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FEDERAL RE SER VE BANK
OF NEW YORK
r Circular No. 3 6 3 6 T
U December 28, 1950 J

SUPPLEMENT TO REGULATION D
Reserves Required To Be Maintained By Member Banks
With Federal Reserve Banks
Increases in Reserve Requirements

To all M em ber Banks in the
Second Federal Reserve D istrict:

The B oard of G overnors of the F ederal R eserve System has today amended the Supple­
ment to R egulation I), a printed copy o f which is enclosed, to increase reserve requirements
o f member banks.
The B oard released the follow ing statem ent fo r publication F rid a y , December 29, 1950:
The Board o f Governors has increased the amount o f reserves required to be maintained with the
Federal Reserve Banks by banks which are members o f the Federal Reserve System. The increase
will become effective according to the follow ing schedule:
On net demand deposits

E ffective

Central reserve city banks

From 22 to 23 per cent
From 23 to 24 per cent

January 11, 1951
January 25, 1951

Reserve city banks

From 18 to 19 per cent
From 19 to 20 per cent

January 11, 1951
January 25, 1951

Country batiks

From 12 to 13 per cent
From 13 to 14 per cent

January 16, 1951
February 1, 1951

On tim e deposits
Central reserve city and
reserve city banks

From 5 to 6 per cent

January 11, 1951

Country banks

From 5 to 6 per cent

January 16, 1951

This action was taken as a further step toward restraining inflationary expansion o f bank credit,
in accordance with the statement issued by the B oard August 18, 1950, that the B oard and the
Federal Open Market Committee “ are prepared to use all the means at their command to restrain
further expansion o f bank credit consistent witli the policy o f maintaining orderly conditions in
the Government securities market.”




(over)

The volume o f bank credit and the money su pply have continued to increase despite previous
actions by the Federal Reserve and other supervisory agencies, and efforts o f individual banks to
be restrictive in granting credit. Loans o f member banks have increased by about 7 billion dollars
since June, reflecting in part seasonal influences and in part accumulation o f inventories at rising
prices. This is an unprecedented rate o f expansion and has contributed to an excessive rise in the
money supply. Moreover, with the end o f usual seasonal demands fo r credit and currency, banks
w ill have additional funds available fo r lending. The purpose o f the announced increase in reserve
requirements is to absorb such funds and generally to reduce the ability o f banks further to expand
credit that would add to inflationary pressures. The increase is timed so as to absorb reserves coming
into the banks from the post-holiday return flow o f currency.
The effect o f this increase will be to raise the required reserves o f member banks by a total of
approxim ately two billion dollars which, under our fractional reserve banking system, could otherwise
be the basis fo r about a six-fold increase in bank credit in the banking system as a whole.
A fte r the increase, reserve requirements at banks other than central reserve city banks will be at
the maximum legal limits which prevailed during the war period. Requirements on net demand deposits
at central reserve city banks will be two percentage points less than the maximum under existing
authority but above requirements that prevailed fo r these banks during most o f the war period.
A d d it io n a l c o p ie s o f th is c ir c u la r a n d o f th e e n c lo s u r e w ill b e fu r n is h e d u p o n re q u e st.




A

llan

S proul,

President.

SU PPLEM EN T TO R E G U L A T IO N D
ISS U E D B Y T H E B OARD OF GO VE R N O RS O F T H E F E D E R A L R E S E R V E S Y S T E M
O N D E C E M B E R 28, 1950

R ESER V E S R E Q U IR E D TO BE
M A IN TA IN E D B Y M EM BE R BANKS
W IT H FE D E R A L R E SER V E BANKS

Pursuant to the provisions o f section 19 o f the Federal Reserve A ct
and section 2 (a ) o f its Regulation D, the B oard o f Governors o f the
Federal Reserve System hereby prescribes the follow ing reserve bal­
ances which each member bank o f the Federal Reserve System is
required to maintain on deposit with the Federal Reserve Bank o f its
d istrict:
1. I f not in a reserve or central reserve city—
(a ) 5 per cent o f its time deposits until the opening o f busi­
ness on January 16, 1951, and 6 per cent o f its time deposits
thereafter, plus
(b ) 12 per cent o f its net demand deposits until the opening
of business on January 16, 1951, 13 per cent o f its net demand
deposits from January 16, 1951 to January 31, 1951, inclusive,
and 14 per cent o f its net demand deposits thereafter.
2. I f in a reserve city (except as to any bank located in an
outlying district o f a reserve city or in territory added to such
city by the extension o f the c ity ’s corporate limits, which, by the
affirmative vote o f five members o f the B oard o f Governors o f the
Federal Reserve System, is permitted to maintain the reserves
specified in paragraph 1 above)—
(a ) 5 per cent o f its time deposits until the opening o f busi­
ness on January 11, 1951, and 6 per cent o f its time deposits
thereafter, plus
(b ) 18 per cent o f its net demand deposits until the open­
ing o f business on January 11, 1951, 19 per cent o f its net
demand deposits from January 11 to January 24, 1951, inclu­
sive, and 20 per cent o f its net demand deposits thereafter.
3. I f in a central reserve city (except as to any bank located
in an outlying district o f a central reserve city or in territory
added to such city by the extension o f the c ity ’s corporate limits,




which, by the affirmative vote o f five members o f the B oard of
Governors o f the Federal Reserve System, is permitted to maintain
the reserves specified in paragraph 1 or 2 above)—
(a ) 5 per cent o f its time deposits until the opening o f busi­
ness on January 11, 1951, and 6 per cent o f its time deposits
thereafter, plus
(b ) 22 per cent o f its net demand deposits until the open­
ing o f business on January 11, 1951, 23 per cent o f its net
demand deposits from January 11 to January 24, 1951, inclu ­
sive, and 24 per cent o f its net demand deposits thereafter.




PR IN TE D IN N E W YORK

FED ERAL RESERVE BANK
O F NEW YORK
Fiscal A g en t o f the U nited States

December 29, 1950

PAYMENT AT MATURITY OF UNITED STATES SA V IN G S BONDS OF SERIES D-1941
Exchange for United States Savings Bonds of Series E
To Incorporated Banks and Trust Companies and Other Financial Institutions
in the Second Federal Reserve District Qualified to Make Payments in
Connection with the Redemption o f United States Savings Bonds:

W e have been requested by the Secretary o f the T reasu ry to bring to your attention his
public statem ent concerning the paym ent at m aturity o f U nited States Savings B onds o f Series
D -1941, beginning on January 1, 1951.

A copy o f the statem ent is printed on the reverse side

o f this letter.
A n y individual (natural p erson ), nam ed as owner or coowner o f m aturing bonds in his
own right, has the option o f receiving paym ent o f the m aturity value in cash, or o f exchanging
his bonds fo r U nited States Savings Bonds o f Series E , registered in his own name in any
authorized fo rm o f registration.

A n y Series E bonds issued in exchange fo r bonds o f Series

D -1941 will not be subject to the lim itation on holdings prescribed fo r Series E bonds on
original issue.

The exchange m ay be made at any time a fter the m aturity o f the Series D

bonds, but an owner who desires to preserve the continuity o f his investm ent should present
his m aturing bonds in the month in which they m ature and make the exchange at th at time.
The Secretary wishes each institution, which is qualified both to p a y and to issue savings
bonds, to receive m aturing Series D bonds and to issue Series E bonds in exchange therefor,
when so requested by the individual owner or coowT
ner.

Series E bonds m ay be issued in any

authorized denom inations, the issue price o f which is fu lly covered by the proceeds o f the
m aturing bonds presented, or such lesser amount as the owner or coowner m ay direct.

Any

rem aining balance should, o f course, be paid to such owner or coowner.
T he original registration stubs o f Series E bonds issued in exchange fo r Series D bonds
should be m arked in the lower left corner, as fo llo w s:
EXCH
Rubber stam ps to be used in im printing this notation on the stubs were sent to all qualified
paying agents in this D istrict in January, 1948.

A dditional stam ps will be furnished by us

upon request. Stubs bearing this notation m ay be included in the sam e transm ittal letter
with stubs o f bonds issued against regular cash paym ents. T he m aturing bonds received in
exchange should be stam ped with your paym ent stam p and handled in the same manner as
any other paid bonds.
Series D bonds registered in the names o f m inors or incompetents under legal guardianship
are eligible fo r exchange to Series E bonds, but the exchange should be effected through this
Bank.

Series D bonds registered in any form other than in the name o f an individual, as owner

o r coowner, should also be submitted to this Bank fo r paym ent.
A dd ition al copies o f this letter will be furnished upon request.




A

llan

S proul,

President.
( over)

TREASURY DEPARTM ENT
W ashington

IM M E D IA T E R E L E A S E ,
Thursday, December 28, 1950.
Secretary o f the Treasury Snyder today reminded the people o f the United States that our
savings bond program has played and continues to play a most im portant part in assuring the
financial health o f the Nation and in enabling all o f our people to share in the responsibilities
o f Government while at the same time they provide fo r their own personal future security.
He said that the Treasury is, therefore, continuing its program o f urging individuals to buy
more savings bonds.
In furtherance o f this policy, the Secretary called attention to the fact that individual
holders o f the Series D-1941 Savings Bonds, which start m aturing January 1, 1951, are permitted
to reinvest the proceeds, as they mature, in the Series E Savings Bonds which are currently on
sale, without regard to the annual limitation. This can be accomplished through the established
paym ent and issue procedure, and the Series E bonds so acquired will be exem pt from the
$10,000 (m aturity value) annual limitation on holdings o f Series E bonds. H olders will be
perm itted to reinvest any part o f the proceeds o f their maturing bonds up to such denominational
amount as the proceeds will fu lly cover. Since Series E bonds may be purchased only in the
names o f individuals, only those Series D-1941 Savings Bonds held b y individuals will be eligible
fo r this privilege.
A n y agent qualified to pay Savings Bonds, which is also an issuing agent, can accomplish
this exchange through the simple procedure o f redeeming matured bonds registered in the name
o f an individual owner or coowner, and applyin g the proceeds to the purchase o f new Series E
bonds. The bonds may also be exchanged, o f course, at any Federal Reserve Bank or Branch,
or at the Treasury Department.
The new bonds will be dated as o f the first day o f the month in which the matured Series
D-1941 Savings Bonds are presented fo r payment. In order to preserve the continuity o f the
investment, individual holders o f the m aturing bonds should present them for exchange during
the month in which they mature.
This exchange privilege applies to savings bonds o f Series D-1941, which will mature from
January 1, 1951 through A p ril 30, 1951. A t a later date the Treasury will announce its p olicy
with respect to savings bonds o f Series E-1941, which begin to mature on M ay 1, 1951.





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102