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THIRTIETH

ANNUAL REPORT
of the

BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM

COVERING OPERATIONS F
<




THE YEAR

BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
[December 31, 1943]
MARRINER S. ECCLES, Chairman
RONALD RANSOM,

Vice Chairman

M. S. SZYMCZAK

ERNEST G. DRAPER

JOHN K. MCKEE

R. M. EVANS

LAWRENCE CLAYTON, Assistant to the Chairman

ELLIOTT THURSTON, Special Assistant to the Chairman

OFFICE OF THE SECRETARY
CHESTER MORRILL, Secretary

LISTON P. BETHEA, Assistant Secretary

S. R. CARPENTER, Assistant Secretary
FRED A. NELSON, Assistant Secretary

LEGAL DIVISION
WALTER WYATT, General Counsel

J. P. DREIBELBIS, General Attorney
GEORGE B. VEST, Assistant General Attorney
B. MAGRUDER WINGPIELD, Assistant General Attorney
DIVISION OF RESEARCH AND STATISTICS
E. A. GOLDENWEISER, Director
WOODLIEF THOMAS, Assistant Director

DIVISION OF EXAMINATIONS
LEO H. PAULGER, Chief

C. E. CAGLE, Assistant Chief
WILLIAM B. POLLARD, Assistant Chief

DIVISION OF BANK OPERATIONS
EDWARD L. SMEAD, Chief

J. R. VAN FOSSEN, Assistant Chief
J. E. HORBETT, Assistant Chief
DIVISION OF SECURITY LOANS
CARL E. PARRY, Chief

DIVISION OF PERSONNEL ADMINISTRATION
ROBERT F. LEONARD, Director

OFFICE OF ADMINISTRATOR FOR WAR LOANS COMM
EDWARD L. SMEAD, Acting Administrator
GARDNER L. BOOTHE, II, Assistant Administrator

FISCAL AGENT
O. E. FOULK, Fiscal Agent
JOSEPHINE E. LALLY, Deputy Fiscal Agent
II




CONTENTS
TEXT OF REPORT
Summary
Full Production for War
Production for armed services
Production for civilians
Inflationary Forces
Pressure of rising incomes on prices
The problem of stabilization
Monetary policy and inflation
International Movement of Gold, Goods, and Capital
War Finance
Federal expenditures and receipts
Nonbank purchases of Government securities
Purchase of Treasury issues by commercial banks
Exemption of Treasury war loan deposits from reserve requirements
Federal Reserve purchases of Government securities.
Prospects on interest rates
Guaranteed loans to industry
Selective Credit Control by the Federal Reserve
Margin requirements
Restrictions on consumer credit
Position of Banks in the War Economy
Deposits and currency
Operations and structure
Recommended Legislation on Bank Holding Companies
Wartime Services of the Reserve Banks
Fiscal agency operations
Enlarged responsibilities of Reserve Bank branches
Bank Supervision by the Federal Reserve
Research and Advisory Services
Reserve Bank Personnel and Operations
Board of Governors—Staff and Expenditures
Federal Reserve Meetings
Legislation Relating to the Federal Reserve System and Reports to
Congress
Changes in Regulations of the Board of Governors
No. 1.
No. z.

TABLES
Statement of Condition of the Federal Reserve Banks
(in detail), Dec. 31, 1943
Statement of Condition of Each Federal Reserve Bank at
End of 194Z and 1943




i
3
4
5
6
6
7
10
10
iz
iz
13
14
15
15
18
19
zz
Z3
Z3
Z5
2.5
Z9
34
37
38
4Z
43
46
50
55
56
57
58

60-61
6Z-65
in

N o . 3.
No. 4.
No. 5.
No. 6.
No. 7.

No. 8.
No. 9.
No. 10.
No. 11.
No.
No.
No.
No.

n.
13.
14.
15.

N o . 16.
N o . 17.

Holdings of United States Government Securities by Federal Reserve Banks at End of December 1942. and 1943 . . . .
Holdings of Special Short-term Treasury Certificates by the
Federal Reserve Banks, 1943
Volume of Operations in Principal Departments of Federal
Reserve Banks, 1939-1943
Earnings and Expenses of Federal Reserve Banks, 1943 . .
Current Earnings, Current Expenses, and Net Earnings of
Federal Reserve Banks and Disposition of Net Earnings,
1914-1943
Number and Salaries of Officers and Employees of Federal
Reserve Banks, Dec. 31, 1943
Receipts and Disbursements of the Board of Governors of
the Federal Reserve System for the Year 1943
Minimum Down Payments and Maximum Maturities on
Consumer Credit Subject to Regulation W
Federal Reserve Bank Discount, Interest, and Commitment
Rates, and Buying Rates on Bills, Dec. 31, 1943
Maximum Rates on Time Deposits
Member Bank Reserve Requirements
Margin Requirements
All Member Banks—Assets and Liabilities on Dec. 31,
1943, by Classes of Banks
All Member Banks—Classification of Loans and United
States Government Direct Obligations on Dec. 31, 1943 . .
Member Bank Reserve Balances, Reserve Bank Credit, and
Related Items—End of Year 1918-1941 and End of M o n t h

!943
N o . 18. Number of Banking Offices in United States, 1933-1943 . . .
N o . 19. Analysis of Changes in Number of Banking Offices, 1943. .
N o . 2.0. Number of Banks on Par List and Nc>t on Par List, by Federal Reserve Districts and States, on Dec. 31, 1941-1943
N o . 1 1 . Money Rates, Bond Yields, and Stock Prices
N o . 1 1 . Business Indexes

66
67
67
68-69

70-71
71
72.-73
73
74
75
75
75
7&~77
78

79
80
81
81
83
84

APPENDIX
Record of Policy Actions—Board of Governors
86-89
Record of Policy Actions—Federal Open Market Committee
90-98
Resolution of Federal Advisory Council regarding Final Settlement
of Terminated Contracts, November 15, 1943
99-100
Board of Governors of the Federal Reserve System
101
Federal Open Market Committee
101
Federal Advisory Council
102.
Senior Officers and Directors of Federal Reserve Banks
103-111
M a p of Federal Reserve Districts
112.
Index
113-113
IV



LETTER OF TRANSMITTAL
BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM,

Washington, April 2% 1944.
THE SPEAKER OF THE HOUSE OF REPRESENTATIVES.

Pursuant to the requirements of Section 10 of the Federal Reserve Act,
as amended, I have the honor to submit the Thirtieth Annual Report, prepared by direction of the Board of Governors of the Federal Reserve System,
covering operations during the calendar year 1943.
Very truly yours,
M. S. ECCLES, Chairman.




ANNUAL REPORT OF THE BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM

During 1943 the enormous output of the American economy became a
decisive factor in the progress of war toward victory. This demonstration
of the nation's ability to organize effectively for a national purpose raises
hopes that the country will be able also to meet successfully the problems of
readjusting to a peacetime economy and of maintaining a high level of output
and continuous employment.
To finance the war effort the United States Treasury in 1943 expended 85
billion dollars. Total expenditures, including those for nonwar purposes,
were 91 billion; net receipts, largely taxes, were 35 billion. War expenditures are determined by the maximum the nation can accomplish in the war
effort and, after the amount to be obtained through taxation has been decided by Congress, the remainder has to be borrowed. The task of financial
authorities is to make certain that the funds which have to be borrowed are
raised promptly and smoothly on terms advantageous to the public interest,
and that they exert a minimum of inflationary pressure on the economy.
At the time the United States entered the war in December 1941, the Board
of Governors issued a statement to the effect that the Federal Reserve System
was prepared to use its powers to assure at all times an ample supply of funds
for financing the war effort and to exert its influence toward maintaining
conditions in the United States Government security market satisfactory
from the standpoint of the Government's requirements. In discharging this
responsibility during 1943 the System engaged in open-market operations to
maintain stable conditions in the Government security market at interest
rates in harmony with a pattern agreed upon with the Treasury. From time
to time it provided such additional reserves as the banks needed in order to
purchase Government issues that were not absorbed by other investors, and
in other ways did everything in its power to assure the success of war financing. It also continued and expanded its work in connection with war production loans guaranteed Jby the War and Navy Departments and the Maritime Commission. The Federal Reserve authorities did what they could to
help raise war funds as far as possible from investors other than banks, thus
diminishing the inflationary pressure resulting from the purchase of Government securities by banks throughout the year. They actively cooperated
with the Treasury by consulting on financing policies to be pursued and by
assisting in every other way in carrying out the war financing program.
In the aggregate the interest-bearing direct and guaranteed debt increased
by 57 billion dollars during the year, of which 2.5 billion was taken by the
banking system and 3Z billion by nonbanking investors. A total of 2.7
million persons participated in pay roll savings plans and holdings of savings
bonds of all kinds increased by 12. billion dollars. While these figures are
large, an increase in participation by individuals in financing the war, with




2.

ANNUAL REPORT OF BOARD OF GOVERNORS

less dependence on bank purchases of Government securities, should continue
to be the objective of the war finance program.
In the course of the year the Federal Reserve System increased its holdings
of Government securities by 5.4 billion dollars. These purchases, which
were made at different times in accordance with current market requirements,
provided the banks with the major part of the reserves needed to offset
an increase of 5 billion dollars in the demand for currency, a loss of gold and
a growth in foreign balances at the Reserve Banks aggregating 1.5 billion,
and an increase of 0.6 billion in required reserves at member banks.
The relatively small increase in required reserves, in the face of a large
growth of bank deposits, was due to the enactment of legislation during the
year, at the Board's recommendation, which exempted war loan deposits
from reserve requirements for the duration of the war emergency. The large
growth of money in circulation, which is common to all countries engaged
in the war, reflected principally the effects of growth in incomes together
with dislocations of populations resulting from the war.
Industrial output, which had expanded rapidly in the preceding two years,
grew further in 1943 and was far larger than in any previous year. Growth
of production was entirely in war industries, but civilian consumption in the
aggregate remained close to the high levels of 1941 and 1941, indicating that
American industry was able to meet the challenge of a global war without
depriving the civilian population of goods and services required to keep up
health and morale. The high level of civilian consumption reflected the fact
that along with the growth of production there has been a wider distribution
of income and a marked rise of consumption at lower income levels. Notwithstanding greatly increased taxes, incomes of individuals were far in
excess of supplies of goods and services available to civilians. This current
surplus of purchasing power, and the exceptional accumulation of liquid
assets held by individuals, increased the difficulty of enforcing rationing,
price, and manpower controls.
During the year liquid funds held by corporations and individuals showed
a large increase. Deposits at all banks increased by 18 billion dollars and
currency holdings outside of banks by 5 billion. The large volume of cash
resources, together with savings which the public has invested in Government securities, is a source of inflationary danger, but at the same time it
forms a backlog of buying power which if properly used should be a powerful
safeguard against postwar deflation.
With the growth in military personnel and the expansion of war work,
organization and distribution of manpower became the principal problems
to be overcome in obtaining further increases in production. Recruitment
of additional manpower became increasingly difficult and made it apparent
that the anticipated expansion in war production during 1944 would have to
be achieved principally by more effective utilization of the manpower already available. Shortages of materials and productive facilities, however,
which had been acute in 1942. and the early part of 1943, had been eased



FEDERAL RESERVE SYSTEM

3

considerably by increased supplies, by the completion of many construction
projects, and by reduced requirements for certain war products.
Wholesale prices advanced 37 per cent from the beginning of the war to
the end of 1943 and the rise in the cost of living for the same period was 2.5
per cent, according to official indexes. Pressures on the price and wage
structures, which have been formidable and are increasing, are a serious
threat to economic stability. To combat this danger now and in the period
immediately following the war, there is need for an adequate further increase
in taxation, for firmness in holding the line against price and wage advances,
and for resistance all along the domestic front to pressures exerted by groups
representing special interests rather than the public welfare.
After the war this country, on the basis of its resources and the warstimulated expansion of its industrial capacity, will have an opportunity
to enter upon an era of high and rising national income and sustained prosperity for all its people. To achieve this objective the country must avoid
the danger of inflation, with its aftermath of economic collapse. Aside
from maintaining wartime regulations during the transition period, nothing
would contribute more to this end than rapid conversion of our industrial
plant to assure a prompt resumption of the flow of goods to civilians, and
planned redirection into other occupations of manpower released from war
activities.
Adequate financial machinery, both for equity investment and credit of all
types, to meet the capital and current financial requirements of reconversion,
and the maintenance of stable and relatively low long-term interest rates to
encourage enterprise, should form a vital part of a postwar program. Longterm policy in regard to governmental investment in public works and the
volume of tax levies should be flexible, with outlays increasing and taxes
declining when business activity shows signs of slackening, and taxes rising
and public works slowing down when consumer and capital demands begin
to press against productive capacity. Sustained prosperity in this country
would result in an upswing of international trade and would contribute
greatly to world reconstruction from the ravages of war and to general improvement of economic conditions throughout the world.
Economic, fiscal, and monetary policy, private and public, during and
after the war, must seek to prevent the surplus income and surplus cash
created by the war from resulting in inflation. In the critical postwar
period ways must be found to promote full employment and stable prosperity
by utilizing the people's abundant liquid resources and the expanded productive capacity of the country.
FULL PRODUCTION FOR WAR
Expansion of economic activity, which Had proceeded at a rapid rate since
the inauguration of the war program in the middle of 1940, slackened during
1943. Raw materials for war production were obtained in greater supply
than in previous years and many additional manufacturing facilities were



4

ANNUAL REPORT OF BOARD OF GOVERNORS

completed. While resources and manpower were more fully utilized than
in 1942. and output of goods and services was in record volume, the reduction
in the size of the labor force limited the increase in output, especially in the
latter part of the year.
The armed services increased their strength by about 3.5 million persons
during 1943. Employment in war industries continued to rise and manpower
controls were established and extended to direct workers to essential jobs,
eliminate labor hoarding, and minimize job-shopping for higher wages.
Total employment outside of the armed forces declined in 1943 by about 2.
million persons. A large share of this decline occurred in the construction
industry, where activity was sharply reduced as military installations and
new industrial facilities for the war program were largely completed. Employment on farms declined but total agricultural production increased somewhat further to a level x8 per cent higher than the 1935-39 average. Crop
yields in the 1943 season were smaller than the record volume of 1942. but
there was a continued large increase in output of livestock products.
Transportation of freight and passengers increased to new record levels,
reflecting the large amount of agricultural and industrial production and
continued restrictions on the use of automobiles for private purposes. Ocean
shipping facilities improved considerably in 1943 owing to an exceptionally
large volume of new ship construction and a marked decline in shipping
losses. Exports, chiefly lend-lease aid to our Allies, totaled 12..7 billion
dollars for the year, which was 58 per cent larger than in 1942. and 5 5 per cent
larger than the value of goods exported in 19x0, the previous high year.
Shipments to the armed forces abroad, not included in these figures, rose
rapidly. Improvement in shipping also resulted in larger supplies of imported materials. Value of imports in 1943 was Z3 per cent larger than in
1942.. In physical volume, however, imports were not as large as in prewar
days, especially imports of goods for civilian use.
Total output of the economy in current prices amounted to 187 billion
dollars, compared with 152. billion in the next highest year, 1942., and 89
billion in the prewar year of 1939. This increase is enormous, even after
allowance for price advances. Of the total for 1943, close to one-half represented output for war purposes. At factories and mines, where war production is concentrated, output in December was Z41 per cent of the 1935-39
average as compared with 1x3 at the end of 1942.. After the early part of
1943 output for war increased at a slower rate and output of manufactures and
minerals for civilian use showed little change. Throughout the year the
bulk of the increase in output continued to be in the industrial sector of the
economy.
Production for armed services. The further large shift of industrial
activity in 1943 to output for war purposes is shown on the chart; in 1943
such production represented about 67 per cent of the total, compared with 54
per cent in the preceding year. In 1943 probably about one-half of the output
for war purposes was accounted for by production of planes, ships, combat



FEDERAL RESERVE SYSTEM

5

vehicles, and ordnance. Most of this production had required considerable
conversion of manufacturing facilities and large expansions, often of specialized character. The remaining half of industrial production for war was
composed of supplies used in producing munitions and of food, clothing,
and the like for the armed services and lend-lease export.
INDUSTRIAL PRODUCTION
1935-1939 AVERAGE"100

200

OTHER MUNITIONS •
AND
WAR SUPPLIES

III

150

CIVILIAN
GOODS

1943

By the end of 1943 production rates for a number of war products were
either close to or had passed their peaks. On the other hand, output of
aircraft and certain other war products was scheduled to show further large
increases in 1944. As a result of the leveling off of the production of heavy
war products (including merchant ships), the reduction in construction
activity, further increases in metal production, better controls over consumption, and cutbacks in parts of the war program, the metal supply situation by the end of 1943 was no longer a limiting factor in war production.
Increased efficiency in mass production was partly responsible for a steady
decline in the contract prices of munitions purchased by the Army during
Production for civilians. With supplies of metals increasing beyond
military requirements, consideration was being given at the end of 1943 to
larger allotments for production of certain durable goods for civilians, but
the volume indicated was small except for farm machinery and railroad
equipment. Activity at furniture factories was maintained at a high level
in 1943, but a number of the mills had shifted to war work and in December
Federal restrictions to conserve lumber for essential uses were placed on
the production of furniture. Purchases of durable goods by consumers in
1943 exceeded output and as a result inventories were further reduced.
Inventories of many nondurable goods were also reduced.



6

ANNUAL REPORT OF BOARD OF GOVERNORS

Food production was one-third greater than the average for the years
1935-39 and, even though military and lend-lease requirements absorbed onefourth of the output, per capita food consumption by civilians in 1943 was
somewhat higher than the average for 1935-39. In order to assure more
equitable distribution of food supplies, rationing was extended to processed
fruits and vegetables, meats, butter, cheese, and fats, and retail price controls
for food were broadened. Production of such nondurable goods as textile,
leather, and paper products for civilian use was generally reduced during
1943. Restrictions on apparel wool used for civilian consumption were
lifted and cotton supplies were also in ample volume, but declining employment in the textile industries limited output of clothing.
Sweeping changes in industrial facilities and great concentration of activity
in war production have resulted over a period of several years in extraordinary shifts in employment opportunities, location of workers, and incomes.
Readaptation of various resources to peacetime needs will also involve widespread economic changes. Capacity to produce materials for peacetime
goods has been greatly expanded since 1939 and the full utilization of this
capacity in the years ahead will require that markets for finished goods be
expanded and maintained considerably above prewar levels.
INFLATIONARY FORCES
The phenomenal production record of 1943 brought a corresponding increase in incomes received by the American people and, since the additional
output was for war purposes and only part of the additional income was
absorbed in taxes, there was a widening spread between the amount of disposable income and the goods on which it could be spent. As a result, inflationary pressures increased throughout the economy. Excess dollars in
the hands of consumers threatened to bid up retail prices and to strain price
controls. Pressures developed 'from various economic groups to increase
their gains at the expense of others and of the public at large.
Pressure of rising incomes on prices. Incomes received by individuals
increased by 2.6 billion dollars from 1941, as shown on the chart. Additional tax payments absorbed less than half of the increase, leaving the people
with 15 billion more of disposable income than in the preceding year. Of
this about 8 billion went into increased consumer expenditures, and since
there had been no considerable increase in the supply of consumer goods,
most of it was reflected in price increases. About 7 billion dollars was
absorbed in an increase in current savings above the 1941 level, and was
added to the reservoir of liquid funds in the hands of the public. The fact
that taxes did not absorb a larger share of the growing consumer income
exposed price and rationing controls to heavy pressures. Although the
stabilization program held price increases within fairly narrow limits, controls failed to check the growth of inflationary pressures throughout the
economy.
The cost of living as measured by the Bureau of Labor Statistics index



FEDERAL RESERVE SYSTEM

continued to rise through the first half of 1943 but in the second half was
stabilized and, in response to subsidy policies, even declined somewhat. At
the end of the year the combined index stood 7 per cent above the 1942.
average. The price of some commodities, food in particular, rose more
sharply from the 1942. level. Net income of farm operators continued to rise
sharply and for the year as a whole was more than 30 per cent higher than
in 1942.. The increase in incomes was largely due to increased prices received by farmers rather than to an increase in output. The use of subsidies cushioned the impact of higher farm prices and was instrumental in
preventing larger increases in prices to consumers. Average wage payments
continued to increase because of shifts to industries with higher wages, fur1NDIVIDUAL INCOMES, EXPENDITURES, AND TAXES
SEASONALLY ADJUSTED, ANNUAL BASIS
BILLIONS OF DOLLARS

QUARTERLY

160 1

140

120

120

100

100

80

1941

1942

NOTE.—Department of Commerce data through second quarter of 1943; data for last two quarters of 1943 are
estimates.

ther increases in hours worked, and upward adjustments of wage rates within
the limits of the stabilization program. Total income of employees was x^
per cent above the 1942. level. Investment incomes received by individuals
increased less rapidly than other types of income but corporation profits continued to rise and profits after taxes were slightly above the 1942. level.
The problem of stabilization. At the end of 1943 the country was facing
the problem whether inflationary increases in incomes would be permitted
to continue and at what rate. Expansion of money incomes, which had
accompanied the increase in output and employment during the earlier stages
of the war production program, continued although the increase in war
production had flattened out. Price and rationing controls, which have
been reasonably successful in protecting prices against the pull of excessive



O

ANNUAL REPORT OF BOARD OF GOVERNORS

consumer demand, were threatened at the end of the year by the growing upward pressure of wages, farm prices, and profits. A stemming of this tide
will be the most urgent task of stabilization policies in the coming year.
The need for maintaining orderly controls over wartime prices and income
is even more important in relation to the subsequent transition to a peacetime
economy. The task of shifting to peacetime employment the millions of
persons now engaged on war orders and the millions to be demobilized from
the armed forces will be enormous. Should there be an interval between the
termination of war in Europe and in the Far East, gradual reconversion of
industry and gradual release of service men and war workers will simplify the
problem. Public policy, however, must be prepared to meet a sudden
cessation of active warfare on both fronts and to prevent large-scale unemployment should it threaten to develop.
While some workers will withdraw from the labor market and a general
shrinkage of hours of work will result in additional opportunities for employment, most of the personnel released from the services and from war
industries will have to depend for jobs on increased production of civilian
goods and services. The less delay in returning to a high volume of peacetime production, the smaller will be the unemployment problem in the
transition period. But a relatively high level of income and employment in
this period will also mean a continued pressure on the prices of those consumer goods of which supplies have not become ample.
To assure a successful transition to a peacetime economy, it is thus most
essential that price, wage, and rationing controls be maintained intact during
the remainder of the war and be supported by adequate tax measures. Failure to do so will leave the economy with insufficient controls in the immediate postwar period, when public opinion may be expected to be less responsive to the adoption of new restrictive measures and the continuance of old
ones. Maintaining orderly inflation controls during the war appears to be
the first condition for a transition to a peacetime economy which will avoid
maladjustments and assure the maintenance of a high level of income and
employment.
Continuing and strengthening monetary policies designed to hold monetary
expansion to a minimum, and fullest cooperation from the public in carrying
these policies into effect, are requirements of a successful transition to peace.
The future problem is made more difficult by the fact that, up to the present,
financing of war expenditures has been accompanied by an expansion in deposits arising out of the purchase of Government securities by banks.
Bank deposits plus currency outside of banks expanded by more than 2.3
billion dollars during 1943, as shown by the chart. This followed a growth
of about 2.1 billion in 1942. and brought the total to nearly 113 billion by the
end of 1943. Adjusted demand deposits and United States Government
deposits accounted for 14 billion of the growth and currency outside banks
for 5 billion. Time deposits, which had shown little change in 1943, expanded by almost 4.5 billion.



FEDERAL RESERVE SYSTEM

9

Individuals have increased their liquid assets by more than 40 billion
dollars in the past two years. Industrial corporations and other business
enterprises have built up huge liquid balances, mainly for working capital
in war production, and some of these will be released during the transition to
peace. States, municipalities, and other local governments have also
increased their liquidity by debt reduction and accumulation of reserves.
These liquid funds can be an asset or a liability to the economy in the search
for postwar security and prosperity, depending upon how they are used.
If they are put to work creating useful peacetime goods and services, they will
cushion the shock of the transition period and will help to maintain a high
level of national income and employment. But if these funds are disbursed
too early or too rapidly, they will contribute to inflationary price increases
which may endanger postwar stability.
BANK DEPOSITS AND CURRENCY
BILLIONS OF DOLLARS

BILLIONS OF DO
_ .

40

140

A

120

00
TOTAL DEPOSI TS
AND C URREN<

/

80

80
-

60

—

— —

OEM AND DE POSITS
ADJUST

TIME DEPOSI

0

- r
1

V

J

40

20

60

**

40

—
•— —

CURR ENCY 0 UTS1DE BANKS

V'T DEPOSITS

1938

If the United States is to continue to realize its potentialities in peacetime,
it must aim for ever increasing production and consumption. The war has
shown the enormous productive power of the economy when there is a demand for its product. The long-term problem of postwar prosperity will be
to maintain a high level of demand for capital and consumption goods with
a consequent high level of output, employment, and income.
The wartime growth in the money supply carries with it a threat of inflationary price advances during and immediately after the war. The most effective means of preventing such inflationary developments is to raise as large
a part of war expenditures as possible from taxation, and to depend as little
as possible on borrowing and particularly on borrowing from the banking
system. It is clear, however, that so far the additional revenue raised by



IO

ANNUAL REPORT OF BOARD OF GOVERNORS

taxation in this country has not been sufficient in view of the growth in consumer and business incomes or of the country's urgent needs.
Monetary policy and inflation. It is believed by many that inflation and
deflation can be prevented by monetary action. The fact that the Federal
Reserve System has the power, through changes in the discount rate, through
open-market operations, and through modifications in reserve requirements,
to make money dearer and scarcer in a boom and cheaper and more abundant in a depression has been taken as an indication that monetary authorities
are able, by their actions alone, to maintain economic stability. This is a
greatly magnified view of the influence of monetary action on the course of
economic life.
In the past quarter century it has been demonstrated that policies regulating the quantity and cost of money can not by themselves produce economic
stability, or even exert a powerful influence in that direction. The country
has gone through boom conditions at times when monetary restraints were
being exerted and interest rates were extremely high, and it has continued
in depression at times when an active policy of monetary ease was in effect
and money was both abundant and cheap. Economic stability depends on a
complex of forces and policies, of which credit policy is only one. In order
to be effective in bringing about stability the regulation of the availability
and cost of money must be integrated with a flexible fiscal policy and at critical times reinforced by direct controls over prices, wages, and supplies.
Further experience with selective credit controls, which are discussed elsewhere in this Report, may also bring fruitful results.
An important consideration at this time is that, while monetary policy
can not by itself prevent inflation, inflationary conditions are certain to
result in heavy upward pressure on money rates. When the buying power of
money is declining holders of money prefer to exchange it for commodities,
equities, or real estate, rather than to invest it at a fixed rate of return, and
others are willing to pay high rates for money to be used in speculation and
speculative ventures. Consequently, money rates are always extremely
high during an inflation. This is an additional reason why, in view of the
enormous growth of our public debt, it will be vitally important to keep
direct controls in effect after the war is ended, and thus to hold the line on
economic stability. These controls can not be abandoned with safety until
the flow of civilian goods from the reconverted industrial plant will be
sufficient to meet the deferred and current demand of the people backed by
their unprecedented holdings of cash and liquid assets.
INTERNATIONAL MOVEMENT OF GOLD, GOODS, AND CAPITAL
The increased magnitude of our war effort in 1943 was reflected in a strengthening of the trends im international trade and finance which were evidenced
in the preceding year. Although the merchandise export surplus was the
largest in history, foreign countries acquired a considerable amount of gold
from the United States while at the same time adding substantially to their
dollar balances. These developments reflect the huge expansion of lend


FEDERAL RESERVE SYSTEM

II

lease exports and the large expenditures for goods and services in foreign
countries by the United States Government and by our troops serving abroad.
Total exports in 1943 (excluding shipments to our armed forces abroad)
were valued at some 12..7 billion dollars, of which 9.9 billion represented
lend-lease goods; in 1941 exports totaled 8 billion dollars, of which 4.9
billion were on lend-lease account. "Cash" exports thus declined from 3.1
billion dollars in 1942. to x.8 billion in 1943, reflecting the increasing pressure
of war requirements upon the output of goods for civilian use and upon the
availability of shipping space. Merchandise imports, on the other hand,
rose from 2..7 billion dollars in 1941 to 3.4 billion in 1943, largely because of
increased deliveries from Latin America. Thus despite record exports in
1943, our international trade on a "cash" basis actually resulted in a net
deficit of about Goo million dollars as compared with a surplus of 400 million
in 1942.. At the same time, the "service" items in the international balance
of payments of the United States, increasingly influenced by expenditures in
foreign countries by the United States Government and by American troops
serving abroad, also called for large net payments to foreigners during 1943.
As a result primarily of the net payments by the United States to foreign
countries on account of merchandise trade and services, these countries as a
group were able to make substantial gold purchases in the United States and
still to build up their dollar balances. The central banks of many Latin
American countries and of some of the European neutrals converted sizable
amounts of their existing or accruing dollar balances into gold, practically
all of which was earmarked at the Federal Reserve Bank of New York. As a
result of these and other transactions, the total gold holdings of foreigners
in this country increased by 804 million dollars during 1943 to 3,477 million
at the end of the year. This increase was almost matched by a reduction
in the monetary gold stock of the United States, which declined by 788
million dollars during the year to 2.1,938 million; the net effect of other
factors affecting the monetary gold stock (gold exports and imports, domestic
gold production, and changes in the holdings of the Stabilization Fund) was
insignificant. During 1942., gold under earmark for foreign account had
increased by 458 million dollars, but this movement was almost wholly offset
by other factors (especially gold imports and new domestic production) so
that the monetary gold stock scarcely changed over the year as a whole.
In addition to foreign purchases of gold, foreign banking funds in the
United States were built up by a net amount of 1,176 million dollars during
the year as compared with 464 million in 1941. In line with the wartime
trend, practically all of this gain was in the accounts of foreign central banks
and governments, which at the end of the year held short-term funds with
banks in the United States amounting to 3,099 million dollars. Of this
amount, 1,080 million represented investments in United States Treasury bills
and certificates of indebtedness; almost half of the net increase in official
foreign banking funds during 1943 was invested in this form.
There was a capital inflow to the United States of 105 million dollars during
1943 as a result of transactions in securities, principally foreign bond redemp


II

ANNUAL REPORT OF BOARD OF GOVERNORS

tions in this market, but this gain was partly offset by an increase of 40 million dollars during the year in the special loan to the Chinese Government by
the United States Treasury and by some small increase in outstanding ExportImport Bank credits.
WAR FINANCE
Monetary developments during 1943 were dominated by war finance. A
great volume of funds was obtained through taxation and through the sale
of United States Government securities to nonbank investors. Total financial requirements, however, exceeded the amounts raised from these sources
and the balance was derived from the sale of Government securities to the
banks.
In wartime the determining factor of public finance is the amount needed to
prosecute the war. To the extent that this is not met by tax revenue it must
be raised by borrowing. It is the function of financial authorities to formulate and carry out a financing program that will supply funds as they are
needed with the least disturbance to the monetary system and with as little
inflationary effect upon the economy as possible. The Federal Reserve System did all in its power during 1943 to contribute to the achievement of these
objectives. More specifically:
It cooperated with the Treasury in the two major war loan drives and in
the continuous effort to sell bonds through pay roll savings plans in order
to secure as much nonbank investment as was possible.
It took measures to assure sufficient reserves to the banking system to enable banks to purchase such Government securities as had to be issued in excess of those taken by other investors.
It maintained stable conditions in the United States Government security
market and kept prices and yields within a pattern agreed upon with the
Treasury. This policy facilitated the sale of securities by removing all
incentive for delaying investment and by encouraging purchasers to hold
the securities they had acquired.
The Board recommended to Congress that United States Government deposits with banks arising out of war loans be exempted from reserve requirements. Congress adopted this recommendation.
In addition to using its powers and resources to facilitate Treasury financing, the Federal Reserve continued to participate in the Government program
for guaranteeing loans to contractors and subcontractors engaged in war production. From the inception of this program in the spring of i94x until the
fall of 1943, guarantees were in general restricted to loans made to furnish
working capital. In September, to meet a situation arising out of changes
in war requirements, loans to enable contractors to free their own working
capital from war projects were made eligible for guarantee in case of contract
cancellation.
Federal expenditures and receipts. In this war Government expenditures for all types of war purposes have far exceeded those of the last war.
The number of persons in the armed forces is larger and expenditures for subsistence and pay are correspondingly greater; much more elaborate and ex
pensive equipment is needed; transportation, communication, and storage


FEDERAL RESERVE SYSTEM

13

facilities cover a wider range of the world's area; and the Government has
participated to a greater extent in financing expansion of plants, other facilities, and inventories needed for war production. Current expenditures for
all these purposes, together with those for regular Government activities,
have been greatly in excess of current tax receipts, and the balance has had to
be obtained by borrowing from banks and the public.
Government expenditures in 1943, including those of Government corporations, totaled 91 billion dollars, 85 billion of which was for direct war purposes, while Government receipts amounted to 35 billion. To balance
expenditures and to enlarge the balance in the Treasury's fund, the interestbearing direct and guaranteed debt was increased by 57 billion, of which 39
billion was in marketable issues, 15 billion in nonmarketable issues, and the
remainder in special issues sold to Government agencies and trust funds.
The 57 billion dollar increase in debt should be viewed with reference to
tax receipts of 35 billion, an increase of 18 billion over 1942.. The increase in
tax receipts reflected greatly increased incomes during 1943, the higher tax
levies adopted by Congress in 1942., the placing of personal income taxes on a
current payment basis, and the introduction of a system of source collection
during 1943. Legislation for additional revenue was under consideration at
the close of the year.
Nonbank purchases of Government securities. In the war loan drives
of April and September, and in the campaign for the sale of savings bonds
through pay roll savings plans, the Treasury and the Federal Reserve System
constantly endeavored to place as large a part of the public debt as possible
outside of the banking system. The authorities endeavored in every way to
make it clear to the public that bond purchases were a protection against
inflation now and a source of security after the war. The increase in ownership of Government securities by bank and nonbank holders is shown on the
chart on the following page.
Nonbank investors took 57 per cent of the increase in public debt during
1943 as compared with 51 per cent in 1942.. Increases in holdings outside
banks totaled 3Z billion dollars in comparison with Z4 billion in the preceding year and consisted of 14 billion in savings bonds and tax notes, 4 billion
in special issues to Government agencies and trust funds, and 14 billion in
marketable issues. Millions of Americans bought securities in each drive,
and purchases by individuals of longer-term marketable bonds and regular
deductions from wages and salaries for investment in savings bonds increased
substantially during the year. By December sales of Series E bonds under
pay roll savings plans were 460 million dollars a month, an increase of 105
million over December 1942..
In terms of sales to nonbank investors and of total sales for the year the
most important features of Treasury financing were the April and September
drives. Purchases during the drives totaled 37 billion dollars and accounted
for 65 per cent of the increase in the public debt during the year. In the April
drive, when purchases by commercial banks were limited to 5.1 billion, nonbank investors bought 13.5 billion of securities; the corresponding figure was

18.9 billion in the September drive, when sales to banks were not permitted.


*4

ANNUAL REPORT OF BOARD OF GOVERNORS

Sales to individuals, partnerships, and personal trust accounts, which absorbed
funds that might otherwise have been used to bid up prices of the limited
supply of consumer goods, were 5.4 billion in the fall drive as compared with
3.3 billion in the spring drive. This marks progress in the effort to finance
the war in a noninflationary way. Insurance companies, mutual savings
banks, and nonfinancial corporations invested 12..9 billion dollars in securities
during the September drive, considerably more than in the April drive.
OWNERSHIP OF U.S. GOVERNMENT SECURITIES
BILLIONS OF DOLLARS

SELECTED DATES 1929-41; END OF MONTH 1942-43

BILLIONS OF' DOLLARS

90

90
80
70
60
50
40
30
20
10
0
1936

1942

Important features of the war loan drives have been the offering of a variety of issues in order to attract funds from all groups of nonbank investors,
full allotment of subscriptions, and a nation-wide organization of volunteer
workers. In addition to the three types of savings bonds and the savings
notes that are continuously available, during the drives three issues of marketable securities of different maturities were offered. They consisted of certificates, intermediate Treasury bonds, and long-term Treasury bonds.
Purchase of Treasury issues by commercial banks. The increase in
holdings of Government securities by commercial banks during 1943
amounted to 34 per cent of the increase in the public debt compared with 41
per cent in 1942.. In addition there were substantial purchases by the Reserve
Banks which raised the total volume taken by the banking system to 43 per
cent of the expansion in debt as compared with 49 per cent in 1941. Subscriptions by commercial banks were limited to 5.1 billion dollars in the April
drive, were excluded from the September drive, and were restricted to 3.2.
billion in the period immediately following that drive.
In addition to subscriptions for new issues, banks purchased some securities
in the market from other holders, and in the first half of the year took a portion of the increase in regular weekly offerings of Treasury bills. Most of the
increase in bills outstanding, however, was absorbed by the Reserve Banks,

the larger part
http://fraser.stlouisfed.org/ of which represented purchases under option agreements from
Federal Reserve Bank of St. Louis

FEDERAL RESERVE SYSTEM

15

member banks needing reserves. The outstanding characteristic of bank investment during 1943 continued, as in 1942., to be a growth in both amount
and proportion to total portfolio in holdings of short- and medium-term
Government securities. At the end of the year 2.4 per cent of the marketable
Government securities held by commercial banks had maturities of less than
one year and 86 per cent were to mature within 10 years, compared with 10
per cent and 63 per cent respectively at the end of 1941. In 1943 as in most of
1942, bank subscriptions for new securities were limited by the Treasury to
maturities not exceeding 10 years.
Exemption of Treasury war loan deposits from reserve requirements.
It has been the practice of the Treasury beginning with the first World
War to authorize banks to pay for United States Government securities
purchased for their own account or for account of their customers by giving
the Treasury credit in so-called war loan accounts. This practice avoids large
transfers of funds to the Reserve Banks when securities are sold and makes for
greater stability in the money market. The Treasury gradually calls on
depositary banks for such amounts as it requires, and since these calls correspond closely to current disbursements, the effect of Treasury transactions on
the money market is greatly diminished.
At the beginning of 1943 a great many commercial banks had not qualified
for carrying war loan accounts, notwithstanding the urging of the Treasury
and the Federal Reserve authorities that banks make full use of such accounts.
To encourage their use the'Board recommended and in April Congress enacted
legislation exempting war loan deposit accounts from reserve requirements
and from assessments for deposit insurance.
As a result of this legislation, the amount of reserves that banks were required to hold declined sharply in periods of extensive Government financing
when bank customers drew on their deposits to pay for Government securities. This gave the banks additional temporary reserve funds, a part of
which they invested in Treasury bills or other securities. Later, as the Treasury drew upon the war loan accounts and the funds returned to other accounts, thus increasing the amount of required reserves, the banks sold some
of the securities in order to obtain the additional reserves needed.
In these transactions the banks made use of the posted buying rate on
Treasury bills established by the Federal Open Market Committee in 1942..
The establishment of a fixed rate of discount on bills, together with the option
to repurchase at the same rate, was undertaken in 1942. for the purpose of
stabilizing the bill market, effecting a broader distribution of bills, and facilitating prompt adjustment of bank reserves to changing conditions. During
1943 banks made extensive use of the facilities offered by the Federal Reserve
to the bill market, and this practice helped to achieve the desired results.
Toward the end of the year many banks sold certificates to the System Account in order to obtain needed reserves.
Federal Reserve purchases of Government securities. Maintaining
the structure of prices and yields of Government securities, and supplying
banks with adequate reserves to enable them to purchase such amounts of



i6

ANNUAL REPORT OF BOARD OF GOVERNORS

Government securities as banks were called upon to take, continued to be
the general objectives of Federal Reserve purchases of Government securities
in 1943. During the year holdings of United States Government securities
by the Reserve Banks increased by 5.4 billion dollars, as shown on the chart.
Bill holdings increased by 5.8 billion and certificate holdings by 1.4 billion,
while holdings of bonds and notes declined by 1.8 billion.
RESERVE BANK HOLDINGS OF U S. GOVERNMENT SECURITIES
WEDNESDAY FIGURES

1942

1943

Treasury bonds were sold by the Reserve System in the first half of the year,
when there was a large demand in the market. These sales helped to maintain the structure of yields on Government securities. The increase in certificate holdings came toward the close of the year and reflected largely the
purchase of certificates sold by commercial banks in order to replenish reserves drawn down by currency outflow and to meet increases in required
reserves. Purchases of special short-term Treasury certificates directly from
the Treasury were made by the Reserve Banks from time to time; principally
to avoid temporary declines in member bank reserves around income tax
dates. Holdings of such certificates, by dates, are shown on page 67.
Throughout the year the Reserve Banks purchased and sold large amounts of
Treasury bills in response to changes in the reserve position of member banks.
The principal cause of the demand for reserve funds was the continuous
growth of money in circulation, which amounted to 5 billion dollars in 1943
following an expansion of 4.2. billion in 1942.. The currency outflow was
fairly evenly distributed throughout the year. Since a growth in money in
circulation, other things being equal, occasions a dollar-for-dollar drain on
bank reserves, it necessitates Federal Reserve purchases of Government
securities in order to adjust the reserve position of the banking system.



FEDERAL RESERVE SYSTEM

Other influences contributing to loss of reserves were an 0.8 billion dollar
decline in the monetary gold stock, which had remained steady at about 2.2..7
MEMBER BANK RESERVES AND RELATED ITEMS
WEDNESDAY FIGURES

BILLIONS OF DOLLARS

BILLIONS OF DOLLARS

25

RESERVE BANK CREDH

1937

1938

1939

1940

1941

1942

1941

1942

1943

15

1943

billion from the middle of 1941 to the beginning of 1943, and a growth of 0.6
billion in funds held by foreign central banks and governments in their
accounts at the Reserve Banks. Some additional reserves of a more or less



18

ANNUAL REPORT OF BOARD OF GOVERNORS

temporary nature were supplied by the issuance of Federal Reserve Bank notes
and by small reductions in Treasury and nonmember bank deposits at the
Reserve Banks. The net result of the various factors was a relatively small
decline in member bank reserve balances, as indicated by the chart.
Required reserves increased somewhat, owing to the rapid growth of bank
deposits which-was occasioned by bank purchases of Government securities.
Deposits expanded by 18 billion dollars at all banks in the country, which is
to be compared with an expansion of 5 billion in currency in circulation.
The effect of this growth upon the reserve position of banks was relatively
small, however, both because of fractional reserve requirements in general
and because of the total exemption from reserve requirements of United States
Government war loan accounts which became effective during the year.
Excess reserves of member banks, which had been declining continuously
from the peak of 7 billion dollars reached near the end of 1940, declined from
a level of about 2. billion at the beginning of 1943 to about 1 billion at the
end of the year. As in 1942., the heaviest drain on reserves was felt in New
York, where the Treasury continued to raise more funds than it sp&nt there.
Commercial banks in New York, Chicago, and in some other cities continued
to follow a policy of relatively full investment of their funds and adjusted
their reserve positions through the purchase and sale of Treasury bills under
the buying rate and repurchase agreement of the Reserve Banks. At reserve
city banks excess reserves declined from a level of about a billion dollars at
the end of 1942. to about 300 million at the end of 1943.
The buying rate on bills established by the Reserve System, combined with
the option to repurchase at the same rate, works in the direction of giving
banks greater flexibility in the management of their reserve funds. Also, the
maintenance of the broad level of prices of other Government securities provides a high degree of liquidity. Under these policies and with the large
volume of short-term securities held by banks, excess reserves no longer have
the special significance for bank liquidity that has been attached to them in
recent years. In general, however, most banks continue to carry some excess
reserves and there appear to be a few which have the clear policy of not allowing their excess reserves to fall below certain fixed levels. Country banks
have gained reserve funds as their requirements have grown and their excess
reserves continued close to 800 million dollars in 1943 as in 1941.
Prospects on interest rates. Rates of interest on Government securities
were maintained during the year within a range from ^ of 1 per cent on
three-month bills to x ^ P e r c e n t o n long-term bonds. The bill rate was
determined by the fact that, by direction of the Federal Open Market Committee, the Federal Reserve Banks stood ready to buy all Treasury bills offered
at that rate, while the bond rate largely reflected conditions in the
investment market. The long-term Government bond market was strong
in 1943 and the System, as a part of its policy to maintain stable conditions
in that market, sold substantial amounts of bonds in the early part of the
year. Rates on other high-grade bonds also remained at low levels. Short



FEDERAL RESERVE SYSTEM

19

rates, after a sharp rise from the low point reached in 1940, are still low compared with past periods and could advance further in response to market conditions without affecting the rate on long-term money.
Long-term rates on Government bonds have become stabilized at their
present level after a decline lasting for many years. The present situation
raises the question of the probable trend of long-term interest rates after the
war. Prospects are that conditions in the postwar period will favor the continuance of low long-term interest rates. Individuals and corporations will
have an enormous volume of liquid assets accumulated in the period of high
incomes and restricted opportunity for the purchase of goods. In addition,
so long as the national income remains high there will be a large amount of
current savings available for investment. The situation will differ radically
from that after the last war, when liquid accumulations of businesses and individuals were far smaller than now. Also, banks were then borrowing
heavily, whereas now they are practically free from debt.
Public policy with regard to long-term interest rates should be part of a
program to achieve continuous full utilization of the country's material and
human resources. It should be formed with reference to the fact that after
the war this country will be the greatest creditor nation in the world and that
in creditor countries, according to past experience, the interest rate on longterm capital is likely to be low.
Over the years a low cost of money to borrowers on long-term should tend
to promote increased employment by encouraging capital outlays in both
old and new enterprises. It would facilitate the task of refunding the public
debt and safeguard the value of Government security holdings of the millions
of individuals, educational institutions, trusts, banks, insurance companies, and other investors, who have placed tens of billions of dollars in
Government bonds to help finance the war.
Guaranteed loans to industry. The program for guaranteeing loans
to industry for war production, under which the Federal Reserve Banks are
serving as fiscal agents for the War Department, the Navy Department, and
the United States Maritime Commission, continued to provide financing for
current war production and was also broadened in September 1943 to provide
for the release of the working capital invested by contractors in war production at the time of contract terminations. The decision to broaden these
credit facilities was reached with a view to preventing any lag in war production, as set forth in more detail on page zo.
Guaranteed loans to industry for war production were first provided for by
the President's Executive Order 9111, issued on March 2.6, 1942.. The War
and Navy Departments and the United States Maritime Commission were
authorized to guarantee and to make loans for the purpose of financing contractors, subcontractors, or others engaged in any business or operation
deemed by those agencies to be necessary, appropriate, or convenient for the
prosecution of the war. The Federal Reserve Banks were authorized to act
as agents in carrying out the provisions of the Order, subject to the specific



iO

ANNUAL REPORT OF BOARD OF GOVERNORS

instructions of the guaranteeing agencies and the general supervision of the
Board of Governors.
After consultation with the guaranteeing agencies, the Board issued its
Regulation V, effective April 6, 1941, prescribing general rules and policies
for the guidance of Reserve Banks in handling guaranteed loans under the war
financing program. There has been no necessity for changing the Regulation
since that time. The adoption by the guaranteeing agencies of a new standard form of guarantee agreement, dated April 6,1943, made no change in policy
with respect to loans. The new form incorporates the substance of the one
formerly used, and the general intent of the agreement remains the same.
The scope of operations under the guarantee program was enlarged by Executive Order 9336, issued by the President on April 2.4, 1943. This order authorized the Office of Lend-Lease Administration and the War Shipping Administration to indemnify any guarantees made on their behalf or for their
benefit by the War and Navy Departments and the Maritime Commission.
During the summer of 1943, it became increasingly evident that many
businesses engaged in war production were reluctant to assume additional
war contracts because of the fear that their working capital would be tied up
in such contracts at the termination of the war. They felt this might delay
their return to peacetime operations and thus put them in an unfavorable
competitive position. In order that war production schedules might not
be interfered with because of such fears, the guaranteeing agencies and the
Board of Governors announced on September 1 a broadened basis for the
guaranteeing of loans under Regulation V which enables contractors who
make arrangements in advance to obtain the use of most of their own working
capital promptly upon termination of their contracts.
Loans guaranteed upon this broadened basis are known as VT loans to distinguish them from loans made without special reference to release of working capital. The maximum amount of credit which a contractor may obtain
under a VT loan is based upon his receivables, inventories, work in process,
and, without duplication, amounts paid or to be paid by him to subcontractors or suppliers because of contract cancellations. Guarantee agreements for VT loans provide that the percentage of the loan guaranteed is not
subject to increase upon cancellation of war production contracts as is the case
with V loans. Also, provision is made for the guaranteeing agency to share
in any commitment fee charged the borrower on the undisbursed portion of
the loan, which fee is limited to one-half per cent per annum. VT loans approved to the end of the year 1943, which are included in the figures of guaranteed loans given below, aggregated 914 million dollars for 132. loans.
By the close of 1942. the War and Navy Departments and the Maritime Commission had approved 1,700 applications for guarantees of loans totaling z.j
billion dollars. By December 31, 1943, the number of approved applications
had increased to 5,300 and the amount to 6.6 billion dollars. Loans outstanding at the end of the year under executed agreements amounted to 1.9
billion dollars, of which 1.6 billion were guaranteed. In addition, about 3.1



FEDERAL RESERVE SYSTEM

21

billion dollars were available to borrowers under guarantee agreements
outstanding.
A recent analysis indicated that over one-half of the number of guaranteed
war production loans were for $100,000 or less, and less than 12. per cent were
for more than 1 million dollars. Loans of 25 million dollars or more constituted about one-half of the aggregate dollar amount of loans approved. The
percentage distribution of the number of loans authorized, according to size
of loan, is given below.
Amount of loan
Up to $5,000

Percentage of total
number of loans

$5,OOI-$IO,OOO
$IO,OOI-$2-5,OOO

3.6
5- 1
11.9

$2.5,ooi-$5o,ooo

J

$5O,OOI-$IOO,OOO
$IOO,OOI-$2.5O,OOO
$2.5O.OOI-$5OO,OOO
$5OO,OOI-$I,000,000
$I,OOO,OOI-$5,000,000
$ 5 , O O O , O O I - $ I O , 000,000
$IO,OOO,OOI-$2-5,000,000
$2-5,OOO,OOI-$5O,OOO,OOO
Over $50,000,000

16.7
16.9
12..4
7-9

Cumulative pe
distributi
3.6
8.7
10.6
34-3
51.0

3-7

67.9
80.3
88.2.
97.2.

9.0
1.4
0.8
0.3
0.3

98.6
99-4
99-7
100.0

A majority of the borrowers have been relatively small business concerns.
As shown by the second table, in which borrowers are classified according to
assets, 2.5 per cent had assets of less than $50,000 each and 68 per cent had
assets of less than $500,000 each.
Percentag ;e of total
number

Assets of borrower
Under $50,000
$50,000 to $500,000
$500,000 to $5,000,000..
$5,000,000 and over....
No information
Total
1
2

24 .7
43 .6
25 .1
6 .1
0 .5
3,245

100.0

Includes 171 borrowers, for whom asset size is not available, with loans of less than $50,000 each.
Includes 113 borrowers, for whom asset size is not available, with loans of between $50,000 and $100,000 each.

Most of these loans and agreements to make loans were made by commercial
banks, but other financing institutions have also participated. Very large
loans have been handled through participations entered into by a number of
institutions. In a few cases V-loan financing has been provided by the Federal Reserve Banks and by the Reconstruction Finance Corporation.
Functions of the Reserve Banks with respect to the negotiation of V loans
include analysis of the financial integrity of the applicant, determination of
the type of financing best suited to meet the particular situation, and the preparation of the necessary documents. In the interest of decentralization and
to speed up the V-loan procedure, applications for guarantees are handled
without reference to Washington on behalf of the War Department when the



2.2.

ANNUAL REPORT OF BOARD OF GOVERNORS

amount of the loan is not more than $100,000 and on behalf of the Maritime
Commission when the guaranteed portion of the loan is not more than
$100,000. All other applications for guarantees are submitted to Washington for approval. Utilization of the twelve Federal Reserve Banks and their
twenty-four branches has decentralized the financing of war production to a
considerable extent, and facilitated the procedure for the Government as well
as for loan applicants.
SELECTIVE CREDIT CONTROL BY THE FEDERAL RESERVE
As indicated in preceding sections of this Report, Federal Reserve policy
during the year was principally concerned with supporting war financing
with as little inflationary consequence as possible. Among the several instruments of credit control at the disposal of the Board of Governors, however, there are two which differ in principle and method from the others.
These are the regulation of stock-market credit by fixing minimum margin
requirements and the regulation of consumer credit by such methods as prescribing minimum down payments and fixing maximum maturities. The
mechanism of these controls, like that of the others, is such that they can be
either stiffened or relaxed from time to time, by administrative action, as
circumstances may demand. They differ from the other methods, however,
in two major respects. (1) They impose a limit on the amount of credit
that borrowers and other credit users are in position to demand, rather than
on the cost and volume of credit that lenders have available; they may,
therefore, limit the use of credit, regardless of the fact that there may be an
abundant supply. (2.) They influence the volume of credit by affecting the
amount used for specified purposes rather than by limiting the amount used
for all purposes. Because of this last characteristic, these instruments of
credit control are sometimes called "selective" instruments.
The addition of such instruments as these to the formal arsenal of a central
banking system is a comparatively recent innovation. They have been used
informally by different central banks for a long while, but significant legislation dates back only to 1934 when the Securities Exchange Act directed and
empowered the Board to fix margin requirements "for the purpose of preventing the excessive use of credit for purchasing or carrying securities." The
analogous power to regulate consumer credit was inaugurated in August 1941,
when an Executive Order, effective for the present national emergency, was
issued by the President. Up to the present time, therefore, the System's
experience with these new instruments has been of short duration, but it has
nevertheless been long enough to provide significant materials for the study
of the principle which they embody.
This principle has accordingly been under continuous study, both inside
and outside the Federal Reserve System, not only in its application to the
fields to which it has already been applied but also in more comprehensive
applications. Such studies take account of the historical fact that there are
times when the traditional monetary controls, such as the discount rate and



FEDERAL RESERVE SYSTEM

open-market operations, are wholly or largely inapplicable. Constructive
possibilities which the selective principle may offer in these and other types
of credit, by way of contributing to the long-run stability of a progressive
national economy, are worthy of thorough exploration.
Margin requirements. Since November i, 1937, requirements under the
Board's Regulations T and U relating to extensions of credit for the purpose
of financing security transactions have remained the same. At that time,
coincident with the decline in stock prices, margins on security purchases
were reduced to 40 per cent and margins on short sales were set at 50 per cent.
During the six-year period from November 1, 1937 to December 31, 1943,
the stock market operated within a relatively narrow range. Only for a short
time in the early part of 1941 did the price level fall below the low point of
1938, and it did not at any time rise above the high point of that year—although a sustained advance beginning in 1^1. had by July 1943 carried prices
to a point above the high of 1941 and about level with the high points of
1938, 1939, and 1940. Subsequently prices fell off slightly but remained near
the level attained in July. Throughout this six-year period the volume of
trading was considerably below that of earlier years, although there was a
considerable but short-lived increase in activity in the first half of 1943. Debit
balances of customers of New York Stock Exchange firms which aggregated
about 1.1 billion dollars in October 1937 declined to about 0.5 billion in
August 1942.. Coincident with the recovery in the market, customers' debit
balances rose to about 0.8 billion dollars at the end of July 1943, and they
remained close to that general level throughout the rest of the year.
The sustained advance in stock prices which began in April of 1942., coupled
with the subsequent increase in trading and the growing total of customers'
debit balances, particularly during the first half of 1943, emphasized the importance of giving careful attention to the various factors of the situation,
including the possibility that a runaway stock market might contribute to
inflationary sentiment in the country as a whole. Conditions did not, however, appear at any time to be such as to call for an increase in margin requirements, although it was recognized that the situation should be watched
closely so that precautionary measures could be taken well in advance of
dangerous developments.
Restrictions on consumer credit. During 1943, restrictions on consumer credit, as applied through the Board's Regulation W, continued in
much the same form as those made effective on May 6, 1942., when the Regulation was amended to expand its scope. On a wide list of consumer durable
and semidurable goods, instalment sales are required to have down payments
of at least 333^ per cent and maturities not exceeding ix months. Sales of
listed articles in charge accounts must contemplate payment by the tenth of
the second calendar month after the purchase. Instalment loans are also
limited to i i months and single-payment loans are limited to 90 days with
renewals totaling not more than 12. months from the date of the original loan.
In the course of the year a few minor administrative changes were made in the



ANNUAL REPORT OF BOARD OF GOVERNORS

2-4

provisions of the Regulation for the purpose of helping merchants to meet
operating problems.
As is shown by the chart, outstanding consumer credit continued to decline
during the year but at a less rapid rate than in 1941. At the lowest point, on
August 31, the total amounted to about 4.8 billion dollars, which was is^ per
cent less than the 6.2. billion dollars outstanding on December 31, 1942..
During the last four months of the year, largely for seasonal reasons, consumer
credit expanded to about 5.x billion dollars, and the net decline for the year
was about 1 billion.
CONSUMER DEBT
BILLIONS OF DOLLARS

ESTIMATED FIGURES, END OF MONTH

BILLIONS OF DOLLARS

12

12
•

\
y \

*
>

-

-

/

-

1934

1936

1938

1940

1942

SOURCE.—This series was assembled by the Bureau of Foreign and Domestic Commerce from
monthly estimates of consumer instalment debt 1919-1938, prepared by Duncan Holthausen
while at the National Bureau, and annual estimates of all types of consumer debt originated by
Rolf Nugent of the Russell Sage Foundation. In August 1942. the series was transferred from
the Bureau of Foreign and Domestic Commerce to the Board of Governors. This series is
limited to debt maturing within five years and consists of instalment and single payment loans
and of charge account and instalment credit for goods and services.

Regulation W has continued to play a part, although clearly a relatively
small part, in the national effort to restrain inflationary forces. A certain
amount of consumer income has been absorbed in retiring pre-existing debt;
less new debt has been created than would otherwise have been the case; and
what new debt has been incurred has been paid off more rapidly. For
example, instalment purchases at furniture stores, which on the average were
being paid off in about 10 months at the end of 1942., were beingspaid off in
about 8 months at the end of 1943. These results were due not only to the
specific provisions of the Regulation, but also to a spirit of restraint on the
part of the public in asking for credit and on the part of credit grantors in
extending credit, which was stimulated by the Regulation and by the Presi


FEDERAL RESERVE SYSTEM

2.5

dent's "hold-the-line" program. In addition there was the important fact
that the supply of goods commonly bought on long-term credit was greatly
curtailed. It should be noted in this connection, however, that the field
covered by the Regulation, as amended on May 6, 1942., was much broader in
scope than the instalment purchasing of heavy durable consumer goods like
automobiles, refrigerators, and washing machines. It was aimed at restraint on the creation of all kinds of consumer credit dollars, because these
would add to the already excessive purchasing power of the public and would
be used to bid for all kinds of goods and services with consequent upward
pressure on their prices.
Tendencies evident in the latter part of 1943 indicate that consumer credit
outstandings may be approaching the lowest level likely to be achieved during the war period. It is not to be assumed from this fact, however, that the
work of regulation has come to an end. The need for keeping consumer credit
from expanding in any substantial amount will still be present. When production of the heavier durable consumer goods is gradually resumed but
production of goods and services in general still falls short of effective demand it will be particularly desirable to prevent large amounts of consumer
credit from being created. On the other hand, sufficient credit will be
available to meet the vital needs of the public as tested by wartime criteria.
As is shown on the chart, outstanding credit at the end of 1943 was
as large as it was at the end of 1935. ^ n ^act» consumer credit not directly
associated with heavy durable consumer goods was, at its lowest point in
1943, about as high as it was in 1937 and 1938.
POSITION OF BANKS IN THE WAR ECONOMY
Banking developments in 1943 were influenced predominantly by the requirements of war finance. Investments continued to increase rapidly, reflecting almost entirely bank purchases of United States Government securities,
and deposits showed a corresponding growth. There was little increase in
loans. Loans made for the purpose of purchasing or carrying securities
(mostly Government securities) increased, while consumer loans continued to
decline. Loans to finance war contracts expanded further but business loans
for nonwar purposes declined. Banking services expanded greatly, particularly those connected with the distribution of Government war bonds,
the cashing of a continuously increasing volume of Government checks, the
handling of ration coupons, and other phases of the war effort.
DEPOSITS AND CURRENCY

All groups of banks throughout the country shared in the growth in deposits and holdings of Government securities, but increases were relatively
larger for reserve city and country banks than for banks in New York City
-and Chicago. Changes in loans, investments, reserves, and deposits at different groups of member banks are shown on page 2.6. Banks in New York
City and Chicago showed smaller increases in assets and deposits than



Xb

ANNUAL REPORT OF BOARD OF GOVERNORS

the other groups of banks. Having previously developed the practice of
depending on sales of bills to the Reserve Banks in order to adjust reserve
positions, by the end of 194Z the banks in the financial centers had employed
practically all of their resources. Consequently they could expand their
loans and investments in 1943 only as they obtained additional reserves.
Banks in reserve cities and country banks, on the other hand, had a substantial
amount of unused funds at the end of 1942. and gained deposits during the year.
They were thus able to expand their holdings of Government securities by
large amounts while their reserves also increased.
C H A N G E I N P R I N C I P A L ASSETS A N D L I A B I L I T I E S — A L L M E M B E R
D E C E M B E R 31, 1942. TO D E C E M B E R

31,

BANKS

1943

[In billions of dollars]

Item

Loans and investments—total
Loans
. .
U. S. Government securities
Other securities
Reserves with Federal Reserve Banks.
Demand deposits, adjusted
U S Government deposits
Time deposits

Central reserve city
member banks
NewYork

Chicago

Reserve
city
member
banks

+ 15.0
+0.2
+15.4

+2.0
+0.3
+2.0

+0.6
+0.2
+0.4

+6.6
+0.1
+6.6

+5.8

-0.2

-0.8

-0.1

+0.2
+3.8
+1.4
+1.1

+0.5
+3.8
+0.9
+1.2

All
member
banks

-0.6

+10.1
+ 1.6
+2.4

-0.3

+2.0
-0.8
+0.1

+0.5
+0.1

-0.1

Country
member
banks

-0.4

+6.3
-0.1

* Less than 50 million dollars.

Expanding deposits increased the amount of reserves that banks were required to hold. At central reserve city banks there were practically no excess
reserves during the year; at reserve city banks the increase in requirements
more than absorbed the small gain in reserves, and excess reserves declined
from an average of around a billion dollars in December 1942. to about 300
million in December 1943. At country banks, the growth in reserves kept
pace with the growth in requirements, and excess reserves continued during
the year at close to 800 million dollars.
Distribution of deposit growth. During 1943 there were increases of
about 14 billion dollars in demand deposits at all banks, 4.5 billion in time
deposits, and 5 billion in currency outside banks. It is estimated that demand deposits of individuals increased by about 5 billion dollars during the
year, and that the larger part of the reported increase in demand deposits was
in business accounts. Most of the growth in time deposits, which moved
upward in 1943 after several years of little change, and also the increase in
currency, were accounted for by individual holdings.
The increase in the total of bank deposits and currency in 1943 was somewhat more rapid than the increase in gross national product or in income
payments and was considerably more rapid than total consumer expenditures
and retail trade. There was a decline in the rate of turnover of deposits.
This would indicate that an increasing portion of the deposits and currency
represents idle balances or uninvested savings.



FEDERAL RESERVE SYSTEM

IT/

Since the beginning of 1942., and particularly during 1943, the course of
Treasury receipts and expenditures has been a dominant influence on the distribution of deposits as well as on their growth. During war loan drives
there have been wide shifts from private to Government accounts, while
between drives, as the Treasury drew upon its war loan deposits to meet
expenditures, the funds shifted back to private accounts and were widely distributed throughout the country. The Treasury built up its deposit balances
in war loan accounts to a high level at the end of 1942. and generally maintained larger balances than usual throughout 1943.
A large portion of the total increase in demand deposits and the largest
percentage growth occurred in medium-size and small cities and towns. The
growth in demand deposits has been shared by small and large business units,
by depositors engaged in manufacturing and mining, in commerce and trade,
and in agriculture, and by urban and rural communities in all sections of the
country. . Information available for the first half of the year indicates that at
least two-thirds of the increase during that period accrued to businesses,
including unincorporated firms. In percentage terms expansion has generally
been greatest in the southern and western districts of the United States, where
there were increases of one-third to one-half in demand deposits, and least in
the northeastern districts, particularly in large city banks. The exceptionally large growth in deposits in areas known to be active in war production
reflects the general tendency for funds to be held near the point of production
in periods of expanding activity rather than near the financial offices of business concerns. The rapid growth in agricultural income also contributed to
the growth of deposits at country banks.
For the year 1943 as a whole, as in 1942., New York City lost funds on balance through Treasury transactions and commercial and financial operations,
and regained funds through the open-market operations of the Reserve System. Adjusted demand and United States Government deposits increased
only 1.2. billion dollars as compared with an increase of 4.5 billion in 1942..
Treasury collection of taxes and sales of new securities continued to take more
money from the New York market than was returned by Treasury expenditures. The market also lost heavily from currency withdrawals and transactions with foreign accounts. During the first six months of 1943 there was
an inflow on commercial and financial accounts, in contrast to the steady
outflow in 1942.. During the last half of the year, however, these accounts
were again drawn down.
The inflow of funds on commercial and financial accounts may have represented the accumulation of business balances in New York. Working balances in the areas of production may have become ample for current
operations, and business concerns may have placed funds in excess of such
needs on deposit in the money-market banks pending investment or other use.
Another source of the inflow may have been purchases of Government securities in New York by banks and other investors outside the city. During the
war loan drives in April and September, however, there was a heavy with


2.8

ANNUAL REPORT OF BOARD OF GOVERNORS

drawal of funds from New York, presumably to make purchases of securities
elsewhere or to replenish working balances that had been exhausted in making subscriptions. The effect of these and of further heavy withdrawals in
December on the supply of funds in the market was largely offset by Federal
Reserve purchases of securities.
Growth of currency. Growth of deposits during 1943, as in previous
war years, was accompanied by expansion of currency in circulation. The
rate of currency outflow was substantially more rapid in 1943 than the
increase in wage and salary payments or consumer expenditures—the principal purposes for which currency is used—thus continuing a development
that had prevailed in a less striking way during 1942.. More large denomination currency went into circulation in 1943 than in 1942., a fact which
suggests that more funds were being held idle. Although 10 and 2.0 dollar
bills accounted for the greater part of the increase in both years, in 1943 the
relative increase in 50 and 100 dollar bills was greater than for any other
denominations. Continued heavy income receipts by the low and middle
income groups, movement of population to new centers of war production,
expansion of the armed forces, and bank service charges on checking accounts
appeared to be continuing factors in the large currency outflow.
Currency growth in this country has not been materially different from that
in other countries with highly developed deposit banking systems. Since
1939 the percentage increase here has been slightly smaller than in Canada
and slightly larger than in Great Britain.
Deposits after the war. The large expansion of bank deposits and currency in recent years raises the question as to what changes are likely to occur
after the war in the volume and distribution of deposits and what effect such
changes may have on the position of banks.
Decline in the volume of deposits in all commercial banks taken as a whole
can be caused by withdrawals of currency or by an outflow of gold from the
country, or it may reflect a reduction in the banks' loans and investments.
Only the last of these causes is likely to occasion a substantial decline in
deposits in the postwar period. The volume of currency in circulation now
is so large that it is much more likely to decline after the war (and thus increase deposits) than to expand further (and thus reduce deposits). Neither
is there any likelihood of a gold outflow of sufficient volume to be of consequence in relation to the total volume of deposits.
Since about two-thirds of the earning assets of banks at present consist of
United States Government securities, any substantial reduction in bank
credit would necessarily mean a decrease in the banks' holdings of these
securities. Such a decrease might be the result of a rapid contraction of the
Government debt or of the sale to nonbank purchasers of Government securities now held by banks. In case of either of these developments bank deposits
would decline, but their decrease would release required reserves which would
be available to serve as a basis of an expansion in loans and investments (and
thus in deposits) equal to the previous contraction.



FEDERAL RESERVE SYSTEM

29

When the present situation is compared with that prevailing after the last
war or in the 1930's, the outstanding difference is that since the banks' portfolios now consist in large part of United States Government securities, the
banks are not likely to be under pressure to liquidate assets, as they were in
the earlier periods. At those times the expansion in deposits had been due in
large part to increases in bank loans during periods of rising values. In the
period preceding 19x0, much of the increase was [in loans on commodities
based on rising commodity prices, while in the years ending in 1919 the expansion was in security loans based on rising stock prices. In both cases a
collapse in values resulted in a weakening of the quality of bank assets, with
consequent urgent pressure by the banks to liquidate loans. After the
present war there is no prospect of a substantial contraction of deposits from
this cause.
Aside from such changes as may take place after the war in the total volume of deposits, there will no doubt be a considerable movement of deposits
between banks and between regions. Growth of deposits during the war
has been widely distributed over the country. It has been largest in places
where war activity has expanded most. At financial centers, where tax
payments and purchases of United States Government securities have been
heaviest, the deposit growth has been least marked. It is possible that after
the war there will be a flow of deposits from scattered communities to the
financial centers. Individual banks may lose deposits through transfers to
other banks and may find it necessary in meeting the drain to dispose of some
of their Government securities. In such cases, however, other banks will
receive the deposits and will be in a position to buy additional securities.
The flexibility of the banking system and of many individual banks in
meeting declines in deposits has been enhanced by the practice of adjusting
the maturities in security portfolios to the character of deposits. In general,
a large proportion of bank holdings of Government securities is in short
maturities which are not subject to wide fluctuations in price. In case large
and abrupt interbank movements of deposits should result in temporary disturbances, the Federal Reserve authorities would be in a position to take
measures, in accordance with their well-established policy, to restore stability to the money market.
OPERATIONS AND STRUCTURE

Bank earnings. Earning assets of the banking system increased by about
2.5 per cent during 1943 following a 2.8 per cent increase during 1942.. At the
close of the year they totaled around 98 billion dollars, over two-thirds of
which consisted of Government securities. The increase in the total volume
of assets more than compensated for lower yields on investments as compared
with loans, and bank earnings were higher than at any time since the banking
holiday.
The large growth in holdings of Government securities, combined with the
decline in loan volume, has produced widely different effects on the earnings



3<3

ANNUAL REPORT OF BOARD OF GOVERNORS

of individual banks. In 1942. net earnings of central reserve and reserve city
banks increased while those of country banks declined. In 1943 earnings at
all classes of banks increased, but the biggest gain was at the money-market
banks in central reserve cities. These variations can be explained largely by
differences in the spread between loan rates and investment yields. At large
banks, where loan rates have not been much higher than rates on investments,
earnings on an enlarged volume of Government securities have more than offset the decline in earnings on loans. At smaller banks, loan rates are
generally much higher than rates on Government securities. Consequently,
while showing an increase in the total volume of earning assets, some of these
banks have suffered a decline in earnings.
Capital accounts. As a result principally of larger earnings and no material change in the amount of cash dividends declared on bank stock, capital
accounts of member banks increased about 374 million dollars in 1943, c o m ~
pared with 114 million in 1942.. Towards the close of the year a number of
the larger banks declared substantial stock dividends out of accumulated surplus and profits, thus increasing the "fixed" portion of their capital structures, and some sold additional common stock. All of this fits in with the
general policy of bank supervisory authorities, that banks should strengthen
their capital structures and take whatever other steps may be necessary to
place them in the best possible position to meet postwar developments.
Increases in banks' capital accounts in recent years have been much smaller,
relatively, than increases in bank liabilities. There is, in other vsrords, less
margin for the protection of the general depositors, if the nature of bank assets
is disregarded. But most of the increase in liabilities has been accompanied
by growth in assets involving no risk of loss, and the ratio of capital accounts
to what are sometimes termed "risk assets" (all assets other than cash, reserves, due from banks, and Government securities) is higher now than it was
at the beginning of the war. On December 31,1943, this ratio for all member
banks as a group was 2.9 per cent, compared with 13 per cent on December 31,
1941.
Change in number of banking offices. Continuing the trend of recent
years, the number of banks declined slightly in 1943. It was 14,579 on December 31, or 101 below the number at the end of 1942.. The number of
branches and additional offices, including banking facilities at military reservations, increased by 194 to 3,933 in 1943. Other than the special wartime
offices, there was an increase of only two in the number of branches and
additional offices established by banks.
As in other recent years, the decrease in the number of banks was due almost
entirely to consolidations and voluntary liquidations. These resulted in a
gross decrease of 148 banks. Four banks suspended during the year—-two
member banks and two insured nonmember banks. The number of banks
newly organized in 1943 was 49, compared with 2.2. the year before. The net
decrease in number of banks during the year was 101.
The number of branches and additional offices established by banks, exclud


FEDERAL RESERVE SYSTEM

ing offices at military reservations, was 49, while the number discontinued
was 47. The new branches were about equally divided between de novo
banking offices and conversions of existing banks into branches. Threefourths of the 49 new branches and half of the 47 branches discontinued were
located outside the cities of their respective head offices. The number of
banking offices opened at military reservations was \^L\ all of these were
established through arrangements made by the Treasury Department with
banks designated as depositaries and financial agents of the Government.
Increase in banking services. The volume of transactions handled by
the banking system increased considerably during 1943, in reflection of the
banks' continued contribution to the war effort. Aside from participating
in the management of the war loan drives aijd purchasing securities for their
own accounts, banks handled subscriptions to securities sold during the
drives. In addition, throughout the year they sold and issued a large volume
of savings bonds to the public and to their employees through pay roll savings
plans. Banks certify owners' signatures on war savings bonds, which are
redeemed outside of Washington solely by the Federal Reserve Banks.
As previously indicated, banks have made many- loans to contractors and
subcontractors engaged in war operations. Additional loans were made to
finance the construction or repair of homes in war housing areas, and to
finance the production of adequate food to meet the needs of the armed services and civilian personnel at home and abroad. At the request of the Treasury, banks have established facilities for the receipt of deposits and payment
of checks at more than 2.00 military reservations since the war began. They
also cash millions*of allotment and allowance checks issued to soldiers' and
sailors' dependents, provide trust services for men and women in the armed
services, etc. Many banks make up cash pay rolls for war industries and, in
some cases, for the Army and Navy.
The tax withholding program of the Treasury and the ration banking plan
of the Office of Price Administration have created new functions for the
banking system. The banks provide receipts for taxes withheld and transfer
the funds to the Reserve Banks from time to time as required by the Treasury.
Millions of ration coupons and stamps are received by the banks from dealers
in rationed products. Accounts for certain rationed commodities are set up
in much the same way as deposit accounts for cash and the banks keep a running balance between deposits of coupons and stamps and withdrawals to
replenish stocks of rationed goods. After their expiration dates, coupons
are kept for the period required by the Office of Price Administration and then
destroyed. Toward the close of the year arrangements were completed for
banks to act as distributing agents for millions of fibre tokens to be issued by
the Office of Price Administration in connection with the rationing program.
Banks assist the Treasury in its control of the movement of funds and assets
belonging to "nonnationals" by effectuating the Treasury orders and licenses
which make limited amounts of such funds available to their owners. The
census of such funds and assets, which the banks had been making for the



3 2-

ANNUAL REPORT OF BOARD OF GOVERNORS

Treasury, had been practically completed prior to 1943. Banks also are the
principal means through which the Treasury is now endeavoring to obtain a
complete census of American holdings of foreign assets.
Increase of membership in Reserve System. Despite the net decrease of
101 in the total number of banks, membership in the Reserve System continued to increase in 1943 and registered a net gain of 59. National banks—
required by law to be members of the Federal Reserve System—declined by a
net of 41, principally because of consolidations. State member banks showed
a net increase of 100—about the same as the year before, but considerably
less than in 1940 and in 1941. The 6,738 member banks (including three
small mutual savings banks) that were in operation on December 31, 1943,
accounted for 48 per cent of the number and about 87 per cent of the deposits
of all commercial banks in the United States. While nearly all of the larger
banks are member banks, most of the member banks are of small or moderate
size. In December i94x, for example, 57 per cent of the member banks had
deposits of 2. million dollars or less each, and 80 per cent had deposits of 5
million or less.
The gross number of State banks admitted to membership in 1943 (including four newly organized banks) was 117. All but one of the 113 operating
State banks admitted to membership were already members of the Federal
Deposit Insurance Corporation. Total deposits of these 113 banks amounted
to about 3x0 million dollars. Admissions of State banks to membership
were distributed throughout the twelve Federal Reserve districts, but twothirds of the total number admitted were in three districts—Chicago, Cleveland, and New York.
In 1943 State bank membership in the Reserve System reached 1,698, its
record peak. There were 50 more State banks in the System on December 31
than there had been in June 192.x, when membership for State banks was at its
former peak. Relative to the number of State banks in existence on the two
dates, State bank membership is now two and one-half times larger than in
1911. In June of that year State member banks were approximately 8 per
cent of all State commercial banks; now they are 19 per cent. The proportion
of State commercial bank deposits held by State member banks is also considerably higher than it was in 192.2., the percentage being 70 now as compared
with 48 in lyiJL.
Par and nonpar banks. The Federal Reserve Act provides that no exchange charges for the collection or payment of checks shall be made against
the Federal Reserve Banks; consequently only checks on which no exchange is
charged are collectible through the Reserve Banks. To facilitate collections,
there is maintained a "Federal Reserve Par List," comprising all member
banks—which are required to remit at par for checks presented to them by
the Reserve Banks—and nonmember banks that have agreed to pay without
deduction of exchange charges such checks drawn upon them as are forwarded
for payment by the Reserve Banks.
During 1943 there was a net increase of 79 in the number of banks on the



FEDERAL RESERVE SYSTEM

33

par list, consisting of 59 member banks and zo nonmember banks. The total
number of banks on the par list at the end of the year was 11,501, comprising
6,738 member banks and 4,763 nonmember banks.
The number of nonmember banks (other than mutual savings banks and
banks on which no checks are drawn) not on the par list was 2., 52.9, compared
with 2.,7io a year earlier. The net reduction of 181 in the number of nonpar
banks is the result principally of the transfer of 191 banks to the par list (111
in Iowa) and the termination of existence of 2.6 nonpar banks. The decrease
in the number of nonpar banks took place largely in July, following the enactment in Iowa of a law providing for the clearing at par of checks drawn on
all banks organized under the law of that State; there were i n nonpar banks
in Iowa at the beginning of 1943. A considerable number of nonmember
banks were also added to the par list in December. The gross decreases in
the number of nonpar banks were offset in part by the withdrawal of z6 banks
from the par list and the organization of zo new nonpar banks.
Of the x,5^9 nonpar banks at the end of the year, about 95 per cent were
located in 16 States as follows: Minnesota 4x0, Georgia 2.63, Mississippi 174,
Tennessee 166, Nebraska 154, Wisconsin 145, Arkansas 12.8, Alabama 117,
North Carolina 1x7, South Carolina 114, North Dakota i n , Louisiana 104,
South Dakota 98, Missouri 94, Florida 88, and Texas 88. Of the remaining
ix8 nonpar banks, 37 were located in Virginia, zz in Washington, zi in Montana, iz each in Illinois and Oklahoma, 10 in Kentucky, and a total of 14 in
six Other States.
Absorption of exchange charges. There was an important development during the year in connection with the practice pursued by some banks
of absorbing exchange charges for correspondent banks. The Board was
presented, in a specific case, with the question whether the absorption of
exchange charges by a particular member bank constitutes a payment of
interest on demand deposits in violation of Section 19 of the Federal Reserve
Act, and of the Board's Regulation Q. The Board held that the absorption
of exchange charges in the case under consideration was equivalent to "a
payment to a depositor for the use of funds constituting a deposit," and,
consequently, under the Board's definition of interest, was a payment of
interest and was in violation of the law and the regulation. This ruling was
published in the Federal Reserve Btdletin for September 1943.
Prohibition of payment of interest on demand deposits was incorporated
into the law by the Banking Act of 1933, which prohibits such payments made
"directly or indirectly by any device whatsoever." By an amendment
adopted in the Banking Act of 1935 the Board was authorized "to determine
what shall be deemed to be a payment of interest" within the meaning of the
statute.
On February 11, 1937, the regulations of the Board and the Federal Deposit
Insurance Corporation were amended by providing that for the purpose of
both regulations the term "interest" shall mean "any payment to or for the
account of any depositor as compensation for the use of funds constituting a



34

ANNUAL REPORT OF BOARD OF GOVERNORS

deposit." By joint announcement of the two agencies, it was made clear
that the purpose of this action was to restate principles of law as decided by
the courts and to provide for the consideration of each case that might arise
upon the basis of the facts involved in the specific case.
It was in accordance with the policy thus agreed upon in 1937 that the
Board's ruling was made in 1943. The facts of the case upon which that
ruling was based were developed in connection with examination of a member
bank and were submitted to the Board with a request for an interpretation.
In expressing its views, the Board was guided by what the courts have considered to be the collection or payment of interest. Principles of law thus
announced by the courts were applied to the facts of the case before the Board,
and the Board expressed the opinion that the practice followed by the bank
in question came within the scope of the statutory prohibition.
The bank to which the ruling applied and other banks in the same community subsequently announced their intention to comply with the Board's
interpretation of the law. A number of other banks throughout the country,
as well as clearinghouse associations, likewise conformed to the Board's
ruling by announcing the discontinuance of the absorption of exchange
charges.
Late in 1943 this matter became the subject of hearings extending into 1944
in the Banking and Currency Committee of the House of Representatives, in
which members of the Board and its General Attorney appeared as witnesses.
Early in 1944, bills were introduced in both Houses of Congress (S. 1642.;
H.R. 3956) for the purpose of amending Section 19 of the Federal Reserve Act
to provide that the absorption of exchange and collection charges by member
banks shall not be deemed to be a payment of interest. In response to a request for its opinion as to the merits of the proposed legislation, the Board of
Governors addressed letters explaining its position to the Chairmen of the
Banking and Currency Committees of the Senate and the House of Representatives. A copy of the Board's letter to the Honorable Robert F. Wagner,
Chairman of the Senate Committee on Banking and Currency, dated January
14, 1944, was printed in the Federal Reserve Bulletin for February 1944.
The letter includes a full statement with respect to the history of the
question of absorption of exchange charges as well as to the Board's position
in this matter.
RECOMMENDED LEGISLATION ON BANK HOLDING COMPANIES
In the Banking Act of 1933 the Congress undertook to provide for the supervision of bank holding companies. The Board, in the light of its experience, believes the present law inadequate to accomplish the purposes for
which it was enacted, and accordingly the Board wishes to recommend certain broad changes which it believes should be incorporated in the law if it
is to be effective.
In the first place, the existing statutory definition of a bank holding company is inadequate. This definition, which is contained in Section x(c) of
the Banking Act of 1933, reads in part as follows:



FEDERAL RESERVE SYSTEM

35

cc

(c) The term 'holding company affiliate' shall include any corporation,
business trust, association, or other similar organization—
" ( i ) Which owns or controls, directly or indirectly, either a majority
of the shares of capital stock of a member bank or more than 50 per centum
of the number of shares voted for the election of directors of any one bank
at the preceding election, * * * ."
Effective control does not depend upon the ownership or control of a majority
of the outstanding shares. It can be and often is exercised through the
ownership or control of a much smaller proportion of total shares outstanding and this fact has been recognized by the Congress in corresponding legislation enacted in other fields.
The number of shares owned or controlled as compared with the number
of shares voted for the election of directors at the preceding election is an
equally unsatisfactory basis for determining whether a holding company
affiliate relationship exists. Such a restricted test puts it within the power of
the holding company, under the statutory test, to establish an absence of
control when, in fact, it is at that very time actually exercising most effective
control. Moreover, regulation, to be effective, must have continuity, and
a statutory yardstick under which a company may be a bank holding company one year and may not be the next year renders regulation difficult if not
impossible in some important instances.
In the Board's experience, the case in which regulation is most necessary
is likely also to be the case in which advantage has been taken of the gaps in the
statutory definition with respect to the number of shares owned or controlled.
The Board believes that these gaps should be filled in by incorporating in the
statute more realistic definitions envisaging the manner and means by which
effective control actually is exercised.
Secondly, the only limitation which the law imposes upon the control of
subsidiary banks by bank holding companies is that the latter may not
vote their stock in a controlled bank without securing a voting permit from
the Board, and it is only as an incident to obtaining the voting permit that
there is any regulation at all. When effective control is exercised without
voting the stock, which is the case in important instances, obtaining a voting
permit from the Board becomes a matter of no importance to the holding
company. In such a case, the bank holding company can escape every consequence of the statute merely by not obtaining a voting permit and not voting its stock. Thus the option of whether or not it shall be regulated under
the statute rests entirely with the holding company. The Board believes
that all bank holding companies should be supervised, as are the banks
which they control.
Finally, even if the holding company chooses to subject itself to regulation, the effectiveness of the Board's supervision is hindered rather than
helped by the penalties provided by the statute. For violation of the statute
or of its agreement with the Board, the holding company's voting permit
may, after hearing, be revoked. The consequences flowing from such a revocation are that the member bank whose stock is controlled can not receive



36

ANNUAL REPORT OF BOARD OF GOVERNORS

deposits of public monies of the United States nor pay any further dividends
to the holding company. Also, if the controlled bank is a national bank,
its charter may be forfeited, and if it is a member State bank, its membership
in the System may be terminated. The Board believes that means should be
provided for reaching the holding company and its management directly
rather than indirectly, as is now the case.
While their operations are extensive in certain areas, bank holding companies are not numerous. Their management, on the whole, has been cooperative and the Board has enjoyed a satisfactory relationship with most of
the holding companies to which it has issued voting permits. It is the
exceptional case which now concerns the Board for it is in the exceptional
case that the inadequacies of the statute are real impediments and in which
the Board's ability to regulate is challenged. In the exceptional case, the
Board has found that the corporate device of the holding company has not
been used solely as a mechanism for the efficient operation of controlled banks
but as a device to accomplish by indirection objectives which could not be
accomplished directly.
Accepted rules of law confine the business of banks to banking and prohibit them from engaging in extraneous businesses such as owning and
operating industrial and manufacturing concerns. It is axiomatic that the
lender and borrower or potential borrower should not be dominated or controlled by the same management. In the exceptional case, the corporate
device has been used to gather under one management many different and
varied enterprises wholly unallied and wholly unrelated to the conduct of a
banking business. When the bank holding company has thus expanded its
operations into other and unrelated activities, it tends more and more to
have the characteristics of the type of institution to which the "Investment
Company Act of 1940" was addressed. Yet, if the company controls banks
and has a voting permit for any one of such controlled banks, it is exempted
from the provisions of that Act. The Board believes that such a company
should be required, by law, to adjust its affairs so as to become either a bank
holding company or an investiment company. In no event should it be permitted to remain a hybrid beyond the period necessary for it to adjust its
affairs in this respect.
In the exceptional case, the Board has found that the corporate device of
the holding company has been used to escape the supervisory powers of the
various bank supervisory agencies. Briefly stated, Congressional policy
with respect to the establishment of branches of banks, as reflected in current
statutes, is designed to limit Federal permission to establish branches in each
State to the legislative policy of the State. The Federal supervisory authorities now have authority to control the direct establishment of branches of
banks under their respective jurisdictions. This is because national banks
must first obtain permission from the Comptroller of the Currency to establish branches, State member banks from the Board and nonmember insured
banks from the F.D.I.C. Through the corporate device of the holding



FEDERAL RESERVE SYSTEM

37

company, however, these controls are defeated and the holding company
by indirection can do what the bank can not do directly. Thus the same
management which is restricted in its operation under a bank charter can,
through the holding company device, acquire unit banks, operate them in the
same manner branches would be operated, and thus defeat the expressed will
of Congress regarding the establishment of branches.
There is now no effective control over the expansion of bank holding companies either in banking or in any other field in which they may choose to
expand. Moreover, the device lends itself readily to the amassing of vast
resources obtained largely from the public which can be controlled and used
by a few people and which give to them, when they choose so to use them,
an unfair and overwhelming advantage in acquiring additional properties
and in carrying out an unlimited program of expansion. In the exceptional
case, these resources have been used to acquire independent banks by measures
which leave the local management and minority shareholders little with
which to defend themselves except their own strenuous protests. Likewise,
these resources have been used to support the market for their own stocks and
thus to facilitate the acquisition of independent banks by the exchange of
stocks, as well as to create trading profits for favored participants.
The Board believes, therefore, that it is necessary in the public interest
and in keeping with sound banking principles that the activities of bank
holding companies be restricted solely to the banking business and that
their activities be regulated, as are the activities of the banks themselves.
It is recognized that bank holding companies have served a useful purpose
in some areas of the country and have contributed banking services which
might not otherwise have been available or might not now be available,
and a requirement that bank holding companies be immediately dissolved
would more likely result in the liquidation of controlled banks in certain
areas than in their sale to and continued operation by new owners.
For these reasons the Board recommends that immediate legislation be
enacted preventing further expansion of existing bank holding companies
or the creation of new bank holding companies. Such legislation should
be so designed as to prevent any such company from using the corporate device to circumvent and evade sound banking principles, regulatory statutes,
and declared legislative policy.
WARTIME SERVICES OF THE RESERVE BANKS
Work performed by the Reserve Banks for the Government in connection
with the prosecution of the war expanded further during 1943. In order to
give the banks and the public the best possible service consistent with economical operation, a number of additional fiscal agency services were made
available at the twenty-four branches of the Reserve Banks. This policy of
decentralization in the Federal Reserve System helped to relieve somewhat
the pressure at the head offices. Toward the middle of the year the operations of the Reserve Banks and their branches were designated an essential
activity by the War Manpower Commission.




38

A N N U A L R E P O R T OF B O A R D O F

FISCAL A G E N C Y

GOVERNORS

OPERATIONS

About i2.,ooo employees or half the System's total personnel were engaged
in fiscal agency activities at the end of the year, a majority of such employees
being assigned to war savings bond operations. The number of employees
in fiscal agency departments alone is now somewhat larger than the total
personnel of the Reserve Banks and branches before the war.
Withholding tax program. One of the principal fiscal agency operations
inaugurated during the year was the handling for the Treasury of much of
the work in connection with the withholding tax program under the Current
Tax Payment Act of 1943, which wTas enacted June 9. This work involved the issuance of Treasury instructions, the qualification of depositary
banks, the acceptance of deposits from such banks, the matching of copies of
depositary receipts received from Collectors of Internal Revenue with those
received from depositary banks, and the issuance and safekeeping of 2. per
cent depositary bonds. These bonds are sold to depositary banks for the
purpose of compensating them for the additional costs they incur in receiving
and accounting for deposits of withheld taxes.
Ration banking. Another new fiscal agency activity was the handling
of ration checks for the Office of Price Administration. Under the Ration
Banking Plan, which was inaugurated on January 2.7, out-of-town ration
checks deposited with banks carrying ration bank accounts are cleared
through the Reserve Banks and their branches. During the year the Reserve
Banks handled more than 52. million ration checks.
Depositary services for the Treasury. During the early part of the year,
the Reserve Banks were requested to act as agents of the Treasurer of the
United States in paying a new type of Government check—a punch-card
check designed to be handled through sorting and tabulating machines.
These card checks are drawn on the Treasurer of the United States payable
through a particular Federal Reserve Bank. During the year the Federal
Reserve Bank of New York, for example, handled 34 million card checks, a
majority of which represented payments to dependents of men in the armed
forces. Checks now being issued in punch-card form payable through the
Reserve Banks include also checks drawn by various Navy offices and yards
and by Treasury regional disbursing offices. The number of Government
checks handled by the Reserve Banks, including card checks, increased from
131 million in 1942 to 2.67 million in 1943. There was also a substantial
increase in the number of checks deposited by Collectors of Internal Revenue
and other Government officials for credit to the Treasurer's general account.
Millions of such checks are now collected annually by the Reserve Banks.
As depositaries of the United States, the Reserve Banks also pay and charge
to the Treasurer's general account maturing coupons from Government securities, 17 million of which were paid during 1943.
Federal Reserve Banks made substantial shipments of currency direct to
Army and Navy posts in this country and to banks for use at such posts.
The Federal Reserve Bank of Dallas estimated that direct payments of cur


FEDERAL RESERVE SYSTEM

39

rency and coin to authorized finance officers of the Army and Navy represented about one-fifth of its total volume of currency shipments.
Issuing and servicing Government obligations. In point of number
of employees engaged, the handling of war savings bonds continued during
1943 to be the largest single operation performed by the Federal Reserve
Banks. In addition to the direct issue of savings bonds, the Reserve Banks,
as fiscal agents, maintain consignment accounts with thousands of banks and
other qualified issuing agents for Series E bonds. Stocks of bonds in the
millions were furnished these issuing agents by the Reserve Banks during
1943 and, as the bonds were sold, reports and remittances were received,
accompanied by the bond stubs which show the registration of each bond
sold. Such stubs are consolidated with those representing bonds issued by
the Reserve Banks, then tabulated and forwarded to the Treasury. The
Reserve Banks supply all issuing agents except post offices with stocks of
bonds. Many of these issuing agents are corporations and others which
operate pay roll savings plans for the purchase of war savings bonds by their
employees. About 75 per cent of the number of savings bonds issued during
1943 were in the $2.5 denomination, which largely accounts for the tremendous amount of work involved. Moreover, savings bonds are issued in
registered form and require considerably more time to handle than bonds
issued in bearer form. The Reserve Banks are the sole redemption agencies
for savings bonds outside of Washington. As the sales of savings bonds
have increased, the number of bonds redeemed has increased, and many
Reserve Banks and branches have set up separate savings bond redemption
departments outside their regular banking quarters. Almost 53 million units
of Series E savings bonds were sold in the Third War Loan Drive and 33
million in the Second Drive. These issues were in addition to sales outside
of the drives.
Reissues of savings bonds increased considerably during the year, principally because of bonds being improperly inscribed at time of purchase. The
Federal Reserve Bank of Chicago renders a special service to the Treasury's
Chicago office in handling reissue cases that can not be settled without
clearance with the Treasury. The Chicago Reserve Bank handles cases of
this type from all parts of the country, whether submitted to the Treasury
Department direct or through other Reserve Banks. The volume, which is
currently running at an annual rate of 2.00,000 pieces, is rapidly increasing.
The safekeeping facilities at the Federal Reserve Bank of Cleveland were
expanded during the year to care for several million bonds to be deposited
for the Navy's personnel. The Chicago Reserve Bank renders a similar
service for the War Department.
As contrasted with the number of pieces, the dollar volume of securities
handled by the Reserve Banks was greatest in the Treasury's market issues,
which were sold largely during the Second and the Third War Loan Drives.
The wider distribution of securities achieved by greater efforts to sell securities to nonbank investors resulted, of course, in a larger number of individual



40

ANNUAL REPORT OF BOARD OF GOVERNORS

pieces sold and consequently in an increase in the volume of work of the
Reserve Banks. Concentration of security offerings into brief drive periods
also resulted in sharp peak loads. In spite of increased staffs and employees
borrowed from other departments, considerable overtime was necessary
in the fiscal agency departments.
The Federal Reserve Banks cooperated fully with the Treasury in the task
of organizing and administering the war loan drives. This activity required
a considerable part of the time of the Presidents of the Reserve Banks and
other officers as well as the full time of a large number of employees. The
work included assistance in the preparation and distribution of publicity
materials such as manuals and letters of instruction to workers in the drives,
printing and distribution of subscription blanks, and tabulation of detailed
reports on the results of the drive for the information of the war finance
committees and the Treasury.
Efforts made during the year to increase the number of banks qualified as
war loan depositaries were quite successful. Owing to the Treasury's large
financing operations, many banks realized the desirability of paying for
subscriptions to Treasury securities by credit in war loan accounts. Funds
in war loan accounts are left in the depositary until actually- needed by the
Treasury.
Services for Government corporations. Since April 1943, a number of
the Reserve Banks have been maintaining complete inventory records of
machinery and equipment owned by the Defense Plant Corporation and used
in war production plants. The Defense Supplies Corporation purchased
large quantities of clothing, strategic materials, automobile tires and tubes,
etc., which were paid for with checks drawn at its direction by the Reserve
Banks on the Treasurer of the United States.
Services somewhat similar to those performed for the Defense Plant
Corporation and the Defense Supplies Corporation were performed by the
Reserve Banks during the year for the Commodity Credit Corporation and
for the Reconstruction Finance Corporation and its various other subsidiaries,
including Metals Reserve Company, War Damage Corporation, Rubber
Reserve Company, U. S. Commercial Company, Federal National Mortgage
Association, Disaster Loan Corporation, and RFC Mortgage Company. The
Reserve Banks disburse, by checks drawn on the Treasurer of the United
States, the amount of loans and other payments made by such agencies and
receive, examine, and hold the notes of the borrowers and other collateral.
Payments of principal, interest, and commitment fees made in connection
with such loans are received and applied by the Reserve Banks. All Reserve
Banks continued to receive a large number of remittances from fiduciary
agents representing premiums collected on War Damage Corporation insurance coverage.
Stabilization Fund operations. The Federal Reserve Bank of New York
carries out the operations of the United States Stabilization Fund in accordance with authorizations and instructions from the Treasury. Such opera


FEDERAL RESERVE SYSTEM

41

tions include the purchase and sale of gold and foreign exchange and the
maintenance of accounts for various foreign central banks and foreign governments in connection with stabilization agreements and other arrangements
between the United States and certain foreign countries.
Foreign Funds Control. The activities of the Federal Reserve Banks as
agents for the Foreign Funds Control in the Treasury continued to be important
during 1943. The Foreign Funds Control regulations were modified and
extended somewhat during the year, particularly with a view to facilitating
legitimate transactions and to tightening up the barriers against Axis manipulation of dollar assets. The liberation of North Africa brought an increase
in the number of applications for transactions with this area, and foreshadowed new problems when contact is resumed with European areas now
occupied by the enemy.
More than 100,000 applications for licenses were received by the Reserve
Banks during the year, most of which were handled under general authorizations from the Treasury Department without the necessity of transmitting
them to Washington. Several hundred thousand reports of transactions
under license were also received and checked. Under special authorization,
the Federal Reserve Bank of Dallas effected during the year about 8,500
releases of currency illegally brought into the United States from Mexico.
At the request of the Treasury, the Reserve Banks distributed during the year
several million copies of forms, circulars, and other documents relating to
foreign funds control.
The Reserve Banks participated during the year in the administration of the
Treasury's general census of foreign property owned by persons subject to
the jurisdiction of the United States, including all residents of the United
States and all American citizens resident abroad. By the end of the year,
approximately zoo,000 reports had been filed with the Federal Reserve Banks
pursuant to this census, involving property in foreign countries valued at
some 11 billion dollars.
Foreign transactions. The Federal Reserve Bank of New York continued to engage in foreign transactions on an extensive scale. Gold under
earmark for foreign account at the New York Bank increased by 804 million
dollars to 3,477 million during 1943, while the deposits of foreign central
banks and governments at that Bank increased by 568 million to 1,360
million at the end of the year. Gold or dollar accounts are held for the
central banks or governments of 59 foreign countries; a few of these accounts
are held by the New York Bank in its capacity as fiscal agent for the Treasury
Department, but most of them are held by the Bank in its own name, and
participated in by the other Reserve Banks pursuant to an agreement approved by the Board of Governors. A further element in the foreign transactions of the Federal Reserve Bank of New York which became increasingly
important during 1943 was the handling of official remittances from the
United States to foreign countries, particularly in connection with the
maintenance abroad of American armed forces.



42-

ANNUAL REPORT OF BOARD OF GOVERNORS

The New York Reserve Bank also acts as agent of the Treasury in connection with transactions in gold and silver, but the decline in gold imports and
the absorption of all silver imports by the market greatly reduced the volume
of such transactions during the year. Near the close of the year arrangements
were being made for the New York Bank, as fiscal agent, to open and maintain on its books an account for the United Nations Relief and Rehabilitation
Administration.
At the close of 1942. two loans on gold to a foreign central bank were outstanding for a total amount of 1.5 million dollars. Two further loans to the
same bank were made in January 1943 by the Federal Reserve Bank of New
York under the usual arrangements authorized by the Board of Governors.
The maximum amount outstanding at any time during the year was 4 million
dollars. These loans were all repaid during 1943, and at the end of the year
no loans on gold were outstanding.
ENLARGED RESPONSIBILITIES OF RESERVE BANK BRANCHES

In line with the movement initiated by the Board of Governors in 1941,
the Federal Reserve Banks continued to expand the operations and functions
of their branches.
Among important changes made during the year was the transfer in several
instances of the reserve accounts of member banks and the clearing accounts
of nonmember banks from a Reserve Bank to the branch serving the territory
in which the banks are located. The Reserve Bank at Cleveland transferred
such accounts to its Cincinnati and Pittsburgh Branches, the Reserve Bank
at Atlanta to its Birmingham, Jacksonville, and Nashville Branches, and the
Reserve Bank at Kansas City to its Oklahoma City Branch. All branches
now carry on their books the reserve accounts of member banks in their
territories.
Branch participation in fiscal agency activities connected with Treasury
financing was expanded, with the approval of the Treasury Department.
Branches now handle transactions in connection with war savings bonds,
Series E, F, and G, and Treasury savings notes, Series C. The war loan deposit accounts of banks in a number of branch territories have been transferred from the head office to the branch. Near the end of the year several
Reserve Banks obtained Treasury authorization to maintain complete stocks
of all market issues of Government securities at their branches, so as to be in
a position to make denominational exchanges and effect delivery of shortterm securities under telegraphic instructions.
New activities assumed by the Reserve System in connection with the
handling of ration banking checks at the request of the Office of Price Administration, and with the withholding tax program at the request of the
Treasury Department, are handled at all Reserve Banks and branches.
Because of the increased responsibilities of their branches, the Federal
Reserve Banks of Cleveland, Chicago, and Kansas City have designated vice
presidents to serve as resident heads of their branches and Dallas has designated vice presidents to serve at its Houston and San Antonio Branches.



FEDERAL RESERVE SYSTEM

43

At the end of the year eight of the twenty-four branches were under the immediate direction of resident vice presidents of their respective Federal Reserve Banks. There will be a further enlargement in the scope of branch
activities in 1944.
BANK SUPERVISION BY THE FEDERAL RESERVE
The added functions and activities incident to the war effort and the
volume of business handled by banks, which continued to expand in 1943,
increased the duties and responsibilities of all bank supervisory agencies.
The work of supervision was carried on during the year with efficiency despite
a continued rapid turnover in personnel, and this accomplishment was due in
no small measure to the cooperation evidenced by thousands of bank officers
and employees. Bank supervisory agencies continued to cooperate in the
national effort to further the control of inflation by encouraging the reduction
of individual credit for nonproductive purposes and of credit for the accumulation of inventories of consumer goods; and, wherever consistent with sound
banking principles, they also sought to pursue examination and supervisory
policies and practices which would implement the financing of the war
program, both private and governmental.
Examination of Federal Reserve Banks. The twelve Federal Reserve
Banks and their twenty-four branches were examined during the year, by
the Board's Division of Examinations, as required by law.
Examination of State member banks. State member banks are subject
to examination at the direction of the Board of Governors or at the direction
of the Federal Reserve Banks by examiners selected or approved by the Board
of Governors. The established policy is to make at least one regular examination of each State member bank, including its trust department, during
each calendar year, by examiners for the Reserve Bank of the district in which
the State member bank is situated, with additional examinations if considered necessary or desirable. In order to avoid duplication and to minimize
inconvenience to the banks examined, wherever practicable such examinations are made jointly in cooperation with State banking authorities or, by
agreement with State authorities, alternate examinations are made.
As stated in the Annual Report covering operations for the year 1941, members of the Board and its staff met in Philadelphia in September of that year
with representatives of the bank examination departments of the Reserve
Banks for a conference on bank examination and other supervisory responsibilities under wartime conditions. One of the principal problems discussed
at the conference was the difficulty of making at least one regular examination
of each State member bank during each calendar year, a difficulty which was
believed certain to become greater and further complicated by the pressure
upon the facilities of the several State supervisory authorities. It was determined to carry out the policy in full so far as possible and, certainly, without
any sacrifice with respect to the scope and adequacy of examinations or the
resultant reports.
With the close cooperation of State authorities it has been possible prac-




44

ANNUAL REPORT OF BOARD OF GOVERNORS

tically to complete the program for examination of all State member banks
in 1943. The very few banks not examined during the calendar year are
scheduled for examination early in the year 1944 and it is hoped that it will
be possible to maintain a satisfactory schedule throughout the coming year.
In view of transportation difficulties and the pressure of other work it was
not considered practicable to hold a conference between representatives of the
Board and representatives of the bank examination departments of the
twelve Federal Reserve Banks in 1943. It was possible, however, to hold a
short and effective independent meeting between members of the Board's
staff and representatives of the Reserve Banks attending the meeting of the
National Association of Supervisors of State Banks in Cincinnati in September. Also, representatives of the Board's Division of Examinations participated in several conferences of examiners at various Reserve Banks. The
coordination of the bank examination and supervisory activities under
general policies of the Board was further effected through continuing contacts
and correspondence.
Bank holding companies. Bank holding companies, technically defined
as "holding company affiliates," are required by law to obtain voting permits
from the Board of Governors of the Federal Reserve System before stock of
subsidiary member banks which the holding companies own or control may
be voted. This requirement does not apply to the voting of stock of subsidiary banks which are not members of the Federal Reserve System, whether
or not they are insured banks. In acting upon an application for a voting
permit the Board is required by law to consider, among other things, the
financial condition of the applicant and the general character of its management. The Board may, in its discretion, grant or withhold a voting permit,
as the public interest may require. Regulation of bank holding companies
by the Board is effected through the specific statutory powers to grant, withhold, or revoke voting permits, and through agreements predicated upon the
general statutory powers and responsibilities of the Board and required to be
executed by the holding companies before obtaining voting permits from the
Board. The purpose of these statutes and agreements is that the holding
companies and their subsidiaries, including member banks and nonmember
banks, whether insured or uninsured, shall maintain sound financial condition
and proper management policies and operating practices, including those
involving intercompany transactions and relationships. Appropriate action
was taken during the year in a number of cases with respect to various
important matters in the regulation of bank holding companies.
During the year the Board authorized the issuance of three general voting
permits, i.e., permits unlimited as to time or matters which may be voted
upon, and four limited voting permits, i.e., permits for limited periods of time
and limited also as to subjects which could be voted upon.
Under the authority of Section 301 of the Banking Act of 1935 the Board
determined that five organizations were not engaged directly or indirectly as
a business in holding the stock of, or managing or controlling, banks,



45

FEDERAL RESERVE SYSTEM

banking associations, savings banks or trust companies, and that, therefore,
they were not holding company affiliates except for the purpose of Section
2.3A of the Federal Reserve Act, which contains limitations on loans to
affiliates and investments in or loans on their obligations by member banks.
Trust powers of national banks. Under the provisions of Section n ( k )
of the Federal Reserve Act, the Board granted to 10 national banks authority
to exercise one or more trust powers. This number includes the grant of additional powers to one bank which previously had been granted certain trust
powers. Trust powers of 44 national banks were terminated, 15 by voluntary liquidation and 2.9 by voluntary surrender. At the end of 1943, there
were 1,798 national banks holding permits to exercise trust powers.
Increased acceptance powers. During the year the Board approved an
application of a national bank made pursuant to the provisions of Section
13 of the Federal Reserve Act for permission to accept drafts and bills of
exchange up to an amount not exceeding at any one time, in the aggregate,
100 per cent of its paid-up and unimpaired capital stock and surplus. No
other applications were received.
Foreign branches and banking corporations. One foreign branch of a
member bank was closed during the year, the branch having been established
with the Board's permission-in the previous year. No applications were
received for permission to establish foreign branches pursuant to the provisions of Section 2.5 of the Federal Reserve Act.
At the end of 1943, seven member banks were operating a total of 64
branches or offices in 14 foreign countries or dependencies or possessions of
the United States, exclusive of branches or offices in enemy occupied territory.
Of the 64 branches and offices, four national banks were operating 60 and
three State member banks were operating 4. The foreign branches were distributed geographically as follows:
Latin America.
Argentina
Brazil.
Chile
..
Colombia
Cuba.
Mexico
Panama
Peru
Uruguay
Venezuela
Far East
India

42. .

10

4

. ..

.

.

2.

England
U. S. Insular Possessions and
Dependencies. . ^
Canal Zone
Puerto Rico

4
7

16

. .. .
. .. . .

Total

1

.

64

1

. .

1

.. . . . .

1
1
1
1

During the year there was no change in the list of the four corporations
operating under agreements entered into with the Board of Governors
pursuant to the provisions of Section 2.5 of the Federal Reserve Act relating
to the investment by member banks in stocks of corporations engaged principally in international or foreign banking. One corporation operates a



4^

ANNUAL REPORT OF BOARD OF GOVERNORS

branch in England and one has an English fiduciary affiliate. The other two
corporations have no foreign offices.
The head office of the one banking corporation in active operation, organized under the provisions of Section 15(a) of the Federal Reserve Act and
chartered by the Board to engage in international or foreign banking, was
examined during the year by the Board's Division of Examinations. The
institution's three branches in the Far East and its two French offices are in
enemy occupied territory. The Board's Regulation K relating to corporations organized under Section 15(a) was amended, in view of changes that
had taken place since the enactment of the Section, so as to require the consent
of the Board in each case before such corporation might invest in stock in
other institutions.
RESEARCH AND ADVISORY SERVICES
The Board continued to modify and amplify its usual reporting services to
meet changes and special problems growing out of the war. The System's
regional research work, in which the twelve Reserve Banks and the Board
cooperate, was considerably expanded and progress was made on the special
postwar studies being conducted by the System's staff. The Board continued
to maintain close contact with other Government agencies engaged in the
war effort and in planning for reconstruction after the war, and information
and advice were contributed to many interdepartmental conferences and
committees. As indicated in other parts of this Report, representatives of the
Board cooperated with representatives of other Government agencies in
efforts to solve problems of public policy and procedure in wartime.
A volume entitled Banking and Monetary Statistics was completed during the
year and published by the Board early in 1944. It is a compilation of statistics on banking, monetary, and other financial developments for past years.
Most of the financial series for which current data are published in the Federal Reserve Bulletin are included and some series of historical interest which
are no longer published currently are also given. The series cover varying
periods ending in 1941. They extend back to 1914 in many cases and in a
few cases to earlier dates.
A survey of the ownership of deposits in March 1943 was made by the
Board and the Reserve Banks, because of the bearing that the distribution of
deposits has on problems of inflation control, on business financial requirements, and on Government financing during and after the war. The survey
was based on voluntary reports from a large sample of member banks throughout the country. It was developed in collaboration with participating
banks, the Association of Reserve City Bankers, The National Bureau of
Economic Research, and various interested Government agencies. Following analysis of the results of the March survey, it was generally agreed that
such information should be obtained regularly, and the survey was established on a semiannual basis, beginning with July 31.
New seasonal adjustment factors for money in circulation were released by



FEDERAL RESERVE SYSTEM

47

the Board in the September 1943 issue of the Bulletin. The new adjustment
factors are ratios based on total currency outstanding, and provide a better
method of adjustment for seasonal changes in times of rapidly expanding
circulation than do the constant dollar adjustments formerly used. Beginning early in 1944 seasonally adjusted figures were published regularly in
the Bulletin.
In order to ascertain the nature of the increase in business deposits and the
factors contributing to them, analyses previously made of financial statements of large manufacturing corporations were greatly expanded and
were extended to cover transportation and other public utility activities.
These studies indicate the directions in which various industries had expanded their business assets during the war and the extent to which this
expansion had been financed by Government funds, other borrowings, and retained earnings. A study was also made of the factors which have contributed to different profit trends in various industries during the war. The
Board's previous studies of durable goods expenditures were continued and
new estimates for capital expenditures in various manufacturing industries
were developed from the financial statements of a large number of companies.
A broad revision of the Board's index of industrial production was made
during the year and the results were published in the October Bulletin. A
number of new production series were developed to measure activity in war
and civilian industries and improvements were made in various old series on
the basis of new data which had become available as a result of the war
program. Special studies of the index were continued in an attempt to obtain a breakdown between production for war and civilian purposes and the
results of these studies were also published in the Bulletin. Work continued
on developing physical production indexes of the monthly output of clothing
and shoes for civilians as part of a general index of output of finished consumer goods. These indexes were supplied on a confidential basis to the
War Department and other Federal war agencies.
The System's monthly indexes of department store sales were revised during
1943 and the final results will be available to the public in the spring of 1944.
The revised national index is computed by combining revised or new indexes
for each of the twelve Federal Reserve districts into a total index. The
district indexes are adjusted to 1919 and 1939 Census data where necessary
and are computed on a 1935-39 average base. Upon completion of this
revision the Board's weekly index of department store sales and the System's
indexes of end-of-month department store stocks will be reviewed and revised
where necessary.
Several studies were made of analyses by Federal war agencies and private
organizations relating to general production measurements and other economic problems, especially output and employment in war industries.
Several special reports on department store sales and stocks were made for
war agencies during the course of the year and the collection of regular



48

ANNUAL REPORT OF BOARD OF GOVERNORS

monthly data showing considerable detail by departments, begun at the
request of these agencies, was continued.
Extensive work was done in the fields of price control, wage stabilization,
taxation, and other aspects of the stabilization program. The Board's staff
cooperated extensively with Walter R. Stark, Assistant Director of the
Board's Division of Research and Statistics, who was granted a leave to act
as an adviser to the Office of Economic Stabilization. At the request of the
Ways and Means Committee of the House of Representatives, the Chairman
of the Board submitted a proposal of a revenue program.
Early in 1943 a special committee of representatives of the Reserve Banks
and the Board of Governors was appointed to study various aspects of
guaranteed loans to industry under the Board's Regulation V. The Committee gave particular attention to problems of meeting the capital requirements of industrial plants during the reconversion period after the war. The
work of this committee was supplemented by intensive study by the Board
and the Federal Advisory Council of all aspects of the final settlement of
terminated war contracts. A resolution containing six recommendations
for procedure in terminating contracts was adopted by the Council on November 15 and concurred in by the Board. The Board submitted the resolution
to Government officials and agencies directly interested and on November 16
released it to the press. A copy of the resolution is given on pages 99-100
of this Report.
The Board continued its study of postwar problems. Among the
problems being studied are: postwar outlook for production and employment; financial needs of industry in the reconversion period; bank investment problems; international financial problems and mechanisms; monetary
and fiscal policies; investment potentialities in various fields, both public
and private; over-all surveys of public investment programs; urban redevelopment and Federal-State-local taxation and fiscal relations. Close contact
is maintained with other agencies working on related programs, particularly
with the Bureau of the Budget, the Department of State, the Treasury, the
Bureau of Labor Statistics, the National Housing Agency, the Department of
Agriculture, the Department of Commerce, the Securities and Exchange Commission, the Foreign Economic Administration, and the War Production
Board.
Expansion in the Federal Reserve System's regional research work continued in 1943. The research departments of the twelve Reserve Banks,
working in cooperation with one another and with the Board's Division
of Research and Statistics, are studying the significant economic developments
in their respective districts in order to provide a basis on which to evaluate
problems that may arise during the war and in the postwar period.
The emphasis of the regional research work undertaken by the Federal
Reserve Banks necessarily varies with the economic characteristics of each
district, but studies on current banking problems, currency flows, the location
and economic influence of war facilities, agricultural land values, and farm



FEDERAL RESERVE SYSTEM

49

credit conditions are in progress at most of the Reserve Banks. In a number
of districts special studies are being made of the impact of the war on selected
areas and industries, with particular reference to the postwar outlook for
production, employment, and financial requirements for reconversion. In
addition, some System-wide projects have been undertaken which include
the continuing survey of the ownership of bank deposits, an investigation of
the financial needs of business for the conversion to civilian goods production after the war, and a study of the problems incident to the increase in
deposits and the banks' investment policies.
Federal Reserve regional research work is directed primarily toward being
of assistance to the System in the discharge of its responsibilities, but it is
hoped that it may also serve to assist the various communities and the country
as a whole in the solution of the economic problems that lie ahead. To this
end, and in order to avoid duplication of effort, the research staffs are cooperating closely with other Government agencies and with public and private groups which are engaged in economic research on a regional or national
basis.
As a result of the increasing number and complexity of the international
problems faced by the Government, the work of the Board in the field of
international finance expanded considerably during 1943. In close collaboration with various Government departments, studies have been pursued in the
fields of international currency stabilization and international investment,
financial administration and reconstruction in liberated areas and in enemy
territory, and monetary and banking reforms in Latin America.
Members of the Board's staff have participated in the interdepartmental
and intergovernmental negotiations with respect to the proposals concerning
international monetary stabilization put forward by experts of the United
States and British Treasuries. Informal discussions of these plans have proceeded with technical experts representing approximately 30 foreign countries, and on the basis of these discussions one revision of the plan drafted
by the American experts has been issued. The discussions continue on a
technical level, the responsibility of the respective governments having not
yet been involved. Members of the Board's staff also participated in interdepartmental conferences with respect to the proposal for an international
bank which was drafted by experts of the United States Treasury and communicated to the Finance Ministers of some 44 countries toward the end of
the year.
At the request of the War Department and civilian government agencies
responsible for the development of financial policy relating to liberated areas
and enemy territory, an extensive research program has been developed involving the analysis of current developments in those areas and of the
problems which may be confronted in this field by American military and
civilian personnel.
Studies of central banking and money markets in Latin America have been
actively pursued, especially as a result of various requests for technical



50

ANNUAL REPORT OF BOARD OF GOVERNORS

assistance which have emanated from the central banks or governments of
these countries. Pursuant to such a request a member of the Board's staff
participated with Treasury experts in a joint mission to Honduras which
submitted a report to the Honduran Government recommending establishment of a central bank in that country. Two members of the Board's staff
also visited Paraguay late in the year, at the request of the Paraguayan Government, and new legislation embodying their recommendations for a reform
of the currency system was passed in that country on October 5. Recommendations with respect to new central banking legislation and a general
banking law are also being developed for submission to that Government.
The Board and several of the Reserve Banks cooperated in the training
program of the Inter-American Training Administration, making their
facilities available to Latin American bankers and banking students and assisting in the planning of the work. The Uruguayan Bankers' Mission,
comprising three officers of the central bank of Uruguay, spent about five
months in the United States, under the auspices of the Inter-American Training Administration, making their headquarters with the Board.
Members of the Board's staff continued to serve as Chairman and Secretary
of the United States Committee of the Joint Economic Committees of Canada
and the United States until these Committees were dissolved by action of the
Canadian and United States Governments on March 14, 1944. It was agreed
that the continued operation of the Committees had been rendered unnecessary by the development of other agencies for collaboration between the two
countries. In addition to various other activities of the Committees during
1943, substantial progress was made in carrying out the joint project for the
North Pacific area initiated in the latter part of 1942.. A number of surveys
were conducted in this area and the results are to be embodied in a forthcoming report.
During 1943 distribution to the general public of the Board's publications
and releases continued to be substantially curtailed as a wartime economy
measure and in cooperation with the policy of the Office of War Information.
Distribution was continued to Government departments and agencies which
make use of the factual information developed by the Board.
RESERVE BANK PERSONNEL AND OPERATIONS
As previously indicated, operations of the Reserve Banks were in considerably larger volume in 1943 than in 1942., particularly those relating to the
issuance and redemption of securities and to other activities as fiscal agents
of the United States. The expansion in operations necessitated an increase
in personnel and the renting of considerable additional office space.
PERSONNEL

Directorates. Directors of a Federal Reserve Bank are elected or appointed for terms of three years. The Board of Directors of each Federal



FEDERAL RESERVE SYSTEM

51

Reserve Bank consists of nine directors, three of whom are designated as
Class A directors, three as Class B directors, and three as Class C directors.
The six Class A and Class B directors are elected by the member banks of the
district, while the three Class C directors are appointed by the Board of
Governors of the Federal Reserve System.
The Class A directors are chosen as representatives of the member banks
and, as a matter of practice, are active officers of member banks. The Class
B directors may not, under the law, be officers, directors, or employees of
banks. At the time of their election they must be actively engaged in their
district in commerce, agriculture, or some other industrial pursuit.
The Class C directors may not, under the law, be officers, directors, employees, or stockholders of banks. They are appointed by the Board of
Governors as representatives not of any particular group or interest, but of
the public interest as a whole.
Federal Reserve Bank branches have either five or seven directors, of whom
a majority are appointed by the Board of Directors of the parent Federal
Reserve Bank and the others are appointed by the Board of Governors.
In making selections of directors, the Board has endeavored to stress the
public interest and bring to the boards men who can make an effective contribution to the public service.
A list of the directors of the Federal Reserve Banks and branches as of the
close of the year is shown on pages 105-111.
Appointments of directors. The Board made the following appointments
of new directors either for terms beginning January 1, 1943, or to fill vacancies
during the year:
William I. Myers, Dean, New York State College of Agriculture, Cornell
University, Ithaca, New York, was appointed a Class C director of the Federal Reserve Bank of New York for the term beginning January 1, 1943. On
September 10 he was appointed Deputy Chairman for the remainder of the
year 1943.
On April 8, C. Canby Balderston, Dean, Wharton School of Finance and
Commerce, University of Pennsylvania, Philadelphia, Pennsylvania, was
appointed a Class C director of the Federal Reserve Bank of Philadelphia.
On May 7, Lyle L. Hague, a farmer and stockman of Cherokee, Oklahoma,
was appointed a Class C director of the Federal Reserve Bank of Kansas City.
On September 13, Robert D. Calkins, Dean, School of Business, Columbia
University, New York, New York, was appointed a Class C director of th^
Federal Reserve Bank of New York.
J. S. Abercrombie, President, J. S. Abercrombie Company, Houston, Texas,
was appointed a director of the Houston Branch of the Federal Reserve Bank
of Dallas for the term beginning January 1, 1943.
C. E. Myers, agriculturist, of Covina, California, was appointed a director
of the Los Angeles Branch of the Federal Reserve Bank of San Francisco for
the term beginning January 1, 1943.



)Z

ANNUAL REPORT OF BOARD OF GOVERNORS

On February 18, Walter S. Byrne, General Manager, Metropolitan Utilities
District of Omaha, Omaha, Nebraska, was appointed a director of the Omaha
Branch of the Federal Reserve Bank of Kansas City.
On February Z7, W. A. Alexander, Vice President, The Denver Tramway
Corporation, Denver, Colorado, was appointed a director of the Denver
Branch of the Federal Reserve Bank of Kansas City.
On April 10, John J. Shaffer, Jr., a sugar planter of Ellendale, Louisiana,
was appointed a director of the New Orleans Branch of the Federal Reserve
Bank of Atlanta.
On May 15, Charles S. Lee, who is engaged in cattle raising and farming
at Oviedo, Florida, was appointed a director of the Jacksonville Branch of
the Federal Reserve Bank of Atlanta.
On May zi, W. C. Arthur, President, Talon, Inc., Meadville, Pennsylvania,
was appointed a director of the Pittsburgh Branch of the Federal Reserve
Bank of Cleveland.
On June 5, George W. Stocking, Professor of Economics, University of
Texas, Austin, Texas, was appointed a director of the San Antonio Branch
of the Federal Reserve Bank of Dallas.
On September 2.3, John D. Clark, Dean, College of Business Administration, University of Nebraska, Lincoln, Nebraska, was appointed a director
of the Omaha Branch of the Federal Reserve Bank of Kansas City.
Expansion in staff. At the end of the year the total number of officers and
employees of the twelve Federal Reserve Banks and twenty-four branches
was 2.4,741 as compared with I^^JT. at the close of the previous year. During the year 1,064 employees of the Reserve Banks left to enter military
service.
OPERATIONS

In so far as extension of credit is concerned, Reserve Bank operations were
predominantly in the form of purchases and sales of United States Government obligations. Discount operations were in somewhat larger volume
than in other recent years, especially toward the end of the year as a few
member banks found it necessary to borrow in order to maintain their required reserves. Industrial advances and commitments declined somewhat
owing to the fact that most industrial enterprises needing working capital
beyond amounts available from the usual sources were engaged in war production work and their needs were taken care of through loans guaranteed
by the War Department, Navy Department, or Maritime Commission under
Executive Order No. 91 iz and the Board's Regulation V. Figures showing
the volume of operations in principal departments are given in Table 5,
page 67.
Earnings and expenses. Current earnings, current expenses,, and distribution of net earnings of the Federal Reserve Banks combined and of each
Reserve Bank are given in detail in Table 6, pages 68-69. The first table
on the opposite page shows a summary of these items for the year 1943 compared with 194Z.



53

FEDERAL RESERVE SYSTEM
EARNINGS, EXPENSES, AND DISTRIBUTION OF N E T EARNINGS OF FEDERAL RESERVE
BANKS IN 1943

AND

1942.

[In thousands of dollars]
1943

1942

Current earnings
Current expenses

69,306
43,546

52,663
38,624

Current net earnings
Net additions to current net earnings

25,760
23,768

14,039
*1,569

49,528

12,470

245
8,911
135
40,237

198
8,669
49
3,554

49,528

12,470

12,551

647

Item

Net earnings
Paid U. S. Treasury (Section 13b)
Dividends paid
Transferred to surplus (Section 13b)
Transferred to surplus (Section 7)
Total
Transferred from surplus (Section 7) to reserves for contingencies

* Net deductions.

Increased current earnings of 17 million dollars in 1943 resulted from larger
holdings of Government securities in the System Open Market Account and
of Treasury bills acquired from member banks and others under agreements
to resell on demand at a discount rate of z/% P e r c e n t P e r annum. Current
expenses, after deducting reimbursable fiscal agency expenses, were 44 million
dollars in 1943 as compared with 39 million in 1942., the increase being due
principally to the larger volume of check collections and currency operations.
Net earnings in 1943 were 50 million as compared with iz million in 1941,
the increase reflecting larger earnings from holdings of Government securities
and also profits on the sale of securities, which are included in the item "net
additions to current net earnings."
EARNINGS

ON

BILLS

AND

SECURITIES

[Amounts in thousands of dollars]

Item and year

Daily average holdings:
1940
1941
1942
1943
Earnings:
1940
1941
1942
1943
Average rate of earnings (per cent):
1940
1941
1942
1943

Total

Bills
discounted

U. S. Govt.
securities
direct and
guaranteed

Industrial
advances

2,429,984
2,200,491
3,209,649
7,761,651

4,046
4,681
6,610
24,759

2,416,761
2,187,030
3,191,259
7,724,488

9,177
8,780
11,780
12,404

42,677
40,607
51,943
68,656

51
56
65
152

42,174
40,152
51,404
68,090

452
399
474
414

1.76
1.85
1.62
0.88

1.26
1.20
0.98
0.61

1.75
1.84
1.61
0.88

4.93
4.54
4.03
3.34

Distribution of net earnings was as follows: Payments to United States
Treasury under provisions of Section 13b of the Federal Reserve Act relating
to industrial advances, 3x45,000; dividends to member banks paid in accordance with the Federal Reserve Act, $8,911,000; and additions to surplus accounts, $40,371,000. Of the total added to surplus, $11,551,000 was trans


54

ANNUAL REPORT OF BOARD OF GOVERNORS

ferred to reserves for contingencies. In case of liquidation of a Federal
Reserve Bank any surplus remaining after payment of all debts, dividend
requirements, and the return of capital paid in by member banks becomes the
property of the United States.
Average daily holdings of discounts, advances, and securities by the
Federal Reserve Banks and average rates of earnings thereon during the past
four years are shown in the second table on page 53.
Retirement System. During the year a number of important changes were
made in the Retirement System of the Federal Reserve Banks which provides
retirement benefits for employees of the twelve Federal Reserve Banks and
of the Board of Governors. The special committee which was appointed
near the end of 1941 by the Conference of Presidents of the Federal Reserve
Banks to review the operation of the Retirement System in the light of the
experience since its establishment in 1934 concluded its studies and submitted
its final report. Preliminary reports had been submitted previously and
considered by the Conference of Presidents and by the Board of Governors.
On the basis of the final report a number of changes were recommended by
the Conference of Presidents and approved by the Board of Governors. The
principal changes were a reduction in the interest basis from 4 per cent to 3
per cent and the provision of a compensating increase in the reserves; a
liberalization of the benefits, particularly for the lower paid employees; and
provision within the Retirement System of the Federal Reserve Banks of a
separate retirement plan permitting employees of the Board of Governors to
receive benefits comparable to those provided by the Civil Service Retirement
System. In order that the Retirement System might continue to be fully
funded under the new basis, special payments totaling 9.8 million dollars
were made to the System, of which 2.-2. million was to adjust to the new interest basis the reserves from prior years' contributions of members and 7.6
million was to provide increased pension benefits.
Building operations. Pressure for additional space at many of the
Federal Reserve Banks and branches arising from expanded wartime operations, which was noted in the Annual Report for 1942., continued throughout
the year. At the end of 1943 all but three of the twelve Federal Reserve
Banks and all but six of the twenty-one branches owning their own bank
buildings were renting outside space. The Cincinnati, Portland, and Seattle
Branches, which rent their bank premises, found it necessary to rent additional space. At Pittsburgh, an old building which had not been occupied
by the Bank since 1931 was reconditioned for use in handling increased wartime operations. The Federal Reserve Bank of Richmond took over its
Annex Building, which had been rented to outside tenants.
A building adjoining the bank premises of the Detroit Branch was purchased during the year, and the Board of Governors authorized the purchase
of two buildings adjoining the Boston Bank building and of a vacant lot
adjoining the Charlotte Branch. Construction of an additional story on
the Memphis Branch building has been approved by the Board of Governors.



FEDERAL RESERVE SYSTEM

55

Interdistrict Settlement Fund. Effective March 15, 1943, the separate
clearing for interdistrict balances arising from shipments of Federal Reserve
notes of other Federal Reserve Banks to the Banks of issue or to Washington
for redemption, which had been conducted by the Board of Governors since
February 192-2., was discontinued. Under the new arrangement amounts
due to other Federal Reserve Banks arising from such Federal Reserve note
shipments are included with credits for checks and other collection items
settled daily through the Interdistrict Settlement Fund.
In connection with the program for enlarging the responsibilities of Federal
Reserve Bank branches, which was undertaken in 1942., six branches were
added to the list of direct settling branches, as follows:
Birmingham
Jacksonville
Oklahoma City
Nashville
Cincinnati
Pittsburgh

October 4
November 1
December 1
December 2.0
January 3, 1944
January 3, 1944

There are now twenty-three branches which settle directly through the
Interdistrict Settlement Fund in addition to the twelve Federal Reserve
Banks.
BOARD OF GOVERNORS—STAFF AND EXPENDITURES
Staff. On December 31, 1943, the Board's employees, exclusive of those
on military leave or on leave without pay, numbered 459 as compared with
42.2. at the end of 1942.. There was practically no increase in the number of
office employees but during the year the employees of the Board's cafeteria,
who had previously been on the pay roll of an outside contractor, became
members of the Board's staff.
At the end of the year 69 of the Board's permanent employees were on
military leave. In addition, 2.4 employees who had received temporary
appointments had resigned to enter military service.
Walter R. Stark resigned in November as Assistant Director of the Board's
Division of Research and Statistics in order to return to private business.
During 1943 Board personnel maintained 100 per cent participation in the
plan of pay roll savings for the purchase of war savings bonds. Deductions
rose from 11.4 per cent of gross salaries in January to 12..7 per cent in April
(Second War Loan Drive) and to 18.9 per cent in September (Third War
Loan Drive). The percentages achieved during April and September placed
the Board's organization at the top of the Honor Roll published by the President's Interdepartmental War Savings Bond Committee showing the comparative standing of governmental organizations operating such plans. No
quota was assigned to the Board by the Interdepartmental Committee in the
Second Drive. However, the quota set for the Board's organization in the
Third Drive, which included both cash purchases and pay roll deductions,
was oversubscribed by 2.8.6 per cent.



56

ANNUAL REPORT OF BOARD OF GOVERNORS

The Board's organization also participated in the blood donor program,
174 individuals having made 375 donations during the year. As of the end
of the year, four had made eight or more donations, two had made seven,
five had made six, and eighteen had made five.
Expenditures. The current expenses of the Board for the year 1943 aggregated $1,914,511. Two assessments were levied on the Federal Reserve
Banks representing about seven-tenths of one per cent of their average paid-in
capital and surplus for the year to cover the general expenses of the Board.
Details are shown in Table 9, page 71.
Under an arrangement with the Federal Reserve Bank of Richmond, the
accounts of the Board for the year 1943 were audited by the Auditor of the
Federal Reserve Bank of Richmond, who certified them to be correct.
FEDERAL RESERVE MEETINGS
The Federal Open Market Committee met in Washington on January 15-2.6,
March 1, May 15, June 2.8, and October 18, 1943, and the executive committee
of the full Committee met from time to time during the year. Under the
provisions of Section 11A of the Federal Reserve Act, the Federal Open
Market Committee has responsibility for determining the policies under
which the open market operations of the Federal Reserve Banks shall be
carried out. A record of the actions taken by the Committee on questions
of policy will be found on pages 90-98 of this Report.
The Chairmen of the Federal Reserve Banks met with the Board of Governors on November 8, 1943. The executive committee of the Chairmen's
Conference met on March 3 and October 1, 1943, to discuss matters of interest
to the Conference.
The Conference of Presidents of the Federal Reserve Banks held meetings
on January 11-2.4, March 1, June 15-17, and October 15-17, 1943, and the
Board of Governors met with the Presidents on January 16, March 1, June
19, and October 19, 1943.
The Board continued to have the benefit of consultations with the Federal
Advisory Council. Meetings of the Federal Advisory Council were held on
February 14-15, May 13-14, September 19-10, and November 14-15, 1943,
and the executive committee of the Council met on January 6, April 7, October 6, and December 7, 1943. The Board of Governors met with the Council
or its executive committee on each of these occasions. The Council is required by law to meet in Washington at least four times each year and is
authorized by the Federal Reserve Act to consult with and advise the Board
on all matters within the jurisdiction of the Board.
During the year several conferences, attended by representatives of the
Federal Reserve Banks and the Board of Governors, were held to discuss
such matters as bank supervision, the research work of the Reserve System,
and the administration of Regulations V and W relating to guaranteed war
production loans and consumer credit, respectively.



FEDERAL RESERVE SYSTEM

57

LEGISLATION RELATING TO THE FEDERAL RESERVE SYSTEM AND REPORTS
TO CONGRESS

War loarTdeposit accounts. By an Act of Congress, approved April 13,
1943, subsection ( h ) ( i ) of Section 11B of the Federal Reserve Act was
amended so as to make it unnecessary for insured banks until six months after
the cessation of hostilities to pay deposit insurance assessments on balances
to the credit of the United States Treasury arising solely as a result of subscriptions for United States securities issued under the Second Liberty Bond
Act, as amended. This Act also amended the last paragraph of Section 19
of the Federal Reserve Act so as to exempt member banks for the same period
from the necessity of maintaining reserves with the Federal Reserve Banks
against deposits payable to the United States arising solely as a result of
subscriptions for such securities.
Stabilization Fund. By an Act of Congress, approved April 2.9, 1943,
the time within which the President may exercise his powers relating to the
Stabilization Fund under the Gold Reserve Act of 1934, which would have
expired on June 30, 1943, was extended until June 30, 1945, and a new provision was added which, according to the report of the Committee on Coinage,
Weights and Measures of the House of Representatives "will carry out the
view expressed by the Secretary of the Treasury that the Stabilization Fund
should not be included in any international fund without the approval of the
Congress."
Government obligations as collateral for Federal Reserve notes.
By an Act of Congress, approved May 2.5, 1943, the second paragraph of
Section 16 of the Federal Reserve Act was amended so that the authority of
the Board of Governors of the Federal Reserve System to .permit direct
obligations of the United States to be used as collateral for Federal Reserve
notes, which would have expired on June 30, 1943, was extended until June
30, 1945.
Federal Reserve Banks as custodians for Commodity Credit Corporation.
By an Act of Congress, approved July 16, 1943, the Federal Reserve Banks
were authorized to act as depositaries, custodians, and fiscal agents for the
Commodity Credit Corporation. The Reserve Banks had for some time performed services for the Corporation at the request of the Reconstruction Finance Corporation.
Reports to Congress. During the year members of the Board were called
upon on several occasions to appear before Committees of Congress to give
information on proposed legislation. At the request of these Committees,
and at the request of the Bureau of the Budget, the Board submitted reports
on proposed legislation relating to the retirement of Federal Reserve Bank
notes, the dissolution of the Regional Agricultural Credit Corporations, the
extension of the time during which direct obligations of the United States
may be used as collateral for Federal Reserve notes, the exemption of Government deposits from Federal deposit insurance assessments and reserve re


58

ANNUAL REPORT OF BOARD OF GOVERNORS

quirements, the restricting of branch banking, the collection of information
by Government agencies, the payment of postage by the executive branch of
the Government, the extension of the time during which the Land Bank
Commissioner may make loans, the reduction of premium rate charged for
insurance by the Federal Savings and Loan Insurance Corporation, the taxation of profits from the sale of farm land, and the financing of terminated war
contracts.
CHANGES IN REGULATIONS OF THE BOARD OF GOVERNORS
The regulations of the Board of Governors were changed during the year
1943 in the following respects:
Reserves of member banks. Effective April 13, 1943, the Board amended
Regulation D, in order to conform to the change in Section 19 of the Federal
Reserve Act made by the Act of April 13, 1943, referred to above.
Extension of credit by brokers, dealers, and members of national
securities exchanges. Effective July 2.4, 1943, the Board amended the portion of Regulation T relating to a "special cash account" so as to permit
payment for certain issued registered securities which are traded in on a national securities exchange on a "when distributed" basis to be made within
seven days after the distribution.
Consumer credit. Effective September 1, 1943, the Board amended
Regulation W. The changes were administrative and designed to help
merchants meet manpower problems in extending charge account credit.
Banking corporations authorized to do foreign banking business
under the terms of Section 2 5 (a) of the Federal Reserve Act. Effective
November 1, 1943, the Board amended Regulation K so as to make it necessary for such corporations to obtain the Board's consent in each case before
investing in the stock or certificates of ownership of other corporations.
Relations of Reserve Banks with foreign banks and bankers. Effective January 1, 1944, the Board amended Regulation N so as to conform to
changes in the law and also in several administrative particulars.







TABLES

ANNUAL REPORT OF BOARD OF GOVERNORS
NO.

1-STATEMENT OF C O N D I T I O N OF THE FEDERAL RESERVE BANKS (IN DETAIL)
DECEMBER 31, 1943 1
ASSETS

[Amounts in boldface type are those shown in the Board's weekly statement.
In thousands of dollars]
Gold certificates with Federal Reserve agent
13,266,000
Interdistrict settlement fund with Board of Governors
5,256,136
Gold certificates on hand
1,010,444

19,532,580
233,671

Gold certificates on hand and due from U. S. Treasury.
Redemption fund—Federal Reserve notes
Total gold reserves
Other cash:
United States notes
Silver certificates
Standard silver dollars
National and Federal Reserve Bank notes
Subsidiary silver, nickels, and cents

19,766,251
25,062
270,702
1,869
14,076
18,113

Total other cash

329,822

Total reserves
Bills discounted:
Secured by U. S. Government obligations, direct and guaranteed:
Discounted for member banks
For others

20,096,073
5,255

Total secured by U. S. Govt. obligations, direct and guaranteed.
Other bills discounted:
For member banks
For others

5,255

Total other bills discounted.
Total bills discounted
Industrial advances
U. S. Government securities, direct and guaranteed:
U. S. Government securities, bought outright:
Bonds
Notes
Certificates
Bills

5,255
10,134
1,629,479
677,900
2,467,300
2,923,191
7,697,870

Total U. S. Government securities, bought outright
U: S. Government securities, bought under repurchase option:
Bills

3,845,077
11,542,947

Total U. S. Government securities, direct and guaranteed...
Total bills and securities
Due from foreign banks
Federal Reserve notes of other Reserve Banks
Uncollected items:
Transit items
Exchanges for clearinghouse
Other cash items

11,558,336
136
90,598
1,828,220
202,982
81,851

Total uncollected items
Bank premises (net)
Other assets:
Industrial advances past due
Miscellaneous assets acquired account industrial advances.
Claims account closed banks
Miscellaneous assets acquired account closed banks

2,113,053
38,293
399
1,023
()
267

1,689
1,440

Total
Less valuation allowances...

249

Net
Federal Deposit Insurance Corporation stock 3 ... .
Fiscal agency and other expenses, reimbursable...
Interest accrued
Premium on securities
Deferred charges.
Sundry items receivable
Real estate acquired for banking-house purposes.,
Suspense account
All other

'13,182
15,041
29,278
779
854
830
548
343

61,104

Total other assets
Total assets
1

Before closing books at end of year.




33,957,593
2

Less than $500.'

3

Charged off.

See footnote 4, Table 7.

FEDERAL RESERVE SYSTEM

61

N o . 1—FEDERAL RESERVE BANKS (IN DETAIL)-Continued
LIABILITIES
{Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollarsl
Federal Reserve notes outstanding (issued to Federal Reserve Banks)
17,512,088
Less: Held by issuing Federal Reserve Banks
580,119
Forwarded for redemption
25,610
605,729
Federal Reserve notes in actual circulation (including notes held
by Treasury and by Federal Reserve Banks other than issuing
Bank)
16,906,359
Deposits:
Member bank—reserve account
12,885,516
U. S. Treasurer—general account
578,457
Foreign
1,360,488
Other deposits:
Nonmember bank—clearing accounts
128,488
Officers' and certified checks
18,633
Federal Reserve exchange drafts
134
All other
208,681
Total other deposits

355,936

Total deposits
Deferred availability items
Other liabilities:
Accrued dividends unpaid
Unearned discount
Discount on securities
Sundry items payable
Suspense account
All other liabilities

15,180,397
1,432,303
467
37
3,361
821
437
870

Total other liabilities

5,993

Total liabilities

33,525,052
CAPITAL ACCOUNTS

Capital paid in
Surplus (sec. 7)
Surplus (sec. 13b)
Other capital accounts:
Reserve for contingencies
Earnings and expenses:
Current earnings
Current expenses

Current net earnings
Add—profit and loss
Deduct—dividends accrued since January 1...'
Net earnings available for charge-oils, reserves and surplus
Total other capital accounts
Total liabilities and capital accounts




154,106
160,411
26,829

*
47,574
69,306
43,546
25,760
26,772
8,911
43,621

91,195
33,957,593

NO 2-STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT END OF 1942 AND 1943
[In thousands of dollars]
Total

Boston

New York

Philadelphia

Richmond

Cleveland

Item
1943

1942

1943

1942

1943

1942

ASSETS
Gold certificates on hand and due from U. S. Treasury. . . 19,532,580 201,523,281 1,025,651 1,172,613 5,904,288 6,855,451
233,671
30,449
22,457
1,152
22,844
1,364
Redemption fund—Federal Reserve notes

1942

1943

1942

1943

1,029,794 1,147,114 1,395,309 1,714,833 ,031,584
23,648
24,120
5,665
31,000
1,140
23,041
24,499
21,191
43,580
24,477

950,761
5,559
19,535

20,096,073 20,907,814 1,078,307 1,213,656 6,001,376 6,930,038 1,078,413 1,173,970 1,450,786 1,759,553 1,078,273

975,855

329,822

354,084

30,199

39,891

74,244

73,223

c!

Other cash
Total reserves
Bills discounted:
Secured by U. S. Government obligations, direct
and guaranteed
Other bills discounted
Total bills discounted
Industrial advances
U. S. Government securities, direct and guaranteed:
Bonds
Notes
Certificates
Bills

3,030
2,541

1,610

5,571
13,649

1,610
342

1,629,479 2,792,581
677,900 1,345,059

5,255
5,255
10,134

2,467,300 1,041,000
6,768,268 1,009,995

Total U. S. Government securities, direct and
11,542,
guaranteed
11,558,
Total bills and securities
Due from foreign banks
90,
Federal Reserve notes of other Federal Reserve Banks ..
2,113,
Uncollected items
35,
Bank premises
61,
Other assets
Total assets.
1

6,188,635
6,207,855
47
57,053
1,717,800
39,285
88,788

420

25
110

265
390

461
820

420
235

135
677

231,524
96,319
350,565
501,745

248,255
119,572
92,543
49,083

126,848
52,772
192,066
280,416

182,445
87,873
68,011
40,412

440,168 1,180,153

509,453

652,102

378,741

652,757
6
12,099
153,090
2,936
4,320

379,553
2
10,794
141,375
3,046
6,048

2,185

235
1,063

320
475

2,185
126

1,298
611

700
4,046

2,380
4,710

142,420
59,250
215,644
334,128

212,493
179,243
102,346
74,569
79,212
271,407
52,852 2,474,891

713,272
343,553
265,889
372,606

138,260
57,519
209,347
456,612

212,929
102,557
79,374
45,308

751,442

446,903 3,000,110 1,695,320

861,738

753,394
3
1,912
146,184
1,666
4,410

447,698 3,002,421 1,697,229
3
156
12,394
923
7,019
502,634
167,471
382,789
2,722
9,121
9,823
6,229
9,936
21,947

700

866,484
13
4,620
117,062
3,600
4,815

2,140
240

265

447,258 1,180,808
13
5
2,541
5,061
114,046
249,227
4,755
4,214
6,926
8,295

33,954,566 29,018,642 1,985,876 1,838,702 9,537,938 9,048,863 2,075,007 1,749,501 2,898,404

After deducting $80,000 participations of other Federal Reserve Banks on Dec. 31, 1943, and $29,000 on Dec. 31, 1942.




190
271

320

510,734
4
2,869
200,909
4,326
8,479

2,486,874 1,903,481 1,516,673

o

§

3
©
O

LIABILITIES
Federal Reserve notes in actual circulation1

16,906,359 12,192,986 1,155,295

881,534 3,766,861 2,799,735 1,149,726

848,682 1,495,780 1,133,507 1,141,590

786,787

Deposits:
Member bank—reserve account
U. S. Treasurer—general account
Foreign
Other deposits

12,885,984 13,116.809
799,449
578,617
1,360,488 792,790
355,936
485,147

653,633
46,850
34,785
4,382

678,306 4,263,922 5,029,391
97,848 2 210,279 2 144,933
600,236 367,578
23,103
246,308
303,762
6,301

645,810
31,375
120,273
5,350

651,566 1,003,595
52,643
75,109
67,100
116,475
4,673
12,403

918,240
132,279
64,304
77,688

544,664
17,131
54,439
2,152

525,661
35,397
30,754
8,633

Total deposits
Deferred availability items
Other liabilities including accrued dividends

15,181,025 15,194,195
1,432,303 1,247,053
5,589
3,568

739,650
61,605
501

805,558 5,320,745 5,845,664
271,518
301,754
124,925
342
1,154
614

802,:
84,032
875

775,982 1,207,582 1,192,511
154,352
89,503
125,478
521
162
524

618,386
124,195
180

600,445

Total liabilities
CAPITAL ACCOUNTS
Capital paid in.
Surplus (sec. 7)
Surplus (sec. 13b)
Other capital accounts

33,525,276 28,637,802 1,957,051 1,812,631 9,390,514 i,917,259 2,037,441 1,714,691 2,858,235 2,451,658 1,884,351 1,500,240

Total liabilities and capital accounts

154,104
188,097
26,965
60,124

146,026
160,411
26,829
47,574

9,797
13,206
2,874
2,948

16,906,359 12,192,986 1,155,295

Collateral held by agent for notes issued to banks:
Gold certificates on hand and due from U. S.
13,266,000 12,467,000
Treasury
2,830
4,990
Eligible paper
4,488,690 355,000
U. S. securities
Total collateral held.
1

57,440
70,012
7,092
12f~~

53,653
58,001
7,070
12,880

14,878
14,767
1,007
4,564

6,140
5,236
3,290
4,464

5,885
5,236
3,244
2,068

W

O

W

8,404 2,486,874 1,903,481 1,516,673
670

1,008

.183,454
33,728

,180,700
873,297 1,552,379 1,175,580 1
39,110
56,599
24,615
42,073

824,238
37,451

881.534 3,766,861 2,799,735 1,149,726

848,682 1,495,780 1,133,507 1,141,590

786,787

119

261

1,930

909,636 3,872,083 2,904,543
104, i
28,102
105,222

100

387

3
W

761,000
1,610
450,00 0

17,759,680 12,824,830 1,212,610

898,000 3,540,000 2,915,000
320
2,185
235
20,000
350,000

715,000
700
475,000

918,320 3,892,185 2,915,235 1,190,700

Includes Federal Reserve notes held by the U. S. Treasury or by a Federal Reserve Bank other than the issuing bank.
2
After deducting $759,843,000 participations of other Federal Reserve Banks on Dec. 31,1943, and $424,034,000 on Dec. 31, 1942.




15,572
16,026
1,007
7,564

11,686
17,859
4,421
3,600

33,954,566 29,018,642 1,985,876 1,838,702 9,537,938 9,048,863 2,075,007

Commitments to make industrial advances
9,270
700
10,661
FEDERAL RESERVE NOTE STATEMENT
Federal Reserve notes:
Issued to Federal Reserve Bank by Federal Reserve
17,512,i
!,672,151 1,203,368
agent
48,073
605,729 479,165
Held by Federal Reserve Bank
In actual circulation1.

9,489
11,160
2,874
2,548

112,605
403

775,000
420
450,000

727,000
25
125,000

897,140 1,555,000 1,180,000 1,225,420

852,025

795,000
2,140
100,000

955,000 1,180,000
600,000

No. 2-STATEMENT OF CONDITION-Continued
[In thousands of dollars]
Item

Atlanta
1943

ASSETS
Gold certificates on h a n d and due from U . S.
Treasury
Redemption fund—Federal Reserve notes
Other cash
T o t a l reserves

St. Louis

Chicago
1942

1942

1943

1942

1943

1942

1943

1942

1943

1942

643,405
19,714
15,399

721,665 365,112 477,051
4,192
8,625
202
19,246
9,777
8,353

668,768
12,288
13,663

662,054
352
11,997

,301,101 1,967,283
468,987 520, 889 2.
20,406
7,133
9,837
371
39,922
11,050 17,175
35,995

932,314

789,260 3,868,550 3,611,524

678,518

745,103 383,514 485,606

694,719

674,403

489,874 538,435 2,361,429 2,010,411

t
8

10
190

75
87

73
120
61

305
110

221

87
504

118,737
49,397
179,785
249,956

131,718
63,444
49,101
23,763

154,843
£4,418
234,460
940,272

342,801
165,109
127,787
241,198

Total U. S. Government securities, direct
and guaranteed

597,875

268,026 1,393,993

Total bills and securities
Due from foreign banks
Federal Reserve notes of other Federal Reserve
Banks
Uncollected items
Bank premises
Other assets

598,096
5
8,932
113,337
1,653
3,893




1942

San Francisco

Dallas

763, 536 3,808,383 3,570,031
19,758
1,475
1,844
40,018
23,880 40,409

Total bills discounted
Industrial advances
U. S. Government securities, direct and guaranteed:
Bonds
Notes
Certificates
Bills

• L e s s t h a n $500.

1943

K a n s a s City

890,198
18,974
23,142

Bills discounted:
Secured by U. S. Government obligations,
direct and guaranteed
Other bills discounted

Total assets

Minneapolis

178

55
366

78,235
32,547
118,457
304,038

133,223 60,270
64,170 25,074
49,662 91,258
40,764 181,594

75,729
36,474
28,230
13,746

104,226
43,361
157,819
238,081

137,180
66,074
51,137
34,617

100,408 113,568
41,772 54,702
152,038 42,335
208,643 17,040

876,895

533,277

287,819 358,196 154,179

543,487

268,617 1,393,997
2
17

877,310
6

533,277
3

288,000 358,374 154,600
1
2

9,906
306,817
2,948
5,807

6,415
244,938
2,917
10,859

6,852
94,750
2,064
2,912

4,827
82,976
1,726
4,022

4,162
75,178
2,110
4,158

3,291
36,279
1,280
2,162

2,108
34,291
1,309
2,513

4,550

200
4,034

194,465
80,902
294,454
597,892

288,968
139,185
107,719
78,606

289,008

502,861 227,645 1,167,713

614,478

543,592
4

290,395
1

502,873 227,749 1,172,263
10
1
4

618,712

4,851
109,204
2,737
3,726

5,449
64,897
2,808
4,410

137
1,250

3,930
69,582
963
3,633

2,695
53,476
1,052
3,590

16,750
214,878
2,023
7,265

7,251
155,454
2,691
9,607

1,658,230 1,151,430 5,588,042 4,753,969 1,318,376 1,118,712 784,902 680,427 1,358,833 1,042,363 1,070,859 826,998 3,774,618 2,804,130

O

s
o

s
o
o

i

LIABILITIES
Federal Reserve notes in actual circulation1

954,983

546,908 3,163,200 2,419,593

725,702

513,737 385,761 302,727

613,745

428,63!

416,356 251,765 1,937,360 1,279,380

Deposits:
Member bank—reserve account
U. S. Treasurer—general account
Foreign
Other deposits

535,969
10,305
44,311
6,592

476,535 1,943,250 1 ,925,896
23,562
56,515
71,445
24,464 154,455 85,273
5,085
3,546
4,310

434,360
18,687
37,981
10,806

446,424 295,470 276,826
56,544 25,045 35,354
20,969 27,853 15,377
12,257 10,051 12,465

583,217
19,241
35,449
6,002

487,364
36,209
20,270
4,903

520,289 468,388 1,461,805 1,232,212
26,840 27,947
41,240
85,288
37,981 20,270 96,250
53,328
3,016
3,456 45,328
41,614

Total deposits
Deferred availability items
Other liabilities including accrued dividends

597,177
89,896
208

529, 646 2,157,766 2,
,086,924
60,;
884 210,687 197,776
334
106
672

501,834
76,497
206

536,194 358,419 340,022
56,581 29,290 27,636
165
229
83

643,909
86,862
484

548,746
52,850
573

588,126 520,061 1,644,623 1,412,442
52,663 43,312 160,470
83,985
219
121
404
77

Total liabilities
CAPITAL ACCOUNTS
Capital paid in
Surplus (sec. 7)
Surplus (sec. 13b)
Other capital accounts
Total liabilities and capital accounts

1,642,264 1,137,544 5,532,325 4,704,627 1,304,239 1,106,595 773,635 670,614 1,345,000 1,030,800 1,057,364 815,259 3,742,857 2,775,884
5,453
5,725
749
4,039

In actual circulation.
Collateral held by agent for notes issued to
banks:
Gold certificates on hand and due from
U. S. Treasury
Eligible paper
U . S. securities
Total collateral held...

17,916
26,490
1,429
9,882

16,306
22,925
1,429
8,682

4,705
6,330
530
2,572

1,658,230 1,151,430 5,588,042 4,753,969 1,318,376 1

Commitments to make industrial advances
FEDERAL RESERVE NOTE STATEMENT
Federal Reserve notes:
Issued to Federal Reserve Bank by Federal
Reserve agent
Held by Federal Reserve Bank

5,188
5,725
717
2,256

135

4,549
4,966
530
2,072

3,236
3,669
1,000
3,362

3,075
3,221
1,000
2,517

4,725
3,613
1,137
2,088

4,657
4,831
1,307
2,700

4,450
4,083
1,307
1,899

12,473
14,159
2,129
3,000

12,081
11,044
2,121
3,000

784,902 680,427 1,358,833 1,042,363 1,070,859 826,998 3,774,618 2,804,130
3,000

337

1,826

2,524

3,892

998,714
43,731
954,983

582, 534 3,223,744 ,469,905
35,626
60,544 50,312

759,355
33,653

541,608 392,402 308,147
6,641
5,420
27,871

634,522
20,117

440,629
11,998

449,884 277,211 2,061,483 1,364,823
33,528 25,446 124,123
85,443

546,908 3,163,200 2,419,593

725,702

513,737 385,761 302,727

613,745

428,631

416,356 251,765 1,937,360 1,279,380

650,000

555,000 2,860,000 2,500,000

400,000

375,000
1,025,000

363,690

480,000 225,000 310,000
45
75,000 175^000

400,000
75
250,000

440,000
65
5,000

261,000 283,000 1,724,000 1,384,000

400,000

585,000 3,260,000 2,500,000

763,690

555,045 400,000 310,000

650,075

445,065

461,000 283,000 2,124,000 1,384,000

30,000

i Includes Federal Reserve notes held by the U. S. Treasury or by a Federal Reserve Bank other than the issuing bank.




5,029
4,554
1,137
3,113

200,000

400,000

66

ANNUAL REPORT OF BOARD OF GOVERNORS
NO. 3—HOLDINGS OF UNITED STATES GOVERNMENT SECURITIES BY FEDERAL
RESERVE BANKS AT END OF DECEMBER 1942 A N D 1943
[In thousands of dollars]
Rate of
interest
(Per cent)

Type of issue
Treasury bonds:
1943-47
1943-45
1944-46
1944-54
1945-47
1945
1946-56
1946-48
1946-49
1947-52
1947
1948-50*
1948-51
1948
1948-50
1949-51* Tune 15
1949-51* Sept 15
1949-51* Dec 15
1949-52
1949-53
1950-52* Mar 15
1950-52* Sept. 15
1950-52 Sept. 15
1951-54
1951-55
1951-53*
1951-53
1951-55*
1952-54*
1952-55*
1953-55
1954-56
1955-60
1956-58*
1956-59
1958 63
1960-65
1967-72*
Total Treasury bonds
Treasury notes:
Mar 15 1943*
June 15 1943
Sept. 15, 1943
Dec 15 1943
Mar. 15, 1944
June 15 1944
Sept. 15, 1944
Sept 15, 1944*
Mar. 15, 1945
Mar. 15, 1945*
Dec 15 1945*
Mar. 15, 1946*
Dec. 15, 1946*
Total Treasury notes
Certificates of indebtedness*
Treasury bills:
Bought under repurchase option*
Other*
Total Treasury bills
Guaranteed securities:
CCC May 1 1943
CCC, Feb. 15, 1945*
RFC July 15 1943*
RFC, Apr. 15, 1944*
HOLC, 1944-52
HOLC, 1945-47
FFMC 1944-64
FFMC, 1944-49
Total guaranteed securities
Total holdings
" Taxable issues.




December
1942
91,107
129,886
126,000
45,530
122,199
55,602
35,135
101,222
48,852
17,159
11,250
125,528
104,529
23,750
4,594
130,427
62,240
141,018
35,889
129,125
177,475

3%

3lA
3%

4
2%
2lA

3%
3
3H
4M
2
2
2%

2
2
2
2
3XA
2H
2
2
2Y>

2%
3
2
2M

2
2Yi

...

2\i

2
2%
2Vs
2Yi
2%
2%
2%
2Vi

" 120,383"
123,393
40,194
79,882
53,291
48,509
87,019
37,050
5,068
89,312
71,861
57,731
64,037
75,352
105,460
2,777,059
39,300
95,400
31,700
54,000
107,400
71,900
59,100

December
1943

- 196,000
60,930
121,200
19,000
37,250
96,700
47,852
13,000
38,100
100,500
7,750
3,000
32,500
74,100
88,700
75,000
85,300
16,000
192,500
32,500
26,500
16,700
6,000
8,000
7,790
5,000
40,900
37,250
73,443
1,559,465

Change
during 1943
—91,107
-129,886
+70,000
+15,400
—999
-36,602
+2,115
—4 522
— 1,000
-4,159
— 11,250
-87,428
—4 029
-23,750
—4 594
-122,677
— 59,240
-141,018
—3 389
-55,025
-177,475
+88,700
-45,383
-38,093
— 24,194
+ 192,500
-47,382
— 53,291
-48,509
— 60,519
-20,350
+932
-81,312
—64,071
-52,731
-23,137
-38,102
-32,017
-1,217,594

85,600
236,845
829
16,725
525,000
1,323,799
1,041,000

268,800
664,900
2,467,300

-39,300
-95,400
-31,700
-54,000
-19,300
-12,500
—35,400
+23,200
-30,000
—90,745
-829
-16,725
-256,200
-658,899
+1,426,300

578,118
431,877
1,009,995

3,845,077
2,923,191
6,768,268

+3,266,959
+2,491,314
+5,758,273

%
\VS
%
%
%
\%
%
1
1H

IH
3
IH
3H

•

475
8,610
9,000
3,175
7,145
1,271
2,000
5,106

88^100
59,400
23.700
23,200
55,600
146,100

2,500'"
10,500
34,501
1,271
7,925
26,317

-475
-6,110
-9,000
+7,325
+27,356
+5,925
+21,211

36,782

83,014

+46,232

6,188,635

11,542,947

+5,354,312

FEDERAL RESERVE SYSTEM
N O . 4 -HOLDINGS OF SPECIAL SHORT-TERM TREASURY CERTIFICATES
BY THE FEDERAL RESERVE BANKS, 1943
[In millions of dollars]
Amount

Date
Jan. 29
30

115
202

Mar. 2
4
5
6
8
9
10
11
12
13
15

3
174
354
543
591
648
632
790
940
1,043
1,302

Date
Mar. 16
17
18
19
20
22
23
24
25
26
27
29
30

Date

Amount

. . .

June 15
16
17
18
19

1,250
981
8^?6
778
768
603
700
512
432
384
304
104
40

Amount

. .

805
659
350
256
212

.

11
126
243
246
214
179
424
258

Sept. 8
9
10
11
13
14
15
16

NO. 5-VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS OF FEDERAL
RESERVE BANKS, 1939-1943
[Number in thousands; amounts in thousands of dollars]
1939

NUMBER

OF

PIECES

1941

1940

1942

1943

HANDLED1

Bills discounted:
Applications
Notes discounted and advances m a d e . . ..
Industrial advances:
Advances made
Commitments to make industrial advances
Bills purchased in open market for own account
Currency received and counted
Coin received and counted
Checks handled:
U. S. Government checks
All other
Collection items handled:
U. S. Government coupons paid 2
All other
Issues, redemptions, and exchanges by fiscal
agency department:
TJ. S. Government direct obligations
All other
Transfer of funds

2
6

2
4

2
4

1
1

2
2

.2

.2

.6

1

.8

.1

.2

.2

.2

.1

.1
2,134,908
2,644,418

2,248,290
2,705,344

2 ,529,703
3 ,216,761

2 ,678,801
3 ,761,445

2 ,874,099
3 ,810,300

133,951
1,023,189

127,284
1,057,072

123,128
1 ,142,465

130,895
1 ,204,648

266,686
1 ,246,384

17,145
6,177

15,444
6,094

15,047
6,392

14,990
5,833

16,520
5,072

3,528
1,162
814

3,752
485
780

13,479
411
840

117,425
.473
842

3

270,358
250
864

AMOUNTS HANDLED

61,884
Bills discounted
86,975
125,178
2 ,840,341
193,278
Industrial advances:
2,860
Advances made
3,805
15,695
68,032
60,265
Commitments to make industrial ad4,374
19,530
vances
4,621
10,221
22,207
Bills purchased in open market for own
account
2,133
Currency received and counted
9,285,921
9,538,629 " l l ,283,817 13 ,010,185 " l 5 ,"599 ,'680
Coin received and counted
276,589
288,140
327,555
381,254
355,581
Checks handled:
16,327,930 18,750,260 27 ,732,559 67 ,834,790 113 ,791,554
U. S. Government checks
Allother
239,610,050 261,685,832 334 ,336,667 409 ,273,478 509 ,640,311
Collection items handled:
U. S. Government coupons paid 2
890,620
902,288
926,960
1 ,082,321
1 ,481,271
All o t h e r . . . .
5,442,645
5,068,674
6 ,003,082
6 ,167,564
7,882,053
Issues, redemptions, and exchanges by fiscal
agency department:
U. S. Government direct obligations
24,462,659 20,189,983 33 ,278,154 90 ,338,225 3209 ,762,970
Allother
4,537,228
1,687,194
3 ,262,012
3 ,260,660
1,986,425
88,080,756 92,105,910 118 ,423,057 140 ,444,452 203 ,510,209
Transfer of funds
1
2
3

Two or more checks, coupons, etc., handled as a single item are counted as one "piece."
Includes coupons from obligations guaranteed by the United States.
Exclusive of Treasury savings certificates and war savings stamps received for redemption.




N O . 6-EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS DURING 1943
Item

System

Boston

New
York

Philadelphia

Cleveland

Richmond

St.
Louis

Minneapolis

Atlanta

Chicago

$8,135
3, 339,535
12,064

8, 606,032 3 ,135,787 1,977,717
139
2,453
5,669

Kansas
City

San
Dallas Francisco

CURRENT EARNINGS
Discounted bills
U. S. Government securities
Industrial advances
Commitments to make ind. adv
All other
Total current earnings

$9,947
$151,915
$11 568
$86,003
68,089,456 4, 857,424 17,766,396 5 122,053
414,281
30,118
174,568
18,623
206
236
48,904
3,022
32,461
601,159
16,387
127,023

$4,101
6 643,854
28,384
2,274
71,971

69,305,715 4, 918,519 17,998,281 5 339,235

6 750,584

$6,742

4, 072,265

20,568
8,906
4,614
4 113,095

648

14,035
3, 374,417

$3,918

125,922

$14,766

5,591
24,351

$564

11,508

8, 738,325 3 ,180,634 1 ,995,458

$3,367

$1,666

$1,138

8,365

1,075

155,932

11,652

112,255
27,943
5,303

3, 128,584 2,798,224 6,641*585
78

3, 296,326 2,812,617 6,788,224

CURRENT EXPENSES
Operating expenses;
Salaries:
Officers
Employees
Retirement System contributions
for current service
Legal fees
Directors' fees and expenses
Federal Advisory Council, fees
and expenses
Traveling expenses (other than
of directors and members of
Federal Advisory Council)
Postage and expressage
Telephone and telegraph
Printing, stationery, and supplies.
Insurance on currency and security shipments
Other insurance
Taxes on bank premises
Depreciation on bank building.. .
Light, heat, power, and water....
Repairs, alterations to bank bldg.
Rent
Furniture and equipment
All other

127,143
2,505,826
111,601
543 751
41,950,755 2, 228,206 9,189,941 2 496,052

4 213,204

2, 341,180

1, 982,726

215,705

162,186

143,871

288,992

166,978

153,829

6, 497,638 2 ,233,480 1 ,407,426

160,423

149,248

282,099

2, 244,275 2,358,531 4,758,096

2,512,998
54,770
130,781

123,995
14,512
9,887

557,657
2,562
10,808

144,067
10,349
9,516

217,591
20,245
10,730

144,358

136,573

392,271

147,791

9,651

8,577

142,913
2,029
15,834

271,192

14,452

89,056
4,648
11,051

145,534

7,883

9,319

13,073

14,827

950

1,036

794

949

581

1,063

1,442

1,350

1,423

1,289

600

3,350

557,728
8,666,419
779,582
3,679,571

26,698
62,264
724,550 1,220,180
37,873
120,793
280,088
687,784

32,543
684,053
42,890
233,762

56,567
966,677
80,807
495,707

32,348
666,815
42,746
176,902

46,789
574,129
62,652
169,297

88,947

74,150
562,130

39,849
388,500
61,886
180,257

30,336
269,484
35,635
149,569

35,542
475,363
64,578
177,361

39,067
413,885
55,744
199,586

66,778
933,184
99,828
367,128

282 450
218,879
1,475,344
1,050,828
559,387
263,741
751,693
1,149,479
1,873,265

37 986
13,574
131,200
55,832
44,465
8,831
14,542
38,419
170,976

18,109
15,964
91,436
143,275
33,148
5,694
21 703
46,850
152,077

21,718
20,209
128,270
112,476
64,825
40,470
170,399
99,858
206,621

29,178
14,656
77,245
88,625
39,649
14,348
7,576
58,106
69,564

24,304
10,549
62,755
42,549
37,116
23,243
46,765
77,797
110,147

28,087
23,054
198,167
76,491
65,871
31,406
177,774
310,861
335,846

7,693
11,555
51,588
44,482
33,627
18,108
18 856
77,457
92,584

6,807
9,252
65,330
28,847
23,233
7,379
8 262
18,759
97,173

13,197
14,620
92,075
70,312
22,516
25,836
9,390
53,805
106,357

13,509
10,860
31,676
93,125
36,402
23,226
19,675
82,492
90,680

41,408
22,406
93,387
74,854
33,953
9,886
98,850
105,133
130,257

68,478,323 4, 074,185 13,990,307 4 309,425

7 143,028

3 974,015

3, 566,802 10, 512,490 3 ,584,618 2 ,417,499

3, 727,715 3,773,170 7,405,069

32,684,507 1, 538,277 5,721,834 1 811,474

3 617,977

1 683,782

1, 746,018

5, 718,472 1 ,744,862 1 ,318,401

1, 784,797 2,150,546 3,848,067

Net operating expenses
Assessment for expenses of Board of
Governors
Federal Reserve currency:
Original cost
Cost of redemption

35,793,816 2, 535,908 8,268,473 2 497,951

3 525,051

2 290,233

1, 820,784

4. 794,018 1 ,839,756 1 ,099,098

1, 942,918 1,622,624 3,557,002

Total current expenses

Total operating expenses
Less reimbursements for certain
fiscal agency and other expenses




40,454
52,180
452,215
219,960
124,582
55,314
157,901
179,942
310,983

69

25

113

1, 349,599

11

2,415,630

169,983

862,086

229,359

223,201

104,021

84,336

294,209

72,801

53,062

68,718

71,271

4,968,676
367,442

331,219
16,184

840,957
62,679

386,479
22,682

417,525
26,620

365,288
39,579

401,206
35,393

714,038
47,969

237,505
25,342

102 992
6,857

183,664
18,745

194,461
23,314

43,545,564 3, 053,294 10,034,195 3 136,471

4 192,397

2 799,121

2, 341,719

5, 850,234 2 ,175,404 1 ,262,009

207

182,583
793,342
42,078

2, 214,045 1,911,670 4,575,005

PROFIT AND LOSS
Current earnings (above)
Current expenses (above)
Current net earnings
Additions to current net earnings:
Profits on sales of U. S. Government securities
,
Recoveries of and withdrawals
from allowances for losses on
industrial advances (net)
Allother
Total additions
Deductions from current net earnings:
Charge-offs and special depreciation on bank premises
Retirement System (interest base
and increased benefits adjustments)
All other

69,305,715 4,918,519 ,998,281 5,339,235
43,545,564 3,053,294 10,034,195 3,136,471

6,750,584
4,192,397

4,113,095
2,799,121

3,374,417
2,341,719

8,738,325 3,180,634 1,995,458 3,296, 326 2 ,812,617 6,788,224
5,850,234 2,175,404 1,262,009 2,214, 045 1,911,670 4,575,005

25,760,151 1,865,225 7,964,086 2,202,764

2,558,187

1,313,974

1,032,698

2,888,091 1,005,230

35,902,055 2,629,096 10,216,982 2,927,686

3,537,441

1,974,305

1,537,926

4,135,904 1,658,200 1,083,198

180,452
511,416

27,060
107,166

24,969
3,035 "113," 535

36,593,923 2,763,322 10,244,986 3,041,221

3,332,292 1,000,099
9,363,778
129,571

1

U,534
413

50,624
264,540

37,500
12,102

3,523,320

2,289,469

1,587,528

482,312 1,012,225

542,442 : 388,556 624,295
,
11,024
7,159
5,851

733,449

1,082,281

900,947 2,213,219

1,718,824 1,387,780 3,094,713

1

1,788

' 1,249

4,773
4,337

4,137,692 1,659,449 1,082,762

845

1,928

1,719,669 1,389,708 3,154,797

243,691
803,689
96,044

528,506
5,386

59,606
478

593,965

470,507
311

1,266,073
357
1,266,430

521,905
110

331,041
879

542,

468,031
660

876,282
1,697

522,015

331,920

542,

468,691 1,471,944

Net additions

23,768,282 1,209,757

,366,959 1,398,850

2,623,587

1,511,8

1,116,710

2,871,262 1,137,434

750,842

1,177.

921,017 1,682,853

Net earnings

49,528,433 3,074,982 5,331,045 3,601,614

5,181,774

2,825,860

2,149,4

5,759,353 2,142,664 ,484,291

Paid U. S. Treasury (sec. 13b)
Dividends paid
Transferred to surplus (sec. 13b)
Transferred to surplus (sec. 7)

17,878
244,726
55,807
8,911,342
573,065 1,280,516
22,153
135,003
40,237,362 2,446,110 !,010,498

599
922,163

24,307
359,650
45,557
2,396,346

15,139
319,356
31,369
1,783,544

Total deductions

12,825,641 1,553,565 2,878,027 1,642,371

899,733

4,259,012

777,583

470,818

50
993,684
4,765,619

148
190,924
2
293,217

2,259,406 1,821,964 3,896,072
290,

738
271,378

1,966, 689 1,549,848

4,082,593
,966,322 3, 220,823 3,612,
160,410,33" 11,159,938 58,001,539 15,670,086 14,766,685 5,235,966 5,724,628 22,924, 752 4,
Surplus (sec. 7), January 1
1,549,848
40,237,362 2,446,110 12,010,498 2,788,552 4,259,012 2,396,346 1,783,544 4,765,619 1,863,778 1,293,217 1,966,
Addition, as above
Transferred to reserves for contingen-600,000 -3,000,000 -2,396,346 -1,783,544 -1,200,000 -500,000 -845,000 -1,0251,000 -801,000
-12,550,890 -400,000
cies

Surplus (sec. 7), December 31
1

Net losses.




188,096,811 13,206,048 70,012,037 17,858,638 16,025,697

5,235,966

5,724,628 26,490,371 6,330,100 3,669,040

43,135
730,663
8,125
1,114,149
,044,326
,114,149

4,554,370 4,831,441 14,158,475

NO. 7-CURRENT EARNINGS, CURRENT EXPENSES, AND NET EARNINGS OF FEDERAL RESERVE BANKS AND DISPOSITION OF NET
EARNINGS, 1914-1943
Disposition of net earnings

Earnings and expenses
Bank and period
Current
earnings
All Federal Reserve Banks by years:
1914-15
1916
1917
1918
....
1919

Current
expenses

Net
earnings 1

Dividends
paid

Franchise tax Paid to U. S.
paid to U. S.
Treasury
Treasury 2
(Sec. 13b)

Transferred
to surplus
(Sec. 13b)

Direct
charges
to surplus
(Sec. 7)

Transferred
to surplus
(Sec.7)

$2,173,252
5,217,998
16,128,339
67,584,417
102,380,583

$2,320,586
2,273,999
5,159,727
10,959,533
19,339,633

$-141,459
2,750,998
9,582,067
52,716,310
78,367,504

$217,463
1,742,774
6,804,186
5,540,684
5,011,832

$1,134,234
2,703,894

$1,134,234
48,334,341
70,651,778

1920
1921
1922
1923
1924

181,296,711
122,865,866
50,498,699
50,708,566
38,340,449

28,258,030
34,463,845
29,559,049
29,764,173
28,431,126

149,294,774
82,087,225
16,497,736
12,711,286
3,718,180

5,654,018
6,119,673
6,307,035
6,552,717
6,682,496

60,724,742
59,974,466
10,850,605
3,613,056
113,646

82,916,014
15,993,086
-659,904
2,545,513
-3,077,962

1925
1926
1927
1928
1929

41,800,706
47,599,595
43,024,484
64,052,860
70,955,496

27,528,163
27,350,182
27,518,443
26,904,810
29,691,113

9,449,066
16,611,745
13,048,249
32,122,021
36,402,741

6,915,958
7,329,169
7,754,539
8,458,463
9,583,913

59,300
818,150
249,591
2,584,659
4,283,231

2,473,808
8,464,426
5,044,119
21,078,899
22,535,597

1930
1931
1932
1933
1934

36,424,044
29,701,279
50,018,817
49,487,318
48,902,813

28,342,726
27,040,664
26,291,381
29,222,837
29,241,396

7,988,182
2,972,066
22,314,244
7,957,407
15,231,409

10,268,598
10,029,760
9,282,244
8,874,262
8,781,661

17,308

$-60,323

-2,297,724
—7,057,694
11,020,582
-916,855
6,510,071

139,299,557

1935
1936
1937
1938
1939

. . . .

42,751,959
37,900,639
41,233,135
36,261,428
38,500,665

31,577,443
29,874,023
28,800,614
28,911,608
28,646,855

9,437,758
8,512,433
10,801,247
9,581,954
12,243,365

8,504,974
7,829,581
7,940,966
8,019,137
8,110,462

$297,667
227,448
176,625
119,524
24,579

27,695
102,880
67,304
-419,140
-425,653

607,422
352,524
2,616,352
1,862,433
4,533,977

731,313
448,835
1,964,919

. . .

43,537,805
41,380,095
52,662,704
69,305,715

29,165,477
32,963,150
38,624,044
43,545,564

25,860,025
9,137,581
' 12,470,451
49,528,433

8,214,971
8,429,936
8,669,076
8,911,342

82,152
141,465
197,672
244,726

-54,456
-4,333
49,602
1.35,003

17,617,358
570,513
3,554,101
40,237,362

12,272,706
132,696
646,641
12,550,890

1,522,696,437

761,770,194

719,254,998

212,541,890

—581,421

356,644,371

1940
1941
1942
1943

Total—1914-1943




2,011,418

149,138,300

1,511,858

3

d
IT1

s
$500,000

o
w
o
\
©

4

168,547,557

o
2
o

s

Aggregate for each Federal Reserve Bank
1914-1943
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

103,469,668
443,836,414
119,406,568
137,581,261
74,701,738
70,697,009
207,787,314
66,232,492
48,658,776
73,111,657
54,854,006
122,359,534

55,226,381
184,389,662
58,377,094
71,023,886
42,841,475
35,509,382
99,417,538
38,847,379
27,182,675
45,709,143
34,001,358
69,244,221

47,540,972
256,941,685
60,409,052
61,271,002
29,335,250
30,094,402
99,556,719
23,166,542
19,815,444
25,093,985
17,643,020
48,386,925

15,330,948
72,249,184
20,000,407
21,507,232
8,991,817
7,558,563
24,642,472
7,524,771
5,246,120
7,173,283
6,809,158
15,507,935

7,111,395
68,006,262
5,558,901
4,842,447
6,200,189
8,950,561
25,313,526
2,755,629
5,202,900
6,939,100
560,049
7,697,341

163,689
135,142
547,411
74,881
163,788
54,154
142,389
7,063
34,960
45,355
99,891
43,135

-1,345
-660,235
222,812
-8,446
-130,886
-8,464
11,681
-18,262
-7,445
-8,388
55,336
-27,779

24,936,285
117,211,332
34,079,521
34,854,888
14,110,342
13,539,588
49,446,651
12,897,341
9,338,909
10,944,635
10,118,586
25,166,293

11,730,237
47,199,295
16,220,883
18,829,192
8,874,375
7,814,960
22,956,280
6,567,240
5,669,868
6,390,264
5,287,145
11,007,818

1

Current earnings less current expenses, plus other additions and less other deductions.
The Banking Act of 1933 eliminated the provision in the Federal Reserve Act requiring payment of a franchise tax.
On Dec. 31, 1943, surplus (Sec. 13b)—relating to funds received from the Secretary of the Treasury under Section 13b of the Federal Reserve Act for the purpose of making
loans to industry—amounted to $26,964,890 ($27,546,311 received from the Secretary of the Treasury minus the $581,421 net debits shown here).
4
On Dec. 31, 1943, surplus (Sec. 7)—accumulated pursuant to Section 7 of the Federal Reserve Act—amounted to $188,096,814 ($356,644,371 retained net earnings, shown in
preceding column, less $168,547,557 direct charges shown here). Direct charges represent amounts transferred to reserves for contingencies except as follows: 1927, charge-off on bank
premises; 1934, charge-off cost of Federal Deposit Insurance Corporation stock.
2

3

NO.

President

Other officers

Federal Reserve Bank
(including branches)

Employees, except those
whose salaries are reimbursed to bank

Employees whose salaries
are reimbursed to bank

<

Total

W

Annual salary
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St Louis

.
\

••

Minneapolis
Kansas Citv
Dallas
San Francisco
Total

Number

Annual
salaries

$25,000
45,000
25,000
25,000

.

11
45
11
24

$95,078
502,100
110,000
178,040

855
2,608
993
1,154

$1,291,221
5,154,110
1,473,183
1,631,698

542
2,026
541
1,104

$695,099
3,668,968
912,679
2,024,556

1,409
4,680
1,546
2,283

21,000
20,000
30,000
25,000

19
20
32
19

148,800
127.200
278,400
146,820

764
564
1,646
757

1,180,478
845 166
2,985,335
1,198,296

664
900
2,186
774

946,464
1,175,114
3,649,403
1,177,239

1,448
1,485
3,865
1,551

2,296,742
2 167 480
6,943,138
2,547,355

25,000
20,000
20,000
25,000

18
20
18
36

133,000
153,980
129,300
266,400

327
617
574
1,162

529,966
1,008,975
916,029
2,019,775

558
732
880
1,528

758,714
1,097,196
1,291,196
2,697,530

904
1,370
1,473
2,727

1,446,680
2,280,151
2,356,525
5,008,705

12,021

$20,234,232

12,435

$20,094,158

24,741

$42,903,508

$306,000

273*

$2,269,118*

* Includes $567,291 reimbursed to the banks on account of salaries of 83 officers.




0

6

8 - N U M B E R A N D SALARIES OF OFFICERS A N D EMPLOYEES OF FEDERAL RESERVE B A N K S
[December 31, 19431

Number

Annual
salaries

Number

Annual
salaries

Number

Annual
salaries
$2 106,398
9,370,178
2,520 862
3,859,294

72-

ANNUAL REPORT OF BOARD OF GOVERNORS

N O . 9—RECEIPTS AND DISBURSEMENTS OF THE BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM FOR THE YEAR 1943
General fund account:
Balance January 1, 1943:
For general expenses of the Board
For expenses chargeable to Federal Reserve Banks
For purchase of war savings bonds for employees under
Board's voluntary pay roll savings plan

$111,738.45
331,555.72
8,359.60

$451,653.77

RECEIPTS
For general expenses of the Board:
Assessments on Federal Reserve Banks for estimated general
expenses of the Board
$2,415,630.64
Subscriptions to the Federal Reserve Bulletin
5,445.06
Other publications, sales
1,933.47
Reimbursements for leased wire service
50,695.47
vJafeteria operations
42,557.99
Miscellaneous receipts, refunds, and reimbursements
32,723.57
For expenses chargeable to Federal Reserve Banks:
Assessments on Federal Reserve Banks for:
Cost of printing Federal Reserve notes
Expenses of leased wire system (telegraph)
Expenses of leased telephone lines
Expenses of Federal Reserve Issue and Redemption Division (Office of Comptroller of the Currency)
Miscellaneous expenses

2,548,986.20

3,983,986.82
63,088.11
10,713.75
56,834.41
4,854.06 4,119,477.15

Employees' pay roll allotments for purchase of war savings bonds

198,670.80

Income and victory tax withheld from salaries

147,796.10

Total receipts

7,014,930.25

Total available for disbursement

7,466,584.02
DISBURSEMENTS

For expenses of the Board:
Current expenses of 1943 (per detailed statement)
$1,914,512.29
Less accounts unpaid December 31, 1943
49,611.11
Expenses of prior years paid in 1943
Expenses of leased wire service, reimbursable
Retirement System (interest base and increased benefits adjustments)
Cafeteria operations
Miscellaneous refunds and items reimbursable
For expenses chargeable to Federal Reserve Banks:
Cost of printing Federal Reserve notes
Expenses of leased wire system (telegraph)
Expenses of leased telephone lines
Expenses of Federal Reserve Issue and Redemption Division
(Office of the Comptroller of the Currency)
Miscellaneous expenses

1,864,901.18
36,747.72
46,564.17
437,442.00
48,627.83
5,159.70

2,439,442.60

3,921,614.72
61,751.09
10,335.50
56,834.41
3,495.58 4,054,031.30

Purchase of war savings bonds and refunds under Board's pay roll p l a n — .
_
Collector of Internal Revenue—income and victory tax withheld from salaries . . .

197,551.10
89,883.75

Total disbursements
Balance in general fund account December 31, 1943:
For general expenses of the Board
For expenses chargeable to Federal Reserve Banks
For purchase of war savings bonds for employees under Board's voluntary
pay roll savings plan
For income and victory tax withholdings due Collector of Internal Revenue..




6,780,908.75
221,282.05
397,001.57
9,479.30
57,912.35
S685,675.27

73

FEDERAL RESERVE SYSTEM
N O . 9-RECEIPTS AND DISBURSEMENTS—Continued

CURRENT EXPENSES OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, 1943
PERSONAL SERVICES:

Salaries

$1,537,054.89

Retirement contributions

84,413.73

Total personal services

$1,621,468.62

NONPERSONAL SERVICES:

Traveling expenses
Postage and expressage
Telephone and telegraph
Printing and binding
Stationery and supplies
Furniture and equipment
Books and subscriptions
Heat, light, and power
Repairs and alterations (building and grounds)
Repairs and maintenance (furniture and equipment)
Medical service and supplies
Insurance
Miscellaneous
Total nonpersonal services
GRAND TOTAL

105,409.16
1,084.30
45,399,75
54,344.43
15,551.58
1,615.79
6,841.05
27,786.37
1,501.27
3,662.52
907.68
2,880.21
26,059.56
$293,043.67
$1,914,512.29

NO. 10- MINIMUM DOWN PAYMENTS AND MAXIMUM MATURITIES ON CONSUMER
CREDIT SUBJECT TO REGULATION W
Prescribed by Board of Governors of the Federal Reserve System in accordance with Executive Order No. 8843
dated August 9, 1941
Sept. 1, 1941-March March 23, 1942-May
22, 1942
5, 1942
Type of credit

Instalment sales:2
Automobiles
Mechanical refrigerators, washing
machines, radios, vacuum cleaners.
Stoves, ranges
Furnaces, oil burners, plumbing and
sanitary fixtures
Furnt.
Furniture
Floor coverings
l
Watches, clocks
Jewelry
Clothing, furs
Materials (not elsewhere listed) for
repair or improvement of residential structures
Instalment loans:
To purchase listed articles
To pay charge account arising from
sale of listed article, or to pay single-payment loan
Other
Consolidations of instalment sale or loan
with previously outstanding instalment credit
Single-payment loans.... ;
Charge sales of listed articles

1
2
3

Effective May 6,
1942

Down Maximum Down Maximum
Down
payment maturity payment maturity payment
(months)
(months)
(%)x

Maximum
maturity
(months)

33%

15

33%

15

20
20

18
18

33^
20

15
15

33%
33%

12
12

15
10

18
18

20
10
20
20

18
15
15
15

33%
20
33%
33%
33%
33H

12
12
12
12
12
12

18

(3)

(3)

(3)

18
18

(3)

18

15
15
(3)

15

12
(3)

(3)

6
12
(3)
(3)

12
3
10th day of
2nd month
after sale

Down payments determined after deduction of any trade-in, except in case of automobiles.
Terms shown for selected articles. For terms on other listed articles, see regulation.
Where credit is to purchase listed articles, requirements same as on instalment sales of the respective
articles.
4
Prior to Dec. 1, 1941, maximum maturity was 18 months.
NOTE.—The above limitations have been subject to various exceptions; for exceptions in detail, and for additional provisions not reflected in this table, the regulation should be consulted. Where no figure is shown, there
was no limitation imposed by Regulation W.




74

ANNUAL REPORT OF BOARD OF GOVERNORS

N O . 11—FEDERAL RESERVEuBANK DISCOUNT, INTEREST, AND COMMITMENT RATES,
A N D BUYING RATES O N BILLS
[Per cent per annum]
In effect December 31, 1943
Type of transaction

San
Bos- New Phil- Cleve- Rich- At- ChiSt.. Min- Kan- Dal- P'ransas
ton York adel- land mond lanta cago Louis neap- City
las cisco
phia
olis

Rediscounts for and advances to member banks
under Sees. 13 and 13a of
the Federal Reserve Act:
Advances secured by
Government securities
maturing or callable
within one year
All other
Advances to member banks
under Sec. 10(b) of the
Federal Reserve Act
Advances^ to individuals,
partnerships, or corporations secured by direct
obligations of the United
States (last paragraph of
Sec. 13 of the Federal Reserve Act):
To nonmember banks....
To others..
Advances to industrial or
commercial businesses under Sec. 13b of the Federal Reserve Act, direct
or in participation with
financing institutions
214-5
Discounts for and purchases
from financing institutions
under Sec. 13b of the Federal Reserve Act:
On portion for which institution is obligated...
On remaining portion —
Commitments to make advances under Sec. 13b of
the Federal Reserve Act:
To industrial or commercial businesses
A
To financing institutions.
V2-1
&

Y2

H

Y2

IY2

1
2H

2^-5

2

2Y2-5 2Y2S 2Y2S 2Y2S

2Y2-5

(I)
-VA

IV2

2Y2

2Y2-5 2Y2-5

( )2

Yi

I-IY2
2Y2-5

Y2-VA Y2-V
Y2-V

0

o

Y2-IX
Y2-V4

Minimum buying rates on
prime bankers' acceptances payable in dollars...
1-90 days
91-120 days
121-180 days
Buying rate on Treasury
bills6
1
2
3
4
5

Rate charged borrower by financing institution less commitment rate.
May charge same rate as charged borrower by financing institution, if less.
Rate charged borrower.
Financing institution is charged lA per cent on undisbursed portion of loan.
The same minimum rates in effect at the Federal Reserve Bank of New York apply to any purchases made
by other Federal Reserve Banks.
6
Established rate at which Federal Reserve Banks stand ready to buy all Treasury bills offered. Purchases
are made subject to the condition that the Reserve Bank upon request of the seller before maturity will sell back
bills of like amount and maturity at the same rate of discount.
NOTE.—Maximum maturities for discounts and advances to member banks are: 15 days for advances secured
by obligations of the Federal Farm Mortgage Corporation or the Home Owners Loan Corporation guaranteed
as to principal and interest by the United States, or by obligations of Federal Intermediate Credit Banks maturing within 6 months; 90 days for other advances and discounts made under Sections 13 and 13a of the Federal
Reserve Act (except that discounts of certain bankers' acceptances and of agricultural paper may have maturities not exceeding 6 months and 9 months respectively); and 4 months for advances under Section 10(b). The
maximum maturity for advances to individuals, partnerships, or corporations made under the last paragraph of
Section 13 is 90 days. Industrial advances and commitments made under Section 13b of the Federal Reserve
Act may have maturities not exceeding 5 years.




FEDERAL RESERVE SYSTEM

75

NO. 12-MAXIMUM RATES ON TIME DEPOSITS
Maximum rates thai may be paid by member banks as established by the Board of Governors under provisions
of Regulation Q
[Percent per annum]
In effect
beginning
Jan. 1, 1936

Type of deposit
Savings deposits
Postal Savings deposits
Other time deposits payable in:
6 months or more
90 days to 6 months
Less than 90 days

2
1

NOTE.—Maximum rates that may be paid by insured nonmember banks as established by the Federal
Deposit Insurance Corporation, effective February 1, 1936, are the same as those in effect for member banks.
Under Regulation Q the rate payable by a member bank may not in any event exceed the maximum rate payable
by State banks or trust companies on like deposits under the laws of the State in which the member bank is
located.

N O . 13-MEMBER BANK RESERVE REQUIREMENTS
[Per cent of deposits!
Net demand deposits 1
Period in effect

June 21, 1917-Aug. 15, 1936
Aug. 16, 1936-Feb. 28, 1937
Mar. 1, 1937-Apr. 30, 1937
May 1, 1937-Apr. 15, 1938
Apr. 16, 1938-Oct. 31,1941
Nov. 1, 1941-Aug. 19, 1942
Aug. 20, 1942-Sept. 13, 1942
Sept. 14, 1942-Oct. 2, 1942
Effective Oct. 3, 1942

Central
reserve city
banks

Reserve
city banks

13

26
24
22
20

Country
banks

10
15

22%
26
4

Time
deposits (all
member
banks)
3

7
12H
14
12
14
14
14
14

20
20
20
20
20

6*
5
6
6
6
6

1
Demand deposits subject to reserve requirements; i.e., demand deposits other than war loan deposits,
minus cash items in process of collection and demand balances due from domestic banks.

NO. 14-MARGIN REQUIREMENTS i
Prescribed by Board of Governors of the Federal Reserve System in accordance with
Securities Exchange Act of 1934
[Per cent of market value]
Apr. 1, 1936Oct. 31, 1937
For extensions of credit by brokers and dealers on listed securities, under
Regulation T .
For short sales, under Regulation T
For loans by banks on stocks, under Regulation u
...

N o v . 1, 1937

SS

40

and after

50
40

1
Regulations T and U limit the amount of credit that may be extended on a security by prescribing a
maximum loan value, which is a specified percentage of its market value at the time of the extension; the
''margin requirements" shown in this table are the difference between the market value (100%) and the maximum loan value.
^ Requirement under Regulation T was the margin "customarily required" by the broker.
° Regulation U became effective May 1, 1936.
NOTE.—Regulations T and U also provide special margin requirements on "omnibus" accounts and loans
to brokers and dealers.




NO. 15—ALL MEMBER BANKS-ASSETS AND LIABILITIES O N DECEMBER 31, 1943
BY CLASSES OF BANKS
[Amounts in thousands of dollars]
Central reserve city
member banks1

Country
member
banks1

All
member
banks

All
national
member
banks

All
State
member
banks

New York

Chicago

Reserve
city
member
banks*

19,994,040
4,428,453
13,579,281
983,898
444,267
453,834
104,307
5,197,227
3,595,906
91,734

4,554,104
1,004,220
3,163,101
74,453
157,767
134,121
20,442
1,283,017
820,622
37,929

27,521,471
6,200,794
18,932,891
748,976
913,092
607,543
118,175
9,326,844
5,115,643
391,403

22,187,988
4,654,053
14,927,384
537,811
1,213,526
777,353
77,861
7,982,946
3,303,078
611,106

74,257,603
16,287,520
50,602,657
2,345,138
2,728,652
1,972,851
320,785
23,790,034
12,835,249
1,132,172

47,498,601
10,116,273
32,450,770
1,614,001
1,928,627
1,239,869
149,061
16,017,030
8,323,142
790,411

26,759,002
6,171,247
18,151,887
731,137
800,025
732,982
171,724
7,773,004
4,512,107
341,761

59,451
. 1,250
13,265
1,435,621
320
191,943
11,315

156,050
1,605
1,557
265,254

1,740,548
17,232
3,626
2,058,392
9,399
297,491
30,207

3,451,410
22,421
1,660
593,271
354,292
39,132

5,407,459
42,508
20,108
4,352,538
9,719
861,253
80,654

4,119,804
33,646
14,588
2,735,439
9,399
545,472
33,989

1,287,655
8,862
5,520
1,617,099
320
315,781
46,665

6,141
26,454
54,872
16,189

256

1,403
13,740
6,236

54,391
13,187
70,360
35,302

16,376
3,015
31,191
23,239

77,164
44,059
170,163
80,966

47,275
26,070
101,257
47,419

29,889
17,989
68,906
33,547

25,498,501

Item

5,876,283

37,358,652

30,638,179

99,371,615

64,326,512

35,045,103

22,405,993
14,372,713
3,359,941
35,112
251,716
2 866,938
809,833

5,014,608
3,097,107
711,557
1,929
174,420
971,649
13,800

28,918,894
18,789,624
3,278,163
95,322
1,448,418
4,770,008
62,798

20,592,852
15,560,718
1,836,224
125,454
1,727,291
994,222
4,639

76,932,347
51,820,162
9,185,885
257,817
3,601,845
9,602,817
891,070

49,721,222
33,184,313
5,601,356
213,462
2,678,747
6,691,842
423,999

27,211,125
18,635,849
3,584,529
44,355
923,098
2,910,975
467,071

709,740

44,146

474,561

344,304

1,572,751

927,503

645,248

ASSETS

Loans and investments

Loans (including overdrafts) . . . .
.
United States Government direct obligations
Obligations guaranteed by United States Government
Obligations of States and political subdivisions
Other bonds, notes, and debentures
Corporate stocks (including Federal Reserve Bank stock)

Reserves, cash, and bank balances

Reserve with Federal Reserve Banks
Cash in vault
Demand balances with banks in the United States (except private banks
and American branches of foreign banks)
Other balances with banks in United States
Balances with banks in foreign countries
Cash items in process of collection
Due from own foreign branches
Bank premises owned and furniture and fixtures
Other real estate owned
Investments and other assets indirectly representing bank premises or other
real estate
..
..
Customers' liability on acceptances
Income accrued but not yet collected
..
Other assets
Total assets

17,527

..

Individuals partnerships, and corporations
United States Government: War loan accounts
Other
.
. . .
States and political subdivisions
Banks in United States
Banks in foreign countries
Certified and officers' checks, cash letters of credit and travelers' checks,
etc




s
O

o

o

S

LIABILITIES
Demand deposits

n

Time deposits
Individuals, partnerships, and corporations
United States Government
Postal savings
States and political subdivisions
Banks in United States
Banks in foreign countries
Total deposits.
Due to own foreign branches
Bills payable, rediscounts, and other liabilities for borrowed money
Acceptances outstanding
Dividends declared but not yet payable
Income collected but not yet earned
Expenses accrued and unpaid
Other liabilities

850,496
815,914
5,199

507,971
505,071
2,250

6,150,644
5,902,177
55,381
901
150,826
39,859
1,500
35,069,538

7,820,902
7,598,575
52,635
3,751
149,390
16,551

10,239,446
9,859,093
93,844
3,912
239,583
38,964
4,050
59,960,668
168,189
8,155
31,476
23,733
23,875
118,273
42,079

32,301^692
35,319
31,155
22,846
14,980
12,117
67,282
34,542

1,630
1,130
1,611
19,140
4,586

16,091
12,288
17,886
79,815
28,386

3,024
8,259
10,456
30,659
8,723

15,330,013
14,821,737
115,465
4,652
326,554
57,555
4,050
92,262,360
203,508
39,310
54,322
38,713
35,992
185,555
76,621

23,636,716

5,550,676

35,224,004

28,484,985

92,896,381

60,376,448

32,519,933

,

570,667
979,570
235,441
76,107

131,000
130,350
25,147
39,110

785,156
889,242
283,489
176,761

929,551
770,615
321,916
131,112

2,416,374
2,769,777
865,993
423,090

1,527,715
1,616,996
541,171
264,182

888,659
1,152,781
324,822
158,908

,

1,861,785

325,607

2,134,648

2,153,194

6,475,234

3,950,064

2,525,170

25,498,501

5,876,283

37,358,652

30,638,179

99,371,615

64,326,512

35,045,103

570,667

131,000

785,156

930,708

2,417,531

1,528,296

889,235

131,000

17,877
73,752
850
692,677

14,232
97,656
12,461
806,359

32,431
179,834
13,311
2,191,955

117,941
9,551
1,400,804

32,431
61,893
3,760
791,151

102,279
850

142,974
18,257

266,140
19,107

159,791
11,258

106,349
7,849

21,843,036
18,654,211
357

14,713,806
17,039,042
6,331

57,989,934
52,642,220
6,738

37,264,965
34,055,124
5,040

20,724,969
18,587,096
1,698

Total liabilities

"25,'688"
1,145
2,550
23 ,256,489
203,508
29,200
33,577
17,036
6,039
55,941
34,926

650
5,522,579

28,413,754'

io,' no'

5,090,567
4,962,644
21,621
740
86,971
18,591

CAPITAL ACCOUNTS
Capital
Surplus
Undivided profits
Other capital accounts
Total capital accounts
Total liabilities and capital accounts
MEMORANDA
Par or face value of capital
Capital notes and debentures. .
First preferred stock
Second preferred stock
Common stock
Retirable value of capital: First preferred stock
Second preferred stock
Net demand deposits subject to reserve
2
Demand deposits adjusted
Number of banks
For footnotes see next table.




a

I
I
Mi

322
8,426
561,919
20,887
17,550,980
13,89S,548
37

3,882,112
3,050,419
13

NO. 16-ALL MEMBER BANKS—CLASSIFICATION OF LOANS AND UNITED STATES GOVERNMENT DIRECT OBLIGATIONS O N DECEMBER 31, 1943
BY CLASSES OF BANKS
[In thousands of dollars]

Item

Central reserve city
member banks1
New York

Loans
Commercial and industrial loans, including open-market paper
Loans on agricultural commodities covered by purchase agreements of
Commodity Credit Corporation
Other agricultural loans
Loans to brokers and dealers in securities
Other loans for purchasing or carrying securities
Real estate loans: On farm land
On residential property
On other properties
Loans to banks
Consumer loans to individuals:
Retail automobile instalment paper
Other retail and repair-modernization instalment loans
Personal instalment cash loans
Single-payment loans to individuals
All other loans (including overdrafts)
United States Government direct obligations,
Treasury bills
Treasury certificates of indebtedness
Treasury notes
United States savings bonds
Other bonds maturing in 5 years or less
Other bonds maturing in 5 to 10 years
Bonds maturing in 10 to 20 years
Bonds maturing after 20 years

Chicago

Reserve
city
member
banks1

Country
member
banks1

Ail
member
banks

All
national
member
banks

All State
member
banks

4,428,453

1,004,220

6,200,794

4,654,053

16,287,520

10,116,273

6,171,247

2,515,262

763,124

1,084,080

7,420,746

4,754,242|

2,666,504

22,117
2,047
1,054,421
323,180
26
61,749
45,151
42,063

3,713
2,554
102,140
51,905
517
14,578
6,840
702

3,058,2801
j
157,887!
121,152!
216,857;
266,923!;
54.211J
1,109,595;
256,395|
13,029|

277,423J]
436,071j
24,818Ji
197,322
190,844
1,232,783
301,521
1,632

461,140
561,824
1,398,236
839,330
245,598
2,418,705
609,907
57,426

393,323!
452,150i
517,3O7|
432,145!
173,4751
1,541,1021
349,509!
24,804;

67,817
109,674
880,929
407,185
72,123
877,603
260,398
32,622

2.138
21,072
21,925
206,849
110,453

3,3761
11,076
5,888
24,331
13,476

74,144!
72,109 :
454,783!
288,068!

52,820
50,580;
115,612
309,615
378,932

115,695
156,872
215,534
995,578
790,929

91,008;
114,715|
148,191!
501,255!
623.047J

24,687
42,157
67,343
494,323
167,882

13,579,281

3,163,101]

18,932,891]

14,927,384

50,602,657

32,450,770|

18,151,887

199,283
877,362
484,358
1,495
325,108
629,735
502,938
142,822

1,801,9731
4,691,130'!
2,496,594:
12,488:
1,993,127!
5,521,9521
1,930,1681
485,459

1,031,646
3,094,113
2,096,152
156,306
1,338,778
4,873,746
1,694,262
642,381

4,360 425
12,071,167
6,906,023
170,761
5,259,443
14,914,737
5,563,960
1,356,141

2,761,718!
7,921,329!
4,531,1131
124,934|
3,121,798!
9,399,533|
3,607,743

1,598,707
4,149,838
2,374,910
45,827
2,137,645
5,515,204
1,956,217
373,539

1,327,523
3,408,562
1,828,919!
472
1,602,430
3,889,304
1,436,592
85,479

57,36lj

982,602

1
Banks are classified according to the reserves which they are required to carry (see Table 13, p. 75). Some banks classified as "country banks" are in outlying sections of reserve citor central reserve cities, and some banks classified as "reserve city banks" are in outlying sections of central reserve cities. Figures for each class of banks include assets and liabilities of their domestic branches, whether located within or outside the cities in which the parent banks are located.
2
Net demand deposits other than interbank and United States Government, less cash items reported as in process of collection.




>
z
z
c
W

c

w

o
>

o
o
Z

c

79

FEDERAL RESERVE SYSTEM

Reserve Bank credit outstanding

s

a

a

.2

jjj

End of year
or month

£-3

M
>

I
-3

IN

CJ

O

to

Urn
o

s

3
H
o

""o
O

2,498
3,292
3,355
1,563

2,873
2,707
2,639
3,373

un

£•-

§^

H

with
tanks

out-

NO. 17-MEMBER BANK RESERVE BALANCES, RESERVE BANK CREDIT, AND RELATED
ITEMS—END OF YEAR 1918-1942 AND END OF MONTH 1943
[In millions of dollars]

.a
>
>

"o
x\
xt

§

1 H
1

i

o

|1
&3
%!>
£^

-o

Member
bank reserve
balances

cu

"
g
<
u

3

o

o

o

H
o

w

4,951
5,091
5,325
4,403

288
385
218
214

51
31
57
96

121
101
23
27

118
208
298
285

1,636
1,890
1,781
1,753

79
27
54
67

1,405 3,642 1,958 4,530
1,238 3,957 2,009 4,757
1,302 4,212 2,025 4,760
1,459 4,112 1,977 4,817

225
213
211
203

11
38
51
16

29
23
39
29

276
275
258
272

1,934
1,898 " " 14
59
2,220
2,212
-44

315
617
228
511

49
64
35
48

1,381
1,655
1,809
1,583

4,205
4,092
3,854
3,997

1,991
2,006
2,012
2,022

4,808
4,716
4,686
4,578

201
208
202
216

17
18
23
29

65
26
27
30

293
301
348
393

2,194
2,487
2,389
2,355

-56
63
-41
— 73

364
339
33
133

729
817
1,855
2,437

29
59
22
20

1,373
1 853
2,145
2,688

4,306
4 173
4,226
4,036

2,027
2,035
2,204
2,303

4,603
211
5,360
222
272
5,388
5,519 . 284

19
54
8
3

28
110
43
132

375
354
355
360

2,471
1 961
2,509
2,729

96
—33
576
859

3
10

6
5
3
1

2,430
2,431
2,430
2,564

20
45
64
38

2,463
2,486
2,500
2,612

8,238
10,125
11,258
12,760

2,511
2,476
2,532
2,637

5,536
5,882
6,543
6,550

3,029
2,566
2,376
3,619

121
544
244
142

189
255
259
407

241
253
261
263

4,096
5,587
6,606
7,027

1,814
2,844
1,984
1,212

4

1

2,564
2,484
2,184
2,254

33
102
87
104

2,601
2,593
2,274
2,361

14,512
17,644
21,995
22,737

2,798
2,963
3,087
3,247

6,856
7,598
8,732
11,160

2,706
2,409
2,213
2,215

441
923
634
653
368 1,732
867 1,360

260 8,724 3,205
251 11,653 5,209
284 14,026 6,615
291 12,450 3,085

6

6,189

484

6,679 22,726 3,648 15,410 2,193

799 1,278

256 13,117 1,988

14
16
13
13
31
5
16
59
12
26
52
5

5,969
5,871
5,919
6,455
6,222
7,202
8,187
9,088
8,919
9,354
10,348
11,543

1918
1919
1920
1921

1,766
2,215
2,687
1,144

287
574
260
145

239
300
287
234

206
203"
120
40

1922
1923
1924
1925

618
723
320
643

272
355
387
374

436
134
540
375

1926
1927
1928
1929

637
582
1,056
632

381
392
489
392

1930
1931
1932
1933

251
638
235
98

7

1934
1935
1936
1937 .
1938 ..
1939
1940
1941
1942
1943—Jan
Feb
Mar
Apr
May

June
July

Aug
Sept
Oct
Nov

Dec

7
3
3

1

356 6,339 22,683
410 6,296 22,644
260 6,191 22,576
378 6,846 22,473
394 6,647 22,426
369 7,576 22,388
483 8,685 22,335
319 9,466 22,243
453 9,384 22,175
443 9,823 22,116
363 10,763 22,065
691 12,239 21,938

1,795
1,707
1,709
1,842

3,830
3,946
3,989
4,012
4,069
4,077
4,086
4,087
4,094
4,101
4,097
4,094

15,590
16,088
16,250
16,660
17,114
17,421
17,955
18,529
18,844
19,250
19,918
20,449

2,199
2,221
2,224
2,235
2,257
2,268
2,264
2,271
2,267
2,288
2,289
2,303

4

131
55
557
62
455
345
249
706
400
394
579

1,171
1,111
1,166
1,369
1,366
1,483
1,622
1,561
1,636
1,674
1,592
1,716

258
269
303
306
313
328
330
330
335
341
331
339

13,630
13,067
12,759
12,204
12,031
12,085
12,590
12,855
11,864
12,086
12,401
12,886

51
68
99

2,387
1,925
1,518
2,315
1,728
1,212
1,268
1,123
1,684
1,102
985
1,236

Includes Government overdrafts in 1918, 1919, and 1920; includes industrial advances outstanding since
July 1934.
2 By proclamation of the President, dated J a n . 31, 1934, the weight of the gold dollar was reduced from
25 8/10 grains to 15 5/21 grains, nine-tenths fine. Between J a n . 31, 1934, and F e b . 1, 1934, the gold
stock increased $2,985,000,000, of which $2,806,000,000 was the increment resulting from the reduction in t h e
weight of the gold dollar and the remainder was gold which had been purchased by the Treasury previously
but not added to the gold stock. T h e increment was covered into the Treasury as a miscellaneous receipt, a n d
appeared together with the new gold as a General F u n d asset. These transactions were also reflected in an increase in the item " T r e a s u r y cash." T h e increment arising from United States gold coin turned in by the public
after J a n . 31, 1934, was also added to both gold stock and Treasury cash a t the time of receipt. T h e increm e n t from this source amounted to about $7,000,000, from F e b . 1 to Dec. 31,1934, to about $1,000,000 in 1935,
to $1,800,000 in 1936, to $1,200,000 in 1937, to $500,000 in 1938, to $350,000 in 1939, to $450,000 in 1940, to $305,000
in 1941, to $280,000 in 1942, and to $195,000 in 1943.
3
Comprises outstanding United States notes, national bank notes, silver bullion, Treasury notes of 1890,
standard silver dollars, subsidiary silver and minor coin, and the Federal Reserve Bank notes for the retirement
of which lawful money has been deposited with the Treasurer of the United States, including the currency of
these kinds t h a t is held in the Treasury and«the Federal Reserve Banks as well as t h a t in circulation.
4
Cash (including gold bullion) held in the Treasury excepting (a) gold and silver held against gold and silver
certificates and (b) amounts held for the Federal Reserve B a n k s .
& Item includes all deposits in Federal Reserve Banks except Government deposits and member bank reserve
balances.
6
This item is derived from the condition statement of the Federal Reserve Banks by adding capital, surplus,
other capital accounts, and " o t h e r liabilities, including accrued dividends," and subtracting the sum of bank
premises and "other a s s e t s . "
7 Represents excess of total reserve balances over reserves required to be held by member banks against their
deposits. Figures not available prior to 1929 except on call dates, and since April 1933 are for licensed member
banks only. For required reserves and changes in the percentages of requirements see Table 13, p. 75.




8o

A N N U A L REPORT OF BOARD OF GOVERNORS
N O . 18-NUMBER OF BANKING OFFICES IN UNITED .STATES, 1933-1943
Commercial banks
All
banks

Year

Member banks
Total
Total

Nonmember banks

State
National member

Total

Mutual
savings
banks

1

InNonInNonsured2 insured2 sured insured

Number of banking
offices
17,940
19,196
19,153
19 066
18,927
18,774

17,236
18,491
18,455
18,373
18,236
18,084

8,092
8,666
8,668
8,755
8,820
8,829

6,275
6,705
6,715
6,723
6,745
6,723

1,817
1,961
1,953
2,032
2,075
2,106

9,144
9,825
9,787
9,618
9,416
9,255

9 144.
3
9 82S
8,562
1,225
8,440
1 178
1,074
8,342
1,029
8,226

18,663
18,561
18 524
18,419
18 512

17,980
17,875
17,841
17,736
17,831

8,882
9,027
9,199
4
9,294
4
9,531

6,705
6,683
6,682
6,673
6,781

4
2,517
4

2,177
2,344

2,621
2,750

9,098
8,848
8,645
8,445
8,303

8,099
7,892
7,742
7,602
7,487

Number of banks
(Head offices)
1933
1934
1935
1936
1937
1938

15,029
16 063
15,869
15 667
15,387
15,194

14,450
15,484
15,299
15,102
14,824
14,639

6,011
6,442
6,387
6,376
6,341
6,338

5,154
5,462
5,386
5,325
5,260
5,224

857
980
1,001
1,051
1,081
1,114

8,439
9,042
8,912
8,726
8,483
8,301

8, z 39
7,699
1,343
7,734
1,178
1,134
7,592
1,032
7,451
7,318
983

1939
1940
1941
1942
1943

15 034
14,895
14 825
14,680
14,579

14,483
14,344
14,277
14,134
14,034

6,362
6,486
6,619
4
6,679
4
6,738

5,187
5,144
5,117
5,081
5,040

1,175
1,342
41,502
4
1,598
4
1,698

8,121
7,858
7,661
7,458
7,299

7,172
6,952
6,810
6,667
6,535

Number of branches
and additional offices
1933
1934
1935
1936
1937
1938

2 911
3 133
3 284
3,399
3,540
3,580

2,786
3,007
3,156
3,271
3,412
3,445

2,081
2,224
2,281
2,379
2,479
2,491

1,121
1,243
1,329
1,398
1,485
1,499

960
981
952
981
994
992

705
783
875
892
933
954

1939
1940
1941
1942
1943 . .

3,629
3,666
3 699
3,739
3,933

3,497
3,531
3,564
3,602
3,797

2,520
2,541
2,580
2,615
2,793

1,518
1,539
1,565
1,592
1,741

1,002
1,002
1,015
1,023
1,052

977
990
984
987
1,004

1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943

.

. . .

.
. .

;.




4

4

4

3

70
7P*

67
67
67
64

631
626
624
626

999
75
956
84
903 484
843 /91
816 4279

608
602
599
592
402

579
68
56
56
56
48

511
514
509
507
507

949
906
851
791
764

51
53
52
56
184

500
498
496
490
361

7 15
3
783
828
848
891
908

47
44
42
46

11
11
11
16

117
117
117
119

927
940
932
935
952

50
50
52
52
52

24
31
32
35
95

108
104
103
102
41

125
126

3

81

FEDERAL RESERVE SYSTEM

NO. 19—ANALYSIS OF CHANGES IN NUMBER OF BANKING OFFICES DURING 1943
Commercial banks
Member
banks

All
banks
Total

Nonmember
banks 1

State
.National member

Mu .ual
savi
bar iks

InNonInNonsured insured sured insured

ANALYSIS OF BANK CHANGES

Number of banks on December 31, 1942
Increases in number of banks:
Primary organizations (newbanks)d

Consolidations and absorptions
Unclassified

14,680 14,134

5,081

+49

+49
+4

+3

86

—4
—86
—62
-1

-2
,-34
— 11

9

Inter-class bank changes:
Conversions—

Number of banks on December 31, 1943

1,598

6,667

+4

+31
+1
-2
-35
—32

-2

-10
— 17
-1

490

-1

+7
—5

+113
-3

-112

-1

+1

+2
+13

-13

+128

-128

+128

— 129

+100

-132

-27

1,698

6,535

764

1,592

1,023

935

52

+22
+24

+3
+8

+3
+9

+14
+7

+2

+3

—43

-11

-14

— 18

-2

+60 " " - 6 0

-100

-41

14,579 14,034

5,040

3 739

3,602

+25
+24
47

101

56

+11
+3

-7

2

791

-7
+10

Federal Reserve membership5—
Admissions of State banks
Withdrawals of State banks
Federal deposit insurance6—
Admissions of State banks
Withdrawals of State banks
Net increase or decrease in number of
banks

2

2

2

184

361

35

102

ANALYSIS or BRANCH CHANGES 7

Number of branches and additional offices on
December 31, 1942
Increases in number of branches:
De novo branches
Banks converted into branches
Decreases in number of branches:
Branches discontinued
Inter-class branch changes:
From national to State
From State member to national
From State member to nonmember
From nonmember to State member
From noninsured to insured nonmember. . .

+1

-1

+2

-2

+5

r

+2

Branches and additional offices established at
military reservations

+192

+192

+148

+29

+15

Net increase or decrease in number of
branches and additional offices

+194

+195

+149

+29

+17

Number of branches and additional offices on
December 31, 1943

3,933

3,797

1,741

1,052

952

1
2

+60
52

95

-61
41

Includes unincorporated (private) banks.
The State member bank figures and the insured mutual savings bank figures both include three member
mutual savings banks. These banks are not included in the total for "commercial banks" and are included only
once in all banks.
J Exclusive of new banks organized to succeed operating banks.
* Exclusive of liquidations incident to the succession, conversion, and absorption of banks.
0
Exclusive of conversions of national banks into State bank members, or vice versa. Such changes do not
affect Federal Reserve membership; they are included under "conversions."
6
Exclusive of insured nonmember banks converted into national banks or admitted to Federal Reserve
membership, or vice versa. Such changes do not affect Federal Deposit Insurance Corporation membership;
they 7are included in the appropriate groups under "inter-class bank changes."
This analysis covers all branches and other additional offices at which deposits are received, checks paid,
or money lent. Offices established at military reservations (shown separately) include "banking facilities"
provided through arrangements made by the Treasury Department with banks designated as depositaries and
financial agents of the Government. Four of these banking facilities are in each case operated by two national
banks, each bank having separate tellers windows; each of these facilities is counted as one banking office only.




N O . 20—NUMBER OF BANKS ON PAR LIST AND N O T O N PAR LIST, BY FEDERAL RESERVE
DISTRICTS AND STATES, ON DECEMBER 31, 1942 AND 1943
T o t a l banks
on which
checks a r e
drawn 1

Federal Reserve
district or State

Banks on par list

Total

Member

1943

1942

1943

1942

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas.....
San Francisco

504
976
862
1,185
1,008
1,096
2,43.5
1,464
1,270
1,760
957
513

508
987
873
1,197
1,010
1,098
2,441
1,481
1,275
1,781
958
523

504
976
862
1,183
724
400
2,349
1,051
555
1,593
814
490

508
987
873
1,195
722
405
2,226
1,035
557
1,608
809
497

346
806
646
707
465
316
953
456
454
741
575
273

Total

14,030

14,132

11,501

11,422

536

1943

Nonmember

1942

1

Bank 5 n o t
on p a r list
(Nonmember)1
1942

1943

1942

348
799
652
685
460
318
925
450
454
744
570
274

158
170
216
476
259
84
1,396
595
101
852
239
217

160
188
221
510
262
87
1,301
585
103
864
239
223

2
284
696
86
413
715
167
143
23

2
288
693
215
446
718
173
149
26

6,738

6,679

4,763

4,743

2,529

2,710

361
40
53
39
154
13
62
1,643
586
292
765
1,476
414
222
464
227
149
997
209
162
167
42
59
145
213
618
17
79
18
193
105
54
28
64
60
297
112
76
84
25
847
63
38
213
533
299
69
26
36
92
27

361
40
53
40
154
14
60
1,644
584
289
771
1,425
391
215
447
225
147
992
209
158
164
43
60
147
211
616
18
79
17
190
103
55
28
68
58
297
112
76
83
26
845
63
38
217
527
298
67
26
36
93

195

3
12
1
145
879
420
94
111
98
154
2
635

3
32
1
159
1,013
421
111
111
113
96
159
2
637

37
6
127
114
263
88
477
10
166
127
174
332
128
104
12
88
22
21

39
6
127
116
260
89
477
10
167
129
171
339
129
103
12
95
23
22

1

1

34
8
201

175
26
12
32
39
9
57
465
126
61
278
1,397
293
280
347
222
255
1,288
42
385
326
3
6
100
426
334
24
96
5
86
71
15
3
18
16
335
273
52
5
5
423
36
3
159
225
155
21
20
19
47
14
5
25
4
171
51
36
84

161

34
8
200
56
32
112

171
26
12
32
38
9
54
438
113
58
267
1,371
267
271
352
215
266
1,389
41
491
332
3
5
105
412
330
24
96
4
83
69
18
3
16
17
326
267
52
5
2
419
31
4
159
225
151
20
21
19
47
14
5
23

23
22
1

26
23
3

1943

DISTRICT

STATE

New England

Maine
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut

Middle Atlantic
New York
New Jersey
Pennsylvania

East North Central
Ohio
Indiana
Illinois
Michigan
Wisconsin

West North Central

Minnesota
Iowa
Missouri
North Dakota
South Dakota
Nebraska
Kansas
South Atlantic
Delaware
Maryland
District of Columbia
Virginia
West Virginia
North Carolina
South Carolina
Georgia
Florida

East South Central
Kentucky .;
Tennessee
Alabama
Mississippi

West South Central
Arkansas
Louisiana
Oklahoma
Texas

Mountain

Montana
Idaho
Wyoming
New Mexico
Arizona
Utah
Nevada

Pacific

Washington
Oregon
California

.,

532
66
65
71
192
22
116
2,081
699
350
1,032
3,008
681
496
828
443
560
3,265
670
653
593
156
162
404
627
1,583
41
175
22
313
180
199
145
343
165
1,100
389
294
216
201
1,598
222
146
384
846
472
110
47
56
139
41
12
57
10
391
128
69
194

536
66
65
72
193
23
117
2,109
710
350
1,049
3,017
684
498
826
448
561
3,293
672
654
601
159
162
406
639
1,587
42
175
22
315
180
197
147
346
163
1,109
395
295
217
202
1,607
228
144
388
847
476
110
46
56
140
41
12
59
12
398
131
70
197

532
66
65
71
192
22
116
2,081
699
350
1,032
2,847
681
493
816
442
415
2,386
250
653
499
45
64
250
625
948
41
175
22
276
174
72
31
80
77
623
379
128
89
27
1,266
94
42
372
758
450
89
47
55
139
41
12
57
10
36*
106
68
194

66
65
72
193
23
117
2,109
710
350
1,049
2,822
684
495
794
447
402
2,280
251
543
490
46
66
247
637
950
42
175
22
276
174
70
31
86
74
632
385
128
88
31
1,268
99
41
376
752
453
88
46
55
140
41
12
59
12
372
108

67
197

27
7
57

31
113

168
50
36
82

1
Does not include nonmember mutual savings banks, on a few of which some checks are drawn. Banks
"not on par list" comprise nonmember banks which have not agreed to pay without deduction for exchange
charges such checks drawn upon them as may be forwarded for payment through the Federal Reserve Banks.
Checks on such banks are not collectible through the Federal Reserve Banks. The difference of 7 between the
number of nonmember banks on December 31, 1943 shown in this table and in Table 18 is due to the fact that
this table excludes 126 banks (principally 56 industrial banks and 54 nondeposit trust companies) on which no

checks are drawn, and includes 119 banks (principally 104 private banks and 13 cooperative banks) on which
http://fraser.stlouisfed.org/ which are not reporting to State banking department or are in liquidation.
checks are drawn but
Back figures.—See Banking
Federal Reserve Bank of St. Louis and Monetary Statistics, Table 15, pp. 54-55.

PEDERAL RESERVE SYSTEM

83

N O . 2 1 - M O N E Y RATES, BOND YIELDS, AND STOCK PRICES
Open-market money rates in
New York City2
(per cent per annum)
U. S. Government
securities
Year and month Prime
9-to
com12mercial
month
3paper,
certi4-6 month
months bills 5 ficates
debtedness
Number of
issues

Common stock prices4
(1935-39 = 100)

Bond yields 3
(per cent per annum)
U. S. Government

3- to 5- Partially
year
taxa- tax- Taxable
ble
exnotes empt

l

Corporate

Public
Total Indus- Rail- utility
road
trial
Aaa

Baa

30

30

402

354

20

28

1919
1920

5.37
7 50

4.73
5 32

5.49
6.12

7.25
8.20

74.6
67.8

65.6
59.8

186.5
169.6

70.5
63.6

1921
1922
1923
1924
1925 .
1926
1927
1928
1929
1930

6.62
4.52
5.07
3.98
4 02
4.34
4.11
4.85
5.85
3.59

5.09
4 30
4 36
4 06
3 86
3.68
3 34
3.33
3.60
3.29

5.97
5.10
5.12
5.00
4.88
4.73
4.57
4.55
4.73
4.55

8.35
7.08
7.24
6.83
6.27
5.87
5.48
5.48
5.90
5.90

58.3
71.5
72.9
76.9
94.8
105.6
124.9
158.3
200.9
158.2

46.7
58.4
60.1
62.9
79.9
90.3
107.0
139.4
171.1
127.0

163.8
192.7
190.6
203.5
237.5
265.1
315.8
340.9
390.7
331.3

67.5
82 8
86.2
92.1
110.9
116.9
135.5
173.9
274.1
250.7

3.34
3.68
3 31
3.12
2 79
2.65
2.68
2.56
2.36
2.21

4.58
5.01
4.49
4.00
3.60
3.24
3.26
3.19
3.01
2.84

7.62
9.30
7.76
6.32
5.75
4.77
5.03
5.80
4.96
4.75

99.5
51.2
67.0
76.6
82.9
117.5
117.5
88.2
94.2
88.1

78.5
41.8
59.9
73.4
82.2
115.2
118.1
90.1
94.8
87.9

191.3
69.5
100.8
110.1
90.2
136.5
129.8
69.5
74.7
71.1

172.8
92.1
91.4
80.5
83.9
122.1
110.4
85.6
98.6
95.8

1.95
2.02 ' 2^35
1.91
2.31

2.77
2.83
2.73

4.33
4.28
3.91

80.0
69.4
91.9

80.4
71.3
94.1

70.6
66.1
88.7

81.0
61.3
82.1

"80 "
.76
.75
.80
.80

1.03
1.15
1.20
1.25
1.27
1.28
1.28
1.34

2.01
2.09
2.00
1.98
1 97
1.97
2.00
2.02
2.03
2.05
2.06
2.09

2.37
2.39
2.35
2.34
2.35
2.33
2.34
2.34
2.34
2.33
2.34
2.36

2.83
2.85
2.86
2.83
2.85
2.85
2.83
2.81
2.80
2.80
2.79
2.81

4.29
4.29
4.30
4.26
4.27
4.33
4.30
4.28
4.26
4.24
4.25
4.28

72.6
69.9
66 0
63.3
63.2
66.1
68.2
68.3
69.4
74 2
75.2
75.9

74.3
71.0
67 2
64.8
64.7
68.2
70.6
70.5
71.6
76.5
77.2
78.5

69.0
68.4
65 0
61.1
60.3
59.0
62.9
65.4
66.7
72.7
73.0
69.3

66.1
64.5
60.5
56.5
57.2
58.8
58.4
58.8
59.5
63.7
66.2
65.2

.76
.73
.75
.78
.78
.70
.68
.75
.77
.78
.77
.77

1.29
1.24
1.33
1.39
1.36
1.32
1.30
1.29
1.31
1.31
1.29
1.30

2.06
2.06
2.08
2.02
1.92
1.85
1.82
1.83
1.80
1.81
1.85
1.86

2.32
2.32
2.33
2.32
2.30
2.29
2.27
2.28
2.30
2.30
2.32
2.34

2.79
2.77
2.76
2.76
2.74
2.72
2.69
2.69
2.69
2.70
2.71
2.74

4.16
4.08
4.01
3.96
3.91
3.88
3.81
3.81
3.83
3.82
• 3.83
3.82

79.7
84.8
88.2
91.3
95.2
96.7
98.5
94.4
95.6
94.8
91.4
91.8

82.3
87.7
90.8
93.7
97.2
99.3
100.9
96.3
97.5
96.6
93.0
93.6

73.7
77.5
86.4
92.8
97.5
94.3
96.6
90.5
91.3
92.0
86.5
85.6

69.3
73.3
76.2
79.1
84.0
84.7
87.7
85.9
87.3
86.8
85.1
85.2

.
. . . .

1-3

1931
1932
1933
1934
1935
1936
1937
1938
1939
1940

2.64
2.73
1.73
1.02

1941
1942
1943

.54
.66
.69

.103
.326
.373 " ! 7 5 "

.56
.63
.63
.63
.63
.69
.69
.69
.69
.69
.69
.69

.214
.250
.212
.299
.364
.363
.368
.370
.370
.372
.371
.363

.69
.69
.69
.69
.69
.69
.69
.69
.69
.69
.69
.69

.367
.372
.373
.373
.373
.374
.374
.375
.375
.375
.375
.375

1942
January
February
March . .
April
May

June
July
August
September
October
November
December
1943
January
February
March
April
May
June
July
August
September
October
November
December

.76

.75
.94
.81
.59
.56

2-6

1.402
.879
.515
.256
.137
.143
.447
.053
.023
.014

1
2

.76

1.13
1.31
.96
.93
.93
.98

r

2

Annual data are averages of monthly figures. r Revised.
For commercial paper, monthly data are averages of weekly prevailing rates; for Treasury bills, average
rates on new issues within period; for certificates of indebtedness, averages of daily figures for 9- to 12month issues; and for Treasury notes, averages of daily figures for 3- to 5-year issues.
3
Monthly data are averages of daily figures. U. S. Treasury bond yields are averages of all outstanding
partially tax-exempt bonds due or callable in more than eight years from 1919 to 1925 and in more than twelve
years beginning in 1926. Corporate average yields are as published by Moody's Investors Service; until 1928
each rating group included 15 bonds; since the early part of 1934 there have been less than 30 bonds in the Aaa
group owing to the limited number of suitable issues in the industrial and railroad groups.
4
Standard and Poor's Corporation. Monthly data are averages of Wednesday figures.
6
Tax-exempt bills prior to March 1941; taxable bills thereafter.




84

ANNUAL REPORT OF BOAR© OF GOVERNORS
NO. 22—BUSINESS INDEXES1
rices *
0

a

si||
rt

a."

National incom
(value) 1935-

a

Wholesale comi
1926 = 100

Z

ON

Department st(>re sa
(value) 1923-:25 =

is

44

79

78

138.6

63
56
79
84
94
122
129
129
135
117

30
44
68
81
95
124
121
117
126
87

90
65
88
86
94
120
135
139
142
142

107.2
82.1
90.8
103.9
96.5
99.9
101.8
99.6
99.7
106.6 106.1

127.1
82.0
88.0
111.6
104.1
109.7
113.1
111.0
112.3
119.8

143.2
127.7
119.7
121.9
122.2
125.4
126.4
124.0
122.6
122.5

94
87
88
98
99
103
106
107
108
111

154.4
97.6

1930
1931
1932
1933
1934
1935
1936
1937
1938
1939

91
75
58
69
75
87
103
113
89
109

98
67
41
54
65
83
108
122
78
109

84
79
70
79
81
90
100
106
95
109

93
80
67
76
80
86
99
112
97
106

92
63
28
25
32
37
55
59
64
72

50
37
13
11
12
21
37
41
45
60

125
84
40
37
48
50
70
74
80
81

98.1 92.5 96.9
88.3 78.2 73.5
77.6 66.4 50.7
78.6 73.5 54.4
86.3 85.8 70.0
90.1 91.4 80.4
96.8 99.1 93.0
102.7 108.7 111.2
95.1 91.0 85.1
100.0 100.0 100.0

119.4
108.7
97.6
92.4
95.7
98.1
99.1
102.7
100 8
99.4

102
92
69
67
75
79
88
92
85
90

125
162
199
239

139
201
279
361

115
142
158
176

117

81
122
166
68

72

125
129
132

89
82
40

89
149
235
92

104.2
115.6
124.2
128.5

107.5 114.5 100.2 94
132.1
105 .'2 110
152.3 242! 3 116.5 124
168.7 316.4 123.6 138

78.6 113.8
87.3
98.8 171.9
103.1 211.4

June

181
183
186
189
191
193
197
204
208
215
220
223

235
241
250
257
264
272
278
290
299
311
319
328

152
153
153
154
153
152
154
158
161
165
168
169

133
133
126
125
126
127
126
130
131
129
130
127

118
128
125
128
158
193
206
182
179
185
198
175

82
100
95
82
76
76
74
65
70
83
90
91

147
151
149
165
226
288
313
278
268
269
286
243

120.4
120.8
121.0
121.2
121.9
122.5
124.5
125.8
126.5
127.6
128.8
130.2

141.6
143.2
144.8
147.0
148.7
150.8
153.2
155.8
157.4
159.6
161.5
164.2

200.7
208.2
215.1
221.4
228.7
234.5
242.7
254.8
261.8
270.9
280.4
287.9

112.0
112.9
114.3
115.1
116.0
116.4
117.0
117.5
117.8
119.0
119.8
120.4

138
126
124
117
108
104
121
130
123
128
138
125

96.0
96.7
97.6
98.7
98.8
98 6
98.7
99.2
99.6
100.0
100.3
101.0

155.2
157.1
159.1
163.4
165.4
169.6
172.8
176.2
178.4
183.0
189.2
193.4

336
344
351
356
359
358
361
366
370
375
377
367

171
174
174
175
176
177
176
177
178
179
179
173

125
131
133
131
129
117
134
135
138
136
133
137

145
102
85
63
52
45
60
59
65
49
60
61

79
56
42
33
31
32
36
35
35
34
37
35

198
140
119
87
68
55
80
79
89
61
78
81

130.0
130.3
129.8
129.3
128.3
128.6
128.6
127.9
126.8
127.5
128.3
128.2

165.8
167.4
168.1
168.4
167.9
169.0
169.7
169.6
168.3
170.1
170.8
169.0

290.9
297.5
304.5
309.7
313.5
317.1
315.6
322.2
328.0
332.6
336.2
328.5

120.7
121.0
122.8
124.1
125.1
124.8
123.9
123.4
123.9
124.4
124.2
124.4

143

June
July

227
232
235
237
238
236
240
242
245
247
247
241

101.9
102.5
103.4
103.7
104.1
103.8
103.2
103.1
103.1
103.0
102.9
103.2

196.5
200.6
204.4
207.3
208.7
211.3
213.1
215.5
215.6
218.0
221.5
224.8

....
. . . .

1940
1941
1942
1943
1942
January
February
March
April
May

July
August
September
October
November
December
1943
January
February
March
April
May
August
September
October
November
December

Factory pay ro
1939 = 100

63

83
66
71
98
89
92
100
100
99
107

Factory
1939 = 100

71

60
57
67
72
69
76
79
83
85
93

All other

62

93
53
81
103
95
107
114
107
117
132

Residential

84

75
58
73
88
82
90
96
95
99
110

Total

72

1920
1921
1922
1923
1924
1925
1926
1927
1928
1929

Minerals

1919

Total

Nondurable
manufactures

1923-25 = 100

Employment
(number)

Cost of living* 1935-

(V2.1lld

Durable
manufactures

Year and
month

Construction contracts awarded

Nonagricultura
1939 = 100

Industrial production
(physical volume) 2
1935-39 = 100

= 100

[Adjusted for seasonal variation]

106.8 106.2 124.5

r

167

136
128
125
129
142
142
132
140
158
131

100.6
98!l
103 5
100 !o
95.4
96.7
95! 3 122 9
86.4
73.0
64.8
65.9
74.9
80.0
80.8
86.3
78.6
77.1

109.1
92.3
70.6
68.9
78.7
87.1
101.3
107.7
98.5
105.5

* Without seasonal adjustment. r Revised.
Indexes compiled by the Board of Governors of the Federal Reserve System, except for indexes of wholesale
commodity prices, cost of living, and factory pay rolls, compiled by the United States Bureau of Labor Statistics, and the index of income payments, compiled by the United States Department of Commerce. Descriptions
and2 back figures for the Board's indexes may be obtained from the Division of Research and Statistics.
Recently revised from 1939 to date. For description of revision, see Federal Reserve Bulletin for October
1943.
3
Three-month moving average, centered at second month, based on F. W. Dodge Corporation data for 37
1

Eastern States.







APPENDIX

RECORD OF POLICY ACTIONS

MEETING ON APRIL 13,

1943

Members present: Mr. Ransom, Vice Chairman; Mr. McKee; Mr. Draper;
Mr. Evans.
Amendment to Regulation D, Reserves of Member Banks.
By unanimous vote, Regulation D was amended, effective
April 13, 1943, to conform the regulation to a law approved on
that date by providing that, until six months after the cessation
of hostilities in the present war, no deposit payable to the
United States by any member bank arising solely as the result
of subscriptions made by or through such member bank for
United States Government securities issued under authority
of the Second Liberty Bond Act should be subject to reserve
requirements.
Beginning with the first World War, it was the practice of the Treasury to
authorize banks to pay for United States Government securities purchased
for their own account or for the account of their customers by giving the
Treasury credit in so-called war loan accounts. This practice was convenient
both for the Treasury and for the banks and tended toward greater stability
in the money market. It avoided large transfers of funds from the market
to the Reserve Banks at the time the securities were sold; the Treasury
utilized the funds as they were needed; and since calls upon the funds corresponded closely to current disbursements by the Treasury the effect of Treasury transactions on the money market was greatly diminished.
Commercial banks had been urged by the Treasury and the Federal Reserve authorities to make full use of war loan deposit accounts and, in order
further to encourage their use, legislation was passed by Congress and signed
by the President on April 13, 1943, which provided that, until six months
after the cessation of hostilities in the present war, (1) banks would not be
required to pay Federal Deposit Insurance assessments on deposits held in war
loan accounts and (2.) member banks would not be required to maintain reserves against such deposits. The amendment to Regulation D referred to
above was approved by the Board for the purpose of conforming the regulation to the provisions of the new law with respect to the maintenance by
member banks of reserves against war loan deposits.
MEETING ON MAY 12.,

1943

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak; Mr. McKee; Mr. Draper; Mr. Evans.
Commitment Fees on Loans under Regulation V, War Financing.
After consultation with the War and Navy Departments,
the Maritime Commission, and the Federal Reserve Banks, and
by unanimous vote, the Board decided that in any case in which
a financing institution charged a borrower a commitment fee
in connection with a loan that was guaranteed pursuant to
86




FEDERAL RESERVE SYSTEM

87

Executive Order 91 ix, the amount of such fee could not exceed
J^ of 1 per cent per annum on the undisbursed portion of the
loan and that no termination fee, service fee, or other fee of a
similar character, except charges covering out-of-pocket expenses of a financing institution, could be charged a borrower
in connection with such a guaranteed loan.
This action was prompted by cases which had arisen in the past and which
it was believed might arise in the future in which the borrower, who would
have no immediate need for funds, would wish to arrange for a commitment
to insure the availability of adequate funds to meet his future requirements,
in which event the commitment on the part of the financing institution
might be outstanding for some time before any funds were actually advanced
under the loan agreement. In such circumstances, the financing institution
would be justified in charging a fee for its commitment as remuneration for
its obligation to make funds available over the period of the commitment,
or as reimbursement for its costs in arranging the credit if only nominal
amounts were borrowed. It was felt that in no event should the fee charged
be in excess of J^ of 1 per cent per annum on the undisbursed portion of the
loan and that the establishment of a maximum fee would permit an agreement between the financing institution and the borrower on any basis within
the limitation that the surrounding conditions might justify. There was
unanimous agreement that in the circumstances under which Regulation V
loans were made there was no justification for charging termination fees,
service fees, or other fees of a similar character, except charges covering outof-pocket expenses incurred by the financing institution.
MEETING ON JULY 2.4,

1943

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak; Mr. McKee; Mr. Evans.
Amendment to Regulation T, Extension and Maintenance of Credit by
Brokers, Dealers, and Members of National Securities Exchanges.
By unanimous vote, Section 4(0X3) of Regulation T was
amended, effective July £4, 1943, to permit purchases of securities which were bona fide cash transactions to be made on a
basis which would enable payment therefor to be deferred,
without a deposit having been made in the meantime, until the
securities were available for delivery. The general effect of
the amendment was to put "when distributed" trading on the
same basis so far as credit was concerned as "when issued"
trading.
The amendment was adopted to meet a situation created by the initiation
on a national securities exchange of trading in issued securities on a "when
distributed" basis which involved delays in deliveries which were comparable in length and causation to the delays which characterized deliveries
under the more common type of trading known as "when issued" trading.
MEETING ON AUGUST 2.8,

1943

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak; Mr. Draper; Mr. Evans.



88

ANNUAL REPORT OF BOARD OF GOVERNORS

Amendment to Regulation W, Consumer Credit.
By unanimous vote, Regulation W was amended, effective
September i, 1943, to (1) raise from $5 to $10 the value of a
listed article that might be delivered by a merchant to a charge
account customer without first determining whether the customer's account was in default, it being understood that if
the merchant later discovered that the account was in default he
would request the customer to return the purchase or pay for it
immediately, and (z) authorize Federal Reserve Banks to grant
to a merchant who desired to adopt "cycle billing" in order
to effect operating economies, permission to use as the "default date*' for each of his groups of accounts the 40th day
following the end of the applicable billing period instead of
the tenth of the second calendar month after the month in
which purchases were made.
These changes, which were administrative in character, were designed to
help merchants meet manpower problems in extending charge account
credit.
MEETING ON AUGUST 30,

1943

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak; Mr. Draper.
Commitment Fees on Loans under Regulation V, War Financing.
The decision having been reached by the War and Navy
Departments and the Maritime Commission that guarantees
under Regulation V would be made available for financing war
production contractors for the purpose of providing (in addition to the needs of any such contractor for borrowed working
capital) for freeing the contractor's own working capital
upon cancellations of his war production contracts which
might occur after the execution of the guarantee, the Board
of Governors at this meeting voted unanimously to advise the
Federal Reserve Banks that, after consulting with the War
and Navy Departments and the Maritime Commission, the
Board had decided that in any case in which special provision
was made for freeing working capital upon cancellation of contracts, the amount of any commitment fee charged the borrower
by the financing institution should not exceed 3^2 of 1 per
cent per annum on the undisbursed portion of the loan.
This action was taken in recognition of the fact that in most of the cases
of the kind under consideration the larger part of the commitments would
be to cover borrowings after the termination of war contracts and, therefore,
the commitments would be outstanding for a longer period than credits for
production purposes only, and that, inasmuch as the financing institution
would be required to retain participation in the loan regardless of developments, the credit risks involved would be greater. In these circumstances
a higher maximum commitment rate was believed to be justified with the
understanding that in any particular case the borrower and the financing
institution could agree upon such rate within the maximum as circumstances might require. Furthermore, provision had been made by the services under which the financing institution would be required to share with



FEDERAL RESERVE SYSTEM

89

the Government any commitment fee in the same proportion as the guarantee
fee charged in connection with the loan bore to the interest payable on the
loan.
MEETING ON SEPTEMBER 14, 1943

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak; Mr. McKee; Mr. Draper; Mr. Evans.
Amendment to Regulation K, Banking Corporations Authorized To Do
Foreign Banking Business under the Terms of Section 2 5 (a) of
the Federal Reserve Act.
By unanimous vote, Section IX of Regulation K was amended,
effective November 1, 1943, so as to discontinue the permission
granted by that section of the regulation to corporations organized pursuant to the provisions of Section 2.5(a) of the
Federal Reserve Act (known as the Edge Act) to invest in stock
or certificates of ownership of corporations of certain kinds,
and so as to require the consent of the Board in each case
before such investments are made.
In view of the changes that had taken place since the Edge Act was passed,
there was unanimous agreement by the members of the Board that the question of legislative policy with respect to the Act should be reviewed by Congress, and that in the meantime any expansion of the operations of Edge-Act
corporations through the purchase of stock in other institutions should be
made only after the Board had had an opportunity to review the matter
and had specifically consented to the purchase. Accordingly, it was decided
that Regulation K should be amended to require, after November 1, 1943,
the prior consent of the Board for investments by Edge-Act corporations in
the stock of other corporations.
MEETING ON DECEMBER 14,

1943

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak; Mr. McKee; Mr. Draper; Mr. Evans.
Amendment to Regulation N, Relations with Foreign Banks and
Bankers.
By unanimous vote, Regulation N was amended, effective
January 1, 1944, (1) t o make its provisions applicable to relationships and transactions between Federal Reserve Banks
and recognized foreign states as defined by Section 2.5OO of
the Federal Reserve Act, as well as to relationships and transactions between Federal Reserve Banks and foreign banks or
bankers, and (2.) to make other changes of an administrative
character in the language of the regulation.
Since Regulation N was first adopted, Section 2.5(b) of the Federal Reserve
Act had been amended to provide for the maintenance by the Federal Reserve Banks of accounts for recognized foreign states, and the first change in
Regulation N referred to above was made to conform the regulation to this
change in the law. The other changes were made in connection with a
general review of the procedures in effect with respect to foreign relationships and transactions of the Federal Reserve Banks and were for the purpose
of the further refinement of the regulation in the light of these procedures.



RECORD OF POLICY ACTIONS
FEDERAL OPEN MARKET COMMITTEE
MEETING ON JANUARY 2.6,

1943

Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman;
Mr. Szymczak; Mr. McKee; Mr. Ransom; Mr. Draper; Mr. Evans; Mr. Williams; Mr. Gilbert; Mr. Young; Mr. Leedy.
1. Authority to Effect Transactions in System Account.
Upon motion duly made and seconded, the following direction to the executive committee, which was in the same form
as the direction issued at the meeting of the Federal Open
Market Committee on December 14, 1942., was approved by
unanimous vote:
"That the executive committee be directed, until otherwise directed
by the Federal Open Market Committee, to arrange for such transactions for the System open market account, either in the open market
or directly with the Treasury (including purchases, sales, exchanges, replacement of maturing securities, and letting maturities run off without
replacement), as may be necessary in the practical administration of the
account, or for the purpose of maintaining about the present general
level of prices and yields of Government securities, or for the purpose of
maintaining an adequate supply of funds in the market; provided that
the aggregate amount of securities held in the account at the close of
this date (other than special short-term certificates of indebtedness
purchased from time to time for the temporary accommodation of the
Treasury and Treasury bills purchased pursuant to the direction of the
Federal Open Market Committee issued under date of September 2.8,
1942.) shall not be increased or decreased by more than 1 billion dollars.
"That the executive committee be further directed, until otherwise
directed by the Federal Open Market Committee, to arrange for the
purchase for the System open market account direct from the Treasury
of such amounts of special short-term certificates of indebtedness as may
be necessary from time to time for the temporary accommodation of the
Treasury; provided that the amount of such certificates held in the
account at any one time shall not exceed 1 billion dollars."
The open market policy under which purchases of Government securities
were made in 1942. was determined with a view to adapting the System's
open market operations as effectively as possible to the program of the
Treasury for war financing and to carrying out the commitment of the System
to use its powers to assure that an ample supply of funds would be available
at all times for financing the war effort and to exert its influence toward the
maintenance of conditions in the Government security market that were
satisfactory from the standpoint of the Government's requirements.
With the continued growth in the volume of production for war and in
the absence of a very large increase in taxes, it was realized that the requirements of the Government for borrowed funds would be larger during the
current year; that the needs of banks for reserve funds would continue to
expand because of the growth in their deposits as a result of Government

90


FEDERAL RESERVE SYSTEM

91

borrowing and because of increases in currency circulation, and that it would
be necessary for the System to continue to supply these reserve funds. It
was agreed, therefore, that the existing policy of authorizing the executive
committee to purchase or sell securities for the System account within stated
limits for the purposes stated in the direction set forth above should not be
changed and that the renewal of the existing direction to the executive committee would carry that decision into effect.
2. Replacement of Maturing Securities.
Upon motion duly made and seconded, it was understood
that, under the authority granted to the executive committee,
it would undertake to arrange with the Treasury for an amendment to the terms under which the various issues of Government securities were offered so as to permit full allotment to the
System of securities issued to refund maturing direct obligations,
to the extent that replacement of such maturing securities held
in the System account appeared to the executive committee to be
desirable.
On this motion Messrs. Eccles, Szymczak, McKee, Ransom,
Draper, Evans, Gilbert, Young, and Leedy voted "aye" and
Messrs. Sproul and Williams voted "no."
This action was taken following consideration of the procedures that
might be used to supply needed reserve funds to the market and was designed
particularly to open the way for the direct replacement of maturing bills
held by the Federal Reserve Banks. It was the majority view that inasmuch
as the Reserve Banks held substantial amounts of maturing bills each week,
which would have to be replaced with other securities in order to maintain
the necessary volume of funds in the market, that could be accomplished
most effectively if arrangements were made for full allotment of new bills
in the amount of the maturing bills held by the Federal Reserve Banks.
It was pointed out that this procedure, which was the same as that generally followed in the past in connection with the replacement of maturing
certificates, notes, and bonds held in the System account, would not result
in placing any additional funds in the market but would obviate the necessity
on the part of the Treasury of redeeming the weekly maturities of bills followed by competition on the part of the Federal Reserve Banks in the market
for a similar amount of new bills, in order to effect an indirect replacement
that could be accomplished with less disturbance to the market by direct
replacement. The availability of this arrangement was believed to be particularly desirable during a period when it was expected that the System would
have to purchase in the market a very substantial amount of additional securities for the purpose of supplying needed reserve funds.
It was the minority view that nothing should be done which might create
public concern about the credit of the Government; that to embark on a
program of direct buying of bills from the Treasury might create such concern; and that therefore direct purchases of bills from the Treasury, to replace
maturing bills held by the Federal Reserve Banks, should not be resorted to
until necessity forced such action, which could then be clearly explained.
The minority felt that, for the present, the better procedure would be to
continue to let the market take the bills it wanted, and, in so far as necessary, to replace System bill maturities indirectly through the market, or
with other securities the market might wish to sell, this procedure having
the advantage of public acceptance through previous experience.



92.

ANNUAL REPORT OF BOARD OF GOVERNORS
MEETING ON MARCH i ,

1943

Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman;
Mr. Szymczak; Mr. McKee; Mr. Ransom; Mr. Evans; Mr. Paddock; Mr.
Fleming; Mr. McLarin; Mr. Peyton (alternate for Mr. Day).
1. Purchase by Federal Reserve Banks of Treasury Bills at Posted Discount Rate.
Upon motion duly made and seconded, the following direction to the Federal Reserve Banks was approved by unanimous
vote, with the understanding that resales of Treasury bills held
under option would be for immediate delivery when so requested
by the holder:
"Until otherwise directed by the Federal Open Market Committee,
the twelve Federal Reserve Banks are directed to purchase all Treasury
bills that may be offered to such Banks on a discount basis at the rate
of 3/g per cent per annum, any such purchases, if desired by the seller,
to be upon the condition that the Federal Reserve Bank, upon the
request of the seller before the maturity of the bills, will sell to him
Treasury bills of like amount and maturity at the same rate of discount.
All bills purchased outright are to be purchased for the System open
market account. All bills purchased under option to repurchase are to
be held by the purchasing Federal Reserve Bank in its own account
and prompt reports of all such purchases are to be made to the Manager
of the System open market account."
Under the law, the Federal Reserve Bank members of the Federal Open
Market Committee are elected annually for terms beginning March 1 of
each year. This was the first meeting of the new Committee, and the above
direction, which was in the same form as the direction issued by the Federal
Open Market Committee on September 2.8, 1942., was issued for the purpose
of renewing the direction given by the old Committee and for substantially
the same reasons.
2. Replacement of Maturing Securities.
Upon motion duly made and seconded, it was understood that
the executive committee would undertake to arrange with the
Treasury for an amendment to the terms under which the various issues of Government securities were offered so as to permit
full allotment to the System of securities issued to refund maturing direct obligations, to the extent that replacement of such
securities held in the System account appeared to the executive
committee to be desirable.
On this action Messrs. Eccles, Szymczak, McKee, Ransom,
Evans, Paddock, Fleming, McLarin, and Peyton voted "aye"
and Mr. Sproul voted "no."
This action constituted a renewal of the understanding reached at the
meeting of the Committee on January 2.6, 1943. Since that meeting the
problem of direct replacement of Treasury bills had not been an urgent
matter and, therefore, no decision had been made with respect to it. However, it continued to be the majority view, for the reasons stated in connection
with the earlier action, that the proposed arrangement should be put into
effect so that it could be used to the extent that developments made such
action desirable.



FEDERAL RESERVE SYSTEM

93

3. Authority to Effect Transactions in System Account.
Upon motion duly made and seconded, the following direction to the executive committee was approved unanimously:
"That the executive committee be directed, until otherwise directed
by the Federal Open Market Committee, to arrange for such transactions
for the System open market account, either in the open market or directly
with the Treasury (including purchases, sales, exchanges, replacement
of maturing securities, and letting maturities run off without replacement), as may be necessary in the practical administration of the account,
or for the purpose of maintaining about the present general level of
prices and yields of Government securities, or for the purpose of maintaining an adequate supply of funds in the market; provided that the
aggregate amount of securities held in the account at the close of this
date (other than special short-term certificates of indebtedness purchased
from time to time for the .temporary accommodation of the Treasury and
Treasury bills purchased pursuant to the directions of the Federal Open
Market Committee issued under dates of September 2.8, 1942., and
March 2., 1943) shall not be increased or decreased by more than 1.5
billion dollars.
"That the executive committee be further directed, until otherwise
directed by the Federal Open Market Committee, to arrange for the
purchase for the System open market account direct from the Treasury
of such amounts of special short-term certificates of indebtedness as may
be necessary from time to time for the temporary accommodation of
the Treasury; provided that the amount of such certificates held in the
account at any one time shall not exceed 1.5 billion dollars."
This direction was in the same form, and was approved for substantially
the same reasons, as the direction adopted at the previous meeting of the
Federal Open Market Committee except that the limitation on the authority
of the executive committee to increase or decrease the amount of securities
in the System account and to purchase short-term certificates for the temporary accommodation of the Treasury was increased from 1 billion dollars
to 1.5 billion in each case. This action was considered appropriate on the
basis of discussions of plans for the Second War Loan Drive, which it was
contemplated would take place in April, as well as in the light of the possibility that the bill pending before Congress, which would remove the requirement that reserves be maintained against war loan deposits, might not be
approved before the April drive, in which event the System might be called
upon to purchase very substantial amounts of securities before and during
the drive for the purpose of supplying banks with reserve funds. There was
agreement that, in these circumstances, and in view of the decline that had
taken place in excess reserves of member banks, higher limitations should be
set on the authority of the executive committee.
MEETING ON MAY 15,

1943

Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman;
Mr. Szymczak; Mr. McKee; Mr. Ransom; Mr. Draper; Mr. Evans; Mr. Paddock; Mr. Fleming; Mr. McLarin; Mr. Day.
1. Purchase by Federal Reserve Banks of Treasury Bills at Posted Discount Rate.
Upon motion, duly made and seconded, it was agreed unanimously that, without changing the direction issued at the



94

ANNUAL REPORT OF BOARD OF GOVERNORS •

meeting of the Federal Open Market Committee on March i,
1943, with respect to the purchase by the Federal Reserve Banks
of Treasury bills, it would be understood that the Reserve Banks
would treat all purchases pursuant to this direction as being subject to the condition that, upon request of the seller before the
maturity of the bills, the Reserve Bank would sell to him Treasury bills of like amount and maturity at the discount rate of
2/g per cent per annum.
Under the direction of March 2., 1943, bills purchased outright were for
the System open market account and bills purchased subject to the right of
repurchase were held by the purchasing Federal Reserve Bank. The suggestion was made at this meeting that it would be helpful from an accounting
and operating standpoint if the Federal Reserve Banks were instructed to
hold in their own accounts all bills purchased under the direction. It was
agreed that this could be accomplished most effectively by treating all such
bills as being subject to the right of repurchase and holding them at the
purchasing Federal Reserve Banks in accordance with the policy of having
the bills available for immediate delivery if desired in the event of their
repurchase.
2. Authority to Effect Transactions in System Account.
Upon motion duly made and seconded, the following direction to the executive committee was approved by unanimous
vote:
"That the executive committee be directed, until otherwise directed
by the Federal Open Market Committee, to arrange for such transactions
for the System open market account, either in the open market or directly with the Treasury (including purchases, sales, exchanges, replacement of maturing securities, and letting maturities run off without
replacement), as may be necessary in the practical administration of the
account, or for the purpose of maintaining about the present general
level of prices and yields of Government securities, or for the purpose
of maintaining an adequate supply of funds in the market; provided
that the aggregate amount of securities held in the account at the close
of this date (other than special short-term certificates of indebtedness
purchased from time to time for- the temporary accommodation of the
Treasury and Treasury bills purchased pursuant to the directions of the
Federal Open Market Committee issued under dates of September x8,
1942., and March 2., 1943) shall not be increased or decreased by more
than 1 billion dollars.
"That the executive committee be further directed, until otherwise
directed by the Federal Open Market Committee, to arrange for the
purchase for the System open market account direct from the Treasury
of such amounts of special short-term certificates of indebtedness as may
be necessary from time to time for the temporary accommodation of the
Treasury; provided that the amount of such certificates held in the
account at any one time shall not exceed 1.5 billion dollars."
Except for the limitation as to amount at the end of the first paragraph,
the direction was in the same form as the directions issued at the meetings
of the Federal Open Market Committee earlier this year and was approved
for substantially the same reasons. The limitation on the authority of the
executive committee to increase or decrease the amount of securities in the
account was reduced from 1.5 billion dollars to 1 billion for the reason that



FEDERAL RESERVE SYSTEM

95

it was anticipated that another meeting of the full Committee would be held
during the latter part of June and that the lower limitation would be adequate
to enable the executive committee to meet the situation during the
intervening period.
MEETING ON JUNE 2.8,

1943

Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman; Mr.
Szymczak; Mr. McKee; Mr. Ransom; Mr. Draper; Mr. Evans; Mr. Paddock;
Mr. Fleming; Mr. McLarin; Mr. Day.
1. Purchase by Federal Reserve Banks of Treasury Bills at Posted Discount Rate.
Upon motion duly made and seconded, the following direction was approved by unanimous vote, with the understanding
that resales of Treasury bills held under option would be for
immediate delivery when so requested by the holder:
"Until otherwise directed by the Federal Open Market Committee, the
twelve Federal Reserve Banks are directed to purchase all Treasury bills
that may be offered to such Banks on a discount basis at the rate of ^
per cent per annum, any such purchases to be upon the condition that the
Federal Reserve Bank, upon the request of the seller before the maturity
of the bills, will sell to him Treasury bills of like amount and maturity
at the same rate of discount. All bills purchased under this direction
are to be held by the purchasing Federal Reserve Bank in its own account
and prompt reports of all such purchases are to be made to the Manager
of the System open market account."
This direction, which superseded the direction issued by the Federal Open
Market Committee on March z, 1943, represented no change in policy and was
for the purpose of conforming the earlier direction to the understanding
reached at the meeting of the Federal Open Market Committee on May 15,
1943, that the Federal Reserve Banks would treat all purchases made pursuant
to the direction as being subject to the right on the part of the seller to
repurchase the bills.
2. Authority to Effect Transactions in System Account.
Upon motion duly made and seconded, the following direction was approved by unanimous vote:
"That the executive committee be directed, until otherwise directed
by the Federal Open Market Committee, to arrange for such transactions
for the System open market account, either in the open market or directly
with the Treasury (including purchases, sales, exchanges, replacement
of maturing securities, and letting maturities run off without replacement), as may be necessary in the practical administration of the account,
or for the purpose of maintaining about the present general level of
prices and yields of Government securities, or for the purpose of maintaining an adequate supply of funds in the market; provided that the
aggregate amount of securities held in the account at the close of this
date (other than special short-term certificates of indebtedness purchased
from time to time for the temporary accommodation of the Treasury and
Treasury bills purchased pursuant to the directions of the Federal Open
Market Committee issued under dates of March 2. and June 2.8, 1943)
shall not be increased or decreased by more than 1.5 billion dollars.



96

ANNUAL REPORT OF BOARD OF GOVERNORS

"That the executive committee be further directed, until otherwise
directed by the Federal Open Market Committee, to arrange for the
purchase for the System open market account direct from the Treasury
of such amounts of special short-term certificates of indebtedness as may
be necessary from time to time for the temporary accommodation of the
Treasury; provided that the amount of such certificates held in the
account at any one time shall not exceed 1.5 billion dollars."
This direction was in the same form as the direction issued by the Committee on May 15, 1943, except that it increased from 1 billion dollars to 1.5
billion the limitation on the authority of the executive committee to increase
or decrease the amount of securities held in the System account. The reasons
for the direction were substantially the same as those stated in connection
with the approval of the directions issued at previous meetings during the
current year. The increase in the limitation on the authority of the executive
committee to execute transactions for the System account was based on
agreement by the members of the Open Market Committee that, in the
absence of unforeseen circumstances, it would not be necessary to hold another
meeting of the full Committee before some date in September and that,
therefore, the executive committee should have increased authority to make
purchases and sales of securities for the purposes stated in the direction.
MEETING ON OCTOBER 18,

1943

Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman;
Mr. Szymczak; Mr. McKee; Mr. Ransom; Mr. Draper; Mr. Evans; Mr.
Paddock; Mr. McLarin; Mr. Day; Mr. Young (alternate for Mr. Fleming).
1, Replacement of Maturing Treasury Bills.
Upon motion duly made and seconded and by unanimous vote,
the executive committee was directed to work out with the
Treasury and put into effect an arrangement under which a
tender would be made each week for new bills in an amount
not exceeding the total amount of maturing bills in the System
and option accounts. This action was taken with the understanding that when the arrangement went into effect the executive committee was authorized to issue a statement to the press
in such form as in its judgment the circumstances required.
Following the action with respect to direct replacement of Treasury bills
which was taken at the meeting of the Federal Open Market Committee on
March 2., 1943, the matter was discussed with the Treasury from time to time
but was not carried to a conclusion for the reason that the situation in the
market made it practicable to continue the existing practice under which
Treasury bills were permitted to run off without replacement. However,
in the period before this meeting the total amount of bills held in the System
and option accounts increased to a point where the weekly maturities averaged between 400 and 500 million dollars. In addition, it was recognized
that with the increase in required reserves that would occur in connection
with the expenditure of funds held by member banks in war loan accounts it
would be necessary for the System not only to replace maturing issues held
in the System account but to purchase additional securities in substantial
volume in order to supply the market with reserve funds.
The procedure suggested by the Committee was believed to be desirable
in a situation which had become mechanically more difficult as weekly
maturities of bills held by the System account had increased until at times




FEDERAL RESERVE SYSTEM

97

they were equal to half of the weekly offerings. In the past the market had
taken all of each week's offering of Treasury bills and promptly sold to the
Federal Reserve Banks the portion of the offerings which it did not wish to
hold. Thus, the Federal Reserve Banks indirectly replaced part or all of
their Treasury bill maturities and, although this procedure worked well when
the amount of maturing bills held by the Reserve Banks was a relatively
small proportion of the weekly offering and allowed the market to determine
directly the amount of the new issue of bills it wished to hold, under existing
circumstances the continuation of that procedure meant that the market
would have to place tenders for new issues of bills in amounts substantially
in excess of market requirements, the excess being taken for the purpose of
immediate sale to the System. In these circumstances, there was unanimous
agreement that a more direct method of replacing maturing bills held by the
Federal Reserve Banks should be adopted.
It was again pointed out that the suggested procedure would not make new
credit available or add new reserve funds to the market but would place the
System in a position more readily to maintain the reserves already provided
to support increased member bank deposits and currency circulation.
A tender for new bills each week in an amount not to exceed the total
amount of maturing bills held by the System would create a situation in
which, if there were a demand for bills at a price to yield less than % of i
per cent per annum, the System might obtain none of the tenders, whereas
if there were no demand for bills at the higher prices the System might obtain
the total amount of its tender, thereby permitting the market to determine
the extent to which the System's holdings of Treasury bills should be replaced as a means of maintaining in the market the reserve funds previously
provided.
Following this meeting, members of the executive committee on several
occasions discussed the proposal of the full Committee with representatives
of the Treasury. However, the Secretary of the Treasury decided that at
that time no change in the procedure for issuing Treasury bills should be
made and for that reason the proposal was not made effective. In lieu
thereof, he requested the Federal Reserve Bank of New York as fiscal agent
of the United States to use its best efforts to see that sufficient tenders for
bills were forthcoming from the market each week to insure the sale of
whatever amount of Treasury bills was offered by the Treasury.
2. Authority to Effect Transactions in System Account.
Upon motion duly made and seconded and by unanimous vote,
the following direction was approved:
"That the executive committee be directed, until otherwise directed
by the Federal Open Market Committee, to arrange for such transactions
for the System open market account, either in the open market or directly
with the Treasury (including purchases, sales, exchanges, replacement
of maturing securities, and letting maturities run off without replacement), as may be necessary in the practical administration of the account,
or for the purpose of maintaining about the present general level of
prices and yields of Government securities, or for the purpose of maintaining an adequate supply of funds in the market; provided that the
aggregate amount of securities held in the account at the close of this
date (other than special short-term certificates of indebtedness purchased
from time to time for the temporary accommodation of the Treasury)
shall not be increased or decreased by more than 1.5 billion dollars.
"That the executive committee be further directed, until otherwise




98

ANNUAL REPORT OF BOARD OF GOVERNORS

directed by the Federal Open Market Committee, to arrange for the
purchase for the System open market account direct from the Treasury
of such amounts of special short-term certificates of indebtedness as
may be necessary from time to time for the temporary accommodation
of the Treasury; provided that the amount of such certificates held in
the account at any one time shall not exceed 1.5 billion dollars."
This direction, which (except for the elimination of the reference contained
in earlier directions to bills purchased at the posted rate) was in the same
form as the direction issued at the meeting of the Federal Open Market
Committee on June 2.8, 1943, was adopted for the purpose of continuing the
existing open market policies and for the same reasons as prompted similar
actions by the Committee at earlier meetings during the year. The reference
to bills purchased at the posted rate was left out of the direction for the
reason that the separate direction issued to the Reserve Banks at the meeting
of the Committee on June 2.8, 1943, relating to such purchases provided that
all such bills would be held by the purchasing Bank and would not be
transferred to the System account.




RESOLUTION OF FEDERAL ADVISORY COUNCIL
REGARDING FINAL SETTLEMENT OF
TERMINATED CONTRACTS
NOVEMBER 159 1943

The larger part of the productive capacity of the country is now engaged in
the production of war goods. When the war ends the task of converting this
gigantic war economy to a peace economy will be a stupendous one, both for
the Government and for business.
Already some war contracts are being canceled. When peace comes a large
percentage of contracts then outstanding will no doubt be canceled. Speedy
and equitable settlement of these contracts will be essential if we are to avoid
a disastrous business depression and mass unemployment. Millions of men
discharged from military service and millions more now engaged in war
plants will be looking for new jobs—and they will expect them promptly.
If we delay in the transition from war to peace, if business is hampered one
bit more than is unavoidable in its reconversion and in providing new jobs,
mass unemployment and social distress will result, relief rolls will mount and
the State and Federal treasuries will be subjected to the necessity of making
huge grants for the relief of the unemployed.
This must not and need not happen.
Many factors are involved but the settlement of terminated war contracts
is one of the most important.
The Federal Advisory Council believes:
( i ) That war contracts which are terminated must be settled and settled
promptly and finally by negotiated agreements between the contractor and
the procuring agency of the Government which negotiated the original
contract.
(z) That settlements so negotiated should be final and not subject to review
by any other agency except for fraud. Any amounts that might conceivably
be saved the Government through a post-audit will fade into insignificance
in comparison with grants for relief that will be necessitated by resulting
delay, uncertainty, and unemployment.
(3) That if settlements of terminated contracts when negotiated by the
procuring agencies are not final, or if they are made subject to subsequent
audit, credit for working capital needed for reconversion after the war may,
in many cases, be unavailable until the settlement does become final and the
basis of credit thereby becomes ascertainable. This applies particularly to
those contractors whose capital is relatively small.
(4) That Congress should relieve contracting officers who negotiate settlements from personal responsibility, except for fraud.
(5) That Congress should enact legislation providing more adequate means



99

IOO

ANNUAL REPORT OF BOARD OF GOVERNORS

of interim financing of contractors whose contracts have been canceled when
for unavoidable reasons there is delay in final settlement and payment.
(6) That appropriate plans should be made in advance for the prompt
removal of surplus Government materiel and facilities from plants whose
contracts are terminated.
In the opinion of the Federal Advisory Council, unless appropriate steps
are taken by the Congress and the various Government agencies to relieve
the minds of thousands of contractors large and small and to assure business
that, when terminated, contracts will be settled fairly, quickly and finally,
there is danger that war production will be hampered now and that peace
production will be perilously delayed after the war.
The Federal Advisory Council believes that these are risks that need not
be taken.




BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
[December 31, 1943]
MARRINER S. ECCLES, of Utah, Chairman
RONALD RANSOM, of Georgia, Vice Chairman
M. S. SZYMCZAK, of Illinois

Term expires
Tanuary 31, 1944
January 31, 1956
January 31, 1948

JOHN K. MCKEE, of Ohio
ERNEST G. DRAPER, of Connecticut

January 31, 1946
January 31, 1950

R. M. EVANS, of Virginia

January 31, 1954

LAWRENCE CLAYTON, Assistant to the Chairman

ELLIOTT THURSTON, Special Assistant to the Chairman
CHESTER MORRILL, Secretary

LISTON P. BETHEA, Assistant Secretary

S. R. CARPENTER, Assistant Secretary
FRED A. NELSON, Assistant Secretary
WALTER WYATT, General Counsel

J. P. DREIBELBIS, General Attorney
GEORGE B. VEST, Assistant General Attorney
B. MAGRUDER WINGFIELD, Assistant General Attorney
E. A. GOLDENWEISER, Director, Division 0} Research and Statistics
WOODLIEF THOMAS, Assistant Director, Division of Research and Statistics
LEO H. PAULGER, Chief, Division of Examinations
C. E. CAGLE, Assistant Chief, Division of Examinations
WILLIAM B. POLLARD, Assistant Chief, Division of Examinations
EDWARD L. SMEAD, Chief, Division of Bank Operations
J. R. VAN FOSSEN, Assistant Chief, Division of Bank Operations
J. E. HORBETT, Assistant Chief, Division of Bank Operations
CARL E. PARRY, Chief, Division of Security Loans
ROBERT F. LEONARD, Director, Division of Personnel Administration
EDWARD L. SMEAD, Acting Administrator, Office of Administrator for War Loans Committee
GARDNER L. BOOTHE, II, Assistant Administrator, Office of Administrator for War Loans Committt
O. E. FOULK, Fiscal Agent
JOSEPHINE E. LALLY, Deputy Fiscal Agent

FEDERAL OPEN MARKET COMMITTEE
[December 31, 1943]
Members

MARRINER S. ECCLES, Chairman (Board of Governors)
ALLAN SPROUL, Vice Chairman (Elected by Federal Reserve Bank of New York)
WM. A. DAY (Elected by Federal Reserve Banks of Minneapolis, Kansas City, and San Francisco
ERNEST G. DRAPER (Board of Governors)

R. M. EVANS (Board of Governors)
M. J. FLEMING (Elected by Federal Reserve Banks of Cleveland and Chicago)
JOHN K. MCKEE (Board of Governors)

W. S. MCLARIN, JR. (Elected by Federal Reserve Banks of Atlanta, St. Louis, and Dallas)
W. W. PADDOCK (Elected by Federal Reserve Banks of Boston, Philadelphia, and Richmond)
RONALD RANSOM (Board of Governors)

M. S. SZYMCZAK (Board of Governors)
Officers
CHESTER MORRILL, Secretary

S. R. CARPENTER, Assistant Secretary
WALTER WYATT, General Counsel

J. P. DREIBELBIS, Assistant General Counsel
E. A. GOLDENWEISER, Economist
MALCOLM H. BRYAN, Associate Economist
KENNETH H. MACKENZIE, Associate Economist
OLIVER P. WHEELER, Associate Economist
JOHN H. WILLIAMS, Associate Economist

Agent
FEDERAL RESERVE BANK OF NEW YORK

R. G. ROUSE, Manager of System Open Market Account



IOI

FEDERAL ADVISORY COUNCIL
[December 31, 1943]
OFFICERS
President, EDWARD E. BROWN
Vice President, GEORGE L. HARRISON
Secretary, WALTER LICHTENSTEIN

EXECUTIVE COMMITTEE
EDWARD E. BROWN, ex officio

W. F. KURTZ

R. V. FLEMING

C. E. SPENCER, J R .

GEORGE L. HARRISON, ex officio

B. G. HUNTINGTON

MEMBERS
District No. 1—CHARLES E. SPENCER, JR., President, The First National Bank of Boston, Boston
Massachusetts.
District No. 2.—GEORGE L. HARRISON, President, New York Life Insurance Company, New York,
New York.
District No. 3—WILLIAM F. KURTZ, President, The Pennsylvania Company for Insurances on
Lives and Granting Annuities, Philadelphia, Pennsylvania.
District No. 4—B. G. HUNTINGTON, President, The Huntington National Bank, Columbus, Ohio
District No. 5—ROBERT V. FLEMING, President, The Riggs National Bank of Washington, D. C.
Washington, D. C.
District No. 6—H. LANE YOUNG, President, The Citizens and Southern National Bank, Atlanta
Georgia.
District No. 7—EDWARD E. BROWN, President, The First National Bank of Chicago, Chicago,
Illinois.
District No. 8—RALPH C. GIFFORD, President, First National Bank, Louisville, Kentucky
District No. 9—LYMAN E. WAKEFIELD, President, First National Bank of Minneapolis, Min
neapolis, Minnesota.
District No. 10—W. DALE CLARK, President, The Omaha National Bank, Omaha, Nebraska.
District No. 11—NATHAN ADAMS, President, The First National Bank in Dallas, Dallas, Texas.
District No. 11—GEORGE M. WALLACE, President, Security-First National Bank of Los Angeles,
Los Angeles, California.

IO2.




SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS
[December 31, 1943]
CHAIRMEN AND DEPUTY CHAIRMEN
Federal Reserve Bank of—

Chairman

Deputy Chairman

Boston

Albert M. Creighton*

Henry S. Dcnnison

New York

Beardsley Ruml

William I. Myers

Philadelphia

Thomas B. McCabe

Warren F. Whittier

Cleveland

G. C. Brainard*

R. E. Klages

Richmond

Robert Lassiter

W. G. Wysor

Atlanta

Frank H. Necly*

J. F. Porter

Chicago

Simeon E. Leland

W. W. Waymack

St. Louis

Wm. T. Nardin

Oscar Johnston

Minneapolis

W. C. Coffey

Roger B. Shepard

Kansas City

R. B. Caldwell

Robert L. Mehornay

Dallas

Jay Taylor

J. B. Cozzo

San Francisco

Henry F. Grady

St. George Holden

Each Federal Reserve Bank has nine directors divided equally into Classes A, B, and C. The
term of office of a director is three years. The Class C directors are appointed by the Board of
Governors of the Federal Reserve System, and can not be officers, directors, employees, or stockholders of any bank. The Class B directors, elected by member banks, must be actively engaged
in some commercial, agricultural, or industrial pursuit and may not be officers, directors, or
employees of any bank. The Class A directors are elected by the member banks as the banks'
own representatives.
For the purpose of electing Class A and Class B directors, the member banks in each Federal
Reserve district are divided into three groups—large, small, and medium-sized banks. Each of
the three groups elects one Class A and one Class B director. The Board of Governors of the
Federal Reserve System designates one of the Class C directors as chairman and Federal Reserve
agent, and another as deputy chairman.
The Board of Directors of each Federal Reserve Bank appoints a president and first vice president, subject to the approval of the Board of Governors, to serve for terms of five years. The
president is the chief executive officer of the bank and all other officers and employees are responsible to him.
Federal Reserve Bank branches have either five or seven directors, of whom a majority, including the managing director if the by-laws provide for a managing director as the chief officer of
the branch, are appointed by the Board of Directors of the parent Federal Reserve Bank and the
others are appointed by the Board of Governors of the Federal Reserve System.
* Served during the year on the Executive Committee of the Conference of Chairmen of the
Federal Reserve Banks. Mr. Brainard was Chairman of the Conference of Chairmen, as well as
Chairman of the Executive Committee.




103

ANNUAL REPORT OF BOARD OP GOVERNORS
SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1943-Cont.
PRESIDENTS AND VICE PRESIDENTS

Federal Reserve
Bank of—

President
First Vice President

Boston

W. W. Paddock
William Willett

K. K. Carrick
E. G. Hult

J. C. Hunter1
Carl B. Pitman

New York. , . .

Allan Sproul
L. R. Rounds

R. M. Gidney
L. W. Knoke
Walter S. Logan

J. M. Rice
Robert G. Rouse
John H. Williams

Philadelphia.. .

Alfred H. Williams
Frank J. Drinnen

W. J. Davis
E. C. Hill

Cleveland

M. J. Fleming
R. B. Hays

Wm. H. Fletcher
J. W. Kossin
A. H. Laning2

B. J. Lazar
K. H. MacKenzie
W. F. Taylor

Richmond

Hugh Leach
J. S. Walden, Jr

J. G. Fry
Geo. H. Keesee1

R. W. Mercer
Edw. A. Wayne

Atlanta

W. S. McLarin, Jr.
Malcolm H. Bryan

L. M. Clark

H. F. Conniff

Chicago

C. S. Young
H. P. Preston

Allan M. Black1
J. H. Dillard
Charles B. Dunn

E. C. Harris
O. J. Netterstrom
Alfred T. Sihler

St. Louis

Chester C. Davis
F. Guy Hitt

O. M. Attebery
C. M. Stewart
Henry H. Edmiston

Vice Presidents

C. A. Mcllhenny2
C. A. Sienkiewicz

A. W. Mills1
Otis R. Preston
E. W. Swanson

Minneapolis. . . J. N. Peyton
O. S. Powell

Sigurd Ueland
A. R. Upgrer
Harry I. Ziemer

Kansas City. . .

H. G. Leedy
Henry O. Koppang

Raymond W. Hall

D. W. Woolley2

Dallas

R. R. Gilbert
E. B. Stroud

E. B. Austin
R. B. Coleman
W. J. Evans

W. O. Ford
W. D. Gentry2
L. G. Pondrom

San Francisco.

Wm. A. Day
Ira Clerk

C. E. Earhart
W. M. Hale

H. N. Mangels1
R. B. West

1

Cashier.




2

Also Cashier.

PEDERAL RESERVE SYSTEM

IO5

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1943—Cont.
DIRECTORS OF FEDERAL RESERVE BANKS

District No. 1—Boston
Class A:
Allen W. Holmes
Allan Forbes
Leon A. Dodge
Class B:
Ralph E. Flanders
Philip R. Allen
Edward J. Frost
Class C.Henry I. Harriman
Albert M. Creighton
Henry S. Dennison

Term
Expires
Dec. 31
President, The Middletown National Bank, Middletown,
Conn
1943
President, State Street Trust Company, Boston, Mass
1944
President, The First National Bank, Damariscotta, Maine... 1945
President, Jones & Lamson Machine Company, Springfield,
Vt
1943
Director, Bird & Son, Inc., East Walpole, Mass
1944
President and Director, Wm. Filene's Sons Company, Boston,
Mass
1945
Director and Vice Chairman, New England Power Association,
Boston, Mass
1943
Chairman of Board
1944
President, Dennison Manufacturing Company, Framingham,
Mass
1945

District No. 2—New York
Class A:
Leon Fraser
William J. Field
Warren W. Clute, Jr
Class B:
Donaldson Brown
Frederick E. Williamson
Carle C. Conway
Class C.Robert D. Calkins
Beardsley Ruml
William I. Myers

President, First National Bank, New York, N. Y
1943
Ptesident, Commercial Trust Company of New Jersey, Jersey
City, N. J
1944
President, Glen National Bank of Watkins Glen, Watkins
Glen, N. Y
1945
Vice Chairman and Vice President, General Motors Corporation, New York, N. Y
1943
President, The New York Central Railroad Company, New
York, N. Y
1944
Chairman and President, Continental Can Company, Inc.,
New York, N. Y
1945
Dean, School of Business, Columbia University, New York,
N. Y
1943
Treasurer, R. H. Macy & Company, Inc.,New York, N. Y..... 1944
Dean, New York State College of Agriculture, Cornell University, Ithaca, N. Y
1945
Buffalo Branch

Appointed by Federal Reserve Bank:
R. B. Wiltse
Raymond N. Ball
Robert R. Dew
Lewis G. Harriman
Appointed by Board of Governors:
Howard Kellogg
Marion B. Folsom
Gilbert A. Prole

Managing Director, Buffalo, N. Y
President, Lincoln-Alliance Bank & Trust Company, Rochester, N. Y
President, Dunkirk Trust Company, Dunkirk, N. Y
President, Manufacturers and Traders Trust Company, Buffalo, N. Y

1943
1943
1944

President, Spencer Kellogg & Sons, Inc., Buffalo, N. Y
Treasurer, Eastman Kodak Company, Rochester, N. Y
Genesee Farm Supply Company, Batavia, N. Y

1943
1944
1945

1945

District No. 3—Philadelphia
Class A.John B. Henning
Howard A. Loeb
George W. Reily
Class B:
C. Frederick C. Stout
Harry L. Cannon
Ward D. Kerlin
Class C:
Warren F. Whittier
C. Canby Balderston
Thomas B. McCabe




President, Wyoming National Bank, Tunkhannock, Pa
1943
Chairman, Tradesmens National Bank and Trust Company,
Philadelphia, Pa
1944
President, Harrisburg National Bank, Harrisburg, Pa
1945
President, John R. Evans & Company, Camden, N. J
1943
President, H. P. Cannon & Sons, Inc., Bridgeville, Del
1944
Secretary & Treasurer, Camden Forge Company, Camden,
N. J
1945
Farmer, dairyman, and cattle breeder, Douglassville, Pa
1943
Dean, Wharton School of Finance and Commerce, University
of Pennsylvania, Philadelphia, Pa
1944
President, Scott Paper Company, Chester, Pa
1945

io6

ANNUAL REPORT OF BOARD OF GOVERNORS

SENIOR OFFICERS A N D DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1 9 4 3 - C o n t .

District No. 4—Cleveland
DIRECTORS—Cont.

Class A:
H. B. McDowell
F. F. Brooks
B. R. Conner

Class B:
R. P. Wright
G. D. Crabbs
T. E. Millsop
Class C:
G. C. Brainard
A. Z. Baker
R. E. Klages

President, McDowell National Bank, Sharon, Pa...
President, First National Bank, Pittsburgh, Pa....
President, First National Bank, Ada, Ohio

Term
Expires
Dec. 31
. 1943
. 1944
. 1945

Secretary-Treasurer, Reed Manufacturing Company, Erie,
Pa
1943
Chairman of Board, Philip Carey Manufacturing Company,
Cincinnati, Ohio
1944
President, Weirton Steel Company, Weirton, W. Va
1945
President, General Fireproofing Company, Youngstown,
Ohio.
1943
President and General Manager, Cleveland Union Stock
Yards Company, Cleveland, Ohio
1944
President, Columbus Auto Parts Company, Columbus, Ohio. 1945
Cincinnati Branch

Appointed by Federal Reserve Bank:
Frederick V. Geier
Buckner Woodford
J. G. Gutting
Appointed by Board of Governors:
Francis H. Bird
Frank A. Brown

.President, Cincinnati Milling Machine Company, Cincinnati,
Ohio
1943
Vice President and Cashier, Bourbon-Agricultural Bank and
Trust Company, Paris, Ky
1943
President, Second National Bank, Cincinnati, Ohio
1944
Professor of Commerce, College of Engineering and Commerce, University of Cincinnati, Cincinnati, Ohio
1943
Farmer, Chillicothe, Ohio
1944
Pittsburgh Branch

Appointed by Federal Reserve Bank:
Archie J. McFarland
Clarance Stanley
E. B. Harshaw
Appointed by Board of Governors:
Robert E. Doherty
W. C. Arthur

.President, Wheeling Steel Corporation, Wheeling, W. Va
1943
.President, Union Trust Company, Pittsburgh, Pa
1943
.Vice President and Cashier, Grove City National Bank, Grove
City, Pa
1944
.President, Carnegie Institute of Technology, Pittsburgh, Pa..
.President, Talon, Inc., Meadville, Pa

1943
1944

District No. 5—Richmond
Class A:
James C. Braswell
John A. Sydenstricker.
Charles E. Rieman
Class B.John H. Hanna
Edwin Malloy
Charles C. Reed
Class C.Robert Lassiter
Charles P. McCormick..
W. G. Wysor

President, Planters National Bank & Trust Company, Rocky
Mount, N. C
1943
Cashier, First National Bank in Marlin ton, Marlinton, W. Va.. 1944
President, Western National Bank, Baltimore, Md
1945
. . .Chairman, Capital Transit Company, Washington, D. C
1943
.. .President & Treasurer, Cheraw Cotton Mills, Inc., Cheraw,
S. C
1944
.. President, Williams & Reed, Inc., Richmond, Va
1945
. .. Chairman of Board, Mooresville Cotton Mills, Mooresville,
N. C
1943
.. .President, McCormick & Company, Inc., Baltimore, Md
1944
...General Manager, Southern States Cooperative, Inc., Richmond, Va
1945
Baltimore Branch

Appointed by Federal Reserve Bank:
W. R. Milford
James Dixon
George W. Reed
James C. Fenhagen
Appointed by Board of Governors:
W. Frank Roberts
W. Frank Thomas
Joseph D. Baker, Jr




Managing Director, Baltimore, Md
President, Easton National Bank of Maryland, Easton, Md..
President, National Marine Bank, Baltimore, Md
Vice Chairman of Board, Baltimore National Bank, Baltimore, Md

1943
1943
1944
1945

President, Standard Gas Equipment Corporation, Baltimore,
Md
1943
Construction Engineer and Real Estate Management, Westminster, Md
1944
Secretary and Treasurer, The Standard Lime and Stone Company, Baltimore, Md
1945

FEDERAL RESERVE SYSTEM

IO7

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1943—Cont.
Charlotte Branch
DIRECTORS—Cont.
Appointed by Federal Reserve Bank:
W. T. Clements
T. E. Hemby
J . Gerald Cowan
Angus E. Bird
Appointed by Board of Governors:
Geo. M. Wright
Chas. L. Creech, Sr
D. W. Watkins

Managing Director, Charlotte, N. C
President, American Trust Company, Charlotte, N . C
Vice President, Wachovia Bank & Trust Company, Asheville,
N. C
President, The Citizens and Southern National Bank of South
Carolina, Charleston, S. C
President, Republic Cotton Mills, Great Falls, S. C
Chairman of Board, B. F . Huntley Furniture Company, Winston-Salem, N . C
Director of Extension, Clemson College, Clemson, S. C

Term
Expires
Dec. 31
1943
1943
1944
1945
1943
1944
1945

District No. 6—Atlanta
Class A:
W. D . Cook
Geo. J. White
Thos. K. Glenn
Class B.Fitzgerald Hall
Ernest T. George
J. A. McCrary
Class C:
Rufus C. Harris
Frank H. Neely
J. F . Porter

Executive Vice President, First National Bank, Meridian,
Miss
iss
President, First National Bank, Mount Dora, Fla
Chairman, Trust Company of Georgia, Atlanta, Ga
President, Nashville, Chattanooga & St. Louis Railway,
Nashville, Tenn
.President, Seaboard Refining Company Ltd., New Orleans,
L
La
Vice President and Treasurer, J. B. McCrary Company, Inc.,
Atlanta, Ga
President, Tulane University, New Orleans, La
Executive Vice President and Secretary, Rich's, Inc., Atlanta,
Ga
President and General Manager, Tennessee Farm Bureau
Federation, Columbia, Tenn

1943
1944
1945

1943
1944
1945
1943
1944
1945

Birmingham Branch
Appointed by Federal Reserve Bank:
P. L. T. Beavers
John S. Coleman
Gordon D. Palmer
M. B. Spragins
Appointed by Board of Governors:
Ed. L. Norton
Donald Comer
Vacancy

Managing Director, Birmingham, Ala
President, Birmingham Trust & Savings Company, Birmingham, Ala
President, First National Bank, Tuscaloosa, Ala
President, First National Bank, Huntsville, Ala
Chairman of Board, Voice of Alabama, Inc., Birmingham, Ala..
Chairman, Avondale Mills, Birmingham, Ala

1943
1943
1944
1945
1943
1944
1945

Jacksonville Branch
Appointed by Federal Reserve Bank:
Geo. S. Vardeman, Jr
J. C. McCrocklin
J. L. Dart
B. C. Teed
Appointed by Board of Governors:
F. D. Jackson
Walter J. Matherly
Charles S. Lee

Managing Director, Jacksonville, Fla
President, First National Bank, Tarpon Springs, Fla
Vice President and Cashier, Florida National Bank, Jacksonville, Fla
Executive First Vice President, First National Bank, Palm
Beach, Fla
President and General Manager, Jackson Grain Company,
Tampa, Fla
Dean, College of Business Administration, University of
Florida, Gainesville, Fla
Livestock and farming, Oviedo, Fla

1943
1943
1944
1945

1943
1944
1945

Nashville Branch
Appointed by Federal Reserve Bank:
Joel B. Fort, Jr
Geo. Neal Bass
B. L. Sadler
Edward Potter, Jr
Appointed
E. W.
Clyde
W. E.

by Board of Governors:
Palmer
B. Austin
McEwen




Managing Director, Nashville, Tenn
Cashier, First National Bank of Franklin County, Decherd,
Tenn
President, First National Bank, Harriman, Tenn
President, Commerce Union Bank, Nashville, Tenn

1943
1943
1944
1945

President, Kingsport Press, Inc., Kingsport, Tenn
President, The Austin Company, Inc., Greeneville, Tenn
Director, County Farm Bureau, Williamsport, Tenn

1943
1944
1945

IO8

ANNUAL REPORT OF BOARD OF GOVERNORS

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1943—Cont.

New Orleans Branch

DIRECTORS—Cont.
Appointed by Federal Reserve Bank:
E. P. Paris
O. G. Lucas
J. F. McRae
T. G. Nicholson

Term
Expires
Dec. 31
Managing Director, New Orleans, La
1943
President, National Bank of Commerce, New Orleans, La.... 1943
President, Merchants National Bank, Mobile, Ala
1944
President, First National Bank of Jefferson Parish, Gretna.
La
1945

Appointed by Board of Governors:
E. F. Billington
Alexander Fitz-Hugh
John J. Shaffer, Jr

Vice President, Soule Steam Feed Works, Meridian, Miss
President, P. P. Williams Company, Vicksburg, Miss
Sugar planter, Ellendale, La

1943
1944
1945

District No. 7—Chicago
Class A:
Edward R. Estberg
Frank D. Williams
Walter J. Cummings
Class B:
Clarence W. Avery
Nicholas H. Noyes
William C. Heath

Chairman, Waukesha National Bank, Waukesha, Wis
1943
President, First Capital National Bank, Iowa City, Iowa
1944
Chairman, Continental Illinois National Bank and Trust Company, Chicago, 111
1945
President and Chairman, The Murray Corporation of America,
Detroit, Mich
1943
Vice President and Treasurer, Eli Lilly and Company, Indianapolis, Ind
1944
President, A. O. Smith Corporation, Milwaukee, Wis
1945

Class C:
Paul G. Hoffman
Simeon E. Leland
W. W. Waymack

Detroit Branch
Appointed by Federal Reserve Bank:
Walter S. McLucas
Joseph M. Dodge
Rudolph E. Reichert

Chairman, The National Bank of Detroit, Detroit, Mich
President, The Detroit Bank, Detroit, Mich
President, Ann Arbor Bank, Ann Arbor, Mich

1943
1944
1944

Appointed by Board of Governors:
L. Whitney Watkins
H. L. Pierson

Farmer, Manchester, Mich
President, Detroit Harvester Company, Detroit, Mich

1944
1945

District No. 8—St. Louis
Class A:
G. R. Corlis
Sidney Maestre
Max B. Nahm
Class B:
H. H. Tucker
John R. Stanley
A. Wessel Shapleigh
Class C.Oscar G. Johnston
Douglas W. Brooks
Wm. T. Nardin

Cashier, Anna National Bank, Anna, 111
1943
President, Mississippi Valley Trust Company, St. Louis, Mo.. 1944
Vice President, Citizens National Bank, Bowling Green,
Ky
1945
President, Fones Bros. Hardware Company, Little Rock, Ark.. 1943
Secretary-Treasurer, Stanley Clothing Company, Evansville, Ind
1944
President, Shapleigh Hardware Company, St. Louis, Mo.... 1945
President, Delta and Pine Land Company, Scott, Miss
1943
President, The Newburger Company, Memphis, Tenn
1944
Vice President and General Manager, Pet Milk Company, St.
Louis, Mo
1945
Little Rock Branch

Appointed by Federal Reserve Bank:
A. F. Bailey
Arthur E. McLean
Paul R. McCoy
Chas. A. Gordon
Appointed by Board of Governors:
I. N. Barnett
S. M. Brooks
R. E. Short




Managing Director, Little Rock, Ark
1943
President, Commercial National Bank, Little Rock, Ark
1943
Chairman, Peoples National Bank, Stuttgart, Ark
1944
Vice President, Simmons National Bank, Pine Bluff, Ark.. .. 1945
Manager, Barnett Bros. Mercantile Company, Batesville,
Ark
1943
President, Brooks Advertising Agency, Little Rock, Ark
1944
Farmer, Brinkley, Ark
1945

FEDERAL RESERVE SYSTEM

IO9

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1943-Cont.
Louisville Branch
Term
DIRECTORS—Cont.
Expires
Appointed by Federal Reserve Bank:
Dec. 31
C. A. Schacht
Managing Director, Louisville, Ky
1943
Phil E. Chappell
.President, Planters Bank & Trust Company, Hopkinsville,
Ky
1943
Wallace M. Davis
Vice President, Citizens Union National Bank, Louisville,
Ky
1944
Lee L. Persise
President, The State Bank of Salem, Salem, Ind
1945
Appointed by Board of Governors:
Perry B. Gaines
E. J. O'Brien, Jr
G. 0 . Boomer

Farmer, Carrollton, Ky
President, E. J. O'Brien & Company, Louisville, Ky
Vice President, The Girdler Corporation, Louisville, Ky

1943
1944
1945

Memphis Branch
Appointed by Federal Reserve Bank:
W. H. Glasgow
B. A. Lynch
Oliver Benton
V. J. Alexander

Managing Director, Memphis, Tenn
President, Farmers Bank & Trust Company, Blytheville, Ark..
President, National Bank of Commerce, Jackson, Tenn
President, Union Planters National Bank & Trust Company,
Memphis, Tenn

Appointed by the Board of Governors:
Rufus C. Branch
J. Holmes Sherard
J. P. Norfleet

1943
1943
1944

Cotton planter and ginner, Pecan Point, Ark
President, Jno. H. Sherard and Son, Sherard, Miss
President, Sledge and Norfleet, Memphis, Tenn

1943
1944
1945

1945

District No. 9—Minneapolis
Class A:
S. S. Ford
J. R. McKnight
F. D. McCartney
Class B:
Homer P. Clark
J. E. O'Connell
Ray C. Lange
Class C:
W. D. Cochran
Roger B. Shepard
W, C, Coffey

President, Northwestern National Bank, Minneapolis, Minn.. 1943
President, Pierre National Bank, Pierre, S. D
1944
Vice President, First National Bank, Oakes, N. D
1945
Chairman, West Publishing Company, St. Paul, Minn
1943
President, Eddy's Bakeries, Inc., Helena, Mont
1944
President, Chippewa Canning Company, Chippewa Falls,
Wis
1945
W. D. Cochran Freight Lines, Iron Mountain, Mich
1943
President, Finch, Van Slyck & McConville, St. Paul, Minn... 1944
President, University of Minnesota, Minneapolis, Minn
1945
Helena Branch

Appointed by Federal Reserve Bank:
R. E. Towle
Peter Pauly
P. B. McClintock
Appointed by Board of Governors:
H. D. Myrick
R. B. Richardson

Managing Director, Helena, Mont
1943
President, Deer Lodge Bank & Trust Company, Deer Lodge,
Mont
1943
Cashier, Farmers National Bank, Chinook, Mont
1944
Farmer, Square Butte, Mont
President, Western Life Insurance Company, Helena, Mont...

1943
1944

District No. 10—Kansas City
Class A:
ML A. Limbocker
W. L. Bunten
T. A. Dines
Class B:
J. M. Bernardin
L. E. Phillips
Willard D. Hosford
Class C:
Robert B. Caldwell
Robert L. Mehornay
Lyle L. Hague

President and Chairman, Citizens National Bank, Emporia,
Kan
1943
Vice President and Cashier, Goodland State Bank, Goodland,
Kan
1944
President, United States National Bank, Denver, Colo
1945
Lumberman, Kansas City, Mo
1943
Phillips Petroleum Company, Bartlesville, Okla
1944
Vice President and General Manager, John Deere Plow Company, Omaha, Neb
1945
Caldwell, Downing, Noble & Garrity, Kansas City, Mo
1943
President, North-Mehornay Furniture Company, Kansas City,
Mo
1944
, . . . Farmer and Stockman, Cherokee, Okla
1945
Denver Branch

Appointed by Federal Reserve Bank:
Jos. E. Olson
W. C. Kurtz
Harold Kountze

Clarence H.
 Adams


Managing Director, Denver, Colo
1943
President and Gen. Mgr., Independent Lumber Company,
Grand Junction, Colo
1943
President, Colorado National Bank, Denver, Colo
1944
President, International Trust Company, Denver, Colo
1945

no

ANNUAL REPORT OF BOARD OF GOVERNORS

SENIOR OFFICERS A N D DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1943-Cont.
Term
Expires
Dec. 31
. . Sheep rancher, Kremmling, Colo
1943
. . Lewis and Grant, Denver, Colo
1944
. . Vice President, Denver Tramway Corporation, Denver, Colo.. 1945

DIRECTORS—Cont.

Appointed by Board of Governors:
M. E. Noonen
J. B. Grant
W. A. Alexander

Oklahoma City Branch
Appointed by Federal Reserve Bank:
G. H . Pipkin
D. M. Tyler

Managing Director, Oklahoma City, Okla
First Vice President, Dewey Portland Cement Company,
Dewey, Okla
Vice President, First National Bank & Trust Company,
Oklahoma City, Okla
Chairman of the Board, Central National Bank, Enid, Okla...

1944
1945

Appointed by Board of Governors:
Phil C. Ferguson
Neil R. Johnson
Lloyd Noble

Stockman, Woodward, Okla
Rancher and farmer, Norman, Okla
President, Noble Drilling Corporation, Tulsa, Okla

1943
1944
1945

Appointed by Federal Reserve Bank:
L. H . Earhart
George A. Bible
George^ W. Holmes
T. L. Davis

Managing Director, Omaha, Neb
President, First National Bank, Rawlins, Wyo
President! First National Bank| Lincoln/Neb
President, First National Bank, Omaha, Neb

Hugh L. Harrell
A. E. Stephenson

1943
1943

Omaha Branch

Appointed by Board of Governors:
John D . Clark
L. E. Hurtz
Walter S. Byrne

T

1943
1943
1944
1945

Dean, College of Business Administration, University of Nebraska, Lincoln, Neb
1943
President, Fairmont Creamery Company, Omaha, Neb
1944
General Manager, Metropolitan Utilities District of Omaha,
Omaha, Neb
1945

District No. 11—Dallas
Class A:
Frank Turner
J. E. Woods
Walter P . Napier
Class B:
Geo. A. Hill, Jr
E. L. Kurth
J. R. Milam
Class C:
J. B . Cozzo
Dolph Briscoe
Jay Taylor

President, First National Bank, Decatur, Texas
1943
Chairman of Board, Temple National Bank, Temple, Texas.. 1944
President, Alamo National Bank, San Antonio, Texas
1945
President, Houston Oil Company of Texas, Houston, Texas.. 1943
Vice President and General Manager, Angelina County Lumber Company, Keltys, Texas
1944
President, The Cooper Company, Inc., Waco, Texas
1945
Builder and manufacturer, Dallas, Texas
Stock raiser, Uvalde, Texas
Ranching and stockyards, Amarillo, Texas

1943
1944
1945

El P a s o Branch
Appointed by Federal Reserve Bank:
R. W. McAfee
J. E. Moore
acobs
H. A. Jacobs..
John K. Hicks
Appointed by Board of Governors:
Jack B. Martin
Frank M. Hayner
R. E. Sherman

Vice President, State National Bank, El Paso, Texas
Vice President, First National Bank, Roswell, N . M
Vice President, El Paso National Bank, El Paso, Texas
. .President and Manager, Hicks-Hayward Company, El Paso,
Texas

1943
1944
1945
1945

President, Arizona Ice and Cold Storage Company, Tucson,
Ariz
1943
President, Las Cruces Lumber Company, Las Cruces, N . M . . . 1944
President, Leavell and Sherman, Inc., El Paso, Texas
1945

Houston Branch
Appointed by Federal Reserve Bank:
W. N . Greer
J. W.McCullough
B. C. Roberts
James A. Elkins
Appointed by Board of Governors:
George G. Chance
Henry Renfert
J. S. Abercrombie

.President, Citizens State Bank, Houston, Texas
1943
.President, Hutchings-Sealy National Bank, Galveston,
Texas
1944
.President, Wharton Bank & Trust Company, Wharton,
Texas
1945
.President, City National Bank, Houston, Texas
1945
.Farmer, Bryan, Texas
1943
.Renfert-Helmbrecht Company, Galveston, Texas
1944
President, J. S. Abercrombie Company, Houston, Texas. . . . 1945
San Antonio Branch

Appointed by Federal Reserve Bank:
J.A.Walker
T. C. Frost, Jr
E. J . Miller
Robert D . Barclay




.Vice President, Del Rio National Bank, Del Rio, Texas
. Vice President, Frost National Bank, San Antonio, Texas . . . .
. President, South Texas National Bank, San Antonio, Texas . .
President, National Bank of Commerce, San Antonio, Texas . .

1943
1944
1945
1945

FEDERAL RESERVE SYSTEM

III

SENIOR OFFICERS A N D DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1 9 4 3 - C o n t .
Term
Expires
Dec. 31
Live stock and farming, Twin Oaks Ranch, Dinero, Texas
1943
General Contractor, Austin, Texas
1944
Professor of Economics, University of Texas, Austin, Texas .. 1945

DIRECTORS—Cont.
Appointed by Board of Governors:
Holman M. Cartwright
J. M. Odom
George W. Stocking

District No. 12—San Francisco
Class A:
C. K. Mclntosh

Chairman of the Board, The Bank of California, N. A., San
Francisco, Calif
1943
President, Puget Sound National Bank of Tacoma, Tacoma,
Wash
1944
Chairman of the Board & Executive Vice President, The First
National Bank of Willows, Willows, Calif
1945

Reno Odlin
Carroll F. Byrd
Class B.Elmer H. Cox

President, Madera Sugar Pine Company, San Francisco,
1943
Calif
1944
Partner, A. Schilling and Company, San Francisco, Calif
President, Union Oil Company of California, Los Angeles,

Wm. G. Volkmann
Reese H. Taylor

Calif..
Class C:
St. George Holden
Henry F. Grady

1945

St. George Holden Realty Company, San Francisco, Calif... 1943
President, American President Lines, Ltd., San Francisco,
1944
Calif
Director,, Giannini Foundation of Agricultural Economics,,
g
U i i
fClifi
B k l
Clif
University of California, Berkeley, Calif
1945

Harry R. Wellman

Los AngeleslBranch
Appointed by Federal Reserve Bank:
W. N. Ambrose
F. E. Snedecor
Herbert D. Ivey
A ppointed by Board of Governors:
Y. Frank Freeman
C. E. Myers

.Managing Director, Los Angeles, Calif
1943
.President, The First National Bank of Corona, Corona, Calif.. 1943
President, Citizens National Trust & Savings Bank of Los
Angeles, Los Angeles, Calif
1944
. Vice President, Paramount Pictures, Inc., Hollywood, Calif...
. Agriculturalist, Covina, Calif

1943
1944

Portland Branch
Appointed by Federal Reserve Bank:
D. L. Davis
Paul S. Dick
William C. Christensen
Appointed by Board of Governors:
George T. Gerlinger
William H. Steen

Managing Director, Portland, Ore
1943
.President, The United States National Bank of Portland,
Portland, Ore
1943
.President, The Commercial National Bank of Hillsboro,
Hillsboro, Ore
1944
.President, Willamette Valley Lumber Company, Portland,
Ore
1943
. Live stock and farming, Milton, Ore
1944
Salt Lake City Branch

Appointed by Federal Reserve Bank:
W. L. Partner
Frederick P. Champ
Orval W. Adams
Appointed by Board of Governors:
Herbert S, Auerbach
R. C.Rich

.Managing Director, Salt Lake City, Utah
1943
.President, Cache Valley Banking Company, Logan, Utah
1943
.Executive Vice President,The Utah State National Bank of
Salt Lake City, Salt Lake City, Utah
1944
.President and General Manager, Auerbach Company, Salt
Lake City, Utah.
1943
. Live stock and farming, Burley, Idaho
1944
Seattle Branch

Appointed by Federal Reserve Bank:
C. R. Shaw
Andrew Price
Fred L. Stanton

v

Appointed by Board of Governors:
Charles F. Larrabee
FredNelsen..




Managing Director, Seattle, Wash
1943
.President, The National Bank of Commerce of Seattle, Seattle,
Wash
1943
. President, The Washington Trust Company, Spokane, Wash... 1944
.Vice President, Pacific American Fisheries, Inc., Bellingham,
Wash
1943
.Farmer and dairyman, Seattle, Wash
1944

FEDERAL RESERVE SYSTEM
BOUNDARIES OF FEDERAL RESERVE DISTRICTS
AND THEIR BRANCH TERRITORIES

0
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Jacksonville

\
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BOUNDARIES OF FEDERAL RESERVE DISTRICTS

—

\

i>w
^

BOUNDARIES OF FEDERAL RESERVE BRANCH TERRITORIES

^L

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

(g)

FEDERAL RESERVE BANK CITIES

•

FEDERAL RESERVE BRANCH CITIES

O

FEDERAL RESERVE BANK AGENCY

^ \

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ans

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X 1
W
JANUARY 2, 1943

BOARD OF GOVERNORS OF THE. FEDERAL RESERVE STSTEM

NOTE.—There has been no change in district or branch territory boundaries since the publication of the description in the Annual Report
of the Board of Governors for 1942, pp. 138-145.




INDEX
Page
Abercrombie, J. S., appointed director at Houston Branch
51
Absorption of exchange charges
33
Acceptances, buying rates
74
Acceptances to 100 per cent of capital and surplus, application granted
45
Agricultural loans
78
Alexander, W. A., appointed director at Denver Branch
52.
Amendments to Federal Reserve Act: (JSee Legislation)
Arthur, W. C , appointed director at Pittsburgh Branch
51
Assets and liabilities: (See Condition statements)
Audit of accounts of Board for 1943
56
Balderston, C. Canby, appointed Class C director at Philadelphia
51
Bank holding companies:
Regulation and supervision of
34
Voting permits issued to
44
Bank mergers
81
Bank premises:
Federal Reserve Banks
54, 60, 62.
Member banks, December 31, 1943
76
Bank supervisory agencies:
Duties and responsibilities increased during year
43
Banking and Monetary Statistics, publication of
46
Banking offices:
Number of:
i933" I 943 •••••.
80
1943, changes in
30
Banks:
Branches:
Number of:
i933-!943
80
f
1943, analysis of changes
81
Capital account of
30
Consolidations, absorptions, etc
81
Earnings of
2.9
Loans to, by member banks, December 31, 1943
78
Movement of, changes during year
30
Number of:
I
i933~ 943
80
:
1943, analysis of changes in
81
Position in war economy
2.5
Purchase of Treasury issues by commercial
14
Services of, increase in
31
Suspensions, number of
81
(See also Federal Reserve Banks; Mutual savings banks; National banks; Nonmember
banks; State member banks)
Bills:
Bought by Federal Reserve Banks:
All banks combined:
1918-1942., end-of-year
figures
79
1943, end-of-month
figures
79
Bought in open market by Federal Reserve Banks:
Volume of operations
67
Discounted by Federal Reserve Banks:
All banks combined:
1918-1942., end-of-year
figures
79
1943, end-of-month
figures
79
December 31, 1943
60
Each bank, end-of-year
figures
62.

Earnings on, each bank
Volume of operations
Board of Governors:
Audit of accounts for 1943 by Federal Reserve Bank of Richmond
Expenditures for year
Members, list of
Officers




68
67
56
56
101
101

"3

114

INDEX

Board of Governors—Continued.
Page
Policy actions: (See Policy actions)
Publications, distribution of
50
Receipts and disbursements for 1943
72.
Regulations: (See Regulations)
Research and advisory services
46
Staff, number of employees
55
Bonds: (See Government securities)
Branch banks:
Federal Reserve System:
Building operations of
54
Direct settling branches, number added during year
^
Directors, list of
105
Examination of
43
Responsibilities enlarged
42.
Vice presidents appointed at certain branches to be in charge of
42.
Foreign, number in operation at end of year
45
Movement of, changes during year
30
Number of:
8o
i933- I 943- • •. • • v
1943, analysis of changes
81
Brokers and dealers in securities, loans to
78
Building operations of Federal Reserve Banks and branches
54
Business indexes
84
Byrne, Walter S., appointed director at Omaha Branch
52.
Canadian Joint Economic Committees, dissolution of
50
Calkins, Robert D., appointed Class C director at New York
51
Capital:
Accounts
30
Federal Reserve Banks
61, 63
International movement of
10
Member banks
77
Census of foreign property owned, participation of Federal Reserve Banks
41
Central reserve city member banks:
Assets and liabilities
76
Classification of loans and Government direct obligations
78
Certificates of indebtedness, holdings of Federal Reserve Banks
66, 67
Chairmen of Federal Reserve Banks:
List of
103
Meetings during year
56
Charts:
Bank deposits and currency
9
Consumer debt
2.4
Individual incomes, expenditures, and taxes
7
Industrial production
5
Member bank reserves and related items
17
Ownership of Government securities
14
Reserve Bank holdings of United States Government securities
16
Clark, John D., appointed director at Omaha Branch
52.
Clearing and collection:
Absorption of exchange charges
33
Interdistrict settlement fund, changes in
55
Par list, number of banks on list and number not on list
32., 82.
Volume of operations at Federal Reserve Banks
67
Coins received and counted by Federal Reserve Banks
67
Commercial paper:
Discount rates, open market
83
Member bank holdings, December 31, 1943
78
Commitment fees:
Loans under Regulation V, entry for policy record:
Meeting of May 12.
86
Meeting of August 30
88
Commitment rates of Federal Reserve Banks
74
Committees:
Executive, of Federal Advisory Council
102.
Federal Open Market: (See Federal Open Market Committee)
Joint Economic Committees of Canada and United States, work of staff of Board o n . .
50



INDEX
Commodity Credit Corporation:
Federal Reserve Banks as depositaries for, authorized by Act of Congress
Services performed by Federal Reserve Banks for
Condition statements:
Federal Reserve Banks:
All banks combined, December 31, 1943
Each bank, end-of-year figures
Member banks, December 31, 1943
Conferences: (See Meetings)
Congress, reports by Board on proposed legislation
Consolidations, absorptions, etc., of banks
Construction contracts awarded:
Indexes of value of
Consumer credit:
Chart
Discussion of
Minimum down payments and maximum maturities
Regulation W, amendment to
Restrictions on
Country member banks:
Assets and liabilities
Classification of loans and Government direct obligations
Credit, bank:
Federal Reserve:
1918-1942., end-of-year
figures
1943, end-of-month
figures
Credit control, selective by Federal Reserve System
Credit facilities available
Currency:
Chart on
Circulation, 1918-1943
Expansion during year
Federal Reserve notes: (See Federal Reserve notes)
Received and counted by Federal Reserve Banks
Defense Plant Corporation, services performed by Federal Reserve Banks for
Defense Supplies Corporation, services performed by Federal Reserve Banks for
Department store sales:
Index
Revision of index
Depositary services for Treasury
Deposits:
Chart on
Expansion during year
Federal Reserve Banks:
All banks combined, December 31, 1943
Each bank, end-of-year
figures
Government :
Federal Reserve Banks:
All banks combined:
1918-1942., end-of-year
figures
1943, end-of-month
figures
Each bank, end-of-year
figures
G r o w t h during year
Member banks, December 31, 1943
Nonmember deposits in Federal Reserve Banks:
1918-1942., end-of-year
figures
1943, end-of-month
figures
Ownership of, survey being made by Board and Federal Reserve Banks
Reserves required from member banks
Savings, interest rates on
Time, interest rates on
War loan, exemption from reserve requirements
Directors:
Federal Reserve Banks:
Balderston, C. Canby, appointed Class C at Philadelphia
Calkins, Robert D., appointed Class C at New York
Classes of



II5
Page
57
40
60
62.
76
57
81
84
2.4
2.4
73
58, 88
2.3
76
78
79
79
2.2.
3
9
79
2.8
67
40
40
84
47
38
9
8
61
63

79
79
63
2.5
76
79
79
46
75
75
75
15, 57
51
51
51

Il6

INDEX

Directors—Con tin ued.
Federal Reserve Banks—Continued.
Hague, Lyle L., appointed Class C at Kansas City
List of
Myers, William I., appointed Class C at N e w York
Federal Reserve branch b a n k s :
Abercrombie, J. S., appointed at Houston Branch
Alexander, W . A., appointed at Denver Branch
A r t h u r , W. C , appointed at Pittsburgh Branch
Byrne, Walter S., appointed at Omaha Branch
Clark, J o h n D . , appointed at O m a h a Branch
Lee, Charles S., appointed at Jacksonville Branch
List of
Myers, C. E., appointed at Los Angeles Branch
Shaffer, John J., Jr., appointed director at N e w Orleans Branch
Stocking, George W., appointed at San Antonio Branch
Discount rates at Federal Reserve Banks
Dividends:
Federal Reserve Banks:
All banks combined, 1914-1943
Each bank, 1943
D o w n payment and maximum maturity on consumer credit under Regulation W
Durable manufactures index
Earnings and expenses:
Federal Reserve Banks:
All banks combined
During 1943 and 1942.
Each bank
Earnings of banks
Employees of Federal Reserve Banks, number and salaries
Employment:
Factory employment index
Nonagricultural index
Examinations:
Federal Reserve Banks
Foreign banking corporations
State member banks
Expenditures and receipts of Government as result of war financing
Expenses:
Board of Governors of the Federal Reserve System
Federal Reserve Banks
Exports and imports:
Amount of, for year
Factory employment, index
!
"
Federal Advisory Council:
Meetings
Members and officers
Resolution regarding final settlement of terminated contracts
Federal Deposit Insurance Corporation:
Membership changes
Federal Open Market Committee:
Meetings during year
Members and officers
Policy actions: (See Policy actions)
Federal Reserve Act:
Amendments: (See Legislation)
Reports on bills introduced in Congress
Federal Reserve Bank of N e w Y o r k :
Foreign transactions by
Stabilization Fund operations under instructions from Treasury
Federal Reserve Bank of Richmond:
Audit of accounts of Board for 1943
Federal Reserve Banks:
Assessment for expenses of Board of Governors
Branches:
Building operations of
Direct settling branches, number added during year
Directors, list of




Page
51
105
51
51
52.
51
52.
52.
52.
105
51
52.
52.
74

70
69
73
84

70
52.
68
2.9
71
84
84
43
46
43
12.
56, 72.
68, 70
10
84
56
102.
48, 99
81
56
101

57
41
40
56
56
54
55
105

INDEX

117

Federal Reserve Banks—Continued.
Branches—Continued.
Page
Examination of
43
Responsibilities enlarged
42.
Vice presidents appointed at certain branches to be in charge of
42.
Building operations during year
54
Chairmen and Deputy Chairmen:
List of
103
Meetings of
56
Depositary services for Treasury
38
Deputy Chairmen, list of
103
Directors:
Appointment of Class C
50
Classes of
51
List of
105
Dividends paid:
All banks combined, 1914-1943
70
Each bank, 1943
69
Earnings and expenses:
All banks combined
70
Discussion of
52.
During 1943 and 1942.
53
Each bank
68
Earnings on bills and securities
53
Employees, number and salaries
71
Examination during year
43
Financing of war program
1
Fiscal agency operations
38
Issuing and servicing of Government obligations
39
Officers:
List of
104
Number and salaries of
71
Operations of
50
Personnel and operations of
50
Presidents:
List of
104
Meetings
56
Profit and loss account
69
Purchases of Government securities by
15
Retirement System
54
Salaries of officers and employees
68, 71
Services performed for Government corporations
40
Staff, expansion during year
52.
Vice presidents, list of
104
Volume of operations
67
Wartime services of
37
Federal Reserve districts, map showing outline of
112.
Federal Reserve notes:
Circulation
> .
63
Clearing for interdistrict balances, discontinued
55
Collateral security, end-of-year
figures
63
Government obligations as collateral for, amendment to Section 16 of the Federal
Reserve Act
57
Issued
63
Redemption fund:
All banks combined, December 3 1 , 1943
60
Each bank, end-of-year
figures
62.
Federal Reserve System:
Contributions to war financing program
12.
M a p of
112.
Membership, changes in
32.
Fiduciary powers:
National banks granted authority to exercise, changes during year
45
Fiscal agency operations of Federal Reserve Banks
.
38
Foreign banking corporations:
Discussion
45
Regulation K, amendment to
58
Policy action
89




Il8

INDEX

Foreign banks:
Page
Deposits of, held by Federal Reserve Banks:
All banks combined, December 31, 1943
61
Each bank, end-of-year figures
63
Foreign banks and bankers:
Relations of Reserve Banks with, amendment to Regulation N
58, 89
Foreign branches of member banks and foreign banking corporations
45
Foreign Funds Control, activities of Federal Reserve Banks as agents
41
Foreign transactions by Federal Reserve Bank of New York
41
Franchise tax paid by Federal Reserve Banks to Government, 1917-1932.
70
Functions of banking system, enlarged scope of
31
Gold:
International movement of
10
Stock:
Chart
17
1918-1942., end-of-year
figures
79
1943, end-of-month
figures
79
Gold certificates:
Federal Reserve Bank holdings:
All banks combined, December 31, 1943
60
Each bank, 1942. and 1943
62.
Government corporations:
Services performed by Federal Reserve Banks
40
Government debt, amount of
1
Government securities:
Bank holdings of
66, 67
Bond yields, table
83
Collateral for Federal Reserve notes, authority extended under Section 16 of the
Federal Reserve Act
57
Federal Reserve Bank holdings:
All banks combined:
End of December, 1942.-1943 in detail
60
December 31, 1943
66
1918-1942., end-of-year
figures
79
1943, end-of-month
figures
79
Each bank, end-of-year
figures
'
62.
Earnings on
53
Federal Reserve purchases of
15
Fiscal agency operations of Federal Reserve Banks
38
Guaranteed securities
66
Issues:
Amounts and types of
j6t 78
Redemption and exchange of
67
Issuing and servicing of Government obligations by Federal Reserve Banks
39
Interest rate on
66
Discussion of prospects on
18
Member bank holdings
76, 78
Nonbank purchases of
13
Open market operations in
1
Ownership of, chart
14
Purchase by commercial banks
14
Reserve Bank holdings of, chart
16
Resolutions of Federal Open Market Committee authorizing transactions in
90-98
Review of war
financing
1
Treasury bills, rates on
83
Treasury bonds and notes, holdings of Federal Reserve Banks
66
Treasury notes:
Holdings by Federal Reserve Banks
66
Yields
83
Volume handled by Federal Reserve Banks
67
Guarantee charges and rates on loans under Regulation V
19
Hague, Lyle L., appointed Class C director at Kansas City
51
Holding company affiliates:
Regulation and supervision of
34
Voting permits issued to
44
Honduras:
Participation by staff of Board in joint mission to establish central bank
50



INDEX
Income:
National income payments, indexes
Pressure of rising incomes on prices
Indexes:
Business
Department store sales, revision of
Industrial production, revision of
Industrial advances of Federal Reserve Banks:
All banks combined, December 31, 1943
Commitments
Each bank, end-of-year figures
Earnings on
Rates on
Volume of operations
Industrial expansion during year
Industrial production:
Chart of
Discussion of
Indexes
Revision of Board's index
Inflation:
Forces tending toward and problem of control
Monetary policy as related to
Interdistrict collection system:
Number of banks on list and number not on list
Volume of operations at Federal Reserve Banks
Interdistrict Settlement Fund, changes during year
Interest rates:
Federal Reserve Banks
Open market in New York City
Prospects on, discussion of
Savings deposits
Time deposits
United States Government securities
International monetary stabilization, discussion of plans for
Investments:
Member banks, December 31, 1943
Lee, Charles S., appointed director at Jacksonville Branch
Legislation:
Bank holding companies, changes suggested
Federal Reserve Act, proposed amendment to Section 19 to provide that absorption of
exchange and collection charges by member banks shall not be deemed to be payment of interest
'.
Federal Reserve Banks as depositaries for Commodity Credit Corporation
Government obligations as collateral for Federal Reserve notes
Reports to Congress on bills
Stabilization Fund, power of the President extended
War loan deposit accounts, amendment to Section i2.b of Federal Reserve Act
Loans:
Brokers' loans by member banks
Contractors and subcontractors guaranteed by Government, discussion of
Guaranteed, to industry for war production
Industrial, rates on
Real estate loans of member banks
Security loans by member banks
Total for member banks, December 31, 1943
VT loans, discussion of
Loans and investments:
Member banks, December 31, 1943
Map:
Federal Reserve districts
Margin requirements under Regulations T and U
Meetings:
Administration of Regulation V
Administration of Regulation W
Chairmen of Federal Reserve Banks
Examiners at Federal Reserve Banks, participation by representatives of Board's
Division of Examinations



119
Page
84
6
84
47
47
60
63
62.
68
74
67
2.
5
4
84
47
6
10
31, 82.
67
55
74
83
18
75
75
66
49
76
52.
34
34
57
57
57
57
57
78
12.
19
74
78
78
76, 78
2.0
76
112.
2.3, 75
56
56
56
44

I2.O

INDEX

Meetings—Continued.
Federal Advisory Council
Federal Open Market Committee
Presidents of Federal Reserve Banks
Research work of Federal Reserve System
Member banks:
Changes
Condition statements, December 31, 1943
National banks: (See National banks)
Number of.
State member banks: (See State member banks)
Membership in Federal Reserve System:
Analysis of increase during year
Minerals, production index
Monetary policy and inflation
Money in circulation:
Chart
New seasonal adjustment factors
1918-1941, end-of-year
figures
1943, end-of-month figures
Money rates:
Open market in New York City
Mutual savings banks:
Banking offices, 1933-1943
Branches:
I
933~I943
r
1943, analysis of changes in
Number of:
I
933~ I 943
;
r
1943, analysis of changes in
Myers, C. E., appointed director at Los Angeles Branch
Myers, William I., appointed Class C director at New York
National banks:
Acceptance powers granted to
Assets and liabilities, December 31, 1943
Banking offices, 1933-1943
Branches:
Number of:
I
933~I943
•.
1943, analysis of changes in
Classification of loans and Government direct obligations
Number of:
i933~I943
•.
1943, analysis of changes in
Trust powers authorized and terminated during year
Nondurable goods, production index
Nonmember banks:
Deposits of, held by Federal Reserve Banks:
1918-1942., end-of-year
figures
1943, end-of-month
figures
Insured banking offices:
I

933~I943

Page
56
c£
56
56
81
76
80
32., 81
84
10
17
46
79
79
.. .

83
80
80
81
80
81
51
51
45
76
80
80
81
78
80
81
45
84
79
79
8o

Branches
00, 81
Number of
80, 81
Par list, number of banks on list and number not on list
82.
Nonpar banks, number of
82.
Open market account: (See Policy actions, Federal Open Market Committee)
Open market operations to aid war
financing
1
Par list:
Number of banks on list and not on list
32.
Table
82.
Paraguay:
Visit by members of Board's staff in connection with new legislation for reform of
currency system
50
Pay roll savings plan for purchase of war savings bonds
55
Pay rolls, factory, index
84



INDEX

I'LI

Policy actions:
Page
Board of Governors:
Regulation D, Reserves of Member Banks, amendment to
86
Regulation K, Banking Corporations Authorized to do Foreign Banking Business
Under Terms of Section 2.5a of Federal Reserve Act, amendment to
89
Regulation N , Relations with Foreign Banks and Bankers, amendment to
89
Regulation T, Extension and Maintenance of Credit by Brokers, Dealers, and
Members of National Securities Exchanges, amendment to
87
Regulation V, War Financing:
Commitment fees on loans under
86, 88
Regulation W, Consumer Credit, amendment to
88
Federal Open Market Committee:
Authority to effect transactions in System open market account:
Meeting of January 2.6
90
Meeting of March 1.
93
Meeting of May 15
94
Meeting of June 2.8
95
Meeting of October 18
97
Purchase by Federal Reserve Banks of Treasury bills at posted discount rate:
Meeting of March 2.
92.
Meeting of May 15
,
93
Meeting of June 2.8
95
Replacement of maturing securities:
Meeting of January 2.6
91
Meeting of March 2.
92.
Replacement of maturing Treasury bills
96
Postal savings deposits:
Interest rate on, paid by member banks
75
Postwar problems, consideration of
48
Presidents of Federal Reserve Banks:
List of
104
Meetings
56
Salaries
71
Prices:
Pressure of rising incomes on
6
Wholesale commodity, index
84
Production:
Expansion for war effort
4
Industrial: (See Industrial production)
Publications of Board:
Distribution to public curtailed during 1943
50
Rates:
Buying rates on bills
74
Commitment
74
Discount at Federal Reserve Banks
74
Industrial loans under Section 13b of Federal Reserve Act
74
Interest:
Federal Reserve Banks
74
Government securities, prospects on
18
Open market rates in New York City
83
Savings deposits
75
Time deposits
75
Ration banking, handling of ration checks by Federal Reserve Banks
38
Real estate:
Loans on, by member banks, December 31, 1943
78
Member bank holdings, December 31, 1943
76
Reconstruction Finance Corporation:
Services performed by Federal Reserve Banks for
^.. .
40
Red Cross Blood Bank:
Contributions of staff of Board
56
Regulations, Board of Governors:
D, Reserves of Member Banks:
Amendment to
58
Policy record
86
K, Banking Corporations Authorized to do Foreign Banking Business:
Amendment to
46, 58
Policy record
89




IZ2.

INDEX

Regulations, Board of Governors—Continued.
Page
N, Relations with Foreign Banks and Bankers:
Amendment to
58
Policy record
89
Q, Payment of Interest of Deposits:
Absorption of exchange charges
33
T, Extension and Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges:
Amendment to
58
Policy record
87
Margin requirements under
2.3, 75
U, Loans by Banks on Stocks:
Margin requirements under
2.3, 75
V, War Financing:
Commitment fees on loans under
86,88
Discussion of
19
Special committee appointed to study
48
W, Consumer Credit:
Amendment to
58
Policy record
:
88
Restrictions on
XT,
Reports to Congress on bills
.'
57
Research and advisory services of Board
46
Reserve city member banks:
Assets and liabilities, December 31, 1943
76
Classification of loans and Government direct obligations
78
Reserve requirements:
Exemption of Treasury war loan deposits from
15, 57
Member banks
75
Regulation D, amendment to
58, 88
Reserves:
Change during year
2.
Federal Reserve Banks:
All banks combined, December 31, 1943
60
Each bank, end-of-year figures
62.
Member banks :
Account in Federal Reserve Banks:
All banks combined, December 31, 1943
60
Each bank, end-of-year figures
62.
Amendment to Regulation D
58, 88
Chart
17
Discussion of
17
Excess:
1918-1942., end-of-year
figures
79
1943, end-of-month
figures
79
Total:
I9i8-i94x, end-of-year
figures
79
1943, end-of-month
figures
79
Resolutions:
Federal Advisory Council:
Final settlement of terminated contracts
48, 99
Retirement System of Federal Reserve Banks:
Changes in
54
Salaries at Federal Reserve Banks
68, 71
Savings deposits, interest rate on
75
Securities:
Government: (See Government securities)
Loans on, by member banks, December 31, 1943
78
Securities exchange administration:
Amendment to Regulation T
58, 87
Services of banks increased
31
Shaffer, John J., Jr., appointed director at New Orleans Branch
52.
Stabilization:
International monetary, discussion of plans for
49
Policies needed as result of growing upward pressure of wages, farm prices, and
profits
7
Stabilization Fund:
Operations
4°
Power of
57
 the President extended


INDEX
Staff of Board of Governors:
Contributions to Red Cross Blood Bank
Number of employees
'
Participation in interdepartmental conferences
Pay roll savings plan for purchase of war savings bonds
Stark, Walter R.:
Granted leave as adviser to Office of Economic Stabilization
Resignation as Assistant Director of Division of Research and Statistics
Stark, Walter R . : (See Staff of Board)
State member banks:
Assets and liabilities, December 31, 1943
Banking offices, 1933-1943
Branches
Classification of loans and Government direct obligations
Examination of
Number of:
I
333-I943--:
•
1943, analysis of changes in
States and political subdivisions, deposits of
Stock prices:
Table
Stocking, George W., appointed director at San Antonio Branch
Studies conducted by Board during year
Surplus:
Federal Reserve Banks
Member banks
Surveys:
Ownership of bank deposits
Regional research work of Board and Federal Reserve Banks
Suspensions of banks
Taxes:
Use in preventing inflation
W i t h h o l d i n g , handling of w o r k for Treasury by Federal Reserve Banks
Treasury bills, holdings of Federal Reserve Banks
Treasury bonds and notes, holdings of Federal Reserve Banks

Treasury currency outstanding, 1918-1943
Trust powers:
National banks granted authority to exercise and to terminate during year
United States Government deposits: (See Deposits, Government)
United States Government securities: (See Government securities)
Uruguayan Bankers Mission:
Headquarters with Board during period spent in United States
Voting permits issued to bank holding companies
War contracts:
Resolution of Federal Advisory Council on settlement of terminated
War finance:
Contributions of Federal Reserve System to
Discussion of
Outline of
War loan deposit accounts:
Amendment to Section i2.b of Federal Reserve Act
War loans:
Commitment fees on loans under
Guaranteed under Regulation V, discussion of
Special committee appointed to study
War savings bonds:
Participation by staff of Board in pay roll savings plan
Wholesale prices:
Advance during year
Index
Withholding tax program




12-3
Page
56
55
49
55
48
55

76
80
80
78
43
8o

81
76
83
52.
47
69, 70
77
46
48
81
9
38
66, 67
66t 6j

79
45

50
44
48, 99
12.
12.
1
57
86, 88
19
48
55
3
84
38


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102