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BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
To.

Date
Subject!

Chairman Eccles

October 22, 1QJ|7

Changes in holdings of

bonds by denoTrn nations

Thomas Lee Smith

Total holdings of Series nEn bonds increased in the first half
of I9I4.7 for the first time since I9k5* The increase, however, was entirely
in denominations of {200 and over, and holdings of lower denominations continued to decrease though at a slower rate than in 19lj.6# Total holdings
increased by 528 million, 2t|6 million because of an excess of sales over
redemptions and 280 million because of additions to accrued discount* By
denominations, sales of $200 and larger bonds exceeded redemptions by 787
million, but sales of smaller denominations were 5k2 million dollars less
than redemptions« The net redemption of |25 and #10 bonds was 350 million
dollars*
The following data with respect to the changes in holdings of
E bonds have been condensed from the attached table which shows changes
in sales and redemptions of all U» S» Savings Bonds •
n n

CHANGES IN HOLDINGS OF w E n BONDS

(In millions of dollars)

?10, $25
bonds

Excluding accrued discount
$50, $100 $200, $500, $1,000
bonds
bonds

Total

Including
accrued
discount,
total

3,1427
I,li32

3.583
1,629

Jan.-June
July-Dec*

783
- 37

1,233
1+05

1,14.08
1,067

Jan.-June
July-Bec«

-600
-508

293
329

378
1485

605
352

- 367
- 96

-350

- 192

787

2ljS

528




To*

Chairman Eccles

- 2 -

Changes in holdings since June are not available by bond denominations* Aggregate holdings, however, have been quite steady during
the last six months« Following an increase of 1427 million in the first
quarter (excluding accrued discount), when sales are seasonally high prior
to exhaustion of the purchase limit, holdings have decreased by 77 wad 70
million in the second and third quarters, respectively*
As shown in the more detailed table attached, aggregate redemptions of nBn bonds increased sharply for a year affcer the end of the war
in mid-1945, rising from 2*1 billion dollars in the first half of 1945 to
3*0 billion in the first half of 1946# At the same time, sales fell off
even more rapidly, from 5*5 billion to 2 # 4 billion in the same two periods*
As a result, aggregate holdings decreased #6 billion in the first half of
19i+6f or else by »4 billion if the increase in accrued discount is added
to holdings* This marks the first and also the greatest decline in nEn bond
holdings that has occurred* Holdings, including accrued discount, decreased
only #1 billion in the second half of 1946, and then increased by #5 billion
in the first half of
k
The improvement since the first half of 1946 is accounted for by
a large reduction in the volume of redemptions, reversing the previous upward trend, which has exceeded in amount a further reduction in the volume
of purchases* Redemptions decreased from 3«>0 billion in the first half of
1946 to 2*0 billion in the first half of 1947, while sales were decreasing
from 2*4 to 2#3 billion* The facts that redemptions are now no larger than
in the first half of 1945 a 1* that sales have turned upward from a low point
-1 *
of 2«C billion in the second half of 1946, reflect the effect of a rising
level of income and the elimination of many of the more transitory investors
who, under the incentive of patriotism, had purchased more bonds than they
could afford*
The increasing permanence of the investments in ttEw bonds is also
shown by the decline in the proportion of redemptions to total amounts outstanding which has been in progress beginning in the last half of 1946 for
all denominations of bonds* The decline in the redeemed proportion of
smaller denomination bonds ($50 and under) began even earlier* The redeemed
proportion of the smaller denomination bonds as well as of the total of all
n n
E bonds has fellen below the level in the first half of 1945 # tut the redeemed proportion of larger denomination bonds has not yet fallen below the
earlier level* The estimated proportions redeemed in selected periods are
as follows:
REDEMPTIONS OF "E* BONDS AS PER CENT
OF AMOCJNT OOTSTANDINCT AT BEGHOrilG OF PERIOD
$10

1945
Jaiu-June
July-Dec*
1946
Jan*-June
July-Dec.




$25

|5£

34*6
35»6

15#1 10*5
17#9 13*0

5*3
6#8

~
—

3*6
4*4

3.5
4*2

8*2
9*9

30*9
23 •&

15*9 12*5
12*7 10*0

7,8
6*5

9*6
6*5

5*9
4*9

5*8
4*7

9#9
7*9

18*3

10.2

5*6

7*0

4*6

4*5

6.6

8*2

$100

$200

$500

$1,000

Total

To*

Chairman Eccles

- 3 -

The pattern of redemptions and sales of smaller denominations
($100 or less) has differed somewhat from that of larger denominations•
The peak redemptions of the smaller denomination bonds occurred in JulyDecember 19U5 rather than in January-June 19^6; and the vdlume of sales
of the smaller denominations has continued to decrease while that of
larger denominations turned upward in July-December
Attachment




U» S. SAVINGS BONDS, SALES AND REDEMPTIONS
(In millions of d o l l a r s )

#10

•25

$50

Series "En bonds
$100
|200
$500

Total

11,000

"G*

"A-D"

Total

1914.5

Jan# * June
Sales
Redemptions
Net
Accrued dis»
July - Dec*
Sales
Redemptions
Net
Accrued dis«
191+6
Jan« - June
Sales
Redemptions
Net
Accrued dis*
July - Dec*
Sales
Redemptions
Net
Accrued dis»
19^7
Jan* - June
Sales
Redemptions
Net
Accrued dis#
•

1,850
811
1,101
352
• 3k • 749 •a+59
*
*

1,087
313
+ 77*+

606
1,392
1+3
21
1+99
59 •107
• 22 •
*

756
1+58

115

•298

+115

•317
*

80
11
+ 69
*

280
257
+ 23

57
12

286
217
+ 69

21
25

*

709
1,295
—586

1+98

*
211
383
-172

11
18

7
*

-501
*

6
13

-

I4.66
967

393
197
736 302
-31+3 -105

- 7
*

•

—

•

31+8
51+7
-199
•

289
144-6
-157

+ 45

•

291+
381

- 87
*

• '156

•316
• 11

1+.3O6
2,871+
+1,1+32
• 197

232
58
+171+
+ 15

1,032
li+5
+ 887

2,1+33
3,038
- 605
+ 238

176
91

1,1+33
203

+ 85
• 19

•1,230

H+9
98

1,203
222
+ 98I

1+05

•286
*
713
3l+2
+371

•

63
16
+ 1+7

Not available*
GOVERNMENT FINANCE SECTION, BOARD OF GOVERNORS
October 2 1 , I9U7




363
1+7

691

I+96
179

2,089

901
266
+635
*

+495
*

•

332
209
•123

5,516

1,100
187
+ 913
*

623
128

2,033

2,385
- 352
•

968

1

351
+617

256

2,251+
2,006
•
•

2148
280

+ 51
+ 22
210
105
•105
+ 27

+1,111

—

7,367
2,361

-105

+ 52

*120
•1,368

•5,006
• 219

120

5,570
3,197

-120
• 61

•2,373
• 265

188
-188

3^520
• 521
• 308

202

-202
+ 51+

280
-280
• 51+

3,385
2,907
+ 478
+ 331
3,922:
2,638

•1,18^
• 360