Full text of Federal Reserve Bank of New York Circulars : 3673. Bulletin No. 1 of Voluntary Credit Restraint Committee

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FEDERAL R E SER VE BANK
O F NEW YORK
/■Circular N o. 3 6 7 3 1
I March 20, 1951 J

BULLETIN NO. 1 OF V O L U N T A R Y CREDIT R ESTR A IN T COM M ITTEE

To all Financing In stitution s in the
Second Federal R eserve D is tr ic t:

There is printed on the reverse side of this circular a copy o f Bulletin No. 1, released
today, o f the Voluntary Credit Restraint Committee, appointed by the Board of Governors
o f the Federal Reserve System, pursuant to the Program fo r Voluntary Credit Restraint.
Copies o f the Program were furnished you by the Chairman of the Board o f Governors,
by letter dated March 9, 1951.
The members of the Voluntary Credit Restraint Committee are as follow s:

Commercial Banks
S. M o o r e , V ice President, The National City Bank, New Y ork, New York.
R. D a v i s , V ice President, State-Planters Bank and Trust Company,
Richmond, V irginia.
K e n t o n R. C r a v e n s , V ice President, Mercantile-Commerce Bank & Trust Company,
St. Louis, Missouri.
E v e r e t t D. R e e s e , President & Trust Officer, Park National Bank, Newark, Ohio.
G eorge

C a r l is l e

Insurance Companies
L. H a r r i s o n , Chairman, New Y ork L ife Insurance Company, New Y ork, New Y ork.
M. S h a n k s , President, Prudential Insurance Company o f America,
Newark, New Jersey.
E . B. S t e v e n s o n , Jr., E xecutive V ice President, National L ife and A ccident Insurance
Company, Nashville, Tennessee.
C l a u d e L. B e n n e r , President, Continental Am erican L ife Insurance Company,
W ilm ington, Delaware.
G eorge

C arroll

Investment Bankers
M. L i m b e r t , V ice President, B lyth & Co., Inc., New Y ork, New York.
S m u t n y , Senior Partner, Salomon Bros. & H utzler, New Y ork, New York.
F r a n c i s K e r n a n , Partner, W hite, W eld & Co., New Y ork, New York.
W i l l i a m K . B a r c l a y , J r., Partner, Stein Brothers & Boyce, Philadelphia, Pennsylvania.
L

ee

R

udolf

The Committee is under the chairmanship of
Governors o f the Federal Reserve System.

O liv e r

S.

P o w e ll,

member of the Board o f

Additional copies of this circular will be furnished upon request.




A

llan

S

proul,

President.

(over)

B U L L E T IN

NUMBER

1 OF

VOLUNTARY

C R E D IT

R E S T R A IN T

C O M M IT T E E

The Voluntary Credit Restraint Committee at its meeting 011 Marcli 14
and 15 in Washington gave consideration to the functioning of the Program as
developed by the financing institutions and approved by the appropriate Govern­
ment agencies.
Regional committees are in the process of formation to be available for con­
sultation by lenders who have specific questions on the application o f the Credit
Restraint Program.
The Committee recognizes that there are many inflationary influences at
work. The Committee expects to issue further bulletins from time to time on
various phases of the Voluntary Credit Restraint Program. This bulletin deals
with the matter of inventory financing.
Inventories in the United States, particularly at wholesale and retail estab­
lishments, are at peak levels even after allowance is made for the sharp increase
in prices at which inventories are carried. An important part of this abnormal
increase in inventories has been financed by borrowed money.
Excess inventory accumulation has already contributed directly to the rise
o f wholesale and retail prices beyond any level justified by the supply situation.
It obviously has created undue competition in scarce materials.
In the light o f the above, the Voluntary Credit Restraint Committee
expressed the hope that all financing institutions would, in carrying out the
terms o f the Program
(1) Refrain from financing inventory increases above normal levels
relative to sales, or reasonable requirements by other conservative yard­
sticks.
(2) Encourage borrowers who already have excess inventories to bring
these commitments and inventory positions in line as promptly as is reason­
ably practical, thereby reducing the amount of credit being used in this
manner.
T

Committee action of
March 15, 1951.




h e

C

o m m it t e e

on

V

oluntary

C

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