Full text of Annual Report of the Board of Governors of the Federal Reserve System : 1942

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TWENTY-NINTH

ANNUAL REPORT
of the

BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM

C O V E R I N G O P E R A T I O N S FOR




T H E YEAR

1942

BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
[December 31, 1941]

M A R R I N E R S. ECCLES, Chairman

RONALD RANSOM, Vice Chairman
M . S . SZYMCZAK

ERNEST G.

JOHN K. MCKEE

R. M .

EVANS

LAWRENCE CLAYTON, Assistant to the Chairman
ELLIOTT THURSTON, Special Assistant to the Chairman

OFFICE O F T H E SECRETARY
CHESTER M O R R I L L , Secretary

LISTON P . BETHEA, Assistant Secretary
S. R. CARPENTER, Assistant Secretary
FRED A . NELSON, Assistant Secretary
L E G A L DIVISION
WALTER WYATT, General Counsel
J. P . DREIBELBIS, General Attorney
GEORGE B. VEST, Assistant General Attorney
B. MAGRUDER W I N G H E L D , Assistant General Attorney
DIVISION O F RESEARCH A N D STATISTICS
E . A . GOLDENWEISER, Director
WOODLIEF THOMAS, Assistant Director
WALTER R . STARK, Assistant Director
DIVISION O F E X A M I N A T I O N S
LEO H . PAULGER, Chief
C. E . CAGLE, Assistant Chief
WILLIAM B. POLLARD, Assistant Chief
DIVISION O F BANK O P E R A T I O N S
E D W A R D L . SMEAD, Chief

J. R. V A N FOSSEN, Assistant Chief
J. E . HORBETT, Assistant Chief
DIVISION O F SECURITY LOANS
CARL E . P A R R Y , Chief

DIVISION O F P E R S O N N E L A D M I N I S T R A T I O N
ROBERT F . L E O N A R D , Director

OFFICE O F A D M I N I S T R A T O R F O R WAR LOANS C O M M I T T E E
EDWARD L . SMEAD, Acting Administrator
GARDNER L . BOOTHS, I I , Assistant
Administrator
FISCAL A G E N T
O . E . FOULK, Fiscal Agent
JOSEPHINE E . LALLY, Deputy Fiscal Agent
11




DRAPER

CONTENTS
TEXT OF REPORT
PAGE

Summary
i
Transition to War Economy
3
Cost of the War
7
War Finance and Federal Reserve Policies
9
The War Financing Program
9
Federal Reserve Purchases of United States Government Securities. . 11
Reduction in Reserve Requirements at Central Reserve City Banks. . 17
Reduction in Discount Rates
2.0
Supervisory Policy Regarding Government Securities
21
Bank Lending in War Time
21
Further Restrictions on Consumer Credit
23
Role of Credit Authorities in Preventing Inflation
2.6
Federal Reserve Banks as Fiscal Agents under War Program
31
Enlarged Responsibilities of Federal Reserve Bank Branches
38
The Banking Structure and Bank Supervision
39
Research and Advisory Services
44
Reserve Bank Personnel
47
Reserve Bank Operations
49
Board of Governors—Staff and Expenditures
53
Federal Reserve Meetings
54
Amendments to the Federal Reserve Act and Reports to Congress
55
Changes in Regulations of the Board of Governors
57
TABLES
No. 1. Statement of Condition of the Federal Reserve Banks (in
detail) December 31, 1942.
No. 2.. Statement of Condition of Each Federal Reserve Bank at
End of 1941 and 1942
No. 3. Holdings of United States Government Securities by
Federal Reserve Banks at End of December 1941 and 1941
No. 4. Volume of Operations in Principal Departments of Federal
Reserve Banks, 1938-1942.
No. 5. Earnings and Expenses of Federal Reserve Banks during
1941
No. 6. Current Earnings, Current Expenses, and Net Earnings of
Federal Reserve Banks and Disposition of Net Earnings,
1914-1941
No. 7. Number and Salaries of Officers and Employees of Federal
Reserve Banks, December 31, 1941



60-61
61-65
66
67
68-69

70-71
71
in

No. 8. Receipts and Disbursements of the Board of Governors of
the Federal Reserve System for the Year 1942.
No. 9. Minimum Down Payments and Maximum Maturities on
Consumer Credit Subject to Regulation W
No. 10. Federal Reserve Bank Discount, Interest, and Commitment
Rates, and Buying Rates on Bills, December 31, 1942... .
No. 11. Maximum Rates on Time Deposits
No. n . Member Bank Reserve Requirements
No. 13. Margin Requirements
No. 14. All Member Banks—Assets and Liabilities on December 31,
1941, by Classes of Banks
No. 15. All Member Banks—Classification of Loans and United
States Direct Obligations on December 31, 1942.
No. 16. Member Bank Reserve Balances, Reserve Bank Credit, and
Related Items—End of Year 1918-1941 and End of Month
I942No. 17. Number of Banking Offices in United States, 1933-1941. . .
No. 18. Analysis of Changes in Number of Banking Offices During
1941
No. 19. Number of Banks on Par List and Not on Par List, by
Federal Reserve Districts and States, on December 31,
1941 and 1941
No. 2.0. Money Rates, Bond Yields, and Stock Prices
No. 2.1. Business Indexes

77-~71>
73
74
75
75
75
76-77
78

79
80
81

81
83
84

APPENDIX

Record of Policy Actions—Board of Governors
Record of Policy Actions—Federal Open Market Committee
Joint Announcement of the Federal Bank Supervisory Agencies
Regarding Amortization of Debt for Nonproductive Purposes..
Use of Credit for Accumulation of Inventories of Consumer Goods. .
Board of Governors of the Federal Reserve System
Federal Open Market Committee
Federal Advisory Council
Senior Officers and Directors of Federal Reserve Banks
State Bank and Trust Company Members
Description of Federal Reserve Districts
Federal Reserve Branch Territories
Map of Federal Reserve Districts
Index

IV



86-102.
103-111
112.
113-114
115
115
116
117-115
116-137
138-143
144-145
146
147-159

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

Washington, March 31, 1943.
T H E 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 Twenty-ninth Annual Report,
prepared by direction of the Board of Governors of the Federal Reserve
System, covering operations during the calendar year 1941.
Yours respectfully,




M. S. ECCLES, Chairman.

v

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

The report of the Board of Governors for 194Z covers the year which
began immediately after the attack on Pearl Harbor. The United States,
with a fiscal and economic system geared to the defense effort of a country at
peace, was abruptly confronted by unprecedented expenditures for total war.
Taxation and measures for diverting the people's savings into the war effort
were wholly inadequate for a war economy. Under these circumstances the
Federal Reserve authorities, in carrying out their responsibilities, were
faced with the problem of making available to the banks of the country
sufficient reserves to enable them at all times to meet such demands as might
be made by the Treasury.
The rapid growth of income in the hands of civilians and the accompanying
decline in the volume of goods produced for civilian consumption resulted
in constant upward pressure on prices. The Federal Reserve authorities
endeavored, within the limits imposed by the exigencies of war finance, to
do whatever was possible to minimize this inflationary pressure.
Throughout the year Federal Reserve and Treasury authorities had continuous conferences on plans for financing the war, organizing machinery for
marketing United States Government securities, and developing and putting
into effect credit policies that would be in harmony with the nation's war
requirements. There was agreement that it was essential to raise as much
of the funds as possible from current income and to hold to a minimum the
creation of new money by borrowing from banks. Every effort was made
to offer securities that would fit the needs of all classes of investors, from
small savers to large corporations with temporarily idle funds. To help in
the distribution of Government securities, Victory Fund committees were
organized in the twelve Federal Reserve districts.
At the beginning of 194:1 the banking system had ample reserves for meeting all immediate demands upon it, notwithstanding the fact that during
the preceding autumn the Board, for the purpose of discouraging expansion
of bank credit for nonessential purposes, had raised reserve requirements by
about one-seventh to the maximum authorized by law. During 1942., however, excess reserves were subjected to a severe drain as the result of the rising
volume of deposits and the constant growth in the demand for currency.
The growth in deposits reflected purchases of United States Government
obligations by the banks and the increase in money in circulation was due
principally to the enlarged dollar volume of payrolls and retail trade, In view
of the consequent absorption of excess reserves and the greatly increased
Treasury requirements necessitated by war, Federal Reserve authorities
found it necessary in the course of the year to take a series of actions in
order to assure the banks adequate reserves to serve as a basis for the purchase



1

1

ANNUAL REPORT OF BOARD OF GOVERNORS

of such Government securities as it was necessary for them to buy. The
Federal Reserve Banks increased their holdings of Government securities by
3.9 billion dollars, the Board reduced reserve requirements hy 1.2. billion, and
there were minor additions to bank reserves from other sources. Nevertheless, excess reserves declined by a billion dollars during the year.
Federal Reserve purchases during the year included United States Government obligations of a wide range of maturities, including Treasury bills
acquired under an arrangement by which the Reserve Banks stood ready
to buy all, bills offered by the market at a rate of ZA per cent per annum. A
further arrangement was made later in the year by which the Reserve Banks,
when desired by the seller, would give an option to repurchase the bills at
the same rate. The general discount rate at all of the Federal Reserve Banks
was reduced to one per cent and a preferential rate of % per cent was
established on advances to member banks secured by short-term Government
obligations.
In the second half of the year the Board of Governors in three steps reduced
from 2.6 to zo per cent the reserve requirements on demand deposits for central
reserve city banks, which were subject throughout the year to a heavy drain
of reserves. These actions were made possible by an amendment to the
Federal Reserve Act, adopted at the request of the Federal Reserve authorities, which authorized the Board to change reserve requirements for banks
in central reserve cities without changing requirements for any other group
of banks.
To assure the banks that examiners' comments and criticisms and other
supervisory action would not be out of harmony with the Federal Reserve
policy of supporting Treasury financing, the Board, in cooperation with other
supervisory bodies, both State and Federal, made a statement of its examination and supervisory policy with reference to investments in Government
securities and loans on such securities. This statement appears on page n
of this report.
For the purpose of being able to meet any development that might arise
in connection with Treasury financing, the Federal Reserve authorities requested from Congress and obtained, within limits, restoration of the power
to purchase Government securities directly from the Treasury. On several
occasions during the year this power was used to purchase one-day certificates
pending Treasury receipts from taxes or the sale of new issues. These
purchases helped to maintain stability in the money market.
Another important field of Federal Reserve action in support of the war
effort was initiated under a Presidential order calling for the development
within the Federal Reserve Banks of regional machinery for channeling bank
credit directly into war production. This was accomplished through a
working arrangement with the War and Navy Departments and the Maritime
Commission, which guaranteed credit extended by financing institutions to
potential producers of war supplies who were unable to obtain the necessary
financing without such guarantees.



FEDERAL RESERVE SYSTEM

3

While supporting by all means at their disposal the Government's program
for financing the war, the Federal Reserve authorities throughout the year
attempted as far as possible to counteract the inflationary effects of military
expenditures by exercising vigorous restraint in the use of credit for purposes
not connected with the war. Thus the Board tightened its regulation
pertaining to consumer credit and broadened the field to which it applied;
it also discouraged the use of credit for nonessential purposes by statements
sent to banks and by instructions to examiners to caution the banks against
such loans.
It has been estimated that, while bank loans to finance war activities
increased by 1.7 billion dollars, bank loans for other purposes diminished
by about 4 billion during the year. Credit to consumers by lenders other
than banks also contracted considerably.
By thus restraining the use of credit for nonessential purposes the Federal
Reserve authorities endeavored to do their part to combat inflation. They
were aware of the fact, however, that success in attaining this objective
could be achieved only through concerted action by all agencies of the
Government supported by the effective cooperation of the public.
TRANSITION TO WAR ECONOMY
Increase in production of war goods. Under the stimulus of expanding
war demands, industrial production in 1942. was 16 per cent larger than in
1941. At the end of 1942. the rate of output was nearly double the 19351939 average, and, as shown in the chart on the next page, 60 per cent of
the output at factories and mines was being used for war purposes, including
exports for aid to our Allies. Agricultural production in i94x was 12. per
cent larger than in 1941, with military and lend-lease requirements taking
about all of the increase.
To an increasing extent continued growth of output in agriculture and
industry was pressing against limitations in the supply of materials, manpower, and plant and equipment facilities, including transportation. War
needs were being met more and more by reduction in civilian goods. Estimates shown on the chart indicate that production of durable manufactures
for civilian use had been curtailed by December 1941 to about half of the
1935-1939 average, while civilian nondurable manufactures, after considerable reduction from the 1941 maximum, were still at about the pre-war
average. Also, owing to shipping shortages, imports of civilian goods were
greatly reduced.
During 1941 the armed forces were built up from about 2. million men to a
total of about 7 million, and millions of additional workers were drawn
into the production of war goods. Manpower became a serious problem and
by the year-end programs designed to obtain maximum utilization of manpower were being formulated and placed in operation.
Manufacturing capacity was sharply expanded for munitions and such
materials as aluminum and aviation gasoline, which were most essential for



4

ANNUAL REPORT OF BOARD OF GOVERNORS

war purposes. Important additions to capacity were also made in other
essential industries such as steel and copper mining. Merchant shipbuilding
was increased from an annual rate of one million deadweight tons of completed deliveries in December 1941 to 14 million in December 1941, in an
effort not only to offset shipping losses but to provide additional cargo space.
While private construction was sharply curtailed, total construction expenditures in 1941 were 2.2 per cent larger than in 1941, the previous record
year.
In May warfare on coastal shipping brought gasoline rationing on the
East Coast. Automobile and tire sales were restricted throughout the year
and rationing of petroleum products was made nation wide in December to
conserve rubber supplies for military and future civilian transport facilities.
INDUSTRIAL PRODUCTION
FOR WAR AND FOR CIVILIAN PURPOSES
AOJUSTEO FOR SEASONAL VARIATION

POINTS IN TOTAL INDEX

POINTS IN TOTAL INDEX

250
.1 WAR
I CIVILIAN DURABLE
I CIVILIAN NONDURABLE

150

I • I I I I
1935-39
AVERAGE

JUNE
1941

DEC.
1941

JUNE
1942

DEC.
1942

NOTE: Production data for manufactures and minerals are in comparable physical units. The
figures for war production are approximations of the amount of industrial production destined for
the use of the armed forces and for lend-lease; they comprise mostly durable products. Metal
mining for civilian purposes is included in civilian durable products and mining of fuels is included
in nondurable products.

Demands on the railroads for passenger accommodation were nearly double
those of 1941, with most of the increase representing military travel. Movement of commodities by rail increased about one-third. In view of limitations on the expansion of rail equipment, the increased traffic required cooperative efforts by shippers, carriers, and Federal regulatory agencies.
Lesser gains in passenger and freight traffic were reported by other forms of
common carrier.
Imposition of price and wage controls. In the early part of the year
distributors and consumers bought heavily, partly in anticipation of
possible scarcities. This was reflected in a rapid rise of prices of most commodities in both wholesale and retail markets. Effective in May, under
authority of the Emergency Price Control Act passed at the end of January,




FEDERAL RESERVE SYSTEM

5

wholesale and retail prices of most goods were restricted to the highest
levels reached in March. As part of the effort to stabilize the cost of living,
maximum rent ceilings were also set up for an increased number of localities.
Prices of farm products and foods, however, continued to rise sharply during the summer and there were also further increases in wage rates. Early
in October legislation was enacted providing for the stabilization of the cost
of living, wage rates, salary levels, and profits, and a Director of Economic
Stabilization was appointed to formulate and direct policies in these and
related matters.
As a result of this legislation levels were lowered at which maximum
prices could be established for agricultural commodities, and at the same time
minimum price guarantees were increased for these commodities; prices
received by farmers advanced 2.9 per cent during the year. Actions taken in
October resulted in the extension of retail price controls to commodities
WHOLESALE PRICES
MONTHLY FIGURES, 1926MOO

PER CENT

PE

120

120

no
100
90

80

70

y

i

ri

J

A

^f~

/
110

100

90
0 THER COMMODITY

\
V

V

V-Vv-

— /
//
/

80

70

PRODUCTS

60

60

50
* OTHER THAN FAR* PRODUCTS AND F 0 0

>s.

40
1938

1939

1940

SOURCE: Bureau of Labor Statistics.

comprising 90 per cent of the food budget. For the year as a whole retail
food prices rose by 17 per cent; other items, however, advanced less and the
average increase in the cost of living was between 10 and 15 per cent. An
important factor limiting increases in prices of most civilian goods, except
foods, during the latter part of the year, was the large volume of stocks
accumulated by distributors and consumers in 1941 and the early part of 1942..
Average wage rates continued to advance in 1942.. During the year,
however, steps were taken limiting further general increases. In July, the
War Labor Board adopted the "Little Steel formula" as a means of bringing
to a halt the race which had developed between wages and prices. Under
this formula, only workers whose rates had risen less than the 15 per cent
advance in living costs between January 1941 and May 1942. were entitled
to further increases unless inequalities or substandard conditions justified
special consideration.



6

ANNUAL REPORT OF BOARD OF GOVERNORS

As the manpower situation tightened, wage advances were increasingly
granted voluntarily by employers seeking to hold or to attract workers. To
meet this situation, the War Labor Board was given the additional authority
to control voluntary wage increases. After early October, general wage-rate
increases above the 15 per cent allowed by the "Little Steel formula" were
prohibited except where special circumstances were involved, such as
inequalities, gross inequities, substandard conditions, and ineffective prosecution of the war. Individual rate increases for merit, length of service,
etc., were still permitted under specified conditions.
Wages of hired farm workers rose about one-third during the year but they
were still considered substandard and limitations on further increases were
lifted.
Growth of incomes. Total payments of wages to labor increased considerably during 1942., as the result of rate advances, an expansion in the
number of employees, longer hours and more overtime work at premium
rates, and upgrading and shifting workers into better paying jobs. Net
income of farmers showed an exceptionally large increase. The general level
of corporate profits after taxes appears to have been about the same in 1942.
as in 1941; it was considerably higher than in 1939. There were wide
differences in net earnings between groups of companies and lines of activity, as there were between particular groups of wage-earners and other
individuals. Dividend payments to individuals declined about 10 per cent.
Investor receipts in the form of interest increased, however, reflecting the expansion of outstanding public debt.
Total income payments expanded 2.5 per cent during the year and in December were at an annual rate of 1x5 billion dollars. A smaller proportion
of this income was used for the purchase of consumer goods in i94i than in
1941, and in physical volume also sales of such commodities were smaller.
In 1941 consumers had used some of their income to make substantial purchases of durable and semi-durable goods in anticipation of future needs;
in 1942. much more of the expanding consumer income went into various
forms of liquid savings.
Supply of civilian goods. Supplies of most consumer goods, except
metal and rubber products, were generally available during 1942., although
scarcities, including those of some important foods, were increasingly
apparent. A number of rationing programs had been developed to further
the equitable distribution of scarce essential commodities and more were
under consideration. At the end of the year stocks of goods in distributors'
hands were still available to meet part of the demand in 1943; new supplies,
however, were expected to become more limited as a result of the widespread
conversion of industry that was taking place. To an increasing extent
declines in output of consumer goods will be reflected in reduction in goods
available to civilians. It is evident, therefore, that problems of adjustment
throughout the civilian economy will become increasingly urgent.



FEDERAL RESERVE SYSTEM

7

COST OF THE WAR
War expenditures continued to increase rapidly in 1941. Monthly expenditures rose from 2. billion dollars at the beginning of the year to 6 billion at
the end. War expenditures increased from 1.7 billion dollars in the fiscal
year 1940, which was the last fiscal year before the inauguration of the national defense program, to 6 billion in 1941 and 26 billion in 1941. The
President's Budget Message in January 1943 estimated a further increase to
74 billion dollars in the current fiscal year and to 97 billion in the fiscal year
1944. Despite a large increase in receipts resulting both from increased tax
levies and rising national income, the budget deficit has increased and,
according to budget estimates, will continue to increase.
The mounting volume of Federal Government purchases in 1941 was reflected in increased incomes for individuals. Incomes also increased because
of the higher prices of goods produced and services rendered. Because of
rapid growth in income and lack of opportunity to buy durable goods, and
the operation of other factors, an unusually high proportion of income was
saved. Increases in savings and tax payments, however, were not a sufficient offset and civilian expenditures increased substantially. Under war
conditions, diversion of resources to military use made it impossible to expand the supply of goods for civilian use. It appears that the physical
volume of goods and services sold to consumers, in part out of large inventories, actually showed a slight decline. The difficulty of increasing supplies in response to increasing demand—or even of maintaining supplies—led
to considerable increases in prices of goods not subject to official controls.
Shortages of an increasing number of items developed in the civilian economy and more and more goods were made subject to priorities and to rationing as the field of price controls was extended.
At the beginning of 1941, however, there was still a considerable amount
of slack in the economy which made it possible to produce an expanded
volume of military output while generally maintaining the standard of living
of the civilian population. Ma lpower and industrial facilities that had been
idle (or used for producers' equipment and private construction purposes)
were drawn into war use; and resources that had been operating at low efficiency were shifted into more efficient mass production. Retailers' stocks
of most consumer goods were high. They had been increasing since the
autumn of 1939 and continued to increase until about the middle of 1942..
While production of some items was discontinued or drastically curtailed in
order to divert raw materials and facilities to military use, in most of these
cases ample stocks were still available until late in the year. Thus a large
part of the increase in military output did not immediately encroach upon
the production of civilian goods, but was attained by fuller use of existing plant capacity and labor resources. In addition, the use of stocks of
consumer goods accumulated in earlier years made it possible for the time
being to maintain a high level of civilian consumption.



8

ANNUAL REPORT OF BOARD OF GOVERNORS

By the end of the year accumulated stocks and slack in the utilization of
existing plant, which had cushioned the impact of war upon the civilian
economy, had largely disappeared. Retail stocks as a whole began to decline after the middle of the year and by the year-end some items difficult or
impossible for retailers to replace had virtually disappeared from their usual
channels of distribution. The increase in aggregate output, military and
civilian, that can be obtained by putting additional people to work, lengthening hours of work, and increasing efficiency is likely to be small in relation
to the increase that has already occurred and to future increases in military
requirements for manpower and production. Increased production of
military items, therefore, will have to come out of a nearly equivalent decrease in the production of civilian items, and, as inventories are reduced,
curtailed production of such items will be reflected more quickly in consumer
markets. There will also be a continuing reduction of transportation,
medical care, and other services available to civilians. The reduction of
living standards in 1943 will be drastic and much more general than that
experienced by consumers in 1942..
It is a fundamental fact, not always clearly understood, that payment of
only a small part of the real cost of a war can be deferred to the future.
Costs can be deferred by diverting resources from the maintenance, repair, and
replacement of public and private capital. Considerable deterioration in the
condition of residential property, productive equipment, and public works
may have no immediate hampering effect on the war effort or on levels of
real income. Physical costs may also be postponed by permitting stocks of
civilian commodities to fall to a level below their usual relationship to sales.
Both developments involve real costs to consumers at some future period
when resources will have to be withheld from producing goods for consumption in order to rehabilitate capital. But by far the greater portion of the
real cost of the war must be on the present generation in the form of current
goods and services diverted from civilian to war use.
These current real costs of the war to the consuming public as a whole can
not be reduced or shifted to the future by any fiscal or financial device. Distribution of the necessary reduction of current consumption as between elements of the population, however, and distribution of such costs as can be
deferred may differ depending on the proportion of the war expenditures that
is raised by taxation and by borrowing, as well as on the steps taken to
restrict physical consumption. It will also be influenced by the incidence
of taxes that are imposed and by the distribution of Government borrowing
among the various economic groups. In view of the large volume of funds
that must be borrowed, the future buying power of savings is a matter of
vital concern to the country. That, in turn, depends on prevention of a
rapid rise in prices.
Success in preventing such a rise, as well as in solving the current problem
of securing a satisfactory distribution of available goods, requires the use of



FEDERAL RESERVE

SYSTEM

9

effective methods to check consumer expenditures. Because of the decrease
in availability of consumer goods and the increasing requirements for military goods, the urgency of diverting consumer income into the war effort
will be much greater in 1943 than it was in 1941.
WAR FINANCE AND FEDERAL RESERVE POLICIES

Federal Reserve policies and operations are necessarily closely related to
those of the Treasury, and in the course of the year Treasury and Federal
Reserve officials, through frequent consultation, endeavored to coordinate
their respective policies and actions toward a common objective.
This common objective was to derive the largest possible amount of war'
funds from current income and from savings, and to depend as little as possible on the creation of additional bank credit. In view of the fact, however,
that all the necessary funds could not be raised in time by taxation and
borrowing from nonbanking investors, the Federal Reserve authorities
endeavored to induce banks to make more complete use of their existing
reserves and also supplied them with such reserve funds as they needed from
time to time to purchase the Government securities offered to them. In
addition, the Treasury made new issues with long maturities ineligible for
purchase by banks. Another joint aim of the Treasury and the Federal
Reserve was to maintain prices and yields on Government securities close to
existing levels for the duration of the war. This assured the Treasury of a
market for its securities at rates of interest known in advance and removed
the incentive for investors to defer purchases of Government securities.
THE WAR FINANCING PROGRAM

The Treasury offered during the year a wide variety of securities designed
to meet the needs of every type of investor. Changes in the outstanding
amounts of the principal classes of securities are shown in the table.
UNITED STATES GOVERNMENT INTEREST-BEARING D E B T

Direct and Guaranteed
[In billions of dollarsl

Type of issue

Treasury bills
Certificates of indebtedness
Treasury notes
Treasury bonds
Guaranteed issues
Total marketable issues1
Savings bonds
Tax notes
Special issues
Total direct and guaranteed interest-bearing debt
1
2

Amount outstanding on
December 31
1942

1941

6.6
10.5
9.9
49.3
4.3

6.0
33.4

+4.6
+10.5
+3.9
+15.9
-2.0
+32.9

80.8

15.0
6.4
9.0

6.1
2.5
7.0

+8.9
+3.9
+2.0

111.6

63.8

+47.8

Including Postal Savings and pre-war bonds not shown separately.
Including adjusted service and depositary bonds not shown separately.




6.3

Change during
1942

IO

ANNUAL REPORT OP BOARD OF GOVERNORS

Issues available to banks. About 15 billion dollars of new money Was
obtained through the sale of various issues of medium- or short-term bonds
and of Treasury notes in excess of maturities. A large proportion of such
issues was purchased by commercial banks. With the exception of a i j 4 P e r
cent 10-13 year bond offered in February, all of these issues bore coupon rates
of 2. per cent or less and were dated to mature in less than ten years. In the
latter part of the year, it was indicated by the Treasury that all new issues
available for purchase by commercial banks would come within this maturity limit.
In order to provide banks and other investors with a medium for liquid
investment, the Treasury offered a number of issues of certificates of indebtedness maturing within a year and increased the amounts of weekly offerings
of three-month Treasury bills. Bill offerings were increased during the
course of the year from 150 million to 600 million dollars a week. For the
year as a whole the outstanding amount of Treasury certificates increased
by 10 billion dollars and that of Treasury bills by 5 billion.
Issues for nonbanking investors. Various means were adopted for
raising funds from nonbanking investors. The War Savings Staff, established by the Treasury prior to 1941 to sell Savings bonds, expanded its activities. In addition, a Victory Fund Committee was established under
Treasury and Federal Reserve auspices in each Federal Reserve district in
May, in order to promote the sale of Government securities to investors
having funds in excess of the amount that may be placed in Savings
bonds. These committees were greatly expanded near the end of the year.
The number of persons participating in payroll savings plans increased to
15 million and the average monthly amount deducted to 370 million dollars.
At the end of the year sales of the popular War Savings bonds (Series E)
amounted to about 700 million dollars a month compared with about 100
million prior to our entry into the war. Series E bonds are sold on a discount basis to individuals in a maximum annual amount of $5,000 maturity
value to each purchaser and yield z.9 per cent if held to maturity. Series
F and G bonds are sold to investors other than commercial banks and yield
z^5 per cent if held to maturity. Series F bonds are on a discount basis and
Series G afford a current return. The maximum amount of Series F and G
Savings bonds that may be purchased by any one investor in any one year was
increased from $50,000 to $100,000. For the year as a whole outstanding
amounts of Series E bonds increased by 6 billion dollars and those of Series
F and G bonds by a total of 3 billion.
The amount of Series A tax notes that can be presented for taxes by any one
taxpayer in any one year was increased, and the maturity of the notes was
extended. A new series of tax notes for larger investors was offered for the
purpose of providing for the temporary or short-term investment of idle
balances as well as for the accumulation of tax reserves. The yield on
these notes increases with the length of time that they are held and averages
1.07 per cent if held for three years to maturity. They may be redeemed for
cash
without loss of interest by investors other than commercial banks dur


II

FEDERAL RESERVE SYSTEM

ing and after the sixth calendar month from the month of issue on 30 days*
advance notice. Following these changes gross sales of tax notes increased
from about 400 million dollars to nearly a billion dollars a month, and for
the year as a whole the amount of such notes outstanding increased by 4
billion dollars.
In May, August, and December the Treasury offered i}A per cent longterm bonds to nonbanking investors without limiting the issue to a stated
amount. These bonds may not be purchased or held by commercial banks
for their own account for a period of ten years after the date of issue. Sales
of these bonds totaled 5 billion dollars.
Victory Fund Drive. Toward the end of the year there was a largescale Victory Fund Drive aimed to raise during December at least 9 billion
dollars from the sale of a variety of issues, including new issues of bonds and
certificates of indebtedness as well as Savings bonds and tax notes and an increase in regular weekly bill offerings. Subscriptions by commercial banks
to the new issues were limited in amount to a total, including Treasury bills,
aggregating about 5 billion dollars. For nonbanking investors all subscriptions were allotted in full, and subscription books remained open for several
weeks. Total sales of all types of securities during the month amounted to
nearly 13 billion dollars.
Distribution of United States Government securities. Commercial
banks and the Federal Reserve Banks together absorbed slightly less than
one-half of the 48 billion dollar increase during 1941 in the interest-bearing
direct and guaranteed debt. Commercial bank holdings of Government
securities are estimated to have increased by more than 19 billion dollars,
and the portfolio of the Federal Reserve Banks increased by 4 billion. In
1941, when the interest-bearing debt increased by 13 billion dollars,
commercial banks and the Reserve Banks absorbed 4 billion dollars or less
than one-third. Practically all of the increase in commercial bank holdings
in 1942. was in securities maturing in ten years or less.
During the past year, as is shown by the following table, individuals,
private trust funds, and corporations as a group increased their holdings of
Savings bonds and tax savings notes by nearly 13 billion dollars and
OWNERSHIP OE UNITED STATES GOVERNMENT SECURITIES
[Estimated; in billions of dollars]
Holdings on December 31

Type of owner
Commercial banks
Federal Reserve Banks
Mutual savings banks
Insurance companies
Other investor group:
Marketable issues
Nonmarketable issues
Federal agencies and trust funds:
SpeciaHssues
Public issues
Total interest-bearing direct and guaranteed securities
outstanding

Increase during
1942

1942

1941

41.3
6.2
4.6
11.0

21.8
2.3
3.7
8.0

19.5
3.9
0.9
3.0

15.2
21.1

10.0
8.5

5.2
12.6

9.0
3.2

7.0
2.5

2.0
0.7

111.6

63.8

47.8


NOTE: Estimates of amounts held at the end of 1942 by commercial banks, mutual savings banks, insurance companies, and other investor group are preliminary.


12.

ANNUAL REPORT OF BOARD OF GOVERNORS

purchased 5 billion dollars of marketable issues. Net purchases by these
investors were three times as large as in the previous year. Insurance
companies added 3 billion dollars to their portfolios, mutual savings banks
one billion, and Government agencies and trust funds 3 billion.
FEDERAL RESERVE PURCHASES OF UNITED STATES GOVERNMENT SECURITIES

Open-market operations by the Federal Reserve System were directed toward the general objectives of providing banks with adequate reserves to
serve as a basis for such purchases of Government securities as might be
essential to the war finance program and of maintaining the structure of
prices and yields of Government securities. Temporary needs of the Treasury
were met by the Federal Reserve through direct purchases of special one-day
certificates.
Decline in bank reserves. Federal Reserve purchases of Government
securities in the open market to provide bank reserves increased in amount
during the course of the year as needs of the Treasury expanded and withdrawals of currency from the banks increased. A sustained growth in bank
reserves, which had resulted from heavy gold imports since early 1934, came
to an end at the beginning of 1941. In 1941 and 1942. excess reserves of
member banks declined primarily because of the rapid growth in bank deposits and in currency outside the banks—in other words, the supply of
money owned by the public.
The increase in the amount of currency in circulation, which banks had to
provide by drawing upon their reserve balances, amounted to more than 4
billion dollars during 1942.. It was due chiefly to the expansion of wages
and salaries, the rise in prices, and the removal of many persons from their
usual residences and banking connections. The growth in deposits during
the year amounted to about 16 billion dollars at all commercial banks and
was due to purchases by banks of United States Government securities.
This growth resulted in an increase in the amount of reserves that member
banks were required to carry and thus reduced excess reserves. Required
reserves increased by nearly 1.8 billion dollars at all member banks, notwithstanding the reduction by the Board of Governors in the required ratio of
reserves against demand deposits at central reserve city banks, the effect of
which was to reduce requirements by 1.2. billion dollars.
The effect of these factors in reducing excess reserves was offset to a considerable extent by an increase in Reserve Bank holdings of Government
securities amounting to 3.9 billion dollars, of which 1.6 billion was acquired
in the last quarter. Some additional reserves were supplied also by increases
in Treasury currency and changes in other factors. As a net result excess
reserves showed a decline of 1.1 billion dollars in the year and on December
31, i94x amounted to 2. billion.
Most of the increase in the Federal Reserve portfolio of Government securities was in short-term obligations—a billion each in Treasury bills and
certificates of indebtedness and another billion in Treasury notes and bonds



J

FEDERAL RESERVE SYSTEM

3

maturing in five years or less—while medium- and long-term bonds increased
by 900 million dollars. At the end of the year holdings totaled 6.x billion
dollars, of which about a third mature within a year and nearly two-thirds
within five years; at the end of 1941 only 40 per cent of the holdings had
maturities of less than five years.
Small operations in first quarter. At the beginning of 194X excess reserves of member banks exceeded 3 billion dollars. This amount was sufficient, if fully utilized, to provide the basis for a large expansion in the
volume of bank credit. In the early months of the year, as shown on the
chart, there was some drain on member bank excess reserves owing to continued expansion of currency in circulation and growth of required reserves
associated with the increase in bank deposits.
MEMBER BANK RESERVES AND RELATED ITEMS
1

-

GOLD STOCK

22 16

/

/

-J
-

/
/r

MONEY IN
TION

/
jT—

;

10

10

-

J

1

-

/

-

RESERVE BANK CRE

-

D.T ^J

~

1940

1941
1942
1940
1941
NOTE: Required and excess reserves are partly estimated.

1942

Open-market operations by the Federal Reserve in this period were relatively small in amount. As in other recent years, they were primarily for
the purpose of maintaining an orderly market for Government securities,
and purchases and sales covered a variety of both long-term and short-term
issues.
Operations in second and third quarters. From April i until early
October Federal Reserve open-market operations consisted principally of
purchases of Treasury bills and certificates of indebtedness, and were primarily for the purpose of supplying additional reserves to banks needing
them. In this period the System portfolio of Government securities increased by 1.3 billion dollars. An additional one and a quarter billion dollars of reserves was made available to central reserve city member banks in
New York and Chicago by reductions in reserve requirements, discussed on




i4

ANNUAL REPORT OF BOARD OF GOVERNORS

pages 17-10. Expansion in bank deposits, however, caused an offsetting rise
in required reserves, and an increase of x.i billion dollars in money in circulation exerted a steady drain on bank reserves. Excess reserves declined
to below 1.5 billion in July and during the remainder of the year fluctuated
generally around that level.
Establishment of bill buying rate and repurchase option. At the end
of April, in connection with Treasury announcement of the May financing
program, the Federal Open Market Committee directed the twelve Federal
Reserve Banks to purchase all Treasury bills offered at a discount rate of
Z
A of one per cent per annum. Adoption of this policy was for the purpose of stabilizing the bill market, effecting a broader distribution of bills,
and facilitating prompt adjustment of bank reserves to changing conditions.
Readiness of the System to buy bills at an established rate assured banks and
other holders that, if at any time it was necessary to obtain reserves or cash,
they could sell their bills at an established price. This offered an encouragement to banks and others to utilize available liquid funds to purchase bills.
In August the directive of the Federal Open Market Committee regarding
the purchase of Treasury bills at a rate of Vs of one per cent was supplemented
by directing the Federal Reserve Banks to give to the seller of bills, if he so
desires, an option to repurchase at the same rate a like amount of bills of
the same maturity. The same privilege extended to banks, both as to selling
bills to the Reserve Banks and as to repurchase options, was accorded to
dealers in securities, corporations, and other holders of liquid funds. The
effect of this action was to make Treasury bills practically as liquid as excess
reserves or idle bank balances and a desirable outlet for funds, just as call
loans had been under different market conditions in the past.
Following the establishment of a buying rate for Treasury bills by the
Federal Reserve and accompanying a substantial increase in the amount of
such bills outstanding, there was a wider distribution of bills among various
groups of banks and other holders. The largest purchasers of bills, however,
continued to be the large money-market banks, which held relatively small
amounts of excess reserves.
Purchases in connection with last quarter's financing. During October, in connection with Treasury financing operations which necessitated
substantial subscriptions by banks to new offerings of notes and mediumterm bonds, the System purchased large amounts of notes and bonds. The
purchases were for the double purpose of supporting the market and of supplying banks with additional reserves during the period of financing. Federal Reserve holdings of certificates also increased in October and again in
November, but in those months resales of bills under repurchase agreements
and maturities exceeded additional purchases of bills. Total holdings of
Government securities by the Reserve Banks increased by more than a billion
dollars in October.
In the latter part of November and early in December, prior to and during
the Victory Fund Drive, the Federal Reserve again made large purchases of



FEDERAL RESERVE SYSTEM

*5

securities. From November 18 to December 9, total holdings of Government securities by the Reserve Banks increased by 850 million dollars. These
RESERVE BANK HOLDINGS OF U. S. GOVERNMENT SECURITIES
BILLIONS OF DOLLARS

t FIGURES

BILLIONS OF DOLLARS

6

6

5

5

TOTAL /

4

4

3

3

2

BONDS

—y/"t

r '

//
//
/
s/
/ / CERTIFICATE
.
NOTES

—"\

BILLS

0

y

r^

y

A
SPECIAL
/ \ CERTIFICATES
;

\

1

,

0

NOTE: U. S. Government security holdings include both direct and guaranteed issues. Special
one-day Treasury certificate of indebtedness shown only for September 16; there were 15 such certificates of varying amounts during the year on dates other than Wednesdays, as shown in accompanying
table in text.




i6

ANNUAL REPORT OF BOARD OF GOVERNORS

operations supplied banks with reserve funds to meet both the heavy currency withdrawals and the increased requirements resulting from large additions to United States Government deposits in payment for bank purchases
of securities. During the period of the financing excess reserves were generally maintained at i..^ billion dollars or more.
In the latter part of December purchases for System account were small,
except that in the last week large amounts of bills were sold under repurchase
agreement to the Reserve Banks in order to obtain reserves needed to meet
heavy currency demands, payments for a new issue of Treasury certificates,
and other end-of-year needs. Many of these bills were repurchased by the
sellers after the turn of the year. It is in such situations particularly that
the established buying rate and the repurchase option provide a ready means
for adjustment of cash positions by banks and others.
Direct advances to the Treasury. The Second War Powers Act, 1942.,
approved March 2.7, authorized the Federal Reserve Banks to purchase
Government securities directly from the Treasury, provided that the aggregate amount of securities so purchased and held at any one time does not
exceed 5 billion dollars. In accordance with this change in the law, the
Open Market Committee authorized purchases of securities for the purpose
of granting temporary accommodation to the Treasury.
Acting under this authority, at various times during the year the Reserve
Banks purchased from the Treasury one-day certificates of indebtedness in
order to supply funds to the Treasury pending receipts from taxes or new
issues of securities. The amounts of such certificates outstanding during
the year were as follows (in millions of dollars):
Date
June 16
June 19
June 20
June 22
June 23
Sept.
Sept.
Sept.
Sept.
Sept.

15
16
17
18
19

Amount
58
70
47
34
94
324
189
286
76
53

Date
Nov. 27
Nov. 28
Nov. 30
Dec. 1

Amount
139
329
422
98

Dec. 10

16

Dec. 15

145

Maintenance of market stability. Largely as a result of the influence
of Federal Reserve open-market operations, and notwithstanding exceptional
demands placed on the market, yields on Government securities showed
little change in the course of 1942.. Yields on short-term securities, which
were low at the beginning of the year, rose somewhat early in the year,
but stabilized after establishment of the bill-buying rate by the Federal
Reserve Banks in April.
The Reserve Banks made purchases and resales of bills at the buying rate
promptly in accordance with the wishes of the holders. Arrangements were
made in September whereby securities bought under repurchase options were
not transferred to the System account but were held in the accounts of individual Reserve Banks in order to expedite repurchase if desired by the origi


FEDERAL RESERVE SYSTEM

*7

nal seller. The System also followed the practice of purchasing promptly
securities offered for the purpose of obtaining reserve funds, as well as of
baying freely for the purpose of maintaining stability in the Government
security market. When offerings appeared to be for the purpose of taking
profits or of speculating in the market, however, the Reserve authorities
avoided purchasing the securities if possible. In pursuing these objectives
the Federal Reserve authorities received a large measure of cooperation from
banks and other holders of securities and from dealers.
REDUCTION IN RESERVE REQUIREMENTS AT CENTRAL RESERVE CITY BANKS

Banks in the money market centers of New York and Chicago were subject to heavier drains of funds in 1942 than banks elsewhere in the country.
These large city banks lost reserves while reserves held by other groups
of banks increased. Special action was consequently taken by the Board of
Governors to supply New York and Chicago banks with additional reserves
by reducing the percentage of demand deposits that central reserve city banks
were required to hold as reserves with Federal Reserve Banks. These reductions were made in three equal steps, effective August 2.0, September 14, and
October 3, and brought reserve requirements at central reserve city banks
down from 26 to 20 per cent of net demand deposits.
New legislation. Under the earlier provisions of the Federal Reserve
Act, the Board of Governors could not change the reserve requirements of
member banks in central reserve cities without making the same change with
respect to member banks in reserve cities. In anticipation of an uneven distribution of reserves that might hinder the financing of the war, the Board
requested Congress to dissociate the reserve requirements for the two classes
of banks so that each could be regulated without reference to the other.
This was done on July 7, 1942., by amending Section 19 of the Federal Reserve
Act so as to permit the Board to change reserve requirements of member
banks in central reserve cities without also changing requirements in reserve
cities. As a result the reserves of the two classes of banks, when influenced
by different factors, may be subjected to different regulatory actions.
Under the amended Act the Board may make changes in requirements for
(1) member banks in central reserve cities or (2) member banks in reserve
cities or (3) member banks not in reserve or central reserve cities or (4) all
member banks. Separate action for each class of banks is permitted within
the limits of change provided by the law, i. e., to not less than the amount
prescribed by statute or to more than twice that amount.
Shifts of reserves from New York. Excess reserves of all member banks
declined sharply in 1941 and the first half of 1942.—from 6.8 billion dollars
in January 1941 to 2.2 billion in July 1942. As shown on the chart, most of
this decline was at banks in New York City and Chicago, which at the peak
had owned half of the excess reserves of all banks. By July 1942 they
held only one-seventh of the total. In July 1942 excess reserves of banks in



i8

ANNUAL REPORT OF BOARD OF GOVERNORS

New York City and Chicago amounted to less than 7 per cent of their required reserves, compared with 35 per cent for reserve city banks, as a group,
and 50 per cent for country banks.
EXCESS RESERVES OF MEMBER BANKS
BILLIONS OF DOLLARS

WEONESOAY

FIGURES

BILLIONS OF OOLLARS

NOTE: Figures for all member banks and for "other" member banks outside New York and Chicago
are partly estimated.

The decline of excess reserves occurred in New York City and Chicago,
notwithstanding the fact that the growth in currency and in bank deposits
was relatively less in those cities than elsewhere. The reason was that New
NEW YORK CITY BANKS
FACTORS OF GAINS AND LOSSES OF RESERVE FUNDS
BILLIONS OF

CUMULATIVE

BILLIONS OF DOLLARS

NET CHANGE FROM END OF 1940 BY WEEKS

4.0

/1
J

3.0

/'

2.0
1.0

t" 4.0

RESERVE BANK
CREDIT

•

J
/

3.0
2.0
1.0

/C^s.*"

0

^ S B / O ^ ^

N

^.^^JNTERBANK

.

0
-1.0

\ / v

,

,

l

i

,

,

CIRCULATION

NET TREASURY ^ * - > . K
TRANSACTIONS' ,
7 ' V

NOTE: Wednesday figures. Factors of gains and losses shown on chart do not include residual
item covering largely commercial and security transactions and disbursements from foreign accounts
with the Federal Reserve Bank of New York.

York City and, to some extent, Chicago banks had lost reserves to the rest
of the country, particularly after April 1942-. These shifts were largely due
to the fact that a substantial portion of the proceeds of tax receipts and of
Government security purchases by banks and other investors in those centers




FEDERAL RESERVE SYSTEM

*9

were expended elsewhere by the Treasury. The major factors accounting
for movements of funds in and out of the New York money market are shown
in the chart. In the last three quarters of the year losses of reserves resulting
from purchases of new Treasury issues and tax payments in the New York
district exceeded net gains from other Treasury transactions by nearly 3 billion dollars. There was also a loss of funds owing to the reduction of out-oftown bankers' balances and to other factors. To some extent total losses
were offset by Reserve System purchases of securities in the New York
market.
As a result of the drain of funds out of New York and of continued large
purchases of Government securities by banks throughout the country, there
was a rapid growth in deposits at banks outside New York City, while
deposits in New York banks showed little growth.during most of the year.
BANKING DEVELOPMENTS IN NEW YORK AND OTHER CITIES
BILLIONS OF DOLLARS

1941

WEDNESDAY FIGURES

1942

1941

1942

BILLIONS OF DOLLARS

1941

1942

NOTE: Figures are for weekly reporting member banks in leading cities. U. S. Government
obligations include both direct and fully guaranteed issues. Demand deposits adjusted exclude
United States Government and interbank deposits and items in process of collection.

Changes in the position of weekly reporting member banks in New York,
in Chicago, and in 99 other cities during 1941 and 1 9 ^ are shown on the
accompanying chart. New York City banks showed some decline in deposits at the end of 1941 and a small increase during the latter part of 1942.;
at the same time they continued to increase their investments and lost
reserves. Chicago banks gained deposits but increased their loans and
investments more rapidly and their reserves declined.
At banks in leading cities outside New York and Chicago both deposits
and investments increased rapidly in 1941 and 1942. while reserves showed
little change. Available data for other banks, not shown on the charts,
indicate a continued growth in deposits and investments and also a small
increase in reserves. Deposits at country member banks in fact showed larger
percentage increases during the year than did those at jcity banks. Although
large volumes of new deposits were created by bank security purchases all



lO

ANNUAL REPORT OF BOARD OF GOVERNORS

over the country, the redistribution of deposits accompanying Government
and civilian spending increased deposits more rapidly in southern and
western than in northeastern districts and generally in smaller than in larger
centers.
As long as New York City banks are heavy purchasers of Government
securities, funds are likely to flow from that center to the rest of the country,
and the extent to which banks in New York City and in Chicago will be
expected to purchase Government securities will depend largely on the
growth of participation in Government financing by banks outside of these
cities, and particularly by nonbank investors.
Under conditions prevailing in 1 9 ^ the smooth functioning of the money
market and the success of the war finance program required the participation
of central reserve city banks, and it was therefore necessary to supply these
banks with the reserves required for such participation. Banks elsewhere,
on the other hand, had large amounts of unused reserves and were constantly gaining funds. For these reasons the reductions in reserve requirements were made applicable solely to central reserve city banks.
REDUCTION IN DISCOUNT RATES

During February, March, and April 1941 discount rates on collateral notes
of member banks secured by United States Government securities and on other
eligible paper were lowered at a number of Federal Reserve Banks to one per
cent, thus establishing a uniform rate at all the Reserve Banks. Rates on
advances to nonmember banks secured by direct obligations of the United
States were similarly lowered to a uniform one per cent. From September
1939 to February 1 9 ^ the Federal Reserve Banks of Atlanta, Chicago, St.
Louis, Kansas City, and Dallas had in effect a rate of one per cent on advances
to member banks secured by Government obligations and a rate of 1V2 per
cent on other eligible paper. At the Federal Reserve Banks of Philadelphia,
Cleveland, Richmond, Minneapolis, and San Francisco, a rate of iM per
cent had been in effect on both types of paper, while the Federal Reserve
Banks of Boston and New York had had a one per cent rate on both types.
During October all Federal Reserve Banks established discount rates of Vz
of one per cent on advances to member banks secured by United States Government obligations maturing or callable in one year or less. Rates on advances
to member banks secured by other United States Government obligations and
rates on eligible paper continued at one per cent.
Discount rates on advances to member banks secured by types of acceptable
assets other than eligible paper (made under Section 10(b) of the Act) wete
lowered during the year to \XA per cent by all the Federal Reserve Banks.
Rates on advances to individuals, partnerships, and corporations other than
banks secured by direct obligations of the United States and rates on industrial advances and commitments under Section 13b were also reduced
during 1941. Discount rates in effect on December 31, 1942. at each Federal
Reserve Bank are shown in Table 10 on page 74.



FEDERAL RESERVE SYSTEM

2.1

The volume of discounts by Federal Reserve Banks has continued small,
because most member banks have had reserves in excess of requirements and
nearly all have been in a position to meet temporary reserve shortages by
selling Treasury bills or other Government securities to Federal Reserve
Banks. The reductions in discount rates, however, provide an alternative
means for member banks to obtain reserve funds, when they may need them,
by borrowing from the Reserve Banks at a low rate. This action was an
additional step to encourage member banks to make fuller use of their
available excess reserves in helping to finance the war, and to bring about a
wider distribution of short-term Government securities among banks outside
of financial centers. As already pointed out, during 1 9 ^ the Treasury increased the outstanding amount of certificates of indebtedness and of bills
maturing within a year by 15 billion dollars, and a substantial portion of
these were purchased by banks.
SUPERVISORY POLICY REGARDING GOVERNMENT SECURITIES

Another measure designed to encourage wider distribution of Government
securities among banks was the adoption on November zx, 1942., by the bank
supervisory agencies, of a joint statement of examination and supervisory
policy with special reference to investments in and loans upon United States
Government securities. This statement was as follows:
"The Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System,
and the Executive Committee of the National Association of Supervisors of State Banks make the following statement of their examination
and supervisory policy with special reference to investments in and
loans upon Government securities.
" 1 . There will be no deterrents in examination or supervisory policy
to investments by banks in Government securities of all types, except
those securities made specifically ineligible for bank investment by the
terms of their issue.
"2.. In connection with Government financing, individual subscribers
relying upon anticipated income may wish to augment their subscriptions by temporary borrowings from banks. Such loans will not
be subject to criticism but should be on a short-term or amortization
basis fully repayable within periods not exceeding six months.
" 3 . Banks will not be criticized for utilizing their idle funds as far
as possible in making such investments and loans and availing themselves of the privilege of temporarily borrowing from or selling Treasury
bills to the Federal Reserve Banks when necessary to restore their
required reserve positions."
BANK LENDING IN WAR TIME
Bank loans in 1941 were affected by two diverse factors—the demand for
credit by businesses engaged in war activities and the repayment of indebtedness, both business and personal, by other borrowers. During the year
Federal Reserve and other authorities took action to facilitate the financing
of war contracts, and also adopted measures to restrict extensions of credit



12

A N N U A L REPORT OF BOARD OF GOVERNORS

for other purposes and to encourage repayment of loans. Increases in
borrowing at this time, especially for purposes of building up inventories of
goods, for purchasing houses or land, or for buying consumer goods, add to
the pressure of inflationary forces, while reductions in outstanding loans,
which divert income from spending, are anti-inflationary. Reduction in
debt also places debtors in albetter position to withstand the effects of possible future declines in income.
Total loans outstanding at banks declined during 1942.. It is estimated
that the decline at all commercial banks exceeded 2. billion dollars. Loans
by banks to finance war contracts, however, increased during the year by an
amount that may be estimated at 1.7 billion dollars. This would indicate a decrease of nearly 4 billion dollars in loans for other than war
purposes. This decline is equivalent to the increase in such loans by
commercial banks during the two and a half years preceding 1942..
At member banks in 101 leading cities, for which detailed figures are available, most of th*e decline in dollar amounts was in commercial and industrial
loans, including paper purchased in the open market, notwithstanding the
fact that the expanded war loans are in this group. The largest percentage
decline was in consumer instalment credits, which for all commercial banks
showed an estimated decrease of 800 million dollars, or 50 per cent. This
was part of a general decline in consumer credit discussed elsewhere in this
report. Real-estate loans, which had been increasing steadily for several
years, showed a slight decline in 1941. Loans to brokers and dealers in
securities fluctuated sharply around Treasury financing dates, particularly
in December in connection with the Victory Fund Drive; they ended the
year about 300 million dollars above their average level but declined in
January 1943.
Lending for war production. Banks of the country have participated
actively in providing credits needed to finance performance on war contracts.
Quarterly reports received by the American Bankers Association from about
400 of the largest banks showed that amounts outstanding on war loans had
increased to a total of 1.1 billion dollars by the end of 1941 and to 1.5 billion
by December 31,1941. It appears likely that by the end of 1941 outstanding
war loans at all commercial banks in the country amounted to about 3 billion
dollars. This is close to 40 per cent of all commercial and industrial loans
of banks, compared with less than 2.0 per cent at the beginning of the year.
Commercial banks and other financing institutions made extensive use of
the facilities for Federal guarantee of war loans and commitments provided
for by the President's Executive Order of March 16, 1941, under which the
Federal Reserve Banks act as fiscal agents for the War Department, the Navy
Department, and the Maritime Commission. A more detailed account of
these facilities is given on pages 32.-35 of this report.
Restrictions on nonessential credit. While facilitating and encouraging
the financing of war contracts, the Federal Reserve authorities took steps
during 1941 to curb the extension of credit for nonessential purposes. The
major
step, which is discussed more fully in the next section of this report,



FEDERAL RESERVE SYSTEM

2-3

was the amending of Regulation W to augment restrictions on consumer
credit. In addition, banks and bank examiners were asked by the Federal
Reserve authorities, the Comptroller of the Currency, and the Federal Deposit
Insurance Corporation to encourage curtailment of the existing volume of
single-payment loans to individuals for nonproductive purposes and of loans
for the accumulation of inventories of civilian consumer goods. Responsible
authorities also pointed out the dangers inherent in expansion of credit for
purchase of real estate at rising prices and the advantages of reducing indebtedness at this time.
On June 17, 1942., following a meeting of Government officials concerned
w i t h the possible consequences of use of creditfor accumulation of inventories,
the Board of Governors addressed a letter to all banks and other financing
institutions urging the voluntary curtailment of credits for the accumulation
of inventories of civilian goods. This did not apply to special situations
such as the accumulation of fuel stocks and stocks of goods held because of
freezing or rationing orders. The Federal bank supervisory agencies requested t h a t their examiners inquire especially during the course of each
examination as to the consideration given by banks to the letter of June 17.
The letter sent to the banks and the one for the guidance of examiners for
the Federal Reserve Banks are published on pages 113-14 as an appendix to
this report.
In the field of agricultural credit also steps were taken to discourage
unnecessary credit expansion. It was recognized that an increased amount
of borrowing by farmers might be needed in connection w i t h the growth of
agricultural output which is part of the war program. Special efforts were
made, however, by authorities responsible for formulating agricultural
policies, as well as by farm borrowers and by lenders, to achieve war expansion of farm output w i t h o u t stimulating a speculative rise in farm values or
involving producers in heavy indebtedness which would become increasingly
burdensome in a period of declining farm income.
Credit problems confronting farmers under war-time conditions have been
under constant consideration by a National Agricultural Credit Committee,
organized under the auspices of the Farm Credit Administration and composed of representatives of farm organizations, banks, life insurance companies, and Government agencies, including the Federal Reserve. Reports
to this Committee indicate t h a t farmers are reducing their mortgage indebtedness at an unprecedented rate, largely as a result of the favorable prices for
farm products prevailing during the past few years. Current mortgage
instalments are being met promptly and many farmers are anticipating
scheduled payments or have repaid their mortgage debt in full. Lenders on
farm real estate have been following the policy of encouraging larger down
payments and of basing loan values on the long-term outlook for farm prices
rather than on current prices.
FURTHER RESTRICTIONS ON CONSUMER CREDIT
During 1942. the Board extended and increased the restriction of consumer

credit
w h i c h it had begun to apply in 1941 through Regulation W. From


2-4

A N N U A L REPORT OF BOARD OF GOVERNORS

September i, 1941, until the spring of 1942., Regulation W had applied only
to instalment sales and to loans repayable in instalments, but effective May
6, 1942., the scope of the regulation was extended to include sales made on
charge accounts and loans repayable in single payments. This was in
compliance with point 7 of the President's anti-inflation message of April
xrj to Congress, which said in part that in order to keep the cost of living
from spiraling upward we must "discourage credit and instalment buying
and encourage the paying off of debts. . . . "
Prior to this time the Board had already taken action, effective March X3,
to reduce the permissible length of most instalment contracts from 18 months
to 15, to increase the size of the down payment required on articles already
subject to the regulation, and to extend the list of such articles. The action,
effective May 6, reduced the maximum maturity still further, from 15 months
to ix (with certain exceptions), expanded the list of articles covered to
include almost all kinds of consumer durable and semi-durable goods, and
increased the required down payments on many articles so that for most
articles the down payment required by the regulation became 33Yz per cent.
The rule laid down for charge accounts prohibits the sale of any listed article
on credit to any customer whose charge account is in default, and sets the
tenth day of the second calendar month after a charge sale as the date on
which the account goes into default unless payment (or specified arrangement to pay) has been made. The principal changes in the regulation are
summarized in Table 9 on page 73.
The restriction of single-payment loans contained in the amendment of
May 6 did not apply to credits already outstanding, but other steps were
taken to encourage their amortization. On May 7 the three Federal bank
supervisory agencies joined in a statement urging banks to adopt even more
generally the principle of amortization for their loans, particularly for those
single-payment loans to individuals for nonproductive purposes that were
already outstanding. The examiners for the several agencies were instructed
to pay particular attention to this type of debt and to comment in their
reports on the extent to which banks cooperated in this program. This
statement is published in the appendix on page 112..
As required by the Executive Order all of these changes in Regulation W
were made after consultation with the Secretary of the Treasury, the Secretary
of Commerce, and the Administrator of the Office of Price Administration.
The Price Administrator issued a statement to the press on May 7 affirming
the constructive bearing of the Board's action in supporting measures that
were being taken by the Office of Price Administration for keeping down the
cost of living.
In a few respects, Regulation W was relaxed during the year, generally
for the purpose of improving its practical workings or of supporting some
phase of the war program sponsored by other branches of the Government.
An example of the latter was an amendment which relieved from restriction
extensions of consumer credit for converting oil-burnine furnaces to coal and



FEDERAL RESERVE SYSTEM

2-5

for insulating homes, measures which were of concern primarily to the War
Production Board, the Office of Defense Transportation, and the Petroleum
Administration for War.
At a time like the year under review, when powerful inflationary forces
were at work, the use of current income to reduce consumer debt rather than
to buy consumer goods exerted an important anti-inflationary influence.
This influence has been at work in the United States since the autumn of
1941, when the volume of consumer debt, then at a peak level of about 9.7
billion dollars, began to go down. By the end of 1941, it had gone down by
about 3.6 billion dollars, or about 37 per cent, as is brought out by the chart,
which shows the course of short-term consumer debt during the past 14 years.
TOTAL CONSUMER DEBT
BILLI ON

OF DOLLARS

ESTIMATED FIGURES; END OF MONTH

BILLIONS OF 3 0 1

10

8

6

^

4

"
2

0
1934

1936

NOTE: Monthly estimates of total consumer debt are based on data prepared by the Bureau of
Foreign and Domestic Commerce, United States Department of Commerce, and more recently by
the Board of Governors of the Federal Reserve System. These estimates of short-term debt consist
of instalment and charge-account sale debt, instalment loans (including repair and modernization
loans), single-payment loans, and service debt.

In addition to Regulation W, other factors have had an important part in
bringing about this reduction. Prominent among these were shortages in
the available supplies of goods such as are commonly bought on the instalment plan, particularly automobiles and household appliances. Another
important factor was that, as wages and farm income increased, many more
consumers were in a position to buy for cash instead of on credit, or to pay
promptly for goods and services purchased on credit. The influence of
Regulation W was supplementary to these factors; it operated by limiting
the amount of credit that could be extended on each instalment sale of any
listed article, by shortening the length of instalment sale contracts, by reducing the customary period for paying charge accounts, and by restricting
extensions of consumer credit in the form of instalment loans and singlepayment loans.
Regulation of consumer credit was a substantial factor contributing to the



i6

ANNUAL REPORT OF BOARD OF GOVERNORS

large reduction in the outstanding volume of this type of credit. It has had,
therefore, a not insignificant influence in combating inflationary forces.
This seems to have been due in large part to the specific provisions of Regulation W, but also in large part to the fact that the admonitions of the President
and the publicizing of the Government's policy of war-time restraint on
consumer credit struck a responsive chord. The acceptability of this policy
was manifested in a widespread public disposition to cooperate and an almost
universal disposition in the trade to observe the spirit as well as the letter
of Regulation W. The educational work carried on by the twelve Federal
Reserve Banks and their twenty-four branches, with the cooperation of numerous trade associations and the press, and quiet but persistent and countrywide measures of enforcement, have contributed much to making the regulation effective.
ROLE OF CREDIT AUTHORITIES IN PREVENTING INFLATION

The principal weapons against inflation in a war economy are taxation,
increased savings, and controls over goods, prices, and wages. For this
reason the role of credit authorities in financing a war without inflation is
necessarily subordinate to that of other Government agencies. With a
national income at an annual rate of 12.5 billion dollars and goods available
for civilian consumption of 80 billion dollars, and with the prospect for a
widening differential in 1943, the principal reliance in preventing inflationary
pressure, outside of direct price and commodity controls, has to be on measures for channeling back into the war effort the excess income created by
military expenditures.
Federal Reserve authorities have no direct responsibility for taxation, but
in view of the importance of taxes in the monetary picture they feel free to
give such suggestions and advice to the Treasury as seem appropriate. The
Board's interest in taxation and other aspects of anti-inflation policy is
recognized by the fact that the Board is represented on the Economic Stabilization Board created by Executive Order on October 3, 1941. In channeling
savings into the war effort Federal Reserve authorities have cooperated with
the Treasury in developing machinery for distributing securities and in helping to determine types of issues that would encourage holders of investment
funds as well as temporarily idle cash to purchase Government securities.
As a further means to reduce the impact of the income stream on consumer
goods, the Board took measures to regulate consumer credit, to encourage
the reduction of debt, and to discourage the use of credit for non-war purposes.
Previous reference has been made to these activities.
It was apparent in 1942., however, that, notwithstanding existing measures
for meeting Treasury needs with as little recourse to the banking system as
possible, a substantial volume of Government securities was being taken by
the banks. In war time the Federal Reserve authorities must provide the
banks with adequate reserves to serve as a basis for purchasing such Government securities as thev are expected to purchase. This responsibility gives



FEDERAL RESERVE SYSTEM

2-7

rise to the further duty of choosing methods to be used in providing these
reserves.
Bank lending versus nonbank lending. There is in practice a great
difference in the effects on the economy as between purchases of Government
securities by commercial banks and purchases by nonbanking investors. The
former results in the creation of new deposits and new buying power, while the
latter diverts into the war effort existing funds which would otherwise be
available for spending and thus for exerting an upward pressure on prices
of civilian goods. It is true that, if securities are sold to holders of investment funds which have been held idle for some time, the result is that these
funds are made active. This process, to be sure, adds as much to the income
stream and to civilian purchasing power as would the creation of money
through purchases of securities by the banks. But this is not the whole
story. The fact is that the person who has invested his funds in Government
securities has reduced the likelihood of his using them to bid up prices.
Consequently, the possibilities of inflationary pressure are less when existing
funds are used than when new funds are created. Furthermore, the subsequent problem of controlling the supply of money is not aggravated when
existing funds are used as it is when additional deposits are created through
the sale of securities to the banks.
In order to illustrate the difference, a series of assumptions and hypotheses
may be helpful. Assume that commercial banks and Federal Reserve Banks
together purchase 50 per cent of the Government securities currently offered,
as they have in the recent past; assume also that Government expenditures
will be in accordance with estimates that have been made and that taxes and
United States bond purchases out of savings will not increase. In that case,
bank holdings of Government securities will increase by about 30-35 billion
dollars in both 1943 and 1944. Commercial bank deposits plus money in
circulation will increase by the same amount. The chart on page 2.8
projects these assumptions into the future. On the chart the total of
deposits and currency rises to nearly 160 billion dollars by the end of 1944.
If the ratio of bank deposits and currency to national income remains the
same as at present, then the national income will be 12.5 billion, not the 150
billion which represents the estimated maximum to which income can
expand by that time on the basis of our physical resources without a general
rise in prices. It is recognized that there is no reason why the ratio of
deposits and currency to income should remain at its present level; it could
be higher or lower. But as an illustrative hypothesis the assumption is
not unreasonable.
The story the chart tells is that money income might go up to about 150
per cent of the limits set by the nation's capacity to produce. The extra
75 billion dollars would represent inflation. These figures are neither estimates nor forecasts. They are hypotheses indicating in broad terms what
the country might have to deal with if certain eventualities occur. This
particular set of figures is not likely to materialize in exactly the magnitudes



z8

ANNUAL REPORT OF BOARD OF GOVERNORS

indicated. If prices began to go up at the rate implied in the hypotheses, a
cycle would start that would upset all calculations: Government expenditures would have to go up more because of the increase in the price of goods;
consequently, national income would go up more; consequently, the amount
that the banks would have to take if they took 50 per cent of the increase in
public debt would be more. All the figures would be changed. Nevertheless, the spread between the lines for bank deposits and currency and for
national income indicates the danger of an increase in deposits and currency
at the rate shown. It is apparent that everything possible must be done to
prevent such a development.
NATIONAL INCOME AND BANK CREDIT
(HYPOTHETICAL PROJECTION)

•

s

•
"V*

,/.

150

A

^JATIONAL INCOME

B,

fe
——=="

— 1 "
BANK DEPOSITS

AND C U K K t N C T

FOR EXPLANATION OF PROJECTIONS
SEE SUBSCRIPT.

1939

1940

1941

1942

1943

NOTE : Projected curves in 1943 and 1944 show hypothetical trends of national income and the
total of bank deposits and currency:
Ai—Volume of bank deposits and currency, if banks purchase half of the currently expected increase in the public debt;
A2—National income corresponding to Ai, if the present ratio of bank deposits and currency
to national income is maintained;
Bi—Volume of bank deposits and currency, if nonbank purchasers invest all surplus funds in
Government securities. The increase would be limited to the amount necessary to
provide a volume of bank deposits and currency sufficient for a national income based
on no rise in prices (Curve B2), and continuation of the present ratio of bank deposits
and currency to national income.
B2—Estimated maximum national income likely to be achieved at present prices.

There is also presented on the chart an indication of an alternative course
of events in which all of the income created by Government expenditures
and not required for current living is used to buy Government bonds. This
is arrived at by assuming that additional deposits will be created only in an
amount sufficient for the functioning of a 150 billion dollar income if the
ratio of deposits and currency to national income remains at its present level.
The required amount of bank deposits and currency would be about 108
billion, not the 160 billion that would result from bank purchases of one-half




FEDERAL RESERVE SYSTEM

29

of the public debt. To provide that amount, the banking system would
have to absorb only about 14 billion dollars of Government securities in 1943
and 4 billion in 1944; nonbank holdings of Government securities, on the
other hand, would increase by 53 billion in 1943 and 66 billion in 1944. To
put it in another way, since an income of 150 billion dollars could be handled
with a volume of bank deposits and currency no larger than 108 billion, there
is no need, from the point of view of service to the public, of selling to the
banks more Government securities than the amount mentioned above.
Theoretically, the rest of the securities could be sold to nonbank investors,
who would be buying them at the rate of about 60 billions a year. If this
were done, there would be no inflationary pressure from additional credit
expansion in the next two years. In fact, if everything that this implies
were done in the fiscal field and in absorption of current incomes into savings,
it is reasonable to assume that there would be no serious inflationary threat.
The situation would certainly be sounder and more conducive to orderly
post-war readjustment than would be the case under the first alternative.
Alternative Federal Reserve policies. As has been indicated, commercial banks are certain to be called upon to take a share of the public debt in
the next two years, and the Federal Reserve authorities will have to provide
the necessary reserves. This could be done by having the banks borrow from
the Federal Reserve Banks. To facilitate this, discount rates have been
reduced, particularly for advances to banks on short-term Government
securities. This should encourage the banks to feel free to make full use of
their existing reserves with the assurance that in case they should run short
they could get accommodation from the Reserve Banks at preferential rates.
They could also obtain these funds by selling Treasury bills at the standing
% per cent rate. A considerable amount of reserves will have to be provided, however, by other Federal Reserve purchases of Government securities, by reductions of reserve requirements, or by a combination of the two.
In order to bring out the consequences that would follow the adoption of
one or the other of the policies, or a combination of the two, two charts are
introduced. These charts are based on the assumption that banks will
purchase additional Government securities amounting to 50 per cent of the
increase in the public debt, or about the same proportion they absorbed
in the last six months of 1942.. The amount so purchased will determine
the growth in bank deposits and, therefore, the amount of additional
reserves that the banks will need. It is also assumed that currency will
continue to expand at a rate of about 6 billion dollars a year. If it should
expand more, the pressure for reserves would be greater than indicated; if
it should expand less, the reserve situation would be correspondingly easier
to handle.
The first chart shows what the portfolio of the Federal Reserve Banks
would be at the end of 1943 and 1944 in case the banks' entire increase in
needed reserves resulting from currency withdrawals and deposit expansion
were met by reducing reserve requirements, what it would be if currency



3°

ANNUAL REPORT OF BOARD OF GOVERNORS

drains were met through open-market operations and reserves were reduced
only to the extent necessary to meet the increase in required reserves arising
from deposit growth, and what would happen if the entire increase in the
FEDERAL RESERVE PORTFOLIO OF GOVERNMENT OBLIGATIONS
UNDER THREE KINDS OF CREDIT ACTION

DEC. 31,1942

END OF 1943

( ACTUAL )

( HYPOTHETICAL )

END OF 1944

banks' reserve needs were met through purchases of securities. If the last
mentioned course were pursued, the total amount of securities held by the
Reserve Banks at the end of 1944 would be about 2.6 billion dollars.
RESERVE REQUIREMENTS OF MEMBER BANKS
UNDER THREE KINDS OF FEDERAL RESERVE CREDIT ACTION
PERCENTAGE OF REQUIRED RESERVES TO TOTAL DEPOSITS

IF CURRENCY INCREASES ARE MET BY OPEN MARKET
PURCHASES AND RESERVE NEEDS DUE TO DEPOSIT
GROWTH BY REDUCTION IN RESERVE REQUIREMENTS.

END OF 1942

END OF 1943

END OF 1944

( HYPOTHETICAL )

( HYPOTHETICAL )

The second chart shows how the three outlined courses of action would
be reflected in the reserve requirements of member banks. We still assume
that
banks take 50 per cent of the growth in the public debt and that currency



FEDERAL RESERVE SYSTEM

31

flows out at the rate of 6 billion dollars a year. The chart shows t h a t if all
of the banks' needs for reserves were met by reduction in requirements, reserve
requirements would have to be almost eliminated by the end of 1944. The
situation would be one where there were practically no reserve requirements
—and practically no bank reserves. A currency drain of the assumed magnitude would have absorbed practically all of them. It is estimated that, in
this sequence, the Board would have exhausted its authority to reduce
reserve requirements by the middle of 1943. It would then have to obtain
further and unlimited authority and by the end of 1944 requirements would
be almost down to zero. This would not be conducive to the maintenance
of sound banking conditions, particularly at a time when bank deposits
might have increased to the high level of 130 billion dollars.
To sum up: the Federal Reserve authorities, in meeting the necessary requirements of member banks for additional reserves in the next t w o years,
will have to determine to w h a t extent they will depend on reductions in
reserve requirements and to w h a t extent on purchases of United States
Government securities. The figures underlying the charts are based on
many assumptions. They are not forecasts; they represent mere hypotheses.
They indicate, however, the nature and general magnitude of the problems
w i t h which the Federal Reserve authorities will have to deal in the immediate future.
FEDERAL RESERVE BANKS AS FISCAL AGENTS UNDER WAR PROGRAM
As in 1941, when preparation for threatened war led to a great increase in
the volume and variety of services performed [by the Reserve Banks for various
branches of the Government, throughout 1941 there was a great expansion
in the scope and volume of w o r k performed for the Government by the
Reserve Banks in connection w i t h the prosecution of the war.
Issuance and servicing of Government obligations. As fiscal agents
of the United States, the Federal Reserve Banks handle all Treasury operations outside of Washington incident to the issue, redemption, and exchange
of public debt obligations, including the qualification of all issuing agents
for the sale of War Savings bonds except the Postal Service. The number of
pieces handled increased more than 700 per cent during 1942., chiefly as the
result of the increase in the number of War Savings bonds. In May, representatives of all Federal Reserve Banks and of the Board of Governors attended a fiscal agency conference held by the Treasury, and in October
representatives of the Federal Reserve Banks and of the Board attended a
meeting in Kansas City called by the Treasury for the purpose of discussing
the War Savings Bond Program.
On the basis of the number of employees assigned, the handling of War
Savings bonds during 1942. was one of the largest single operations performed
by the Federal Reserve Banks since the establishment of the System. During
the last half of 1941, an average of 4,000 officers and employees were
assigned to the War Savings Bond unit, or somewhat more than were assigned
toFRASER
the entire check collection function, the next largest activity. Before the
Digitized for


31

ANNUAL REPORT OF BOARD OF GOVERNORS

year ended, Savings bond operations had grown so large that several Reserve
Banks and branches found it necessary to lease space outside their own buildings. Operations performed in connection with Savings bonds are quite
complicated owing to the fact that the bonds are registered and also to the
fact that they are redeemed by check rather than by cash. The exceedingly
large number of Series E bonds handled during 194Z is due in part to the
small denominations in which they may be purchased—about two-thirds
of the total number of bonds handled, for example, were in the $2.5 denomination. In addition to cooperating with the State organizations of
the Treasury's War Savings Staff and with national and State banking
authorities and others in obtaining the qualification of banks as issuing
agents, the Federal Reserve Banks during 1942. cooperated in obtaining the
qualification of corporations, credit unions, building and loan, and savings
and loan associations, etc., as issuing agents for War Savings bonds. The
Federal Reserve Banks supply all issuing agents except post offices with their
stocks of bonds and handle all remittances and accounting in connection
therewith.
In May, the Federal Reserve authorities cooperated with the Secretary of
the Treasury in setting up a Victory Fund organization to aid in the sale of
Government obligations. A Victory Fund committee was established in
each Federal Reserve district under the chairmanship of the President of the
Federal Reserve Bank. The personnel of each district committee, although
chosen primarily from the financial community, included other persons whose
position or ability made their appointment appropriate and desirable. All
appointments, most of which provided for no compensation, were made
subject to approval by the Secretary of the Treasury. Regional committees
were also appointed within the Federal Reserve districts.
The twelve district Victory Fund committees are tied together nationally
by a committee of the Federal Reserve Bank presidents of which the Secretary
of the Treasury is Chairman. The Chairman of the Board of Governors
provides the liaison between the Reserve Banks and the Treasury. Several
meetings were held during the year for the purpose of formulating plans and
procedure. In December the activities of the Victory Fund committees
reached their peak for the year in connection with the new issues sold by
the Treasury at that time.
Financing war production. Important new responsibilities were conferred upon the Federal Reserve by the President's Executive Order No. 9112.,
issued on March 2.6, 1942., which provided for a Government guarantee of
loans made for war production purposes. The basic purpose of the order
was to facilitate war production by providing adequate financing for subcontractors and prime contractors whose need for working capital had been
increased by war orders beyond their borrowing ability so that private
financing institutions could not properly extend the credits required without
some form of Government protection. The order was designed particularly
to assist subcontractors to whom financing was not available either through



FEDERAL RESERVE SYSTEM

33

the Assignment of Claims Act of 1940 or through advance payments by the
procurement agencies of the Government, except to a limited extent through
the medium of prime contractors. It was of especial aid to business concerns, including small businesses, whose credit standing was not sufficiently
high to justify bank loans of the size necessary for their greatly expanded
volume of production.
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, including the obtaining or conversion
of facilities. The Federal Reserve Banks were authorized to act as agents for
the principals in carrying out the provisions of the Order, subject to their
specific instructions and the general supervision of the Board of Governors.
Any funds appropriated for the use of the principals were made available for
disbursement under the Order through the agency of the Reserve Banks. A
press statement released by the White House stated that guarantees under
the Order would not be made under peace-time credit rules, but would be
made whenever additional financing is essential for increased production.
On April 1, representatives of the Federal Reserve Banks met with the
Board of Governors in Washington for discussion of the procedure necessary
to give effect to the program with the least possible delay. Somewhat later
the Board of Governors designated three of its members as a War Loans Committee to assist in handling the supervisory activities entrusted to the Board
by the Executive Order. To implement the work of the committee, the
Office of Administrator for War Loans Committee was created on April 6.
After consultation with officials of the War and Navy Departments, the
Maritime Commission, and the War Production Board, the Board of Governors issued its Regulation V, effective April 6. The new Regulation prescribes general rules and policies for the guidance of the Reserve Banks in
handling guarantees of loans which the armed forces and the Maritime Commission deem essential to the prosecution of the war. The functions of the
Reserve Banks with respect to negotiation of these loans include analysis
of the financial integrity of the applicant, determination of the type of financing best suited to meet different situations, and preparation of the necessary
documents. The servicing of guaranteed loans after they have been made
is done principally by the banks and other financing institutions. The War
and Navy Departments and the Maritime Commission have the responsibility
of certifying as to the technical qualification of the applicant and the importance of the work to be financed.
The way in which Regulation V has facilitated war production may be
illustrated by reference to one of the earliest loans arranged under this
financing mechanism. To meet certain ordnance requirements, it appeared
necessary to build new facilities requiring investment of an estimated
$16,000,000 by the Government, but entailing a delay of from six months to



34

ANNUAL REPORT OF BOARD OF GOVERNORS

a year to reach full production. A certain manufacturer, however, proposed
to take subcontracts from several important companies having prime contracts with the Ordnance Department, and, in turn, to farm out the bulk of
the work with more than xo of its peace-time competitors located at various
points in the eastern half of the country. This plan made use of valuable
facilities at scattered points which might otherwise have remained idle
since they had been devoted to supplying parts for civilian automobiles.
Financing was a real problem. The manufacturer, not having a prime contract, could not avail himself of advance payments except to a limited extent
and the sub-subcontractors did not have access to any financial aid except such
as they could obtain through their own banking connections. Regulation
V furnished the answer to the financial problem. Not only the orders of the
subcontractor from the prime contractors, but likewise the orders of the
sub-subcontractors constituted "war production contracts" entitled to
financing under Regulation V. The loan was arranged within a few weeks
after the Regulation was promulgated and the resulting production for the
Ordnance Department's program has been an outstanding success. The
flexibility of Regulation V financing was also illustrated by this case.
Initially, the subcontractor borrowed a sufficient amount to finance the
operations of his sub-subcontractors, most of whom, as the program proceeded, arranged their financing with their own commercial banks under
Regulation V.
Under the President's Order and the Board's Regulation V, by the end
of the year about 1,700 applications for guarantees of loans, aggregating
i..y billion dollars in amount, had been authorized through the Federal
Reserve Banks. Of the total number of guarantees authorized, iq per cent
were for amounts up to $15,000 and 59 per cent for amounts up to $100,000.
It is apparent, therefore, that a large proportion of these loans was made in
relatively small amounts and presumably to small concerns. In dollar
amount, however, the bulk of the guarantees was covered by a relatively
small number of large loans. On December 31 about 803 million dollars of
advances on such loans were outstanding. Varying percentages of the loans
are guaranteed; of the loans outstanding on December 31 the portions guaranteed aggregated 631 million dollars. In addition, about 1.4 billion dollars
were available to borrowers under guarantee agreements outstanding.
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 the Federal Reserve Banks have agreed to
make advances under guarantees and the Reconstruction Finance Corporation
has made a number of such commitments.
Utilization of the twelve Federal Reserve Banks and their twenty-four
branches has made it possible to decentralize the financing of war production
to a considerable extent, thus facilitating the procedure for the Government
as well as for loan applicants. As indicated on page 2.1. of this report,



FEDERAL RESERVE SYSTEM

35

the banks of the United States, both members and nonmembers of the
Federal Reserve System, have given full cooperation.
Depositary, custodianship, and other functions. As depositaries of
Government funds, the Reserve Banks handled and charged against the
Treasurer's account a total of 150 million Government checks drawn by
disbursing officers throughout the country for war and other Government
expenditures. They also handled and credited to the Treasurer's general
account millions of checks and other items received by Federal officers in
payment of taxes, customs, etc. During the last half of 1942., an average of
about 8,000 officers and employees of the Federal Reserve Banks, or more
than 40 per cent of their entire personnel, were engaged in serving various
United States Government departments and agencies. This was a substantial
increase over normal years and arose for the most part from war activities.
The Reserve Banks, acting as fiscal agents, custodians, and depositaries for
the Reconstruction Finance Corporation, actively participated during the
year in the administrative aspects of the various war-time programs of the
Corporation, its various subsidiaries, and the Commodity Credit Corporation.
Such activities included the construction and expansion of production facilities for the manufacture of war material, the procurement and stock-piling
of strategic and critical materials, the operation of the Government's War
Damage Insurance program, and other projects directly related to the war
effort.
The Reserve Banks disburse, by checks drawn on the Treasurer of the
United States, the amounts of loans and other payments made by the Reconstruction Finance Corporation, the Commodity Credit Corporation, and
their various subsidiaries, 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.
Among the important disbursements effected by the Reserve Banks during
the year in the above-mentioned capacities were those made for account of
the Defense Plant Corporation, a subsidiary of the Reconstruction Finance
Corporation, incident to the purchase of land, the building, expansion, and
equipment of plants, and the purchase of materials. The Reserve Banks
received, examined, and held documents in connection with such activities
and collected and applied payments received on behalf of the Corporation.
For the Defense Supplies Corporation, the Rubber Reserve Company, and
the Metals Reserve Company, the Reserve Banks received, examined, and
held documents incident to transactions and effected and received many
payments in substantial amounts. These agencies, all of which are subsidiaries of the Reconstruction Finance Corporation, are primarily engaged
in purchasing, holding, and selling strategic and critical materials and
supplies which include a multitude of individual items. Similar services
were performed by the Reserve Banks during the year for the account of the
Commodity Credit Corporation, which acquires domestic and foreign agri


36

ANNUAL REPORT OF BOARD OF GOVERNORS

cultural commodities required by the United States and the Allied nations.
Certain commodities so accumulated were transferred under lend-lease
projects.
In connection with the activities of the War Damage Corporation, a subsidiary of the Reconstruction Finance Corporation, the Reserve Banks received from the fire insurance and casualty companies handling such insurance
statements regarding the insurance written by them and the premiums
received therefor, less certain commissions and service fees. The Reserve
Banks verified the computations, collected the remittances received from the
insurance companies, and reported with respect thereto to the War Damage
Corporation. Since July 1 9 ^ the War Damage Corporation has insured real
and personal property against loss or damage resulting from enemy attack or
action of our own armed forces in resisting enemy attack.
Beginning in October the Reserve Banks effected payments for the Defense
Supplies Corporation in connection with its program involving the acquisition of new and used tires and tubes from consumers. Payments were made
by check or by War Savings bonds or stamps to owners who did not make
gifts of such tires and tubes.
The Reserve Banks delivered large amounts of currency over-the-counter
to authorized finance officers of the Army and Navy and made large currency
shipments for payroll purposes direct to Army and Navy posts and also to
banks in the vicinity of posts and military and naval construction projects.
Foreign funds control and intergovernmental problems. As in
1941, the "freezing" of foreign assets and the control of foreign transactions
was an important war activity in 1941. The Federal Reserve Banks, as
agents for the Foreign Funds Control in the Treasury, receive license applications relating to transactions affecting the interests of "nationals" of blocked
countries. Under general authorizations from the Treasury, the Reserve
Banks act independently on most of these applications and refer only a small
number to the Treasury Department with recommendations.
Early in 1941 the Foreign Funds Control regulations were amended to
require that all currency imported or otherwise brought into the United
States (except from certain British countries and except for small exempted
amounts carried by travellers) should be deposited with a Federal Reserve
Bank and released only upon authorization by the Treasury. This measure
was designed to prevent the liquidation in this country of dollar currency
looted by the Axis in occupied areas, and to destroy so far as possible the
markets for such currency abroad. Many foreign countries, in particular the
Latin American republics, have lent their aid to this program by restricting
or prohibiting transactions in dollar currency within their borders.
The Federal Reserve Banks hold the gold reserves and most of the official
funds maintained by foreign countries in the United States. Gold under
earmark for foreign account at the Reserve Banks increased by 45 8 million
dollars to 2.9674 million during 1942., while the deposits of foreign central
banks and governments in the Reserve Banks were increased by xo million



FEDERAL RESERVE SYSTEM

37

to 792 million at the end of the year. A large proportion of these foreign
assets were in "frozen" accounts which, though relatively inactive, required
much attention from the Reserve Banks and the Board. It was necessary to
obtain not only licenses for transactions in such accounts but also certification
of the authority to operate many of the accounts pursuant to Section X5(b)
of the Federal Reserve Act. On the other hand, some of the accounts which
were not "frozen" were exceptionally active. The Reserve Banks rendered
important service to Allied belligerent governments and their official missions
in this country by handling their dollar disbursements for war supplies.
They were also active in arranging for official remittances from the United
States to foreign countries, particularly in connection with the maintenance
abroad of American armed forces.
The Reserve Banks continued their activities as agents of the Treasury in
gold and silver transactions with foreigners. Silver imported in 1942., however, was sold almost entirely to industrial consumers in the market rather
than to the Treasury. The Federal Reserve Bank of New York carries out
the operations of the Stabilization Fund in accordance with instructions from
the Treasury. The Reserve Banks have also collected reports and maintained the records of international capital movements and foreign exchange
transactions compiled since 1934 in accordance with executive orders and
Treasury regulations. Publication of these statistics was discontinued at
the end of 1941, except for data showing the total capital movement distributed by various types.
Beginning in May the Federal Reserve Bank of New York, with the
approval of the Board of Governors and in accordance with established practice, made a series of small loans on gold to a foreign central bank. The
highest amount outstanding during the year was 5 million dollars. The
loans maturing in 1941 were repaid in full on their respective due dates; at
the end of the year two loans amounting to 2.. 5 million dollars remained
outstanding, maturing early in 1943.
An innovation in the operations of the Federal Reserve Banks was the
handling by the Federal Reserve Bank of San Francisco of the complicated
property problems created by the large-scale war-time evacuation of all
Japanese and persons of Japanese ancestry from military areas in the Twelfth
Federal Reserve District. Pursuant to Executive Order No. 9066 issued by
the President on February 19, and under the direction of the local military
authorities, over 100,000 persons were evacuated.
After conferring with the Board of Governors, the Secretary of the Treasury
asked the Federal Reserve Bank of San Francisco, in its capacity as Fiscal
Agent of the United States, to administer the property of evacuated persons,
when the persons so desired, with the exception of agricultural property
and equipment, which were placed under the jurisdiction of the Farm
Security Administration. Early in March representatives of the Board, the
Treasury Department, and the War Department met in San Francisco to
confer with officials of the Reserve Bank, representatives of other civilian



3»

ANNUAL REPORT OF BOARD OF GOVERNORS

agencies of the Government, and the military authorities to prepare for the
task at hand.
The San Francisco Reserve Bank offered the evacuees protection against
fraud, forced sales, and unscrupulous creditors, and assisted them in arranging for the administration or orderly liquidation of their business and other
property interests. In order to provide ready accessibility, four principal
offices outside Reserve Bank buildings were established in San Francisco,
Los Angeles, Portland, and Seattle, and forty-nine field offices were established throughout the district. The offices were staffed with a group of
men whose experience had been wide and varied, and in May 1941, at the
peak of operations, 184 persons were engaged directly in the performance of
duties of the Evacuee Property Department!
ENLARGED RESPONSIBILITIES OF FEDERAL RESERVE BANK BRANCHES

In order that the Federal Reserve might be in a better position to fulfill
its war-time responsibilities, the Board of Governors initiated a movement
to increase the services rendered by branches of the Federal Reserve Banks.
The Board seeks to adjust the services of each branch to the increasing requirements of the territory it serves rather than to develop a uniform pattern
of expansion for all branches. Although special attention is being given to
increasing the war-time services of the branches, consideration is also being
given to ways in which the public interest would be served by a decentralization of peace-time functions. The subject was discussed at the joint meeting
of the Board and the Presidents of the Reserve Banks in March and the
President of each Reserve Bank having one or more branches later came to
Washington for consultation on plans for decentralizing activities within
his district.
Among the first steps taken in the general program was the expansion, with
the approval of the Treasury Department, of the branch fiscal agency activities, particularly those incident to the handling of War Savings bonds.
While all of the Federal Reserve Bank branches had previously issued War
Savings bonds, in many cases their operations in this connection had been
limited to over-the-counter sales. These activities were expanded to include
(1) the issuance of savings bonds for firms throughout the branch territories
which are operating payroll savings plans without having qualified as
issuing agents, and (2.) the maintenance and servicing of the consignment
accounts of banks and others who have qualified as issuing agents. The
branches are also handling Series F and G bonds and Tax Savings notes, and
consideration is being given to an expansion of their activities in connection
with market issues.
There was also an expansion of branch activities in connection with war
production loans, consumer credit control, and economic research. Wherever possible these services, as well as others of peculiar value to individual branch territories, were adapted to conditions prevailing in the
localities where thev were offered. It is contemplated that the duties and



FEDERAL RESERVE SYSTEM

39

responsibilities of the Board of Directors of each branch will increase as
the services of the branch expand.
The program for increasing the responsibilities of branches also provides
for strengthening their personnel. With the approval of the Board of
Governors, for example, one Federal Reserve Bank which has greatly expanded the facilities of its branch has made the following changes with
respect to personnel: It has appointed one of its vice presidents to serve as
resident head of the branch. This officer will no longer serve as a member
of the branch board, which has been reduced from seven to five members.
The resident staff of the branch will be expanded to include a senior bank
examiner, an attorney, and a research economist. Other Banks are considering similar additions to personnel and changes in title of the heads of
branches.
The Board and the Federal Reserve Banks are planning for further development of branch activities in 1943.
THE BANKING STRUCTURE AND BANK SUPERVISION

In addition to handling an increasing volume of banking business, when
the turnover of bank personnel was extremely high, the banks of the country
in 1942. served war agencies, war plants, and military posts. They also sold
a large volume of Government bonds and War Savings stamps. At the close
of the year the banks were prepared to undertake the handling on a nationwide basis of the ration banking plan which was being developed by the
Office of Price Administration with the cooperation of banks and bank
supervisory agencies. In view of the heavy demands that banks have been
called upon to meet in connection with financing the war, many banks have
taken steps to place their institutions in the best possible position to meet
whatever conditions may develop during and after the war. They have
endeavored to strengthen their position by restricting credit to productive
purposes, by collecting nonessential loans and placing loans on an amortization basis where practicable, by confining new investments to higher
grade securities, by disposing of less desirable assets as opportunities were
afforded, and by curtailing dividends in order to build up strong capital
structures. As a means of obtaining the benefits afforded by the Federal
Reserve System, a number of State-chartered banks became members of the
Federal Reserve System during the year.
Bank supervisory agencies have cooperated with other agencies to further
the control of inflation through the reduction of individual credit for nonproductive purposes and credit for the accumulation of inventories of consumer goods and, wherever consistent with sound banking principles, to
implement the financing of the war program, both private and governmental.
These activities have been described in earlier sections of this report.
Member and nonmember banks. The number of banking offices in the
United States declined from 18,52.4 at the end of 1941 to 18,419 on December 31, 1942.. This decline of 105 followed the trend of recent years, but was



4o

A N N U A L REPORT OF BOARD OF GOVERNORS

somewhat larger than in the previous year. The number of banks decreased
by 145 to 14,680, while the number of branches and additional offices increased by 40 to 3,739.
As in past years, the net decrease in the number of banks was due principally to consolidations and voluntary liquidations. There were nine banks
suspended during the year, none of which was a member bank. Newly
organized banks—12. in number—were fewer than in any other year of record.
The net increase of 40 in the number of branches and additional offices was
largely accounted for by the opening during 1941 of 33 new offices at various
military reservations. A few of these offices were regularly authorized
branches, but the majority were "banking facilities" established through
arrangements made by the Treasury Department with banks designated as
depositaries and financial agents of the Government. Apart from the
offices at military reservations, there were 58 branches established during
1941 and 51 discontinued, compared with 70 established and 37 discontinued
in 1941. Approximately two-thirds of these 58 new branches were located
outside the head-office city; 19 were de novo and 19 were conversions of
existing banks into branches.
Membership in the Federal Reserve System continued to increase in 1941—
showing a net gain of 60 banks—despite the net decrease of 145 in the total
number of banks. National banks—required by law to be members of the
Federal Reserve System—declined by a net of 36, but State member banks
showed a net increase of 96, including two newly organized State banks.
This increase in the number of State member banks in 1942. was, however,
somewhat below the increases of 1940 and 1941. The 6,679 member banks
that were in operation on December 31, 1942-, accounted for 47 per cent of
the number and about 88 per cent of the deposits of all commercial banks in
the United States.
Total deposits of the 104 previously operating State banks admitted to
membership in 1941 (as shown by their first call reports filed as members)
amounted to 865 million dollars, of which 614 million was accounted for
by one bank in the New York district. Deposits of the remaining 103 banks
ranged from $179,000 to $31,477,000. Admissions were distributed throughout the.twelve Federal Reserve districts, over two-thirds having been in
four districts—Chicago, Cleveland, St. Louis, and Richmond.
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.
At the end of 1941 there were 11,4x1 banks on the Federal Reserve par



FEDERAL RESERVE SYSTEM

41

list. This figure included the 6,679 member banks and 4,743 nonmember
banks. The number of nonmember banks (other t h a n mutual savings banks
and banks on which no checks are drawn) not on the par list was i , 7 i o .
The number of banks on the par list declined by 12.1 during the year, as a
result of mergers, voluntary liquidations, suspensions, and withdrawals from
the list. There was also a net decrease of ±1 in the number of nonpar banks;
but, as in other years, more of the banks t h a t continued in existence throughout the year w i t h d r e w from the par list than were added to it. There were
34 withdrawals as against 17 additions. Forty-eight nonpar banks went
out of existence, but this decrease was partially offset by the organization of
ten new nonpar banks. For several years the number of nonpar banks going
out of existence has exceeded the number newly organized.
At the end of the year nonpar banks were distributed by States as follows:
Minnesota 411, Georgia z6o, Mississippi 171, Tennessee 167, Nebraska 159,
Wisconsin 159, Alabama 1x9, Arkansas 12.9, N o r t h Carolina 117, South
Carolina 116, N o r t h Dakota 113, Iowa 111, Missouri i n , Louisiana 103,
South Dakota 96, Texas 95, Florida 89, and twelve other States 154.
Examination of Federal Reserve Banks. The 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 m e m b e r b a n k s . 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 policy was continued in 1941 of making 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 w h i c h the State member bank is situated, w i t h additional examinations in special cases. As in previous years, in order to avoid duplication
and to minimize inconvenience to the banks examined, wherever practicable
joint examinations in cooperation w i t h the State banking authorities or,
by agreement w i t h the State authorities alternate examinations, were made.
In accordance w i t h the practice of holding periodic conferences w i t h representatives of the bank examination departments of the Reserve Banks, members of the Board of Governors and its staff met at the Federal Reserve Bank
of Philadelphia for several days in September to confer w i t h representatives
of the bank examination departments of the twelve Federal Reserve Banks.
The general theme of the conference was bank examination and other supervisory responsibilities under war-time conditions. Particular consideration
was given to the effect of current and prospective post-war credit, monetary,
and price factors on loan and investment policies.
In line w i t h the policy of having the bank examination and supervisory
activities of the Federal Reserve Banks closely coordinated under general
policies of the Board, representatives of the Board's Division of Examinations
participated in several conferences of examiners at various Federal Reserve
Banks.



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ANNUAL REPORT OF BOARD OF GOVERNORS

During the year the Board, the Comptroller of the Currency, and the
Federal Deposit Insurance Corporation, adopted a uniform inscription on
their reports of examinations of banks for the purpose of further insuring the
confidentiality of such reports.
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 inter-company 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 two general voting
permits, i.e., permits unlimited as to time or matters which may be voted
upon, and two 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 six organizations were not engaged directly or indirectly as
a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks or trust companies, and that, therefore, they
were not holding company affiliates except for the purpose of Section 2.3 A 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 eight national banks authority to exercise one or more trust powers. This number includes grants
of one or more additional powers to two banks which previously had been
granted certain trust powers. Trust powers of twelve national banks were
terminated, eleven by voluntary liquidation and one by voluntary surrender.
At the end of 1942., there were 1^2. national banks holding permits to exercise
trust powers.



FEDERAL RESERVE SYSTEM

43

Increased acceptance powers. The Board approved during the year the
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.
Foreign branches and banking corporations. Foreign branch operations of member banks were further restricted during the year by the expansion of Japanese military activities in the Far East, where five branches and
offices suspended operations or were discontinued as a result of enemy occupation or war developments. The German seizure of unoccupied France
brought one branch of a member bank under enemy control. One foreign
branch was established during the year under permission granted by the
Board to a member bank pursuant to the provisions of Section 2.5 of the
Federal Reserve Act, the branch being opened for business shortly after permission was granted.
At the end of 1942., seven member banks were operating a total of 65
branches or offices in 14 foreign countries or dependencies or possessions of
the United States, exclusive of branches or offices in enemy or enemy occupied territory. Of the 65 branches and offices, four national banks were
operating 60 and three State member banks were operating 5. The foreign
branches were distributed geographically as follows:
Latin America
Argentina
Brazil
Chile
Colombia
Cuba
Mexico
Panama
Peru
Uruguay
Venezuela

42. I England.
10
4
x
3
16
1
3
1
1
1

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

Total.

4
7

65

Far East
India

1

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.
There was no change during the year in the list of the four corporations
organized under State law and operating under agreements with the Board
pursuant to the provisions of Section 15 of the Federal Reserve Act relating

to the investment by member banks in stocks of corporations engaged prin

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ANNUAL REPORT OF BOARD OF GOVERNORS

cipally in international or foreign banking. One corporation operates a
branch in England and one has an English fiduciary affiliate. The other two
corporations have no foreign offices.
RESEARCH AND ADVISORY SERVICES

The Board continued its usual reporting services, modifying them to meet
current changes in the economy and special problems growing out of the
war. Work on several long-run research projects was advanced, and information and advice were contributed to many inter-departmental conferences
and committees. As indicated in other parts of this report, there were frequent conferences between representatives of the Board and representatives
of other Government agencies with respect to questions of public policy and
procedure in war time.
Early in 194Z the Board and the Federal Reserve Banks began the collection and compilation of commercial bank figures on consumer instalment
credit. The registration statements filed pursuant to the Board's Regulation
W and the condition reports of member banks submitted regularly to the
Board provide data of use in collating and standardizing the collection and
presentation of other figures for consumer credit. For this reason and because of the responsibility of the Board of Governors for the regulation of
consumer credit, the collection of statistics in this field was centralized so
far as practicable in the Reserve System.
As part of the program the monthly series of consumer instalment loans
held by commercial banks, previously compiled by the Consumer Credit
Division of the American Bankers Association, was taken over by the Federal
Reserve. Likewise the consumer credit statistics for personal finance companies, industrial banks, credit unions, and certain retail lines, formerly
collected by the Bureau of Foreign and Domestic Commerce, were transferred
to the Federal Reserve. The collection of credit data from department stores
was extended and the collection of retail furniture statistics centralized in
the System. In addition, at the request of the Board, the Bureau of the Census expanded the scope of the statistics it collects from sales finance companies.
In October for the first time the Board released to the public two monthly
series of commercial bank figures on consumer instalment credit. They
show, by type of loan, the estimated amount of such loans outstanding each
month and the volume made within the month. A description of the new
series was published in the Federal Reserve Bulletin for October 1941.
In order to obtain information on the nature of current bank lending and
the extent to which banks are participating in financing war production,
the Board of Governors and the Reserve Banks conducted a special survey
of commercial and industrial loans made by member banks over the period
April 16 to May 15, 1942., inclusive. The Board also undertook the compilation of a new index measuring monthly output of finished consumer goods
in physical terms. The index will show the amount of output destined for



FEDERAL RESERVE SYSTEM

45

civilians and exclude that destined for the Government, including our
military forces and Allies. At the request of the War Production Board some
of the data prepared were made available to it in December before the project was complete. At various times during the year special studies of the
Board's industrial production index were made in order to obtain a breakdown between war and civilian activity and the results of these studies were
published in the Federal Reserve Bulletin. At the request of the Statistical
Division of the War Department, studies were made of the tonnage of manufactured goods produced in 1941 and 1942.. Special analyses of department
store sales and inventories were also made for war agencies. Some of the
results of these studies have been published in the Federal Reserve Bulletin
and others have been made available to Government agencies for their
confidential use.
In the course of the year the Board made substantial revisions in some of the
reports required of banks. The year-end report of condition was reduced to
half its former length, the report of earnings and dividends was revised and
simplified, and the "bank debits" reports were changed from a weekly to a
monthly basis. Besides reducing the number of reports, this last change
improved the usefulness of the data by providing a series that eliminated
wide weekly variations.
The revisions in bank reporting reflect in part the changing emphasis
brought about by the war, and in part further progress toward simplification
and standardization of bank report forms by cooperative action of the three
Federal supervisory agencies and the State banking authorities. The primary
result is an improvement in currently available information regarding
banking developments. An incidental result is an appreciable lightening
of the clerical burden of the reporting banks and the Federal Reserve Banks.
This has been of considerable importance, particularly since service in the
armed forces has drawn off personnel while financing and other phases of
the war program have greatly increased the volume of bank operations.
The Board continued its study of post-war problems. Among the domestic problems being studied are: monetary and fiscal policies; investment potentialities of various fields, both public and private; overall surveys of public
investment programs; 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 Treasury, the
National Resources Planning Board, the Bureau of Labor Statistics, the
National Housing Agency, the Department of Agriculture, and the Department of Commerce.
During the latter part of 1941 an expanded program of research on regional
economic problems was undertaken by the Federal Reserve System. Research departments have always been maintained at the twelve Federal Reserve Banks in order to interpret local economic developments for the officials
of the Banks and to provide the Board of Governors with information concerning developments in the various regions of the country. The work of



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A N N U A L REPORT OF BOARD OF GOVERNORS

these departments has now been expanded, in cooperation with the Board's
Division of Research and Statistics, to include more intensive study of the
impact of war upon various strategic localities. The location of the Federal
Reserve Banks and branches in important areas throughout the country and
the inclusion on their directorates of local representatives of industry, trade,
and agriculture, as well as finance, provide an unusually good opportunity
for regional studies which may be used as the basis for the consideration of
national economic problems.
The projects undertaken include an analysis of the current situation in
each important region and an appraisal of likely developments in the postwar period in order that these matters may be given proper consideration
in the development of Federal Reserve policy. It is hoped that the results
of this work will be of use also to Federal, State, and local government
agencies and to private organizations and individuals concerned with the
localities studied. In the conduct of these studies, the Board of Governors
and the Federal Reserve Banks are cooperating to the fullest possible extent
with other agencies doing similar work in order that duplication of effort
may be avoided.
International post-war studies are directed broadly to the problems of
monetary and financial rehabilitation in reoccupied areas, exchange stabilization, international developmental loans, and the financing of world commodity surpluses in the post-war period. Other Government agencies with
which the Board has been in contact in this field are the State Department,
the Treasury Department, the Board of Economic Warfare, and the War
Department. Shortly after the end of the year a special assignment of work
by the military authorities necessitated an expansion of the Board's staff
engaged in international studies.
Special attention is being devoted to Canadian-United States economic
relations, and members of the Board's staff are continuing to serve as Chairman and Secretary of the United States Committee of the Joint Economic
Committees of Canada and the United States. These committees study and
report to their respective governments on the possibilities for more efficient
use of the combined resources of the two countries in the production of war
requirements and on ways of reducing the impact of post-war economic
dislocations. In the latter part of 1942. joint work was started on a major
planning project on the North Pacific area. War-time collaboration is
rapidly expanding means of communication in the region embracing northern
British Columbia, the Yukon Territory, and Alaska, and the development of
this area will bring many problems calling for joint action by Canada and
the United States.
The American Technical Mission to Cuba, on which two members of the
Board's staff serve with representatives of the Treasury Department and the
Farm Credit Administration, submitted a report to the Cuban Government
in April 1941, relating to a Cuban Central Bank and Stabilization Fund.
The Cuban Government has drafted legislation to give effect to most of the



FEDERAL RESERVE SYSTEM

47

major recommendations of the report, and is seeking the approval of the
Cuban Congress. The Mission has submitted reports dealing with the proposed legislation and has also been giying consideration to the problem of
agricultural credit in Cuba.
Services of the Board's library were greatly influenced by conditions
brought about by the war. Reference questions increased in variety and
complexity, some of them requiring intensive searching, and the field of
study covered by those whom the library served widened considerably.
Accessions to the library included literature on Latin American affairs, postwar planning and economic conditions of countries in the theatre of war,
and with the addition of 1,971 cataloged items (books, pamphlets, and
bound periodicals) the library collection reached a total of 36,643 volumes
at the end of 1942.. Continuing suspension of publication and breakdown
of facilities for delivery of foreign periodical literature created difficulties
and gaps in files, and many arrangements for exchange of publications had
to be temporarily cancelled.
During 1942 distribution to the general public of the Board's publications
and releases was substantially curtailed as a war-time 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

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



48

ANNUAL REPORT OF BOARD OF GOVERNORS

A list of the directors of the Federal Reserve Banks and branches as of
the close of the year is shown on pages 119-115.
Appointments of directors. During the year the Board made the following appointments of directors to fill vacancies:
On January 9, Albert M. Creighton, manufacturer, of Boston, was appointed a Class C director of the Federal Reserve Bank of Boston and
designated as Chairman and Federal Reserve Agent.
On August 7, A. Z. Baker, President, Cleveland Union Stock Yards Company, Cleveland, Ohio, was appointed a Class C director of the Federal
Reserve Bank of Cleveland.
On October 27, Harry R. Wellman, a member of the faculty of the University of California where he is director of the Giannini Foundation of
Agricultural Economics, was appointed a class C director of the Federal
Reserve Bank of San Francisco.
On November 14, Paul G. Hoffman, President of the Studebaker Corporation of South Bend, Indiana, was appointed a Class C director of the
Federal Reserve Bank of Chicago.
Frank J. Lewis resigned as Class C director and Chairman of the Federal
Reserve Bank of Chicago as of July 1. On October 9, he was succeeded as
Chairman by Simeon E. Leland, Chairman of the Department of Economics
and Professor of Government Finance at the University of Chicago, who
had previously served as Deputy Chairman. On the same date W. W.
Waymack, Vice President and Editor of the editorial pages of the Des Moines
Register-Tribune, Des Moines, Iowa, was appointed Deputy Chairman.
On January 28, Jay Taylor of the Rafter O Cattle Company, Amarillo,
Texas, who had previously served as Deputy Chairman, was appointed
Chairman of the Federal Reserve Bank of Dallas. At the same time J. B.
Cozzo of Womack and Cozzo (General Contractors), Dallas, Texas, was
appointed Deputy Chairman, and Dolph C. Briscoe, stockraiser, Uvalde,
Texas, who had been serving as a director of the San Antonio Branch, was
appointed a Class C director of the Federal Reserve Bank of Dallas.
On October Z7, R. B. Richardson, President of the Western Life Insurance
Company of Helena, Montana, was appointed a director of the Helena
Branch of the Federal Reserve Bank of Minneapolis.
On November 5, Holman Cartwright, Twin Oaks Ranch, Dinero, Texas,
was appointed a director of the San Antonio branch of the Federal Reserve
Bank of Dallas.
On November 19, Y. Frank Freeman, Vice President, Paramount Pictures
Inc., Hollywood, California, was appointed a director of the Los Angeles
Branch of the Federal Reserve Bank of San Francisco.
On October 29, William H. Steen, stockman and farmer of Milton, Oregon,
was appointed a director of the, Portland branch of the Federal Reserve Bank
of San Francisco.
Changes in Presidents and First Vice Presidents. Effective as of March
31, 1941, R. A. Young resigned as President of the Federal Reserve Bank of



FEDERAL RESERVE SYSTEM

49

Boston and was succeeded on April i , i^\z by W. W. Paddock, w h o , in
turn, was succeeded as First Vice President by William Willett, formerly
Cashier of the Bank. The appointments of Messrs. Paddock and Willett
were for the unexpired portion of the terms ending February 2.8, 1946.
E x p a n s i o n in staff. During the year the great increase in activities of
the Reserve Banks, particularly in connection w i t h activities as fiscal agent
for the Government, necessitated an increase in personnel. At the end of
the year the total number of officers and employees was 19,971, as compared
w i t h 14,083 at the close of the previous year. Practically the entire increase
consisted of women. During the year, 1,472. employees of the Reserve
Banks left to enter the military service.
RESERVE BANK OPERATIONS
The greatest expansion in operations of the Federal Reserve Banks during
1941 was in their Government services, as already indicated. The volume
of currency and checks handled also increased substantially. Discounts for
member banks increased somewhat over the low level of 1941, while industrial advances showed more substantial increases, reflecting war production
loan activities to some extent. Figures for volume of operations in principal
departments of the Reserve Banks are shown in Table 4 on page 6j.
D i s t r i b u t i o n of net e a r n i n g s . Current earnings, current expenses, and
distribution of net earnings of the Federal Reserve Banks in 1942., compared
w i t h 1941, are shown in the accompanying table. Net earnings amounted to
$11,470,000 in 1941, which was $3,333,000 more than in 1941. This increase
resulted primarily from an increase in current earnings owing to larger
holdings of Government securities. Other than increased expenses in fiscal
agency operations, which are largely reimbursable, the expenses of the
Federal Reserve Banks increased principally in the check collection department and in the currency function.
EARNINGS, EXPENSES, AND DISTRIBUTION OF NET EARNINGS OF FEDERAL RESERVE
BANKS IN 1942 AND 1941
[In thousands of dollars]
Item
Current earnings
Current expenses
Current net earnings
Net deductions from current net earnings
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 reserve for contingencies
* Net additions.




1942
52,663
38,624

41,380
32,963

14,039
1,569

8,417
*720

12,470

9,137

198
49
3,554

141
8,430
-4
570

12,470

9,137

8,669

647

A N N U A L REPORT OF BOARD OF GOVERNORS

50

Net earnings were distributed as follows: Dividends to member banks,
paid in accordance with the provisions of the Federal Reserve Act, $8,669,000;
payments to the Secretary of the Treasury under provisions of Section 13b
of the Federal Reserve Act relating to industrial advances, $198,000; and net
additions to surplus accounts, $3,603,000. Of this total $647,000 was transferred to reserves for contingencies.
Detailed statements of earnings, expenses, and distribution of net earnings
for the System and for each Federal Reserve Bank are given in Table 5 on
pages 68-69.
Average daily holdings of bills and securities by Federal Reserve Banks
during the last four years and average rates of earnings thereon are shown
in the accompanying table.
EARNINGS ON BILLS AND SECURITIES
[Amounts in thousands of dollars]

I t e m and year

Daily average holdings:
1939
1940
1941
1942
Earnings:
1939
1940
1941
1942
Average r a t e of earnings (per
cent):
1939
1940
1941
1942

U. S. Govt,
securities
direct a n d
guaranteed

Industrial
advances

440

2,584,268
2,416,761
2,187,030
3,191,259

12,779
9,177
8,780
11,780

61
51
56
65

2

36,903
42,174
40,152
51,404

615
452
399
474

1.20
1.26
1.20
0.98

.53

1.43
1.75
1.84
1.61

4.81
4.93
4.54
4.03

Total

Bills
discounted

Bills bought
in open m a r k e t

2,602,590
2,429,984
2,200,491
3,209,649

5,103
4,046
4,681
6,610

37,581
42,677
40,607
51,943

1.44
1.76
1.85
1.62

Federal Reserve Bank notes. As a part of the program of the Government to conserve both labor and materials during the war period, the Board
of Governors, after consultation with the Treasury Department, authorized
the Federal Reserve Banks to utilize the existing stock of currency printed
in the early thirties known as "Federal Reserve Bank notes." The stock of
these notes, which is in $5, $10, $2.0, $50, and $100 denominations, amounted
to approximately 660 million dollars. By making this stock of unissued
paper currency available for use, as needed, it is estimated that more than
$300,000 will be saved in the cost of printing new currency. In terms of
labor and materials, there would be a saving of 1x5,000 man hours in printing
alone, and of 45 tons of paper in addition to a substantial saving of nylon and
ink. No Federal Reserve Bank notes have been printed since 1933 and the
Board of Governors has no plans for the printing of additional stocks of
such notes. Federal Reserve Bank notes may not be issued after the President declares that the emergency recognized by his Proclamation of March 6,
1933, no longer exists.
Federal Reserve note clearing. Section 16 of the Federal Reserve Act
provides
that, whenever Federal Reserve notes issued through one Federal


FEDERAL RESERVE SYSTEM

51

Reserve Bank are received by another Frederal Reserve Bank, they shall
promptly be returned to the issuing Bank or, if unfit for further circulation,
forwarded to Washington for retirement. In accordance with this provision
of the law, frequent shipments of Federal Preserve notes are made to the issuing Federal Reserve Banks and to Washington. Balances between the
Federal Reserve Banks arising from these shipments of notes are settled daily
through the Interdistrict Settlement Fund.
Since February i9xx the Board of Governors has conducted a separate
Federal Reserve note clearing on an immediate credit basis, necessitating a
daily exchange of wires between each Federal Reserve Bank and the Board.
During 1942. a plan was worked out whereby the separate Federal Reserve
note clearing would be discontinued, and effective March 15, 1943, the new
plan was put into effect.
Under the new arrangement amounts due to other Federal Reserve Banks,
arising from these shipments, are included with credits for checks and other
collection items settled daily through the Interdistrict Settlement Fund.
It was estimated that the new procedure would eliminate about n,ooo
telegrams annually.
Ration banking plan. During the last half of 194Z the Board of
Governors and the Federal Reserve Banks participated, together with the
Office of the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, State bank supervisory authorities, and the American Bankers
Association, in working out details of the ration banking plan developed by
the Office of Price Administration. The plan was tried out on an experimental basis in the latter part of 1942. in 33 banking offices in the AlbanyTroy-Schenectady area of New York. Beginning January zy9 J943> it was
put into operation on a nation-wide basis, utilizing the facilities of the
Federal Reserve Banks and branches for clearing out-of-town ration checks
received by banks participating in the plan.
The ration banking records of banking institutions are subject to inspection
by the Federal or State banking agencies having supervision over the participating banks. After numerous conferences, members of the examining
divisions of the Board of Governors, the Office of the Comptroller of the
Currency, and the Federal Deposit Insurance Corporation have developed a
procedure to be followed in checking ration banking records during the
course of regular examinations of banks under their respective supervision.
Foreign accounts in Reserve Banks. The Board's Annual Report for
1941 refers to legislation recommended by the State Department, the Treasury
Department, and the Board of Governors, which made it clear that Federal
Reserve Banks might open and maintain banking accounts for foreign banks
or bankers or for foreign governments without having to establish accounts
with such foreign banks, bankers or governments, or to appoint them as
correspondents or agents of the Reserve Banks, and which also provided a
procedure whereby the Reserve Banks and insured banks might safely make
payments from the accounts of foreign governments or foreign central banks
in FRASER
cases where there may be differences of opinion as to who is entitled to
Digitized for


52-

ANNUAL REPORT OF BOARD OF GOVERNORS

order such payments. Beginning September z, 194Z, the Board changed
the form of the published weekly statement to indicate the participation of
the several Reserve Banks in such accounts. In line with its duty of exercising special supervision over Reserve Bank foreign relationships and
transactions and at the request of the Presidents Conference of the several
Reserve Banks, the Board is in the process of clarifying the rights and duties
of Reserve Banks participating in such accounts by appropriate revision of
its regulations.
Adoption of self-insurance plan. For a number of years representatives
of the Board of Governors and the Federal Reserve Banks have had under
consideration the possibility of substituting self-insurance for purchased
insurance on certain risks of the Federal Reserve Banks. During the year
194Z a plan of limited self-insurance was adopted, which became effective
March 1, 1943. Under the agreement adopted by all the Reserve Banks,
self-insurance is provided on losses in excess of coverage provided by purchased insurance and on losses of the kinds not covered by purchased insurance, because of war risk and other exclusion clauses of the policies.
An insurance committee, consisting of a representative from each Federal
Reserve Bank, will administer the plan and continue to study the problems
involved in the extension of the self-insurance features.
Retirement System. Near the end of 1941 a special committee was appointed by the Conference of Presidents of the Federal Reserve Banks to review the operation of the Retirement System of the Federal Reserve Banks
with a view to determining what changes, if any, should be made, particularly as regards the benefits provided. This committee continued its
study of the Retirement System throughout the year 194Z and shortly after
the close of the year submitted proposals designed to increase the retirement
allowances provided by the Retirement System for the lower paid employees.
In the meantime the amendment of January 2.4, 194Z, to the Civil Service
Retirement Act, providing more liberal retirement allowances and extending
the coverage of the Civil Service Retirement Act, made it necessary to reconsider retirement benefits for the employees of the Board of Governors.
A study is now being made of this subject.
Another respect in which a revision of the Retirement System became
necessary was the basic interest rate underlying the payments and benefits.
In view of the low level of interest rates which has prevailed since the
inauguration of the system the rate on which the calculations were based
had to be revised downward.
Building operations. The new banking quarters of the Charlotte
Branch of the Federal Reserve Bank of Richmond were completed and occupied in January 1941. The building was started early in 1941, and although
most necessary materials were contracted for before the Defense Program
was fully developed, many substitute materials were finally used in the
construction, and the installation of air-conditioning equipment was indefinitely postponed. In March 1941 the Federal Reserve Bank of Atlanta




FEDERAL RESERVE SYSTEM

53

purchased a lot adjoining the Jacksonville Branch Building, for possible
future expansion.
All Federal Reserve Banks and their branches, except the Cincinnati,
Portland, and Seattle Branches are now housed in buildings owned by the
Banks. As noted elsewhere, several of the Federal Reserve Banks and
branches found it necessary to rent outside space to accommodate the increasing volume of operations, particularly in connection with fiscal agency
functions.
BOARD OF GOVERNORS—STAFF AND EXPENDITURES

Reappointment of Board members. On January 15, the reappointment
by President Roosevelt of Ronald Ransom as a member of the Board of
Governors was confirmed by the Senate. Mr. Ransom has served as a member of the Board since February 3, 1936, and his new appointment is for a
term of fourteen years from February 1, 1941. Governor Ransom continues
to serve as Vice Chairman of the Board under a designation by the President
which will expire on August 5, 1944.
On February 17, President Roosevelt nominated R. M. Evans as a member
of the Board of Governors for the unexpired portion of a term of fourteen
years from February 1, 1940, to fill the vacancy made by the resignation of
Chester Davis on April 15, 1941. The nomination was approved by the
Senate on March 9, 1941, and Mr. Evans assumed his duties on March 14.
Creation of War Loans Committee. On March 2.6, 1941, the Board of
Governors designated three of its members to serve as a War Loans Committee for the purpose of assisting in the supervision of the activities of the
Federal Reserve Banks under the President's Executive Order No. 91 iz.
To assist the Committee in its work, the Office of Administrator for War
Loans Committee was created on April 6 and Kenton R. Cravens, on leave of
absence from the Cleveland Trust Company, was appointed as Administrator.
Upon Mr. Cravens' return to the Cleveland Trust Company in October, Mr.
Smead, Chief of the Board's Division of Bank Operations, was made Acting
Administrator. Effective June 16, Gardner L. Boothe, II, was designated
Assistant Administrator.
Changes in Board staff. Effective July 1 the Board created in its staff
a Division of Personnel Administration, in which is centralized the personnel
work of the Board pertaining both to its own organization and to such
personnel matters at the Federal Reserve Banks as come before the Board.
Robert F. Leonard, formerly Assistant Chief of the Division of Examinations,
was appointed Director of the new division.
The Board and the Federal Reserve Banks have been keenly interested in
the development of able leadership and efficient management in the Federal
Reserve System. As one phase of the activity in that direction, in 1941 the
Conference of the Chairmen of the Federal Reserve Banks proposed that a
committee consisting of a member of the Board of Governors, a chairman
of a Federal Reserve Bank, and a president of a Federal Reserve Bank, be



54

ANNUAL REPORT OF BOARD OF GOVERNORS

appointed to make a study of the whole question. Such a committee was
appointed and results of a survey made under the direction of the committee
were reported to the Conferences of Chairmen and of Presidents at meetings
held in 1942.. The Conference of Presidents also established a Standing
Committee on Executive Development. One of the important functions of
the Board's Division of Personnel Administration is to assist in furthering
the purposes of the program.
William B. Pollard, formerly an examiner in the Board's Division of Examinations, was appointed Assistant Chief of the Division effective July 1.
On August 10, J. P. Dreibelbis, formerly Assistant General Counsel, was
designated General Attorney, and George B. Vest and B. Magruder Wingfield, formerly Assistant General Counsels, were designated Assistant General
Attorneys.
On February 16, Walter R. Stark became an Assistant Director of the
Board's Division of Research and Statistics. Since October 19 Mr. Stark has
been assigned to James F. Byrnes, Director of the Office of Economic Stabilization, to assist him in the handling of economic problems.
During the year there was a net reduction of 33 in the number of employees
on the Board's staff. On December 31, 1942., the Board's employees, exclusive of those on military leave or on leave w i t h o u t pay, numbered 411,
of w h o m 117 were men and 105 were women. At the end of the year 49 of
the Board's permanent employees were on military leave. In addition, 13
of the employees w h o had received temporary appointments had resigned
to enter military service.
The voluntary payroll deduction plan for purchase of War Savings bonds at
the Board of Governors showed great progress in 194Z b o t h in number of
employees participating and in percentage of total salaries authorized to be
deducted. Beginning in October, the Board's personnel, w h i c h had been
participating 100 per cent in the payroll savings plan since June, exceeded
the 10 per cent goal established by the Secretary of the Treasury. T h e ratio
of deductions to salaries in the Board's plan at the end of the year had
increased to 11.3 per cent.
Board expenditures. The total cost of conducting the w o r k of the Board
during the year 1941 was $1,708,893.81. Details are shown in Table 8 on
pages 71-73. For the general expenses of the Board t w o assessments were
levied against the Federal Reserve Banks aggregating $1,746,32.6.00, or
about one-half of one per cent of their average paid-in capital and surplus
for the year.
Under an arrangement w i t h the Federal Reserve Bank of Philadelphia,
the accounts of the Board for the year 1941 were audited by the Auditor of
the Federal Reserve Bank of Philadelphia, w h o certified them to be correct.
FEDERAL RESERVE MEETINGS
The Federal Open Market Committee, w h i c h under the l a w is charged
w i t h the responsibility for the determination of the System's open-mar*ket



FEDERAL RESERVE SYSTEM

55

policies, met in Washington on February z8-March z, May 8, June zz,
August 3, September Z8-Z9, and December 14, 1942., and the executive
committee of the full Committee met from time to time during the year.
A record of actions taken by the Committee on questions of policy relating
to open-market operations is published on pages 103-111 of this report.
The Chairmen of the Federal Reserve Banks met with the Board of Governors on January 2.6 and October 5, 1941. In addition, the executive committee of the Chairmen's Conference met from time to time to discuss
matters of interest to the Conference and to prepare for its meetings.
The Conference of Presidents of the Federal Reserve Banks held meetings
on February 2.-3, February 2.8-March 2., May 8, June 2.2.-2.3, anc^ September
Z 5 - 2 7 , 1942..

Meetings of the Federal Advisory Council were held on February 15-16,
May 17-18, September 13-14, and November 15-16, 1942.. The Executive
Committee of the Council met on March iz, April 9, June 3, July 1, August
5, and October 7, 194Z. 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.
AMENDMENTS TO THE FEDERAL RESERVE ACT AND REPORTS TO CONGRESS

The Federal Reserve Act was amended in several respects during i94zSome of the changes were primarily designed to facilitate action by the Federal Reserve System in aiding the financing of the war.
Purchases of Government obligations by Reserve Banks directly from
United States. Title IV of the "Second War Powers Act, 194Z" approved
March 27, amended Section 14(b) of the Federal Reserve Act so as to authorize
the purchase or sale by the Federal Reserve Banks either in the open market
or directly from or to the United States, of bonds, notes, or other obligations
which are direct obligations of the United States, or which are fully guaranteed as to principal and interest. However, the aggregate acquired directly
from the United States and held at any one time by the twelve Reserve Banks
is limited to an amount not exceeding 5 billion dollars and the period during
which the amendment shall remain in effect will expire on December 31,
1944, or such earlier date as the President or Congress by concurrent resolution may designate.
Taxation of dividends on Federal Reserve Bank stock. The third paragraph of Section 7 of the Federal Reserve Act, which exempts from Federal
taxation income derived from Federal Reserve Bank stock, was in effect
amended by Section 6 of an Act of Congress, approved March z8, 194Z, so
as to remove such exemption from shares issued on or after that date.
Nonmember banks as depositaries of United States. The second paragraph of Section 15 of the Federal Reserve Act, which provides that Government funds shall not be deposited in any bank not belonging to the Federal



56

ANNUAL REPORT OF BOARD OF GOVERNORS

Reserve System, was in effect amended by Section 10 of an Act of Congress,
approved June n , 1942., authorizing the Secretary of the Treasury to designate any insured bank as a depositary of public money and repealing all acts
in conflict therewith.
Membership of Federal Open Market Committee. By an Act of Congress, approved July 7, 1942., subsection (a) of Section 12.A of the Federal
Reserve Act was amended to provide for a regrouping of the Federal Reserve
Banks for the purpose of electing representative members of the Federal
Open Market Committee (which is composed of the members of the Board
of Governors and five representatives of the Federal Reserve Banks). Under
the law as amended one member of the Committee is elected annually by the
directors of the Reserve Banks in each of the following groups: (1) New
York, (2.) Boston, Philadelphia, and Richmond, (3) Cleveland and Chicago,
(4) Atlanta, Dallas, and St. Louis, and (5) Minneapolis, Kansas City, and
San Francisco. This arrangement makes provision for continuous representation of the Federal Reserve Bank of New York on the Federal Open Market
Committee. This is for the reason that the New York Bank is in the principal capital market and acts as the agent for the Federal Open Market Committee in the operation of the System open-market account. The amendment
also made it clear that no one except a president or first vice president of a
Federal Reserve Bank can represent a Federal Reserve Bank on the Committee.
Reserves required of member banks. The Act of Congress approved
July 7, 1942., amended the sixth paragraph of Section 19 of the Federal Reserve Act so as to authorize the Board of Governors to change the reserve
requirements of member banks in central reserve cities, within the limitations of the present law, without necessarily making a change in reserve
requirements of member banks in reserve cities.
Loans or dividends while reserves deficient. The Act of Congress
approved July 7, 1942., amended the ninth paragraph of Section 19 of the
Federal Reserve Act by repealing the provision which prohibits member
banks from making new loans or paying dividends while their reserves are
deficient.
Reports to Congress. At the request of Committees of Congress, the
Board submitted reports on proposed legislation affecting the application of
the Securities Act to banks and holding company affiliates of banks, enlarging
the field of the Home Loan Bank System, authorizing national banks to reimburse directors, officers, and employees for certain litigation expenses,
requiring the publication of reports of insured banks at the location of their
branches, reallocating representation on the Federal Open Market Committee, liberalizing the Board's powers with respect to reserve requirements,
and amending the prohibition upon making loans or paying dividends while
reserves are deficient.




FEDERAL RESERVE SYSTEM

57

CHANGES IN REGULATIONS OF THE: BOARD OF GOVERNORS

Most of the changes in the Board's regulations during the year 1941
were directly related to the credit and monetary problems arising out of the
prosecution of the war. In addition to the issuance of Regulation V and
the amendments to Regulation W described in other sections of this report,
the following changes were made:
Regulation A, relating to discounts for and advances to member banks by
Federal Reserve Banks, was amended by removing the requirement of negotiability with respect to any note, draft, or bill of exchange evidencing
a loan which is in whole or in part the subject of a guarantee or commitment
by the War or Navy Department or the Maritime Commission pursuant to
Executive Order No. 9111. Regulation A was also amended to clarify the
authorization in Section 13 of the Federal Reserve Act to Federal Reserve
Banks to make advances to their member banks for periods not exceeding
90 days on their promissory notes secured by direct obligations of the United
States.
The Board likewise made several clarifying and technical changes
in its Regulation S, relating to loans by Federal Reserve Banks to industry
and business, in order further to facilitate the participation by the Reserve
Banks in the program of war financing.
The Board's Regulation D relating to reserves of member banks was
amended in a number of respects during the year. Additional funds were released to member banks in central reserve cities by three successive amendments to the Supplement which reduced the amount of reserves required
against demand deposits by member banks in those cities in three steps from
2.6 per cent to zo per cent. By another amendment member banks in central
reserve and reserve cities were required to compute reserves on a weekly basis
instead of semi-weekly as previously. In conformity with the amendments
to Section 19 of the Federal Reserve Act, the Regulation was also amended
by removing the prohibition against member banks' making loans while reserves are deficient and removing directors' liability for losses on loans made
and dividends paid under those circumstances. A provision was also inserted in the Regulation, similar to a provision already appearing in Regulation J, to the effect that a Federal Reserve Bank in its discretion may refuse
to permit the withdrawal or other use of credit given for any item for which
it has not yet received payment in finally collected funds.
The effective dates of the amendments made in 1942. were as follows:
Regulation A
Regulation D
Regulation S
Regulation V
Regulation W




March zo, September 18
February z8, July 14, August 10,
September 14, October 3
April 30
Issued effective April 6
March Z3, May 6, July z, July 2.7,
August iz, October 2.6




TABLES

6o

ANNUAL REPORT OF BOARD OF GOVERNORS

N O . 1-STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL)
DECEMBER 31, 1942*
ASSETS
[Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars
Gold certificates with Federal Reserve Agent
12,467,000
Interdistrict settlement fund with Board of Governors
6,545,837
Gold certificates on hand
1,510,444
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

20,523,281
30,449
20,553,730
27,250
221,857
2,505
87,001
15,471

Total other cash

354,084

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

20,907,814
3,030
3,030
41
2,500

Total other bills discounted

2,541

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

5,571
13,649
2,792,581
1,345,059
1,041,000
1,009,995

Total U . S . Government securities, direct and guaranteed

6,188,635

Total bills and securities
Due from foreign banks
Federal Reserve notes of other Reserve Banks
Uncollected items:
Transit items
Exchanges for clearing house
Other cash items

6,207,855
47
57,053
1,501,862
167,201
48,742

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
Total
Less valuation allowances
Net
Federal Deposit Insurance Corporation stock8
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
Total other assets
Total assets
1
2
3

Before closing books at end of year.
Less than $500.
Charged off. See footnote 4, Table 6.




1,717,805
39,977
479
1,803
(2)
385
2,667
1,603
"

1,064
9,526
17,052
58,147
898
249
1,076
493
368
88,873
29,019,424

F E D E R A L R E S E R V E SYSTEM

6l

N o . 1—FEDERAL RESERVE B A N K S ( I N D E T A I L ) - C o n t i n u e d
LIABILITIES
[Amounts in boldface type are those shown in the Board's weekly statement. I n thousands of dollars]
Federal Reserve notes outstanding (issued to Federal Reserve Banks)
12,672,151
Less: Held by issuing Federal Reserve Banks
464,238
Forwarded for redemption
14,927
479,165
Federal Reserve notes in actual circulation (including notes held
by Treasury and by Federal Reserve Banks other than issuing
Bank)
Deposits:
Member bank—reserve account
U. S. Treasurer—general account
Foreign
Other deposits:
Nonmember bank—clearing accounts
Officers' and certified checks
Federal Reserve exchange drafts
All other

12,192,986
13,115,921
799,291
792,790
139,120
84,023
743
260,473

Total other deposits

484,359

Total deposits
Deferred availability items
Other liabilities:
Accrued dividends unpaid
Unearned discount
Discount on securities
Sundry items payable
_
_.
_.
Deferred earnings on commitments to make industrial advances
Suspense account
All other liabilities

15,192,361
1,247,053
887
4
624
463
*
1,126
1,088

Total other liabilities

4,192

T o t a l liabilities

28,636,592
C A P I T A L 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 J a n u a r y 1
N e t earnings available for charge-offs, reserves, and surplus
Total other capital accounts
T o t a l liabilities and capital accounts
* Less t h a n $500.




146,026
157,502
26,781
47,032
52,663
38,624
14,039
121
8,669
5,491
52,523
29,019,424

ON

N O 2 - S T A T E M E N T O F C O N D I T I O N O F EACH FEDERAL RESERVE B A N K A T E N D O F 1941 A N D
[In thousands of dollars]
Total

Boston
1941

1942
ASSETS
Gold) certificates on h a n d and due from U. S. T r e a s u r y . .
Redemption fund—Federal Reserve notes

New York

1942

Cleveland

Philadelphia

1941

Richmond

1942

20,523,281 20,490,015 1,172,613 1,162,307 6,855,451 8,164,207 1,147,114 1,224,286 1,714,833 1,627,213
30,449
13,668
1,152
1,364]
5,665
1,140]
4,143]
1,047
892]
919
354,0841
260,678
39,891
73,223
21,191
43,5801
25,5891
46,842
23,521
19,345

950,761
5,559
19,535

20,907,814 20,764,361 1,213,656 1,192,039 6,930,038

975,855

Other cash
1,173,970 1,244,523 1,759,553 1,651,653

T o t a l reserves
Bills discounted:
Secured by U . S. Government obligations, direct
and guaranteed
Other bills discounted
T o t a l bills discounted
I n d u s t r i a l advances
U . S. Government securities, direct and g u a r a n t e e d :
Bonds
Notes
Certificates
Bills
T o t a l U . S. Government securities, direct a n d
guaranteed
T o t a l bills and securities
D u e from foreign banks
Federal Reserve notes of other Federal Reserve B a n k s .
Uncollected items
Bank premises
Other assets
T o t a l assets
1

3,030]
2,541

1,768
1,187

5,571
13,6491

2,955
9,504

260

235
1,063

615]
75

2,140
240

624
50

190]
271

100
87

25
110

320
475

260
1,883]

1,298
611

690
1,098

2,380
4,710

674
3,468i

461
820 i

187
233;

135
677

2,792,581 1,466,805
1,345,059]
777,300
1,041,000
1,009,995'

212,493
102,346
79,212
52,852

113,230
60,005

713,272
343,553
265,8891
372,606

385,294
204,178]

115,799
61,364
819

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

145,193
76,943

2,724

212,929]
102,557
79,374
45,3081

1,026

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

6,188,635] 2,254,475

446,903

174,035 1,695,320

592,196

440,168

177,982]

509,453

223,162

378,741

6,207,855 2,266,934
47
47
57,053
36,287
1,717,800] 1,200,724
39,285
40,767
43,724

447,698
3
923
167,471
2,722
6,229

176,178 1,697,229
593,984
447,258]
3
118
iis|
5
2,541
7,019
4,493
774
114,046]
382,789
316,326]
116,237
4,755
9,823
10,507
2,778
6,926]
21,947
11,148
3,177
1,838,702) 1,491,186 9,048,863 9,148,572 1,749,501

182,124
51
2,700
84,370
4,866
4,061

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

223,582
4
2,087
149,177
4,4391
4,613

379,553

29,018,642i 24,352,844

After deducting $29,000 participations of other Federal Reserve Banks.




800

2

10,794
141,3751
3,046
6,0481
2,486,874 2,035,555 1,516,673 1,042,943

LIABILITIES
Federal Reserve notes in actual circulation1.,

12,192,986 8,192,169

881,534

671,656

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

13,116,809 12,450,333
867,493
799,449
774,062
792,790
586,170
485,147

678,306
97,848
23,103]
6,301

Total deposits
Deferred availability items
Other liabilities including accrued dividends..

15,194,195 14,678,058
1,247,053 1,106,929
3,568
2,195

805,558
124,925
614

Total liabilities
CAPITAL ACCOUNTS
Capital paid in.
Surplus (sec. 7).
Surplus (sec. 13b)
Other capital accounts..
Total liabilities and capital accounts.,
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
In actual circulation 1 ..
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.
1
2

848,682

575,036

568,846 5,029,391 5,639,629!
80,782
144,933, 220,654!
29,543! 2367,578 2306,991
475,283
303,762
9,527

651,566
52,643!
67,100
4,673

661,703
73,578
74,057
12,391

688,698 5,845,664 6.642,557
104,811
266,815
271,518
143
347
342

775,982
89,503
524

821,729 1,192,511 1,078,906
90,557
125,478
143,848
840
162
173

28,637,802 23,979,351 1,812,631
146,026
160,411
26.829J
47,574

142,180
157,501
26,780
47,032

9.489
11,160
2,874
2,548

2,110,650

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

786,787

919,517
72,247
70,240
16,902

525,661 451,776
23,729
35,397
32,829
30,754!
6,106
8,633

8,917,259 9,020,165 1,714,691 1,488,162 2,451,658
9,403
10,949
2,874
2,448

53,653
58,001
7,070|
12,1

51,806!
56.651
7,070
12,880

11,747
15,670
4,393
3,000

11,923'
15,171
4,393
3,000|

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

431,489

778,072

600,445
112,605
4031

514,440
80,625
246

1,500,240 1,026,800
14,640|
14,345
1,007
4,564

5,885
5,2361
3,244
2,068

5,709
5,236
3,244
1,954

29,018,642 24,352,844 1,838,702 1,491,186 9,048,863 9,148,572 1,749,501 1,522,649 2,486,874 2,035,555 1,516,673 1,042,943
10,661

14,597

119

12,672,151
479,165

;,611,926
419,757

909,636
28,102

700,116 2,904,543 2,210,118
28,460
99,468
104,808

873,297
24,615

602,134
27,098]

,175,580
42,073

12,192,986j 8,192,169

881,534

671,656 2,799,735 2,110,650

848,682

575,036 1,133,507

1,724,000
2,567

898,000
320
20,000

720,000 2,915,000 2,220,000
260
690
235

795,000
2,140
100,0001

615,000 1,180,000
624

12,824,830 8,726,567

918,320

720,260 2,915,235 2,220,690

897,140

615,624 1,180,000

12,467,000
2,830
355,000

139

261

1,346

2,617

1,008

857

811,693
33,621

824,238
37,451

461,916
30,427

778,072

786,787

431,489

727,000
25
125,0001

475,000

852,025

475,000

387

815,000

Includes Federal Reserve notes held by the U. S. Treasury or by a Federal Reserve Bank other than the issuing bank.
After deducting $424,034,000 participations of other Federal Reserve Banks on December 31, 1942 and $464,634,000 on December 31, 1941.




ON

ON

N o . 2 — S T A T E M E N T OF C O N D I T I O N — C o n t i n u e d
(In thousands of dollars]
Atlanta
1941

1942
ASSETS
Gold certificates on hand and due from U . S. Treasury.
R e d e m p t i o n fund—Federal Reserve notes
Other cash
T o t a l reserves..
Bills discounted:
Secured by U. S. Government
direet a n d g u a r a n t e e d
Other bills discounted

U. S. Government securities, direct a n d g u a r a n t e e d :
Bonds
Notes
Certificates
Bills
T o t a l U . S. Government securities, direct a n d
guaranteed
T o t a l bills and securities
D u e from foreign banks
Federal Reserve notes of other Federal Reserve Banks.
Uncollected items
Bank premises
Other assets

* Less t h a n $500.




S t . Louis

1941

1942

1941

Minneapolis

Kansas City

1942

1942

1941

1941

Dallas
1942

San Francisco

1941

1942

1941

763,536
1,844
23,880

551,394 [3,570,031 3,423,782
1,475!
451
1,122
40,018
17,035
38,858

721,665' 632,041 477,051 394,665
4,192
643!
2021
401
19,246 17,602
5,418
8,353

662,054 557,610 520,889 414,284, l t 967,283| 1,547,779
352
566
1.293
754
371
7,133
11,997 11,759] 17,1751 13,784
35,995
26,532

789,260

568.880 3,611,524 3,463,762'

745,103 650,286 485,606 400,484

674,403 570,123 538,435 428,634 2,010,411 1,575,604

obligations,

T o t a l bills discounted.
Industrial advances

T o t a l assets.

Chicago

73

305

87
871
504

14
477

305
HOl

131,7181
63,444
49,101
23,763

62,241
32,983

342,801
165,1091
127,787
241.198

268,026

95,664

876,895

305,718

287,819 113,269

268,617
2
i
4 827
82.976
1,726]
<r,022

96,155
2i
4,110
42,290
1,948|
1,797]

877,310
6
6,415
244,938
2,917
10,859

306,042
6
3,449
180,907
2,971
5,466)

288,000 113,569| 154,600
1
1
4,162]
2,4301
2,108
75,178 49,586I 34,291
2,110
2,155
1,309
• 4,158
2,027
2,513

1,151.430,

440,

18
3061
198,906
105,406
1,406

120|
61
133,223
64,1701
49,662'
40,764j

551
366
73,695
39,053!
521

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

*

50
5141

137
1,250

953
92

109!

10
190

109
244

200
4,034
125,770
66,650

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

62,593 113,568
33,1681 54,702]
42,335
17,040]

51,197
27,131
362

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

66,509

289,008

96,204 227,645

78,690

614,478

193,309

67,073

290,395
lj
5,449
64,897
2,808
4,4101

97,249 227,749
1
lj
2,695
2,071
47,535 53,4761
1,052
2,880
3,590
1,783

79,043
1]
1,367
37,094
1,137
1,509]

618,712
4|
7,251
155,454|
2.691
9,6071

193,433
4
3,395
66,962
2,766
4,083

43,272
22,931

*

889

651
26,571
1,3381
1,309
715,182 4,753,969 3,962,603 1,118,712 820,054 680,427 497,426 ,042,363 721,642 826,998 548,785 2,804.130 1.846.247

LIABILITIES
Federal Reserve notes in a c t u a l circulation 1 .

546,908

Deposits:
Member bank—reserve a c c o u n t . . .
U . S. Treasurer—general account.
Foreign bank
Other deposits

476,535 322,452 1,925,896 1,762,132|
23,5621 28,685
71,445 156,906
24,464
26,722
85,273
91,617
5,085
5,123
4,3101
3,496

T o t a l deposits
Deferred availability items
;
Other liabilities including accrued dividends.

529,646
60,884
106

1,719,536

382,982 2,086,924 2,014,151
39,912 197,776 180,340
44
334
165

446,424 363,642
56,544 39,646;
20,969 22,904]
12,257 12,594

CAPITAL ACCOUNTS
C a p i t a l paid in
Surplus (sec. 7)
Surplus (sec. 13b)
Other capital accounts
T o t a l liabilities a n d capital a c c o u n t s . .

5,188
5,725|
717
2,2561

1

I n a c t u a l circulation ..
Collateral held b y a g e n t for notes issued to b a n k s :
Gold certificates on h a n d a n d due from U. S.
Treasury
Eligible paper
U . S. securities
T o t a l collateral held.

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

15,613
22,925
1,429]
8,444

4,549
4,966|
530|
2,072

1,151,430' 715,182 4,753,969 3,962,603 1,118,712

Commitments t o m a k e industrial advances
FEDERAL RESERVE NOTE STATEMENT
Federal Reserve n o t e s :
Issued to Federal Reserve Bank b y F e d e r a l
Reserve a g e n t
Held by F e d e r a l Reserve B a n k

4,880
5,725
713
2,362

1,767

1,874

428,631 263,578 251,765

276,826 178.535
35,354 52,4601
15,377 16,796|
12,465 10,815

1,279,380

487,364 344,996 468,388 306,697 1,232,212
36,209 35,850 27,947 36,989| 85,288]
20,270 22,141 20,270 22,141
53,328|
4,903
1,929| 3,456
1,312
41,614

699,739
930,408
45,967
58,081
30,692

536,194 438,7861 340,022 258,606 548,746 404,916 520,061 367,139 1,412,442 1,065,148
56,581 47,312] 27,636 22,554
52,850 41,734 43,312 34,8061 83,985
53,615
841
229
32
44
83
121
573
72
77
5

4,704,627 3,914,192: 1,106,595

T o t a l liabilities.,

1

513,737 322,068 302,727

1,687

670,614 487,754 1,030,800 710,272 815,259 537,288 2,775,884 1,818,507
4,417
4,966!
529]
1,944

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

3,003
3,152
1.000
2,517

4.600|
3,613
1,137
2,020)

1,042,363 721,642

820,054] 680,427

28

1,226

4,7251
3,613
1,137]
2,088

1,500

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

4,359
3,976
1,263
1,899

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

11,827
10,792
2,121
3,000

548,785 2,804,130 1,846,247

23

3,892

3,063

582,534 303,618 2,469,905] 1,763,428
35,6261
25,054
43,892
50,312

541,608 341,354 308,147 213,129
5,420
6,619
27,871 19,2861

440,629 274,221 277,211 149,933 1,364,823
11,998 10,643 25,446 14,662
85,443

780,266
80,527

546,908

513,737 322,068 302,727 206,510

428,631 263,578 251,765 135,271 1,279,380

699,739

555,000

310,000 2,500,0001 1,780,000

30,000
585,000

2,500,000 1,780,000

480,000
45
75,000

310,000 214,000
50

555,045 350,000 310,000 214,050

W

O
w
>
w
CO

W
7i

<

440,000 275,000 283,000 156,000 1,384,000] 794,000
65
943
5,000]
445,065 275,943 283,000 156,000 1,384,000

Includes Federal Reserve notes held b y t h e U . S .Treasury or by a Federal Reserve Bank other t h a n t h e issuing b a n k .




Os

66

A N N U A L REPORT OF BOARD OF GOVERNORS
N O . 3—HOLDINGS OF UNITED STATES GOVERNMENT SECURITIES BY FEDERAL
RESERVE BANKS AT END OF DECEMBERH1941 AND 1942
[In thousands of dollars]
R a t e of
interest
(Per cent)

Treasury bonds:
1943-47
1943-45
1944-46
194V54
1945-47
1945
1946-56
1946-48
1946-49
1947-52
1947
1948-50*
1948-51
1948
1948-50
1949-51* J u n e 15
1949-51* Sept. 15
1949-51* D e c . 15
1949-52
1949-53
1950-52*
1950-52
1951-54
1951-55
1951-53
1951-55*
1952-54*
1952-55*
1953-55
1954-56
1955-60
1956-58*
1956-59
1958-63
1960-65
1967-72*
Treasury notes:
M a r . 15, 1942
Sept. 15, 1942
D e c . 15, 1942
M a r . 15, 1943*
J u n e 15, 1943
Sept. 15, 1943
D e c . 15, 1943
M a r . 15, 1944
J u n e 15, 1944
Sept. 15, 1944
Sept. 15, 1944*
M a r . 15, 1945
M a r . 15, 1945*
D e c . 15, 1945*
M a r . 15, 1946*
D e c . 15, 1946*

3H
34
3M
4

2H
24
3%

34
44
22
2H
22V2
2
2
2

December
1941

December
1942

Change
during 1942

30,400
46,500
53,000
35,000
62,300
27,200
24,500
72,800
23,600
10,600
26,500
64,800
90,800
21,400

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
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

+60,707
+83,386
+73,000
+10,530
+59,899
+28,402
+10,635
+28,422
+25,252
+6,559
-15,250
+60,728
+13,729
+2,350
+4,594
+130,427
+62,240
+141,018
+6,389
+38,825
+177,475
+39,633
+24,343
-5,606
+1,982
+40,501
+25,409
+87,019
+5,650
+1,568
+19,512
+15,111
+7,331
+11,987
+27,552
+3,545
+1,314,854

34
24

29,500
90,300

2
24
2%
3
24
2

80,750
99,050
45,800
77,900
12,790
23,100

24

31,400
3,500
69,800
56,750
50,400
52,050
47,800
101,915
1,462,205

2%
2

24
2%

24
2%
2%

2H
24
2

%

14
l
14
l

H
l

H

%
%

|

84,800
66.200
30,800
39,300
102,400
35,700
69,800
109,900
76,400
60,600
6,000
95,400

39,300
95,400
31,700
54,000
107,400
71,900
59,100
85,600
236,845
829
16,725
525,000
1,323,799

-7,000
-4,000
-15,800
-2,500
-4,500
-1,500
-6,000
-9,800
+236,845
+829
+16,725
+525,000
+546,499

371,000
150,000
209,000
311,000
1,041,000

+371,000
+150,000
+209,000
+311,000
+1,041,000

10,370

578,118
431,877

+578,118
+421,507

10,370

1,009,995

+999,625

14
l
14

777,300
Certificates of indebtedness:
F e b . 1, 1943*
M a y 1, 1943*
Aug. 1, 1943*
N o v . 1, 1943*
T o t a l certificates of indebtedness

-84,800
-66,200
-30,800

Vs
.65

4
4

T r e a s u r y bills:
Other*
T o t a l T r e a s u r y bills
G u a r a n t e e d securities:
C C C , M a y 1, 1943
C C C , F e b . 15, 1945*
R F C , J u l y 15, 1943*
R F C , Apr. 15, 1944*
H O L C , 1942-44.
H O L C , 1944-52
H O L C , 1945-47
F F M C , 1942-47
F F M C , 1944-64
F F M C , 1944-49
T o t a l g u a r a n t e e d securities




H
14
14

475
8,610
9,000
3,175

l

24

3

14
3

34
3

2,000
1,000

7,i45
1,271

1,000
600
4,600

2,000
5,106
36,782

2,254,475

6,188,635

1

+475
+8,610
+9,000
+3,175
—2,000
+6,145
+1,271
-1,000
+2,000
+4,506
+32,182

1 +3,934,160

67

FEDERAL RESERVE SYSTEM
N O . 4-VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS OF FEDERAL
RESERVE BANKS, 1938-1942
[Number in thousands; amounts in thousands of dollars]
1940

1939

1938

1942

1941

N U M B E R OF P I E C E S H A N D L E D 1

Bills discounted:
Applications
Notes discounted
Advances made
Industrial advances:
Advances made
Commitments to make industrial advances
Bills purchased in open m a r k e t for own acCurrency received and counted
Coin received and counted
Checks handled
Collection items handled:
U. S. Government coupons paid 2
All other
Issues, redemptions, and exchanges by fiscal
agency d e p a r t m e n t :
U. S. Government direct obligations —
All other
Transfer of funds

6
6
6

2
4
2

2
3
1

2
3
1

1
.2
1

.4

.2

.2

.6

1

.2

.1

.2

.2

.2

.2
2,089,987
2,676,248
1,098,115

.1
2,134,908
2,644,418
1,157,140

2,248,290
2,705,344
1,184,356

2,529,703
3,216,761
l,265,593

2,678,80i
3,761,445
1,335,543

17,802
6,389

17,145
6,177

15,444
6,094

15,047
6,392

14,990
5,833

3,456
575
853

3,528
1,162
814

3,752
485
780

13,479
411
840

117,425
473
842

10,472

11,285
75,690

8,384
61,500

9,222
115,956

8,581
184,697

3,805

2,860

15,695

68,032

4,621

4,374

19,530

22,207

r

AMOUNTS H A N D L E D

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

226,687
6,500
11,217
2,781
8,883,728
271,128
231,820,217

2,133
9,538,629
11,283,817 13,010,185
9,285,921
355,581
288,140
327,555
276,589
r
255,937,980 280,436,092 362,069,226 477,108,268

854,273
5,321,443

890,620
5,442,645

24,450,791
2,581,611
82,219,749

24,462,659
4,537,228
88,080,756

902,288
5,068,674




1,082,321
6,167,564

20,189,983 33,278,154 90,338,225
3,262,012
1,687,194
3,260,660
92,103,910 118,423,057 140,444,452

Revised.
*Two or more checks, coupons, etc., handled as a single item are counted as one '
Includes coupons from obligations guaranteed by the United States.

2

926,960
6,003,082

NO. 5—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS DURING 1942
System

Boston

NewYork

Philadelphia

CURRENT

Cleveland

Richmond

Atlanta

Chicago

St.
Louis

Minneapolis

Kansas
City

Dallas

San
Francisco

EARNINGS

$1,328
$946
$1,645
$1,748
$1,838
$3,074
$1,119
$2,775
$64,521
$3,502
$3,171
$35,927
$7,448
51,404,012 3,809,976 13,877,200 3,947,483 4,872,024 3,187,860 2,264,110 6,407,272 2,518,157 1,447,985 2,314,984 2,009,841 4,747,120
39,591
39,623
33,110
12,609
21,276
474,370
19,800
982
19,085
7,939
40,461
39,403
200,491
45,822
7,520
10,300
14,961
101,050
6,279
48
1,601
6
9,177
2,510
1,943
883
7,742
158,579
13,655
9.574
618,751
7,893 157,774
73.855
22,203
15,734
11,477
122,268
17,997

Discounted bills
U . S. Government securities
I n d u s t r i a l advances
Commitments to m a k e industrial advances
All other

52,662,704 3,871,125 14,077,799 4,174,302 4,975,032 3,252,964 2,314,127 6,590,508 2,552,357 ( 1,478,321,2,496,219 2,032,434 4,847,516

T o t a l current earnings

CURRENT

EXPENSES

Operating expenses:
Salaries:
132,246 151.795 140,576
240,822
257,955
172,087
125,622
193,097 154,328 144,328
2,333,523
107,820
512,847
Officers
28,576,521 1,643,148 7,012,576 1,926,399] 2,643,9121 1,643,675 1,261,585 3,980,240 1,497,5861 965,089 1,583,882] 1,380,754 3,037,675
Employees
Retirement System contributions for cur90,161
80,735
58,090]
132,085
93,260
164,988
81,041
1,585,4421
224,507
386,439
102,066
89,027
83,043
rent service
15
9,461
30.874
237
2,001
593
3,861
1
75,487
895
8,572
18,977
Legal fees
9,3941
8,502]
13,400
13,083
7,931
8,184
11,784
15,145
9,617
8,971
11,475
9,490
126,976
Directors' fees and expenses
Federal Advisory Council, fees a n d ex1,141
1,374
1,444]
3,350
1,118
1,968
1,150|
1,1281
1,350
850
penses
Traveling expenses (other t h a n of directors]
a n d members of Federal Advisory
59,189
44,542
33,269
66,021
28,649
24,637
24,225
432,806
28,062
24,283
54,174
26,588
Council)
19,167
944,018
9,203,992
825,834 1,514,070
817,068 1,037,200 586,165 434,979 1,494,156 387,661 296,7031 512,492 353,646
Postage and expressage
84,251
62,304
29,040]
37,774
631,834
50,796
45,7161
52,665
43,938
28,340
51,653
39,570
105,787
Telephone a n d telegraph
83,442 107,775 125,026! 232,084
239,704 131,789] 115,687
2,420,462
322,662
121,930]
236,624
526,366
177,373
Printing, s t a t i o n e r y , and supplies
Insurance on currency a n d security ship23,789
33,115
29,088
6,915
11,219
ll,052j
20,286!
28,535
20,084
8,044
283,148
43,933
47,088|
ments
18,264
19,742
18,073
10,849
14,945
13,168
17,594
12,7001
13,941
12,519
209,197
12,720|
44,682
Other insurance
136,317
95.004
189,457
93,858
34,504
91,436
73,516
62,255
52,936] 66,0991
1,508,451
481,869!
131,200
Taxes on bank premises.
112,476
76,631
102,097
89,0861
90,764]
126,532i
86,161
42,548
44,391
1,075,325[
28,847
219,960]
55,832
Depreciation on bank building
50,896
29,738
56,133
20,869
32,913
31,095
35,544
33,155
30,339
477,589
21,910
98,472
36,525
Light, h e a t , power, a n d w a t e r
29,208
34,782
35,415
37,270
6,004
31,878
17,544]
34,366
19,532
17,386
312,726|
36,798
12,543
Repairs and alterations to b a n k building ..
70,126
96,438
15,949
693
2401
1,580
1,428
43
322
3,020
288,251
97,0401
1,372
Rent...,
103,192
102,360
115,022
52,949
34,676
107,527
90,5281
64,606
37,581
84,634
961,2331
123,716
F u r n i t u r e and equipment
44,442
98,748
139,275
215,142
70,000
67,468
122,254
58,172
79,293
42,715
69,794
1,306,496
211,3841
All other
132,251
T o t a l operating expenses
Less reimbursements for certain fiscal
agency and other expenses

51,825,966 3,443,891 11,486,766] 3,783,925 5,036,377 3,090,096] 2,481,853 7,183,458 2,680,999 1,842,100 2,937,433 2,450,521 5,408,547

N e t operating expenses
Assessment for expenses of Board of Governors
Federal Reserve currency:
Original cost
Cost of redemption

32,051,226 2,423,237 7,378,285 2,455,065 3,059,645 2,157,069 1,487,189 4,186,456 1,749,381 1,012,033 1,790,362 1,389,287 2,963,217
132,115
51,341
213,773
52,994
38,277
160,2741
1,746,326
619,754
167,491
50,007]
60,543
123,861
75,896

T o t a l current expenses




19,774,740 1,020,6541 4,108,481 1,328,860 1,976,732

,

4,575,869
250,623

371,379
14,419

836,422
45,5691

315,597
18,072

364,5991
22,446]

933,027

391,816
28,985

994,664 2,997,002

293,578
23,0881

748,318
28,856

931,618

239,155
16,771

830,067 1,147,071 1,061,234 2,445,330

110,947
5,090

175,825
11,988

124.634
13,2521

603,599
22.087

38,624,044 2,932,896 8,880,030 2,956,225 3,606,964 2,653,766 1,864,398| 5,177,403| 2,058,301 1,166,347 2,028,182 1,578,514 3,721,018

PROFIT AND LOSS
52,662,704 3,871,125 14,077,799 4,174,302) 4,975,0321 3,252,964 2,314,127 6,590,508 2,552.357 1,478,321 2,496,219 2,032,434 4,847,516
38,624,044 2,932,896] 8,880,030! 2,956,225! 3,606,964 2,653,766 1.864,398 5,177,403 2.058,301 1,166,347 2,028,182 1.578,514 3,721,018

Current earnings (above)
Current expenses (above)

14,038,660
Current net earnings
Additions to current net earnings:
Profits on sales of U . S. Government
securities
All other
T o t a l additions
Deductions from current net earnings:
Losses and allowances for losses on industrial advances (net)
Charge-offs and special depreciation on
bank premises
R e t i r e m e n t System (interest base adjustment)
All other
T o t a l deductions
N e t deductions
N e t earnings
Paid U . S. T r e a s u r y (sec. 13b)
Dividends paid
Transferred to surplus (sec. 13b)
Transferred to surplus (sec. 7)
Surplus (sec. 7), J a n u a r y 1
Addition, as above
Transferred to reserves for contingencies
Surplus (sec. 7), December 31
1

938,229 5,197,769 1,218,077 1,368,068

449,729 1,413,105

494,056

311,974

468,037

453,920 1,126,498

3,348,705
353,632

244,396
18,873

967,507
3,917

276,774
158,451

333,826
2,303

178,234
14,609

141,591
137,242!

378,311
8,587

153,088
1,539

102,716
2,285

161,654;
3,328

128,841

281,767
15

3,702,337

263,269

971,424

435,225

336,129

192,843

278,833

386,898

154,627

105,001

164,982

131,324

281,782

112,933

27,836

^.sss]

100,000

H^si

10,000

J

l,242

Hi

All

481,923

693,700

210,000]
312,542
2,106

381,490j
7,481

259,717
29,117|

197,830
53

311,899

414,648

387,729

271,412

406,202

48,630

+20,577

4,416,845
47,068

279,461
4,6021

5,270,546
1,568,209
12,470,451)

889,5991

197,672
8,669,076
49,602
3,554,101

12,982
566,010

157,502,880
3,554,101
-646,6411

1,949,332
310,6071
-100,000

310,607

, 160,410,340 11,159,939

,122,130
372

592,793
49

6,848
888,550

58,959]
348,441

498,68 2

421,070

113,229

651,401 15,171,403
498,682
350,1391

,345,615
421,070

,235,966
113,229
-113,2291

15,139
302,750
4,471

52,800

248,913
136|

151,741
1,668]

276,464
40

208,523
164

385,241
1,280

250,826

165,233

276,504

143,393

439,321

96,199

60,232

111,522

12,069

157,539

251,7421

356,515! 441,851

968,959

3l
183,336

8,309
280,355

322,360 1,197,161

32,098
707,874

34,277
184,2401

65,294J

1,777

51,6001

1,238,654! 1,316,468

1

4,021
955,508
237,632

269,312
616
127,929'

67,851

25,036
265,769
44,515
106,531

1,924,752 ,966,321 ,152,420 1,612,681 ,976,0631
237,6321 127,9291
67,851 106,531
68,403
-237,632 -127,929
-67,851

716,931
252,028
1,792,298
252,028

15,670,085 14,766,685 5,235,966 5,724,628) 22,924,752 4,966,321 3,220,823 3,612,6814,082,594 11,044,326

N e t recoveries.




ON

3
NO. 6-CURRENT EARNINGS, CURRENT EXPENSES, AND NET EARNINGS OF FEDERAL RESERVE BANKS AND DISPOSITION OF NET
EARNINGS, 1914-1942
E a r n i n g s and expenses
Current
earnings

Disposition of n e t earnings
Dividends
paid

F r a n c h i s e tax P a i d to U . S.
paid to U . S.
Treasury
Treasury2
(Sec. 13b)

Transferred
to surplus
(Sec. 13b)

Transferred
t o surplus
(Sec. 7)

Direct
charges
to surplus
(Sec. 7)

Current
expenses

Net
earnings 1

$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
2,011,418

-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

r

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

1940
1941
1942

43,537,805
41,380,095
52,662,704

29,165,477
32,963,150
38,624,044

25,860,025
9,137,581
12,470,451

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

82,152
141,465
197,672

-54,456
-4,333
49,602

17,617,358
570,513
3,554,101

12,272,706
132,696
646,641

1,453,390,722

718,224,630

669,726,565

203,630,548

-716,424

316,407,009

All Federal Reserve B a n k s by y e a r s :
1914-15
1916...
1917
1918
1919

Total—1914-1942




$-60,323

149,138,300

1,267,132

r

3

$500,000

4

155,996,667

Aggregate for each Federal Reserve Bank
1914-1942:
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

$98,551,149
425,838,133
114,067,333
130,830,677
70,588,643
67,322,592
199,048,989
63,051,858
46,663,318
69,815,331
52,041,389
115,571,310

$52,173,087
174,355,467
55,240,623
66,831,489
40,042,354
33,167,663
93,567,304
36,671,975
25,920,666
43,495,098
32,089,688
64,669,216

$44,465,990
241,610,640
56,807,438
56,089,228
26,509,390
27,944,994
93.797,366
21,023,878
18,331,153
22,834,579
15,821,056
44,490,853

$14,757,883
68,968,668
19,299,135
20,585,069
8.632,167
7,239,207
23,648,788
7,246,975
5,055,196
6,882,408
6,537,780
14,777,272

$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

$107,882
117,264
463,443
74,282
139,481
39,015
142,339
5,948
34,812
43,513
99,153

$-1,345
-682,388
194,990
-8,446
-176,443
-39,833
11,681
-18,237
-7,447
-8,388
55,336
-35,904

$11,330,237
47,199,295
15,620,883
15,829,192
6,478,029
6,031,416
21,756,280
6,067,240
4,824,^68
5,365,264
4,486,145
11,007,818

$22,490,175
105,200,834
31,290,969
30,595,876
11,713,996
11,756,044
44,681,032
11,033,563
8,045,692
8,977,946
8,568,738
22,052,144

r

Revised.
Current earnings less current expenses, plus other additions and less other deductions.
T h e Banking Act of 1933 eliminated the provision in the Federal Reserve Act requiring p a y m e n t of a franchise tax.
On December 31, 1942, surplus (Sec. 13b)—relating to funds received from the Secretary of the T r e a s u r y under Section 13b of t h e Federal Reserve Act for the purpose of m a k i n g
loans to industry—amounted to $26,829,887 ($27,546,311 received from the Secretary of the T r e a s u r y minus the $716,424 net debits shown here).
4
On December 31, 1942, surplus (Sec. 7)—accumulated pursuant to Section 7 of the Federal Reserve Act—amounted to $160,410,342 ($316,407,009 retained net earnings, shown in
preceding column, less $155,996,667 direct charges shown here). Direct charges represent a m o u n t s transferred to reserves for contingencies except as follows: 1927, charge-off on b a n k
premises; 1934, charge-off cost of Federal Deposit Insurance Corporation stock.
1

2

3

H

>

N O . 7 - N U M B E R AND SALARIES OF OFFICERS A N D EMPLOYEES OF FEDERAL RESERVE BANKS
[December 31, 1942]

President

Other officers

Federal Reserve B a n k
(including branches)

Employees, except those
whose salaries are reimbursed to b a n k

Employees whose salaries
are reimbursed to b a n k
Annual
salaries

fotal

<

Annual salary

Number

Annual
salaries

Number

$25,000
45,000
22,000
25,000

9
44
10
21

$78,220
465,700
97,680
165,650

815
2,261
808
1,058

$1,198,410
4,412,880
1,324,486
1,763,619

432
1,565
433
822

$531,851
2,866,500
670,767
1,124,867

1,257
3,871
1,252
1,902

21,000
17,500
30,000
25,000

18
20
28
19

134,180
122,800
243,350
140,440

697
526
1,541
645

1,042,590
719,252
2,577,293
1,000,354

461
630
1,393
471

633,485
764,490
2,147,962
684,842

1,177
1,177
2,963
1,136

1,831,255
1,624,042
4,998,605
1,850,636 "

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

17
18
17
29

119,250
130,036
121,744
222,900

354
516
512
1,199

526,653
826,068
789,426
1,835,167

508
644
597
822

638,797
928,215
844,678
1,557,751

880
1,179
1,127
2,051

1,309,700
1,904,319
1,775,848
3,640,818

10,932

$18,016,198

8,778

$13,394,205

19,972

$33,752,853

Annual
salaries

Number

Number

Annual
salaries
W

New York

Total

$300,500

250*

* Includes $480,890 reimbursed t o the b a n k s for salaries of 70 officers.




$2,041,950*

$1,833,481
7,790,080
2,114,933
3,079,136

ANNUAL REPORT OF BOARD OF GOVERNORS

72.

NO. 8-RECEIPTS AND DISBURSEMENTS OF THE BOARD OF GOVERNORS OF THE

FEDERAL RESERVE SYSTEM FOR THE YEAR 1942
General fund account:
Balance January 1, 1942:
For general expenses of the Board
$241,089.10
For expenses chargeable to Federal Reserve Banks
62,302.95
For purchase of War Savings bonds for employees under Board's Volun- •
tary Pay Roll Savings Plan
4,625.18

$308,017.23

RECEIPTS

For general expenses of the Board:
Assessments on Federal Reserve Banks for estimated general
expenses of the Board
$1,746,326.00
Subscriptions to the Federal Reserve Bulletin
5,239.87
Other publications, sales
2,720.86
Reimbursements for leased wire service
61,610.67
Miscellaneous receipts, refunds, and reimbursements
16,116.23 1,832,013.63
For expenses chargeable to Federal Reserve Banks:
Assessments on Federal Reserve Banks for:
Cost of printing Federal Reserve notes
3,501,626.59
Expenses of leased wire system (telegraph)
50,105.82
Expenses of leased telephone lines
12,918.00
Expenses of Federal Reserve Issue and Redemption Division (Office of Comptroller of the Currency)
48,560.06
Miscellaneous expenses
4,702.44 3,617,912.91
Employee's pay roll allotments for purchase of War Savings bonds

94,356.90

Total receipts

5,544,283.44

Total available for disbursement

5,852,300.67

DISBURSEMENTS
For expenses of the Board:
General expenses of 1942 (per detailed statement). $1,708,893.82
Less accounts unpaid December 31, 1942
35,607.70 1,673,286.12
Expenses of 1941 paid in 1942
Expenses of leased wire service, reimbursable
Retirement System (interest base adjustment)
Miscellaneous refunds and items reimbursable

41,004.14
65,049.54
177,188.00
4,836.48 1,961,364.28

For expenses chargeable to Federal Reserve Banks:
Cost of printing Federal Reserve notes
3,232,952.54
Expenses of leased wire system (telegraph)
51,442.84
Expenses of leased telephone lines
...
12,918.00
Expenses of Federal Reserve Issue and Redemption Division
(Office of Comptroller of the Currency)
48,560.06
Miscellaneous expenses
2,786.70 3,348,660.14
Purchase of War Savings bonds and refunds under Board's pay roll
plan

90,622.48

Total disbursements
Balance in general fund account December 31, 1942:
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




5,400,646.90
111,738.45
331,555.72
8,359.60
$451,653.77

FEDERAL RESERVE SYSTEM

73

NO. 8-RECEIPTS AND DISBURSEMENTS-Continued
GENERAL EXPENSES OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, 1942
PERSONAL SERVICES*.

Salaries

$1,364,610.69

Retirement contributions

'.

72,559.98

Total Personal Services

$1,437,170.67

NON-PERSONAL 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 Non-personal Services
GRAND TOTAL

76,766.23
1,297.37
60,232.16
56,859.32
17,761.66
6,041.61
6,583.18
25,514.53
2,469.26
2,981.18
1,151.62
4,210.06
9,854.97
271,723.15
$1,708,893.82

:

N O . 9 - M I N I M U M 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

Effective May 6,
1942

Down Maximum Down Maximum
Down
payment maturity payment maturity payment
1
(%)1 (months) (%)X (months)

(%)

Instalment sales:2
Automobiles
#
Mechanical refrigerators, washing
machines, radios, vacuum cleaners.
Stoves, ranges
Furnaces, oil burners, plumbing and
sanitary fixtures
Furniture
Floor coverings
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

33M

Maximum
maturity
(months)

3SH

20
20

18
18

MH
20

15
10

18
18

20
10
20
20

15
15
18
15
15
15

18

18

(3)

(3)

18
18

15
15
(3)

12
12
33M
20
33H
33M
33M
33M

12
12
12
12
12
12
12

(3)

(3)

6
12
(3)
(3)

12
3
10th day of
2nd month
after sale

NOTE.—The above limitations have been subject to various exceptions; for exceptions in detail, and for addtional provisions not reflected in this table, the regulation should be consulted. Where no figure is shown, there
was 1no limitation imposed by Regulation W.
Down payments determined after deduction of any trade-in, except in case of automobiles.
2
Terms shown for selected articles. For terms on other listed articles, see regulation.
3
Where credit is to purchase listed articles, requirements same as on instalment sales of the respective
articles.
4
Prior to December 1, 1941, maximum maturity was 18 months.




74

ANNUAL REPORT OF BOARD OF GOVERNORS

NO. 10-FEDERAL RESERVE BANK DISCOUNT, INTEREST, AND COMMITMENT RATES,
A N D BUYING RATES ON BILLS
[Per cent per annum]
In effect December 31, 1942
Boston

PhilRich- Atadel- Clevephia land mond lanta

New
York

Rediscounts for a n d advances t o member banks
under Sees. 13 a n d 13a of
the Federal Reserve A c t :
Advances secured > by
Government securities
m a t u r i n g or callable
within one year
H
H
V2
H
yi2
yi2
All other
l
1
l
l
Advances to member banks
under Sec. 10(b) of the
Federal Reserve Act
iy2
1H
\y2
Advances to individuals,
partnerships, or corporations secured b y direct
obligations of the United
States (last paragraph of
Sec. 13 of t h e Federal R e serve Act) :
T o nonmember b a n k s . . . .
l
i
i
i
i
i
T o others
2
2
2
2
iy2
2y2
Advances t o industrial or
commercial
businesses
under Sec. 13b of the Federal Reserve Act, direct
or in participation with
financing institutions
2K-5 2H-5 2VT-5 2H-5 2M-5 2y2-s
Discounts for a n d purchases
from financing institutions
under Sec. 13b of the Federal Reserve A c t :
On portion for which in2
stitution is obligated...
2
3
3
3
3
3
3
On remaining portion
Commitments to make advances under Sec. 13b of
the Federal Reserve A c t :
T o industrial or commercial businesses
y-\ VT-VA H-1M H-1M
y2-\x
T o financing institutions. M-i M-iM 34-1M 4 KM-Vi *y2-

m m m

0( ) 0( )

()

(0)

(<1>
) 0
()

wm

Minimum buying rates on
prime
bankers'
acceptances
payable
in
dollars
1-90 days
91-120 days
121-180 days
Buying r a t e on Treasury
bills®
1
2
3
4
5

(5)

Min- K a n ChiSt..
cago Louis neap- sas
olis
City

H

1

y2i

y2i

1H

IK

IK2

l
2

i
2

2M-5 2y2-s

2 ^ - 5 \-\y2
3
2M-5

()

1

iy2

y12

Dallas

y12

San
Francisco

y12

m m m

1
2

1
2

1

2M

2H-5 2 ^ - 5 2 H - 5 2 ^ - 5

<D
(3) (03)

#3
()

(03)

l
A-VA y2-vA y2-iA y2-m y2-\x K-iX
y2-ix X-iH y2-iA y2-vA *y2- 4 K-

1K

(5)

(6)

(5)

(5)

(5)

(5)

(5)

(5)

(5)

(6)

%

H

H

H

y8

H

H

H

«

%

l

Vs

H

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 A 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.
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 the 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

75

SYSTEM

N O . U - M A X I M U M RATES O N TIME DEPOSITS
Maximum rates t h a t m a y be paid b y member banks as established by the Board of Governors under provisions
of Regulation Q
[Per cent per annuml

Nov 1, 1933,

In effect
beginning
Jan 1, 1936

to
Jan.
Savings deposits
Postal Savings deposits
O t h e r time deposits p a y a b l e in
6 m o n t h s or more
90 days to 6 m o n t h s
Less t h a n 90 days

31, 1935
3
3

2H
2V2

3
3
3

2K
2
1

N O T E . — M a x i m u m rates t h a t 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 m a y not in any event exceed the maximum rate payable
by State b a n k s or t r u s t companies on like deposits under the laws of the State in which the member bank is
located.

NO.

1 2 - M E M B E R B A N K RESERVE R E Q U I R E M E N T S
[Per cent of deposits]
N e t demand deposits 1

J u n e 21,
Aug. 16,
M a r . 1,
May
1,
Apr. 16,
N o v . 1,
Aug. 20,
Sept. 14,
Effective

1917-Aug. 15,
1936-Feb. 28,
1937-Apr. 30,
1937-Apr. 15,
1938-Oct. 31,
1941-Aug. 19,
1942-Sept. 13,
1942-Oct.
2,
Oct. 3, 1942

1936
1937
1937
1938
1941
1942
1942
1942

Central
reserve city
banks

Reserve
city b a n k s

Country
banks

Time
deposits (all
member
banks)

13
19M
22%
26
22%
26
24
22
20

10
15
17M
20
17K
20
20
20
20

7
10H
12%
14
12
14
14
14
14

5%
6
5
6
6
6
6

1
Gross demand deposits minus demand balances with domestic banks (except private b a n k s and American
branches of foreign banks) and cash items in process of collection.

N O . 1 3 - M A R G I N 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]

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

Apr. 1, 1936Oct. 31, 1937

N o v . 1, 1937
and after

5 5

40
50
40

„

3

55

1
Regulations T and U limit the a m o u n t of credit t h a t may be extended on a security by prescribing a
maximum loan value, which is a specified percentage of its m a r k e t value a t the time of the extension; the
"margin requirements" shown in this table are the difference between the m a r k e t value (100%) and the maxim u m loan value.
2
Requirement under Regulation T was the margin "customarily r e q u i r e d " by the broker.
3
Regulation U became e l e c t i v e M a y 1, 1936.
NOTE.—Regulations T and U also provide special margin requirements on " o m n i b u s " accounts and loans
to brokers and dealers.




N O . 14—ALL MEMBER BANKS-ASSETS AND LIABILITIES O N DECEMBER 3 1 . 1942
BY CLASSES OF BANKS
[Amounts in thousands of dollars]

Item

ASSETS
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)
T o t a l loans a n d investments
Reserve with Federal Reserve Banks
Cash in vault
.t
Demand balances with banks in United
States (except private banks and American branches of foreign banks)2
Other balances with banks in United States
Balances with banks in foreign countries
Due from own foreign branches
Cash items in process of collection
Bank premises owned and furniture and fixtures
Other real estate owned
Investments and other assets indirectly representing bank premises or other real
Customers' liability on acceptances...
Income accrued but not yet collected.
Other assets
T o t a l assets..
LIABILITIES
Demand deposits—Total 2
Individuals, partnerships, and corporations
United States Government.
States and political subdivisions
Banks in United States2
Banks in foreign countries
Certified and officers' checks, cash letters of credit and travelers' checks, etc..
Time deposits—Total
Individuals, partnerships, and corporations
United States Government
Postal savings
#
States and political subdivisions
Banks in United States
Banks in foreign countries
Total deposits 2




Central reserve city
member banks 1

ON

Reserve city
member1
banks

Country
member1
banks

All member
banks

All national
member
banks

All State
member
banks

5,904,973
12,811,255
990,852
947,803
849,399
183,189
21,687,471
4,867,524
297,366
1,439,170
12,904
3,348

s

362

o
w
o
>
d

New York

Chicago

4,115,544
11,475,702
1,070,979
592,894
556,174
145,283
17,956,576
4,388,001
72,480

832,250
2,705,788
83,463
166,131
165,222
20,554
3,973,408
902,216
39,087

6,102,034
12,226,637
811,223
954,088
691,111
129,622
20,914,715
4,940,388
365,419

5,038,496
8,598,309
574,088
1,252,066
874,186
81,487
16,418,632
2,841,753
541,626

16,088,324
35,006,436
2,539,753
2,965,179
2,286,693
13,072,358
1,018,612

10,183,351
22,195,181
1,548,901
2,017,376
1,437,294
193,757
37,575,860
8,204,834
721,246

80,849
1,250
8,365

162,417
1,464
389

2,178,762
22,838
2,679

3,662,118
36,819
1,520

6,084,146
62,371
12,953

4,644,976
49,467
9,605

362

376,946
59,263,331

362

1,313,275
198,825
17,819

246,622
18,267
1,228

1,915,566
319,341
53,007

554,392
367,697
62,792

4,029,855
904,130
134,846

2,553,839
578,656
61,039

1,476,016
325,474
73,807

10,414
22,330
44,148
12,748

617
1,356
11,126
5,741

61,580
13,818
48,617
31,672

20,324
3,003
22,396
23,726

92,935
40,507
126,287
73,887

51,340
23,285
74,604
42,188

41,595
17,222
51,683
31,699

24,127,442

5,363,938

30,868,402

24,556,798

84,916,580

54,590,939

30,325,641

21,340,195
12,501,442
4,186,231
262,619
3,208,852
732,836
448,215
737,844
711,239

4,585,096
2,587,969
664,671
177,637
1,105,295
11,862
37,662
455,278
452,878
2,250

23,640,987

23,594,671
15,469,810
3,177,600
903,608
3,158,083
412,566
473,004
4,213,538
4,106,770
12,110
1,319

150

65,435,697
42,139,236
7,923,429
3,317,989
10,101,306
811,439
1,142,298
12,840,974
12,365,923
47,675
8,566
331,933

41,841,026
26,669,426
4,745,829
2,414,381
6,943,223
398,873
669,294

23,134
160
3,311
22,078,039

15,869,419
11,989,022
1,090,108
1,558,479
956,627
3,559
271,624
6,589,142
6,396,873
25,155
7,119
140,044
19,951

5,040,374

15,060,803
1,982,419
1,319,254
4,830,532
63,182
384,797
5,058,710
4,804,933
20,270
1,447
168,605
61,955
1,500
28,699,697

22,458,561

82,066

4,811
78,276,671

8,627,436

8,259,153
35,565
7,247
267,935
53,486
4,050
50,468,462

63,998
28,580
761
27,808,209

2
a

I

o

o
o
<
o

D u e t o own foreign branches
.
Bills payable, rediscounts, a n d other liabilities for borrowed money.
Acceptances outstanding
Dividends declared b u t not y e t payable
Income collected b u t not y e t earned
Expenses accrued and unpaid
O t h e r liabilities
Total liabilities.

215,398
26,050
16,957
7,472
28,662
27,445

1,568
982
1,825
12,491
3,029

22,400,023

1,554
2,007
15,557
12,036
23,459
53,265
32,746

2,800
3,000
7,511
13,758
22,332
7,152

216,952
4,807
46,175
37,486
46,514
116,750
70,372

189,596
3,516
25,999
22,776
30,114
75,036
46,082

27,356
1,291
20,176
14,710
16,400
41,714
24,290

28,840,321

22,515,114

78,815,727

50,861,581

27,954,146

783,148
803,513
278,562
162,858

926,392
702,981
290,871
121,440

2,378,674
2,499,071
846,793
376,315

1,499,882
1,435,949
540,071
253,456

878,792
1,063,122
306,722
122,859

CAPITAL ACCOUNTS
Capital
Surplus
Undivided p r o 6 t s
Reserves for contingencies a n d o t h e r capital a c c o u n t s .
Total capital accounts
Total liabilities a n d capital accounts....
MEMORANDA
P a r or face value of capital—Total
C a p i t a l notes and d e b e n t u r e s . .
F i r s t preferred stock
Second preferred stock
Common stock
R e t i r a b l e value of c a p i t a l : F i r s t preferred stock
Second preferred stock.,
N e t demand deposits subject t o reserve
D e m a n d deposits—adjusted 3
Reciprocal bank balances
N u m b e r of banks
For footnotes see next t a b l e .




567,834
865,987
240,625
52,973

101,300
126,590
36,735
39,044

1,727,419

303,669

2,028,081

2,041,684

6,100,853

3,729.358

2,371,495

24,127,442

5,363,938

30,868,402

24,556,798

84,916,580

54,590,939

30,325,641

567,834

101,300

783,148

928,027

2,380,309

1,501,041

879,268

197
8,718

1,300

21,417
76,139
2,150
683,442

14,507
110,781
14,681
788,058

36,121
196,938
16,831
2,130,419

133,795
12,137
1,355,109

36,121
63,143
4,694
775,310

>
H
M

558,919

' 166,066'

21,617

1,300

106,402
2,150

155,808
20,556

285,127
22,706

177,888
14,085

107,239
8,621

a

19,946,071
11,899,001
43,415
37

4,176,458
2,556,646
32,550
13

19,547,715
14,849,288
376,872
354

11,655,409
13,264,733
60,334
6,275

55,325,653
42,569,668
513,171
6,679

34,643,268
27,199,262
348,964
5,081

20,682,385
15,370,406
164,207
1,598

I

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W

NO.

1 5 - A L L MEMBER B A N K S - C L A S S I F I C A T I O N OF L O A N S A N D U N I T E D STATES G O V E R N M E N T D I R E C T O B L I G A T I O N S O N DECEMBER 3 1 , 1942
B Y CLASSES O F B A N K S
[In thousands of dollars]

Item

Central reserve c i t y
member b a n k s 1
New York

Loans—Total
Commercial and industrial loans, including open m a r k e t paper
Loans on agricultural commodities covered b y 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 p r o p e r t y
On other properties
Loans to b a n k s
Consumer loans to individuals:
Retail automobile instalment paper
Other retail instalment paper a n d repair a n d modernization instalm e n t loans
Personal instalment cash loans
Single p a y m e n t loans t o individuals
All other loans (including overdrafts)
U n i t e d States Government direct obligations—Total
T r e a s u r y bills
T r e a s u r y certificates of indebtedness
T r e a s u r y notes
United States savings bonds
Other bonds m a t u r i n g in 5 years or less
Other bonds m a t u r i n g in 5 to 10 years
Bonds m a t u r i n g in 10 to 20 years
Bonds m a t u r i n g after 20 years

Chicago

Reserve
city
member
banks1

Country
member
banks1

All
member
banks

All
national
member
banks

All State
member
banks

4,115,544

832,250

6,102,034|

5,038,496

16,088,324

2,546,454|

657,765

2,957,136

1,225,530

7,386,885

4,742,709i

2,644,176

20,649
90
787,374
192,519
60
65,4601
51,794
21,133

3,971
2,523|
33,634
31,615
284|
14,841
7,492
2

162,487
127,5241
96,585
153,0861
66,060
1,116,779
303,069
3,546

338,745
432,782
16,860
160,933
199,166
1,260,599
337,558
1,703

525,852
562,919
934,453
538,153
265,570
2,457,679
699,913
26,384|

443,072!
466,702
302,878
295,031
196,9351
1,570,788
411,006
10,0951

82,780
.96,217
631,575
243,122
68,635
886,891
288,907
16,289

7,872

5,197

108,555

89,801

211,425

159,922

51,503

O

45,5481
37,166
212,740
126,685

14,435
9,098
33,659
17,734

126,335
93,315
479,581
307,9761

91,367
145,297
347,206
390,949

277,685
284,876
1,073,186
843,344

197,924
193,954
560,339
631,996

79,761
90,922
512,847
211,348

>

8,598,309

35,006,436

22,195,181,

12,811,255

670,954
1,251,233
1,240,221
142,222
531,954
2,660,757
1,640,807
460,161

4,363,309
6,285,324|
5,409,821
151,8641
2,671,558
9,078,768
5,927,930
1,117,862

2,826,020
4,050,715
3,387,0471
115,624
1,433,708
5,710,632)
3,863,267!
808,168

1,537,289
2,234,609
2,022,774
36,240
1,237,850
3,368,136
2,064,663
309,694

11,475,702
1,854,983
2,144,006
2,056,453
267
1,229,603
2,635,678
1,454,531!
100,1811

2,705,788
396,547
636,9381
390,592]
865
86,941
530,7091
483,326
179,870

12,226,637
1,440,825
2,253,147
1,722,555
8,510
823,0601
3,251,624
2,349,266
377,650

5,904,973

1
B a n k s are classed according to t h e reserves which t h e y a r e required to carry (see table 11). Some b a n k s classed as " c o u n t r y b a n k s " are in outlying sections of reserve cities or
central reserve cities, and some b a n k s classed as "reserve c i t y b a n k s " are in outlying sections of central reserve cities. Figures for each class of b a n k s include assets a n d liabilities
of their domestic branches, whether located within or outside the cities in which the parent b a n k s are located.
2 Excludes reciprocal bank balances, shown as a m e m o r a n d u m item. Before J u n e 30, 1942, such balances were reported gross.
3 D e m a n d deposits other t h a n interbank a n d United States Government, less cash items reported as in process of collection.




00

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O

W
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o
o
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o

FEDERAL RESERVE
NO.

79

SYSTEM

1 6 - M E M B E R B A N K RESERVE B A L A N C E S , RESERVE B A N K C R E D I T , A N D R E L A T E D
I T E M S - E N D OF YEAR 1 9 1 8 - 1 9 4 1 A N D E N D OF M O N T H 1942
[In millions of dollars]

^j

End of year
or m o n t h

1

Td

s
<u

a2

a

o

^!
3
o
x>

CO

C'z)

O'-M

O'C
.

rCJ
,£!

<uri>

B

T3
co

d
T3

3

a>

a

>
»
d

CJ

&M
u

C

CO

c3 2

u

. to

0

m

«

O

o

d

>-,

to

H

H

3i2
o£
aLn

-d^
>>1$
3 <u
COT3
VlK

H

Member
bank reserve
balances

>

CO

M
£ <u

CD
CD

"35
o

a

T3

Nonmember

^.

Reserve Bank credit outstanding

,8"
<u d
h

3

n P

^ n
-3 rt

o

«j

CD

o
H

W

X

1918
1919
1920
1921

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

287
574
260
145

239
300
287
234

206
203
120
40

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

2,873 1,795] 4,951
2,707 1,707 5,091
2,639 1,709] 5,325
3,373 1,842 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

99

1922
1923
1924
1925

618
723
320
643

272
355
387
374

436
134
540
375

79
27
54
67

1,405
1,238
1,302
1,459

3,642 1,958 4,530
3,957 2,009 4,757
4,212 2,025 4,760
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
2,220
2,212

14
59
-44

1926
1927
1928
1929

637
582
1,056
632

381
392
489
392

315
617
228
511

49
64
35
48

1,381
1,655
1,
1,583

4,205 1,991 4,
4,092 2,006] 4,716
3,854 2,012 4,
3,997 2,022 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

1930
1931
1932
1933

251
638
235
98

364
339
33
133

729
817
1,855
2,437

29
59
22
20

1,373
1,853
2,145
2,

4,306|
4,173
4,226
4,036|

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

4,603
5,360]
5,
5,519

211
222
272
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

1934
1935
1936
1937
1938

7

6

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

20
45
64
38
33

2,463
2,
2,500
2,612
2,601

8,238
10,125
11,258
12,7601
14,512

2,511
2,476
2,532
2,637
2,798

5,536
5,882
6,543
6,550]
6,856]

3,029
2,566
2,376
3,619
2,706

121
544
244
142
923

189
255
259
407
441

241
253
261
263
260

4,096
5,587
6,606
7,027
8,724

1,814
2,844
1,984
1,212
3,205

1939

2,484

102

2,593 17,644 2,963 7,598 2,409

634

653

251 11,653 5,209

1940

2,184

87

2,274| 21,995 3,087 8,732 2,213

368 1,732

284 14,026 6,615

1941

2,254

104

2,361 22,737 3,247] 11,160] 2,215

867

1,360

291 12,450 3,085

1942—Jan..
Feb..
Mar.
Apr..
May.
June
July.
Aug.
Sept.
Oct..
Nov.
Dec.

2,243
2,262
2,244
2,357
2,489
2,645
3,153
3,426
3,567
4,667
5,399
6,189

123
144
102
105
138
126
188
131
199
282
308
484

2,196
2,172
2,190
2,182
2,192
2,187
2,223
2,217
2,222
2,261
2,236
2,193

361
567
289
201
261
290
266
246
661
252
6
799

1,428
1,255
1,405
1,345
1,429
1,362
1,401
1,368
1,407
1,326
1,320
1,278

289
287
296
295
293
297
294
292
296
283
263
256

22,747
22,705
22,687
22,691
22,714
22,737
22,744
22,7561
22,754
22,740|
22,743
22,726]

3,259 11,175
3,268 11,485
3,277! 11,566]
3,289 11,767
3,305 12,074
3,313 12,383
3,326 12,739
3,340 13,200
3,353 13,703
3.368 14,210
3,381 14,805
3,648 15,410

12,927
12,619
12,575
12,658
12,405
12,305
12,492
12,338
11,592
12,735
13,208
13,117

51
68

3,347
2,969
3,073
2,791
2,486
2,362
2,130
2,143
1.69C
2,644
2,909
1,988

1
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 u a r y 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 u a r y 31, 1934, a n d February 1, 1934, the gold
stock increased $2,985,000,000, of which $2,806,000,000 was the increment resulting from the reduction in the
weight of the gold dollar and the remainder was gold which had been purchased by the Treasury previously
b u t 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 Fund 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 u a r y 31, 1934, was also added to both gold stock and Treasury cash a t the time of receipt. T h e increment from this source amounted to a b o u t $7,000,000, from February 1 to December 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, and to $280,000 in 1942.
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 Banks.
5 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, a n d since April 1933 are for licensed member
banks only. For required reserves a n d changes in the percentages of requirements see table I t .




8o

A N N U A L REPORT OF BOARD OF GOVERNORS
N O . 1 7 - N U M B E R O F B A N K I N G OFFICES I N U N I T E D S T A T E S ,
Nonmember banks

Member b a n k s

E n d of year figures
National

State

1933-1942

Other t h a n
m u t u a l savings
and private banks
Insured 1

Branches

Total
Mutual
savings

Private 2

Noninsured 1

In
[ headoffice
cities

Outside
headoffice
cities

1,784
1,776
1,754
1,749
1,757
1,743
1,738
1,716
1,726
1,720

1,127
1,357
1,530
1,650
1,783
1,837
1,891
1,950
1,973
2,019

N u m b e r of banking
offices
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942

6,275
6,705
6,715
6,723
6,745
6,723
6,705
6,683
6,682
6,673

1,817
1,961
1,953
2,032
2,075
2,106
2,177
2,344
2,517
2,621

8,556
8,436
8,340
8,224
8,098
7,891
7,741
7,601

9,041
9,579
1,088
1,043
997
958
931
895
846
787

704
705
698
693
691
690
683
686
680
4
680

103
246
143
139
79
73
69
62
58
657

N u m b e r of banks
(Head offices)
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
r. ..

5,154
5,462
5,386
5,325
5,260
5,224
5,187
5,144
5,117
5,081

857
980
1,001
1,051
1,081
1,114
1,175
1,342
6
1,502
6
1,598

7,693
7,728
7,588
7,449
7,316
7,171
6,951
6,809
6,666

8, 341
1,108
1,046
1,004
960
917
887
851
800
741

579
579
570
565
563
555
551
551
545
543

98
241
138
134
74
68
63
56
52
51

N u m b e r of branches
and additional offices7
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942

1,121
1,243
1,329
1,398
1,485
1,499
1,518
1,539
1,565
1,592

960
981
952
981
994
992
1,002
1,002
1,015
1,023

828
848
891
908
927
940
932
935

125
126
128
128
128
135
132
135
135
137

5
5
5
5
5
5
6
6
6
6

1
2

3

700
778
i

42
39
37
41
44
44
46
46

j

17,940
19,196
19,153
19,066
18,927
18,774
18,663
18,561
18,524
18,419

15,029
16,063
15,869

15,667 1
15,387
15,194
15,034
14,895
14,825 i
14,680

2,911
3,133
3,284
3,399
3,540
3,580
3,629
3,666
3,699
3,739

Federal deposit insurance did not become operative until January 1, 1934.
The figures for December 1934 include 140 private banks which reported to the Comptroller of the Currency
under the provisions of Section 21(a) of the Banking Act of 1933. Under the provisions of the Banking Act of
1935, private banks no longer report to the Comptroller of the Currency and, accordingly, only such private
banks
as report to State banking departments are in the figures shown for subsequent years.
3
Separate figures not available for branches of insured and noninsured banks.
\ Comprises 53 insured banks with 35 branches and 490 noninsured banks with 102 branches. The figures
beginning with 1939 exclude one bank with 4 branches which theretofore was classified as an insured mutual
savings
bank but is now included with "Nonmember banks other than mutual savings and private banks."
6
Comprises 1 insured bank with no branches and 50 noninsured banks with 6 branches.
6
Includes
3 mutual savings banks.
7
Figures for 1942 include "banking facilities" provided through arrangements made by the Treasury Department with banks designated as depositaries and financial agents of the Government.




FEDERAL RESERVE SYSTEM
N O . 1 8 - A N A L Y S I S O F C H A N G E S I N N U M B E R O F B A N K I N G OFFICES D U R I N G 1 9 4 2
Member b a n k s

Total
National

State

Nonmember b a n k s
Other t h a n
mutual savings
and p r i v a t e
banks
Insured

A N A L Y S I S OF B A N K

Mutual
savings

Private

545

52

Noninsured

CHANGES

14,825
Increases in number of b a n k s :
P r i m a r y organizations (new b a n k s ) 1
Unclassified
Decreases in number of b a n k s :
Suspensions
Consolidations and absorptions
Voluntary liquidations 2
Unclassified

5,117

+22
+1
+2
-9
-91
-69
-1

Inter-class bank changes:
ConversionsNational into S t a t e
State into N a t i o n a l

N u m b e r of banks on December 31,1942

6,809

800

+2

+12

+8
+1

+2
-6
-44
-28

-3
-12
-33
-1

-28
-7

-5
-1

-6
+5

-2

+6
-3
+1

+104
-2

-97
+2

-7

+12

-12

Federal Reserve membership— 3
Admissions of State banks
Withdrawals of State banks
Federal deposit insurance— 4
Admissions of State banks
Withdrawals of State banks
N e t increase or decrease in number
of banks

1,502

-145

-36

14,680

5,081

5

-2

-1

+96

-143

-59

-2

—1

1,598

6.666

741

543

51

46

135

6

ANALYSIS OF BRANCH C H A N G E S 6

N u m b e r of branches and additional offices
on December 31, 1941

3,699

1,565

1,015

932

Increases in number of branches:
De novo branches
Banks converted into branches

+29
+29

+11
+9

+3
+2

+14
+16

+1
+2

Decreases in number of branches:
Branches discontinued

-51

-16

-16

-18

-1

+15

-15

Inter-class branch changes:
Nonmember into State member
Branches and additional offices established
a t military reservations
N e t increase or decrease in number
of branches and additional offices..
N u m b e r of branches and additional offices on
December 31,1942
1
2
3

+33

+23

+4

+6

+40

+27

+8

+3

3,739

1,592

1,023

935

+2
46

137

6

Exclusive of new banks organized to succeed operating banks.
Exclusive of liquidations incident to the succession, conversion, and absorption of banks.
Exclusive of conversions of national banks into State bank members, or vice versa, as such conversions
do 4not affect Federal Reserve membership.
Exclusive of conversions of member banks into insured nonmember banks, or vice versa, as such conversions
do not affect Federal Deposit Insurance Corporation membership.
5
Includes 3 mutual savings banks.
6
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.




ANNUAL

82.

REPORT

OF BOARD

OF

GOVERNORS

N O . 1 9 - N U M B E R O F B A N K S O N P A R L I S T A N D N O T O N P A R L I S T , 1 B Y FEDERAL
RESERVE D I S T R I C T S A N D S T A T E S , O N D E C E M B E R 3 1 , 1 9 4 1 A N D 1 9 4 2
Federal Reserve
district or S t a t e

Nonmember banks, other than
mutual savings banks

Member banks

O n par list

Dec. 31, 1 Dec. 31,

DISTRICT

1942

Total

|

1

Dec. 31,
1941

347
797
659
673
447
317
899
437
452
741
573
277

160
188
221
510
262
87

162
195
224
538
275
82

1,301

1,338

585
103
864
239
223

6,679

6,619

40
53
40
154
14
60

348 1
799
652
685
460
318
925
450
454
744
570
274

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

1941

Dec. 31,
1942

Not on par list
Dec. 31,
1942

Dec. 31,
1941

621
115
905
241
228

2
288
693
215
446
718
173
149
26

2
289
704
220
443
716
176
152
29

4,743

4,924

2,710

2,731

40
53
40
153
14
60

26
12
32
39
9
57

26
12
32
41
9
57

584
289
771

580
291
778

126
61
278

133
61
288

391
215
447

293
280
347
222
255

312
296
364
230
260

3
32
1
159

3
32
1
161

STATE

New England:
Maine
New Hampshire
Vermont
Massachusetts
Rhode Island
Connecticut
Middle Atlantic:
New York
New Jersey
Pennsylvania
E a s t N o r t h Central:
Ohio
Indiana
Illinois
Michigan
Wisconsin
West N o r t h Central:
Minnesota
Iowa...;
Missouri
North Dakota
South D a k o t a
Nebraska
Kansas
South Atlantic:
Delaware
Maryland
District of Columbia
Virginia...
West Virginia
N o r t h Carolina
South Carolina
Georgia
Florida
E a s t South Central:
Kentucky
Tennessee
Alabama
Mississippi
West South Central:
Arkansas
Louisiana
Oklahoma
Texas
Mountain:
Montana
Idaho
Wyoming
Colorado
New Mexico
Arizona
Utah
Nevada
Pacific:
Washington
Oregon.
California

1
j

225
147

379
201
434
224
145

1

209
158
164
43
60
147
211

207
154
160
45
60
147
209

42
385
326
3
6
100
426

48
390
344
4
6
107
447

421
111
111
113
96
159
2

420
114
107
112
96
164

18

1
1

79
17
190
103
55
28
68
58

18
74
17
184
101
55
27
69
58

24
96
5
86
71
15
3
18
16

23
100
5
91
74
17
4
19
15

39
6
127
116
260
89

39
6
125
119
261
89

112
76
83
26

113
77
82
26

273
52
5
5

275
47
4
6

10
167
129
171

10
173
132
175

63
38
217
527

59
37
218
530

36
3
159
225

44
4
160
227

129
103
12
95

127
105
12
96

67
26
36
93
27
7
34
8

66
28
35
93
27
7
34
8

21
20
19
47
14
5
25
4

24
22
22
51
15
5
26
4

22

22

1

1

23
3

26
3

57
31

57
32

51
36

51
36

113

113

84

86

l Includes all member banks, and all nonmember banks on which checks are drawn (except m u t u a l savings
banks, on a few of which some checks are drawn). Banks " n o t on par l i s t " comprise non-member banks which
have not agreed to pay without deduction such checks drawn upon them as m a y be forwarded for p a y m e n t through
the Federal Reserve Banks. Checks on such banks are not collectible through the Federal Reserve Banks. T h e
difference of 5 between the number of nonmember banks on December 31, 1942 shown in this table and in table
17
is due to the fact t h a t this table excludes 135 banks (principally 59 industrial banks and 58 non-deposit trust

companies) on which no checks are drawn, and includes 130 banks (principally 110 private banks and 15 cooperahttp://fraser.stlouisfed.org/
tive banks) on which checks are drawn b u t which (1) are not reporting to S t a t e banking d e p a r t m e n t s , or (2) are

Federal Reserve Bank of St. Louis

FEDERAL RESERVE

83

SYSTEM

N O . 2 0 — M O N E Y RATES, B O N D YIELDS, A N D S T O C K PRICES
Open-market money rates in
New York City2
(per cent per a n n u m )
U. S. Government
securities
Year a n d m o n t h

Number
issues

Bond y i e l d s 3
(per cent per a n n u m )
U. S. Government

Prime
9-to
com- j
12- 3- to 5mercial
artim
o n t h year Pally
3paper,
4-6
m o n t h certi- taxataxmonths bills 5 ficates
exble
of indebt- notes empt
edness

Common stock prices 4
(1935-39 = 100)

Corporate

Total
Taxable

1

Aaa

Baa

Industrial

Railroad

Public
utility

of
1-3

354

2-6

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

6.62
4.52
5.07
r
3.98
r
4.02
4.34
4.11
r
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
2
2
2
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

2.77
2.83

4.33
4.28

80.0
69.4

80.4
71.3

70.6
66.1

81.0
61.3

2.75
2.78
2.80
2.82
2.81
2.77
2.74

85.0
80.1
80.3
77.9
77.1
79.5
83.2
83.2
83.6
80.4
77.4
71.8

84.7
79.4
79.6
77.3
77.3
79.7
84.2
84.3
84.8
81.6
78.6
73.8

73.4
70.0
70.6
71.2
70.7
70.9
73.8
74.4
72.6
70.3
68.4
61.0

91.1
87.1
87.1
83.1
78.9
81.6
81.8
81.0
81.3
78.5
74.5
66.2

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

1919.
1920.,
1921.,
1922.,
1923.,
1924.
1925.
1926.
1927.
1928.
1929.
1930.

r

1931.
1932.
1933.
1934.
1935.
1936.
1937..
1938.
1939.
1940.

r

2.64
2.73
1.73
1.02
.76
.75
r
.94
.81
.59
.56

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

.54
.66

.103
.326

.76
1.13

1.95
2.04

1941
January —
February..
March
April
May
June
July
August —
September.
October
November.
December. ,

.56
.56
.56
.56
.56
.56
.50
.50
.50
.50
.50
.56

(6)

.034
.089
.092
.082
.089
.097
.108
.055
.049
.242
.298

.76
.81
.84
.81
.72
.68
.67
.62
.62
.72
.90
1.02

1.99
2.10
2.01
1.96
1 92
1 91
1.90
1.94
1.94
1.88
1.85
1.96

2.22
2.37

2.80

4.38
4.42
4.38
4.33
4.32
4.31
4.28
4.27
4.30
4.28
4.28
4.38

1942
January
February..
March
April
May
June
July
August
September..
October
November..
December. .

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

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

.96
.93
.93
.98
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

1941.
1942.

r

1

.80
.76
.75
.80
.80

2.35

Annual d a t a are averages of monthly figures. r Revised.
For commercial paper, monthly d a t a are averages of weekly prevailing rates; for Treasury bills, the average
rates on new issues within period; for certificates of indebtedness, the averages of daily figures for 9- to 12m o n t h issues; and for Treasury notes, the averages of daily figures for 3- to 5-year issues.
3
Monthly d a t a 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 t h a n 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 p a r t 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.
5
Tax-exempt bills prior to March 1941; taxable bills thereafter.
6
Negative rate.
for FRASER
2

Digitized


84

ANNUAL

REPORT

OF B O A R D

OF

GOVERNORS

N O . 2 1 - B U S I N E S S INDEXES*
[Adjusted for seasonal variation]
I n d u s t r i a l production
(physical volume)
1935-39 = 100

Construction cont r a c t s awarded
(value) 2
1923-25 = 100

Employment
(number)
w ||

O)

28

„> 3

3rtvS
*
12 «J

cti

w
c3
4>

HB .3

£

2

62

71

3

Ho

tA

63

SfON
Cirri
flON

44

63
28
25
32
37
55
59
64
72
81

37
13
11
12
21
37
41
45
60
72

125
129

122
166

170
175
179
180
191
196
200
200
202
208
209
213

123 120
126 119
128 126
131
96
135 121
139 127
138 126
139 128
138 132
139 1 134
143 133
141 134

221
225
230
234
239
244
249
258
264
274
279
285

143
142
139
139
138
136
138
140
142
144
147
148

83
66
71
98
89
92
100
100
99
107
93

75
58
69
75
87
103
113
89
108
123

67
41
54
65
83
108
122
78
109
138

79
70
79
81
90
100
106
95
108
113

80
67
76
80
86
99
112
97
106
117

156
181

193
250

135
141

140
143
147
144
154
159
160
160
161
164
167
167
171
172
171
173
174
176
178
183
187
191
194
197

134
133
126
125
126
127
125
130
131
129
130
127

63
56
79
84
94
122
129 121 1
129 117
135 1 126 1
117
87 1
50 i
92

d"""1

106.
90
65
88
86
94
120
135
139
142
142
125

93
53
81
103
95
107
114
107
117
132
98

o ®*

fe

30
44
68
81
95
124

60
57
67
72
69
76
79
83
85
93
84

75
58
73
88
82
90
96
95
99
110
91

a

**

107.2|
82.1
90
103.9|
96.5J
99.9
101.8
99.6
99.7
106.01 106.1
98.1 92.5

106.2| 124.5
143.21
127.7
119.7
121.9
122.2]
125.4
126.4]
124.0
122.6
122.5
119.4

94
87
88
98
99
103
106
107
108
111
102

84
40
37
48
50
70
74
80
81
89

88.31 78.2| 73.5 108.7
77.6 66.4 50.7 97.6
78.6| 73.5 54.4 92.4
86.3 85.8 70.0 95.7
90.1 91.4 80.4 98.1
96.8] 99.1 93.0 99.1
102.7 108.7 111.2 102.7]
95.1 91.0 85.1 100.8]
100.01 100.0| 100.0| 99.4
104.2 107.5 114.5 100.2

92
69
67
75
79
88
92
85
90
94

89
82

149
235

115.6 132.1 167.5 105.2
124.2 152.3 242.31 116.5

110
124

103
99
94
103
101
117
139
152
161
145
138
123

84
76
74
80
88
101
115
112
105
87
74
69

117
118
109
121
111
129
158
184
206
192
189
167

110.3
111.5
111.7
111.8
113.6
115.3
117.1
118.4
118.9
119.2
119.8
120.3]

118.9|
121.3
123.3
126.3
129.5
133.0|
136.1
137.8|
138.7
139.7
139.91
141.0

132.6
140.3
145.9
150.2
161.3
170.5
172.0
178.8
184.8
190.2
188.6|
195.1

100.81
100.8
101.2
102.2
102.9
104.6
105.3
106.2
108.1
109.3
110.2
110.5

101
103
103
104
105
104
115
134
116
105
116
111

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|
130.5

142.2
143.7
145.3
147.1
149.1
150.9]
153.4
155.1
156.9
158,9
160.9
164.4

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
116.01
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

127.1
82.0]
88.0|
111.6
104.1
109.7
113.1
111.01
112.3
119.8
96.9

* W i t h o u t seasonal adjustment.
1
Indexes compiled by the Board of Governors of the! Federal Reserve System, except for indexes of wholesale
commodity prices, cost of living, and factory p a y rolls, compiled by the United States B u r e a u of Labor S t a t i s tics, a n d the index of income p a y m e n t s , compiled by the United States D e p a r t m e n t of Commerce. Descriptions
and back figures for the B o a r d ' s indexes m a y be obtained from the Division of Research and Statistics.
2
Three-month moving average, centered a t second m o n t h , based on F . W. Dodge Corporation d a t a for 37
Eastern States.







APPENDIX

RECORD OF POLICY ACTIONS
BOARD OF GOVERNORS
M E E T I N G ON FEBRUARY 2.1,

1942.

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak, Mr. McKee, Mr. Draper.
Amendment to Regulation D , Reserves of Member Banks.
By unanimous vote, Regulation D was amended, effective
w i t h the reserve computation period beginning February z8,
1942., to provide t h a t deficiencies in reserve balances of member
banks in all central reserve and reserve cities shall be computed
on the basis of average daily net deposit balances covering
weekly periods.
Before this change was made, Regulation D required t h a t deficiencies in
reserves of member banks in cities in w h i c h Federal Reserve Banks and their
branches were located and in a few other reserve cities be computed on the
basis of average daily net balances covering semi-weekly periods, while
member banks in other reserve cities were required to compute their reserves
on a weekly basis. The amendment placed all banks in central reserve and
reserve cities (except banks in outlying sections of such cities) on the same
basis. Increased activity resulting from the war effort had resulted in wide
fluctuations in member bank reserves in financial centers from day to day
w h i c h caused many banks to maintain unnecessarily large excess reserves in
order to avoid deficiencies because of the short period over w h i c h their
reserves could be averaged. It was anticipated t h a t this condition would be
accentuated as war production increased, and the amendment was made for
the purpose of providing for the banks affected greater flexibility in adjusting
their reserve positions to meet the situation. N o change was made in the
requirement of the regulation t h a t deficiencies in reserves of " c o u n t r y b a n k s "
(member banks outside of central reserve and reserve cities) be computed on
a semi-monthly basis.
M E E T I N G ON FEBRUARY X4,

1942.

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak, Mr. McKee, Mr. Draper.
A m e n d m e n t N o . 3 to Regulation W, Consumer Credit.
By unanimous vote, Regulation W was amended effective
March z.3, 1942., except t h a t the amendment providing for the
use of automobile appraisal guides in determining the maximum
credit value of a used automobile was made effective April 1,
1941.
The principal changes made by the amendment were: (1) The maximum
maturity for credits subject to the regulation was reduced from 18 to 15
months, except the maturity of credits for residential repair and modernization, plumbing and sanitary fixtures, furnaces, water heaters, w a t e r pumps,
86




FEDERAL RESERVE SYSTEM

87

and pianos and electric organs, which was left at 18 months. (V) The required down payment was increased from zo per cent to 333^ per cent on
refrigerators, washing machines, ironers, vacuum cleaners, electric dish
washers, room unit air conditioners, sewing machines, radios and phonographs, and musical instruments; from 15 per cent to 333^ per cent on home
air conditioning systems and attic ventilating fans; and from 15 per cent to
zo per cent on furnaces, water heaters, water pumps, and plumbing and
sanitary fixtures. (3) Bicycles, lawn mowers, silver ware, and photographic
equipment were added to the list of articles covered by the regulation with a
required down payment of 333^ per cent, and clocks, watches, and floor
coverings were added with a down payment of 10 per cent. (4) Instead of
basing the maximum credit value of a used automobile solely on the purchase
price, the amended regulation required that after April 1, 194X5 such credit
value be based either on the purchase price or on the average retail value as
stated in automobile appraisal guides designated by the Board for the
purpose, whichever was lower. These changes were made after consultation
with the Committee provided for that purpose by the President's Executive
Order.
When Regulation W was adopted in August 1941, a statement of the
reasons for the regulation was released to the press (see page 58 of the Annual
Report of the Board of Governors for the year 1941). One of the purposes of
the original regulation was to help dampen the demand for goods the civilian
supply of which had already been reduced and would have to be reduced
further because of defense needs. It was desirable that in the beginning the
regulation be in such form as to apply moderate restrictions in a manner
consistent, where possible, with prevailing trade standards and thereby lay a
basis for such subsequent changes in coverage and adjustment of terms as
experience and economic developments might indicate to be necessary without imposing unnecessary burdens on consumers, dealers, or credit institutions. Some months after the adoption of the regulation the United States
entered the war and the demands on its productive capacity expanded enormously, with a resulting increased need for further curtailment of consumer
demand for goods that might interfere with the war effort. It was expected
that by applying the restrictions of the regulation to additional articles
composed largely of materials or using skills required for the manufacture of
war goods, reducing the maximum maturity of credits subject to the regulation, and increasing the required down payment on instalment purchases of
listed articles, the effectiveness of the regulation in reducing civilian demands for goods using critical materials or manufacturing facilities would be
materially increased. This in turn would help to release greater quantities
of these materials and facilities for war needs, would relieve to some extent
the pressure on prices, and would make existing stocks of manufactured goods
last longer. The Board was advised that the adoption of the amendment
would be of assistance to the War Production Board and the Office of Price
Administration in meeting their responsibilities in connection with the
war program.
Before the adoption of Amendment No. 3, there was no satisfactory measure under the existing regulations by which the valuation of a used car could
be determined for the purpose of applying the down payment requirement of
the regulation. It was the opinion of the Board that the use of appraisal
manuals of the kinds which had been in customary use by dealers and finance
companies as guides would provide such a measure and that by this means the
effectiveness of the regulation as it related to used cars would be increased.



88

ANNUAL REPORT OF BOARD OF GOVERNORS
MEETING ON FEBRUARY 17,

1942

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak, Mr. McKee, Mr. Draper.
Changes in Rates on Discounts and Advances under Sections 13 and 13a
of the Federal Reserve Act.
By unanimous vote, the Board approved for the Federal
Reserve Bank of Chicago, effective February 28, 1942., a rate of
1 per cent on discounts for and advances to banks under sections
13 and 13a of the Federal Reserve Act.
The Federal Reserve Banks of Boston and New York had previously established a rate of 1 per cent on loans and advances to member banks under
Sections 13 and 13a and, in accordance with the policy followed in taking
the above-stated action as to Chicago, the Board, effective on the dates
stated below, approved reductions to 1 per cent at the other Federal Reserve
Banks:
Federal Reserve Bank

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

Rediscounts and Advances
under Sections 13 and 13a

March xi, 1942.
April
11, 1941
March 14, 1941
March 21, 1942.
February 28, 1941
March 14, 1942.
March 28, 1941
April
11, 1941
March 21, 1941
April
4, 1942.

Because of the huge amount of funds required to finance the war, banks are
purchasing substantial amounts of Government securities. While, in the
aggregate, sufficient reserves for this purpose would be available, individual
banks might at times be subjected to temporary deficiencies in their reserves.
It would be better in such cases if banks would obtain the needed reserves by
borrowing from the Reserve Banks, rather than by selling their Government
securities in the market. Reductions in the discount rates of the Reserve
Banks', therefore, might have some influence in causing member banks to
make fuller use of their existing reserves for war financing, as they would
have the assurance that, if necessary, they could replenish their reserves by
borrowing from the Federal Reserve Banks at low rates. For these reasons,
the Board, after approving the reduction above stated for Chicago, advised
the Federal Reserve Banks that it would approve the same rate when submitted by the other Reserve Banks which had not previously taken such
action.
Rate on Advances to Nonmember Banks.
Following the above-stated action, the Board also, by unanimous vote,
approved reductions in rates at the Federal Reserve Banks of Philadelphia,
Cleveland, Richmond, Minneapolis, and San Francisco on advances to nonmember banks secured by direct obligations of the United States to i per
cent effective March 21, April n , March 14, March 28, and April 4, 1941,
respectively. These reductions were in accordance with the announcement
made by the Board on September 1,1939, that the Federal Reserve Banks were
prepared to make advances to member and nonmember banks on Government
obligations
 at par at the rates prevailing for member banks. The other


89

FEDERAL RESERVE SYSTEM

seven Federal Reserve Banks had established a i per cent rate on such advances in 1939. (See page 64 of the Annual Report of the Boart for 1939.)
Rates on Advances to Member Banks under Section 10(b).
The rate on advances to member banks under section 10(b) of the Federal
Reserve Act is required to be at least y2 per cent higher than the highest discount rate in effect on loans and advances under sections 13 and 13a of the
Federal Reserve Act. In view of the underlying reasons for the approval of
the basic discount rate of 1 per cent, the Board was of the opinion that there
was no reason why the rate under section 10(b) should be more than y2 per
cent above the basic discount rate. Subsequently, by unanimous vote, the
Board approved reductions to iy2 per cent at all the Federal Reserve Banks,
effective on the dates stated below:
Advances under
Section 10(b)

Federal Reserve Bank

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

October 2.7, 1942.
October 30, 1942.
October 17, 1942.
September 12., 1941
October 2.8, 1^2.
October 15, ijqi.
August
19, 1941
March
14, 1942.
October 30, 1941
October 2.7, 1941
October 17, 1942.
October 2.8, 1941
MEETING ON MARCH 17,

1942.

Members present: Mr. Eccles, Chairman; Mr. McKee, Mr. Draper, Mr.
Evans.
Amendment to Regulation A, Discounts for and Advances to Member
Banks by Federal Reserve Banks.
By unanimous vote, subsection (b) of section 2. of Regulation
A was amended, effective March 2.0, 1942., to clarify the provisions of the subsection relating to advances to member banks
secured by direct obligations of the United States.
The amendment made no change in the substance of the regulation, its
sole purpose being to make it clear that under the law Federal Reserve Banks
are authorized to make advances to their member banks for periods not exceeding 90 days on the promissory notes of such member banks secured by
direct obligations of the United States.
MEETING ON APRIL 6,

1941

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak, Mr. Draper, Mr. Evans.
Adoption of Regulation V, War Financing.
By unanimous vote, Regulation V, which establishes a procedure under which the Federal Reserve Banks are authorized
to act as fiscal agents for the War Department, Navy Department, and Maritime Commission in facilitating and expediting
the financing of contractors, subcontractors, and others engaged
in war production, was adopted to become effective immedi
ately.


9o

A N N U A L REPORT OF BOARD OF GOVERNORS

The following paragraphs taken from a statement issued by the Board
under date^of April 10, 1942., describe the procedure contemplated by the
regulation and give the reasons for the Board's action:
"The Board of Governors of the Federal Reserve System announced
today adoption of Regulation V to carry out the President's Executive
Order No. 9111 of March x6, 1942., for the purpose of facilitating and
expediting the financing of war production. The regulation was
adopted after consultation with the War Department, the Navy Department, and the United States Maritime Commission following conferences in which representatives of the War Production Board participated.
"The objective, as set forth in Regulation V, is to facilitate and
expedite production for war purposes by arranging for the financing of
contractors, subcontractors and others engaged in businesses or operations deemed by the armed services and the Maritime Commission to
be necessary for the prosecution of the war.
"The War Department has sent initial instructions to the Federal
Reserve Banks covering the authority and procedure to be followed by
them in acting for the War Department under the Board's regulation.
The program embraces financial aid for contractors and subcontractors,
both large and small, and contemplates the maximum participation of
small business enterprises in war production.
"Regulation V prescribes general rules and policies to govern the
operations of the twelve Federal Reserve Banks, which will act as fiscal
agents of the armed services and the Maritime Commission in carrying
out the President's Executive Order. The utilization of the facilities of
the twelve Federal Reserve Banks and their twenty-four branches
throughout the United States makes it possible to decentralize the war
financing program to a large extent. The program looks to the fullest
possible participation by the banks of the United States, whether members or nonmembers of the Federal Reserve System, in the financing contemplated under the authority of the President's Executive Order.
"Under the Executive Order the three military procurement agencies
are authorized to guarantee commercial banks, Federal Reserve Banks,
the Reconstruction Finance Corporation, or other financial institutions
against loss on loans made to concerns to finance the performance of war
orders. The primary aim is to expand and expedite war production.
Accordingly, peace-time credit rules or standards, as the President stated
at the time of signing the Executive Order, must not be permitted to
hold up production of war supplies needed by the armed forces.
"The Board's regulation authorizes the Federal Reserve Banks, acting
in accordance with the provisions of the President's Executive Order
and the instructions of the three military procurement agencies, to
arrange loans and guarantees thereof wherever it is believed that they
will contribute to the obtaining of maximum war production expeditiously.
"To assist in carrying out the provisions of the President's Executive
Order and to aid in decentralizing operations under it as fully as possible,
the War Department plans to have a liaison officer stationed at each
Federal Reserve Bank. Generally speaking, the liaison officer will
certify to the Reserve Bank that an applicant for financing is qualified
from the technical or production standpoint to carry out a contract,
subcontract or order for war supplies or equipment.



FEDERAL RESERVE SYSTEM

91

" I t is expected t h a t any applicant will first take up his credit needs
w i t h his commercial bank or other financing institution. When the
necessary credit can not be arranged by the financing institution w i t h o u t
the assistance of the War Department, the financing institution will
apply to the Federal Reserve Bank for a guarantee of a part or all of the
proposed financing. After certification by the liaison officer, it will be
the Reserve Bank's function to analyze the financial aspects of the application, including the integrity of the management, and determine the
type of financing best suited to meet the situation.
"Under the initial instructions of the War Department, and upon
appointment of liaison officers, guarantees or loans up to a prescribed
maximum to be determined by the War Department will be made at the
Federal Reserve Bank w i t h o u t reference to W a s h i n g t o n . "
Guarantee Charges and Rates on Loans under Regulation V.
By unanimous vote, the Board prescribed a maximum interest
rate of 5 per cent on loans guaranteed in whole or in part by the
War Department, Navy Department, or Maritime Commission
and the following schedule of fees for such guarantees:
GUARANTEE CHARGES ON PORTION OF LOAN GUARANTEED
Percentage of loan guaranteed
91-100
76- 90
Up to 75 (Inclusive)

Charges to be determined byReserve Bank within the following limits
30-40 per cent of Loan Rate
20-25 per cent of Loan Rate
10-20 per cent of Loan Rate
No charge shall be less than Yq. per cent per annum
on portion of loan guaranteed.

Section 6 of Regulation V provides t h a t rates of interest, fees, and other
charges on loans made or guaranteed in whole or in part by the War Department, Navy Department, or Maritime Commission through the agency of a
Federal Reserve Bank shall be prescribed, either specifically or by maximum
limits or otherwise, by the Board of Governors of the Federal Reserve System
after consultation w i t h the armed services or the Maritime Commission and
w i t h the Federal Reserve Banks.
The rates were prescribed in flexible form w i t h the t h o u g h t t h a t the
Government guarantee would justify placing a limit on the interest rate t h a t
could be charged to the borrower by the financing institution and t h a t the
rate to be fixed w i t h i n t h a t limit would be influenced by the extent to which
the loan was guaranteed, the credit standing of the borrower, the cost of
servicing the loan, and other factors. It was also felt t h a t the guarantee
charges should depend upon the extent to which the loan was guaranteed,
w i t h i n the range from a minimum of y2 per cent per annum on the guaranteed
portion of the loan up to 40 per cent of the loan rate w h e n the guarantee
exceeds 90 per cent of the loan, and t h a t guarantee charges arrived at in this
manner would be reasonable for both the Government and the financing
institution.
MEETING

ON A P R I L 30,

1941

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



S2-

A N N U A L REPORT OF BOARD OF GOVERNORS

Amendment No. 4 to Regulation W, Consumer Credit.
By unanimous vote, Regulation W was amended in several
important respects, effective May 6, 1942..
The principal changes made in the regulation by the amendment and the
reasons therefor are set forth in the following paragraphs taken from a
statement issued to the press under date of May 5, 1941.:
"In conformity with the President's Special Message to Congress of
April 27 and under authority of Executive Order No. 8843 of August 9,
1941, the Board of Governors of the Federal Reserve System has adopted,
effective May 6, 1942-, Amendment No. 4 of Regulation W relating to
consumer credit.
"As amended, the regulation is extended to cover a comprehensive list
of durable and semi-durable goods for civilian consumption, and contemplates that the volume of outstanding consumer credit, already substantially diminished, will be further contracted in keeping with the
Government's purpose to prevent the rapid bidding up of prices. The
purpose of this revision is to help make effective the last point in the
seven-point program which the President set forth in his Special Message to Congress of April 27, 1942., as follows:
'To keep the cost of living from spiraling upward, we must
discourage credit and instalment buying, and encourage the
paying off of debts, mortgages, and other obligations; for
this promotes savings, retards excessive buying and adds to the
amount available to the creditors for the purchase of War
Bonds.'
* 'The principal changes made in the regulation are:
" 1 . The list of consumers' goods to which the regulation applies
has been broadened to include automobile batteries and accessories, tires
and tubes; bedding; draperies; binoculars; household electric appliances
not hitherto listed; used furniture; jewelry; luggage; athletic equipment; table and kitchenware; pottery, glassware; yard goods; and
non-military clothing and furs, including shoes, hats and other haberdashery.'
"2. The maximum permissible maturity of instalment sales has been
reduced to 11 months, and the required down payment for all listed
articles has been increased to 333^ per cent. Exceptions to this rule
include instalment sales of automobiles, for which the down payment of
one-third and the maximum maturity of 15 months are retained, and
furniture and pianos, for which the required down payment, formerly 10
per cent, becomes 2.0 per cent, the maximum maturity being 12 months.
" 3 . The scope of the regulation has been broadened to make it cover,
in addition to instalment sales and instalment loans, charge-account
sales of listed articles and single-payment consumer loans. The regulation provides with respect to charge accounts that unless payment is
made by the tenth day of the second calendar month following the purchase, no further credit may be extended to purchase any listed article
until the items in default have been paid for in full or have been placed on
an instalment basis for payment within 6 months. No down payments
are required on purchases in charge accounts.
"4. Single-payment loans of $1500 or less are limited to a maturity of
90 days, and where such a loan is to purchase a listed article costing



FEDERAL RESERVE SYSTEM

93

$15.00 or more, a down payment is also required. If not paid in 90
days, the loan must be placed on an instalment basis.
"5. The revised regulation provides that instalment payments shall
not be less than $5.00 per month or $1.2.5 P e r week.
"The exemption from down-payment requirements of instalment sales
maturing within 3 months has been repealed.
"Provisions covering seasonal adjustments and so-called farmer plans
are retained in the regulation, together with various additional exceptions, such as real-estate loans; security loans subject to Regulations
T and U; educational, hospital, medical, dental, and funeral expenses;
aircraft; defense housing; credit to dealers; fire and casualty insurance
premiums; agricultural production loans; business loans; insurance
policy loans; and extensions of credit to the Federal Government, to
local governments, or to any hospital, school, college, or other educational or charitable institution."
This action was taken after consultation with the Committee provided for
the purpose by the President's Executive Order.
Amendment to Regulation S, Industrial Loans by Federal Reserve Banks.
By unanimous vote, Regulation S was amended, effective immediately, so as to make it clear (1) that an application by
an industrial or commercial business may be transmitted to the
Federal Reserve Bank of any district in which there is an office
or place of business of the applicant, and (2.) that an application
by a financing institution for the discount or purchase of an obligation of an industrial or commercial business located in any
Federal Reserve district may be made to the Reserve Bank of any
district in which the financing institution is operating. Other
changes of a minor technical character were also made by the
amendment.
In accordance with the foreword to the regulation, the amendment was for
the purpose of liberalizing the procedure of financing working capital loans
under section 13 b of the Federal Reserve Act for industrial and commercial
enterprises, thereby facilitating the participation of Federal Reserve Banks
in the program of war financing contemplated by the President's Executive
Order No. 9112, of March 2.6, 1942..
MEETING ON MAY

8,

1941

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak, Mr. McKee, Mr. Draper, Mr. Evans.
Changes in Rates on Industrial Loans under Section 13b of the Federal
Reserve Act.
By unanimous vote, approval was given to the following
schedule of rates on loans and commitments made by the
Federal Reserve Bank of Cleveland under section 13 b of the
Federal Reserve Act, effective May 8, 194x1
On advances direct to industrial or commercial organizations, including
advances made in participation with other financing institutions—
V/2 t o 5 P e r cent.



ANNUAL REPORT OF BOARD OF GOVERNORS

94

On advances to financing institutions:
i. Portion for which financing institution is obligated—rate charged
borrower less commitment rate.
2.. Remaining portion—rate charged borrower.
On commitments to make industrial advances:
i. Direct to industrial or commercial organizations—10 to -L^ per
cent of loan rate with minimum of y2 per cent,
z. To financing institutions (provided that no commitment shall be
given on a loan on which borrower is charged more than 5
per cent):
(a) Undisbursed portion of loan—34 per cent.
(b) Disbursed portion of loan—10 to Z5 per cent of loan rate with
minimum of y2 per cent.
On April 6, 1942., pursuant to the provisions of section 6 of Regulation V,
War Financing, the Board prescribed a maximum rate of 5 per cent on loans
made by financing institutions under that regulation and fixed guarantee
charges on such loans between the limits of a minimum of y2 per cent per
annum, and a maximum of 40 per cent of the loan rate, on the portion of the
loan guaranteed.
Inasmuch as loans and commitments made by the Federal Reserve Banks in
the future under the provisions of section 13b of the Federal Reserve Act
presumably would be largely for the purpose of financing war production and
in some cases would be guaranteed at least in part by the War Department,
Navy Department, or Maritime Commission, it was felt that rates in effect at
the Federal Reserve Banks on such loans and commitments should not exceed
the limits established on rates for loans and guarantees under Regulation V.
The approval by the Board of the rates established at the Federal Reserve
Bank of Cleveland and subsequently at the other Federal Reserve Banks, as
shown in the following schedule, was in accordance with this policy.
To industrial or
commercial businesses
Federal Reserve Bank

Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.
1
2
3
4
5

To financing institutions
Discounts or purchases

On portion
On
On commit- for which
institution
advances 1
ments
is obligated
2H-5
2^-5
2H-5
2^-5
2^-5
2H-5
2H-5
2H-5
2^-5
2M-5
2H-5
2^-5

V2-I
Vi-VA
VTWA

VrVi
VrVi
Vr\A
V2-m
Vi-VA

Vr-m

H-ltf
H-lK
H-lM

On

Effective date

portion

(2)
(2)
(4)2
(2)
(2)
(2)

(3)
(3)
(3)
(3)
(3)
(3)

2H-5
1-1J4

5
%
(3)

(2)
(2)
(2)

On commitments

(3)
(3)
(3)
(3)

w

V2-1
V2-1A
y2-^A
(fK5 )
H-1K
,^/2-VA
w

Yr\M
i

A-m
A-m
YrVi

, . M

J \Y2~\A
M-1M

(5)

May
June
May
May
May
May
May
May
May
June
May
May

29, 1942
6, 1942
20, 1942
8, 1942
23, 1942
16, 1942
29, 1942
16, 1942
16, 1942
6, 1942
16, 1942
23, 1942

Including loans made in participation with financing institutions.
Rate charged borrower less commitment rate.
Rate charged borrower.
May charge same rate as charged borrower by financing institution, if lower.
Financing institution is charged A per cent on undisbursed portion of loan under commitment.

MEETING ON JULY Z,

1941

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



FEDERAL RESERVE SYSTEM

95

Amendment N o . 5 to Regulation W, Consumer Credit.
By unanimous vote, section 12. of Regulation W was amended,
effective July z, 1941, to provide that, when a registrant w h o on
M a y 6, 1941, was using a system of "cycle billing" (a system of
recording and billing charge accounts whereby such accounts
are divided into several groups and a different monthly closing
date and monthly billing period is used for each group) and had
received notification from the Federal Reserve Bank of the district stating t h a t the Bank was satisfied t h a t such billing system
made it impracticable for the registrant to operate under section
5(c) of the regulation or to change his system to calendarmonth billing, the charge accounts maintained by such registrant would be deemed to be in default when items purchased
in such accounts had not been paid for on or before the fortieth
day following the last day of the applicable monthly billing
period during w h i c h such article was sold.
Amendment N o . 4 to Regulation W, which became effective on May 6,
i 9 4 i , provided, among other things, t h a t w i t h certain stated exceptions a
charge account would be deemed to be in default if any article purchased
in such account had not been paid for on or before the tenth day of the
second calendar month following the calendar month in w h i c h the article
was purchased. It had been found by the Board t h a t , w i t h the exception of
the very few stores t h a t were using a cycle billing procedure, stores maintaining charge accounts had been able to adjust their procedures so that they
could operate satisfactorily under the regulation. However, the stores t h a t
had adopted cycle billing could not as a practical matter adapt the procedure
so as to bill on a monthly basis, w i t h o u t additional trained personnel and
new equipment which were no longer available, and the regulation was
amended to provide relief in these isolated cases.
M E E T I N G ON JULY 14,

1942.

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak, Mr. Evans.
Amendment to Regulation D , Reserves of Member Banks.
By unanimous vote, Regulation D was amended, effective
July 14, 1942., (1) to conform the regulation to the amendments
made by the Act of July 7, 1942., to section 19 of the Federal
Reserve Act, and (2.) to add a proviso authorizing a Federal
Reserve Bank, in its discretion, to refuse at any time to permit
the w i t h d r a w a l or other use of credit given in a member bank's
reserve account for any item for which the Federal Reserve
Bank had not received payment in actually and finally collected
funds. Certain other changes in the regulation of a minor
technical character were also made by the amendment.
The Act of July 7, 1941, removed from section 19 of the Federal Reserve
Act the provision t h a t no member shall make any new loans or pay any
dividends while its reserves are deficient. The Federal Reserve Act has always contained a provision permitting, subject to regulations and penalties
prescribed by the Board of Governors, the reserves of member banks to be
w i t h d r a w n for the purpose of meeting existing liabilities. The purpose of



96

A N N U A L REPORT OF BOARD OF GOVERNORS

this provision, however, was to some extent nullified by the prohibition
against making new loans and paying dividends while reserves were deficient.
Owing to a fear of personal liability on the part of bank directors for losses
sustained on loans made while reserves were deficient, some banks, under the
law as it existed prior to the Act of July 7, 1942., were hesitant about utilizing
any portion of their required reserves even for a day unless they refrained from
making any new loans. In view of the wide fluctuations that may occur
from day to day in the reserves of an individual bank, some banks had
followed the practice of maintaining at all times a larger volume of excess
reserves than they actually needed to meet their average requirements.
Under the law as now amended the banks are not restricted in making new
loans or paying dividends even though their reserves are below the minimum
requirements. The power of the Board of Governors to prescribe penalties
for deficiencies in reserves remains unaffected by the change in the law, and
the first amendment to Regulation D referred to above was for the purpose
of eliminating from the regulation references to the making of loans and the
payment of dividends during periods of deficient reserves and to the personal
liability of directors for permitting violations of this kind.
The second change in Regulation D was to conform the regulation to a
similar provision in the Board's Regulation J, Check Clearing and Collection.
MEETING ON JULY 2.7,

1941

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak, Mr. McKee, Mr. Draper, Mr. Evans.
Amendments Nos. 6 and 7 to Regulation W, Consumer Credit.
Effective immediately, Regulation W was amended, by unanimous vote, to remove the restrictions of the regulation
from extensions of credit (1) to finance the conversion of heating
equipment from one type of fuel to another and the installation
of storm doors and windows, weather stripping, and insulation
within existing structures, and (2.) to finance repairs or replacements of real or personal property damaged or lost as a result of
floods or other similar disasters which the Federal Reserve
Bank of the district finds has created an emergency affecting a
substantial number of the inhabitants of the stricken area.
The first of these amendments (No. 6) was adopted as a means of cooperating with other Government agencies in an attempt to meet the contemplated
shortage of fuel in various sections of the country during the coming winter,
resulting from a lack of transportation facilities, by facilitating the adaptation of heating equipment to the kind of fuel that might be available in such
sections, and the insulation of existing structures to reduce the amount of
fuel required for heating purposes.
Amendment No. 7 was for the purpose of affording relief in cases where
purchases or loans, which otherwise would be subject to the restrictions of
the regulation, were made necessary because of losses resulting from disasters
creating emergency conditions.
MEETING ON AUGUST 6, i94x
Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak, Mr. McKee, Mr. Draper, Mr. Evans.



FEDERAL RESERVE SYSTEM

97

Reduction in Reserve Requirements of Member Banks in Central Reserve
Cities.
By unanimous vote, the supplement to Regulation D, Reserves of Member Banks, was amended, effective as of the
opening of business on August xo, 194X, to require that
member banks in central reserve cities (except certain banks in
outlying sections of such cities which were authorized by the
Board to maintain lower reserves) maintain reserves of 14 per
cent, instead of 16 per cent, of their net demand deposits.
This action was taken under the authority granted to the Board by the
Act of July 7, 1941, which permitted changes in reserve requirements of
member banks in central reserve cities without changes in the requirements
for member banks in other reserve cities. The action was taken in recognition of the continued loss of reserves, particularly since April of this year,
that had been experienced by member banks in New York City and to some
extent in Chicago. These shifts of reserves from central reserve cities to
banks in other parts of the country were largely the result of the fact that a
substantial portion of the proceeds of Government securities purchased by
central reserve city banks and of tax receipts in these cities were being spent
by the Government in other parts of the United States. Substantial purchases of Government securities by the Federal Reserve Banks during this
period, which had been made largely in New York City, supplied the New
York banks with additional reserves, which enabled them to continue to buy
Government securities to finance the war notwithstanding the loss of reserves
to the rest of the country. The additions to excess reserves of approximately
$350,000,000 in New York City banks and $75,000,000 in Chicago banks
which were provided by the reduction in reserve requirements served the
same purpose.
MEETING ON AUGUST IX,

1941

Members present: Mr. Eccles, Chairman; Mr. Szymczak, Mr. Draper,
Mr. Evans.
Amendment No. 8 to Regulation W, Consumer Credit.
Effective August ix, 194X9 certain provisions of Regulation
W were amended, by unanimous vote, to (1) remove an obstacle
to the making of certain loans to farmers, such as "wheat
loans", by the Commodity Credit Corporation or by banks
cooperating with the Corporation in its loan program, (2.) permit certain railroad employees whose jobs require them to have
a precision watch to purchase such a watch on instalments
without having to make a down payment, (3) change the required down payment for reupholstering furniture from 331^
per cent to 2.0 per cent, the figure applicable to furniture, (4)
extend to single-payment loans for educational, hospital,
medical, dental, and funeral expenses the exemption that previously had been applied to instalment loans for these purposes,
and (5) extend to credit sales of unlisted articles for resale the
same exemption as previously had been applied to credit sales
of listed articles for resale.
These changes were made for the purpose of relaxing certain restrictions
where practicable without impairing the effectiveness of the general



98

ANNUAL REPORT OF BOARD OF GOVERNORS

objectives of the regulation, and of removing inconsistencies w h i c h had
become apparent in the practical application of the regulation.
M E E T I N G ON SEPTEMBER I I ,

1942.

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

Mr.

Reduction in Reserve Requirements of Member Banks in Central Reserve
Cities.
By unanimous vote, the supplement to Regulation D, Reserves of Member Banks, was amended, effective as of the
opening of business on September 14, 1941, to require t h a t
member banks in central reserve cities (except certain banks in
outlying sections of such cities w h i c h were authorized by the
Board to maintain lower reserves) maintain reserves of 2.2. per
cent, instead of 2.4 per cent, of their net demand deposits.
Since the action taken by the Board on August 6, 1942., to reduce reserve
requirements of member banks in central reserve cities the drain on their
reserves had continued, and the action of the Board as stated above was
taken for substantially the same reasons as prompted the reduction in reserve
requirements w h i c h became effective on August xo, 1942..
M E E T I N G ON SEPTEMBER 18,

1942.

Members present: Mr. Ransom, Vice Chairman; Mr. Szymczak, Mr.
McKee, Mr. Draper.
Amendment to Regulation A, Discounts for and Advances to Member
Banks by Federal Reserve Banks.
Subsection ( h ) of section 1 of Regulation A was amended,
effective immediately, to provide t h a t the requirement of
section 1 of the regulation t h a t a note, draft, or bill of exchange be negotiable before it would be eligible for discount
by a Federal Reserve Bank or as collateral for advances under
section 13 of the Federal Reserve Act would not be applicable w i t h respect to any note, draft, or bill of exchange
evidencing a war production loan which was in whole or in
part the subject of a guarantee or commitment by the War
Department, Navy Department, or United States Maritime
Commission pursuant to Executive Order N o . 91 ix. On this
action Messrs. Szymczak, McKee, and Draper voted " a y e "
and Mr. Ransom did not vote.
The incorporation by reference in obligations evidencing such loans of the
provisions of the guarantee agreement executed by the War or N a v y Department or the Maritime Commission relating to the suspension of maturity
of the obligations rendered then nonnegotiable and under the provisions of
Regulation A, as previously in effect, negotiability was one of the requirements for eligibility for discount by a Federal Reserve Bank or as collateral
for advances under section 13 of the Federal Reserve Act. The requirement
of negotiability was not a requirement of the Federal Reserve Act but had
been placed in Regulation A as a means of protecting the Federal Reserve
Banks against certain legal disadvantages or nonnegotiable paper. It was



FEDERAL RESERVE SYSTEM

99

represented to the Board that, if war production loan obligations were eligible for discount, they would be more readily accepted, and the Board was
of the opinion that in the circumstances under which the notes were issued
and in view of the participation of the Federal Reserve System in the procedure involved in such transactions it could safely amend Regulation A so
that negotiability of such paper would not be required as a condition of
eligibility for discount by a Federal Reserve Bank or as collateral for advances under section 13 of the Federal Reserve Act.
MEETING ON OCTOBER 1,

1942.

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak, Mr. McKee, Mr. Draper, Mr. Evans.
Reduction in Reserve Requirements of Member Banks in Central Reserve
Cities.
Mr. Szymczak moved that required reserves on net demand
deposits of member banks in central reserve cities (except certain banks in outlying sections of such cities which were authorized by the Board to maintain lower reserves) be reduced
from 2.2. per cent to 2.0 per cent, effective as of the opening
of business on October 3, i94x. As a substitute for Mr.
Szymczak's motion, Mr. McKee moved that, effective as of the
opening of business on October 3, 1942., required reserves of
member banks on net demand deposits be reduced to the following percentages of such deposits:
Central reserve city banks
Reserve city banks
"Country" banks

2.0
18
13

Mr. McKee's motion was put by the chair and lost, Messrs.
McKee and Draper voting "aye" and Messrs. Eccles, Ransom,
Szymczak, and Evans voting "no".
Mr. Szymczak's original motion was put by the chair and
carried, Messrs. Eccles, Ransom, Szymczak, McKee, and
Evans voting "aye" and Mr. Draper voting " n o " .
At the time these motions were considered by the Board estimated excess
reserves of member banks outside of central reserve cities were more than
$1,600,000,000.

The substitute motion was offered by Mr. McKee in the belief that, although as a whole the excess reserves of reserve city and "country" banks
were large, there were individual banks that had utilized their reserves iqt
the purchase of Government securities as fully as banks in central reserve
cities had done and that the shortage of reserves in these instances was as
acute as in the case of central reserve city banks. He was also of the opinion
that a differential in the reserve requirements of banks in central reserve
cities and reserve cities should be preserved because of the volume of bank
deposits in central reserve city banks.
The rejection of the substitute motion was on the grounds that as long as
member banks in reserve cities and "country" banks held such a large volume
of excess reserves there was at this time no need for a reduction in reserve
requirements affecting these banks, notwithstanding anticipated further
increases in currency in circulation and the possible immobilization of a
portion of their excess reserves resulting from a desire on the part of the



IOO

ANNUAL REPORT OF BOARD OF GOVERNORS

banks for liquidity because of an abnormal growth in demand deposits.
The reduction in required reserves from IX per cent to zo per cent of net demand deposits for member banks in central reserve cities was made for
substantially the same reasons as occasioned similar actions by the Board
which became effective on August 2.0 and September 14, i94x.
MEETING ON OCTOBER 14,

1942.

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak, Mr. McKee, Mr. Draper.
Amendment No. 9 to Regulation W, Consumer Credit.
By unanimous vote, Regulation W was amended, effective
October z6, 1942., to provide (1) that listed articles may be
delivered to a customer "on approval", "on trial", or as a
"demonstrator" only on condition that his charge account is
not in default, or, in case the sale is to be an instalment sale,
that before making delivery the seller obtain a deposit equal to
the required down payment; (2.) that when a listed article
which is to be "charged and sent" does not cost over $5.00
the seller is not required to check the customer's account before
the sale to see whether the account is in default, provided,
however, that if the account is found to be in default a prompt
request will be made of the customer to return the article or
to pay for it immediately; and (3) that a charge account shall
not be deemed to be in default for the purposes of the regulation if the amount of the default is less than $2..00.
The first change was made to close a loophole in the regulation of which
increasing use was being made to avoid the down payment required by the
regulation and, in line with the policy of the Office of Price Administration
and the needs of the times, to discourage goods being sent out on approval.
The second change was for the purpose of relieving stores of the necessity
of having to hire additional personnel to authorize charge sales in peak
periods at a time when the national manpower problem was acute and to
avoid the necessity of employees working so much overtime in such periods.
The third change was intended to eliminate a requirement that was frequently
a cause of annoyance out of all proportion to its importance to the purposes
of the regulation.
MEETING ON OCTOBER 15,

194Z

Members present: Mr. Eccles, Chairman; Mr. Ransom, Vice Chairman;
Mr. Szymczak, Mr. McKee, Mr. Draper, Mr. Evans.
Establishment of (l) Preferential Rate on Advances to Member Banks
Secured by Short-term Obligations of the United States and (2)
Reduced Rate on Advances to Individuals, Partnerships, and Corporations Other Than Banks.
By unanimous vote, the Board approved for the Federal Reserve Bank of Atlanta, effective October 15, 1942., rates established by the board of directors of the Bank of y2 per cent on
advances to member banks secured by direct or fully guaranteed
obligations of the United States which had one year or less to
run to call date or to maturity if no call date, and 2. per cent on
advances to individuals, partnerships, and corporations (other




FEDERAL RESERVE SYSTEM

IOI

than banks) secured by direct obligations of the United States
under the last paragraph of section 13 of the Federal Reserve
Act.
The Board of Governors had considered informally and had discussed with
the Presidents of the Federal Reserve Banks the question of reduced discount
rates at the Reserve Banks as a means of encouraging member banks to utilize
their excess reserves for the purchase of Government securities. The Board
reviewed the arguments that had been advanced against preferential rates of
discount and felt that in ordinary circumstances such rates should not be
established. It was recognized, however, that the war financing program
would require substantial purchases of Government securities by the banks
and it was the belief of the Board that if there were a preferential rate for
advances secured by Government obligations that fact would encourage
member banks, particularly outside the financial centers, to invest more of
their excess reserves in short-term Government securities, and that the
preferential rate could be eliminated with less misunderstanding when the
need had passed than might arise if there were corresponding changes in the
general discount rate.
The reduction in the rate on advances to individuals, partnerships, and
corporations (other than banks) under the last paragraph of section 13 of
the Federal Reserve Act was approved for the reason that the System had
strongly advocated a policy of selling as many Government securities outside
the banking system as possible and it was felt that, although there was little
or no occasion for such advances at the present time, it would be more consistent with this policy if Federal Reserve Bank rates on loans to such borrowers on the security of Government obligations were at a lower level.
Following action by the Board on the rates established by the Federal
Reserve Bank of Atlanta the other Federal Reserve Banks fixed a preferential
rate of y2 per cent on advances to member banks secured by direct and fully
guaranteed obligations of the United States maturing or callable within one
year. Seven of the Banks also established a rate of 2. per cent on advances
to individuals, partnerships, and corporations (other than banks) secured
by direct obligations of the United States under the last paragraph of section
13 of the Federal Reserve Act, and the Federal Reserve Banks of New York,
Richmond, Minneapolis, and San Francisco established a rate of T.%, per cent
on such advances. These rates were approved by the Board, effective as of
the dates shown below, in accordance with the policy established by its
action on the rates fixed by the board of directors of the Federal Reserve
Bank of Atlanta:
Federal Reserve Bank
Boston
New York
Philadelphia
Cleveland
Richmond
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
MEETING

October
October
October
October
October
October
October
October
October
October
October
O N D E C E M B E R 2.9,

2.7, 1941
30, 1941
17, 1941
Z7, 1942.
z8, 1942.
17, 1941
2.7, 1941
30, 1942.
2.7, 1941
17, 1941
18, 1942.

1942.

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



IOl

A N N U A L REPORT OF BOARD OF GOVERNORS

Guarantee Charges on Loans Under Regulation V, War Financing.
The following revised schedule of guarantee fees on loans
guaranteed in whole or in part by the War Department, Navy
Department, or Maritime Commission under Executive Order
No. 9111. was approved by unanimous vote, effective December
30, 1941, with the understanding that on guarantees authorized but not executed prior to December 30, the guarantee
fee might be either that specified in the authorization or the
fee applicable under the new schedule, whichever was preferred
by the financing institution, and that in any pending case which
involved an amount making it unnecessary for the Reserve Bank
to submit the matter to Washington before executing the
guarantee agreement and in which there had been an understanding as to the guarantee fee to be charged, the fee might be
either that agreed upon or the fee applicable under the new
schedule, whichever was preferred by the financing institution:
Percentage of loan guaranteed
60 or less
65
70
75
80
85
90 (for loans of $150,000 or less)
90 (for loans over $150,000)
Over 90

Guarantee fee (per cent of loan rate
on portion of loan guaranteed)
10

uy
15 2

17H

20

22H

25
25-30
30-50

The above rates supersede those approved by the Board on April 6, 1942..
The schedule of rates in effect prior to December 30, 1942., gave the Federal
Reserve Banks and the War Department, Navy Department, and Maritime
Commission the right to fix guarantee fees within certain limits, depending
upon the percentage of the loan guaranteed, and provided for a minimum
guarantee fee of one-half of one per cent on the portion of the loan guaranteed. In the new schedule no specific minimum rate has been provided.
In the case of loans guaranteed less than 90 per cent, the guarantee fee to be
charged will depend entirely on the rate of interest charged the borrower
and the percentage of the loan that is guaranteed. Any financing institution
can determine for itself what the guarantee fee will be on any guaranteed
loan where the percentage of the guarantee is less than 90 per cent, and for
90 per cent guaranteed loans where the amount of the loan is not more than
$150,000. The gradations in the guarantee fee from 10 per cent of the loan
rate for loans guaranteed for 60 per cent or less, to a maximum of 50 per cent
for loans guaranteed for more than 90 per cent, were primarily for the
purpose of discouraging financing institutions from asking for larger percentage guarantees than the character of the loan would justify.
No change was made by the Board in the maximum interest rate of 5 per
cent prescribed at the meeting on April 6,1941, on loans guaranteed in whole
or in part by the War Department, the Navy Department, or the Maritime
Commission.




RECORD OF POLICY ACTIONS
FEDERAL OPEN MARKET COMMITTEE
M E E T I N G ON M A R C H 2.,

1942.

Members present: Mr. Eccles, chairman; Mr. Sproul, Vice Chairman;
Mr. Szymczak, Mr. McKee, Mr. Ransom, Mr. Draper, 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 of the Federal Open Market
Committee was approved by unanimous vote:
" T h a t 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 (including purchases,
sales, exchanges, replacement of maturing securities, and letting maturities run off w i t h o u t replacement) as in its judgment from time to
time may be advisable in the light of existing conditions; provided that
the aggregate amount of securities held in the account at the close of
this date shall not be increased or decreased by more than $500,000,000."
Following the entry of the United States into the war in December, the
expansion of the program of national defense increased very greatly the
amount of funds required to finance the war effort. The Board of Governors, after consultation w i t h the Presidents of the Federal Reserve Banks,
had, on December 8, 1941, issued a statement that the Federal Reserve
System was prepared to use its powers to assure t h a t an ample supply of
funds was available at all times for financing the war effort and to exert its
influence toward maintaining conditions in the Government security market
that were satisfactory from the standpoint of the Government's requirements.
At this meeting of the Federal Open Market Committee there was a full
discussion of open market policy in the light of suggestions that had been
made in conferences w i t h representatives of the Treasury w i t h respect to
the Treasury's program of war financing. It was agreed t h a t the policy
to be followed by the Federal Open Market Committee was so closely
related to the financing policies of the Treasury that, pending a further
determination by the Treasury of w h a t its program would be, the Federal
Open Market Committee should continue the open market policy then in
effect under which the executive committee was authorized, w i t h i n the
limits established by the full Committee, to take such action in the market
as in the judgment of the executive committee might be required by any
conditions t h a t might arise. The direction set forth above, which was in
the same form as the direction issued at the meeting of the Federal Open
Market Committee on December n , 1941, was approved for that purpose.
M E E T I N G ON M A Y 8,

1942.

Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman;
Mr. Szymczak, Mr. McKee, Mr. Ransom, Mr. Draper, Mr. Evans, Mr.
Williams, Mr. Gilbert, M r . Young, Mr. Leedy.



103

104

ANNUAL REPORT OF BOARD OF GOVERNORS

1. Purchases by Federal Reserve Banks of Treasury Bills at Fixed
Discount Rate.
On April 30, 1942., in connection with the announcement of the May
Treasury financing, which included an increase to $2.50,000,000 in the
weekly offering of Treasury bills, all the members of the Federal Open
Market Committee agreed upon a direction which was immediately issued
to the twelve Federal Reserve Banks to purchase for the System open market
account all United States Treasury bills that might be offered to such Banks
on a discount basis at a rate of % per cent per annum.
At this meeting, upon motion duly made and seconded, it
was voted unanimously to approve, ratify, and confirm the
direction and to continue it in effect until otherwise directed
by the Federal Open Market Committee.
After the meeting of the Federal Open Market Committee, which was
held on March 2., 1942., members of the Committee continued to confer from
time to time with representatives of the Treasury on the subject of the
formulation of a Treasury financing program which would be designed to
attract as many funds as possible from sources other than commercial banks
and regarding the methods by which the Federal Reserve System would
supply such reserves as were necessary to assure the successful financing of the
war. In connection with the latter problem and in order to carry out the
existing open market policy, the members of the executive committee of the
Open Market Committee had agreed that the general market should be maintained on about the then existing curve of rates (but that this did not mean
special support for issues which might be out of line or that any issue must
be held at par or at any other fixed price), and that the Federal Open Market
Committee should use its best judgment with respect to the market and
with regard for the relation of the market to the general financing program.
The direction to the Federal Reserve Banks to purchase Treasury bills on
a fixed discount basis was agreed upon by the members of the Committee
as a means of stabilizing the bill market, of effecting a broader distribution
of bills, and of encouraging banks and others to utilize available liquid
funds for the purchase of bills with the assurance that, if at any time it
was necessary to sell bills to adjust their individual positions, the Federal
Reserve Banks of their respective districts would purchase the bills at the
announced rate.
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 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 aate (other than Treasury bills purchased



FEDERAL RESERVE SYSTEM

I05

pursuant to the direction of the Federal Open Market Committee issued
under date of April 30, 1941) shall not be increased or decreased by
more than $500,000,000."
The foregoing direction differed from the one approved at the previous
meeting of the Committee in that it provided for purchases either in the
open market or directly from the Treasury and for purchases either for
the purpose of maintaining the general level of prices and yields of Government securities or for the purpose of maintaining an adequate supply of
funds in the market, and made it clear that Treasury bills purchased by
Federal Reserve Banks pursuant to the direction issued April 30, 1942., were
not restricted by the limit placed upon the authority of the executive committee by this direction.
Open market operations in the previous months had been largely for the
purpose of maintaining about the existing level of rates of Government
securities in a period when the Treasury was offering a large volume of new
securities, and for the purpose of furnishing funds to banks whose reserves
were being reduced through the purchase of additional amounts of Government obligations. There was agreement that operations in the open market
during the period before another meeting of the Committee would continue
to be largely for these purposes and that the terms of the direction to the
executive committee should be changed to relate the authority of the executive committee specifically to these conditions.
On March 17, 1942., the Second War Powers Act was approved, which
authorized the Federal Reserve Banks, until December 31, 1944, or such
earlier time as Congress or the President may designate, to purchase Government securities directly from the Treasury, provided that the aggregate
amount of such securities purchased and held at any one time does not
exceed $5,000,000,000. In accordance with this change in the law, the
authority of the executive committee was expanded to permit direct purchases of securities from the Treasury in order to provide for temporary
accommodations to the Treasury during periods of Treasury financing or
other periods when it was desirable for a brief time to allow Treasury
balances at the Reserve Banks to decline.
MEETING ON JUNE 2.2.,

1942.

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 was approved by unanimous
vote:
"That the executive committee be directed, until otherwise directed
by the Federal Open Market Committee, to arrange for such trans^
actions 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, or



io6

ANNUAL REPORT OF BOARD OF GOVERNORS

for the purpose of granting temporary accommodation to the Treasury;
provided that the aggregate amount of securities held in the account
at the close of this date (other than Treasury bills purchased pursuant
to the direction of the Federal Open Market Committee issued under
date of April 30, 1942.) shall not be increased or decreased by more
than $500,000,000."

At this" meeting the Federal Open Market Committee reviewed the important problems relating to the Treasury financing and Federal Reserve
System monetary policies which had been considered by members of the
Committee in discussions with representatives of the Treasury since the
meeting of the Committee on May 8. The members of the Committee were
unanimously of the opinion that during this period of further development
by the Treasury of a program of war financing the directions to the executive
committee should be in such form as would cover the continuance of the
existing policy of arranging for such open market operations as may be
necessary for the practical administration of the System account, to maintain the market for outstanding issues of Government securities at about
the existing price level, to supply needed funds to the market in connection
with Treasury financing operations, and to grant temporary accommodations to the Treasury.
MEETING ON AUGUST 3,

1941

Members present: Mr. Eccles, Chairman; Mr. Szymczak, Mr. McKee,
Mr. Ransom, Mr. Draper, Mr. Evans, Mr. Williams, Mr. Gilbert, Mr.
Young, Mr. Leedy.
1. Authority to Increase the Amount of Securities in System Account.
On July 6, 1942., at the request of the members of the executive committee, all the members of the Federal Open Market Committee approved
an increase from $500,000,000 to $850,000,000 in the limitation on the
authority of the executive committee to increase or decrease the amount of
securities held in the System open market account.
At this meeting of the full Committee, upon motion duly
made and seconded, and by unanimous vote, this action of the
members of the Committee was approved, ratified, and confirmed.
Early in July it appeared that the amount of securities that would have
to be purchased for the System account in order to continue the policy agreed
upon at the previous meeting of the Federal Open Market Committee would
exceed the limit which had been placed on the authority granted to the
executive committee to increase the amount of securities held in the account.
Accordingly, the members of the executive committee asked the remaining
members of the full Committee to agree to an increase in the limitation
on the authority of the executive committee and this request was approved
unanimously. Between the meeting on June 12., I942-, and this meeting,
the security holdings of the Federal Reserve Banks were increased by
$611,000,000 to $3,159,963,000.

2. Purchase by Federal Reserve Banks of Treasury Bills under a
Repurchase Option.
Upon motion duly made and seconded, the following supplementary direction to the Federal Reserve Banks was approved
bv unanimous vote:




FEDERAL RESERVE SYSTEM

107

"Supplementing the direction of April 30, 1942., issued by the Federal
Open Market Committee to the Federal Reserve Banks to purchase all
Treasury bills t h a t may be offered to such Banks on a discount basis
at the rate of ys per cent per annum, any such purchases shall, if desired
by the seller, be upon the condition t h a t 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."
This action had the effect of amending the direction as then in effect to
give to the seller of bills to a Federal Reserve Bank, when desired, the
right of repurchase. Treasury bills in the hands of banks thus became
practically equivalent to excess reserves. In the event it became necessary
tor a bank or other holder of bills temporarily to adjust his cash position,
he could sell the bills to a Federal Reserve Bank under the repurchase option
and reacquire them after the need for funds had passed, thus avoiding the
necessity of selling the bills in the market to meet a temporary situation.
It was believed that this arrangement would encourage fuller investment
of idle short-term funds and thereby bring about a wider distribution of bills.
3. Authority to Effect Transactions in System Account.
Upon motion duly made and seconded, the following direction to the executive committee was also approved by unanimous vote:
" T h a t 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 w i t h the Treasury (including purchases, sales, exchanges,
replacement of maturing securities, and letting maturities run off w i t h out 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 oi maintaining an adequate supply of funds in the market,
or for the purpose of granting temporary accommodation to the Treasury;
provided that the aggregate amount of securities held in the account
at the close of this date (other than Treasury bills purchased pursuant
to the directions of the Federal Open Market Committee issued under
dates of April 30 and August 3, 1941) shall not be increased or decreased by more than $1,000,000,000."
This direction, w h i c h was in the same form as the direction to the executive committee approved at the meeting of the Federal Open Market Committee on June 2.2., I 94 2 -, except t h a t the limitation on the direction was
increased from $500,000,000 to $1,000,000,000, was adopted for substantially
the same reasons as had attended the approval of the earlier direction.
The increase in the limitation on the authority, w h i c h was approved in the
light of further discussions w i t h Treasury representatives of Government
financing and Federal Reserve System policies, was based on the expectation
t h a t w i t h the rapid g r o w t h of the Treasury's needs for funds to finance the
w a r program substantial additional amounts of securities would have to be
purchased to effectuate the policies adopted by the Committee, and, therefore, the members were in agreement t h a t the executive committee, in
carrying out the direction, should be in a position to meet any situation t h a t
could be foreseen over the next few weeks.



108

ANNUAL REPORT OF BOARD OF GOVERNORS
M E E T I N G ON SEPTEMBER X8,

1942.

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. Amended Direction to the Federal Reserve Banks to Purchase
Treasury Bills at the Posted Discount Rate.
Upon motion duly made and seconded, the following
amended direction to the Federal Reserve Banks was approved,
Messrs. Eccles, Ransom, Draper, Evans, Williams, Gilbert,
Young, and Leedy voting "aye" and Messrs. Sproul, Szymczak,
and McKee voting " n o " :
"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 y% 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.
"The Federal Reserve Bank of New York, as agent for the System
account, is directed to transfer to the respective Federal Reserve Banks
as promptly as convenient all unmatured bills held in the System
account which were purchased by such Banks for System account under
an option retained by the seller to repurchase and such bills shall be
received and held by such Federal Reserve Banks subject to the first
paragraph of this direction."
It had been the practice of the Federal Reserve Banks in purchasing bills
at the posted discount rate of y% per cent to make such purchases for delivery
the following full business day, the customary market practice, it being
understood that in the case of an emergency, in order to provide funds
immediately, the purchase would be made for immediate delivery. Repurchases by the original sellers of the bills had been on the same basis, i.e.,
for delivery the following full business day. Under this arrangement there
was time for the bills purchased at individual Reserve Banks to be transferred to and held in the System open market account. Inasmuch as the
purpose of the arrangement for the purchase of bills under the repurchase
option was to broaden the market through a wider distribution of bills and
to increase the use of bills as investments for idle funds, it was the opinion
of the majority of the members present that the accomplishment of this
purpose would be promoted if a further step were taken to make the bills
the equivalent of cash such as would be the case if, in addition to the privilege
of selling them to the Federal Reserve Banks for immediate credit, they were
available at the Federal Reserve Banks for immediate delivery when repurchase was desired. The revised arrangement required that bills subject to
the option be held by each Federal Reserve Bank in a special account separate
from its participation in the System open market account. In published
statements such bills are combined with bills held in the System account.




FEDERAL RESERVE SYSTEM

IO9

2. 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 approved at the meeting on August 3, 194Z,
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, or
for the purpose of granting temporary accommodation to the Treasury;
provided that the aggregate amount of securities held in the account
at the close of this date (other than Treasury bills purchased pursuant
to the directions of the Federal Open Market Committee issued under
dates of April 30, August 3, and September 2.8, 194Z) shall not be increased or decreased by more than $1,000,000,000."
Consideration of open market policy at this meeting took into account
(1) the actions which had been taken by the Board of Governors to decrease
required reserves of member banks in central reserve cities effective August
18, 1942., from 16 per cent to 14 per cent of net demand deposits and effective
September 14, 1942., from 14 per cent to 2.2. per cent of such deposits; (2.)
the discussions by members of the Federal Open Market Committee with
representatives of the Treasury relating to the financing program and to
Federal Reserve policy, and (3) the respective parts that open market operations, changes in reserve requirements and changes in discount rates at the
Federal Reserve Banks might play in carrying out Federal Reserve policies.
It was pointed out that, if reductions in reserve requirements alone were
relied upon to furnish needed bank reserves, required reserves could be expected to decline almost to the vanishing point by the end of 1943, and there
was unanimity of opinion that the System should not rely upon any single
power to the exclusion of others in the field of credit control, but that it
should use any or all of its powers as circumstances might arise. Specifically,
it was the opinion of a majority of those present that, if a further reduction
in resqrve requirements of member banks in central reserve cities from 2.x
per cent to 2.0 per cent of net demand deposits were made by the Board of
Governors, no further action should be taken by the Board in this field
for the time being and that whatever additional funds were needed to
finance the war should be supplied through open market operations as
directed by the Federal Open Market Committee. It was agreed that, if
this course were followed, substantially larger purchases of securities
for the System open market account would be necessary but that, inasmuch
as purchases of Treasury bills at the fixed discount rate were not to be
limited in amount by the terms of the directions which had been approved
by the Committee, the renewal of the existing directions of the full Committee to the executive committee should be sufficient to meet the situation
for the time being, with the understanding that increased authority for
additional purchases could be granted upon telephonic, telegraphic, or
written approval of a majority of the members of the full Committee if
such action were found to be desirable.



no

A N N U A L REPORT OF BOARD OF GOVERNORS
MEETING ON DECEMBER 14,

1942.

Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman;
Mr. McKee, Mr. Ransom, Mr. Draper, Mr. Evans, Mr. Williams, Mr.
Gilbert, Mr. Young, Mr. Leedy.
1. Authority to Increase the Amount of Securities in System Account.
On October 9, 1941, all members of the Federal Open Market Committee,
at the request of the members of the executive committee, approved an
increase from $1,000,000,000 to $1,500,000,000 in the limitation on the
authority of the executive committee to increase or decrease the amount
of securities held in the System open market account. In view of the rapid
increase in the volume of purchases that were being made for the purpose
of supplying reserve funds to the banks of the country, a further increase in
the limitation to $3,000,000,000 was approved by all the members of the full
Committee on December 9, 1941.
At this meeting of the full Committee, upon motion duly
made and seconded, and by unanimous vote, these actions of
the members of the Committee were approved, ratified, and
confirmed.
In connection with the October and December Treasury financing operations, it was agreed that the System should purchase increased amounts
of securities for the purpose primarily of furnishing banks with funds in
such amounts as would provide substantial support for the new financing
in addition to maintaining the market at approximately existing levels.
The actions of the members of the Committee were taken to accomplish these
purposes. As of the close of business on December n , 1941, total securities
held by the Federal Reserve Banks amounted to $5,601,118,000, an increase
of over $1,100,000,000 since the meeting of the Committee on September 18,
1941.
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 Feaeral Open Market Committee issued under dates of April 30,
August 3, and September 18, 1941) shall not be increased or decreased
by more than $1,000,000,000.
"That the executive committee be further directed, until otherwise
directed by the Federal Open Market Committee, to arrange for the pur


FEDERAL RESERVE SYSTEM

III

chase 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 $1,000,000,000."
This direction was the same as the direction issued at the meeting of the
Federal Open Market Committee on September 2.8, 1942., except that the
amount of the limitation specified in the direction to the executive committee to arrange for the purchase of special short-term certificates of indebtedness for the temporary accommodation of the Treasury was increased
and this direction was placed in a separate paragraph.
The action of the Committee in approving the direction was taken in
the light of the program which had been adopted by the Treasury for the
December financing campaign, which had been the subject of several discussions with representatives of the Treasury, and for substantially the same
reasons as prompted the approval of the direction at the meeting on September 2.8, 1941.
The separate direction relating to the purchase of special short-term
certificates for the temporary accommodation of the Treasury was approved
for the purpose of meeting any temporary needs of the Treasury over the
year-end and in recognition of the procedure followed by the Treasury in
drawing upon its balances with the Federal Reserve Banks before and during
Treasury financing operations.




JOINT ANNOUNCEMENT
O F T H E F E D E R A L BANK SUPERVISORY A G E N C I E S
REGARDING AMORTIZATION OF DEBT
FOR NONPRODUCTIVE PURPOSES9
I S S U E D M A Y 7 9 1942

In accordance with that part of the President's Special Message to Congress
of April irj which urged the paying off of debts as a restraint upon rising living costs, the Comptroller of the Currency, the Board of Directors of the
Federal Deposit Insurance Corporation, and the Board of Governors of the
Federal Reserve System have issued the following joint statement with
respect to the procedure to be followed by their respective organizations to
encourage the reduction of individual debt through amortization of bank
loans:
' 'One of the greatest advances in banking practices during recent years has
been the wide acceptance of the principle of amortization of debts. This
principle is incorporated in Regulation W, issued by the Board of Governors
of the Federal Reserve System, which relates to consumer credit and applies
to certain types of bank loans.
"In the exercise of their supervisory responsibilities, the Comptroller of
the Currency, the Board of Directors of the Federal Deposit Insurance
Corporation, and the Board of Governors of the Federal Reserve System urge
that the principle of amortization be extended to other loans which are not
subject to the provisions of Regulation W, particularly to the volume of
single-payment loans to individuals for nonproductive purposes presently
outstanding.
"The examiners for the respective agencies are being instructed to pay
particular attention in the course of their examinations to individual debt
to determine whether it is being reduced and to the circumstances which
may be preventing its reduction or preventing it being put on an amortization
basis. The examiners are likewise being instructed to include in their
reports of examination comments as to the extent to which the bank has
cooperated in the program for reduction of personal indebtedness incurred
for nonproductive purposes, and as to the results achieved.
"In order to provide a measure of the volume of personal loans, banks will
be asked from time to time to report information as to the amounts of singlepayment personal loans on their books in addition to information now being
reported as to instalment paper."




USE OF CREDIT FOR ACCUMULATION
OF INVENTORIES OF CONSUMER GOODS
Letter of the Board of Governors of the Federal Reserve System requesting
cooperation of banks and other financing institutions in discouraging all
unnecessary accumulation of inventories of consumer goods.
June 17, 1941.
To All Banks and Other
Financing Institutions:
Recently a meeting was held for the purpose of discussing the use of credit
in connection with the accumulation of inventories of consumer goods.
Among those present were the following: Mr. Morgenthau, the Secretary of
the Treasury; Mr. Jones, the Secretary of Commerce; Mr. Nelson, the
Chairman of the War Production Board; Mr. Henderson, the Administrator of the Office of Price Administration; Mr. Purcell, the Chairman of the
Securities and Exchange Commission; and myself.
There was complete agreement that in the present situation, when all
possible production must be diverted to military purposes, accumulation of
inventories of civilian consumer goods should be discouraged. We are sure
that it is clear to you why this is desirable from the standpoint of avoiding
inflationary developments as well as of endeavoring to assure fair treatment
of the needs of all dealers and all consumers.
Various ways by which this purpose might be accomplished were canvassed. It was agreed that, whether or not other steps may be necessary
under the authority of legislation or executive orders, it is of the utmost importance to enlist your voluntary cooperation and that of your customers in
helping to achieve this objective. To this end, it is hoped that you will use
your influence in your community to discourage all unnecessary purchases of
civilian goods and that you will scrutinize carefully every application which
might enable a borrower to carry a greater supply of goods than his minimum
requirements.
This general credit policy would not apply in special situations such as the
need for supplying fuel for heating purposes next winter, or accommodating
manufacturers and dealers having stocks that must be held because of freezing
or rationing orders.
The Board of Governors of the Federal Reserve System is writing this letter
to you at the request of the group mentioned at the beginning. You have
already rendered and are rendering great service in connection with the
financing of the war program, and this additional responsibility is one which
it is believed you will be glad to undertake in the general public interest.
We feel sure that we can rely upon your cooperation.
Sincerely yours,



MARRINER S. ECCLES,

Chairman
"3

II4

ANNUAL REPORT OF BOARD OF GOVERNORS

The following letter was sent to the President of each Federal Reserve
Bank on June Z5 for the guidance of examiners:
June Z5, 1941.
Dear Sir:
Under date of June 17, 1942., the enclosed letter relating to the use of credit
in connection with the accumulation of inventories of civilian consumer
goods was sent by the Board of Governors to all banks and other financing
institutions at the request of the group referred to in the first paragraph of the
letter.
The Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Board of Governors have agreed that the examiners for the
three supervisory agencies should be instructed to ascertain during the course
of their examinations of banks what is being done by the banks to comply
with the request contained in the letter and, wherever necessary, to urge
compliance.
It is requested, therefore, that examiners make special inquiry during the
course of each examination as to the consideration given by the bank to the
Board's letter, the action taken by the bank in connection with it, and the
bank's policy with respect to loans for the purpose of carrying civilian consumer goods inventories. Whenever it appears that the bank does not understand the reasons for the letter or the need for carrying out the suggestions
contained therein, the examiner should discuss the matter with the appropriate officer of the bank and urge full cooperation. The reports of examination
should include in each case comments relating to the extent to which the
bank is cooperating and the examiner's views as to the effectiveness of any
actions taken in reducing credit extended by the bank for what would be
regarded, in the light of the Board's letter, as unwarranted accumulations of
inventories of civilian consumer goods.
In order to carry out the understanding that copies of this letter and its enclosure will be placed in the hands of all examiners for the three Federal bank
supervisory agencies, it is requested that a copy be sent to each of your examiners. Extra copies are enclosed for that purptose.
Very truly yours,




M.

S.

ECCLES,

Chairman

BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
[December 3 1 , 1941]
MARRINER S. ECCLES, of U t a h , Chairman.
RONALD RANSOM, of Georgia, Vice Chairman
M . S. SZYMCZAK, of Illinois
J O H N K. M C K E E , of O h i o
ERNEST G . DRAPER, of Connecticut
R. M . EVANS, of Virginia

Term expires
January 3 1 , 1944
January 3 1 , 1956
January 3 1 , 1948
January 3 1 , 1946
January 31, 1950
January 3 1 , 1954

LAWRENCE CLAYTON, Assistant to the Chairman
ELLIOTT THURSTON, Special Assistant to the Chairman
CHESTER M O R R I L L , Secretary

LISTON P . BETHEA, Assistant Secretary
S. R. CARPENTER, Assistant Secretary
F R E D A. NELSON, Assistant Secretary
WALTER WYATT, General Counsel
J . P . DREIBELBIS, General Attorney
GEORGE B. VEST, Assistant General Attorney
B. MAGRUDER W I N G F I E L D , Assistant General Attorney
E. A. GOLDENWEISER, Director, Division of Research and Statistics
WOODLIEF THOMAS, Assistant Director, Division of Research and Statistics
WALTER R. STARK, 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. V A N 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 Committee
O.E. FOULK, Fiscal Agent
JOSEPHINE E . LALLY, Deputy Fiscal Agent

FEDERAL OPEN MARKET COMMITTEE
[December 3 1 , i94x]
Members
MARRINER S. ECCLES, Chairman (Board of Governors)
ALLAN SPROUL, Vice Chairman (Elected by Federal Reserve Banks of Boston and N e w Y o r k )
ERNEST G . DRAPER (Board of Governors)
R. M . EVANS (Board of Governors)
R. R. GILBERT (Elected by Federal Reserve Banks of Richmond, A t l a n t a , and Dallas)
H . G . LEEDY (Elected by Federal Reserve Banks of Minneapolis, Kansas City, and San Francisco)
J O H N K. M C K E E (Board of Governors)
RONALD RANSOM (Board of Governors)
M . S. SZYMCZAK (Board of Governors)
ALFRED H . WILLIAMS (Elected by Federal Reserve Banks of Philadelphia and Cleveland)
C. S. Y O U N G (Elected by Federal Reserve Banks of Chicago and St. Louis)
Officers
CHESTER M O R R I L L , Secretary

S. R. CARPENTER, Assistant Secretary
E. A . GOLDENWEISER, Economist
J O H N H . WILLIAMS, Associate Economist
WALTER WYATT, General Counsel
J . P . DREIBELBIS, Assistant General Counsel
Agent
FEDERAL RESERVE B A N K OF N E W Y O R K

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




FEDERAL ADVISORY COUNCIL
[December 31, 1941]
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

S. E. RAGLAND

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—S. E. RAGLAND, President, The First National Bank of Memphis, Memphis,
Tennessee.
District No. 9—LYMAN E. WAKEFIELD, President, First National Bank and Trust Company of
Minneapolis, Minneapolis, 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. 12—GEORGE M. WALLACE, President, Security-First National Bank of Los Angeles,
Los Angeles, California.




FEDERAL RESERVE SYSTEM

117

SENIOR OFFICERS A N D DIRECTORS OF FEDERAL RESERVE BANKS
[December 31, 1941]
CHAIRMEN AND DEPUTY CHAIRMEN
Federal Reserve Bank of—

Chairman

Deputy Chairman

Boston

Albert M. Creighton*

Henry S. Dcnnison

New York

Beardsley Ruml*

Edmund E. Day

Philadelphia

Thomas B. McCabe*

Warren F. Whittier

Cleveland

Geo. C. Brainard*

R. E. Klages

Richmond

Robt. 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

Tav 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, 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. During the first part of the year the Committee consisted of Mr.
Ruml, chairman, and Messrs. Brainard and McCabe. The new Committee appointed at the
conference on October 5, 1942., consisted of Mr. Brainard, chairman, and Messrs. Creighton
and Neely.




n8

ANNUAL REPORT OF BOARD OF GOVERNORS

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 3 1 , 1942 - C o n t .
PRESIDENTS ANDJVICE PRESIDENTS

Federal Reserve
Bank of—
Boston

President
W. W. Paddock

First Vice President

Vice Presidents

William Willett

K. K. Carrick
E. G. Hult
Carl B. Pitman 1

L. R. Rounds

R. M. Gidney
L. W. Knoke
Walter S. Logan
J. M. Rice
Robert G. Rouse
John H. Williams

New York

Allan Sproul

Philadelphia

Alfred H. Williams.... Frank J. Drinnen

W. J.
E. C.
C. A.
C. A.

Cleveland

M. J. Fleming

F. J. Zurlinden

C. W. Arnold
Wm. H. Fletcher
R. B. Hays
K. H. MacKenzie
W. F. Taylor 2

Richmond

Hugh Leach

T. S. Waldcn, Tr

J. G. Fry
Geo. H. Kecsee1
R. W. Mercer

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
A. J. Mulroney
Alfred T. Sihler

St. Louis

Chester C. Davis

F. Guy Hitt

O. M. Attebery
C. M. Stewart

Minneapolis

J. N. Peyton

O. S. Powell

A. W. Mills 1
E. W. Swanson
Arthur R. Upgren
Harry I. Ziemer

Kansas City

H. G. Leedy

Henry 0 . Koppang

J. W. Helm2
D. W. Woolley

Dallas

R. R. Gilbert

E. B. Stroud

R. B. Coleman
W. J. Evans
W. O. Ford 1

San Francisco

Wm. A. Day

Ira Clerk

C. E. Earhart
H. N. Mangels 1
W. M. Hale
R. B. West

1

Cashier.




2

Also Cashier.

Davis
Hill
Mcllhenny2
Sienkiewicz

FEDERAL RESERVE SYSTEM

119

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 3 1 , 1 9 4 2 - C o n t .
DIRECTORS OF FEDERAL RESERVE BANKS

District No. 1—Boston
Class A.Leon A. Dodge
Allen W. Holmes
Allan Forbes
Class B:
Edward J. Frost
Ralph E. Flanders
Philip R. Allen
Class C:
Henry S. Dennison
Henry I. Harriman
Albert M. Creighton

Term
Expires
Dec. 31

President, First National Bank, Damariscotta, Me
1942
President, Middletown National Bank, Middletown, Conn. .. 1943
President, State Street Trust Co., Boston, Mass
1944
President and Director, Wm. Filene's Sons Company, Boston,
Mass
1942
President, Jones & Lamson Machine Co., Springfield, Vt
1943
Director, Bird & Son, inc., East Walpole, Mass
1944
President, Dennison Manufacturing Co., Framingham, Mass.. 1942
Director and Vice Chairman, New England Power Association,
Boston, Mass
1943
Director, Boston Woven Hose and Rubber Co., Boston, Mass.. 1944

District No. 2—New York
Class A:
Neil H. Dorrance
Leon Fraser
William J. Field
Class B:
Carle C. Conway
Donaldson Brown
Frederick E. Williamson
Class C.Edmund E. Day
Vacancy
Beardsley Ruml
Appointed by Federal Reserve Bank:
R. B. Wiltse
Vacancy
Raymond N. Ball
Robert R. Dew
Appointed by Board of Governors:
Gilbert A. Prole
Howard Kellogg
M. B. Folsom

President, First National Bank & Trust Co., Camden, N. Y... 1942
President, First National Bank, New York, N. Y
1943
President, Commercial Trust Company of New Jersey, Jersey
City, N. J
1944
Chairman, Continental Can Co., Inc., New York, N. Y
1942
Vice Chairman and Vice President, General Motors Corporation, New York, N. Y
1943
President, New York Central Railroad, New York, N. Y
1944
President, Cornell University, Ithaca, N. Y
Treasurer, R. H. Macy & Co., Inc., New York, N. Y
Buffalo Branch

1942
1943
1944

Managing Director, Buffalo, N. Y

1942
1942
President, Lincoln-Alliance Bank & Trust Co., Rochester,
N. Y
1943
President, Dunkirk Trust Co., Dunkirk, N. Y
1944
Genesee Farm Supply Co., Batavia, N. Y
President, Spencer Kellogg & Sons, Inc., Buffalo, N. Y
Treasurer, Eastman Kodak Co., Rochester, N. Y

1942
1943
1944

District No. 3—Philadelphia
Class A.George W. Reily
John B. Henning
Howard A. Loeb
Class B:
W. D. Kerlin
C. Frederick C. Stout
Harry L. Cannon
Class C.Thomas B. McCabe
Warren F. Whittier
Vacancy

President, Harrisburg National Bank, Harrisburg, Pa
President, Wyoming National Bank, Tunkhannock, Pa
Chairman, Tradesmens National Bank and Trust Company,
Philadelphia, Pa

1942
1943

Secretary & Treasurer, Camden Forge Co., Camden, N. J
President, John R. Evans & Co., Camden, N . J
President, H. P. Cannon & Son, Inc., Bridgeville, Del

1942
1943
1944

President, Scott Paper Company, Chester, Pa
Farmer, dairyman and cattle breeder, Douglassville, Pa. . ..

1942
1943
1944

1944

District No. 4—Cleveland
Class A.Ben R. Conner
H. B. McDowell
F. F. Brooks
Class B:
T. E. Milsop
R. P. Wright
G. D. Crabbs




President, First National Bank, Ada, Ohio
President, McDowell National Bank, Sharon, Pa
President, First National Bank, Pittsburgh, Pa

1942
1943
1944

President, Weirton Steel Co., Weirton, W. Va
1942
Secretary-Treasurer, Reed Manufacturing Co., Erie, Pa
1943
Chairman, Philip Carey Manufacturing Co., Lockland, Ohio 1944

ANNUAL REPORT OF BOARD OF GOVERNORS

no

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont.
/-,

j.

DIRECTORS-Cont.
Class C:
R. E. Klages
Geo. C. Brainard
A. Z. Baker
Appointed by Federal Reserve Bank:
B. J. Lazar
John J. Rowe
Buckner Woodford
Appointed by Board of Governors:
Frank A. Brown
Francis H. Bird

Term

Expires
Dec. 31
President, Columbus Auto Parts Co., Columbus, Ohio
1942
President, General Fireproofing Co., Youngstown, Ohio
1943
President, Cleveland Union Stock Yards Co., Cleveland, Ohio 1944
Cincinnati Branch
Managing Director, Cincinnati, Ohio
1942
President, Fifth-Third Union Trust Co., Cincinnati, Ohio.... 1942
Vice President and Cashier, Bourbon-Agricultural Bank &
Trust Co., Paris, Ky
1943
Farmer, Chillicothe, Ohio
1942
;
Professor of Commerce, College of Engineering and Commerce,
University of Cincinnati, Cincinnati, Ohio
1943
Pittsburgh Branch

Appointed by Federal Reserve Bank:
P. A. Brown
E. B. Harshaw
Clarance Stanley
Appointed by Board of Governors:
Geo. T. Ladd
Robert E. Doherty

Managing Director, Pittsburgh, Pa
1942
Vice President and Cashier, Grove City National Bank, Grove
City, Pa
1942
President, Union Trust Co., Pittsburgh, Pa
1943
President, United Engineering & Foundry Co., Pittsburgh, Pa. 1942
President, Carnegie Institute of Technology, Pittsburgh, Pa.. 1943

District No. 5—Richmond
Class A:
Charles E. Rieman
J. C. Braswell
J. A. Sydenstricker
Class B:
Chas. C. Reed
John H. Hanna
Edwin Malloy
Class C:
W. G. Wysor
Robt. Lassiter
Charles P. McCormick

President, Western National Bank, Baltimore, Md
1942
President, Planters National Bank & Trust Co., Rocky Mount,
N. C
1943
Cashier, First National Bank, Marlinton, W. Va
1944
Vice President & General Manager, Williams & Reed, Inc.,
Richmond, Va
1942
Chairman, Capital Transit Co., Washington, D. C
1943
President and Treasurer, Cheraw Cotton Mills, Inc., Cheraw,
S. C
1944
General Manager, Southern States Cooperative, Inc., Richmond, Va
1942
Chairman, Mooresville Cotton Mills, Mooresville, N. C
1943
President, McCormick & Co., Inc., Baltimore, Md
1944
Baltimore Branch

Appointed by Federal Reserve Bank:
W. R. Milford
James C. Fenhagen
James Dixon
George W. Reed
Appointed by Board of Governors:
Jos. D. Baker, Jr
W. Frank Roberts
W. Frank Thomas

Managing Director, Baltimore, Md
Vice Chairman, Baltimore National Bank, Baltimore, Md
President, Easton National Bank of Maryland, Easton, Md...
President, National Marine Bank, Baltimore, Md

1942
1942
1943
1944

Secretary and Treasurer, Standard Lime and Stone Co., Baltimore, Md
1942
President, Standard Gas Equipment Corp., Baltimore, Md
1943
Construction Engineer and Real Estate Management, Westminster, Md
1944
Charlotte Branch

Appointed by Federal Reserve Bank:
W. T. Clements
B. M. Edwards
T. E. Hemby
J. Gerald Cowan
Appointed by Board of Governors:
D. W. Watkins
Geo. M. Wright
Chas. L. Creech, Sr




Managing Director, Charlotte, N. C
President, South Carolina National Bank, Charleston, S. C...
Executive Vice President, American Trust Co., Charlotte,
N. C
Vice President, Wachovia Bank and Trust Co., Asheville, N. C.

1942
1942

Director of Extension, Clemson College, Clemson, S. C
President, Republic Cotton Mills, Great Falls, S. C
Chairman, B. F. Huntley Furniture Co., Winston-Salem, N. C

1942
1943
1944

1943
1944

FEDERAL RESERVE SYSTEM

12.1

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont.

District No. 6—Atlanta
~ L
DiKECTORS-Cont,
Class A:
Thos. K. Glenn
W. D. Cook
Geo. J. White
Class B:
J. A. McCrary
Fitzgerald Hall
Ernest T. George
Class C:
J. F. Porter
Rufus C. Harris
Frank H. Neely

Term
Expires
Dec. 31
1942

Chairman, Trust Company of Georgia, Atlanta, Ga
Executive Vice President, First National Bank, Meridian,
Miss
1943
President, First National Bank, Mount Dora, Fla
1944
Vice President and Treasurer, J. B. McCrary Co., Inc., Atlanta, Ga
1942
President, Nashville, Chattanooga & St. Louis Railway, Nashville, Tenn
1943
#
President and Chairman, Seaboard Refining Co., Ltd., New
Orleans, La
1944
President and General Manager, Tennessee Farm Bureau Federation, Columbia, Tenn
1942
President, Tulane University, New Orleans, La
1943
Executive Vice President and Secretary, Rich's, Inc., Atlanta,
Ga
1944
Birmingham Branch

Appointed by Federal Reserve Bank:
P. L. T. Beavers
John C. Persons
John S. Coleman
Gordon D. Palmer
Appointed by Board of Governors:
Howard Gray
Ed. L. Norton
Donald Comer

Managing Director, Birmingham, Ala
1942
President, First National Bank, Birmingham, Ala
1942
President, Birmingham Trust and Savings Company, Birmingham, Ala
1943
;
President, First National Bank, Tuscaloosa, Ala
1944
Farmer, New Market, Ala
1942
Executive Vice President, Munger Realty Co., Birmingham,
Ala
1943
Chairman, Avondale Mills, Birmingham, Ala
1944
Jacksonville Branch

Appointed by Federal Reserve Bank:
Geo. S. Vardeman, Jr
B. C. Teed
J. C. McCrocklin
J. L. Dart
Appointed by Board of Governors:
Vacancy
F. D. Jackson
Walter J. Matherly

Managing Director, Jacksonville, Fla
Executive First Vice President, First National Bank, Palm
Beach, Fla
Executive Vice President, First National Bank, Tarpon
Springs, Fla
.
Vice President and Cashier, Florida National Bank, Jacksonville, Fla

1942
1942
1943
1944

.
1942
President and General Manager, Jackson Grain Company,
Tampa, Fla
.._
1943
Dean, College of Business Administration, University of
Florida, Gainesville, Fla
1944
Nashville Branch

Appointed by Federal Reserve Bank:
Joel B. Fort, Jr
F. M. Farris
Geo. Neal Bass
B. L. Sadler
Appointed by Board of Governors:
W. E. McEwen
E. W. Palmer
Clyde B. Austin

Managing Director, Nashville, Tenn
1942
President, Third National Bank, Nashville, Tenn.
1942
Cashier, First National Bank of Franklin County, Decherd,
Tenn
1943
President, First National Bank, Harriman, Tenn
1944
Director, County Farm Bureau, Williamsport, Tenn
President, Kingsport Press, Inc., Kingsport, Tenn
President, The Austin Co., Inc., Greeneville, Tenn

1942
1943
1944

New^Orleans Branch
Appointed by Federal Reserve Bank:
E. P. Paris
E. E. Soulier
O. G. Lucas
J. F. McRae
Appointed by Board of Governors:
H. G. Chalkley, Jr
E. F. Billington
Alexander Fitz-Hugh




Managing Director, New Orleans, La
President, First National Bank, Lafayette, La
President, National Bank of Commerce, New Orleans, La
President, Merchants National Bank, Mobile, Ala

1942
1942
1943
1944

President and General Manager, Sweet Lake Land & Oil Co.,
Inc., Lake Charles, La
1942
Vice President, Soule Steam Feed Works, Meridian, Miss
1943
President, P . P . Williams Company, Vicksburg, Miss
1944

122

ANNUAL REPORT OF BOARD OF GOVERNORS

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont.

District No. 7—Chicago
/-, *
DIRECTORS—Cont.
Class A:
Walter J. Cummings
Edward R. Estberg
Frank D. Williams
Class B:
MaxW. Babb
Clarence W. Avery
Nicholas H. Noyes
Class C:
W. W. Waymack
Paul G. Hoffman
Simeon E. Leland

Term
Expires
Dec. 31
Chairman, Continental Illinois National Bank and Trust Co..
Chicago, 111
1942
Chairman, Waukesha National Bank, Waukesha, Wis.
1943
President, First Capital National Bank, Iowa City, Iowa
1944
Chairman, Allis-Chalmers Manufacturing Co., Milwaukee,
Wis.
1942
President and Chairman, Murray Corporation, Detroit, Mich.. 1943
Vice President & Treasurer, Eli Lilly and Company, Indianapolis, Ind
1944
Vice President and Editor, Editorial Pages, Des Moines Regisister and Tribune, Des Moines, Iowa
1942
President, Studebaker Corporation, South Bend, Ind
1943
Chairman, Department of Economics and Professor of Government Finance, University of Chicago, Chicago, 111
1944
Detroit Branch

Appointed by Federal Reserve Bank:
H. J. Chalfont
James E. Davidson
Walter S. McLucas
Joseph M. Dodge
Appointed by Board of Governors:
H. L. Pierson
Vacancy
L. Whitney Watkins

Managing Director, Detroit, Mich
President, Peoples Com. & Sav. Bank, Bay City, Mich
Chairman, The National Bank of Detroit, Detroit, Mich
President, The Detroit Bank, Detroit, Mich

1942
1942
1943
1944

President, Detroit Harvester Co., Detroit, Mich

1942
1943
1944

Farmer, Manchester, Mich

District No. 8—St. Louis
Class A:
Max B. Nahm
G. R. Corlls
Sidney Maestre
Class B:
J. W. Harris
H. H. Tucker
John R. Stanley
Class C:
Wm. T. Nardin
Oscar G. Johnston
Douglas W. Brooks

Vice President, Citizens National Bank, Bowling Green, Ky..
Cashiet, Anna National Bank, Anna, 111
President, Mississippi Valley Trust Co., St. Louis, Mo

1942
1943
1944

Chairman, Harris-Langenberg Hat Co., St. Louis, Mo
President, Fones Bros. Hardware Co., Little Rock, Ark
Secretary-Treasurer, Stanley Clothing Co., Evansville, Ind...

1942
1943
1944

Vice President and General Manager, Pet Milk Co., St. Louis,
Mo
1942
President, Delta and Pine Land Co., Scott, Miss
1943
President, The Newburger Co., Memphis, Tenn
1944
Little Rock Branch

Appointed by Federal Reserve Bank:
A. F. Bailey
James H. Penick
Arthur E. McLean
Paul R. McCoy

Managing Director, Little Rock, Ark
President, W. B. Worthen Co., Bankers, Little Rock, Ark
President, Commercial National Bank, Little Rock, Ark
Chairman, Peoples National Bank, Stuttgart, Ark

1942
1942
1943
1944

Appointed by Board of Governors:
R. E. Short
I. N. Barnett, Jr
S. M. Brooks

Farmer, Brinkley, Ark
Manager, Barnett Bros. Mercantile Co., Batesville, Ark
President, Brooks Advertising Agency, Little Rock, Ark

1942
1943
1944

Louisville Branch
Appointed by Federal Reserve Bank:
C. A. Schacht
J. O. Sanders
Phil E. Chappell
Ralph C. Gifford

Managing
President,
President,
President,

Director, Louisville, Ky
First National Bank, Huntingburg, Ind
Planters Bank & Trust Co., Hopkinsville, Ky
First National Bank, Louisville, Ky

1942
1942
1943
1944

Appointed by Board of Governors:
G. O. Boomer
Perry B. Gaines
E. J. O'Brien, Jr

Vice President, The Girdler Corporation, Louisville, Ky
Farmer, Carrollton, Ky
President, E. J. O'Brien & Co., Louisville, Ky

1942
1943
1944




FEDERAL RESERVE SYSTEM

123

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont.
Memphis Branch
~ L
Term
DIRECTORS-Cont.
Expires
Appointed by Federal Reserve Bank:
Dec. 31
W. H. Glasgow
Managing Director, Memphis, Tenn
1942
V. J. Alexander
President, Union Planters National Bank & Trust Co., Memphis, Tenn
1942
B. A. Lynch
President, Farmers Bank & Trust Co., Blytheville, Ark
1943
Oliver Benton
President, National Bank of Commerce, Jackson, Tenn
1944
Appointed by Board of Governors:
J. P. Norfleet
R. C. Branch
J. Holmes Sherard

President, Sledge & Norfleet, Memphis, Tenn
Cotton planter and ginner, Pecan Point, Ark
President, Jno. H. Sherard & Son, Sherard, Miss

1942
1943
1944

District No. 9—Minneapolis
Class A:
F. D. McCartney
S. S. Ford

Vice President, First National Bank, Oakes, N. D
1942
President, Northwestern National Bank & Trust Co., Minneapolis, Minn
1943
President, Pierre National Bank, Pierre, S. D
1944

J. R. McKnight
Class B:
Albert P. Funk
Homer P. Clark
J. E. O'Connell

President, LaCrosse Rubber Mills Co., LaCrosse, Wis
Chairman, West Publishing Co., St. Paul, Minn
President, Eddy's Bakeries, Inc., Helena, Mont

Class C:
W. C. Coffey
W. D. Cochran
Roger B. Shepard

President, University of Minnesota, Minneapolis, Minn
1942
W. D. Cochran Freight Lines, Iron Mountain, Mich
1943
President, Finch, Van Slyck & McConville, St. Paul, Minn,... 1944

1942
1943
1944

Helena Branch
Appointed by Federal Reserve Bank:
R. E. Towle
P. B. McClintock
Peter Pau4y

Managing Director, Helena, Mont
1942
Cashier, Farmers National Bank, Chinook, Mont
1942
President, Deer Lodge Bank & Trust Co., Deer Lodge, Mont.. 1943

Appointed by Board of Governors:
R. B. Richardson
H. D. Myrick.

President, Western Life Insurance Co., Helena, Mont
Farmer, Square Butte,Mont

1942
1943

District No. 10—Kansas City
Class A:
Thomas A. Dines
M. A. LimbockerWilliam L. Bun ten
Class B:
Willard D. Hosford

President, United States National Bank, Denver, Colo
1942
President and Chairman, Citizens National Bank, Emporia,
Kan
1943
Vice President and Cashier, Goodland State Bank, Goodland,
Kan
1944

J. M. Bernardin
L. E. Phillips

Vice President and General Manager, John Deere Plow Co.,
Omaha, Neb
1942
Vice President, Burk Lumber Co., Dawson, N. M
1943
Phillips Petroleum Company, Bartlesville, Okla
1944

Class C:
Vacancy.
R. B. Caldwell
Robert L. Mehornay

1942
McCune, Caldwell, Downing & Noble, Kansas City, Mo
1943
President, North-Mehornay Furniture Co., Kansas City, Mo.. 1944
Denver Branch

Appointed by Federal Reserve Bank:
Jos. E. Olson
Roblin H. Davis
W. C. Kurtz
Harold Kountze
Appointed by Board of Governors:
Wilson McCarthy
M. E. Noonen
J. B. Grant




Managing Director, Denver, Colo
1942
President, Denver National Bank, Denver, Colo
1942
President and General Manager, Independent Lumber Co.,
Grand Junction, Colo
1943
President, Colorado National Bank, Denver, Colo
1944
President, Denver & Salt Lake Railway Co., Denver, Colo—
Sheep rancher, Kremmling, Colo
Lewis and Grant, Denver, Colo

1942
1943
1944

124

ANNUAL REPORT OF BOARD OF GOVERNORS

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1 9 4 2 - C o n t
Oklahoma City Branch
r> .
DIRECTORS—Cont.
Appointed by Federal Reserve Bank:
G. H. Pipkin
A. E. Stephenson
D. M. Tyler
Hugh L. Harrell
Appointed by Board of Governors:
Lloyd Noble
Phil C. Ferguson
Neil R. Johnson

Term
Expires
Dec. 31
1942
1942

Managing Director, Oklahoma City, Okla
President, Central National Bank, Enid, Okla
First Vice President, Dewey Portland Cement Co., Dewey,
Okla
1943
Vice President, First National Bank & Trust Co., Oklahoma
City, Okla
1944
President, Noble Drilling Corp., Tulsa, Okla
Stockman, Woodward, Okla
Rancher and farmer, Norman, Okla

1942
1943
1944

Omaha Branch
Appointed by Federal Reserve Bank:
L. H. Earhart
Thomas L. Davis
Geo. A. Bible
George W. Holmes

Managing Director, Omaha, Neb
President, First National Bank, Omaha, Neb
President, First National Bank, Rawlins, Wyo
President, First National Bank, Lincoln, Neb

1942
1942
1943
1944

Appointed by Board of Governors:
H. L. Dempster
W. H. Schellberg
Leonard E. Hurtz

President, Dempster Mill Mfg. Co., Beatrice, Neb
Stockman, Omaha, Neb
President, Fairmont Creamery Company, Omaha, Neb

1942
1943
1944

District No. 11—Dallas
Class A:
Ed. H. Winton
Frank Turner
J. E. Woods
Class B:
J. R. Milam
Geo. A. Hill, Jr
E. L. Kurth
Class C.Jay Taylor
J. B. Cozzo
Dolph Briscoe

Executive Vice President, Continental National Bank, Fort
Worth, Tex
1942
President, First National Bank, Decatur, Tex
1943
Chairman of Board, Temple National Bank, Temple, Tex
1944
President, Cooper Company, Inc., Waco, Tex
1942
President, Houston Oil Company of Texas, Houston, Tex
1943
Vice President and General Manager, Angelina County Lumber Co., Keltys, Tex
1944
Ranching and stockyards, Amarillo, Tex
Builder and manufacturer, Dallas, Tex
Stock raiser, Uvalde, Tex
El Paso Branch

1942
1943
1944

Appointed by Federal Reserve Bank:
J. L. Hermann
H. A. Jacobs
R. W. McAfee
J. E. Moore

Managing Director, El Paso, Tex
Vice President, El Paso National Bank, El Paso, Tex
Vice President, State National Bank, El Paso, Tex
Vice President, First National Bank, Roswell, N. M

1942
1942
1943
1944

Appointed by Board of Governors:
R. E. Sherman
Jack B. Martin
F. M. Hayner

President, Leavell and Sherman, Inc., El Paso, Tex
President, Arizona Ice and Cold Storage Co., Tucson, Ariz
President, Las Cruces Lumber Co., Las Cruces, N. M.

1942
1943
1944

Houston Branch
Appointed by Federal Reserve Bank:
W. D. Gentry
P. B. Doty
W. N. Greer
J. W. McCullough

Managing Director, Houston, Tex
President, First National Bank, Beaumont, Tex
President, Citizens State Bank, Houston, Tex
President, Hutchings-Sealy National Bank, Galveston, Tex...

1942
1942
1943
1944

Appointed by Board of Governors:
Sam Taub
George G. Chance
H. Renfert

J. N. Taub & Sons, Houston, Tex
Farmer, Bryan, Tex
Cotton Merchant, Galveston, Tex

1942
1943
1944

San Antonio Branch
Appointed by Federal Reserve Bank:
E. B. Austin
E. J. Miller
J. A. Walker
T. C. Frost, Jr




Managing Director, San Antonio, Tex
President, South Texas National Bank, San Antonio, Tex
Vice President, Del Rio National Bank, Del Rio, Tex
Vice President, Frost National Bank, San Antonio, Tex

1942
1942
1943
1944

FEDERAL RESERVE SYSTEM

Il5

SENIOR OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS, Dec. 31, 1942-Cont.
_ .
DIRECTORS—Cont.
Appointed by Board of Governors:
Edwin F. Flato
H. M. Cartwright
J. M. Odom

Term
Expires
Dec. 31
President,Corpus Christi Hardware Co., Corpus Christi,Tex.. 1942
Live stock and farming, Twin Oaks Ranch, Dinero, Tex
1943
General Contractor, Austin, Tex
1944

District No. 12—San Francisco
Class A.Carroll F. Byrd
C. K. Mcintosh
Reno Odlin

Chairman & Executive Vice President, First National Bank,
Willows, Calif
1942
Chairman, Bank of California, N. A., San Francisco, Calif.... 1943
President, Puget Sound National Bank, Tacoma, Wash
1944

Class B:
Reese H. Taylor
Elmer H. Cox
Wm. G. Volkmann

President, Union Oil Co., Los Angeles, Calif
1942
President, Madera Sugar Pine Company, San Francisco, Calif.. 1943
Partner, A. Schilling and Co., San Francisco, Calif
1944

Class C:
Harry R. Wellman
St. George Holden
Henry F. Grady

Director, Giannini Foundation of Agricultural Economics,
University of California, Berkeley, Calif
1942
St. George Holden Realty Company, San Francisco, Calif
1943
President, American President Lines, Ltd., San Francisco,
Calif
1944
Los Angeles Branch

Appointed by Federal Reserve Bank:
W. N. Ambrose
H. D. Ivey
F. E. Snedecor
Appointed by Board of Governors:
W. S. Rosecrans
Y. Frank Freeman
Appointed by Federal Reserve Bank:
D. L. Davis
N. A. Davis
Paul S. Dick
Appointed by Board of Governors:
William H. Steen
George T. Gerlinger
Appointed by Federal Reserve Bank:
W. L. Partner
Orval W. Adams
Frederick P. Champ
Appointed by Board of Governors:
R. C. Rich
Herbert S. Auerbach

Managing Director, Los Angeles, Calif
1942
President, Citizens National Trust & Savings Bank, Los
Angeles, Calif
1942
President, First National Bank, Corona, Calif
1943
Property management and investments, Los Angeles, Calif... 1942
Vice President, Paramount Pictures, Inc., Hollywood, Calif... 1943
Portland Branch
Managing Director, Portland, Ore
1942
Vice President, Baker-Boyer National Bank, Walla Walla,
Wash
1942
President, United States National Bank, Portland, Ore
1943
Livestock and farming, Milton, Oregon
President, Willamette Valley Lumber Co., Portland, Ore
Salt Lake City Branch

1942
1943

Managing Director, Salt Lake City, Utah
1942
Executive Vice President, Utah State National Bank, Salt
Lake City, Utah
1942
President, Cache Valley Banking Co., Logan, Utah
1943
Livestock and farming, Burley, Idaho
1942
President and General Manager, Auerbach Co., Salt Lake City,
Utah
1943
Seattle Branch

Appointed by Federal Reserve Bank:
C. R. Shaw
Fred L. Stanton
Andrew Price
Appointed by Board of Governors:
Fred Nelsen
Charles F. Larrabee




Managing Director, Seattle, Wash
President, Washington Trust Company, Spokane, Wash
President, National Bank of Commerce, Seattle, Wash

1942
1942
1943

Farmer and dairyman, Seattle, Wash
1942
Vice President, Pacific American Fisheries, Inc., Bellingham,
Wash
1943

STATE BANK AND TRUST COMPANY MEMBERS
Following is a list of the 1,598 State bank and trust company members of
the Federal Reserve System on December 31, 1942..
DISTRICT NO. 1 (44 banks)
CONNECTICUT! (6 banks)
Hartford
Phoenix State Bank & Trust Co.
Meriden
Puritan Bank & Trust Co.
New Haven
Union & New Haven Trust Co.
Torrington
Brooks Bank & Trust Co.
Waterbury
Colonial Trust Co.
Waterbury Trust Co.
Augusta
Bangor
Bar Harbor
Ellsworth
Sanford

MAINE (5 banks)
Depositors Trust Co.
Merrill Trust Co.
Bar Harbor Banking & Trust Co.
Union Trust Co.
Sanford Trust Co.

MASSACHUSETTS (30 banks)
Menotomy Trust Co.
New England Trust Co.
Old Colony Trust Co.
Pilgrim Trust Co.
State Street Trust Co.
United States Trust Co.
Bridgewater
Bridgewater Trust Co.
Brookline
Norfolk County Trust Co.
Cambridge
County Bank & Trust Co.
Harvard Trust Co.
Fall River
B.M.C. Durfee Trust Co.
Fall River Trust Co.
Gloucester
Gloucester Safe Deposit & Trust
Co.
Greenfield
Franklin County Trust Co.
Holyoke
Hadley Falls Trust Co.
Hyannis
Hyannis Trust Co.
Lynn
Security Trust Co.
Milton
Blue Hill Bank & Trust Co.
Newton
Newton Trust Co.
Norwood
Norwood Trust Co.
Quincy
Granite Trust Co.
Quincy Trust Co.
Salem
Naumkeag Trust Co.
Somerville
Somerville Trust Co.
Springfield
Springfield Safe Deposit & Trust
Co.
Union Trust Co.
Taunton
Bristol County Trust Co.
Wellesley Hills
Wellesley Trust Co.
Winchester
Winchester Trust Co.
Worcester
Worcester County Trust Co.
Arlington
Boston

Conway

NEW HAMPSHIRE (1 bank)
Carroll County Trust Co.

RHODE ISLAND (2 banks)
Providence
Industrial Trust Co.
Union Trust Co.
DISTRICT NO. 2 (225 banks)
CONNECTICUT! (2 banks)
Bridgeport
West Side Bank
Springdale
Springdale Bank & Trust Co.
NEW JERSEY* (57 banks)
Bayonne Trust Co
Bloomfield Bank & Trust Co.
Community Trust Co.
Bogota
Bank of Bogota
Boonton
Boon ton Trust Co.
Bound Brook
Bound Brook Trust Co.
Carteret
Carteret Bank & Trust Co.
Cranford
Cranford Trust Co.
Dover
Dover Trust Co.
Bayonne
Bloomfield

DISTRICT NO. 2—Continued
NEW JERSEY—continued
Dunellen
Peoples Trust Co.
East Orange
Ampere Bank & Trust Co.
Savings Investment & Trust Co.
Elizabeth
Central Home Trust Co.
Elizabethport Banking Co.
Fair Lawn
P air Lawn-Radburn Trust Co.
Fort Lee
Fort Lee Trust Co.
Franklin
Sussex County Trust Co.
Glen Ridge... :•
Glen Ridge Trust Co.
Glen Rock
Glen Rock Bank
Hackensack
Hackensack Trust Co.
Peoples Trust Co. of Bergen
County
Jersey City
Commercial Trust Co. of New
Jersey
Keyport
Keyport Banking Co.
Linden
Linden Trust Co.
Long Branch
Long Branch Trust Co.
Maplewood
Maplewood Bank & Trust Co.
Montclair
Bank of Montclair
Montclair Trust Co.
Morris town
Morristown Trust Co.
Newark
Clinton Trust Co.
Columbus Trust Co.
Federal Trust Co.
Fidelity Union Trust Co.
Franklin-Washington Trust Co.
Merchants & Newark Trust Co.
United States Trust Co.
West Side Trust Co.
Nutley
Bank of Nutley
Passaic
Bank of Passaic & Trust Co.
Peoples Bank & Trust Co.
Perth Amboy
First Bank & Trust Co.
Phillipsburg
Phillipsburg Trust Co.
Plainfield
Mid-Citv Trust Co.
Plainfield Trust Co.
State Trust Co.
Red Bank
Merchants Trust Co.
Ridgefield Park
Ridgefield Park Trust Co.
Ridgewood
.North Jersey Trust Co.
Rochelle Park
Rochelle Park Bank
Rutherford
Rutherford Trust Co.
South Orange
South Orange Trust Co
Summit
Citizens Trust Co.
Summit Trust Co.
Tenafly
Tenafly Trust Co.
Washington
Washington Trust Co.
Westfield
Peoples Bank & Trust Co.
Westfield Trust Co.
NEW YORK (166 banks)
Citizens & Farmers Trust Co.
First Trust Co.
State Bank of Albany
Amityville
Bank of Amityville
Amsterdam
Montgomery County Trust Co
Arcade
Citizens Bank
Arlington
Vassar Bank
Attica
Bank of Attica
Auburn
Auburn Trust Co.
Avoca
Bank of Avoca
Babylon
Bank of Babylon
Baldwin
Peoples State Bank
Batavia
Genesee Trust Co.
Bay Shore
South Side Bank
Belmont
State Bank of Belmont
Binghamton
Marine Midland Trust Co
Blasdell
Bank of Blasdell
Brooklyn (see New York)
Buffalo
Liberty Bank
Manufacturers & Traders Trust
Co.
Marine Trust Co.
Adams
Albany

1 Exclusive of part of State located in another district.



F E D E R A L R E S E R V E SYSTEM

I l

7

S T A T E B A N K AND T R U S T COMPANY MEMBERS—Continued
D I S T R I C T N O . 2—Continued

D I S T R I C T N O . 2—Continued

N E W YORK—continued

N E W YORK—continued
Merchants Bank
J . P . Morgan & Co. I n c .
New York T r u s t Co.
P a n American T r u s t Co.
Pennsylvania Exchange Bank
Schroder T r u s t Co.
T r a d e Bank & T r u s t Co.
United States T r u s t Co.
West New Brighton Bank
Niagara Falls.
Power City T r u s t Co.
N o r t h Collins
Bank of N o r t h Collins
Northville
Northville Bank
Norwood
State Bank of Norwood
Nyack
Nyack Bank & T r u s t Co.
Ogdensburg T r u s t Co.
Ogdensburg...
Olean T r u s t Co.
Olean
Oneida
Madison County T r u s t & Deposit
Co.
State Bank of Ontario
Ontario
Bank of Orchard P a r k
Orchard P a r k . .
First T r u s t & Deposit Co.
Oriskany Falls.
Ossining T r u s t Co.
Ossining
State Bank of Parish
Parish
Patchogue Citizens Bank &
Patchogue
T r u s t Co.
State Bank of Pearl River
Pearl R i v e r . . . .
Citizens Bank
Perry
Washington Irving T r u s t Co.
P o r t Chester...
Bank of P o r t Jefferson
P o r t Jefferson..
Poughkeepsie T r u s t Co.
Poughkeepsie..
P r a t t s b u r g h State Bank
Prattsburg —
Rensselaer
County Bank &
Rensselaer
T r u s t Co.
Suffolk County T r u s t Co.
Riverhead.
Central T r u s t Co.
Rochester..
Lincoln-Alliance Bank & T r u s t
Co.
of
Rockville
Centre
Rockville C e n t r e . . . Bank
T r u s t Co.
Rome T r u s t Co.
Rome
Rye T r u s t Co.
Rye
Peconic Bank
Sag Harbor
Salamanca T r u s t Co.
Salamanca
Saratoga Springs... Adirondack T r u s t Co.
Oystermen's Bank & T r u s t Co.
Sayville
Citizens T r u s t Co.
Schenectady
Schenectady Trust Co.
Schoharie County Bank
Schoharie
Glenvi lie Bank
Scotia
S t a t e Bank of Sea Cliff
Sea Cliff
Smith town Branch. Bank of Smith town
Solvay Bank
Solvay
Bank of Southold
Southold
Farmers & Merchants Bank
Spencer
R a m a p o T r u s t Co.
Spring Valley
Bank of Suffolk County
Stony Brook
First Trust & Deposit Co.
Syracuse
Syracuse T r u s t Co.
Utica....
First Bank & T r u s t Co.
Warsaw.
Wyoming County Bank & T r u s t
Co.
Waterford
Bank of Waterford
Watertown
N o r t h e r n New York T r u s t Co.
Westbury
Bank of Westbury T r u s t Co.
Westhampton Beach .Seaside Bank
West New Brighton (see New York)
White Plains..."
Citizens Bank
County T r u s t Co.
State Bank of Williamson
Williamson.
Bank of Worcester
Worcester...
Bank of Westchester
Yonkers

Camillus
Camillus B a n k
Canandaigua
Ontario County T r u s t Co.
Canaseraga
Canaseraga State Bank
Canisteo
First S t a t e Bank
Cattaraugus
Bank of C a t t a r a u g u s
Center Moriches
Center Moriches Bank
Chatham
State Bank of C h a t h a m
Chestertown
Chester-Schroon-Horicon Bank
Cicero
Cicero S t a t e Bank
Clyde
Citizens Bank
Clymer
Clymer S t a t e Bank
Cohocton
Cohocton S t a t e Bank
Cohoes
Manufacturers Bank
De R u y t e r
De R u y t e r S t a t e Bank
Dundee
Dundee State Bank
Dunkirk
Dunkirk T r u s t Co.
E a s t Aurora
Erie County T r u s t Co.
E a s t Syracuse
Bank of E a s t Syracuse
Ellenburg Depot. .. . S t a t e Bank of Ellenburg
Elmira
Chemung Canal T r u s t Co.
Elmira Bank & T r u s t Co.
Endicott
E n d i c o t t T r u s t Co.
Union T r u s t Co.
E v a n s Mills
Peoples Bank _
Farmingdale
Bank of Farmingdale
Forest Hills (see New York)
Fredonia..
Citizens T r u s t Co.
Garden City
Garden City Bank & T r u s t Co.
Geneva
Geneva T r u s t Co.
Glen Cove
Glen Cove T r u s t Co.
Gloversville
T r u s t Co. of Fulton County
Great Neck
Bank of Great Neck
Hamburg
.Peoples Bank
Hammondsport
Bank of H a m m o n d s p o r t
Hicksville
Bank of Hicksville
Hudson
Hudson River T r u s t Co.
Huntington
Bank of Huntington & T r u s t Co.
Ithaca
Tompkins County T r u s t Co.
Jamestown
Bank of Jamestown
Johnson City
Workers T r u s t Co.
Katonah
Northern Westchester Bank
Kenmore
State Bank of Kenmore
Kingston
Kingston T r u s t Co.
Lackawanna
American Bank
Lindenhurst
Lindenhurst Bank
Little Falls
Herkimer County T r u s t Co.
Liverpool
Liverpool Bank
Locke
Citizens Bank
Locust Valley
Matinecock Bank
Lowville
Lewis County T r u s t Co.
Malone
Peoples T r u s t Co.
Massena
Massena Banking & T r u s t Co.
Mayville
State Bank of Mayville
Middletown
Orange County T r u s t Co.
Millbrook
Bank of Millbrook
Mineola
Nassau County T r u s t Co.
Monticello
Sullivan County T r u s t Co.
M o u n t Vernon
Fleetwood Bank
Mount Vernon T r u s t Co.
Newburgh
Columbus T r u s t Co.
New York
Amalgamated Bank
Bankers T r u s t Co.
Bank of the M a n h a t t a n Co.
Bank of New York
Bank of Yorktown
Boulevard Bank
Bronx County T r u s t Co.
Brooklyn T r u s t Co.
Central Hanover Bank & T r u s t
Co.
Chemical Bank & T r u s t Co.
City Bank Farmers T r u s t Co.
Clinton T r u s t Co.
Colonial T r u s t Co.
Continental Bank & T r u s t Co.
Corn Exchange Bank T r u s t Co.
Federation Bank & T r u s t Co.
Fifth Avenue Bank
Fulton T r u s t Co.
G u a r a n t y T r u s t Co.
Irving T r u s t Co.
Lawyers T r u s t Co.
Manufacturers T r u s t Co.
Marine Midland T r u s t Co.
1
Exclusive of p a r t of State



D I S T R I C T N O . 3 (80 banks)
D E L A W A R E (4 banks)
Wilmington

Equitable Trust Co.
Industrial T r u s t Co.
Security T r u s t Co.
Wilmington T r u s t Co.
N E W JERSEY* (10 banks)

Borden town
Burlington

located in another district.

Bordentown Banking Co.
Burlington City Loan & T r u s t
Co.

ANNUAL REPORT OF BOARD OF GOVERNORS

12.8

STATE BANK AND TRUST COMPANY MEMBERS—Continued
DISTRICT NO. 4 (190 banks)
KENTUCKY^ (7 banks)
NEW JERSEY-continued
Catlettsburg
Kentucky-Farmers Bank
Covington
Peoples-Liberty Bank & Trust
Camden
Camden Trust Co.
Co.
Egg Harbor City....Egg Harbor City Trust Co.
Lexington
Bank of Commerce
Hightstown
Hightstown Trust Co.
Security Trust Co.
Mount Holly
Farmers Trust Co.
Paris
Bourbon-Agricultural Bank &
Princeton
Princeton Bank & Trust Co.
Trust Co.
Riverside
Riverside Trust Co.
Peoples Deposit Bank & Trust
Swedesboro
Swedesboro Trust Co.
Co.
Wildwood
Union Bank
Richmond
State Bank & Trust Co.
DISTRICT NO. 3—Continued

PENNSYLVANIA! (66 banks)
Allen town
Bloomsburg

Liberty Bank & Trust Co.
Bloomsburg Bank-Columbia
Trust Co.
Carlisle
Carlisle Trust Co.
Chester
Chester-Cambridge Bank &
Trust Co.
Clearfield
Clearfield Trust Co.
Curwensville
Curwensville State Bank
Danville
Montour County Trust Co.
Du Bois
Union Banking & Trust Co.
Easton
Easton Trust Co.
East Petersburg
East Petersburg State Bank
Egypt
Farmers Bank
Glen Rock
Peoples Bank
Harrisburg
Central Trust Co.
Dauphin Deposit Trust Co.
Hazleton
Markle Banking & Trust Co.
Peoples Savings & Trust Co.
Traders Bank & Trust Co.
Honesdale
Wayne County Savings Bank
Houtzdale
.Houtzdale Bank
Huntingdon
Grange Trust Co.
Jenkintown
Jenkintown Bank & Trust Co.
Jersey Shore
Jersey Shore State Bank
Kane
Kane Bank & Trust Co.
Lancaster
Farmers Bank & Trust Co.
Northern Bank & Trust Co.
Lemoyne
Lemoyne Trust Co.
Lewis town
Lewistown Trust Co.
Littlestown
Littlestown State Bank
Lock Haven
Lock Haven Trust Co.
Lykens
Miners Bank
Middletown
Citizens Bank & Trust Co.
Farmers Trust Co.
Mont Alto
Mont Alto State Bank
Mount Carmel
Liberty State Bank & Trust Co.
Myers town
Myerstown Trust Co.
Nanticoke
Peoples Bank
New Oxford
Farmers & Merchants Bank
Newtown
Newtown Title & Trust Co.
Norristown
Montgomery Trust Co.
Norristown-Penn Trust Co.
Orrstown
Orrstown Bank
Paoli
Paoli Bank
Paradise
State Bank of Paradise
Philadelphia
Fidelity-Philadelphia Trust Co.
First Trust Co.
Gimbel Bros. Bank & Trust Co.
Girard Trust Co.
Ninth Bank & Trust Co.
Pennsylvania Co. for Insurances
on Lives and Granting Annuities
Provident Trust Co.
Security Bank & Trust Co.
Prospect Park
Interboro Bank & Trust Co.
Quakertown
Quakertown Trust Co.
Reading
City Bank & Trust Co.
Reading Trust Co.
Schnecksville
Schnecksville State Bank
Schuylkill Haven... .Schuylkill Haven Trust Co.
Steel ton
Steel ton Bank & Trust Co.
Tamaqua
Peoples Trust Co.
Temple
Temple State Bank
White Haven
White Haven Savings Bank
Wilkes-Barre
Wilkes -Barre Deposit & Savings
Bank
Williamsport
West Branch Bank & Trust Co.
Wyomissing
Peoples Trust Co.
York
Guardian Trust Co.
York Trust Co.

OHIO (150 banks)
Liberty Bank
Firestone Park Trust & Savings
Bank
First-Central Trust Co.
Alger
Alger Savings Bank
Alliance
Mount Union Bank
Antwerp
Antwerp Exchange Bank
Apple Creek
Apple Creek Banking Co.
Archbold
Peoples State Bank Co.
Arlington
Farmers & Merchants Bank Co.
Ashland
Ashland Bank & Savings Co.
Ashville
Ashville Banking Co.
Bellevue
Union Bank & Savings Co.
Bellville
Farmers Bank
Bolivar
Bolivar State Bank Co.
Bowling Green
Bank of Wood County Co.
Brecksville
Brecksville Bank Co.
Bucyrus
Farmers & Citizens Bank &
Savings Co.
Canal Winchester.... Peoples Bank Co.
Canton
First Trust & Savings Bank
Geo. D. Harter Bank
Peoples Bank
Cardington
Citizens Bank
Castalia
Castalia Banking Co.
Celina
Commercial Bank Co.
Christiansburg
Farmers & Merchants Bank Co.
Cincinnati
Central Trust Co.
Fifth Third Union Trust Co.
Peoples Bank & Savings Co.
Provident Savings Bank & Trust
Co.
Southern Ohio Savings Bank &
Trust Co.
Western Bank & Trust Co.
Cleveland
Cleveland Trust Co.
Lorain Street Bank
Union Bank of Commerce Co.
Columbiana
Union Banking Co.
Columbus
Fifth Avenue Savings Bank Co.
Conneaut
Citizens Banking & Savings Co.
Conneaut Banking & Trust Co.
Cortland
Cortland Savings & Banking Co.
Crestline
Farmers & Citizens State Bank
Croton
Croton Bank Co.
Danville
Commercial & Savings Bank Co.
Delphos
Commercial Bank
Peoples Bank
Delta
Peoples Savings Bank Co.
East Liverpool
Potters Bank & Trust Co.
Elmore
Bank of Elmore Co.
Elyria
Elyria Savings & Trust Co.
Savings Deposit Bank & Trust
Co.
Englewood
Farmers State Bank
Findlay
Ohio Bank & Savings Co.
Fort Recovery
Fort Recovery Banking Co.
Freeport
Freeport State Bank
Fremont
Colonial Savings Bank
Geneva
Geneva Savings & Trust Co.
Genoa
Genoa Banking Co.
Gibsonburg
Home Banking Co.
Gnadenhutten
Gnadenhutten Bank
Green Springs
Commercial Bank Co.
Hillsboro
Hillsboro Bank & Savings Co.
Hubbard
Hubbard Banking Co.
Killbuck
Killbuck Savings Bank Co.
Kipton
Kipton Bank Co.
Leesburg
Citizens Bank & Savings Co.
Lewisburg
Peoples Banking Co.
Lodi
Lodi State Bank
Logan
Farmers & Merchants Bank
Ada
Akron

Digitized for 1FRASER
Exclusive of part of State located in another district.


FEDERAL RESERVE SYSTEM

1X9

STATE BANK AND TRUST COMPANY MEMBERS—Continued
DISTRICT NO. 4—Continued
DISTRICT NO. 4-Continued
OHIO—continued
OHIO—continued
Lorain
Central Bank Co.
Wooster
Commercial Banking & Trust Co.
City Bank Co.
Yellow Springs
Miami Deposit Bank Co.
Lorain Banking Co.
Youngstown
City Trust & Savings Bank
Luckey
Exchange Bank
Dollar Savings & Trust Co.
Lyons
Farmers State Bank
PENNSYLVANIA^ (29 banks)
Madison
Citizens Bank
Mansfield
Farmers Savings & Trust Co.
Aliquippa
Woodlawn Trust Co.
Richland Trust Co.
Ambridge
Economy Bank
Marblehead
Marblehead Bank Co.
Beaver
Beaver Trust Co.
Martins Ferry
Peoples Savings Bank Co.
Dormont
Dormont Savings & Trust Co.
Mason
First-Mason Bank
Elizabeth
Bank of Elizabeth
Massillon
Ohio-Merchants Trust Co.
Erie
Security-Peoples Trust Co.
Maumee
State Savings Bank Co.
Homestead
Monongahela Trust Co.
McComb
Peoples Banking Co.
Jeannette
First
Jeannette Bank & Trust Co.
Middle Point
Middle Point Banking Co.
Farmers & Merchants Bank
Middletown
First American Bank & Trust Co. Linesville
McKeesport
Peoples
City Bank
Millersburg
Commercial & Savings Bank
Meadville
Crawford County Trust Co.
Minerva
Minerva Banking Co.
New Brighton
Beaver County Trust Co.
Minerva Savings & Bank Co.
New Castle
Lawrence Savings & Trust Co.
Minster
Minster State Bank
Pittsburgh
Allegheny Trust Co.
Monroeville
Farmers & Citizens Banking Co.
Allegheny Valley Bank
Montpelier
Farmers & Merchants State &
Bank of Ohio Valley
Savings Bank
Colonial Trust Co.
Mount Blanchard.. .Citizens Bank
Commonwealth Trust Co.
Mount Eaton
Bank of Mount Eaton Co.
Home
wood Bank
Mount Gilead
Peoples Savings Bank Co.
Iron & Glass Dollar Savings
Mount Sterling
Sterling State Bank
Bank
of Birmingham
Mount Vernon
Knox County Savings Bank
Peoples-Pittsburgh Trust Co.
Napoleon
Community Bank
Potter
Title
& Trust Co.
Newark
Newark Trust Co.
St. Clair Deposit Bank
Union Licking Bank
Union
Trust
Co.
New Knoxville
Peoples Savings Bank
William Penn Bank of Commerce
New Lexington
Perry County Bank
Somerset
Somerset
Trust
Co.
New Philadelphia.. .Ohio Savings & Trust Co.
Turtle Creek
Turtle Creek Bank & Trust Co.
New Waterford
New Waterford Savings & BankWarren
Warren
Bank
&
Trust Co.
ing Co.
Windber
Windber Trust Co.
Niles
Niles Bank Co.
Northfield
Macedonia-Northfield Banking
WEST VIRGINIA^ (4 banks)
Co.
Norwalk
Huron County Banking Co.
Follansbee
Citizens Bank
Norwood
Norwood-Hyde Park Bank &
Sistersville
First-Tyler Bank & Trust Co.
Trust Co.
Wheeling
Security Trust Co.
Oak Harbor
Oak Harbor State Bank Co.
Wheeling Dollar Savings &
Oberlin
Oberlin Savings Bank Co.
Trust Co.
Orrville
Orrville Savings Bank •
Pemberville
Citizens Savings Bank Co.
DISTRICT NO. 5 (123 banks)
Perrysburg.
Citizens Banking Co.
Pickerington
Pickerington Bank
DISTRICT OF COLUMBIA (8 banks)
Polk
Polk State Bank
Washington
American Security & Trust Co.
Pomeroy
Farmers Bank & Savings Co.
City Bank
Ravenna
First Savings Bank
McLachlen Banking Corp.
Reading
Reading Bank
Munsey Trust Co.
Richwood
Richwood Banking Co.
National Savings & Trust Co.
Rittman
Rittman Savings Bank
Security Savings & Commercial
Russellville
Bank of Russellville
Bank
St. Bernard
Citizens Bank
Union Trust Co.
St. Henry
St. Henry Bank
Washington
Loan & Trust Co.
St. Marys
Home Banking Co.
Sandusky
Citizens Banking Co.
MARYLAND
(16
banks)
Western Security Bank
Shelby
Citizens Bank
Baltimore
Baltimore Commercial Bank
Shiloh
Shiloh Savings Bank Co.
Calvert Bank
Shreve
Farmers Bank
Fidelity Trust Co.
Silverton
Silver ton Bank
Maryland Trust Co.
Strasburg
Citizens-State Bank
Union Trust Co. of Maryland
Sylvania
Sylvania Savings Bank Co.
Cambridge
County Trust Co. of Maryland
Tiro
Farmers & Citizens Bank
Ellicott City
Commercial & Farmers Bank
Toledo
Commerce Guardian Bank
Forest Hill
Forest Hill State Bank
Morris Plan Bank
Hagerstown
Hagerstown Trust Co.
Ohio Citizens Trust Co.
Havre de Grace
Havre de Grace Banking &
Toledo Trust Co.
Trust Co.
Utica
Utica Savings Bank Co.
Pikesville
Peoples Bank
Vandalia
Vandalia State Bank
Randallstown
Randallstown Bank
Van Wert
Peoples Savings Bank
St. Michaels
St. Michaels Bank
Wakeman
Wakeman Bank Co.
Salisbury
Farmers & Merchants Bank
Warren
Union Savings & Trust Co.
Westminster
Westminster Savings Bank
Waterville
Waterville State Savings Bank
Williamsport
Savings Bank of Williamsport
Co.
Wellington
First Wellington Bank
NORTH CAROLINA (11 banks)
West Alexandria
Twin Valley Bank
Charlotte
American Trust Co.
West Carrollton
West Carrollton Bank
Concord
Citizens Bank & Trust Co.
West Manchester
First State Bank
Durham
Fidelity Bank
Whitehouse
Whitehouse State Savings Bank
Eden ton
Bank of Eden ton
Woodville
Woodville State Bank
1
Exclusive of part of State located in another district.



130

ANNUAL REPORT OF BOARD OF GOVERNORS

STATE BANK AND TRUST COMPANY MEMBERS—Continued
DISTRICT NO. 5—Continued
DISTRICT NO. 5—Continued
NORTH CAROLINA—continued
WEST VIRGINIA^ (22 banks)
Marshall
Citizens Bank
Belington
Belington Bank
Tryon
Tryon Bank & Trust Co.
Berwind
Berwind Bank
Wadesboro
Bank of Wadesboro
Bruceton Mills
Bruceton Bank
Washington
Bank of Washington
Buffalo
Buffalo Bank
Wilmington
Peoples Savings Bank & Trust
Charleston
Kanawha Banking & Trust Co.
Co.
Kanawha Valley Bank
Wilmington Savings & Trust Co.
Greenville
Bank of Greenville
Winston-Salem
Wachovia Bank & Trust Co.
Hurricane
Putnam County Bank
Lewisburg
Greenbrier Valley Bank
Martinsburg
Peoples Trust Co.
SOUTH CAROLINA (6 banks)
Parsons
.Tucker County Bank
Beaufort
Peoples Bank
Petersburg
Potomac Valley Bank
Bishopville
Peoples Bank
Quinwood
Bank of Quinwood
Camden
Commercial Bank
Rainelle
Bank of Rainelle
Charleston
Carolina Savings Bank
Romney
Bank of Romney
Chester
Commercial Bank
St. Albans
Bank of St Albans
Hartsville
Bank of Hartsville
St. Marys
Pleasants County Bank
Spencer
Traders Trust & Banking Co.
Summersville
Farmers & Merchants Bank
VIRGINIA (60 banks)
Union.
Bank of Monroe
Abingdon
Farmers Exchange Bank
Wardensville
Capon Valley Bank
Alberta
Bank of Alberta
White Sulphur
Amelia
Union Bank & Trust Co.
Springs
Bank of White Sulphur Springs
Amherst
Farmers & Bank of Amherst
Blacksburg
Farmers & Merchants Bank
DISTRICT NO. 6 (55 banks)
Blackstone
Citizens Bank & Trust Co.
ALABAMA (17 banks)
Bowling Green
Union Bank & Trust Co.
Bridgewater
Planters Bank
Aliceville
Aliceville Bank & Trust Co.
Chase City
Peoples Bank & Trust Co.
Auburn
Bank of Auburn
Chatham
Planters Bank & Trust Co.
Birmingham
Birmingham Trust & Savings Co.
Christiansburg
Bank of Christiansburg
Clanton
Peoples Savings Bank
Coeburn
Farmers Exchange Bank
Clayton
Bank of Commerce
Danville
Danville Loan & Savings Ban
Columbiana
Columbiana Savings Bank
Edinburg
Farmers Bank
Cullman
Parker Bank & Trust Co.
Elkton
Bank of Elkton
Dothan
Dothan
Bank & Trust Co.
Farmville
Planters Bank & Trust Co.
Eutaw
Merchants & Farmers Bank of
Front Royal
Bank of Warren
Greene
County
Glade Spring
Bank of Glade Spring
Guin
Marion County Banking Co.
Halifax
Bank of Halifax
Marion
Junction
Marion
Junction
State Bank
Hillsville
Carroll County Bank
Montgomery
Union Bank & Trust Co.
Hilton Village
Bank of Warwick
Oneonta
Citizens
Bank
Kenbridge
Bank of Lunenburg
Pine Apple
Bank of Pine Apple
Lacrosse
Bank of Lacrosse
Selma
Peoples Bank & Trust Co.
Lawrenceville
Farmers & Merchants Bank
Thomaston
Planters Bank & Trust Co.
Lynchburg
Lynchburg Trust & Savings
York/.
Bank
of York
Bank
Mathews
Farmers Bank
FLORIDA (5 banks)
McKenney
Bank of Dinwiddie
Bradenton
Manatee River Bank & Trust Co.
Montross
Peoples Bank
Fort Lauderdale
Broward Bank & Trust Co.
Mount Jackson
Peoples Bank
Miami
American Bank & Trust Co.
Norfolk
Merchants & Planters Bank
Ocala
Commercial Bank & Trust Co.
Odd
Citizens Bank of Poquoson
St. Petersburg
Union Trust Co.
Petersburg
Petersburg Savings & American
Trust Co.
GEORGIA (18 banks)
Phoebus
Bank of Phoebus
Portsmouth
Merchants & Farmers Bank
Adairsville
Bank of Adairsville
Powhatan
Bank of Powhatan
Atlanta
Trust Co. of Georgia
Pulaski
Pulaski Trust Co.
Augusta
Georgia Railroad Bank & Trust
Remington
State Bank of Remington
Co.
Rich Creek
Farmers & Merchants Bank
Bainbridge
Citizens Bank & Trust Co.
Richmond
Bank of Commerce & Trusts
Blackshear
Blackshear Bank
Mechanics & Merchants Bank
Brunswick
Brunswick Bank & Trust Co.
Southern Bank & Trust Co.
Canton
Bank of Canton
State-Planters Bank & Trust Co.
Columbus
Columbus Bank & Trust Co.
Rocky Mount
Bankers Trust Co.
Merchants & Mechanics Bank
Rural Retreat
Peoples Bank
Commerce
Northeastern Banking Co.
Shawsville
Bank of Shawsville
Lawrenceville
Brand Banking Co.
Smithfield
Bank of Smithfield
Millen
Bank of Millen
Merchants & Farmers Bank
Monroe
Farmers Bank
South Boston
Citizens Bank
Pelham
Farmers Bank
South Boston Bank &.Trust Co.
Savannah
Citizens Bank & Trust Co.
South Hill
Citizens Bank
Savannah Bank & Trust Co.
Stanardsville
Bank of Greene
Soperton
Bank of Soperton
Suffolk
American Bank & Trust Co.
Swainsboro
Central Bank
Farmers Bank of Nansemond
Tazewell
Farmers Bank of Clinch Valley
LOUISIANA^ (6 banks)
Vienna
Vienna Trust Co.
Waverly
Bank of Waverly
Alexandria
Rapides Bank & Trust Co
Arabi
St. Bernard Bank & Trust Co.
Waynesboro
Citizens-Waynesboro Bank &
Lake Charles
Lake Charles Bank & Trust Co.
Trust Co.
Williamsburg
Peninsula Bank & Trust Co.
New Orleans
American Bank & Trust Co.
Louisiana Savings Bank & Trust
Winchester
Union Bank
Co.
Woodstock
Shenandoah County Bank &
Slidell
Bank of Slidell
Trust Co.
1
Exclusive of part of State located in another district.



FEDERAL RESERVE SYSTEM

I I

3

STATE BANK AND TRUST COMPANY MEMBERS-Continued
DISTRICT NO. 6-Continued
DISTRICT NO. 7-Continued
MISSISSIPPI (2 banks)
ILLINOIS—continued
Forest
Bank of Forest
Rushville
Rushville State Bank
St. Charles
State Bank of St. Charles
Jackson
Deposit Guaranty Bank &
Shannon
First State Bank
Trust Co.
Shelbyville
Shelby County State Bank
TENNESSEE (7 banks)
Shelby Loan & Trust Co.
Skokie
Niles
Center State Bank
Carthage
Citizens Bank & Trust Co.
Springfield
Springfield Marine Bank
Chattanooga
American Trust & Banking Co.
Thomson
Thomson
State Bank
Greeneville
Greene County Bank
Tinley Park
Bremen State Bank
Hartsville
Bank of Hartsville
Tolono
Citizens
Bank
Knoxville
Commercial Bank & Trust Co.
Urbana
Busey's State Bank
Lewisburg
Peoples & Union Bank
Villa Grove
Villa Grove State Bank
Nashville
Commerce Union Bank
Walnut
Citizens State Bank
Washington
Danforth
Banking Co.
DISTRICT NO. 7 (392 banks)
Wenona
First State Bank
Wheaton
Gary-Wheaton
Bank
ILLINOIS^ (81 banks)
Wheaton Trust & Savings Bank
Abingdon
Abingdon Bank & Trust Co.
Wilmette
Wilmette State Bank
Argenta
Gerber State Bank
Yorkville
Farmers State Bank
Arthur
State Bank of Arthur
Bloomington
Corn Belt Bank
INDIANAi
(77 banks)
Peoples Bank
Blue Island
State Bank of Blue Island
Amboy
State Bank of Amboy
Blue Mound
State Bank of Blue Mound
Anderson
Citizens Banking Co.
Buffalo
Farmers State Bank
Andrews
State Bank of Andrews
Bushnell
Farmers & Merchants State Bank Angola
Steuben County State Bank
Byron
Rock River Community Bank
Auburn
Auburn State Bank
Camp Grove
Camp Grove State Bank
Avilla
Community State Bank
Chadwick
Farmers State Bank
Battle Ground
Battle Ground State Bank
Chicago
Amalgamated Trust & Savings
Berne
First Bank of Berne
Bank
Bippus
Bippus State Bank
Chicago City Bank & Trust Co.
Boswell
Farmers & Merchants Bank
East Side Trust & Savings Bank
Bourbon
First State Bank
Harris Trust & Savings Bank
Brazil
Brazil Trust Co.
Kaspar-American State Bank
Bremen
Bremen State Bank
Lake Shore Trust & Saving
Brookville
Peoples Trust Co.
Bank
Cambridge City
Wayne Trust Co.
Lake View Trust & Savings
Carthage
State Bank of Carthage
Bank
Chesterton
Chesterton State Bank
Main State Bank
Columbia City
Citizens State Bank
Metropolitan State Bank
Farmers Loan & Trust Co.
Metropolitan Trust Co.
Connersville
Central State Bank
Northern Trust Co.
Fayette Bank & Trust Co.
Sears-Community State Bank
Crawfordsville
Elston Bank & Trust Co.
South Chicago Savings Bank
Darlington
Farmers & Merchants State Bank
State Bank of Clearing
Decatur
First State Bank
Chillicothe
Truitt-Matthews Banking Co.
Delphi
Union Bank & Trust Co.
Cowden.
State Bank of Cowden
De Motte
De Motte State Bank
East Moline
State Bank of East Moline
Elkhart
First Old State Bank
Elburn
Kane County Bank & Trust Co.
St. Joseph Valley Bank
Eureka
State Bank of Eureka
Etna Green
Etna Bank
Evans ton
Evanston Trust & Savings Bank
Fairmount
Fairmount State Bank
State Bank & Trust Co.
Fowler
Fowler State Bank
Freeport
State Bank of Freeport
Franklin
Farmers Trust Co.
Fulton
Fulton State Bank
Garrett
Garrett State Bank
Galesburg
Farmers & Mechanics Bank
Gary
Gary State Bank
Geneva
State Bank of Geneva
Gary Trust & Savings Bank
Glasford
Glasford State Bank
Greencastle
First-Citizens Bank & Trust Co.
Hillsdale
Old Farmers & Merchants State
Greenfield
Greenfield Banking Co.
Bank
Greensburg
Union Trust Co.
Illiopolis
Farmers State Bank
Hartford City
Citizens State Bank
Joy
Joy State Bank
Hebron
Citizens Bank
Kankakee
First Trust & Savings Bank
Hope
Hope State Bank
Lanark
Exchange State Bank
Howe
State Bank of Lima
LaSalle
LaSalle State Bank
Indianapolis
Fletcher Trust Co.
Lostant
Farmers State Bank
Jamestown
Citizens State Bank
McHenry
West McHenry State Bank
Kokomo
Union Bank & Trust Co.
Metamora
Metamora State Bank
Ladoga
Ladoga State Bank
Milford
Citizens State Bank
La Fayette
La Fayette Savings Bank
Millbrook
Farmers State Bank
Linden
Linden State Bank
Moline
Moline State Trust & Savings
Logansport
Farmers & Merchants State
Bank
Bank
Momence
Parish Bank & Trust Co.
Marshall
Citizens State Bank
Morrison
Smith Trust & Savings Bank
Milan
State Bank of Milan
Mt. Pulaski
Farmers Bank
Mohawk
Mohawk State Bank
Niantic
State Bank of Niantic
Monticello
State & Savings Bank
Oak Park
Oak Park Trust & Savings Bank
Montpelier
Bank of Montpelier
Petersburg
Schirding State Bank
Muncie
Merchants Trust Co.
Piper City
State Bank of Piper City
Nappanee
State Bank of Nappanee
Port Byron
Port Byron State Bank
Oldenburg
Farmers & Merchants State Bank
Riverdale
First Trust & Savings Bank
Parker
Parker Banking Co.
Rochester
Rochester State Bank
Pendleton
Pendleton Banking Co.
Rock Island
Rock Island Bank & Trust Co.
Peru
Peru Trust Co.
State Bank of Rock Island
Poland
Poland-State Bank
1

Exclusive of part of State located in another district.


132.

A N N U A L REPORT OF BOARD OF GOVERNORS

STATE BANK AND TRUST COMPANY MEMBERS-Continued
DISTRICT NO. 7—Continued
DISTRICT NO. 7—Continued
MICHIGAN—continued
INDIANA—continued
Albion
Commercial & Savings Bank
Porter
First State Bank
Algonac
Algonac Savings Bank
Reynolds
Bank of Reynolds
Allegan
Allegan State Bank
Rising Sun
Rising Sun State Bank
Alpena
Alpena Savings Bank
Roachdale
Roachdale Bank & Trust Co.
Alto
Farmers State Bank
Saratoga
Saratoga State Bank
Ann Arbor
Ann Arbor Bank
South Bend
First Bank & Trust Co.
State Savings Bank
Sweetser
Farmers State Bank
Armada
Armada State Bank
Tipton
Farmers Loan & Trust Co.
Bay City
Bay City Bank
Valiparaiso
First State Bank
Peoples Commercial & Savings
Van Buren
Van Buren Bank
Bank
Veedersburg
Veedersburg State Bank
Belleville.
Peoples State Bank
Warren
Exchange Bank
Berrien Springs
Berrien Springs State Bank
Warsaw
Lake City Bank
Big Rapids
Big Rapids Savings Bank
Waterloo
Citizens State Bank
Blanchard
Blanchard State Bank
West College Corner
Blissfield
Blissfield State Bank
(College Corner,
Bronson
Peoples State Bank
Ohio, P.O.)
Farmers State Bank
Brown City
Brown City Savings Bank
Winamac
First Union Bank & Trust Co.
Byron Center
Byron Center State Bank
Caledonia
State Bank of Caledonia
IOWA (56 banks)
Capac
Capac State Savings Bank
Cass City
Cass City State Bank
Algona
Iowa State Bank
Pinney State Bank
Security State Bank
Cassopolis
Cass County State Bank
Ames
Ames Trust & Savings Bank
Charlevoix
Charlevoix County State Bank
Auburn
Auburn Savings Bank
Charlotte
Eaton County Savings Bank
Aurelia
First Trust & Savings Bank
Chelsea
Chelsea State Bank
Blencoe
Blencoe State Bank
Chesaning
Chesaning State Bank
Cherokee
Cherokee State Bank
Clare
Citizens State Bank
Churdan
First State Bank
Clarkston
Clarkston State Bank
Clarinda
Citizens State Bank
Coloma
State
Bank of Coloma
Clear Lake
Clear Lake Bank & Trust Co.
Coopersville
Coopersville State Bank
Corydon
Corydon State Bank
Corunna
Old
Corunna
State Bank
Davenport
Davenport Bank & Trust Co.
Croswell
State Bank of Croswell
Des Moines
Bankers Trust Co.
Davison
Davison State Bank
Dubuque
American Trust & Savings Bank
Decatur
First State Bank
Early
Early Savings Bank
Detroit
Commonwealth Bank
Estherville
Iowa Trust & Savings Bank
Detroit Bank
Fairfield
Iowa State Bank & Trust Co.
United Savings Bank
Fontanelle
State Savings Bank
Dexter
Dexter Savings Bank
Forest City
Forest City Bank & Trust Co.
Dundee
Monroe County Bank
Fort Dodge
The State Bank
Durand
Shiawassee County Bank
Fort Madison
Fort Madison Savings Bank
Ecorse
Ecorse Savings Bank
Gladbrook
State Bank
Farmington
Farmington State Bank
Glenwood
Glenwood State Bank
Old State Bank
Goldfield
Goldfield State Bank & Trust Co. Fennville
Fen ton
State Savings Bank
Holstein
Holstein State Bank
Flint
Citizens Commercial & Savings
Hull
Iowa State Bank
Bank
Ida Grove
Ida County State Bank
Genesee County Savings Bank
Jesup
Farmers State Bank
Merchants & Mechanics Bank
Keota
Security State Bank
Flushing
Peoples State Bank
Laurel
Peoples Savings Bank
Fountain
Fountain State Bank
Lineville
Lineville State Bank
Frankenmuth
Frankenmuth State Bank
Lohrville
Commercial Savings Bank
Frankfort
State Savings Bank
Maquoketa
Jackson State Savings Bank
Fremont
Fremont State Bank
Mason City
United Home Bank & Trust Co.
Old State Bank
Mondamin
Mondamin Savings Bank
Gagetown
State Savings Bank
Monticello
Monticello State Bank
Gaylord
Gay lord State Savings Bank
Moorhead
Moorhead State Bank
Grand Haven
Grand Haven State Bank
Muscatine
Central State Bank
Peoples Savings Bank
Muscatine Bank & Trust Co.
Grand Rapids
Old Kent Bank
New Hampton
Security State Bank
Union Bank of Michigan
Newton
Jasper County Savings Bank
Grandville
Community State Bank
Ogden
City State Bank
Grant
Grant State Bank
Osage
Home Trust & Savings Bank
Greenville
Commercial State Savings Bank
Ottumwa
Fidelity Savings Bank
First State Bank
Union Bank & Trust Co.
Grosse Pointe
Grosse Pointe Bank
Riceville
Riceville State Bank
Hamtramck
Liberty State Bank
Royal
Home State Bank
Harbor Beach
State Bank
Sheldon
Security State Bank
Harbor Springs
Emmet County State Bank
Shenandoah
Security Trust & Savings Bank
Hillsdale
Hillsdale State Savings Bank
Storm Lake
Commercial Trust & Savings
Holland
Holland State Bank
Bank
Peoples State Bank
Security Trust & Savings Bank
Holly
First State & Savings Bank
Strawberry Point... .Union Bank & Trust Co.
Howell
First State & Savings Bank
Templeton
Temple ton Savings Bank
lmlay
City
Imlay City State Bank
Tipton
Tipton State Bank
Jackson
Jackson City Bank & Trust Co.
Washington
Washington State Bank
Jonesville
Grosvenor
Savings Bank
Williams
Williams Savings Bank
Kalamazoo
Industrial State Bank
Kingston
Kingston
State
Bank
MICHIGANi (135 banks)
Lakeyiew
Bank of Lakeview
Adrian
Adrian State Savings Bank
Lansing
American State Savings Bank
Commercial Savings Bank
Bank of Lansing
Lenawee County Savings Bank
Lapeer
Lapeer Savings Bank
1
Exclusive of part of State located in another district.



FEDERAL RESERVE SYSTEM

*33

STATE BANK AND TRUST COMPANY MEMBERS—Continued
DISTRICT NO. 7—Continued
DISTRICT NO. 7—Continued
MICHIGAN—continued
WISCONSIN-continued
Oakfield
Bank of Oakfield
Lawrence
Home State Bank
Platteville
State Bank of Platteville
Lowell
State Savings Bank
Sauk City
Farmers & Citizens Bank
Ludington
Ludington State Bank
Sheboygan
Bank of Sheboygan
Manchester
Peoples Bank
Citizens State Bank
Union Savings Bank
South Milwaukee. . .Home State Bank
Manistee
Manistee County Savings Bank
Sturgeon Bay
Bank of Sturgeon Bay
Marcellus
G. W. Jones Exchange Bank
Viroqua
State Bank of Viroqua
Mason
Farmers Bank
Farmers State Bank
Merrill
„ . .Farmers & Merchants State Bank Waupaca
Waupun
State Bank of Waupun
Midland
Chemical State Savings Bank
Wausau
Citizens State Bank
Milan
Peoples State Bank
West Allis
Milwaukee County Bank
Montague
Farmers State Bank
Whitewater
First Citizens State Bank
Morrice
Morrice State Bank
Mount Clemens
Mount Clemens Savings Bank
DISTRICT NO. 8 (132 banks)
Mount Pleasant
Exchange Savings Bank
Isabella County State Bank
ARKANSAS (12 banks)
New Baltimore
Citizens State Savings Bank
New Boston
Peoples State Bank
Arkadelphia
Elk Horn Bank & Trust Co.
New Haven
New Haven Savings Bank
Batesville
Citizens Bank & Trust Co.
Niles
State Bank of Niles
Blytheville
Farmers Bank & Trust Co.
North Branch
Pioneer Bank
Camden
Merchants & Planters Bank
Onsted
Onsted State Bank
El Dorado
Exchange Bank & Trust Co.
Oxford
Oxford Savings Bank
Fordyce
Fordyce Bank & Trust Co.
Petoskey
First State Bank
Hot Springs
Arkansas Trust Co.
Pigeon
Pigeon State Bank
Little Rock
W. B. Worthen Co.
Pinconning
Pinconning State Bank
Russellville
Bank of Russellville
Plymouth
Plymouth United Savings Bank
Peoples Exchange Bank
Richmond
Macomb County Saving Bank
Sheridan
Grant County Bank
River Rouge
River Rouge Savings Bank
Waldron
Bank of Waldron
Romeo
Romeo Savings Bank
St. Clair
Commercial & Savings Bank
ILLINOIS^ (27 banks)
St. Johns
State Bank of St. Johns
Breese
State Bank of Breese
Saugatuck
Fruit Growers State Bank
Cairo
First Bank & Trust Co.
Sebewaing
Farmers & Merchants State Bank
Clay City
Clay City Banking Co.
South Haven
Citizens State Bank
Dongola
First State Bank
First State Bank
Dupo
Dupo State Savings Bank
Sparta
Sparta State Bank
DuQuoin
DuQuoin State Bank
Spring Lake
Spring Lake State Bank
East St. Louis
Union Trust Co.
Springport
Springport State Savings Bank
Edwards ville
Bank of Edwards ville
Traverse City
First-Peoples State Bank
Effingham
Effingham State Bank
Traverse City State Bank
Eldorado
C. P. Burnett & Sons, Bankers
Trenton
Trenton State Bank
Farina
State Bank of Farina
Vassar
State Bank of Vassar
Hillsboro
Montgomery
County Bank
Wayne
Wayne State Bank
Hoyleton
Hoyleton State & Savings Bank
West Branch
State Savings Bank
Jacksonville
Elliott
State
Bank
Whitehall
State Bank of Whitehall
Johnston City
Johnston City State Bank
Williamston
Peoples State Bank
Keyesport
State Bank of Keyesport
Wyandotte
Wyandotte Savings Bank
Litchfield
Litchfield Bank & Trust Co.
Yale
Yale State Bank
Mounds
First
State Bank
Zeeland
Zeeland State Bank
Olmsted
First State Bank
Quincy
State
Street Bank & Trust Co.
WISCONSIN^ (43 banks)
Red Bud
First State Bank
Rich
view
Rich
view
State Bank
Antigo
Fidelity Savings Bank
Ridgway
Gallatin County Bank
Beloit
Beloit Savings Bank
St.
Elmo
Fayette
County
Bank
Beloit State Bank
St. Peter
First State Bank
Berlin
Farmers & Merchants Bank
Teutopolis
Teutopolis
State
Bank
Burlington
Bank of Burlington
Vandalia
Farmers & Merchants Bank
Chilton
Commercial Bank
Cudahy
Cudahy State Bank
INDIANA^ (14 banks)
De Forest
De Forest-Morrisonville Bank
Denmark
Denmark State Bank
Bloomfield
Bloomfield State Bank
Edgerton
Tobacco Exchange Bank
Charlestown
First Bank of Charlestown
Evansville
Union Bank & Trust Co.
Corydon
Old Capital Bank & Trust Co.
Fox Lake
State Bank of Fox Lake
French Lick
French Lick State Bank
Francis Creek
State Bank of Francis Creek
Hardinsburg
State Bank of Hardinsburg
Green Bay
Peoples Trust & Savings Bank
Loogootee
Union Bank
Green Lake
Green Lake State Bank
Oaktown
Oaktown Bank
Kaukauna
Bank of Kaukauna
Orleans
Bank of Orleans
Kewaunee
State Bank of Kewaunee
Petersburg
Citizens State Bank
Lake Mills
Bank of Lake Mills
Richland
Lake State Bank
Lancaster
Lancaster State Bank
Salem
State Bank of Salem
Manitowoc
Manitowoc Savings Bank
Sandborn
Sandborn Banking Co.
Marathon
State Bank of Marathon City
Scottsburg
Scott County State Bank
Markesan
Markesan State Bank
Washington
Citizens Loan & Trust Co.
Milwaukee
American State Bank
Commonwealth Mutual Savings
KENTUCKY^ (11 banks)
Bank
Bardstown
Farmers Bank & Trust Co.
Home Savings Bank
Campbellsville
Citizens Bank & Trust Co.
Marshall & llsley Bank
Clay
Farmers
Bank
Northern Bank
Danville
Boyle Bank & Trust Co.
Park Savings Bank
Hartford
Citizens
Bank
Teutonia Avenue State Bank
Hopkinsville
Planters Bank & Trust Co.
West Side Bank
i Exclusive of part of State located in another district.



i34

ANNUAL REPORT OF BOARD OF GOVERNORS

STATE BANK AND TRUST COMPANY MEMBERS-Continued
DISTRICT NO. 8—Continued
DISTRICT N O . 9-Continued
KENTUCKY—continued
MICHIGAN—continued
Louisville
Kentucky Title Trust Co.
Escanaba
State Savings Bank
Lincoln Bank & Trust Co.
Ewen
State Bank of Ewen
Louisville Trust Co.
Gladstone
Gladstone State Savings Bank
Middletown
Bank of Middletown
Gwinn
Gwinn State Savings Bank
Owensboro
First-Owensboro Bank & Trust
Iron
River
Miners
State Bank
Co.
Ishpeming
Peninsula Bank
L'Anse
Commercial
Bank
MISSOURI (68 banks)
Manistique
State Savings Bank
Arnold
Bank of Maxville
Menominee
Commercial Bank
Buffalo
O'Bannon Banking Co.
Newberry
Newberry State Bank
California
Farmers & Traders Bank
Ontonagon
Citizens State Bank
Camdenton
Camden County Bank
Sault Ste. Marie
Central Savings Bank
Carrollton
Carroll County Trust Co.
Sault Savings Bank
Clayton.
St. Louis County Bank
South Range
South Range State Bank
Clinton
Union State Bank
Crane
Bank of Crane
MINNESOTA (24 banks)
Cuba
Peoples Bank
Austin
Austin State Bank
Eldon
Bank of Eldon
Caledonia
Sprague State Bank
Elsberry
Bank of Lincoln County
Cannon
Falls
Security
State Bank
Fair Play
Citizens State Bank
Chatfield
Root River State Bank
Farmington
United Bank
Clinton
Clinton
State
Bank
Fenton
Farmers & Merchants Bank
Hawley
State Bank of Hawley
Fulton
Callaway Bank
Houston
Security
State
Bank
Glasgow
Glasgow Savings Bank
Lakefield
Farmers State Bank
Hannibal
Farmers & Merchants Bank &
Madelia
Farmers
State
Bank
Trust Co.
Minneapolis
Fidelity State Bank
Keytesville
Bank of Keytesville
Northfield
State Bank of Northfield
Lancaster
Schuyler County State Bank
Owatonna
Security Bank & Trust Co.
Lebanon
State Bank of Lebanon
Plainview
Peoples
State Bank.
State Savings Bank
Rockville
State Bank of Rockville
Luxemburg
Lemay Bank & Trust Co.
Rushmore
First
State
Bank
Maplewood
Maplewood Bank & Trust Co.
St. Cloud
Zapp State Bank
Peoples State Bank
Sleepy
Eye
State
Bank
of Sleepy Eye
Marshall
Wood & Huston Bank
Springfield
Farmers & Merchants State Bank
Memphis
Bank of Memphis
State
Bank
of SpringfieldMexico
Mexico Savings Bank
Virginia
State Bank of Virginia
Moberly .*
City Bank & Trust Co.
Wadena
Wadena
County
State Bank
Mechanics Bank & Trust Co.
Welcome
Welcome State Bank
Monroe City
Monroe City Bank
West Concord
Farmers State Bank
Montrose
Montrose Savings Bank
Winona
Merchants Bank
Normandy
Normandy State Bank
Paris
Paris Savings Bank.
MONTANA (26 banks)
Pine Lawn
Pine Lawn Bank & Trust Co.
Polo
Farmers Bank
Anaconda
Daly Bank & Trust Co.
St. Charles
St. Charles Savings Bank
Belt
Belt Valley Bank
Union Savings Bank
Big Timber
Citizens Bank & Trust Co.
Ste. Genevieve
Bank of Ste. Genevieve
Billings
Security Trust & Savings Bank
St. Louis
Baden Bank
Bozeman
Gallatin Trust & Savings Bank
Bremen Bank & Trust Co.
Security Bank & Trust Co.
Cass Bank & Trust Co.
Broadus
Powder River County Bank
Chippewa Trust Co.
Butte
Metals Bank & Trust Co.
Easton-Taylor Trust Co.
Cascade
Stockmens Bank
Jefferson Bank & Trust Co.
Choteau
Citizens State Bank
Jefferson-Gravois Bank
Columbus
Yellowstone Bank
Lindell Trust Co.
Deer Lodge
Deer Lodge Bank & Trust Co.
Manchester Bank
Denton
Farmers State Bank
Manufacturers Bank & Trust Co.
Fromberg
Clarks Fork Valley Bank
Mercantile-Commerce Bank &
Glasgow
Farmers-Stockgrowers Bank
Trust Co.
Great Falls
Montana Bank & Trust Co.
Mississippi Valley Trust Co.
Hamilton
Ravalli County Bank
Mound City Trust Co.
Helena
Union Bank & Trust Co.
North St. Louis Trust Co.
Laurel
Yellowstone Bank
Plaza Bank
Libby
First State Bank
Southern Commercial & Savings
Richey
First State Bank
Bank
Ronan
Ronan State Bank
Southwest Bank
Terry
State Bank of Terry
Tower Grove Bank & Trust Co.
Townsend
State Bank of Townsend
United Bank & Trust Co.
Victor
Farmers State Bank
St. Louis County. .. Gravois Bank
Worden
Farmers State Bank
Sedalia
Sedalia Bank & Trust Co.
Springfield
Southern Missouri Trust Co.
SOUTH DAKOTA (23 banks)
Steelville
Community Bank
Alcester
State Bank of Alcester
Sweet Springs
Chemical Bank
Arlington.
Citizens State Bank
Tipton
Tipton Farmers Bank
Belle
Fourche
Bank
of Belle Fourche
Vandalia
Vandalia State Bank
Belvidere
Belvidere State Bank
Versailles
Bank of Versailles
Buffalo
First
State
Bank
Vienna
Maries County Bank
Custer
Custer County Bank
Washington
Franklin County Bank
Faith
Farmers
State
Bank
Webster Groves
Webster Groves Trust Co.
Flandreau
Farmers State Bank
Freeman
Merchants
State
Bank
DISTRICT NO. 9 (94 banks)
Fulton
Fulton State Bank
MICHIGAN* (15 banks)
Huron
Farmers & Merchants Bank
Madison
Security Bank & Trust Co.
Bark River
Bark River State Bank
1
Exclusive of part of State located in another district.



*35

FEDERAL RESERVE SYSTEM

STATE BANK AND TRUST COMPANY MEMBERS-Continued
DISTRICT NO. 9—Continued
DISTRICT NO. 10—Continued
MISSOURI—continued
SOUTH DAKOTA-continued
Kansas City
Commerce Trust Co.
Miller
Hand County State Bank
Mercantile Home Bank & Trust
Mitchell
Commercial Trust & Savings
Co.
Bank
Merchants Bank
Mobridge
Citizens Bank
King City
First State Bank
Onida
Onida Bank
Barton County State Bank
Presho
Farmers & Merchants State Bank Lamar
Neosho
Bank of Neosho
Sioux Falls
Union Savings Bank
Rich Hill
Security Bank
Sturgis
Bear Butte Valley Bank
St. Joseph
Empire Trust Co.
Toronto
Bank of Toronto
South St. Joseph....First St. Joseph Stock Yards
Vermillion
Citizens Bank
Bank
Webster
Security Bank
Stanberry
Farmers State Bank
Woonsocket
Sanborn County Bank
WISCONSIN^ (6 banks)
Boyceville
Bank of Boyceville
Glenwood City
First State Bank
Menomonie
Bank of Menomonie
Kraft State Bank
Rhinelander
Merchants State Bank
Tomahawk
Bradley Bank
DISTRICT NO. 10 (96 banks)
COLORADO (15 banks)
Brighton
Brighton State Bank
Craig
Moffat County State Bank
Del Norte
Rio Grande County Bank
Delta
Colorado Bank & Trust Co.
Denver
Central Savings Bank & Trust
Co.
International Trust Co.
Eaton
Eaton Bank
Fort Morgan
Farmers State Bank
Grand Junction
United States Bank
Gunnison
Gunnison Bank & Trust Co.
Hotchkiss
First State Bank
La Junta
Colorado Savings & Trust Co.
Sterling
Commercial Savings Bank
Security State Bank
Yuma
Farmers State Bank

Abilene
Augusta
Burns
Caldwell
Clay Center
Eldorado
Ellsworth
Goodland
Great Bend
Hiawatha
Hill City
Horton
Hoxie
Hutchinson
Kansas City
Kinsley
Lamed
Liberal
Luray
Ness City
Norton
Oakley..
Osage City
Pratt
Rossville
St. Marys
Sedan
Sylvan Grove
Tonganoxie
Topeka
Wakefield
Winfield

Albany
Carthage
Craig

KANSAS (32 banks)
Citizens Bank
Prairie State Bank
Burns State Bank
Stock Exchange Bank
Union State Bank
Citizens State Bank
Citizens State Bank
Goodland State Bank
American State Bank
Morrill & Janes Bank
Farmers & Merchants Bank
Home State Bank
Hoxie State Bank
Hutchinson State Bank
Riverview State Bank
Kinsley Bank
First State Bank
Citizens State Bank
Peoples State Bank
First State Bank
First State Bank
Farmers State Bank
Citizens State Bank
Peoples Bank
Peoples State Bank
St. Marys State Bank
Sedan State Bank
Sylvan State Bank
First State Bank
Fidelity Savings State Bank
Farmers & Merchants State Bank
The State Bank
MISSOURI (13 banks)
Gentry County Bank
Bank of Carthage
Bank of Craig

Alma
Bancroft
Blair
Blue Hill
Chappell
Hartington
Lexington
North Platte
Pawnee City
Scribner
Stromsburg
Valley
Wahoo
Wallace

Aztec
Taos
Ada
Canton
Eldorado
Fairview
Garber
Medford
Okarche
Purcell
Stroud
Woodward

NEBRASKA (14 banks)
Harlan County Bank
Citizens Bank
Washington County Bank
Commercial Bank
Deuel County State Bank
Bank of Hartington
Farmers State Bank
McDonald State Bank
Citizens State Bank
Farmers State Bank
Stromsburg Bank
Bank of Valley
Wahoo State Bank
Farmers State Bank
NEW MEXICO^ (2 banks)
Citizens Bank
First State Bank
OKLAHOMA^ (10 banks)
Oklahoma State Bank
Bank of Canton
First State Bank
Fairview State Bank
Bank of Garber
Grant County Bank
First Bank of Okarche.
First State Bank
First State Bank
Bank of Woodward

WYOMING (10 banks)
Evanston
Stockgrowers Bank
Gillette
Stockmens Bank
Lusk
Lusk State Bank
Mountain View
Uinta County State Bank
Newcastle
First State Bank
Saratoga
Saratoga State Bank
Sundance
Sundance State Bank
Wheatland
State Bank of Wheatland
Stock Growers Bank
Worland
Farmers State Bank

Tucson

Minden
Shreveport

Carlsbad
Deming
Logan

DISTRICT NO. 11 (95 banks)
ARIZONA! (1 bank)
Southern Arizona Bank & Trust
Co.
LOUISIANA! (2 banks)
Minden Bank & Trust Co.
Continental-American Bank &
Trust Co.
NEW MEXICO! (3 banks)
American Bank
Mimbres Valley Bank
McFarland Bros. Bank
OKLAHOMA! (1 bank)

Atoka

1

Exclusive of part of State located in another district.


Atoka State Bank

i36

A N N U A L REPORT OF BOARD OF GOVERNORS

STATE BANK AND TRUST COMPANY MEMBERS—Continued
DISTRICT NO. 11-Continued
|
DISTRICT NO. 11—Continued
TEXAS (88 banks)
TEXAS—continued
Aransas Pass
First State Bank
Wellington
Wellington State Bank
Bandera
First State Bank
West Columbia
First Capitol State Bank
Bangs
First State Bank
Wharton
Security Bank & Trust Co.
Bay City
Bay City Bank & Trust Co.
Wharton Bank & Trust Co.
Beaumont
Security State Bank & Trust Co. Winters
Winters State Bank
Beeville
State Bank & Trust Co.
Yorktown
First State Bank
Brackettville
First State Bank
Bremond
First State Bank
DISTRICT NO. 12 (72 banks)
Brenham
Washington County State Bank
Brownfield
Brownfield State Bank
ARIZONA* (1 bank)
Bryan
First State Bank & Trust Co.
Buckeye
Buckeye Valley Bank
Celina
First State Bank
Clarendon
Farmers State Bank
Cleveland
Farmers State Bank
CALIFORNIA (18 banks)
Clifton
Farmers State Bank
Auburn
Placer County Bank
Crosby
Crosby State Bank
Carmel
Bank of Carmel
Crowell
Crowell State Bank
Solano County Bank
Cuero
Farmers State Bank & Trust Co. Fairfield
Lakewood Village... Peoples Bank
Dalhart
Citizens State Bank
Lodi
Farmers & Merchants Bank
Dallas
Liberty State Bank
Long Beach
Farmers & Merchants Bank
De Kalb
State Bank of De Kalb
Los Angeles
California Bank
Del Rio
Del Rio Bank & Trust Co.
California Trust Co.
Dodson
First State Bank
Union Bank & Trust Co.
Dumas
First State Bank
Newman
Bank
of Newman
East Bernard
Union State Bank
Oakland
Bank of Commerce
Eden
Eden State Bank
Pasadena
Citizens
Commercial Trust &
Ferris
Farmers & Merchants State Bank
Savings Bank
Forney
Forney State Bank
First
Trust
& Savings Bank
Franklin
First State Bank
Salinas
Monterey County Trust & SavFredericksburg
Security State Bank
ings
Bank
Gatesville
Guaranty Bank & Trust Co.
San Francisco
American Trust Co.
Gladewater
First State Bank
Wells Fargo Bank & Union
Gonzales
Gonzales State Bank
Trust Co.
Granger
First State Bank
San Rafael
Bank of San Rafael
Hamilton
Hamilton Bank & Trust Co.
Santa Paula
Citizens State Bank
Hempstead
Citizens State Bank
Houston
Citizens State Bank
Guardian Trust Co.
IDAHO (10 banks)
University State Bank
Aberdeen
Bank of Aberdeen
Iola
Iola State Bank
American Falls
American Falls Bank
Kerrville
First State Bank
Arco
Butte County Bank
Knox City
Citizens State Bank
Glenns Ferry
Glenns Ferry Bank
Kosse
First State Bank
Hazelton State Bank
Ladonia
Farmers & Merchants State Bank Hazelton
Malad City
J. N. Ireland & Co., Bankers
Llano
Moore State Bank
Orofino
Bank of Orofino
Loraine
First State Bank
Richfield.
First State Bank
Lorenzo.. ;
Lorenzo State Bank
Soda Springs
Largilliere Co., Bankers
Madisonville
Farmers State Bank
Twin
Falls
Twin
Falls Bank & Trust Co.
Marion
Marion State Bank
Marlin
First State Bank
NEVADA (2 banks)
Matador
First State Bank
Mathis
First State Bank
Elko
Nevada Bank of Commerce
Maypearl
First State Bank
Pioche
Bank of Pioche
McAllen
City State Bank & Trust Co.
Monahans
First State Bank
OREGON (6 banks)
Mount Pleasant
Guaranty Bond State Bank
Muleshoe...,
Muleshoe State Bank
Albany
Bank of Albany
Pearsall
Security State Bank
Beaverton
First Security Bank
Ralls
Security State Bank & Trust Co. Dallas
Dallas City Bank
Rankin
First State Bank
Halsey
Halsey State Bank
Richardson
Citizens State Bank
Myrtle Point
Security Bank
Robert Lee
Robert Lee State Bank
Oakland
E. G. Young & Co. Bank
Roby
Citizens State Bank
Rockwall
First State Bank
UTAH (21 banks)
Roscoe
Roscoe State Bank
Royse City
Citizens State Bank
Brigham
State Security Bank
Rusk
Farmers & Merchants State
Cedar City
Bank of Southern Utah
Bank & Trust Co.
Ephraim
Bank
of Ephraim
San Marcos
State Bank & Trust Co.
Gunnison
Gunnison Valley Bank
Schertz
Schertz State Bank
Heber
Commercial
Bank of Heber City
Seguin
Seguin State Bank & Trust Co.
Helper
Helper State Bank
Seminole
Seminole State Bank
Kaysville
Barnes
Banking
Co.
Shamrock
Farmers & Merchants State Bank Logan
Cache Valley Banking Co.
Shiro
Farmers State Bank
Nephi
Commercial
Bank
Silsbee
Silsbee State Bank
Ogden
Commercial Security Bank
Sin ton
Commercial State Bank
Price
Carbon Emery Bank
Spearman
First State Bank
Provo
Farmers & Merchants Bank
Spur
Spur Security Bank
Salina
First State Bank
Sulphur Springs
Sulphur Springs State Bank
Salt Lake City
Tracy Loan & Trust Co.
Taft
First State Bank
Utah Savings & Trust Co.
Thorndale
Thorndale State Bank
Walker Bank & Trust Co.
Spanish Fork
Bank of Spanish Fork
Tomball
Guaranty Bond State Bank
Commercial Bank
Trent
Home State Bank
Exclusive of part of State located in another district.


1

FEDERAL RESERVE SYSTEM

J

37

STATE BANK AND TRUST COMIP ANY MEMBERS-Continued
DISTRICT NO. 12—Continued
DISTRICT NO. 12—Continued
UTAH—continued
WASHINGTON—continued
Springville
Springville Banking Co.
Lacrosse
First State Bank
Puyallup
Citizens State Bank
Vernal
Bank of Vernal
Ridgefield
Ridgefield State Bank
Uintah State Bank
Ritzville
Ritzville State Bank
Rockford
Farmers & Merchants Bank
WASHINGTON (14 banks)
Seattle
Seattle Trust & Savings Bank
Almira
Almira State Bank
Selah
Selah State Bank
Cashmere
Cashmere Valley Bank
Spokane
Washington Trust Co.
Coulee City
Security State Bank
Union town
Farmers State Bank
Kelso
Cowlitz Valley Bank
Wilbur
State Bank of Wilbur




i38

ANNUAL REPORT OF BOARD OF GOVERNORS

DESCRIPTION OF FEDERAL RESERVE DISTRICTS
Land area
Civilian
(square
population1
miles)
May 1, 1942

Federal Reserve district
No.
No.
No.
No.
No.
No.
No.
No.
No.
No.
No.
No.

1—Boston
2—New York
3—Philadelphia...
4—Cleveland
5—Richmond
6—Atlanta
7—Chicago
8—St. Louis
9—Minneapolis...
10—Kansas City..
11—Dallas
12—San Francisco
Total

62,573
52,153
37,023
74,027
152,471
247,778
190,446
195,902
412,304
480,537
386,447
685,438

7,956,045
16,608,287
7,686,381
11,689,081
12,520,242
12,703,285
19,813,670
10,069,182
5,218,317
7,468,974
7,734,901
11,513,912

2,977,099

130,982,277

62,573

7,956,045

4,266
31,040
7,907
9,024
1,058
9,278

1,318,852
822,226
4,272,255
477 703
720,872
344,137

52,153

16,608,287

633
3,591

446,824
3,285,607

FEDERAL RESERVE DISTRICTS
DISTRICT NO. 1—BOSTON
Connecticut (excluding Fairfield County)
New Hampshire
Rhode Island
Vermont
DISTRICT NO. 2—NEW YORK
Connecticut (Fairfield
New Jersey (northern
Counties of—
Bergen
Essex
Hudson
New York

County)
part)
Hunterdon
Middlesex
Monmouth

Morris
Passaic
Somerset

Sussex
Union
Warren

47,929

12,875,856

DISTRICT NO. 3—PHILADELPHIA

37,023

7,686,381

Delaware
New Jersey (southern part)
Counties of—
Atlantic
Cape May
Burlington
Cumberland
Camden
Pennsylvania (eastern part)
Counties of—
Adams
Clinton
Bedford
Columbia
Berks
Cumberland
Blair
Dauphin
Bradford
Delaware
Bucks
Elk
Cambria
Franklin
Cameron
Fulton
Carbon
Huntingdon
Center
Juniata
Chester
Lackawanna
Clearfield
Lancaster
DISTRICT NO. 4—CLEVELAND

1,978
3,931

275,478
940,819

31 114

6,470,084

74,027

11,689,081

17,772

1,314,810

Kentucky (eastern part)
Counties of—
Bath
Elliott
Bell
Estill
Boone
Fayette
Bourbon
Fleming
Boyd
Floyd
Bracken
Garrard
Breathitt
Grant
Campbell
Greenup
Carter
Harlan
Clark
Harrison
Clay
Jackson
1

Gloucester
Mercer

Ocean
Salem

Lebanon
Lehigh
Luzerne
Lycoming
McKean
Mifflin
Monroe
Montgomery
Montour
Northampton
Northumberland
Perry

Philadelphia
Pike
Potter
Schuylkill
Snyder
Sullivan
Susquehanna
Tioga
Union
Wayne
Wyoming
York

Jessamine
Johnson
Kenton
Knott
Knox
Laurel
Lawrence
Lee
Leslie
Letcher
Lewis

Persons in the armed forces are not included.




Lincoln
McCreary
Madison
Magoffin
Martin
Mason
Menifee
Montgomery
Morgan
Nicholas
Owsley

FEDERAL RESERVE

SYSTEM

*39

D E S C R I P T I O N OF F E D E R A L RESERVE DISTRICTS—Continued
Land area
(square
miles)

Federal Reserve district
D I S T R I C T N O . 4—CLEVELAND—Continued
Kentucky (eastern p a r t )
Counties of—Continued
Pendleton
Powell
Rockcastle
Perry
Pulaski
Rowan
Pike
Robertson
Scott
Ohio
Pennsylvania (western part)
Counties of—
Allegheny
Crawford
Indiana
Armstrong
Erie
Jefferson
Beaver
Fayette
Lawrence
Butler
Forest
Mercer
Clarion
Greene
Somerset
West Virginia (northern part)
Counties of—
Brooke
Marshall
Tyler
Hancock
Ohio
Wetzel

WhitleyWolfe
Woodford

Mingo
Monongalia
Monroe
Morgan
Nicholas
Pendleton
Pleasants
Pocahontas
Preston
Putnam
Raleigh
Randolph
Ritchie




6,930,496
3,246,354

1,202

197,421

152,471

12,520,242

61
9,887
49,142
30,594
39,899
22,888

821,299
1,895,329
3,456,909
1,896,417
2,792,135
1,658,153

247,778

12,703,285

51,078
54,262
58,518
26,630

2,889,043
1,940,913
3,057,284
1,677,450

Roane
Summers
Taylor
Tucker
Upshur
Wayne
Webster
Wirt
Wood
Wyoming

DISTRICT NO. 6-ATLANTA
Alabama
Florida
Georgia
Louisiana (southern part)
Parishes of—
Acadia
Evangeline
Allen
Iberia
Ascension
Iberville
Assumption
Jefferson
Avoyelles
Jefferson Davis
Beauregard
Lafayette
Calcasieu
La Fourche
Cameron
Livingston
E a s t Baton
Orleans <
Rouge
Plaquemines
E a s t Feliciana
Pointe Coupee
Mississippi (southern p a r t )
Counties of—
Adams
Harrison
Amite
Hinds
Claiborne
Issaquena
Clarke
Jackson
Copiah
Jasper
Covington
Jefferson
Forrest
Jefferson Davis
Franklin
Jones
George
Kemper
Greene
Lamar
Hancock
Lauderdale
Tennessee (eastern p a r t )
Counties of—
Anderson
Clay
Bedford
Cocke
Bledsoe
Coffee
Blount
Cumberland
Bradley
Davidson
Campbell
D e Kalb
Cannon
Dickson
Carter
Fentress
Cheatham
Franklin
Claiborne
Giles

41,122
13,931
Venango
Warren
Washington
Westmoreland

DISTRICT NO. 5 - R I C H M O N D
District of Columbia
Maryland
N o r t h Carolina
South Carolina
Virginia . ; . .^
West Virginia (southern part)
Counties of—
Barbour
Hardy
Berkeley
Harrison
Boone
Jackson
Braxton
Jefferson
Cabell
Kanawha
Calhoun
Lewis
Clay _
Lincoln
Doddridge
Logan
Fayette
McDowell
Gilmer
Marion
Grant
Mason
Greenbrier
Mercer
Hampshire
Mineral

Civilian
population
M a y 1,1942

Rapides
St. Bernard
St. Charles
St. Helena
St. James
St. John the
Baptist
St. Landry
St. Martin
St. M a r y
St. T a m m a n y

Tangipahoa
Terrebonne
Vermilion
Vernon
Washington
West Baton
Rouge
West Feliciana

Lawrence
Leake
Lincoln
Madison
Marion
Neshoba
Newton
Pearl River
Perry
Pike
Rankin

Scott
Sharkey
Simpson
Smith
Stone
Walthall
Warren
Wayne
Wilkinson
Yazoo

1,062,884

31,198
Grainger
Greene
Grundy
Hamblen
Hamilton
Hancock
Hawkins
Hickman
Houston
Humphreys

Jackson
Jefferson
Johnson
Knox
Lawrence
Lewis
Lincoln
Loudon
McMinn
Macon

2,075,711

140

ANNUAL REPORT OF BOARD OF GOVERNORS
DESCRIPTION OF FEDERAL RESERVE DISTRICTS-Continued
Civilian
Land area
(square
population
miles)
May 1, 1942

Federal Reserve district
DISTRICT NO. 6-ATLANTA-Continued
Tennessee (eastern part)
Counties of— Continued
Marion
Perry
Marshall
Pickett
Maury
Polk
Meigs
Putnam
Monroe
Rhea
Montgomery
Roane
Moore
Robertson
Morgan
Rutherford
Overton
Scott
DISTRICT NO. 7—CHK:AGO
Illinois (northern par t)
Counties of—
Boone
Ford
Bureau
Fulton
Carroll
Grundy
Cass
Hancock
Champaign
Henderson
Christian
Henry
Clark
Iroquois
Coles
Jo Daviess
Cook
Kane
Cumberland
Kankakee
De Kalb
Kendall
De Witt
Knox
Douglas
Lake
Du Page
La §alle
Edgar
Lee
Counties of—
Adams
Allen
Bartholomew
Benton
Blackford
Boone
Brown
Carroll
Cass
Clay
Clinton
Dearborn
Decatur
De Kalb
Delaware
Elkhart
Fayette

Fountain
Franklin
Fulton
Grant
Hamilton
Hancock
Hendricks
Henry
Howard
Huntington
Jasper
Jay
Jennings
Johnson
Kosciusko
Lagrange
Lake

Counties of—
Alcona
Eaton
Allegan
Emmet
Alpena
Genesee
Antrim
Gladwin
Arenac
Grand Traverse
Barry
Gratiot
Bay
Hillsdale
Benzie
Huron
Berrien
Ingham
Branch
Ionia
Calhoun
Iosco
Cass
Isabella
Charlevoix
Jackson
Cheboygan
Kalamazoo
Clare
Kalkaska
Clinton
Kent
Crawford
Lake
Wisconsin (southern part.1)
Counties of—
Adams
Door
Brown
Fond du Lac
Calumet
Grant
Clark
Green
Columbia
Green Lake
Crawford
Iowa
Jackson
Dane
Jefferson
Dodge




Sequatchie
Sevier
Smith
Stewart
Sullivan
Sumner
Trousdale
Unicoi
Union

Van Buren
Warren
Washington
Wayne
White
Williamson
Wilson

Livingston
Logan
McDonough
McHenry
McLean
Macon
Marshall
Mason
Menard
Mercer
Moultrie
Ogle
Peoria
Piatt
Putnam

Rock Island
Sangamon
Schuyler
Shelby
Stark
Stephenson
Tazewell
Vermilion
Warren
Whiteside
Will
Winnebago
Woodford

La Porte
Madison
Marion
Marshall
Miami
Monroe
Montgomery
Morgan
Newton
Noble
Ohio
Owen
Parke
Porter
Pulaski
Putnam
Randolph

Ripley
Rush
St. Joseph
Shelby
Starke
Steuben
Tippecanoe
Tipton
Union
Vermillion
Vigo
Wabash
Warren
Wayne
Wells
White
Whitley

Lapeer
Leelanau
Lenawee
Livingston
Macomb
Manistee
Mason
Mecosta
Midland
Missaukee
Monroe
Montcalm
Montmorency
Muskegon
Newaygo
Oakland
Oceana

Ogemaw
Osceola
Oscoda
Otsego
Ottawa
Presque Isle
Roscommon
Saginaw
St. Clair
St. Joseph
Sanilac
Shiawassee
Tuscola
Van Buren
Washtenaw
Wayne
Wexford

Juneau
Kenosha
Kewaunee
Lafayette
Langlade
Manitowoc
Marathon
Marinette

Marquette
Milwaukee
Monroe
Oconto
Outagamie
Ozaukee
Portage
Racine

190,446

19,813,670

35,333

6,688,217

26,779

2,839,447

55,986
40,484

2,444,848
5,240,867

31,864

2,600,291

141

FEDERAL RESERVE SYSTEM
DESCRIPTION OF FEDERAL RESERVE DISTRICTS—Continued

Civilian
Land area
(square
population
miles)
May 1, 1942

Federal Reserve district
DISTRICT NO. 7-CHICAGO-Continued
Wisconsin (southern part)
Counties of—-Continued
Richland
Sheboygan
Rock
Vernon
Sauk
Walworth
Shawano
Washington
DISTRICT NO. 8—ST. ]LOUIS
Arkansas
Illinois (southern pai t)
Counties of—
Adams
Franklin
Alexander
Gallatin
Bond
Greene
Brown
Hamilton
Calhoun
Hardin
Clay
Jackson
Clinton
Jasper
Crawford
Jefferson
Edwards
Jersey
Effingham
Johnson
Fayette
Lawrence
Counties of—
Clark
Greene
Crawford
Harrison
Daviess
Jackson
Dubois
Jefferson
Floyd
Knox
Gibson
Lawrence
Kentucky (western part}
Counties of—
Adair
Crittenden
Allen
Cumberland
Anderson
Daviess
Ballard
Edmonson
Barren
Franklin
Boyle
Fulton
Breckinridge
Gallatin
Bullitt
Graves
Butler
Grayson
Caldwell
Green
Calloway
Hancock
Carlisle
Hardin
Carroll
Hart
Casey <
Henderson
Christian
Henry
Clinton
Hickman
Mississippi (northern Dart}
Counties of—
Alcorn
De Soto
Attala
Grenada
Benton
Holmes
Bolivar
Humphreys
Calhoun
Itawamba
Carroll
Lafayette
Chickasaw
Lee
Choctaw
Leflore
Clay
Lowndes
Coahoma
Marshall
Missouri (eastern part}
Counties of—
Adair
Clark
Audrain
Cole
Barry
Cooper
Benton
Crawford
Bollinger
Dade
Boone
Dallas
Butler
Daviess
Caldwell
Dent
Callaway
Douglas
Camden
Dunklin
Cape Girardeau
Franklin
Carroll
Gasconade
Carter
Greene
Cedar
Grundy
Chariton
Harrison
Christian
Henry




Waukesha
Waupaca
Waushara
Winnebago

Wood

Macoupin
Madison
Marion
Massac
Monroe
Montgomery
Morgan
Perry
Pike
Pope
Pulaski

Randolph
Richland
St. Clair
Saline
Scott
Union
Wabash
Washington
Wayne
White
Williamson

Martin
Orange
Perry
Pike
Posey
Scott

Spencer
Sullivan
Switzerland
Vanderburg
Warrick
Washington

Hopkins
Jefferson
Larue
Livingston
Logan
Lyon
McCracken
McLean
Marion
Marshall
Meade
Mercer
Metcalfe
Monroe
Muhlenberg
Nelson

Ohio
Oldham
Owen
Russell
Shelby
Simpson
Spencer
Taylor
Todd
Trigg
Trimble
Union
Warren
Washington
Wayne
Webster

Monroe
Montgomery
Noxubee
Oktibbeha
Panola
Pontotoc
Prentiss
Quitman
Sunflower
Tallahatchie

Tate
Tippah
Tishomingo
Tunica
Union
Washington
Webster
Winston
Yalobusha

Hickory
Howard
Howell
Iron
Jefferson
Johnson
Knox
Laclede
Lafayette
Lawrence
Lewis
Lincoln
Linn
Livingston
Macon
Madison

Maries
Marion
Mercer
Miller
Mississippi
Moniteau
Monroe
Montgomery
Morgan
New Madrid
Oregon
Osage
Ozark
Pemiscot
Perry
Pettis

195,902

10,069,182

52,725
20,613

1,964,725
1,286,303

9,399

639,434

22,337

1,436,091

21,328

1,066,679

58,737

2,833,315

142.

ANNUAL REPORT OF BOARD OF GOVERNORS
DESCRIPTION OF FEDERAL RESERVE DISTRICTS-Continued
Civilian
Land area
population
(square
May
1, 1942
miles)

Federal Reserve district
DISTRICT NO. 8-ST. LOUIS-Continued
Missouri (eastern part)
Counties of—Continued
Phelps
Reynolds
Pike
Ripley
Polk
St. Charles
Pulaski
St. Clair
Putnam
St. Francois
Ralls
St. Louis
Randolph
St. Louis City
Ray
Ste. Genevieve
Tennessee (western part)
Counties of—
Benton
Fayette
Carroll
Gibson
Chester
Hardeman
Crockett
Hardin
Decatur
Haywood
Dyer
Henderson
DISTRICT NO. 9—MINNEAPOLIS
Michigan (northern part)
Counties of—
Alger
Dickinson
Baraga
Gogebic
Chippewa
Houghton
Delta
Iron
Minnesota
Montana
North Dakota
South Dakota
Wisconsin (northern part)
Counties of—
Ashland
Dunn
Barron
Eau Claire
Bayfield
Florence
Buffalo
Forest
Burnett
Iron
Chippewa
La Crosse
Douglas
Lincoln
DISTRICT NO. 10—KANSAS CITY
Colorado
Kansas
M issouri (western part)
Counties of—
Andrew
Cass
Atchison
Clay
Barton
Clinton
Bates
De Kalb
Buchanan
Gentry
Nebraska
New Mexico (northern part)
Counties of—
Bernalillo
Mora
Colfax
Rio Arriba
Harding
Sandoval
McKinley
San Juan
Oklahoma (northwestern part)
Counties of—
Adair
Ellis
Alfalfa
Garfield
Beaver
Garvin
Beckham
Grady
Blaine
Grant
Caddo
Greer
Canadian
Harmon
Carter
Harper
Cherokee
Haskell
Cimarron
Hughes
Cleveland
Jackson
Comanche
Jefferson
Cotton
Kay
Craig
Kingfisher
Creek
Kiowa
Custer
Latimer
Delaware
La Flore
Dewey
Lincoln
Wyoming




Saline
Schuyler
Scotland
Scott
Shannon
Shelby
Stoddard
Stone

Sullivan
Taney
Texas
Warren
Washington
Wayne
Webster
Wright

Henry
Lake
Lauderdale
McNairy
Madison
Obion

Shelby
Tipton
Weakley

Keweenaw
Luce
Mackinac
Marquette

Oneida
Pepin
Pierce
Polk
Price
Rusk
St. Croix

10,763

842,635

412,304

5,218,317

16,538

297,990

80,009
146,316
70,054
76,536
22,851

2,676,218
521,622
592,960
587,493
542,034

480,537

7,468,974

103,967
82,113
10,533

1,089,361
1.718,496
901,230

76,653
48,045

1,242,970
281,967

61,720

2,003,063

Menominee
Ontonagon
Schoolcraft

Sawyer
Taylor
Trempealeau
Vilas
Washburn

Holt
Jackson
Jasper
McDonald
Newton

Nodaway
Platte
Vernon
Worth

San Miguel
Santa Fe
Taos
Union

Valencia

Logan
Love
McClain
Mcintosh
Major
Mayes
Murray
Muskogee
Noble
Nowata
Okfuskee
Oklahoma
Okmulgee
Osage
Ottawa
Pawnee
Payne
Pittsburg

Pontotoc
Pottawatomie
Roger Mills
Rogers
Seminole
Sequoyah
Stephens
Texas
Tillman
Tulsa
Wagoner
Washington
Washita
Woods
Woodward

FEDERAL

RESERVE

143

SYSTEM

D E S C R I P T I O N OF F E D E R A L RESERVE DISTRICTS—Continued
Civilian
Land area
population
(square
May 1, 1942
miles)

Federal Reserve district
D I S T R I C T N O . 11—DALLAS
Arizona (southeastern p a r t )
Counties of—
Cochise
Greenlee
Graham
Louisiana (northern p a r t )
Parishes of—
Bienville
D e Soto
Bossier
E a s t Carroll
Caddo
Franklin
Caldwell
Grant
Catahoula
Jackson
Claiborne
La Salle
Concordia
Lincoln
New Mexico (southern part)
Counties of—
Catron
Eddy
Chaves
Grant
Curry
Guadalupe
De Baca
Hidalgo
Dona Ana
Lea
Oklahoma (southeastern p a r t )
Counties of—
Atoka
Choctaw
Bryan
Coal
Texas

Pima

Santa Cruz

Madison
Morehouse
Natchitoches
Ouachita
Red River
Richland
Sabine

Tensas
Union
Webster
West Carroll
Winn

Lincoln
Luna
Otero
Quay
Roosevelt

Sierra
Socorro
Torrance

Johnston
McCurtain

Marshall
Pushmataha

386,447

7,734,901

23,227

140,225

18,547

747,683

238,828

7,563

6,439,826

D I S T R I C T N O . 12—SAN F R A N C I S C O
Arizona (northwestern p a r t )
Counties of—
Apache
Maricopa
Coconino
Mohave
Gila
California
Idaho
Nevada
Oregon
Utah
Washington




168,339

11,513,912

Navajo
Pinal

90,353

354,934

156,803
82,808
109,802
96,349
82,346
66,977

7,185,142
476,953
128,157
1,064,590
553,717
1,750,419

Yavapai
Yuma

ANNUAL REPORT OF BOARD OF GOVERNORS

i44

FEDERAL RESERVE BRANCH TERRITORIES
[December 31, 1942]
'
2).- -The 10 most westerly counties in'the State of New York, as follows:
Monroe
Orleans
Allegany
Wyoming
i
Chautauqua
Genesee
Erie
Cattaraugus
Livingston
Niagara
CINCINNATI BRANCH (district No 4).—That part of the State of Keritucky in Federal Reserve district No. 4,
and the following counties in southern Ohio:
Adams
Clermont
Greene
Meigs
Ross
Athens
Clinton
Hamilton
Miami
Scioto
Brown
Darke
Highland
Montgomery
Vinton
Butler
Fayette
Jackson
Pike
Warren
Clark
Gallia
Lawrence
Preble
Washington
PITTSBURGH BRANCH (district No. 4).—Those parts of the States of Pennsylvania and West Virginia included in
Federal Reserve district No. 4.
BALTIMORE BRANCH (district No. 5).—The State of Maryland and the following counties in the State of West
Virginia:
Barbour
Grant
Lewis
Pendleton
Taylor
Berkeley
Hampshire
Marion
Pleasants
Tucker
Braxton
Hardy
Mineral
Preston
Upshur
Calhoun
Harrison
Monongalia
Randolph
Webster
Doddridge
Jackson
Morgan
Ritchie
Wirt
Gilmer
Jefferson
Nicholas
Roane
Wood
CHARLOTTE BRANCH (
ict No 5).—The following counties in the States of North Carolina and South Car
BUFFALO BRANCH (district No.

NORTH CAROLINA

Alamance
Alexander
Alleghany
Anson
Ashe
Avery
Buncombe
Burke
Cabarrus
Caldwell

Catawba
Chatham
Cherokee
Clay
Cleveland
Davidson
Davie
Forsyth
Gaston
Graham

Guilford
Haywood
Henderson
Iredell
Jackson
Lee
Lincoln
Macon
Madison
McDowell
SOUTH CAROLINA

Mecklenburg
Mitchell
Montgomery
Moore
Polk
Randolph
Richmond
Rockingham
Rowan
Rutherford

Stanly
Stokes
Surry
Swain
Transylvania
Union
Watauga
Wilkes
Yadkin
Yancey

Abbeville
Edgefield
Lancaster
Newberry
Saluda
Spartanburg
Aiken
Fairfield
Laurens
Oconee
Union
Anderson
Greenville
Lexington
Pickens
Cherokee
Greenwood
McCormick
Richland
York
Chester
BIRMINGHAM BRANCH (district No. 6).—The State of Alabama except the following counties:
Baldwin
Covington
Geneva
Houston
Pike
Barbour
Dale
Henry
Mobile
Russell
Coffee
and towns and cities in Lee and Chambers counties located on or south of the Atlanta & West Point Railroad
and the Western Railway of Alabama.
JACKSONVILLE BRANCH (district No 6).—The entire State of Florida.
NASHVILLE BRANCH (district No. 6).—That part of the State of Tennessee included in Federal Reserve district
No. 6 with the exception of the city of Chattanooga.
NEW ORLEANS BRANCH (district No. 6).—Those parts of the States of Louisiana and Mississippi located in FederJ
Reserve district No. 6, and the counties of Baldwin and Mobile in the State of Alabama.
SAVANNAH AGENCY (district No. 6).—Savannah, Ga.
DETROIT BRANCH (district No. 7).—The following counties in the State of Michigan:
Bay
Ingham
Livingston
Saginaw
Tuscola
Genesee
Jackson
Macomb
Sanilac
Washtenaw
Hillsdale
Lapeer
Monroe
St. Clair
Wayne
Huron
Lenawee
Oakland
Shiawassee
LITTLE ROCK BRANCH (district No. 8).—The State of Arkansas except
Kcept the
t following counties:
Baxter 1
Greene
Craighead
Sabastian2
"""Mississippi
Lawrence
Benton
Crawford
Sharp
Phillips
Lee
Washington
Boone
Crittenden
Poinsett
Woodruff
Madison
Carroll
Cross
Randolph
.Marion.
Clay
ffultpn
St. Francis
and except also the towns of jbeValls BluffOPrairie.County]^ and J [ejaaJPolk County).
LOUISVILLE BRANCH (district No 8).—That part of the State of Kentucky included in Federal Reserve district
No. 8, with the exception of the town of Mgrganfield (Union County), and the following counties in the State
of Indiana:
Clark
Floyd
Jefferson
Orange
Switzerland
Crawford
Harrison
Lawrence
Perry
Washington
Dubois3
Jackson
Martin*
Scott
MEMPHIS BRANCH (district No. 8).—Those parts of the States of Mississippi and Tennessee included in Federal
Reserve district No. 8, with the exception of Union City (Obion County), Tejmesjsee^and^Paris (Henry County))
Tennessee, and the following counties in the State of Arkansas:
Craighead
Cross
Lee
Phillips
St. Francis
Crittenden
Lawrence
Mississippi
Poinsett
Woodruff
also the town of JDe Vails Bluff (Prairie County), Arkansas*.
1
2

Town of-Gentry assigned to Little Rock Branch.
Town or-Mansfiela assigned tto. Little Rock Branch.




FEDERAL RESERVE SYSTEM

M5

FEDERAL RESERVE BRANCH TERRITORIES—Continued
HELENA BRANCH (district No. 9).—The entire State of Montana.
DENVER BRANCH (district No. 10').—The entire State of Colorado and that part of the State of New Mexico included in Federal Reserve district No. 10.
OKLAHOMA CITY BRANCH (district No. 10).—That part of the State of Oklahoma located in Federal Reserve
district No. 10.
OMAHA BRANCH (district No. 10).—The entire States of Nebraska and Wyoming.
EL PASO BRANCH (district No. 11).—That part of the States of Arizona and New Mexico located in Federal Reserve district No. 11, and the following counties in the State of Texas:
Andrews 1
Ector
Jeff Davis
Midland
Reeves
Brewster
El Paso
Loving
Pecos
Ward
Crane
Hudspeth
Martin
Presidio
Winkler
Culberson
HOUSTON BRANCH (district No. 11).—The following counties in the southeastern part of the State of Texas:
Shelby
Anderson
Jackson
Nacogdoches
Cherokee
Trinity
Angelina
Jasper
Newton
Colorado
Tyler #
Austin
Jefferson
Orange
Fayette
Bastrop
Polk .
Victoria
Fort Bend
Lavaca
Brazoria
Refugio
Walker
Galveston
Lee
Brazos
Waller
Liberty
Sabine
Grimes
Burleson
Madison
San Augustine
Washington
Hardin
Calhoun
San Jacinto
Wharton
Harris
Matagorda
Chambers
Montgomery
Houston
SAN ANTONIO BRANCH (district No. 11).- -The following counties in the State of Texas:
Starr
Aransas
De Witt
Hidalgo
La Salle
Terrell
Jim Hogg
Llano
Atascosa
Dimmit
Bandera
Duval
Jim Wells
Live Oak
Travis
Bee
Edwards
Karnes
Mason
Uvalde
Bexar
Frio
Kendall
Maverick
Val Verde
Kenedy
McMullen
Webb
Blanco
Gillespie
Willacy
Brooks
Goliad
Kerr
Medina
Caldwell
Gonzales
Kimble
Nueces
Wilson
Cameron
Guadalupe
Kinney
Real
Zapata
Comal
Hays
Kleberg
San Patricio
Zavalla
Los ANGELES BRANCH (district No. 12).—That part of the State of Arizona located in Federal Reserve district
No. 12, and the following counties in the State of California:
Imperial
Los Angeles
Riverside
San Diego
Ventura
Inyo
Orange
San Bernardino
Santa Barbara •
PORTLAND BRANCH (district No 12).—The entire State of Oregon, and the town of Ilwaco and the following
counties in the State of Washington:
Asotin
Columbia
Garfield
Skamania
Walla Walla
Clark
Cowlitz
Klickitat
Wahkiakum
Also, the following counties in the State of Idaho:
Benewah
Boundary
Idaho
Latah
Nez Perce
Bonner
Clearwater
Kootenai
Lewis
Shoshone
SALT LAKE CITY BRANCH (district No. 12).—The entire State of Utah and the following counties in the States of
Idaho and Nevada:
Ada
Adams
Bannock
Bear Lake
Bingham
Blaine
Boise

Bonneville
Butte
Camas
Canyon
Caribou
Cassia
Clark

IDAHO

Custer
Elmore
Franklin
Fremont
Gem
Gooding
Jefferson

Jerome
Lemhi
Lincoln
Madison
Minidoka
Oneida
Owyhee

Payette
Power
Teton
Twin Falls
ValleyWashington

NEVADA

Lincoln
Clark
Elko
SEATTLE BRANCH (district No. 12).—The entire State of Washington
ing counties which are affiliated with the Portland Branch:
Asotin
Columbia
Garfield
Clark
Cowlitz
Klickitat
1

White Pine
except the town of Ilwaco and the followSkamania
Wahikiakum

Transferred from San Antonio zone to El Paso zone effective Jan. 2, 1943.




Walla Walla

FEDERAL RESERVE SYSTEM
BOUNDARIES OF FEDERAL RESERVE DISTRICTS
AND THEIR BRANCH TERRITORIES

>
o

8
O

w
o

>

o

o

o
<
o

^ ^

BOUNDARIES O P FEDERAL RESERVE DISTRICTS

—

BOUNDARIES OF FEDERAL R E S E R V E BRANCH TERRITORIES

^L

BOARD OF GOVERNORS O F T H E FEDERAL RESERVE SYSTEM

<§)

F E D E R A L R E S E R V E BANK CITIES

•

FEDERAL R E S E R V E BRANCH CITIES

O

FEDERAL R E S E R V E B A N K A G E N C Y




JANUARY 2.

1943

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SfSTEM

INDEX
Page
Acceptances, buying rates
74
Acceptances to 100 per cent of capital and surplus, application approved during year
43
Agricultural credit
2.3
Agricultural production discussed
3
Amendments to Federal Reserve Act: (See Legislation)
American Bankers Association, compilation of consumer instalment loan series taken over
by Federal Reserve System
44
Amortization of debt for nonproductive purposes, joint announcement of Federal bank
supervisory agencies
112.
Assets and liabilities: (See Condition statements)
Audit of accounts of Board for 1942.
54
Baker, A. Z., appointed Class C director at Cleveland
48
Bank credit: (See Credit)
Bank failures
81
Bank holding companies
42.
Bank mergers
81
Bank premises:
Federal Reserve Banks
51
Member banks, December 31, 1942.
76
Bank supervision and the banking structure
39
Bank supervisory agencies:
Amortization of debt for nonproductive purposes, joint statement on
112.
Bank holdings of Government securities, supervisory policy regarding
2.1
Inventories, letter for guidance of examiners in use of credit for accumulation of . . . .
113
Banking offices:
Number of, 1933-1942.
80
Banks:
Branches:
Number of:
1933-1941
80
1941, analysis of changes in
81
Business volume, increase during year
39
Consolidations, absorptions, etc
81
Loans to, by member banks:
December 31, 1941
78
Number of:
1933-1941
80
1942., analysis of changes in
81
Suspensions:
Number of
81
(See also Federal Reserve Banks; Mutual savings banks; National banks; Nonmember
banks; Private banks; State member banks)
Bills:
Bought by Federal Reserve Banks:
All banks combined:
1918-1941, end of year
figures
79
1942., 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:
1918-1941, end of year
figures
79
1942., end of month
figures
79
December 31, 1941
60
Each bank, end of year
figures
62.
Earnings on, each bank
68
Volume of operations
67
Board of Governors:
Audit of accounts for 1942. by Federal Reserve Bank of Philadelphia
54
Division of Personnel Administration, creation of
53
Expenses for 1942.
54, 73
Library, increase in services of
47
Members:
Evans, R. M., appointed for unexpired term
53
List of
115
Ransom, Ronald, reappointed for full term
53
Officers
115
Policy actions: (See Policy actions)

147


148

INDEX

Board of Governors—Continued.
Page
Publications, distribution of
47
Receipts and disbursements for 1 9 ^
72.
Regulations: (See Regulations)
Research and advisory services
44
Staff:
Boothe, Gardner L., II, appointed Assistant Administrator for War Loans Committee
53
Cravens, Kenton R., appointed Administrator for War Loans Committee
53
Dreibelbis, J. P., designated General Attorney
54
Leonard, Robert F., appointed director of Division of Personnel Administration.
53
Number of employees during year, changes in
54
Pollard, William B., appointed Assistant Chief of Division of Examinations....
54
Smead, E. L., appointed Acting Administrator of War Loans Committee. . . . . . .
53
Stark, Walter R., appointed Assistant Director of Division of Research and Statistics
54
Vest, George B., designated Assistant General Attorney
54
Voluntary payroll deduction plan for purchase of War Savings bonds
54
Wingfield, B. Magruder, designated Assistant General Attorney
54
Bonds:
Government: (See Government securities)
Yields:
Monthly and yearly
figures
83
Branch banks:
Federal Reserve: (See Federal Reserve Banks)
Foreign of member banks and foreign banking corporations
43
Number of:
1941
40
1933-1942.
80
1941, analysis of changes in
81
Briscoe, Dolph C , appointed Class C director at Dallas
48
Brokers and dealers in securities:
Loans to, by member banks, December 31, 1942.
78
Building operations of Federal Reserve Banks
51
Business indexes
84
Canadian-United States economic relations
46
Capital:
Federal Reserve Banks:
All banks combined, December 31, 1941
61
Each bank, end of year
figures
62.
Member banks, December 31, 1942.
77, 78
Cartwright, Holman, appointed director at San Antonio Branch
48
Central reserve city member banks:
Assets and liabilities, December 31, 1941.
76
Classification of loans, Government direct obligations, and capital, December 31,1941.
78
Reserve requirements, amendments to Regulation D reducing
17, 57, 97, 98, 99
Certificates of indebtedness, holdings of Federal Reserve Banks
66
Chairmen of Federal Reserve Banks:
Changes during year
48
List of
117
Meetings during year
55
Charts:
Banking developments in New York and other cities
19
Excess reserves of member banks
18
Federal Reserve portfolio of Government obligations under three kinds of credit action
30
Industrial production for war and for civilian purposes
4
Member bank reserves and related items
13
National income and bank credit
2.%
N e w Y o r k City banks, factors o f gains and losses of reserve funds
18
Reserve Bank holdings of United States Government securities
15
Reserve requirements of member banks under three kinds of Federal Reserve credit
action
30
Total consumer debt
i5
Wholesale prices
5
Check clearing and collection:
Par list:
Discussion of changes in list
40
Number of banks on list and number not on list
81

Volume of operations at Federal Reserve Banks
67


INDEX

149

Page
Chicago, excess reserves of member banks in
18
Civilian goods, supply of
6
Coins received and counted by Federal Reserve Banks
67
Commercial paper:
Discount rates, open market
83
Member bank holdings, December 31, 194Z
78
Commitment rates of Federal Reserve Banks
74
Committees:
Executive Development of Conference of Presidents
54
Federal Open Market: (See Federal Open Market Committee)
Insurance, to administer self-insurance plan
51
National Agricultural Credit, study of credit problems of farmers
Z3
Retirement System, changes being considered
52.
Victory Fund, organized for distribution of Government securities
1
War Loans, created
53
Comptroller of the Currency, joint statement issued by
2.1
Condition statements:
Federal Reserve Banks:
All banks combined, December 31, 1941
60
Each bank, end of year
figures
61
Member banks, December 31, 1942.
76, 78
Conferences:
Bank examination departments of Federal Reserve Banks
41
Chairmen of Federal Reserve Banks
55
Presidents of Federal Reserve Banks
55
(See also Meetings)
Congress, reports by Board on proposed legislation
55
Consolidations, absorptions, etc., of banks
40, 81
Construction contracts awarded:
Indexes of value of
84
Consumer credit:
Minimum down payments and maximum maturities on
73
Regulation W:
Administration of
14
Amendments to
14, 57, 86-100
Restrictions during year, discussed
3, iz, 14
Statistics collected in connection with
44
Consumer goods :
Decrease in supplies during year
6
Correspondence:
Letter to Federal supervisory agencies for guidance of
2.1
Use of credit for accumulation of inventories, letter to financing institutions on
113
Country member banks:
Assets and liabilities
76
Classification of loans, Government direct obligations, and capital
78
Cozzo, J. B., appointed Deputy Chairman at Dallas
48
Cravens, Kenton R., appointed Administrator for War Loans Committee
53
Credit, bank:
Federal Reserve:
1918-1941, end of year
figures
79
1941, end of month
figures
79
Policies adopted to aid war effort
1
Restrictions on nonessential
:
2.2.
Use for accumulation of inventories, letter t o financing institutions
1 3 , 113
Creighton, Albert M . , designated Chairman and Federal Reserve Agent a t Boston
48
Cuba, report of American Technical Mission
46
Currency:
Circulation, 1918-1941
79
Federal Reserve Bank notes, issuance of
50
Federal Reserve notes: (See Federal Reserve notes)
Received and counted b y Federal Reserve Banks
67
Custodian for other agencies, function of Federal Reserve Banks
35
Department store sales index
,
84



i5o

INDEX

Depositaries of Government funds:
Page
Function of Federal Reserve Banks
35
Nonmember banks as, amendment to Federal Reserve Act
55
Deposits:
Federal Reserve Banks:
All banks combined, December 31, 1941
61
Each bank, end of year
figures
62
Government:
Federal Reserve Banks:
All banks combined :
1918-1941, end of year
figures
79
1942., end of month
figures
79
Each bank, end of year
figures
62
Member banks, December 31, 1941
76
Nonmember deposits in Federal Reserve Banks:
1918-1941, end of year
figures
79
1942., end of month
figures
79
Reserves required for member banks
75
Savings, interest rates on
75
Time, interest rates on
75
Directors, Federal Reserve Banks:
Baker, A. Z., appointed Class C at Cleveland
48
Briscoe, Dolph C , appointed Class C at Dallas—
48
Chairmen and Deputy Chairmen
117
Class C, appointments during year
48
Classes of
47
Cozzo, J. B., appointed Deputy Chairman at Dallas
48
Creighton, Albert M., appointed Class C and designated Chairman and Federal Reserve Agent at Boston
48
Hoffman, Paul G., appointed Class C at Chicago
48
Leland, Simeon E., appointed Chairman and Federal Reserve Agent at Chicago
48
Lewis, Frank J., resignation as Class C and Chairman at Chicago
48
List of
119
Taylor, Jay, appointed Chairman at Dallas
48
Waymack, W. W., appointed Deputy Chairman at Chicago
48
Wellman, Harry R., appointed Class C at San Francisco
48
Directors, Federal Reserve Branch Banks:
Appointment of
47
Cartwright, Holman, appointed director at San Antonio
48
Executive head, change from Managing Director to Vice President at one
39
Freeman, Y. Frank, appointed director at Los Angeles
48
List of
119
Number reduced at some
39
Richardson, R. B., appointed director at Helena
48
Steen, William H., appointed director at Portland
48
Discount rates at Federal Reserve Banks:
Discussion
2., 20
Table
74
Dividends:
Federal Reserve Bank stock, amendment to Federal Reserve Act on taxation of. . . . .
55
Federal Reserve Banks:
Each Federal Reserve Bank, 1942
69
Federal Reserve Banks combined, 1914-1942
70
Member banks
77
Down payment and maximum maturity on consumer credit under Regulation W
73
Dreibelbis, J. P., designated General Attorney
54
Durable goods index
84
Earnings and expenses:
Federal Reserve Banks:
All banks combined
70
Each bank
68
Year 1942
49
Earnings on bills and securities at Federal Reserve Banks
50
Economic Stabilization, Director appointed
5
Employees of Federal Reserve Banks, number and salaries
71



INDEX

I5 1

Employment:
Page
Developments during year discussed
3
Factory employment index
84
Nonagricultural employment index
84
Evacuation of Japanese from military areas
37
Evans, R. M., appointed member of Board of Governors for unexpired term
53
Examinations:
Federal Reserve Banks
41
Foreign banking corporations
43
Reports, uniform inscription adopted
42.
State member banks
41
Expenses:
Board of Governors of the Federal Reserve System
54, J-L
Federal Reserve Banks
68, 70
Factory employment index
84
Federal Advisory Council:
Meetings during year
55
Members and officers
116
Federal Deposit Insurance Corporation :
Joint statement of examination and supervisory policy
2.1
Membership changes
81
Federal Open Market Committee:
Discount rate of % per cent on purchase of Treasury bills established by
14, 104
Direction to Federal Reserve Banks amended
108
Meetings during year
54
Members and officers
115
Membership of, amendment to Federal Reserve Act, regrouping Federal Reserve Banks
for election of
56
Policy actions: (See Policy actions)
Repurchase option, authority to Federal Reserve Banks to give to seller of bills.2., 14, 106
Federal Reserve Act:
Amendments: (See Legislation)
Reports on bills introduced in Congress
55
Federal Reserve Bank notes :
Issuance of reserve stocks
50
Federal Reserve Bank of Boston:
Staff:
Paddock, W. W., election as President
49
Willett, William, elected First Vice President
49
Young, R. A., resignation as President
48
Federal Reserve Bank of New York:
Loans to foreign bank
37
Stabilization fund operations
37
Federal Reserve Bank of Philadelphia:
Audit of accounts of Board for 1942.
54
Federal Reserve Bank of San Francisco:
Evacuation of Japanese from military areas
37
Federal Reserve Banks:
Assessment for expenses of Board of Governors
54
Branches:
Building operations of
52.
Directors, list of
119
Examination of
41
Fiscal agency activities increased
38
Personnel to be strengthened
39
Responsibilities enlarged
38
Territory of
144
Chairmen and Deputy Chairmen:
Appointments during year
48
List of
117
Meetings of
55
Custodians for Government departments and agencies
35
Depositaries of Government funds
35
Depositary, custodian, and other functions
35
Directors:
Appointment of Class C
48
List of
119



i5x

INDEX

Federal Reserve Banks—Continued.
Dividends paid:
All banks combined
Each bank
Earnings and expenses:
All banks combined
Discussion of
Each bank
Earnings on bills and securities
Employees, numbers and salaries
Examination of
Fiscal agents under war program
Functions performed for Government agencies
Officers:
Changes during year
List of
Number and salaries of
Operations during year
Presidents:
Changes during year
List of
Meetings
Profit and loss account
Purchase of Government securities direct from Treasury
Retirement system contributions
Salaries of officers and employees
Staff, expansion in
Vice Presidents, list of
Volume of operations
Federal Reserve districts:
Area, square miles
Map showing outline
Population
Territory comprising
Federal Reserve notes:
Circulation
Clearing of, new plan adopted
Collateral security, end of year
figures
Issued
Redemption fund:
All banks combined, December 31, 1941
Each bank, end of year
figures
Federal Reserve policies to aid war
financing
Federal Reserve System:
Activities during 1942.
Membership:
Changes in
State bank and trust company members
Policies during 1941 reviewed
War economy, place in
Fiduciary powers:
National banks granted authority to exercise, changes during year
Fiscal agency operations of Federal Reserve Banks
Foreign accounts maintained by Federal Reserve Banks
Revision of regulations under consideration
Foreign banking corporations
Foreign banks:
Deposits of, held by Federal Reserve Banks:
All banks combined, December 31,1941
Each bank, end of year
figures
Loans to
Foreign branches of member banks and foreign banking corporations
Foreign funds control:
Federal Reserve Banks as agents for Treasury
Franchise tax paid by Federal Reserve Banks to Government, 1917-1931
Freeman, Y. Frank, appointed director at Los Angeles Branch
Freight-car loadings, indexes



Page
50, 70
69
70
49
68
50
71
41
31
35
49
118
71
49
48
118
55
69
z, 16
68
. 68, 71
49
118
49, 67
138
146
138
138
63
50
63
63
60
6z
9,2.9
2.
81
iz6
9, Z9
3
4z
31
36
51
43
61
63
37
19
36
70
48
84

INDEX

I53

Gold:
Page
Reserves of foreign countries held by Federal Reserve Banks
36
Stock, monetary in United States:
1918-1941, end of year
figures
79
1941, end of month
figures
79
Gold certificates:
Federal Reserve Bank holdings:
All banks combined, December 31, 1941
60
Each bank, end of year
figures
62.
Government securities:
Bank holdings of
66
Bond yields:
Table
83
Distribution of
11
Federal Reserve Bank holdings:
All banks combined*
End of December 1941 and 1941. in detail
66
December 31, 1941
60
1918-1941, end of year
figures
79
1941, end of month
figures
79
Each bank, end of year
figures
62.
Earnings on
68
Federal Reserve purchases
iz
Fiscal agency operations of Federal Reserve Banks
31
Insurance, self, plan adopted by Federal Reserve Banks
52.
Interest rate on
66
Issue, redemption, and exchange of, work of Federal Reserve Banks in connection with 31, 67
Issues:
Amounts and types of
76, 78
Available to banks
10
Available to nonbanking investors
10
During year to meet war needs
9
Member bank holdings
76, 78
Nonbanking investors, purchase by
zj
Offerings during year for war financing program
9
Open markets operations in
12.
Ownership of
11
Purchase by Federal Reserve Banks direct from Treasury
x, 16
Purchases by Federal Reserve System
11
Reserve Bank holdings of, chart
15
Resolutions of Federal Open Market Committee authorizing transactions in
103
Supervisory policy regarding bank holdings of, joint statement
zi
Treasury bills :
Discount rates on
14, 83, 104, 108
(See also Treasury bills)
Treasury bonds and notes, holdings of Federal Reserve Banks
66
Treasury notes:
Holdings by Federal Reserve Banks
66
Yields
83
Victory Fund drive
*
11
Volume handled by Federal Reserve Banks
67
War effort, policies as to distribution and marketing
„
1
Guarantee charges and rates on loans under Regulation V
91
Schedule revised
ioz
Hoffman, Paul G., appointed Class C director at Chicago
48
Holding company affiliates
41
Voting permits issued to
42.
Income:
Growth during year
6
National income payments, indexes
84
Industrial advances or Federal Reserve Banks:
All banks combined, December 31, 1941
60
Commitments
63
Each bank, end of year
figures
62.
Earnings on
68
Rates on:
Changes in
93
Table
74

Volume of operations
67


*54

INDEX

Industrial production:
Page
Increase in 1941 discussed
3
Indexes
84
Inflation:
Methods of counteracting discussed
3
Role of credit authorities in preventing
2.6
Inscription on examination reports, adoption of uniform
41
Interdistrict collection system:
Discussion of changes
40
Number of banks on list and number not on list
82.
Volume of operations at Federal Reserve Banks
67
Interest rates:
Federal Reserve Banks
74
Open market, in New York City
83
Savings deposits
75
Time deposits
75
United States Government securities
66
Inventories:
Use of credit for accumulation of
2.3, 113
Investments:
Member banks, December 31, 1942.
76
Japanese, evacuation from military areas
37
Joint statements, Federal bank supervisory agencies:
Amortization of debt for nonproductive purposes
112.
Supervisory policy regarding bank holding of Government securities
2.1
Legislation:
Cuban Central Bank and Stabilization Fund
-.
46
Federal Open Market Committee, amendment to Federal Reserve Act on membership
of
56
Nonmember banks as depositaries of United States, amendment to Federal Reserve Act
55
Purchases of Government obligations by Federal Reserve Banks direct from United
States
55
Reports to Congress on proposed
55
Reserves, amendment to Federal Reserve Act to allow changes in central reserve cities
without making other changes
17, 56
Reserves, loans or dividends while deficient, amendment to Federal Reserve Act
56
Stabilization of cost of living, wage rates, etc
5
Taxation of dividends on Federal Reserve Bank stock, amendment to Federal Reserve
Act
55
Leland, Simeon E., appointed Chairman at Chicago
48
Leonard, Robert F., appointed director of Division of Personnel Administration
53
Lewis, Frank J., resignation as Class C director and Chairman at Chicago
48
Library of Board, increase in services of
47
Loans:
Bank lending vs. nonbank lending
2.J
Brokers loans by member banks
78
Commercial and industrial, special survey of
44
Industrial, rates on, changes approved
93
(See also Industrial advances)
Real estate loans of member banks
78
Security loans by member banks
78
Total for member banks, December 31, 1941
76, 78
Trend during year.
11
Loans and investments:
Member banks, December 31, 1941
76, 78
Manpower problem discussed
3
Map:
Federal Reserve districts
146
Margin requirements:
Table of
75
Meetings:
Bank examination departments of Federal Reserve Banks.
41
Chairmen of Federal Reserve Banks
55
Federal Advisory Council
55
Federal Open Market Committee
54
Presidents of Federal Reserve Banks
55



INDEX

J

55

Member banks:
Page
Changes in number during year
39
Condition statements, December 31, 1942
76, 78
National banks: (See National banks)
Number of
80
State member banks: (See State member banks)
Membership in Federal Reserve System:
Changes during year
40
State banks and trust companies
126
Minerals production index
84
Money in circulation:
1918-1941, end of year figures
79
1941, end of month
figures
79
Money rates:
Open market in New York City
83
Mutual savings banks:
Banking offices, 1933-1942
80
Branches:
193 3-1942
80
1942, analysis of changes in
81
Number of:
1933-1942
80
1942, analysis of changes in
81
National banks:
Acceptance powers granted
43
Assets and liabilities, December 31, 1942
76
Banking offices, 1933-1942
80
Branches:
Number of:
193 3-1942
80
1942, analysis of changes in
81
Classification of loans, Government direct obligations, and capital, December 31, 1942
78
Number of:
1933-1942
80
1942, analysis of changes in
81
Trust powers of
42
New York City, excess reserves of member banks in
17
Nondurable goods production index
84
Nonmember banks:
Changes in number during year
39
Depositaries of United States, amendment to Federal Reserve Act
55
Deposits of, held by Federal Reserve Banks:
1918-1941, end of year
figures
79
1942, end of month
figures
79
Insured:
Banking offices, 1933-1942
80
Branches
80, 81
Number of
80, 81
Par list, number of banks on list and number not on list
40, 82
Uninsured:
Banking offices, 1933-1942
80
Branches
80, 81
Number of
80, 81
Non-par banks, number of
40, 82
Open market account:
Authority to effect transactions in, direction to executive committee approved:
Meeting of March 2
103
Meeting of May 8
104
Meeting of June 22
105
Meeting of August 3
107
Meeting of September 28
109
Meeting of December 14
no
Authority to increase amount of securities in
106, n o
Purchase of Government securities
13
Review for second and third quarters
13
Open market operations by Federal Reserve System
12
Paddock, W. W., election as President at Boston
49



I56

INDEX

Par list:
Page
Number of banks on
40
Tabic
8z
Payroll deduction plan for purchase of War Savings bonds
54
Payrolls, factory, index
84
Policy actions:
Board of Governors:
Advances to individuals, partnerships, and corporations other than banks, rate
reduced
100
Guarantee charges on loans under Regulation V, schedule
91, 102.
Preferential rate on advances to member banks secured by short-term obligations
of United States, establishment of
100
Rates on advances to member banks under section 10(b)
89
Rates on advances to nonmember banks, reduction approved
88
Rates on discounts and advances under Section 13 and 13 a of Federal Reserve Act
88
Rates on industrial advances under Section 13b, changes approved
93
Regulation A, Discounts for and Advances to Member Banks by Federal Reserve
Banks:
Amendment to subsection h of Section 1
98
Amendment to subsection b of Section z
89
Regulation D, Reserves of Member Banks:
Amendment requiring that deficiencies be computed on basis covering weekly
periods
86
Amendment to conform with recent amendment to Federal Reserve Act
95
Reduction in reserve requirements of member banks in central reserve cities 97, 98, 99
Regulation S, Industrial Loans by Federal Reserve Banks, amendment adopted. .
93
Regulation V, War Financing, adopted
89
Guarantee charges and rates on loans under
91, 102.
Regulation W, Consumer Credit:
Amendment No. 3 adopted
86
Amendment No. 4 adopted
<$L
Amendment No. 5 adopted
95
Amendment No. 6 adopted
96
Amendment No. 7 adopted
96
Amendment No. 8 adopted
97
Amendment No. 9 adopted
100
Federal Open Market Committee:
Authority to effect transactions in System open market account:
Meeting of March x
103
Meeting of May 8
104
Meeting of June 2.2.
105
Meeting of August 3
107
Meeting of September 2.8
109
Meeting of December 14
no
Authority to increase amount of securities in System account
106, n o
Treasury bills, direction to Federal Reserve Banks to purchase at posted discount
rate
104,108
Treasury bills, purchase by Federal Reserve Banks under repurchase option
106
Post-war problems, studies being made
45
Postal savings (deposits:
Interest rate on, paid by member banks
75
Presidents of Federal Reserve Banks:
Changes during year
48
List of
118
Meetings during year
55
Press statements:
Regulation V, War Financing
90
Price controls, imposition discussed
.
4
Prices:
Wholesale commodity, index
84
Private banks:
Banking offices, 1933-1942.
80
Branches:
1933-1941
80
1942., analysis of changes in
81
Number of:
1933-1942.
80
1941, analysis of changes in
81



INDEX

*57

Production, industrial: (See Industrial production)
Page
Publications of Board issued during year, distribution of
47
Ransom, Ronald, reappointed member of Board of Governors for full term
53
Rates:
Advances to individuals, partnerships, and corporations other than banks, reduction in 100
Advances to member banks under Section 10(b), reduction approved
10, 89
Advances to nonmember banks secured by direct obligations of United States, reduction approved
xo, 88
Buying rates on bills at Federal Reserve Banks
14, 74
Commitment rates
74
Discount at Federal Reserve Banks
74
Reduction in
i , xo, 88
Discount rate of % per cent on purchase of Treasury bills established by Federal Open
Market Committee
14, 104, 108
Industrials loans under Section 13b of Federal Reserve Act, changes approved
93
Interest, at Federal Reserve Banks
74
Open market rates in New York City
83
Preferential rates on advances to member banks secured by short-term obligations of
United States
100
Savings deposits
75
Time deposits
75
Ration banking plan
51
Real estate:
Loans on, by member banks, December 31, 1942.
78
Member bank holdings, December 31, i^z
76
Regional economic problems, program of research undertaken
45
Regulations, Board of Governors:
A, Discounts for and Advances to Member Banks by Federal Reserve Banks:
Amendment to subsection b of Section 2.
89
Amendment to subsection h of Section 1
98
Amendments during year
57
D, Reserves of Member Banks:
Amendment to conform to recent amendment to Federal Reserve Act
95
Amendment requiring that deficiencies be computed on basis covering weekly
periods
86
Amendments during year
57
Reduction in requirements in central reserve cities
17, 97, 98, 99
S, Industrial Loans by Federal Reserve Banks:
Amendment to
57
Amendment adopted
93
T, Extensions of Credit by Brokers or Dealers on Listed Securities:
Margin requirements
75
U, Loans by Banks on Stocks:
Margin requirements
75
V, War Financing:
Adopted
57> 89
Guarantee charges and rates on loans under
91
Schedule revised
ioi
Issuance discussed
33
W, Consumer Credit:
Administration of
2.4
Amendment No. 3 adopted
86
Amendment No. 4 adopted
91
Amendment No. 5 adopted
95
Amendment No. 6 adopted
<)6
Amendment No. 7 adopted
96
Amendment No. 8 adopted
97
Amendment No. 9 adopted
100
Changes during year
M* 57
Minimum down payments and maximum maturities
73
Regulations, Foreign funds control, amended
36
Reports:
Congress, on legislation during year
55
Revision of certain forms for
45
Repurchase of bills from Federal Reserve Banks by seller, option given
x, 14, 106
Research service of Board
44
Reserve city member banks:
Assets and liabilities, December 31,1941
76

Classification of loans, Government direct obligations, and capital, December 31,1942.
78


i58

INDEX

Reserve requirements:
Page
Discussion of
2., 31
Member banks
75
Member banks in central reserve cities, amendment to Regulation D reducing. . 17, 97, 98, 99
Regulation D, amendments to
57, 95
Reserves:
Actions of Board to provide adequate for war needs
1,31
Amendment to Federal Reserve Act to permit changes in central reserve cities without
making other changes
17, 56
Decline during year
12.
Deficient:
Loans or dividends by member banks, amendment to Federal Reserve Act
56
Excess of member banks
17
Federal Reserve Banks:
All banks combined, December 31, 1942.
61
Each bank, end of year
figures
62.
Member banks:
Account in Federal Reserve Banks:
All banks combined, December 31, 1942.
61
Each bank, end of year figures
63
Amendment to Federal Reserve Act authorizing Board to change requirements in
central reserve cities
17, 56
Amendment to Regulation D providing that deficiencies be computed for weekly
periods
."
86
Excess:
1918-1941, end of year
figures
79
1942., end of month
figures
79
Increase in requirements
60
Reduction in requirements at central reserve city banks
17, 97, 98, 99
Total:
1918-1941, end of year
figures
79
1942., end of month
figures
79
Retirement System, changes under consideration
52.
Richardson, R. B., appointed director at Helena Branch
48
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, 1942.
78
Smead, E. L., appointed Acting Administrator or War Loans Committee
53
Staff of Board: (See Board of Governors)
Staff of Federal Reserve Banks, expansion in
49
Stark, Walter R., appointed Assistant Director of Division of Research and Statistics. . . .
54
State member banks:
Assets and liabilities, December 31, 1942.
76
Banking offices, 1933-1941
80
Branches:
Number of:
1933-1942.
80
1941, analysis of changes in
81
Classification of loans, Government direct obligations, and capital, December 31,1942.
78
Examination of
41
List of, December 31, 1942.
12.6
Number of:
1933-1941
80
1941, analysis of changes in
81
States and political subdivisions:
Obligations of, owned by member banks
76
Statistics collected by Federal Reserve System
44
Steen, William H., appointed director at Portland Branch
48
Stock prices:
Table
83
Studies undertaken by Board during year
44
Surplus:
Federal Reserve Banks
69, 70
Member banks
77
Suspensions, banks
40, 81



INDEX

J

59

Taxation:
Page
Dividends on Federal Reserve Bank stock, amendment to Federal Reserve Act
55
Use as weapon against inflation
2.6
Taylor, Jay, appointed Chairman at Dallas
48
Treasury bills:
Discount rate of ^ per cent on purchase of, established by Federal Open Market Committee
14, 104
Direction to Federal Reserve Banks amended
108
Holdings of Federal Reserve Banks
34, 66
Repurchase option, Federal Reserve Banks given authority by Federal Open Market
Committee
z, 14, 106
Treasury bonds and notes, holdings of Federal Reserve Banks
66
Treasury currency outstanding, 1918-1942.
79
Treasury policy for financing war
9
Trust company members of Federal Reserve System
12.6
Trust powers, national banks granted authority to exercise and to terminate during year. .
4Z
United States Government deposits: (See Deposits, Government)
United States Government securities: (See Government securities)
Vest, George B., designated Assistant General Attorney
54
Victory Fund drive
11
Victory Fund organization
3Z
Voting permits issued to holding company affiliates
42.
Wage controls, imposition of
4
War:
Contracts, financing of
2.2.
Cost of, increase in expenditures during year
7
Economy, transition t o
3
Finance, policies of Federal Reserve System in connection w i t h program
9, 2.9
Financing program of Treasury
9
Loans :
Applications for
34
Financing war production, responsibility of Federal Reserve System
31
Guarantee charges and rates on loans under Regulation V
91, 102.
Regulation V adopted
57, 89
War Loans Committee created
53
War Savings bonds :
Voluntary payroll deduction plan for purchase of
54
Waymack, W. W., appointed Deputy Chairman at Chicago
48
Wellman, Harry R., appointed Class C director at San Francisco
48
Wholesale commodity prices index
84
Willett, William, elected First Vice President at Boston
49
Wingfield, B. Magruder, designated Assistant General Attorney
54
Young, R. A., resignation as President a t Boston
48