ + 1.1 - 0.3 1/ - 0.3 Data for April are a f f e c t e d by the date of the l a s t Wednesday of March r e l a t i v e t o the April 1 personal property tax date in Cook County, I l l i n o i s . Note; Data f o r April 30, 1958 are preliminary estimates based on data f o r weekly reporting member banks and estimates for other banks. Later estimates f o r April v l l l be shown in the Board's statement "Assets and L i a b i l i t i e s of A l l Banks in the United States" available at the end of May. Hot f o r publication L.4.3 • 3 •* Table 1 - continued Estimated Changes l a Loans and Investments a t A l l Commercial Banks (In b i l l i o n s of dollara) Item Total loans (excluding Interbank) Business Beal e s t a t e Security Agricultural Consumer A l l other 1956 Jan. 1 Apr. 25 1954 1955 Jan. 1 - Jan« 1 Apr. 27 Apr, 28 1952 1953 Jan. 1 Apr. 29 1951 Jan. 1 - Jan. 1Apr. 30 Apr. 25 + 1.9 + 1.4 - 1.1 + 0.7 + 0.2 + 1.7 + 1.6 + 0*6 + + - + + + + + + + + + + + + - 0*6 0.7 0.8 0.2 0.8 1.0 0*2 0*6 0*5 0.1 0.3 0.5 0.1 0.9 0.2 0.7 0.2 0.3 0.1 0.2 1/ 1.7 0.4 0.6 0.1 1/ + 0.2 - 0*2 + 0.5 + 0.1 + 0.6 + 0.2 - Uo S» Government s e c u r i t i e s - 3.4 - 3.4 - 1.3 - 4.4 - 1.0 - 3.5 Other s e c u r i t i e s - 0.1 + 0.7 + 0.5 + 0.3 + 0.4 + 0.2 - 1.6 - 1*2 - 1.9 - 3.6 - 0.6 - 1.7 Total loans and Investments ( l e s s interbank) l/ Less than $50 m i l l i o n . Not f o r publication 0.3 u L.4.3 - 4 Table 2 Changes l a Commercial and Industrial Loans l / ( l a m i l l i o n s of d o l l a r s } 34 + 105 + 3 + 226 + i48 + 352 - 40 - 189 + 43 • Q7 10 25 + 17 + 51 6 + 117 - kpo - 300 + ?2 + 34 + I % - 4o6 + 19 + 25 13 + - 66 12 18 +1 + - 295 - 131 + 20 1 1 + 177 166 - 34 + 52 + 15 - 18 + + 30 X + 32 + 32 + T3 32 + 28 - - 10 + 19 + 20 - + 269 + 49 + 220 2 / - 210 - 432 - 186 - 119 85 - 499 - 72 + 31T 2/+ - 6l8 - 204 - 571 68 — 887 + 22 - 865 - to + 18 + 1 10 RfB 1/ 2/ + § $ Total change + 2T0 - 2T2 - 2 + • 71 ±—§2 - 130 - 113 + T6 1 1 + Classified Unclassified - 216 - 117 - 203 - 166 - 116 + V - 2TT - 57 - 92 + 121 - 28 1 + • A l l other - t o t a l Metals and products T e x t i l e s , apparel and leather Petroleum, c o a l , e t c . Other manufacturing and mining Public u t i l i t i e s Construction A l l other types of business 1952 1953 Mar. 26— Mar. 27Apr. 29 Apr. 3® 1 • Sales finance - 118 - 95 1 1 +| 1 • Food processors Commodity dealers Trade concerns Total 1956 1954 1957 1955 Mar. 27- Mar. 28- Mar. 29- Mar. 31~ Apr. 1 May 2 May 4 Apr. 30 May 1 May 5 1958 - 1 +1 + • Business of Borrower Prior t o week ending January 11, 1956, included changes l a a g r i c u l t u r a l loans. Includes CCC c e r t i f i c a t e s of Indebtedness which are estimated t o have declined $170 m i l l i o n . Note: C l a s s i f i e d data f o r f o r a sample of about 210 banks reporting changes l a t h e i r larger loans, these banks hold over 90 per cent of t o t a l commercial and Industrial loans of a l l weekly reporting banks and nearly TO per cent of those of a l l commercial banks. Data are preliminary f o r week of April 30, 1959. Hot f o r publication - 5 Table 2 - continued L.4.3 Changes In Commercial and I n d u s t r i a l Loans l / (In m i l l i o n s of d o l l a r s ) F i r s t f o u r months of year Business of Borrower 1958 216 - + 312 - + 595 + 877 +1,862 + 973 + 7* 47 + 126 + 78 + + 154 255 + - 60 46 5 + + 169 + + 246 232 - + 2 - 25 - 143 — -1,909 231 + 377 - 195 +1,387 + 50 -2,1# + 183 +1,437 Sales finance - 685 A l l other - t o t a l Metals and products T e x t i l e s , apparel and l e a t h e r Petroleum, c o a l , e t c . Other manufacturing and mining Public u t i l i t i e s Construction A l l other types of business - 30 41 + - T o t a l change - 685 95 43 1952 - 653 - 438 - Ill -1,202 226 - 444 - 373 + 6? - 752 - 416 331 62 809 453 - 417 + 182 - 688 2*9 + 375 - 185 - + 819 - 114 167 + 620 + 3W +1,030 + 99* + 313 + - 53 33 + 129 + 50 + + 75 + 107 + 32 + 3* 18 35 + 26 + 100 + 5 + 67 - 87 26 O tr\ + - 423 - 3*8 - 42 - 813 - 1953 + 248 19* - 2*1 - 267 -1,193 195* 1955 - Food processors Commodity d e a l e r s Trade concerns Total Classified Unclassified 1956 1957 30 - 72 + Wn -1,109 2 / - 257 l h 1 2 6 70 - 187 - 501 *7 2 / + 184 - 257 - 548 75 + 185 + 32 2/-l,235 - 1 - 328 1 155 l/ 2/ Prior t o week ending January 11, 1956, Included changes In a g r i c u l t u r a l l e a n s . Includes CCC c e r t i f i c a t e s of I n t e r e s t which are estimated t o have declined — $370 m i l l i o n . Jj}/ Includes CCC c e r t i f i c a t e s of I n t e r e s t which are estimated t o have Increased $125 m i l l i o n . Rotes C l a s s i f i e d data are f o r a sample of about 210 banks reporting changes In t h e i r larger l o a n s , t h e s e banks hold over $0 per cent of t o t a l commercial and i n d u s t r i a l loans of a l l weekly reporting banks and nearly 70 per cent of those of a l l commercial banks. Data are preliminary f o r week of A p r i l 30, 1958* got for publication continued but a t a l e s s rapid rate than In other y e a r s . Reductions in loans t o the t e x t i l e industry were larger than in other years and increases in loans t o trade concerns generally vere smaller. Loans t o public u t i l i t i e s , which had been declining e a r l i e r in the year, increased In A p r i l . The $ 2 . 1 b i l l i o n reduction i n business loans so f a r t h i s year exceeded the declines i n the f i r s t four months of the recession years 194-9 and 1954 by $500 m i l l i o n and $900 m i l l i o n , r e s p e c t i v e l y . In s i x of the t h i r t e e n postwar years, business loans increased. Reductions in the seasonal industries—food processors, commodity d e a l e r s , and trade concerns—have been larger than usual and have accounted f o r over half the t o t a l d e c l i n e . Repayments by s a l e s finance companies a l s o have been s u b s t a n t i a l , accounting f o r most of the remainder. Other Industry categories have tended t o show only small changes. Security loans rose sharply during e a r l y - and mid-April, mainly loans t o brokers and dealers in connection with the Treasury f i n a n c i n g . Subsequently, they declined somewhat. So f a r t h i s year, these loans have increased $900 m i l l i o n compared with a reduction of $500 m i l l i o n l a s t year. Consumer loans declined further i n April bringing the y e a r ' s reduction t o $500 m i l l i o n . Last year, they had increased $400 m i l l i o n . On the other hand, r e a l e s t a t e and a g r i c u l t u r a l loans Increased somewhat t h i s year compared with l i t t l e change l a s t year. So f a r t h i s year, t o t a l credit a t a l l commercial banks has Increased $4 b i l l i o n . Holdings of U. S. Government s e c u r i t i e s have increased $ 4 . 6 b i l l i o n and holdings of "other s e c u r i t i e s " , $1.4 b i l l i o n . Total loans have dropped $1.8 b i l l i o n , however. In the comparable period of a l l other postwar years, t o t a l c r e d i t has declined from $1 b i l l i o n t o almost $4 b i l l i o n . Generally reductions i n holdings of U. S. Government s e c u r i t i e s have been s u b s t a n t i a l and have been o f f s e t i n part by increases i n holdings of "other s e c u r i t i e s " and growth in loans. Only i n 1954, 19^9> and 1946, did t o t a l loans decline in any substantial volume and reductions i n these years were considerably l e s s than in 1958. Deposits and currency. Preliminary estimates indicate t h a t demand deposit and currency holdings of businesses and individu a l s , seasonally adjusted, rose $400 m i l l i o n further in April as shown in Table 3 . This followed $900 m i l l i o n increases in both February and March. At the April monthend, the p r i v a t e l y - h e l d money supply was about l / 2 per cent below i t s year-ago l e v e l . So f a r t h i s year, i t has increased $1.2 b i l l i o n — o r a t an annual rate of about 2 - 3 / 4 per cent—twice as much as i n the comparable period l a s t year. Hot f o r publication L.4.3 - 7 Table 3 Estimated Changes In Deposits and Currency (In b i l l i o n s of d o l l a r s ) Item Seasonally adjusted data l / Demand deposits adjusted Currency outside banks Total Unadjusted data l / Demand deposits adjusted Currency outside banks Total Time deposits Commercial Mutual savings U. S 0 Government deposits Total Factors a f f e c t i n g deposits and currency Bank loans and Investments other than U. S. Govt. s e c . Commercial Mutual savings Bank holdings of U. S. Government s e c u r i t i e s : Federal Beserve Commercial Mutual saving and other Gold stock and f o r e i g n deposits a t F. B. Banks Other f a c t o r s 4 / V Tear ending: 1957 Mar. 27- Mar. 28- Jan; 1 - Jan. 1 - Apr. 30, Apr. 24, Apr. 30 Apr. 24 Apr. 30 Apr. 24 1958 1957 1958 1957 1958 + 0.3 + 0.1 + 0.4 + 0*3 2/ + 0.3 + 1.6 + 2.1 + 0.1 + 2.1 2/ + 2.1 - 3i6 + 2i2 + 1;2 + 1.1 + Oil - OiP + 2.9 + 0.3 + 0.3 + 0A + 2.8 - 0;4 + 1.2 - + + + + + 0i8 4.4 4.6 3;8 0;8 1.2 1.5 + 0.6 2/ + 0.6 - 0.6 -2/ - 0.6, - 4.1 - 0.9 - 5.0 + + 0.6 0.1 0.5 8.8 + + + + 7.02.1 1.2 9.5 + 2.7 + + + - 2.3 0.4 0.2 2.1 + 1.2 + 0.4 + 1.6 + 1.2 + 0.4 + 1.6 + + + - 5.6 4.1 1.7 0.3 + 6.9 (signs indicate e f f e c t on deposits and currency) + 0i4 + 1*0 + 0.8 + 0.? - 0;5 + O.p + 0.5 + 7.1 + 0;2 + 0.2 + 0.2 + 1.0 + 0.8 + 2.5 + 3»? + 0;2 + 1.7 + 4i0 - 0.6 + 4.6 2/ - + ?.2 + 0.5 + 5.3 - - - - 0.8 - 2.2 + 0.4 - 0.4 + 0.1 + 0.1 + 1.8 - 0.2 - 0;5 - 0.5 + 0.1 + 3;2 2/ 3.0 - 1.7 - 1.1 - 0.1 + 4.2 0.6 - 0.2 - 2.6 + 8.3 + 5.9 + 2.4 !•? 0.1 - 0.7 0.8 + 0.5 - 0.4 Seasonally adjusted data are f o r l a s t Wednesday throughout; unadjusted data are f o r l a s t Wednesday except in case of June and December c a l l dates, vhen a v a i l a b l e . Less than $50 m i l l i o n . Total includes f o r e i g n loans on gold, holdings of bankers' acceptances a t the Federal Beserve, and loans t o f o r e i g n banksj changes In these Items are generally r e l a t i v e l y small. In addition even i f there were no changes in these items, changes a t commercial and mutual savings banks would not add t o t o t a l change •which i s "net" because commercial banks exclude a l l Interbank loans, domestic and f o r e i g n . y Includes Interbank time d e p o s i t s , largely held by f o r e i g n banks, which Increased $1 b i l l i o n between December 31, 1957# and April 30, 1958 a t weekly reporting banks. Note: Data f o r A p r i l 30, 1958 are preliminary estimates based on data f o r weekly reporting member banks and estimates f o r other banks. Later estimates f o r April w i l l be shown In the Board' s statement, "Assets and L i a b i l i t i e s of A l l Banks i n the United States" available a t the end of Bay. Hot f o r publication % The seasonally adjusted r i s e In the money supply in April was only s l i g h t l y larger than in April l a s t year. Over the f i r s t four reporting weeks of April, demand deposits adjusted at c i t y banks rose considerably more rapidly than l a s t year or i n most other recent y e a r s . In the week ending April 30, however, they declined substantia l l y as i s o f t e n the case in t h i s week. The comparable week i n 1957 ended on May 1 and was included in the May reporting period. Time deposits at commercial and mutual savings banks increased $1.2 b i l l i o n further in April, about one-fourth l e s s than i n March. In general, however, growth i n time deposits i s smaller i n April than in surrounding months. Time deposits of f o r e i g n banks (included in "other factors" on Table 3) increased somewhat further i n April, but as in March, the rate of accumulation was much smaller than in the early weeks of the year. increased any other about the more than increased but about So f a r t h i s year, time deposits a t commercial banks have $3.8 b i l l i o n , much more than i n the comparable period of year. Last year, these deposits had increased $2.3 b i l l i o n , same as the sharp growth in 1945 and again, s u b s t a n t i a l l y in other y e a r s . Deposits a t mutual savings banks have $800 m i l l i o n so f a r t h i s year, twice as much as l a s t year, the same as in many other recent y e a r s . U . S . Government deposits declined $500 m i l l i o n in April from t h e i r unusually high end-of-March l e v e l . Last year i n April, they had increased about $500 m i l l i o n . On balance, t o t a l deposits and currency rose $ 2 . 9 b i l l i o n , about the same as in April l a s t year. The e f f e c t on deposits of the past month1a sharp credit growth was o f f s e t in part by further gold outflows and changes in other f a c t o r s absorbing d e p o s i t s . The seasonally adjusted annual rate of demand deposit turnover a t banks outside Hew York and other f i n a n c i a l centers averaged 22.7 times during the f i r s t quarter of 1958, about the same as in the fourth quarter of 1957 and about 4 per cent l e s s than the t h i r d quarter peak. At banks in Hew York City, however, turnover rose further during the f i r s t quarter of 1958, averaging 8 per cent more than in the t h i r d quarter of 1957« Bank reserves. Free reserves of member banks averaged $530 m i l l i o n in April compared with $490 m i l l i o n i n March as shown In Table 4 . At central reserve c i t y banks i n Hew York, however, p o s i t i o n s tightened somewhat with borrowings about equalling excess r e s e r v e s . In Chicago, a small volume of net borrowed reserves continued t o p r e v a i l . P o s i t i o n s were s l i g h t l y l e s s easy in reserve c i t i e s than a month e a r l i e r , but a t country banks, f r e e reserves were somewhat higher. Free reserves averaged l e s s than $500 m i l l i o n i n early April but rose in the l a t t e r part of the month and i n early May t o an average l e v e l Hot f o r publication - 9 Table 4 L.4.3 Free Reserves (Excess reserves minus member bank borrowings; based on average of d a l l y f i g u r e s ; In m i l l i o n s of d o l l a r s ) All member Hew York 25k 158 - 127 - 365 - 29 1 - 112 - 192 - 75 64 - 67 - 95 First Second Third Fourth - - 170 - 147 - 175 - 71 - 113 - 329 First Second Third Fourth - 108 - 485 - 440 - 115 - l4l - 105 - 221 373 428 320 316 224 286 - - 27 365 - 4o - 53 - 253 - 172 - 249 - 242 369 299 280 - 210 - 165 - 263 269 Period Quarterly averages 1955: F i r s t Second Third Fourth 1956: 1957: 1958: 1958J 1958s 96 - 157 - 166 - 88 - 196 - 241 - 109 - 9 117 126 316 505 444 - 41 - 123 - 101 - 300 - 508 - 383 - 471 - 185 - 181 - 289 - 293 - - - 466 - 344 - 133 122 324 493 531 April 552 537 2 9 16 23 30 7 - 313 January February March April May Note; - 256 First 1957 s January February March April May June July August September October November December 310 4n 230 128 429 578 561 572 - 104 Chicago - 56 16 - 48 - 28 - 105 - 26 - 115 - 115 - 123 - 77 - - 25 6 - 18 5 - 254 - i4l - 80 46 24 42 3 93 32 31 11 77 5 14 — - 9 18 6 4 Data f o r second h a l f of April and May are preliminary. Hot f o r publication Beserve City Country - 99 - 150 - 323 - 4l8 457 374 375 341 - 418 - 341 - 214 - 367 488 452 400 433 389 342 - 228 - 144 1 62 35 120 58 22 24 67 12 336 278 338 365 276 192 210 278 244 336 301 252 277 337 353 406 504 325 511 447 582 411 558 E.4.3 - 10 - of $575 m i l l i o n . The e f f e c t i v e rate on Federal funds fluctuated considerably over the month but was always below the discount r a t e . Over April, as shown in Table 51 about $500 m i l l i o n of reserves on a monthly average b a s i s were supplied t o banks through reductions in reserve requirements, and an additional $160 m i l l i o n through System purchases of U. S. Government s e c u r i t i e s . These funds were l a r g e l y absorbed through a gold, outflow of almost $400 m i l l i o n , increases i n required reserves r e s u l t i n g from the month's s u b s t a n t i a l credit and deposit expansion, and an increase in currency in circulation® So f a r t h i s year, f r e e reserves have increased about $670 m i l l i o n while in the comparable period l a s t year, they declined $470 million—a net difference of $ 1 . 1 b i l l i o n . Reserves released through the reductions in reserve requirements so f a r t h i s year, t o t a l i n g $ 1 . 1 b i l l i o n on a monthly average b a s i s , have about equalled the increase in f r e e r e s e r v e s . Reductions in holdings of U. 8 . Government s e c u r i t i e s have amounted t o only $300 m i l l i o n t h i s year compared with $1.5 b i l l i o n l a s t year, but gold outflow has absorbed about $500 m i l l i o n of reserves whereas l a s t year, gold purchases provided $400 m i l l i o n . In addition, required reserves r e s u l t i n g from deposit growth have shown l i t t l e o v e r - a l l change t h i s year while l a s t year, deposits declined and reductions in required reserves provided $300 m i l l i o n of reserve funds. I n t e r e s t r a t e s . E f f e c t i v e between April 18 and May 9, with the approval of tiie Board of Governors, the discount rate was lowered t o 1 - 3 / 4 per cent from 2 - 1 / 4 per cent a t a l l Reserve Banks, In the week following announcement of the reduction in the discount r a t e , p r i n c i p a l banks in Hew York and other large c i t i e s reduced the prime rate—the rate charged on loans t o businesses with highest credit standing—from 4 per cent t o 3-1/2 per cent. The higher rate had been in e f f e c t since January 1958. During April, rates declined 3/8 per cent on 4 - 6 months prime commercial paper and on 3-6 months finance paper t o 1 - 3 / 4 per cent and 1 - 3 / 8 per cent r e s p e c t i v e l y . Rates a l s o dropped l / 4 per cent on bankers f acceptances. Reserve requirements. On April 17, the Board of Governors reduced the reserves required t o be maintained by central reserve c i t y banks against demand deposits by l / 2 per cent e f f e c t i v e April 17 and by an additional l / 2 per cent e f f e c t i v e April 24, About $ 2 6 0 m i l l i o n of funds were r e l e a s e d . Also, e f f e c t i v e April 24, the Board reduced the reserves required t o be maintained by reserve c i t y banks against demand deposits by l / 2 per cent, thereby r e l e a s i n g $190 m i l l i o n of funds. So f a r t h i s year, the three reductions in reserve requirements have released about $1,450 m i l l i o n of funds—$510 m i l l i o n a t central reserve c i t y banks# $580 m i l l i o n a t reserve c i t y banks, and $ 3 6 0 m i l l i o n a t country banks. Hot f o r publication 1,4,3 - 11- Table 5 Changes In Member Bank Reserves, with Relevant Factors (Monthly average of d a i l y f i g u r e s 5 i n m i l l i o n s of d o l l a r s ! Item April 1958 Jan, -Apr Year ending April 1957 1958 + 203 -1,026 - 448 - 366 + 214 -1,110 - 303 - - 504 + 138 + 30 + 214 + - 303 145 + + 1958 1957 1957 Member bank reserve balances Total Required reserves 1 / 2 / E f f e c t of reduction i n requirements E f f e c t of d e p o s i t change Excess reserves l / - Principal factors - -1,126 16 84 11 + 240 847 -1,126 279 154 + 260 + 260 - 20 ( s i g n s indicate e f f e c t on r e s e r v e s ) Currency in c i r c u l a t i o n Gold stock and f o r e i g n accounts Treasury operations Federal Reserve f l o a t Other f a c t o r s 64 - %5 +1,279 +1,162 384 1 + - 24 - + 395 + 29 - 523 - 29 10 E f f e c t of above f a c t o r s on reserves + - 12 86 183 525 23 579 - - 39 - 368 66 110 246 32 + 568 + 168 289 + + 774 - 209 + 424 + 185 - 129 488 - 15% - 101 + J52 + 356 - 924 -1,221 - 482 - 184 + 16: + 18 + 178 + 124 + 54 - 333 - 357 -l,?26 -1,377 - 149 + + 410 517 - 171 - 272 + 101 25 + 14 + 11 323 7 - 881 25 + 49 25 Federal Reserve loans and investments: Total U„ S» Govt, s e c u r i t i e s Outright Repurchase agreements Special c e r t i f i c a t e s Acceptances Discounts and advances t To member banks To others l/ 2/ - 11 - 11 «* 2 - 8 - 1 + + 23 1 + 177 580 6 + + - 108 Data f o r A p r i l 1958 are preliminary, On February 27, 1958, required reserves were reduced about $125 m i l l i o n a t c e n t r a l reserve c i t y banks and about $195 m i l l i o n a t reserve c i t y banks as a r e s u l t of the reduction of l / 2 of 1 per cent in the r e s e r v e s required t o be maintained against net demand depos i t s . On March 1, about $180 m i l l i o n were r e l e a s e d a t country banks as the r e s u l t of a s i m i l a r reduction in reserve requirements. On March 20, required reserves were reduced $125 m i l l i o n a t c e n t r a l reserve c i t y banks and $190 m i l l i o n a t reserve c i t y banks as tiie r e s u l t of a f u r t h e r 1 / 2 percentage reduction 1b reserve requirements „ On A p r i l 1, about $175 m i l l i o n "were r e l e a s e d a t country banks as the r e s u l t of a s i m i l a r reduction. On A p r i l 17, required r e s e r v e s were reduced about $130 m i l l i o n a t c e n t r a l reserve c i t y banks as the r e s u l t of a l / 2 percentage reduct i o n in reserve requirements. On A p r i l 24, they were reduced $130 m i l l i o n further a t c e n t r a l reserve c i t y banks and $190 m i l l i o n a t reserve c i t y banks as the r e s u l t of a l / 2 percentage reduction i n reserve requirements. Hot for publication L 0 4»3 - . , - 12 Loans and Ixrrestments a t A l l Commercial Banks (In b i l l i o n s of d o l l a r s ) Loans and investments Date # # 1947 s 1948: 1949 s 1950s 1951? 1952s 1953s 195%: 1955: Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 31 31 31 31 31 31 31 31 31 116*2 114*2 120; 1 126*6 132 *5 141*5 145.5 155*7 160.3 1956s Mar. 28 June 30 Sept.26 Dec. 31 158*5 159*3 160*7 164.5 # # 1957 s Jan. Feb. Mar. Apr. May June July Aug. 27 24 29 26 31 28 Sept.25 • Oct. 30 Nov. 27 Dec. 31 1958: # 30 27 Jan. Feb. Mar. Apr. 29p 26p 26p 30e 161.6 161*1 l6l*4 163*8 163*8 164*3 164.1 164*6 165*1 166*5/ 165*9 169.3 166*2 167*1 169*9 173.3 p - Preliminary e - Estimated • U . So Govt, Other Total secur- secur- loans ities ities 69*2 62*6 67*0 62*0 61.5 63.3 63*4 69*0 9.0 9.2 10.2 12.4 13.3 14.1 14.7 16.3 37.9 42.4 42.9 52.2 57.6 64.0 67.4 70.4 82.0 61.6 16.7 5 8*6 16.6 16.5 16.6 16.3 89.7 16.2 16.3 87.7 87.9 16.5 16.7 89.1 56*6 57.0 58.6 57*7 56*8 55*7 57*5 57*1 55*5 56*3 56*2 55*9 52*3 56*9 58.2 57*7 58*3 59*6 62.8 ' 16.8 16.8 16.8 16.9 17.1 17.6 17.4 17.9 17.9 18.2 18.9 19.3 83.3 86.2 87.2 89.7 89.9 92.0 91.0 91.5 92.2 91.6 91.5 93.2 90.5 90.6 91.5 91.3 Beal SecuConAll Business e s t a t e r i t y Farm sumer other 18.2 18.9 17.1 21.9 25.9 27.9 27*2 33.2 18.4 20.8 2.1 2.3 2.6 2.9 2.6 3.2 3.6 4.5 5.0 1.7 2.9 3.1 2.9 3.4 3.9 5.0 5.2 4.5 3.8 4.8 5.8 7.4 7.5 9.4 10.9 10.9 13.2 2.9 3.1 3.4 4.2 4.5 4.9 5.1 5.6 6.5 34.5 36.1 37.0 38.7 21.2 21.8 22.3 22.5 4.5 4.4 4.1 4.3 4.4 4.3 4.2 4.2 13.4 14.2 14.4 14.6 6.6 6.8 6.7 7.0 37.6 37,8 39.0 39.0 38.9 40.5 39.6 39.9 40.3' 39.7 39.640.5 22.5 22.5 22.5 22.5 22.5 22.6 22.7 22.8 22.9 22.9 23.0 23.1 3.7 3.7 3.6 3.8 3.8 3.9 3.7 3.8 3.8 3.7 3.6 4.2 4.2 4.2 4.2 4.1 4.1 4.0 3.9 3.8 3.8 4.0 4.0 4.1 14.5 14.5 14.6 14.9 15.1 15.4 15.5 15.6 15.7 15.8 15.7 15.8 6.8 6.8 6.8 6.9 7.0 7.1 7.1 7.1 7.2 7.1 7.2 7.2 38.8 38*6 39.2" 38.3 23.1 23.2 23.2 23.3 3.6 3.9 4.2 4.9 4.2 4.4 4.4 4.3 15.7 15.5 15.4 15.3 7.0 6.9 6.8 6.9 26.9 9.4 10.8 11.5 13.5 14.6 15.7 16.7 *Y**/ Note: Data exclude Interbank loans. Total loans are a f t e r and types of loans before deductions f o r valuation reserves• Consumer and "other loans" are p a r t l y estimated f o r a l l d a t e s . Other data are p a r t l y estimated on a l l but June and December c a l l dates* A l l data f o r April 30, 1958, are estimates and subject t o error. Hot f o r publication Banking Section, Board of Governors, May 13, 1958