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BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Office Correspondence To Goreraor Bccles Frnm Woodlief Thomas pate j^e ^ 1948 Subject' Attached are tables giving figures you wanted, together with some others that may be of interest to you* You will note in the first table that loans of all commercial banks increased by an estimated 1 # 3 billion in the first five months of this year compared with an increase of 2 billion in the same period last year* The total of currency and deposits, especially when TJ* S* Government deposits are excluded, has declined by somewhat more in the first five months of this year than they did in the same period last year* Loans at member banks in leading cities, shown in the second table, account for little of the increase in total loans at all commercial banks* Loans on real estate and consumer loans at city banks have increased this year by about as much as they did in the same period last year* Commercial loans have shown a small decline compared with a small increase last year* lie do not yet have data on -types of loans at banks outside leading cities where most of the loan increase has occurred* The third table gives the tabulations from John Langumfs statement* The increase in loans and security holdings (excluding U* S* Government securities) at commercial banks in the two years March 19I46 to March I9I4B amounted to Iiu3 billion, corresponding to the net excess of Treasury cash receipts over payments to the public other than debt transactions* In this period* however, the Treasury redeemed 8*5 billion of debt held outside of the banking system* As a consequence the expansion in bank credit considerably more than offset net withdrawals of funds from the public by the Treasury* For this reason, together with gold movements and some of the other factors shown, there was a continued increase in deposits and currency held by the public* Other tables show changes in wholesale prices, industrial production, and gross national product* The wholesale price index is now back to the January peak* The consumer price index (cost of living) has risen to a new high level* Industrial production remains close to the postwar maximum* The gross national product continues to increase, reflecting mostly price rises* Attachments Principal Assets and Liabilities of All Commercial Banks Figures partly estimated (In billions of dollars) Change, May 26, Dec. 31, Dec. May 28, Dec. 19*8 to 19*7 May 19*8 Loans and investments, total U.S. Government securities Other securities Loans Reserves, cash and bank balances 11*. 116. h -3.3 9.2 39.* 9.0 38.1 32.8 37.5 10.7 2.* -2.3 +0.9 +0.2 +1.3 112.9 Change, Dec. * to May .0 -l.l -3.3 71.5 8.3 33.1 8.1 31.1 +0.2 +2.0 31.7 3*.2 -2.5 12.7 3.1 83.3 33.8 -1.2 -0.9 -1.8 Deposits Interbank U. S. Government......... Demand, adjusted Time 83.3 35.5 13.0 1.5 87.I 35.2 Capital accounts. 10.3 10.1 +0.2 11.5 2.2 81.5 3*.5 9.8 168.1 171.3 1.5 +0.9 165.0 2.2 I67.I 3.1 -2.1 -0.9 162.8 i6k.o -1.2 81.5 83.3 -1.8 *.O +1.2 +0.7 +0.* +0.1 -0.6 -3.8 +0.3 9.6 +0.7 +0.2 Memoranda Deposits and currency, total U.S. Government deposits. Total, excluding U. S. Government deposits Demand deposits, adjusted 165.7 83.3 87.I -3.8 Time deposits, total Commercial banks......... Mutual savings banks..... Postal savings... 57.0 35.5 18.1 3.* 56.* 35.2 17.7 3.* +0.6 +0.3 +0.* 17.3 3.* 33 16.9 3.3 Currency outside banks..... 25.* 26.* -1.0 26.1 26.7 Banking Section, BOASD OF GOVERNORS June 2*, 19*8 Loans at Member Banks In Loading Cities (In billions of dollars) June 1 19*8 Change, Change, Dec. 31, Dec. 19*7 June 18, Dec. 31, Dec. 19*6 *6 to 19*7 19*7 to June 19*7 June 19*8 Loans, total..... +0.3 20.1 19.* +0.7 Cowwrcial and agricultural.. 1*.2 1*.7 -0.* 11.8 11.3 +0.5 Real estate.... 3.8 3.5 +0.3 2.9 2.5 +0.* For purchasing securities..., 1.7 1.7 2.2 2.7 -0.5 Loans to banks. 0.2 0.1 +0.1 0.2 0.1 +0.1 Other (largely consuner)..... 3.6 3.* +0.2 3.0 2.8 +0.2 Banking Section, BQABD 0? G07EEH0RS June 2k, 19*8 Statement of Factors Affecting Demand Deposits and Currency Held by the Public March 19^6 -- March 1 9 ^ (In billions of dollars) Factors expanding demand deposits and currency; 1. Increase In earning assets of commercial banks., other than U. S. Government securities...... • lU.3 a* Loans ................ b. Corporate and municipal securities.. • • 2. Gold acquisitions. . . • •••••.••. 12.5 1.8 3.6 Factors contracting demand deposits and currency: 1. Treasury operations.. ........ • ...... a* Net excess of cash receipts over payments to the public, other than in borrowing or repayment of borrowing. * b. Less net redemption of nonbank held debt c. Net market sale of Government securities for Treasury Investment and other accounts 2. Increase In time deposits at commercial banks. • 7*0 •• 14.3 -8.5 1.2 k.k 3. Net market sale of Government securities by the commercial banking system. .(JwJjuVjjg. T*. JU P « * A ) 1.7 Increase in demand deposits and currency held by the public Increase in demand deposits, adjusted Decrease In currency outside banks • 5.2 -0.5 Tabulation based on analysis by John K. Langum presented at the meeting of the Federal Open Market Committee on May 20, H8 Note: About 28 billion dollars of U. S. Government securities held by the commercial banks and Federal Reserve Banks were retired for cash during this period. These retirements may be said to have been accomplished In part out of a 7 billion increment from Treasury operations and the balance (21 billion) through a reduction of Treasury cash balances. The 7 billion surplus Increment Is already shown separately as a factor contracting public deposits and currency. The 21 billion dollar retirement of bank held debt out of accumulated balances had no net direct effect on public holdings of deposits and currency. Banking Section, BQAED OF GOVERNORS June 2k, WHOLESALE PRICES Other Commodities Farm All Foods Commodities Products Total Building Materials Index ]lumbers, '.L926 average = 100 1939 77.1 65.3 70.4 81.3 90.5 1945 105.8 128.2 !L06.2 99.7 117.8 1946June 112.9 1I+0.1 :L12.9 105.6 129.9 1947Jan. June 11+1.5 11+7.6 165.0 177.9 :L56.2 :L61.8 127.6 131.1+ 169.7 1948Jan. Feb. June 165.7 160.8 165.5 199.2 185.3 195.5 :L79-9 li+8.2 :172.1+ li+7.5 :180.0 11+9.3 193.1 192.6 197.5 Percentage increase to June 191+8 from: 1939 1H+.7 199.1+ 191+5 56.1+ 52.5- 191+7June 12.1 9.9 1948Feb. 2.9 5.5 83.6 118.2 69.5- 1+9.7 67.7 11.2 13.6 13.2 1.2 2.5 •1-55-7 Note 1—Bureau of Labor Statistics data; June 1948 figures estimated by Federal Reserve. f
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