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STRICTLY CONFIDENTIAL
J a n u a r y 1 9 , 19li8.
TREASURY FINANCING AND BANK CREDIT
In the first quarter of 1?U8 commercial bank reserves will be
affected by the following factors:
Factors decreasing reserves:
(In millions
of dollars)
Treasury cash transactions—excess of receipts
over expenditures (including about 800 million for
voluntary retirement of maturing securities held
by others than the Federal Reserve but excluding
retirement of Federal Reserve holdings)•
5,800
Sales of savings bonds and notes through war loan
accounts and calls on those accounts
1
Making a total drain from Treasury transactions of
7,300
These will be partly offset by the following:
Increase
Decrease
Decrease
Decrease
in gold stock of about
in currency in circulation of
in required reserves of member banks
in excess reserves
Total
Federal Reserve System will need to purchase in the market
to maintain bank reserves a net amount of
500
700
700
700
2,600
-wjj. 300
Of which it appears that purchases from nonbank
investors may be as much as
Leaving purchases from banks of about
2,100
2,700
Funds will be available for retirement of all Federal Reserve
holdings of certificates and bonds maturing in the quarter (about 2.5 billion
dollars) and of bills at the rate of 100 million a week and still leave the
Treasury on March 31 with i±.6 billion on deposit with Federal Reserve Banks
£ Failure to balance exactly with difference between two previous totals
is due to other factors and to rounding.
and about a billion in war loan accounts. These balances could be reduced
by more rapid retirement of bills or could be retained for subsequent retirement of Federal Reserve-held debt*
These estimates assume a further increase in bank loans of about
1.5 billion in the quarter, as well as continued heavy nonbank sales of
Government securities, vjhich m i l tend to increase bank deposits as an
offset to the drain by the Treasury*
will decline by about 5 billion.
in the first quarter*
Nevertheless commercial bank deposits
They also assume no tax reduction effective
They assume that war loan deposits will be permitted
to increase to about 1 billion dollars (the amount held on December 31)
and then be retained at about that level*
Estimates as to System purchases of Government securities from
nonbank investors, assumed to be $15>0 million each week, may be wide of the
mark*
Purchases of restricted bonds amounted to nearly $500 million in
the first half of January and if they should continue that large the
indicated pressure on banks would be greatly ameliorated.
On the other
hand should sales by these investors be smaller than the amount assumed,
the pressure on banks will be greater*
Pressure might also be increased to
the extent that nonbank investors used proceeds from sales of bonds to
purchase bills and certificates from the Federal Reserve*
It is difficult
to estimate how much these offsetting transactions may be*
Timing of changes*—-The attached tables show the amount of these
various changes by weeks and months during the first quarter of the year
and by months for the second quarter. The last column on the first table
-3-
gives the estimates of the amount of securities that commercial banks
will presumably have to sell to the Federal Reserve in order to maintain
their reserve position. These figures are a measure of the extent of
pressure on the banks.
It will be noted that the pressure does not begin until the last
week of January and will continue rather large for about four weeks. It
will then be moderate for another period of four weeks and be very large
5JI the last half of March, This timing reflects principally the flow of
income tax receipts. The figures shown are based upon estimates of total
taxes that are slightly larger than those implied in the President's
budget statement and assume -a-weekly receipts corresponding closely to the
#
precedent of the last two or three years. This means large receipts in
the latter half of January and the first half of February and again in the
latter half of March.
In view of the unreliable basis for the assumptions as to nonbank
sales of securities to the Federal Reserve, this schedule could be considerably altered by changes in those transactions.
Estimates for second quarter.—In the second quarter of the year,
Treasury cash transactions may be expected to put over 1,J> billion dollars
of funds back into the market* The Treasury can meet these payments, retire
about 1,8 billion of Federal Reserve-held securities, and still have a
cash balance of 2,3 billion at the end of June, Some of this could be used
to retire a small part of the large July 1 maturities.
c
Since increases in required reserves and currency Till be
approximately balanced by continued gold inflow in this quarter, the
Federal Reserve will have to sell about 1»5> billion of securities or take
other action to keep banks from gaining reserves. To the extent that
there are further purchases of securities by the Federal Reserve from
nonbank investors, there will be correspondingly larger amounts of bank
reserves to be absorbed*
c
o
7f
j ,./ r
& » J * .A
/
o
Estimated Changes in Bank Reserves and Re\ A e Bank Purchases
(in millions of dollars)
o
of Government Securities
January 19, 1948
Period
Week ending:
1948 - January 7,*
14..
21..
28..
February 4..
11..
18..
25..
March
3..
10..
17..
24..
31..
Major factors
Member bank reserves
causing reserve> needs
Treasury
BorrowCurrency
deposits
Gold
in
Required
Total
ings and
Excess
stock
with F»R»
circulation Banks 1/
float
+•
+
+
+
+
+
+
+
+
+
+
+
+
8
28
49
50
50
+
50
40
40
50 . +
40
40
40
40
+
50
...
50
...
50
- 308
+ 257
+ 471
+ 610
-1,110
+1,030
+ 610
+ 120
- 220
+ 140
+ 290
+1,360
+ 480
205
284
200
61
50
...
50
+
-
-
15
67
197
72
400
—
90
90
1,740
90
90
90
435
90
240
90
90
- 476
+ 213
+
91
+ 484
+ 505
+ 823
+ 435
+ 261
+ 200
+ 175
+ 273
+1,313
+ 508
+
+
+
+
+
+
+
+
•
+
+
+
+
200 +1,270
3,535
+4,805
+2,113
+2,692
+
-
9
15
Total... +
Month ending:
+
February.... •
+
•
May
+
+
525
-
700
+3,730
-
735 -
700 -1,435
175
175
175
175
175
175
-
700
...
+
50
+1,330
+ 500
+1,900
-1,300
- 800
-1,200
+
+
+
105 2S0 340
188
130
117
600 100 ... +
+
+
January-March... +
+
525
525
+
700
50
+3,730
-3,300
+
735
435
-
Six months••. +1,050
-
650
+
-
300 -
430
Government security holdings
Net market purchases
Securities
(+) Oi bales (• )
Total
retired
Alonbank
Banks
Total
holders 2 / 2/
15 - 876
387 - 396 *
35 + 213
337 + 360 +
1
50 +
250 - 27-2200 - 255 - 150 + 394
50 -1,235
100 - 175
... + 733
100 - 247
....
75 + 100 + 345
...
9 - 100 + 171
...
... - 235
15
...
... +
85
15
...
33
67 + 100
... - 197 - 100 +1,223
—
+ 418
72
9
23
ZZ
55
75
147
75
-
Reserves Bank credit
-
163
300
150
150
150
150
150
150
150
150
150
150
150
-
639
87
59
+ 334
+ 355
+ 673
+ 285
+ 111
+
50
+
25
+ 123
+1,163
+ 358
705 390
340
188
130
117
200 -
50
65
... +1,385
... -1,287
mm*
- 795
-1,258
670
2,010
855
575
360
840
+ 620
+1,945
+2,240
- 712
- 435
- 418
+
+
+
838
600
675
...
...
...
- 218
+1,345
+1,565
...
...
...
700 -1,435
... + 435
-
200 +1,270
... -3,340
3,535
1,775
+4,805
-1,565
+2,113
...
•2,692
...
700 -1,000
-
200 -2,070
5,310
+3,240
1/ See attached table for factors causing changes in Treasury balances.
2/ Figures for nonbank holders for past dates represented by purchases or sales of restricted issues, while those for
banks' are changes in System holdings of all eligible issues. Projections for future are guesses.
—.
S TRICTL.
•
JNFIDEETIAL
TREASUI
IT
SE> BALANCE.
(In millions of dollars)
Period
Statement week ended:
1947 - December 31*,
1948 - January 7*
14*
21
28
January
T a r loan deposits
Treasury deposits with Federal. Reserve Banks
Change
Redemptions
Income
(end of
Calls
Bills { C/I Treas» bonds taxes
period)
Amount
870
562
819
1,290
1,900
- 545
+ 527
+156
-100
-100
—
0+hpr
Amount
Change
Few
(end of
period) securities Galls
968
619
598
+140
+ 465
+ 507
+1,020
+1,590
-
+1,220
+1,030
+1,020
+ 56O
- 380 1,080
970
70
- 300 1,040
- 550 1,110
+200
+ 90
+ 70
+ 70
+ 540
+ 600
+1,650
+1,900
+1,000
-
755
406
450
680
-527
-156
+136
880
t575.
i 6 , 19I+8
Total
Treasury
deposits l /
(end of period)
1,838
1,181
1,417
2,030
2,780
March 3
10
17
24
51
2,550
2,470
2,760
l o n t h ending:
1948 - January
February
March
April
May
June
+200
•MM
+200
+150
-100
-100
-100
-100
-1,850
- 50
- 10
- 10
-100
-100
-100
-100
-100
* 460
- 50
- 10
- 543
-1,900
- 500
4i600
+150
+100
2,200
2,700
4,600
+685
+4oo
-500
+I+00
-400
+4oo
-500 -250
-1+00
-4901 -650
5,500
2,500
1,500
+1+00
+1+00
-4oo
1
t
790
1,820
2,450
2,550
1 1 1
i l l
+140
February 4
11
18
25
-200
1,870
2,790
3,470
5,660
4oo
480
970
570
520
1,070
1,000
1,060
990
1,020
+160
+ 80
+ 60
+ 80
+130
-200
-150
5,400
5,470
-150
-100
5,820
5,110
^,620
1,020
1,020
1,020
+700
+1+00
+I+00
-683
-300
-2,610
+3^400 -1,000
+5,4oo -2,700
1,020
1,020
1,020
+400
+1+00
+1+00
-400
-1+00
-2C0
+1,750 -2,700
+1,800 -2,600
+5,500 -5,850
•280
- 20
-4oo
-400
-4oo
5,220
5,720
5,620
4,520
3,520
2,520
* Actual
l/ T o t a l of Treasury d e p o s i t s a t F e d e r a l Reserve Banks and war loan d e p o s i t accounts; t o t a l does n o t i n c l u d e free
which amounts t o about 1,050 m i l l i o n d o l l a r s , and o t h e r small items i n t h e General Fund b a l a n c e .
GOVERNMENT FINANCE SECTION, BOARD OF GOVERNORS
gold,
PRICES AMD YIELDS OF mXABLB TREASURY BONDS
( P r i o e s i n 32nd»f yi©ld« i n p©ro@ntag«$)
Taxable Treasury Bond
•quotations
12/12/1+7
J'riee
Vield
Issue
Bank eligjiblet
%
Juxm i+9-51
2
Sept, 1+9*51
%
2
Deo. 1+9*51
;•
2
2fcr. 50-52
Proposed Curve
Yield
Price
(Curve
Beading) Bquiir.
I.3I4.
1.56
1.50
1.51}.
1 # 6U
101.ok
101. oLj.
101,08
101.12
101.12
100.00
101.12
101.12
uik
1.69
105.ok
101.08
1.62
1.61
1.75
1.76
102.01+
101,01+
105.01
103.12
1.61+
1.83
2. lit
2.13
102.21+
Sept. 67-72
103.07
2.29
Bank r e s t r i o t e d *
2 1
June 59-62
2 1
Doo. 59-62
100,13
100.13
2.21
2.21
2.27
2.27
99.2k
2
2
2
2
1
1
1
1
Juxw
Dee.
June
Deo.
62-67
63-68
6^*69
(h~t$
102.20
102.06
101.28
101.26
2.29
Ml
2.40
2.U2
2.36
2.1iU
^.2.37
2.U5
101.06
101.00
100.21+
100.2l+
2
2
2
2
1
1
1
1
Mar. 65-70
Mar, 66-71
101.25
101.2lt
100.00
101.00
2.37
2.38
2,1$
2.hk
2.U5
2
Sept;
Dec,
Mu*.
June
June
Dee.
51*53
51-55
52-5U
52*5U
52-55
52-^
101.06
101.08
101.11
101.13
101.17
100.15
101,20
101.25
103.23
101.2U
102.£3
101.27
2 1/^
2 1
yar. 56-58
Sept, 56*59
2 1
8
2
1 1
2
2
sept. 50-52
Dec. 50
$
2 1/ * *
2
2 1
/p.
«hm© 67-72
Dec, 67-72
1.20
1.27
1.31
1.37
l*kk
1.59
1.59
L2I4.
1.35
1.36
1.37
Ml
i.te
101.00
101.00
2.1i7
2.1+7
2.1+7
99.2i+
100.2i+
100.16
100.08
100,08
J o
oaiiuaiy
STRICTLY C
(
DISPOSITION OF MATURED MARKETABLE TREASURY BONDS, NOTES AND CERTIFICATES,
JULY 1 , 191+7 - JUNE 3 0 , 191+9
(In millions of dollars)
Issue
191+7:
19^8:
July 1 ,
Aug. 1 ,
Sept. 1 ,
Sept.15,
Sept.15,
Oct. 1 ,
Oct. 1 5 ,
Nov. 1 ,
Dec. 1,
Dec. 15,
Jan. 1 ,
Feb. 1 ,
Mar. 1 ,
Mar. 1 5 ,
Mar. 1 5 ,
Apr.
June
June
July
July
July
I,
1,
15f
1,
1,
1,
7/8% c/T
1/Qfo C/l
7/Q% c / l
1 l/2?S T/N
7/c^ c/l
h i/l+% T/B
i/Q% c / i
7/W> $/l
^ T/B
7/8^5 C/l
1/% C/l
7/b% c/l
2% T/B
2 3/1$ T/B
7/°?6 c / i
7/&% c / i
1 3/1$
T/B
7/8^ C/l (F)
7/Q% C/I (G)
7/Q% c / i ( H ;
1 1/2% T/N
2 1/27S T/B
He! d b y
Commercial F . R .
Banks
Banks
1,081
665
51+1
260
707
797
57
1,71+7
689
17
680
73
1+77
12
710
203
820
139
521
751
1,676
1^023
880
31+8
50
708
101
I4I4.3
123
l+l^
381
66
1,995
655
I+67
2,290
370
2,162
661
Sept. 1 5 ,
Sept. 1 5 ,
Oct. 1 , 1# T/N
Oct. 1 , 1* c/i (J)
Oct. 1 , 1% C / l (K)
* 66j
l+6q.
Dec. 1 5 , 19I48-50 2%y%
*lr22l|
191+9* Jan. 1 , 1 1 / 8 $ T / N
Jan. 1 , 1 l/&% G^I •l,2oQ
June 15>
7uo
J u l y - Dee.
T o t a l s s 191+7
7,973
191+8
J a n . * June
7,673
July - Dec.
J a n . * June
8,038
3.230
1 ,1429
534
1,058
51+8
mm
928
165
293
mm,
351
5
2,223
3,536
4.955
Nonbank
Investors*
1,170
1422
837
903
981
687
270
862
2,322
180
1,01J.3
1,21+8
9ll+
357
219
753
977
1,001
658
287
Trvt-oi
Outstanding
Total
2,916
1,223
2,31+1
2,707
1,687
171+
1,1*1+0
3,131+
3,91+7
2,11+2
1,115)
1,223)
1,777
3,062
2,71+2
1,127
2,209
3,71+8
1+51
2,309
3.533
6,5^
1+.768
3,552
308
3.281
701
l4.,092
29°
263
759
759
1,775
68^
910
81
1,002
528
511
107
8,631+
97
132
128
175
86
5U3
,900
500
300
* -250* 650
•1
*
*
200
Redeemed for cash
Commercial
1 Banks
Banks*
—
81+
—
51+
—
60
81+
72
,1+3
1+77
—
12
203
139
VL
55
80
101
Nonbank
Investors*
90
U3
72
1+U
103
1+3
270
58
171+
19
Uoo
63
•1,676
* 3l|8
123
Amount
Exchanged
2,71+2
1,127
2,209
2,580 )
1.512 )
1,351+
1,1+67
2
'&7 ]
us
65
* 151
* 125
* 1+19
89
*
66
1+5
1.038
351+
916
16,521+
110
77
39
79
166
Vfifi C/I
7/8^ c/i
7/8?J c/l
1% T/N
Y/i/Us
7/1A8
10/lA8
7/l/l+8
1% C/l
10/1/1+8
1% c/i
1 1/8^ T/N
1 l/8# C/l
1 1/8^ C/l
1 1/8^ C/l
10/lA8
1/1/1+9
mm
2,591
•2,0^47
•1,6142
•2,038
•1,071
•1,127
•2,962
75
Description of new securities
1/1A9
2/1/1+9+
3/1/1+9*
Vl/1+9*
1 l/Q% C/l
V1A9*
1 l / 8 # C/l
1 l/8# c/lor T/N 6/1/U9*
7/1/I+9*
1 l/Qf0 T/N
1,351+
1,1+67
571
l9Oll+
18,830
17,721
17.761
2 .308
191+9
356
7,138
•Estimated
NOTE: Debt outstanding and Federal Reserve Bank holdings a r e for December 3 1 , 191+7. Commercial bank data a r e from Treasury Survey of Ownership of U. S . Government
s e c u r i t i e s for which l a t e s t date i s October 3 1 , 191+7* Exceptions t o t h e s e d a t e s include i s s u e s p r i o r t o and subsequent t o dates mentioned.
http://fraser.stlouisfed.org/
GOVERKMEKT
Federal
Reserve BankFINANCE
of St. Louis
SECTION, BOARD OF GOVEI^ORS
NO. 3 2 8 .
TAXABLE TREASURY BONDS
19*48 1*9 1950 1951 1952 1953 1954 1955 1956 1957
•-r-
Yield
T
i
m
mmm
l
i
n
rrfl
I
n
n -- H
Green - proposed
r-f- -\—I
H-H--F-H- -•
hm---t-H- i-H-F-F1--
1958
1959
i960
I96I
1962
1963
i i i
1
196U
-
I965
1966
1967
@FedFRASER