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THIRTY-FOURTH

ANNUAL REPORT
of the

BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSr

COVERING. OPERATIONS FOR

THE YEAR

1947

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

Washington, April Q, 1948.
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 Thirty-fourth Annual Report, prepared by direction of the Board of Governors of the Federal Reserve System,
covering operation during the calendar year 1947.
Yours respectfully,

M. S. ECCLES, Chairman pro tern.

TEXT OF REPORT
Page

Introduction
I
Monetary Policy in 1947
3
Inadequacy of Existing Monetary Instruments
7
Legislative Proposals
11
Government Finance
12
Bank Credit Developments
15
Bond Market and Money Rates
25
Demand, Production, and Prices
27
International Trade and Finance
32
Changes in Banking Structure
\
37
Number of banking offices
37
Increase in Federal Reserve membership
37
Par and nonpar banks
38
Check routing symbols
38
Designation of reserve cities
38
Bank Supervision by the Federal Reserve System
40
Examination of Federal Reserve Banks
42
Examination of State member banks
42
Bank holding companies
43
Trust powers of national banks
43
Acceptance powers of member banks
44
Foreign branches and banking corporations
44
Changes in Regulations of the Board of Governors
45
Margin requirements for purchasing securities
45
Consumer credit
45
Litigation
45
Suit regarding removal of bank directors
45
Conviction for violating Regulation W
45
Suit regarding condition of membership
46
Legislation
46
Purchase of Government obligations by Federal Reserve Banks 46
Federal Reserve branch bank buildings
46
Stock of Federal Deposit Insurance Corporation
47
Consumer credit
47
War loan deposits
47

age

Reserve Bank Operations
Volume of operations
Earnings and expenses
Foreign transactions
Bank premises
Reserve Bank Personnel
Chairmen and Deputy Chairmen
Directors
Change in First Vice Presidents
Staff
Board of Governors—Staff
Appointment of Board member
Death of Vice Chairman Ransom
Staff
Board of Governors—Income and Expenses
Research and Advisory Services
Publications and Releases
Federal Reserve Meetings

47
47
48
49
50
51
51
52
53
53
53
53
53
53
54
55
58
59

TABLES
1. Statement of Condition of the Federal Reserve Banks (In Detail).
Dec. 31, 1947
2. Statement of Condition of Each Federal Reserve Bank, End of 1947
and 1946
3. Holdings of United States Government Securities by Federal Reserve
Banks, End of December 1945, 1946, and 1947.
4. Holdings of Special Short-Term Treasury Certificates by the Federal
Reserve Banks, 1942-47
5. Volume of Operations in Principal Departments of Federal Reserve
Banks, I943"47
6. Earnings and Expenses of Federal Reserve Banks during 1947. • • •
7. Current Earnings, Current Expenses, and Net Earnings of Federal
Reserve Banks and Disposition of Net Earnings, 1914-47
8. Bank Premises of Federal Reserve Banks and Branches, Dec. 31,
1947
9. Number and Salaries of Officers and Employees of Federal Reserve
Banks, Dec. 31, 1947
10. Federal Reserve Bank Discount, Interest, and Commitment Rates,
and Buying Rates on Bills (In Effect Dec. 31, 1947)
11. Member Banks Reserve Requirements
12. Maximum Rates on Time Deposits
IV

62
64
68
69
69
7°
72
74
75
76
77
77

Page

13. Margin Requirements
14. Minimum Down Payments and Maximum Maturities on Consumer
Credit Subject to Regulation W
15. Analysis of Changes in Number of Banking Offices during 1947. . . .
16. Number of Banking Offices on Federal Reserve Par List and Not on
Par List, by Federal Reserve Districts and States, Dec. 31, 1947. .

77
78
79
80

APPENDIX
Record of Policy Actions—Board of Governors
82
Record of Policy Actions—Federal Open Market Committee
88
Statement of Federal Advisory Council on Bank Credit, Consumer Credit
Controls, and Bank Reserves
98
Board of Governors of the Federal Reserve System
101
Federal Open Market Committee
101
Federal Advisory Council
102
Directors and Senior Officers of Federal Reserve Banks
103
Map of Federal Reserve Districts
114
Index
115

ANNUAL REPORT OF THE BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
Inflationary forces continued to dominate the nation's economy during 1947
and the early months of 1948. Monetary and fiscal policies were directed
toward reducing the influence of credit expansion in furthering inflation. In
view of the wartime growth of the public debt, however, and the responsibility of the Federal Reserve System for maintaining an orderly market for
Government securities, the Federal Reserve authorities were unable to make
use of established instruments to restrain credit expansion to the extent that
was previously possible. Accordingly, the Board of Governors recommended
to the Congress the adoption of legislation that would restore to the System
the power to impose more effective restraints.
Total demand by consumers, businesses, and government, based on rising
incomes, on the use of previously accumulated savings, and on new borrowing,
exceeded the capacity of the economy to supply goods and services. Aggregate
output, which at the beginning of 1947 was larger than in any previous
peacetime period, showed little further growth in the course of the year.
Prices rose under the pressure of vigorous demands, and the total value of
the nation's product of goods and services continued to increase. Employment
was close to the maximum level possible with the existing labor force. The
large volume of employment, rising wage rates, high prices for farm products,
and large profits by businesses were reflected in a further growth of national
income.
Consumer expenditures, which had necessarily been less than income during
the war period because of the scarcity of goods available for purchase and
the effect of rationing and price controls, increased after the war more rapidly
than personal incomes. This reflected the increased availability of goods and
the willingness of many consumers to spend freely notwithstanding sharply
advanced prices. Many consumers drew upon their large wartime accumulations of savings and others borrowed to supplement current incomes. Although
current personal savings were considerably below the abnormally high wartime level, individuals in the aggregate continued to add to their holdings of
liquid assets.
Heavy business expenditures for equipment, plant, and inventories, prompted
by expanding markets and increased earnings, added to the total volume of
buying. Farmers, with incomes at record high levels, were likewise active
buyers of equipment, as well as of consumers' goods. There was also a sharp
expansion in expenditures of State and local governments. Growing domestic
expenditures were reinforced by exceptionally active demand for American
goods from abroad, reflecting acute needs on the part of war-ravaged Europe
and large purchasing power on the part of other countries.

ANNUAL REPORT OF BOARD OF GOVERNORS

Expenditures by the Federal Government in 1947 were an important factor
in total demand, as measured by peacetime standards, although somewhat
smaller than in 1946. At the same time, Government cash receipts exceeded
cash payments, and a substantial amount of Government securities was retired, particularly of bank-held securities. These fiscal and debt-management
developments had an anti-inflationary impact. They not only withdrew funds
from current incomes of businesses and individuals and thereby reduced
amounts available for spending; they also had the effect of withdrawing
reserves from banks, thereby making it necessary for many banks to liquidate
Government securities in order to maintain their reserve positions and at the
same time meet the growing demand for loans.
Increased expenditures by businesses and by State and local governments
were financed in part by a large volume of security offerings for new money
and a rapid expansion of bank loans. Growing investment in housing resulted
in an expansion of mortgage loans, and consumer credit also increased substantially.
Vigorous and widespread bank credit demand in 1947 stemmed largely
from forces accompanying the high level of economic activity and sharply
rising prices. Some of the loans extended by banks facilitated expansion in
production of goods and services but, since there was little over-all increase in
the total volume of output, the additional money supplied by increases in bank
loans was an important inflationary factor. Some of the funds made available
through bank loans were used by businesses to bid for scarce materials and
manpower or by consumers to swell the demand for limited supplies of goods
and services. Thus by borrowing from banks some producers were able to
bid away productive resources from others, who in turn were induced by
active business conditions to seek additional credit with which to protect their
own operations. Similarly, borrowing by consumers was a factor in the rising
prices of many consumer items. Some borrowers, moreover, encouraged by
inflationary price advances, sought bank loans to purchase and withhold supplies from the market. Loans of this type retarded production and stimulated
price advances.
In summary, inflationary developments, which had begun because of wartime shortages of goods in relation to income, were carried forward through
1947 by a rising spiral of costs, prices, and incomes, supported by use of past
savings and by substantial credit expansion. With additions to the supply of
domestic goods limited, with supplies from abroad still small and needs large,
with the economy's total expenditures increasing, and with an already abundant money supply and capacity for further credit expansion, the threat of
further inflation continued into 1948.

FEDERAL RESERVE SYSTEM

MONETARY POLICY IN 1947
Policies pursued by the Federal Reserve authorities since 1946, together
with measures adopted by the Treasury in connection with management of
the public debt, have been designed to absorb bank deposits and bank reserves
and to restrain further over-all monetary expansion. With a vigorous demand
for loans on the part of nearly all groups of borrowers and with decreases in
net earnings, banks have been under pressure to expand their loans. Funds to
meet current demands for credit have been made available by the large inflow
of gold or have been readily obtainable by banks through selling some part of
their greatly expanded holdings of Government securities. Reserves have also
been supplied more recently through sales of Government securities by nonbank investors. In the absence of other buyers, a large portion of the securities offered for sale have been purchased by the Federal Reserve Banks in
accordance with the System's policy of maintaining an orderly and stable
market for the vast volume of Government securities outstanding.
Effective limitations on credit expansion could be accomplished only by
absorption of bank reserves through a reduction in Federal Reserve holdings
of Government securities or by voluntary restraint on the part of borrowers
and lenders. Since banks, and at times during the year other investors as well,
were selling Government securities on balance in order to obtain funds for
other purposes, it was not possible for the Reserve System to reduce its holdings to the extent necessary. In any event, a vigorous attempt to do so would
have brought about disorderly conditions in the market for Government
securities with widespread repercussions throughout the economy.
Some restraint was effected through the use of an excess of Treasury cash
receipts over expenditures to retire Government securities held by the Federal
Reserve Banks. This excess, which reflected not only a small surplus in budget
accounts but also receipts for Government trust accounts invested in special
issues and sales of new issues of nonmarketable securities in excess of redemptions, represented the balance of funds being withdrawn from banks by
Treasury transactions. When used to retire securities held by the Reserve
Banks, these funds are not returned to the market, as they would be if used
to retire securities held by others.
Banks losing funds through these transactions had to sell Government securities in order to maintain their reserve positions, and particularly to expand
loans. These securities, if not taken by other buyers, were purchased by the
Federal Reserve Banks, which thereby made additional reserves available to
banks. Even though securities were readily salable by banks, the need
to sell securities to adjust reserve positions and make loans was a factor of
restraint on credit expansion by some banks.
During the early months of 1947, banks obtained reserves from the gold
inflow and a seasonal return of currency from circulation. Although the

A N N U A L REPORT OF BOARD OF GOVERNORS

Treasury had a large excess of cash receipts over expenditures, much of this
excess was returned to the banks through substantial retirement of securities
held by commercial banks and other holders. In this period, therefore, banks
were able to meet substantial losses of deposits and also expand their loans.
In the second quarter of the year, a larger portion of debt retirements were
of securities held by Federal Reserve Banks, including a portion of the weekly
issues of Treasury bills. These operations utilized Treasury balances accumulated during the first quarter in a manner that did not add to reserves. Bank
reserves were increased, however, by the gold inflow, as is shown in the
accompanying chart, and bank loans and deposits increased.
MEMBER BANK RESERVES,
RESERVE BANK CREDIT, AND RELATED ITEMS
BILLIONS OF DOLLARS
30

BILLIONS OF DOLLARS
30

WEDNESDAY FIGURES

.25

TREASURY CASH AND DEPOSITS.

1945

1946

1947

1948

In the middle part of the year, there was a strong demand for Government
bonds on the part of banks and other investors. The Treasury sold substantial amounts of marketable bonds from Government trust funds to meet some
of this demand. These sales withdrew funds from the banks which were
used to retire maturing debt. There was a growth in the total of bank loans
and investments and, notwithstanding the continued gold inflow, banks sold
certificates to the Federal Reserve in order to obtain additional reserves.

FEDERAL RESERVE SYSTEM

Beginning in July the Federal Reserve System and the Treasury adopted
measures to permit some rise in interest rates on short-term Government securities in order to increase their attractiveness to banks and other investors and
to place an additional restraint on further monetary expansion. The System
discontinued its buying rate on Treasury bills, which had been fixed at
Y% per cent since 1942. The rate on bills rose during the remainder of the
year to nearly 1 per cent, as is shown in the chart. The length of term to
maturity of newly offered Treasury certificates was shortened in August and
September and subsequently higher issuing rates were placed on new issues;
these rates rose from % per cent to iJ/% per cent by the end of the year.
In October the Treasury sold to institutional investors a 2,y2 per cent longterm, nonmarketable bond, redeemable at a discount prior to maturity. This
issue, together with sales of marketable securities from Government trust
funds, absorbed funds seeking investment. After October Federal Reserve
holdings of maturing securities other than bills were paid off in full. In this
way the Treasury excess of cash receipts was withdrawn from the market and
not put back, thereby exerting a maximum of pressure on the reserve position
of banks.
YIELDS ON TREASURY AND CORPORATE SECURITIES

1944
1945
1946
1947
1948
NOTE: Latest figures shown are for week ended Apr. 3, 1948. The Treasury series include all securities
within the classes specified with the following exceptions: the 3-5 year series and, since Dec. 15, 1945, the
7-9 year series, include only selected issues. For data, see Federal Reserve Bulletin for April 1948, tables
on p. 427.

ANNUAL REPORT OF BOARD OF GOVERNORS

These official measures, designed to restrict the supply of available funds,
were accompanied by increased demand for bank credit and for investment
funds. Offerings of corporate securities increased and those of State and local
government issues continued in large volume; there was a growing demand
for mortgage and consumer credit as well as for commercial loans. As a
result, bank credit expanded sharply in the last half of 1947.
Growing demands for funds, coupled with measures to absorb the supply
available for investment and to restrict credit extension, resulted in a rise in
money rates and bond yields during the last half of 1947. In October this
movement began to affect the Government bond market. During part of
November and December, the Federal Reserve and the Treasury through
limited purchases supported prices of Government bonds at the levels they
had reached in the market, which were in most cases still substantially above
par. On December 24 prices of Treasury bonds were permitted to decline
to a new level, which maintained the 2Y/2 per cent yield on the longest-term
Treasury bond and yields on other issues at appropriate levels in relation to
this rate and to the i1/^ per cent rate on Treasury certificates. The Federal
Reserve System became an active buyer at the new level.
Large amounts of Treasury bonds were purchased by the Reserve Banks
during December 1947 and the early weeks of 1948 in providing support to
the market. A substantial portion of these purchases were from insurance
companies and other institutional investors and some were from banks. At
the same time banks, as well as other investors, increased their holdings of
Treasury bills, certificates, and notes. Since these were largely purchased from
Federal Reserve accounts and since during the period the Treasury had a
substantial cash surplus, which it continued to use to retire securities held by
the Federal Reserve Banks, the total Federal Reserve portfolio of Government securities declined during the early weeks of 1948.
In the middle of January 1948, as a measure of restraint upon the
use of Federal Reserve Bank credit, the Federal Reserve Banks increased
their discount rates on advances to member banks from I to 1 ^ per cent.
The Board of Governors also took action late in January to increase from
20 to 22 per cent, effective February 2y^ 1948, the reserves required to be
maintained against net demand deposits by member banks in central reserve
cities (New York and Chicago). The requirement for banks in these cities
had been at 20 per cent since the latter part of 1942, when it had been reduced
from 26 per cent, the maximum permitted under existing law.
In view of the expanding volume of bank lending and the accompanying
inflationary developments, the Federal and State bank-supervisory agencies
issued in November a joint statement urging banks to curtail speculative loans,
to guard against overextension of consumer credit, and to confine financing
to loans which would help production and not merely increase consumer
demand.

FEDERAL RESERVE SYSTEM

Toward the end of 1947 the American Bankers Association sponsored an
organized effort by banking leaders to encourage voluntary restraint on inflationary bank credit extension among the country's 15,000 commercial banks.
To the extent that individual banks restrict voluntarily their lending and
investing programs, anti-inflationary monetary and supervisory policies pursued by the Federal Reserve System and the Treasury are reinforced and made
more effective. Such voluntary action, to be effective in restricting credit
expansion, requires the adoption by individual banks of rigid standards in all
lending operations, with a view to preventing further expansion in the total
volume of bank deposits as well as avoiding loans that may involve a high
degree of risk.
INADEQUACY OF EXISTING MONETARY INSTRUMENTS
Since 1945 the Federal Reserve authorities have been confronted by a
redundant money supply and demands on the part of banks for additional
reserves to support further credit expansion. In this situation, which was
largely created through the processes of war finance, the central problem of
monetary policy has been to restrain further growth in bank credit, which
would add to an already excessive supply of money and thereby increase postwar inflationary pressures. In view of the large volume and widespread distribution of Government securities, which can be sold to the Federal Reserve
Banks, thereby creating additional bank reserves, and in view of the need for
assuring support to the market for these securities, customary instruments of
monetary policy have had only limited applicability to the restraint of credit
expansion. Accordingly, in recent Annual Reports and in other public statements the Board has pointed out the present inadequacies of these instruments.
The commercial banks of the country hold nearly 70 billion dollars of
Government securities, and others, excluding Government agencies and the
Federal Reserve, hold another 70 billion of marketable issues that can be
readily sold, not to mention some 60 billion of nonmarketable issues redeemable practically on demand. Substantial amounts of marketable issues are regularly being bought and sold in the market, and constant Federal Reserve
operations are essential for the maintenance of an orderly market and reasonable stability of prices. In these circumstances, it is not possible for the System
to confine its open market operations to meeting the economy's current needs
for bank credit. To permit a gradual decline in prices of Government securities, moreover, might result in heavy liquidation of investor holdings.
Inflationary potentialities latent in the postwar monetary situation and
limitations of the Reserve System's statutory powers for exerting an effective
anti-inflationary influence under conditions brought about by the war were
first pointed out in the Board's Annual Report for 1945. Developments since
that time have emphasized the dilemma of the System in undertaking restrictive action within the existing framework of its authority while maintaining

ANNUAL REPORT OF BOARD OF GOVERNORS

a responsibility for the orderliness and stability of the Government securities
market. The Board believes that it would be unwise to set aside this responsibility in view of likely adverse effects on financial institutions, on the Government's fiscal and debt-management operations, and on the financial position
of business.
After extensive study of the problem of bank credit restraints, the Board
concluded that, in order to be in a position to meet further contingencies of
inflationary bank credit expansion without abandoning support of the Government securities market, some workable addition to the System's existing
authority may be needed, at least on a temporary basis. Rapid bank credit
expansion during the second half of 1947 clearly indicated that existing
restraints are not adequate for these objectives. In response to a request from
committees of Congress, in a session called to consider emergency measures to
aid European recovery and to cope with inflationary developments in the
economy, the Chairman of the Board of Governors presented an analysis of
the credit situation and the Board's proposal for legislation to permit the
imposition of more effective restraints.
Strengthening of monetary policy to regulate over-all bank credit expansion in accordance with the economy's needs could be accomplished by legislation extending authority to increase the statutory reserve requirements of
member banks and to require nonmember banks to hold additional reserves in
an amount corresponding to the increase for member banks. In adjusting to
higher reserve requirements, banks would be obliged to sell Government securities and thus to reduce their earning assets.
Late in 1940, the Board of Governors, the Presidents of the Federal
Reserve Banks, and the Federal Advisory Council, in recognition of the inflationary dangers presented by imminent war, recommended to the Congress
that additional authority to raise basic reserve requirements for member banks
be granted to the Federal Reserve System and that nonmember banks be
made subject to similar requirements. In its Annual Reports for 1945 and
1946, the Board again urged such an authority as a possible means of meeting
the postwar problem of regulating the pace of monetary expansion.
Over the longer run, authority to vary the level of primary reserve requirements might well be adjusted to a revised basis of reserve requirements for
individual banks. The present structure of reserve requirements is based on
cities in which banks are located and traces back to the National Banking
Act, under which banks in certain designated cities were authorized to hold
the basic reserves of other banks. A new system of reserve requirements
related to the type of deposit business which individual banks perform might
be substituted for this outmoded set of standards. Under the new pattern all
banks should be required to maintain the same amount of reserves against any
one type of deposit and variations in requirements should be entirely in accord-

FEDERAL RESERVE SYSTEM

ance with the type of deposit, e.g., interbank balances, other demand deposits,
and savings deposits. This would greatly moderate the arbitrary inequities
among banks which result from existing statutory requirements. In addition,
vault cash should be made eligible as a reserve asset. The role of interbank
balances in our banking system could be given greater recognition, but in
such a way that shifts in correspondent balances would not affect the reserve
position of the banking system as a whole.
An alternative solution to the current problem of restrictive monetary
policy, which wTould not require banks to reduce their holdings of earning
assets, would be a temporary special reserve authority along the lines proposed by the Board to the called session of the 8oth Congress. Under this
plan banks were not to be required to add to their reserve balances with
Federal Reserve Banks, but would be permitted to hold as special reserves
certain cash assets not now eligible as reserves for member banks, and in addition
certain earning assets, namely, Treasury bills, certificates, and short-term notes.
Specified cash assets in excess of existing reserve requirements and customary
operating funds would be counted toward the special reserve, and an allowance of 20 per cent of demand deposits and 6 per cent of time deposits was
proposed as an adequate allowance for these established banking needs. Maximum statutory limits of 25 per cent of gross demand deposits and 10 per cent
of time deposits were suggested for the special reserve requirement.
Under this measure banks would be restricted as to the amount and types
of securities they could sell to obtain additional reserves but would not have
to reduce their total holdings of securities in order to meet the requirement.
Most banks would probably find it unnecessary to make any adjustment in
existing assets at the time of the initial imposition of the requirement. The
authority would make it possible for the Federal Open Market Committee
to require banks to immobilize a portion of their greatly expanded holdings
of Government securities instead of permitting them to treat these holdings
as excess reserves, which can be used at will to expand loans. The special
reserve requirement could be adjusted by the Committee from time to time in
accordance with changes in reserves resulting from gold or currency movements or from purchases or sales of Government securities by the Federal
Reserve Banks.
The special requirement would not compel any bank to hold Government
securities if it preferred to hold cash assets. It would, however, encourage the
holding of short-term Government securities and help to maintain a stable
market for such issues. The authority, by thus partially insulating a portion
of the public debt, would make it possible to limit the volume and raise the
cost of private credit without necessarily increasing the interest cost to the
Government. It would not prevent banks from obtaining additional funds to

ANNUAL REPORT OF BOARD OF GOVERNORS

meet deposit withdrawals or make essential loans, but would impose some
restraint on credit expansion.
The Board believes that the proposed plan would be the most effective and
practical method of dealing with the present monetary and credit situation
because it could be used to exert pressures at the places where restraint on
bank credit expansion is needed, namely, in the field of private loans. At the
same time the plan would protect the interests of the Government, the general
public, and the banking system.
Use of temporary authority to increase commercial bank reserve requirements, on the basis of either an extension of the existing pattern or a special
reserve, would be subject to proper statutory safeguards and governed by the
continuation or resumption of excessively rapid bank credit expansion. If present inflationary pressures should relax, the authority need not be applied, or if
already applied, its requirements could be eased or withdrawn if necessary to
discourage liquidation of bank credit.
Potential expansion of bank credit on the basis of any increase in reserves
could be reduced by higher levels of reserve requirements. In addition, provision of authority to establish such levels would enable the Federal Reserve
System to use its customary instruments of open market operations and discount rates with greater effectiveness and flexibility than postwar conditions
have heretofore permitted.
Another measure to help curb prevailing inflationary credit tendencies, recommended by the Board to the 8oth Congress, is the re-establishment of control over the terms of consumer instalment credit. Regulation of consumer
credit by the Federal Reserve System, which had been in effect under Executive Order since September I, 1941, was terminated on November 1, 1947, by
congressional action. Temporary restoration of the Board's authority, so far
as it related to consumer instalment credit, was subsequently approved by the
Senate—in December, by S. J. Res. 157; the House of Representatives
referred the resolution to its Committee on Banking and Currency, which has
taken no action on the matter.
The Board favors this legislation as a timely anti-inflationary measure.
The Board continues to recommend, as an anticyclical measure, the enactment
of permanent legislation authorizing the regulation of consumer instalment
credit. For the reasons set forth in the Board's Annual Reports for 1945 and
1946, permanent authority would assist in "the over-all program of stabilizing the national economy at a high level of production and employment."
Re-establishment of this control at the present time would help to dampen
consumer demand, especially for durable goods, financed on time-payment
plans. This would help to restrain further inflationary growth in consumer
expenditures and reduce upward pressures on consumer and other prices.
Consumer instalment credit regulation would also discourage many American families from going too heavily into debt on easy terms for goods, in

FEDERAL RESERVE SYSTEM

many cases of inferior quality, selling at inflated prices. In this way, it would
assist in deferring consumer buying until such time as inflationary tendencies
have abated and an increase of consumer expenditures would be desirable in
the interest of general economic stability. It would also diminish the deflationary effects of debt liquidation in a period of declining incomes.
The Board fully recognizes that the current inflationary problem has its
genesis largely in the monetary upheaval due to war expenditures and also
that many of the basic and continuing causes of present inflationary developments lie outside the field of monetary and banking matters. The Board,
nevertheless, believes that the Federal Reserve System should be prepared to
take such action in the monetary field as seems necessary to help accomplish
the purpose for which the System was established, namely, to provide the
basis for a supply of money and credit regulated to the best interests of the
economy.
LEGISLATIVE PROPOSALS
As stated in the previous section, the Board recommended to Congress in
1947 specific legislation to authorize the establishment of a temporary special
reserve requirement on commercial banks and also to restore authority to
regulate consumer instalment credit. These proposals were especially designed
to deal with current inflationary developments in the economy. Other legislative proposals made by the Board were the following.
Bank holding company legislation. The Board has repeatedly pointed
out the inadequacy of the existing law relating to bank holding companies
and the need for new legislation to provide more effective supervision and
control of such companies. The Board has recommended legislation which
would treat bank holding companies in much the same manner as banks themselves and include provisions regulating expansion and requiring the divorcement of all activities unrelated to banking. During 1947, hearings were held
by the Senate and House Committees on Banking and Currency, and the
Senate Committee reported favorably a bill, S. 829, designed to carry out
the Board's recommendations. The Board believes that this legislation is
urgently needed and that action with respect to it should not be delayed.
Reserve Bank guarantee of loans to business. The Board again recommends the enactment of legislation, discussed in its Annual Report for 1946,
which would give the Federal Reserve Banks more effective authority to
guarantee in part business loans made through established banking channels.
This proposal is designed primarily to strengthen and make more effective the
existing facilities for financing smaller business enterprises. It is intended
particularly to assure the availability of long-term loans to supply necessary
capital which such businesses could not otherwise obtain.
Section 13b of the Federal Reserve Act now authorizes the Federal Reserve

ANNUAL REPORT OF BOARD OF GOVERNORS

Banks to make and to guarantee industrial loans, but it contains provisions
which are so restrictive as to impair seriously the ability of the Reserve Banks
to assist in business financing. Under the Board's proposal, Section 13b would
be repealed and the authority to make loans directly to business enterprises
would be eliminated. In lieu of Section 13b, a new statutory provision would
be enacted which would give the Reserve Banks more adequate authority to
guarantee loans than they now possess. The maximum maturity of a guaranteed loan would be 10 years, and the maximum proportion of a loan which
could be guaranteed would be 90 per cent. With the repeal of Section 13b,
the Reserve Banks would be required to return funds heretofore advanced to
them by the Treasury for use in their industrial loan activities. The appropriation of about 139 million dollars available under existing law for industrial loan operations of the Reserve Banks would be repealed and Government funds no longer would be used for this purpose.
Hearings on the Board's proposal were held by the Senate and House
Committees on Banking and Currency during 1947 and the Senate bill,
S. 408, was reported favorably by the Senate Committee. While the proposed
authority would not be used extensively under existing conditions, the Board
believes that this legislation should be enacted to provide stand-by authority
for use as the need arises.
Capital requirements for member banks. As stated in its Annual Report
for 1946, the Board believes that the law governing the establishment of
branches by national and State member banks should be amended to eliminate
requirements, particularly with respect to capital, which result in unwarranted
discrimination against these classes of banks. It also believes that consideration
should be given to the modification of the capital requirements for the admission of State banks to membership in the Federal Reserve System.
GOVERNMENT FINANCE
Development of a budget surplus in 1947, for the first calendar year since
1930, was an anti-inflationary influence. This surplus amounted to only
1.8 billion dollars but, as is indicated in the accompanying table, it compared
with a deficit of 3.5 billion in 1946 and one of 43.7 billion in 1945. By using
this surplus and drawing down the balance in its general fund, the Treasury
reduced the public debt by 2.2 billion dollars to 257 billion. Moreover, as
previously pointed out, by using cash received from the sale of nonmarketable
securities, the marketable public debt was reduced from 177 billion dollars to
166 billion, and a large part of this decline was in the holdings of the banking system.

FEDERAL RESERVE SYSTEM
BUDGET EXPENDITURES AND RECEIPTS AND CHANGES IN PUBLIC D E B T

[In billions of dollars]
Calendar year

Expenditures 1
Net receipts
Budget surplus ( + ) or deficit (—)
Change in:
General fund balance
Gross public debt
Marketable public debt

1947

1946

1945

42.1
44.0

45.1
41.6

89.8
46.0

+ 1.8

-3.5

-43.7

-0.4
-2.2
-10.9

-22.5
-19.0
-22.2

+ 3.8
+ 47.5
+37.1

1
Including net transactions of trust accounts, etc., and clearing account items, which are not ordinarily
reflected in the budget surplus or deficit.

Total marketable debt that matured or was called during the year amounted
to 38 billion dollars, excluding weekly maturities of Treasury bills. Of this
total, 30 billion consisted of certificates, 6.3 billion of notes, and 1.5 billion of
bonds. About 9 billion of these redemptions were paid off in cash and the
remainder were refunded into certificates and short-term notes. In addition,
Treasury bills in the amount of nearly 2 billion dollars were paid in cash.
Major changes in the composition of the marketable and nonmarketable debt
are shown in the following table.
PUBLIC D E B T OUTSTANDING, BY T Y P E OF ISSUE 1

[Par value, in billions of dollars]
Type of issue

Interest-bearing debt: total
Marketable issues: total
Treasury bills
Certificates
Treasury notes
Treasury bonds, due or callable:
Within 1 year
1-5 years
After 5 years
Other
Nonmarketable issues: total2..
Savings bonds
Savings notes
Armed forces leave bonds.
Investment bonds
Depositary bonds
. Special issues

Matured debt and debt bearing no interest...
Gross public debt

1947

1946

1945

254.2
165.8
15.1
21.2
11.4

257.6
176.6
17.0
30.0
10.1

275.7
198.8
17.0
38.2
23.0

6.4
46.4
65.0
0.2
59.5
52.1
5.4
0.8
1.0
0.3

1.5
.35.8
82.0
0.2

2.3
25.3
92.8
0.2
56.9
48.2
8.2

56.5
49.8
5.7
0.6

29.0
2.7
256.9

0.3

0.5

21>.6
1.5

20.0
2.4

259.1

278.1

Excludes guaranteed securities, which are included in the table on p. 15.
Excludes special issues, which are shown separately below.
NOTE: Figures are for Dec. 31; details may not add to totals because of rounding.

Changes in ownership of the public debt resulted primarily from the debtretirement program but also to an important extent from purchases and sales
in the market. The largest decline—nearly 6 billion dollars—was in holdings

ANNUAL REPORT OF BOARD OF GOVERNORS

of commercial banks; about two-thirds of this reduction reflected retirement
of matured issues and the remainder sales to maintain reserve positions in
view of Treasury withdrawals of funds and expanding demand for loans.
The net decline in P^ederal Reserve holdings of less than a billion dollars
reflected retirements of about 3 billion offset by purchases in the market.
Individuals added to their holdings of savings bonds. State and local governments further increased their holdings of marketable securities, while corporations continued to reduce theirs. These and other changes are reflected in
the accompanying chart.
OWNERSHIP OF U. S. GOVERNMENT SECURITIES
BILLIONS OF DOLLARS

100

BILLIONS OF DOLLARS
100

Every class of investor, but particularly insurance companies, commercial
banks, and mutual savings banks, offered bank-eligible bonds for sale in the
market. Net offerings were absorbed by the Federal Reserve in support of the
market. Restricted bonds were sold from United States agency accounts during the summer in order to restrain declines in long-term interest rates. They
were originally taken up by institutional investors, but subsequently these
investors sold restricted issues, which were purchased by the Treasury and
the Federal Reserve. Mutual savings banks purchased enough restricted
bonds to cancel their sales of bank-eligible bonds. Commercial banks and to

FEDERAL RESERVE SYSTEM

a small extent insurance companies, in addition to selling bonds, sold certificates and notes principally to the Federal Reserve. On the other hand,
commercial banks, and to a lesser extent corporations, acquired Treasury
bills from the Federal Reserve. Net changes in holdings of the various
classes of issues by the major groups of holders are shown in the table.
CHANGES IN OWNERSHIP OF UNITED STATES GOVERNMENT SECURITIES DURING 1947

[Partly estimated; par value, in billions of dollars]
Total
U.S. Gov't Federal Com- Mutual Insurance Indiv's,
corp's,
outagencies and Reserve mercial savings communicip's,
standing trust funds Banks banks banks panies and
others

Type of issue
Marketable issues: total
Treasury bills
Certificates
Treasury notes
Treasury bonds: total

-10.9
-1.9
-8.8
+ 1.3

Due or callable:
Within 1 year
1-5 years
5-10 years
After 10 years:
Bank eligible
Restricted
. . . .
Other

-1.0
C11)
C1)
C)

-1.5

-1.0

+ 5.0
+ 10.6
-17.0

-0.2
-0.2

C1)

+0.1
-0.8

-0.8
-3.3
-0.7
+ 1.1
+2.1
+0.2
+0.8
+0.4
+0.1
+0.6

-5.8
+0.9
-5.1
-0.8
-0.8
+ 3.7
+ 6.7

-11.2

+0.1
-0.1
1

Nonmarketable issues:total2.
Special issues

+2.8
+4.4

+4.4

Total, interest-bearing
securities8

-3.7

+3.4

+0.1

-0.8

C1)

-1.4

(*)

+0.1

-0.1
-0.1
+ 0.2
+0.2
+0.8
-1.5
C1)
+0.6

C1)

-0.1

+0.2

-5.9

+0.2

-0.2
-0.4
-1.0
+0.1
+ 1.0
-2.0
-0.2
+0.2

-1.9
+0.4
-2.7
+ 1.5
-1.0
+0.8
+ 1.5
-2.6

+0.4

-0.1
-0.5
C1)
+2.3

-1.0

+0.4

1
2 Less than .05 billion dollars,
s Excludes special issues, which

are shown separately below.
Includes guaranteed securities, which are excluded in the table on p. 13.
Note: Detailed figures may not add to totals because of roundings.

Treasury transactions through the surplus and through sales of nonmarketable securities, as has been explained in other sections of this report,
had the effect of drawing funds from bank deposits and bank reserves, while
retirement of securities returned a portion of the funds. Factors that expanded
deposits and reserves, however, more than offset the drain from Treasury
operations.
BANK CREDIT DEVELOPMENTS
Strong demand for bank credit by most of the major users other than the
United States Government—businesses, consumers, real estate owners, and
State and local governments—was the most striking characteristic^ of the
banking situation in 1947. Bank loans increased by about 7 billion dollars,
the largest annual increase in the history of American banking. This loan
growth, which followed a sharp revival of bank lending activities in 1945
and 1946, raised the year-end volume of outstanding loans at commercial
banks above 38 billion dollars, some 2 billion higher than the previous peak
in 1929.
This growth in loans, together with an increase of about a billion dollars in

ANNUAL REPORT OF BOARD OF GOVERNORS

holdings of other securities, as is shown in the chart, exceeded the further
decrease in commercial bank portfolios of United States Government securities. As a consequence, there was a growth in total loans and investments,
following a decline in 1946. Bank reserves also increased, as a result of an
inflow of gold, which was only partly offset by other factors affecting reserves.
Total deposits at commercial banks showed a renewed growth, following the
reduction due to the large withdrawals from war loan accounts in 1946.
LOANS AND INVESTMENTS OF ALL COMMERCIAL BANKS
BILLIONS
OF DOLLARS
140

BILLIONS
OF DOLLARS
140

JUNE AND DECEMBER 1929 - 1946; LAST WEDNESDAY OF MONTH 1947

>
irOTAL LOA NS
AN D INYESTM ENTS /

120
\

100
<

y
/

— -

/
4

\
\

U. S. 6C)V'T
TIES

f
LOA MS

p j r —— >

rstra

~~~ • *
7 i
1929

1931

I—
1

OTHER SE CURl TIES

1
1937

1939

1945

1947

NOTE: Figures are for all commercial banks in the United States. U. S. Government securities and
other securities are for June dates only through 1935. Monthly figures are partly estimated.

Nature of loan expansion. Use of bank credit by business continued to
grow in 1947, as is shown in the chart on the following page. During the
year commercial and industrial loans at all insured commercial banks increased
by close to 4 billion dollars, nearly the same growth as occurred in 1946.
At the end of the year bank loans to business were over 18 billion dollars,
more than twice the amount outstanding at the cessation of hostilities in
mid-1945.
Vigorous business demand for bank credit reflected sharply increased needs
for working capital at current levels of costs, prices, and sales, as well as an
extraordinarily large current volume of expenditures for plant and equipment.
Many companies, particularly those engaged in processing foods and other

FEDERAL RESERVE SYSTEM

COMMERCIAL BANK LOANS
ALL INSURED BANKS
CALL REPORT DATES

BILLIONS OF DOLLARS
18

BILLIONS OF DOLLARS
16

LOANS FOR PURCHASING
OR CARRYING SECURITIES:

1939

1940

1941

1942

1943

1944

1945

1946

1947

NOTE: All insured commercial banks in the United States. Commercial loans include commercial and
industrial loans, open market commercial paper, and acceptances. Consumer loans are partly estimated
prior to Dec. 31, 1942.

agricultural commodities, used bank credit because of higher raw material
prices and actual and anticipated advances in other business costs such as
wages and transportation expenses. Some concerns borrowed to finance a
growing volume of business. A part of the expenditures of big utility companies, oil companies, and manufacturers of machinery were financed out of
bank loans. Many of these loans were arranged on a term basis, while many
were short-term advances. In numerous instances, bank loans were used as
an interim source of funds in anticipation of retained profits or until new
security issues were floated. Their effect, however, was to expand the volume
of bank credit. Borrowings of instalment finance companies at banks, which
are included in business loans, reflect a part of the growth in consumer credit.
Farmers as a group have shown little increase in their borrowing at banks
since the end of the war. Much of the growth that has occurred is attributable to credit grants for purchase of farm machinery and equipment and for
other capital improvements. Loans on farm real estate by banks have increased
only moderately.
Active residential and nonresidential construction, the extensive relocation
of families in recent years, and rising real estate values resulted in further

ANNUAL REPORT OF BOARD OF GOVERNORS

extension of bank credit to owners of urban real estate. Urban mortgage
loans of insured commercial banks increased 2 billion dollars over the year
and at the end of 1947 amounted to 8.5 billion, or almost one-fourth of
the banks' total loan portfolios. A substantially larger portion of new urban
mortgage business was handled by banks in 1947 than in prewar years.
Consumers had recourse to bank credit in increasing volume in 1947 to
finance purchases of durable goods, expenditures for current living, and outlays for other purchases. Bank loans to consumers increased 1.6 billion
dollars, largely in instalment loans for repair and modernization of houses and
for purchases of automobiles and other consumer durable goods.
The increase in total consumer credit, including that extended by dealers
and by nonbank lenders as well as by banks, approximated 3.2 billion dollars.
This was about one-third of a billion less than the increase during 1946, and
most of the difference was due to a smaller increase in charge accounts. For
consumer instalment credit, on the other hand, the increase of more than 2
billion dollars was one-third again as large as the growth in 1946. The
large increase in consumer instalment credit reflected the influence of such
factors as growing supplies of consumer durable goods, a substantial increase
in loans for the repair and modernization of residental property, further
resort to borrowing by consumers pressed by the rising cost of living, and
active promotional work by credit grantors. Consumer instalment credit was
under restraint imposed by the Board's Regulation W until November 1,
when this regulation was terminated by congressional action.
Bank loans for purchasing and carrying securities declined by a further
billion dollars in 1947* This decline reflected continued liquidation of the
substantial volume of bank credit extended in connection with purchase of
Government securities in the Victory Loan Drive at the end of 1945. Loans
for purchasing or carrying securities other than United States Government
securities changed little throughout the year and maintained an average level
slightly below that for 1946. There was a small increase, amounting to less
than 50 million dollars, in credit extended for this purpose by brokers to their
customers, but these credits continued generally at around the lowest levels
of the past three decades.
The relative stability in credit to purchase or carry securities accompanied
little change in the level of stock prices and the volume of trading on the
New York Stock Exchange. A factor in the continued small volume of stock
market credit, in contrast to expansion of such credit in most other periods
of inflationary developments, was the maintenance of margin requirements at
a high level by the Board's Regulations T and U. These requirements, which
were raised to the 100 per cent level during 1946, were reduced to 75 per
cent effective February 1, 1947.
Bank holdings of municipal and corporate securities. State and local
governments floated an exceptionally large volume of new securities in 1947,

FEDERAL RESERVE SYSTEM

and bank portfolios of such securities increased by 900 million dollars. This
growth compares with issues for new money of about 2 billion dollars and
an increase in the total volume of securities outstanding of somewhat more
than a billion. At the end of the year commercial banks held about 5.3
billion of State and local government securities, the largest amount ever held.
Several large veterans' bonus issues by States were in part taken by city banks.
Country banks expanded their portfolios, largely by subscription to numerous
local security offerings of municipalities and other political subdivisions to
finance construction projects. Corporate sales of new-money bond issues were
large in 1947 but bank holdings of corporate securities did not increase.
Growth of deposits. Monetary expansion continued in 1947, and total
deposits and currency held by individuals and businesses increased by more
than 6 billion dollars. As is shown in the chart, growth was particularly
rapid in the last quarter when deposits expanded at a rate of about one billion
dollars a month. At the end of 1947, privately held deposits and currency
totaled 170 billion dollars, 24 billion more than when hostilities ceased in
August 1945 and 107 billion above the level of 1939.
Demand deposits of individuals and businesses increased by a net amount
BANK DEPOSITS AND CURRENCY
BILLIONS OF DOLLARS
180

BILLIONS OF DOLLARS

/v 1 .

*
160

TOT;\L DEPOSITS f</
/V
• A N C) CURFtENCY
\ - \ - / '

140

A/EXCLUDIh 6
- / » U. S. GOV
/
DEPOSIT 3

140

if* i

i v'

120

ioo

100

••••Mi

——

[ )EMAN D

DEP
A[)JUST

40
T IME DEPOSIIrs

* * *

—<

•*—— * * *

CURF ENCY OUTS IDE BANKS
1

0
1930

1932

1934

1936

1938

1940

1942

1944

1946

NOTE: Figures are partly estimated. Deposits are for all banks in the United States. Demand deposits
adjusted exclude U. S. Government and interbank deposits and items in process of collection. Time
deposits include deposits in the Postal Savings System and in mutual savings banks. Figures are for June
and December, 1929-42; end of month, 1943-46; last Wednesday of month, 1947.

A N N U A L REPORT OF BOARD OF GOVERNORS

of almost 4 billion dollars. In the first quarter of the year these deposits
were drawn down to meet heavy income-tax payments, but in the succeeding
three quarters they grew by 6.8 billion dollars. Their total at the end of the
year was 87 billion, the largest amount on record.
Time deposits at commercial and mutual savings banks increased by about
2.5 billion dollars during the year. The increase, although less than in the war
and early postwar periods, was larger than in most previous peacetime years.
The slackening rate of growth reflected a substantial reduction in current
personal savings from abnormally high wartime levels.
Deposit expansion was general throughout the country and occurred at most
banks in both large and small centers. Growth was particularly rapid, however, in the middle western and southwestern areas, where it probably reflected
in large part the rapid rise in prices of grains and meats. The smallest change
was in the northeastern part of the country.
Expansion of bank loans was the major factor in the growth of deposits in
1947, as is shown in the accompanying table. A gold inflow of over 3 billion
dollars and increased bank holdings of State and local government securities
also expanded deposits. A reduction of 1.2 billion dollars in United States
Government deposits was an additional factor in private deposit growth.
Treasury fiscal and debt-retirement operations, on the other hand, tended to
reduce deposit expansion in I947» The Treasury excess of current cash
receipts, resulting from the budget surplus and sales of nonmarketable
FACTORS IN EXPANSION OF DEPOSIT AND CURRENCY HOLDINGS OF INDIVIDUALS AND BUSINESSES

Changes in Amounts Outstanding during 1947
[In billions of dollars, partly estimated]
Factors in deposit change

Total

Expansive factors
+ 7.3
Bank loans
Bank holdings of municipal and corporate securities . . . + 1.2
Holdings of U. S. Government securities:
Commercial and mutual savings banks. . .
Federal Reserve Banks
+ 3.1
Gold certificates
U. S. Government deposits. .
— 1.2
Other factors, net

Fourth
quarter

Third
quarter

Second
quarter

First
quarter

+ 2.6

+ 2.0
+0.5
+0 3
+0.2
+0.7

+ 1.4
+0.3

+ 1.2
+0.3

+0.9

+0.8

-1.7
-0.9

-2.2
-0.5
+ 1.8
+0.5

+0.2

+0.4
+0.8

—0 3
-0.9

Contractive factors
Holdings of U. S. Government securities:
Commercial and mutual savings banks.
Federal Reserve Banks
U S Government deposits
Other factors, net

+0.5

Change in deposits and currency held by individuals and businesses: total

+6.2

+ 3.5

+ 2.6

+ 3.9
+ 2.5

+3.0
+0.4
+0.1

+ 2.1
+0.4
+0.1

Demand deposits, adjusted
Time deposits
.
Currency outside banks

-5 3
-0.8

-0.2

—1 7

+0 5
+0.6

-3 2

+0.4
+ 2.8
+ 1.7
+0.9
+0.2

-2.7
-2.9
+0.8
-0.6

NOTE: Figures cover all commercial banks, Federal Reserve Banks, mutual savings banks, and the
Postal Savings System; interbank items are excluded. Changes for 1947 arc based on figures for the last
Wednesday in the first and third quarter and for the June 30 and December 31 call report dates in the
second and fourth quarters respectively. Details may not add to totals because of rounding.

FEDERAL RESERVE SYSTEM

securities, in the first instance drew upon private deposits. Use of some surplus
funds by the Treasury for retirement of securities held by nonbank investors
returned funds to private balances. Since most of the Treasury cash surplus
was used to retire bank-held debt, however, the deposits drawn down were
to a large extent extinguished. It is estimated that the net result of Treasury
operations on private bank deposits was a drain of more than 6 billion dollars.
Availability of bank reserves. Extension by banks of substantial amounts
of credit to individuals, businesses, and State and local governments was made
possible in 1947 by an increase in member bank reserves. As is shown in the
accompanying table, the banking system acquired about 3 billion dollars of reserves during the year as a consequence of the gold inflow resulting from the
large surplus of exports over imports. This increase in bank reserves was offset in part by a shift of funds out of commercial banks by the Treasury and
the use of these funds to retire securities held by the Federal Reserve Banks
and to increase Treasury balances with the Reserve Banks. The net result
was an increase of 700 million dollars in member bank reserve balances.
Vigorous demand for bank credit and the desire of bankers to maintain or
increase earnings in the face of rising operating costs resulted in substantial
bank sales of short-term Government securities to obtain funds to acquire
more profitable assets. These securities were largely purchased by the Federal
Reserve, and the resulting additions to bank reserves in part offset the effect
of the use of excess Treasury receipts to retire securities held by the Reserve
Banks.
In the period March through June, substantial reduction of Federal Reserve
SUPPLY AND USE OF MEMBER BANK RESERVE FUNDS

[In millions of dollars]
Year ending1
Item
December 1947 December 1946
Changes increasing reserves:
Gold stock
Treasury cash
Treasury currency
Currency in circulation
Reserve Bank credit
Nonmember deposits at Federal Reserve Banks.
Treasury deposits at Federal Reserve Banks. . . .
Changes decreasing reserves:
Reserve Bank credit
Nonmember deposits at Federal Reserve Banks.
Treasury deposits at Federal Reserve Banks
Currency in circulation
Other
Member bank reserve balances: total.
Required
Excess
1
2

+ 2,224
2-926

-60

-1,888
+ 164
+411

+441
-13
+ 230
+2
-395
-69

+545
+ 113

+ 744
+ 657
+ 87

+490
+ 1,088
-598

Changes based on monthly averages of daily figures for December 1945, 1946, and 1947.
The increase in gold stock was substantially smaller than net gold acquisitions from foreign countries
because 700 million dollars in gold was contributed by the United States to the International Monetary
Fund during the year.

ANNUAL REPORT OF BOARD OF GOVERNORS

holdings of Government securities by Treasury retirement of marketable
securities tended to neutralize the effect of the gold inflow on reserves. Subsequent gold movements were not offset in this way, however, and went to
increase member bank reserves and to finance the seasonal increase in currency
in circulation late in the year. Since additions to reserves available from the
gold inflow were not adequate to meet both the increase in currency circulation and the rapid expansion of bank credit, banks sold some securities to
bolster reserve positions in the last quarter. They also benefited in this period
by an increase in reserves resulting from Federal Reserve absorption of
sales of Government securities by nonbank investors.
Treasury operations were almost as restrictive in their effect on bank
reserves in 1947 as in 1946, although total operations were much smaller.
In 1946 debt retirement was effected by calls on war loan balances at the
banks, which had been built up largely during the Victory Loan Drive. These
calls in the first instance acted to drain bank deposits and reserves by 29
billion dollars, but 25 billion was returned to bank reserves by the retirement
of securities and other Treasury disbursements. The process was largely one
of drawing on Treasury deposits at banks to retire Government securities held
by banks. It had little net effect on the reserve positions of banks, and it did
not affect private deposits and the amount of required reserves, especially
since Treasury war loan deposits were at that time not subject to reserve
requirements.
Cash retirement of securities held by the Reserve System amounted to
almost 4.6 billion dollars in 1946. Such retirement in 1947 was little more
than 3 billion dollars; in addition there was some increase in Treasury balances at the Reserve Banks, making a total drain on bank reserves through
Treasury fiscal and debt retirement operations of 3.5 billion for the year.
Bank earnings and earning assets. Member bank net profits after taxes
were 653 million dollars in 1947, 105 million lower than in the preceding
year and 135 million lower than in the peak year 1945. Net current operating
earnings before income taxes were only slightly smaller in 1947 than in 1946
since increased earnings on loans and other earning assets almost entirely
offset the decline in earnings on United States Government obligations and
increases in all major items of expense. About 43 per cent of net profits was
distributed as dividends and the remainder was added to capital accounts.
Net profits of member banks were 7.9 per cent of total capital accounts in
1947 as compared with 9.6 per cent in 1946, thus continuing the downward
trend of this ratio from the peak of nearly 11 per cent reached in 1945. The
declines were due in part to increases in capital accounts. As is shown in the
accompanying chart, the present ratio of net profits to total capital accounts

FEDERAL RESERVE SYSTEM

approximates the level of the late 1920's but is higher than the level of the
late 1930's and early 1940's. The upward trend of the ratio of net current
earnings before income taxes to total capital accounts was reversed in 1947
when the ratio declined to 11.2 per cent from a high of nearly 12 per cent
in 1946.
EARNINGS RATIOS OF MEMBER BANKS
PERCENTAGES OF CAPITAL ACCOUNTS
PER CENT

ANNUAL FIGURES

PER CENT

1920
1925
1930
1935
1940
1945
NOTE: Net current earnings are total earnings from current operations less current operating expenses.
Net profits are net current earnings plus recoveries, profits on securities, etc., less losses and charge-offs
and taxes on net income. Capital accounts consist of all forms of capital, including capital notes and
debentures, surplus, undivided profits, reserves for contingencies, and other miscellaneous capital accounts. Prior to 1927 profits on securities were included in current earnings; beginning in 1942 taxes on net
income were excluded, while recurring depreciation was included, as a current operating expense deduction
from earnings.

Earning assets of member banks amounted to 98 billion dollars at the close
of 1947, an increase of about 1.5 billion during the year. A decline of more
than 5 billion dollars in holdings of United States Government obligations
during the year was more than offset by an increase of about 7 billion dollars
in loans and other securities. Corresponding changes during 1946 had been
a decrease of over 15 billion dollars in holdings of United States Government
securities and an increase of about 4 billion in holdings of loans and other
securities. Low-yield loans for the purpose of purchasing or carrying securities declined further during 1947, both actually and relatively to total loans.
Other major classes of loans with higher yields increased, for the most part
during the second half of the year. There was a further increase during the
year in member bank holdings of State and local government securities.
Changes in earning assets during the year are shown in the table on page 24.

ANNUAL REPORT OF BOARD OF GOVERNORS

Reflecting debt retirement, shifts in bank portfolios, and increases in yields
on short-term Government securities since the middle of 1947, the average
yield to member banks from their Government security holdings increased
from 1.48 per cent in 1946 to 1.53 in 1947. The average yield on loans also
increased, rising from 3.18 per cent to 3.54. This was partly because memMEMBER BANK LOANS AND INVESTMENTS

[In billions of dollars]
Outstanding
Dec. 31, 1947

Change during year
1947

1946

+ 1.5
+5.9
+3.8
+0.2
-1.1
+ 1.8
+ 1.4

-10.8

57.9
12.6
45.3

-5.1
-4.2
-0.9

-15.3
-16.7

State and local government securities

4.2

+0.7

Other securities

3.1

Loans and investments: total .
Loans: total .

Commercial and industrial loans
Agricultural loans
Loans for purchasing or carrying securities
Real estate loans
Consumer loans
All other, including loans to banks

U. S. Government securities, direct and guaranteed: total..
Bills, certificates, and notes
Bonds

97.8
32.6
17.0
1.0
1.9
7.1
4.7
1.0

-0.1

+3.9
+ 4.2
-3.5

+ 1.9
+ 1.4
-0.1

+ 1.4
+0.3
+0.3

ber banks, particularly reserve city and country banks, tended to hold larger
proportions of their loans in the form of higher-yield real estate and consumer loans.
Capital accounts. Capital accounts of member banks increased by 369
million dollars in 1947, after having increased by 506 million in 1946 and
621 million in 1945. Retention of profits accounted for the current increase;
aggregate sales of additional stock were about the same as retirements of
preferred stocks and capital notes held by the Reconstruction Finance Corporation. Dividend payments amounted to 280 million dollars in 1947.
The ratio of average total capital accounts to average total assets increased
to 6.5 per cent during 1947, capital accounts having increased relatively more
than total assets. As is shown in the accompanying chart, this was the second
successive year of increase in this ratio.
In contrast, the ratio of average total capital accounts to average risk assets,
defined to include all assets other than cash and United States Government
securities, fell from almost 25 per cent in 1946 to 22 per cent in 1947, the
lowest ratio since 1931. The decline from the preceding year resulted from
a far greater relative growth in so-called risk assets than in total capital
accounts. As has been noted previously, there was an over-all growth of
7 billion dollars in risk assets, including a shift of 5 billion dollars from
Government securities.

FEDERAL RESERVE SYSTEM
CAPITAL RATIOS OF MEMBER BANKS
PERCENTAGES OF TOTAL ASSETS AND "RISK ASSETS*'
PER CENT

ANNUAL RATES

PER CENT
30

/-"^

/->

CAPITAL
TO"RISK ASSETs"

20
/

15
_

^
r.fi pfTAI

^"^S^
^

TO TOTAL ASSETS

1
1920

1925

1
1930

1935

1940

t
1945

NOTE: "Risk assets" represent total assets other than cash assets and U. S. Government securities.
Capital and asset figures are based on averages of June and December call date figures 1919-40 and of
three or four call date figures thereafter.
• Indicates Dec. 31, 1947, call date ratio.

BOND MARKET AND MONEY RATES
The cost of money increased further in I947> with all of the increase in
the second half of the year. At the end of the year long-term rates were close
to those prevailing immediately before the war while most short-term rates
were near those of the early thirties. Such rates, however, were substantially
lower than those of the twenties. Accompanying the increased cost of money,
new securities of private corporations and of State and local governments were
issued in large volume and bank loans increased substantially.
Short-term money rates on United States Government obligations began to
rise in July when the Federal Reserve System discontinued the fixed buying
rate and repurchase option for Treasury bills issued on or after July 10, 1947.
Thereafter rates on Treasury bills, which had been held at y% per cent since
1942, increased sharply, and at the end of the year new issues were yielding
almost one per cent. The Treasury also took action to increase yields on
Treasury certificates. On August 1 an 11-month % per cent certificate was
offered in exchange for a maturing 12-month certificate bearing the same rate.
Later a certificate bearing the rate of 1 per cent was issued and in December
a 13-month 1% per cent note was offered in exchange for a 12-month % per
cent certificate maturing on December 1, as well as for a bond issue maturing

ANNUAL REPORT OF BOARD OF GOVERNORS

December 15. This was followed on January 1, 1948 by an exchange offering
of a 12-month 1% P e r c e n t certificate. Average yields on 9 to 12-month certificates increased from 0.85 per cent in July to 1.09 per cent in January 1948.
Private short-term money rates also firmed somewhat during the last half
of 1947. Open market rates on bankers' acceptances, loans to brokers and
dealers secured by Government obligations, and commercial paper rose. Some
banks also announced increases in the rates charged their commercial and
industrial borrowers although the average of such rates continued at a low
level.
The increase in short-term money rates reflected the pressure of a growing
demand for bank credit, which in the third quarter became very large and
affected long-term rates. Monetary action to permit some change in shortterm rates introduced a degree of flexibility in the money market.
Long-term interest rates on both public and private obligations remained
relatively stable prior to September, but in this period excess funds in the
market were partly absorbed by substantial sales of marketable Government
bonds by Federal agencies and trust funds. Financial institutions, however,
largely replenished funds invested in these bonds before the end of September
by the sale of other securities to banks.
Beginning in September there was a decline in bond prices, with a rise in
yields, which was due to many factors that had been accumulating pressure
during the two preceding years. Large institutional investors, particularly
insurance companies, were confronted with a rapidly increasing demand for
funds by home owners, businesses, and State and local governments. In
addition, the Treasury offered a new 23/2 per cent long-term nonmarketable
bond to savings institutions. Finally, the market was affected by the intensified efforts of monetary authorities to put pressure on bank reserves and
restrain credit, and the possibility of future changes in credit policy and
interest rates.
The rise in long-term interest rates (decline in bond prices), which started
in the corporate bond market early in September, proceeded almost uninterruptedly until the middle of October. During these six weeks the yield on
high-grade corporate issues increased from 2.52 to 2.70 per cent. The yield
on long-term Government bonds remained fairly steady during this period,
with the result that the spread between the yields of corporate and Government bonds increased somewhat.
In the middle of October the weakness in the corporate bond market spread
to Government securities and the yields on taxable Government bonds with
a maturity of 15 years or more rose from 2.26 in mid-October to 2.37 per cent
in mid-November. At that point the increase was stopped by open market support purchases of these securities by the Federal Reserve System and the
Treasury.
From mid-November to late December there was practically no change in

FEDERAL RESERVE SYSTEM

yields on long-term Government securities and yields on private long-term
obligations fluctuated within a fairly narrow range. On December 24 a new
lower support level for Government bonds was established by the Open Market Committee of the Federal Reserve, and yields on Government bonds rose
generally to that support level; yields on other types of long-term securities
also rose further. The yield on high-grade corporate bonds had risen to 2.91
per cent by the end of the year, that on municipal bonds to 2.46 per cent,
and that on long-term Governments to 2.45 per cent.
At the end of the year the spread between the yields of high-grade corporate and United States Government bonds was greater than at any time since
fully taxable long-term Government • bonds were issued (1941), and the
yield on high-grade municipal bonds was higher than the yield on long-term
taxable Governments for the first time since early 1942. These changes in
the relative costs of different types of long-term money reflected primarily a
changing pattern of demand for funds. During the war, corporate and municipal demand for new money was small and Federal Government demand
large; during 1946 and 1947, corporate and municipal demand rose considerably while the Federal Government actually reduced the volume of its marketable debt outstanding.
The cost of equity funds to corporations also rose somewhat in 1947. Preferred stock yields (dividend-price ratios) fluctuated little during the first three
quarters of the year but rose from 3 % to 4 per cent during the last quarter.
This upward movement reflected primarily the increase in long-term interest
rates. Common stock yields, as represented by a dividend-price ratio for
industrial issues, were considerably higher at the end of the year ( 5 ^ per
cent) than at the beginning (4J4 per cent). They have fluctuated widely
from year to year in the past, and their average at the end of 1947 was about
the average level for the period 1912 to date. In contrast yields on other
forms of long-term money have exhibited a marked downward trend since the
early twenties. At the end of 1947 they were close to or somewhat below
the levels of the late thirties and^ substantially below those of the twenties
and early thirties.
DEMAND, PRODUCTION, AND PRICES
Domestic and foreign demands for goods and services were at exceptionally high levels in 1947 and, although production was in very large volume,
inflationary forces continued dominant. Total expenditures for goods and
services increased by over 20 billion dollars during the year, as is indicated
in the chart, and at the close of the year were at an annual rate of more than
240 billion. Reflecting heavy demands from many sources and inadequate
supplies, wholesale commodity prices rose 15 per cent during 1947 and consumer prices advanced 9 per cent. Wage rates increased further, with average

ANNUAL REPORT OF BOARD OF GOVERNORS

hourly earnings of factory workers rising n per cent during the year. Real
estate values in farm and urban areas remained at sharply advanced levels
or rose somewhat further.
GROSS NATIONAL PRODUCT
ANNUAL RATES
BILLIONS OF DOLLARS

ANNUAL RATES
BILLIONS OF DOLLARS

SEASONALLY ADJUSTED, QUARTERLY AT ANNUAL RATES

250

200

150

100

1939

1940

(941

1942

1943

1944

1945

1946

1947

NOTE: U. S. Department of Commerce data.

In the spring of the year many buyers, who had increased their inventories
considerably in 1946, withdrew from the market in the expectation of a
decline in prices. As a result there were reductions during the second quarter in output of textiles, shoes, radios, and some other products. The general
level of wholesale prices showed little change.
Shortages, however, persisted for many industrial products, such as steel
and automobiles. Because of unfavorable growing conditions in the United
States and abroad, prospects also developed for shortages of agricultural
products. The Marshall Program was advanced for Federal financing of a
continued large volume of exports to promote economic recovery in Western
Europe, and buying by other countries was maintained in substantial volume,
despite increasing dollar shortages. Demand for most types of construction
expanded, although costs were at very high levels, and new shortages of
building materials appeared. A sharp rise in wage rates at coal mines early
in July was followed by marked advances in prices of coal and steel products.
Requests were announced for large increases in freight rates, and wage rates

FEDERAL RESERVE SYSTEM

on the railroads were raised. Veterans' terminal leave bonds, amounting to
2 billion dollars, became eligible for cashing in September.
As a result of such development, in the second half of the year widespread
expectations of lower prices gave way to expectations of higher prices;
demands generally expanded; and upward pressures on productive resources
and on prices again increased.
Production near capacity. As the year ended the physical volume of production was close to practical limits and unemployment was negligible. Total
employment increased about 3 per cent during the year and there was little
change in the average number of hours worked.
Industrial production was slightly larger in December than in January
1947, according to the Board's seasonally adjusted index. Construction activity rose during 1947, but at the end of the year further expansion was limited
by shortages of materials. Railroad freight traffic was in about the same
volume at the end of 1947 as at the beginning of the year. Altogether, production of goods and services showed only a moderate growth from the early
part of 1947 to the end of the year and the possibilities of further increase
in the near future were limited.
For the year as a whole, production in most parts of the economy was
larger than in 1946, a year of transition and of interruptions in activity occasioned by unbalanced supplies and important industrial disputes. Total output at factories and mines, at an average of 187 per cent of the 1935-39
average, was up 10 per cent from the 1946 average of 170, and there was
nearly as much expansion in construction activity. In most other lines increases
were less marked. Agricultural production, although large, was somewhat
below the level of the previous year.
Rising demands. The physical volume of supplies available to the market
in 1947 failed to keep pace with an unusual combination of rising demands
from all sources. With supplies at the year-end only moderately larger, prices
were up considerably, and total expenditures for all purposes increased about
10 per cent during the year. This situation was made possible by expanding
incomes, further bank credit expansion, continued large holdings of liquid
assets, and willingness on the part of buyers to spend freely even with prices
at new high levels. Personal incomes were at a seasonally adjusted annual
rate of 210 billion dollars in December as compared with 190 billion at the
beginning of the year. Wage and salary payments rose by 10 billion dollars or
9 per cent. Farm income increased substantially. Corporate profits after
taxes for the year were estimated to have been 17 billion dollars, compared
with 12.5 billion in 1946, and there was a further rise in dividend payments.
The most marked increases in expenditures during 1947 were for private
construction, producers' equipment, and consumer durable goods. Larger
expenditures for these goods reflected higher prices as well as increases in

ANNUAL REPORT OF BOARD OF GOVERNORS

physical volume and were facilitated by the abundant supply of credit available at low rates. An exceptional instance of this was the practice of financing
new veterans' housing with mortgages written for close to the full purchase
price of the properties at 4 per cent interest and running for as long as 25
years. Residential construction outlays in the fourth quarter reached a new
high level for the postwar period. The increase during 1947 in expenditures
for producers' equipment occurred despite the very high level of equipment
outlays at the beginning of the year, as compared with other periods of high
economic activity such as 1937 and 1929. Inventory accumulation by manufacturers and distributors declined during the first half of the year and
apparently was below the 1946 rate of growth.
Consumer expenditures expanded about 10 per cent during the year. The
increase in purchases of nondurable goods, which was less proportionally than
that in outlays for durable goods, reflected higher prices, with increases in
physical volume for some nondurable items offset by declines for others.
Owing chiefly to the exceptionally high level of food and clothing prices, the
proportion of expenditures for nondurable goods to total consumer expenditures continued to be unusually large in 1947 as compared with the relationship in prewar years. On the other hand, a smaller share of expenditures .
went for services in 1947, reflecting in part the maintenance of rent controls.
Government purchases of goods and services showed a moderate rise in
1947, reflecting a sharp increase in State and local expenditures. Total
Federal expenditures were sustained in part by large payments to veterans,
interest payments, and aid to foreign countries.
The value of recorded merchandise exports in 1947 was 14.5 billion dollars
as compared with 9.7 billion in 1946 and a prewar average of 3 billion.
After reaching a peak in May exports declined as dollar shortages developed
and as new import restrictions abroad became effective. For some products,
such as wheat, cotton, and tobacco, exports in 1947 represented 25 to 35
per cent of production, and for cotton and rayon textiles, machinery, steel,
and bituminous coal, the proportions ranged from 10 to 15 per cent of production. For most other products, the share going into export markets was
much smaller. Merchandise imports were in larger dollar amount than in
1946, reflecting higher prices, but were only about one-third as large as
exports.
Further price advances. Prices in wholesale and retail markets continued
to rise in 1947, although not so rapidly as in the latter part of 1946, when
Federal price controls were lifted. Wholesale prices of farm products, foods,
and other commodities were all up by about 15 per cent, reflecting the effects
of generally rising demands and costs. Throughout the year prices of farm
products and foods were at exceptionally high levels in relation to other prices,
as is shown in the accompanying chart.

FEDERAL RESERVE SYSTEM
WHOLESALE PRICES
200

200

180

«•<>

160

140

1939

1940

1941

1942

1944

1945

1946

1947

N O T E : Bureau of Labor Statistics index.

The largest increases in prices of agricultural products were in grains,
reflecting the reduced harvests of feed grains during 1947, a record rate of
Government purchases of wheat and flour for export, and prospects of a
somewhat reduced wheat crop and continued large grain exports in 1948.
As a result partly of larger consumer incomes, prices of livestock and meats
in December 1947 were about 15 per cent higher than a year earlier. Cotton
prices advanced somewhat during the year owing to the relatively low level
of domestic stocks of raw cotton, the moderate size of the crop, and strength in
the markets for cotton textile products. Prices of fruits and tobacco were
adversely affected by reduced export demand, and sugar prices were held
down by a very large increase in supplies.
Prices of commodities other than farm products and foods rose in the first
quarter, were stable in the second quarter, and then advanced steadily during
the second half of the year. In December prices of fuels, iron and steel,
lumber, and leather were substantially higher than at the beginning of the
year, with the largest increases in bituminous coal and in petroleum products.
Large domestic requirements for fuel, limited transportation facilities, and
heavy exports contributed to the marked rise in fuel prices.

ANNUAL REPORT OF BOARD OF GOVERNORS

Retail prices of goods and services purchased by consumers at the end of
1947 were up 9 per cent from the beginning of the year and 67 per cent as
compared with prewar. Prices of foods and many other nondurable goods
rose about 10 per cent and in December were double the prewar level.
Housing rentals showed a rise of about 5 per cent after the middle of 1947
when controls were modified, but increases over prewar levels were still
very much less than in retail prices of commodities. Utility rates also were
rising at the end of the year but were still relatively low.
INTERNATIONAL TRADE AND FINANCE

In 1947, as in 1946, the immense productive power of the United States,
called into action at a time when production in much of the rest of the world
had not yet recovered from the ravages of war, yielded a high level of exports
of goods and services and a huge export surplus. This surplus, amounting to
11.3 billion dollars in 1947 as compared with 8.1 billion in 1946, was far
greater than in any previous peacetime year and only slightly below the peak
attained at the height of the Lend-Lease program in 10,44.
In large measure, the volume of exports and of the export surplus reflects
the contribution of the United States to postwar reconstruction in war devastated areas. In addition, countries that escaped war damage and disruption,
notably those in the Western Hemisphere, have made great demands upon
United States production because of their high levels of domestic income,
large deferred demands for many products, and the slow recovery of other
sources of supply.
This large export surplus would not have been possible without major financial assistance to needy foreign countries by the United States Government.
At the same time, major inroads were made upon foreign holdings of gold
and dollar assets. By the end of the year, many foreign countries had largely
depleted their liquid dollar resources, including lines of credit, and were facing a serious crisis in their payments relations with the United States.
While some countries are in a position to impose restrictions upon imports
from the United States in order to conserve dwindling reserves of gold and
dollars, many foreign areas are critically dependent upon the flow of supplies
from the United States. In large measure, the volume of this flow during
1948 will be determined by the scale of financial assistance from the United
States Government. It is not expected, however, that exports of goods and
services or the export surplus will attain the record level reached during the
past year.
Exports and imports. Recorded exports of merchandise in 1947 reached an
all-time peak of 14.5 billion dollars, almost 50 per cent larger than in 1946.
In addition to recorded exports, as is shown in the accompanying table, there
were other exports of goods amounting to 1.5 billion dollars and receipts from
services amounting to 3.6 billion. The unrecorded exports of goods consisted

FEDERAL RESERVE SYSTEM

mainly of two items: ( i ) civilian supplies distributed by the armed forces ir
occupied areas, amounting to over 800 million dollars (excluding freight)
and (2) sales of Government surplus property located abroad, amounting tc
about 200 million dollars.
The marked increase in the dollar value of recorded exports was due
mainly to the expanded physical capacity of the United States to produce foi
export, but also reflected a 21 per cent increase in the average of export prices
Industrial production in the United States was 10 per cent larger in 194;
than in 1946, and exports of semi-finished and finished manufactures, whici
INTERNATIONAL TRANSACTIONS AFFECTING FOREIGN GOLD RESERVES AND BANKING FUNDS
IN THE UNITED STATES, 19471

[In billions of dollars]
United States exports:
Goods
Services

16.0
3.6

Total
United States imports:
Goods
Services

19.6
6.0
2.3

Total

8.3

Net purchases of goods and services from United States by foreign countries
Sources of financing utilized by foreign countries:
United States Government (net)—
Credits
Donations

11.3

4.0
1.7

Total
United States—private (net)—
Foreign investment (long- and short-term)
Donations

5.8
0.6
0.7

Total
International institutions (net)—
Dollars disbursed by International Bank
Dollars drawn from International Monetary Fund

1.3
0.3
0.5

Total
Foreign countries' own capital assets (net)—•
Sales of gold to United States
Reduction of banking funds in United States
Liquidation of other assets in United States (long- and short-term)

0.8
2.8
1.2
0.5

Total

4.5

Total sources of financing

12.3

Errors and omissions

Net sales of gold to United States by foreign countries (repeated from table above). .
Foreign subscriptions in gold to International Monetary Fund
Net gold losses by foreign countries in international transactions

—1.1

2.8
0.7
3.5

ANNUAL REPORT OF BOARD OF GOVERNORS

in 1947 accounted for over 70 per cent of all recorded exports, were estimated
to be 46 per cent larger, in physical volume terms, than in 1946. In the case
of crude foodstuffs, the volume of exports was only moderately greater than
in 1946, while in the case of crude materials and manufactured foodstuffs,
the volume was actually less. The aggregate volume of recorded exports,
adjusted for price changes, was estimated to be 24 per cent larger than in 1946.
Total United States imports of goods and services, amounting to 8.3 billion
dollars, provided foreign countries in 1947 with dollars sufficient to pay for
only two-fifths of United States exports. Recorded imports of merchandise
amounted to 5.7 billion dollars, as compared with 4.9 billion in 1946, the
increase being attributable entirely to the rise in import prices which occurred
during the year. It appears that, in terms of physical volume, recorded imports
were actually slightly smaller in 1947 than in 1946. Imports of goods and
services have been a smaller proportion of national income than before the
war. During the interwar period, total imports averaged about 6 per cent of
the national income, but in 1947 the corresponding figure was only about
4 per cent. This smaller proportion of imports is primarily a reflection of
production and supply difficulties abroad, particularly in Europe, rather than
lack of demand. Merchandise imports from Europe, which in the interwar
years accounted for between 40 and 50 per cent of all imports of goods by the
United States, amounted to only 14 per cent of such imports in 1947.
Before the war, United States trade was characterized by an export surplus of goods and by an import surplus of services. Also, while total sales of
United States merchandise to foreign countries regularly exceeded total purchases from abroad, an export balance in merchandise trade with Europe,
Africa, and the rest of North America was offset in substantial measure by
an import balance with Asia and with South America. In 1947, however,
United States sales, both of goods and of services, exceeded purchases in the
case of every major area. Recorded exports and imports of merchandise, by
areas, are shown in the following table.
UNITED STATES BALANCE OF RECORDED MERCHANDISE TRADE, BY AREAS,

1947

[Dollar items in millions]
Area
Northern North America
Southern North America
South America
Europe
Asia, Oceania
Africa
Total

Recorded
exports

Recorded
imports

Net
recorded
exports

Imports as a
percentage
of exports

$2,132
1,714
2,358

$1,130
1,022
1,237

$1,002
692
1,121

53.0
59.6
52.5

5,214
2,242
822

819
1,205
327

4,395
1,037
495

15.7
53.7
39.8

14,482

5,740

8,742

39.6

FEDERAL RESERVE SYSTEM

In the case of Europe, sales of goods to the United States were sufficient to
pay for less than one-sixth of the recorded merchandise exports received from
this country. For Asia and the various areas in the Western Hemisphere, the
corresponding proportion was one-half or more. Of the total recorded merchandise export surplus, about half was accounted for by net exports to
Europe, about a third by net exports to Western Hemisphere countries, and
the remainder by net exports to Asia, Oceania, and Africa.
Means of financing export surplus. As may be seen from the table on
page 33, about half the over-all export surplus of goods and services was
financed by loans and gifts from the United States Government, and about
two-fifths was financed by the liquidation of foreign-owned gold and dollar
assets. The remaining net exports were paid for with dollars secured from
private United States investments and gifts and, to a smaller extent, from
loans by the International Bank and the International Monetary Fund. European countries received the great bulk of loans and gifts forthcoming from
Government and private sources, but nonetheless had to liquidate gold and
dollar assets on an extensive scale in order to pay for imports. Countries in
the Western Hemisphere paid for most of their net imports from the United
States with dollars acquired from their exports to other areas and from the
liquidation of gold and dollar assets.
During 1947, the United States Government made net donations ("unilateral transfers") to foreign countries amounting to 1.7 billion dollars.
More than half of this consisted of transfers of civilian supplies to areas
occupied by United States armed forces, and was financed from Department
of the Army appropriations.
In addition to outright donations, the United States Government in 1947
made net disbursements on foreign loans amounting to 3.9 billion dollars.
By far the largest component was the 2.9 billion dollars advanced to Britain
under the terms of the Anglo-American Financial Agreement of 1946. Drawings on the British loan were particularly large during July and August, when
Britain temporarily restored limited convertibility of the pound sterling. By
the end of the year, all but 300 million dollars of the original 3,750 million
line of credit had been used up. This unexpectedly rapid utilization of the
British loan reflected a number of adverse factors in the development of the
British balance of payments, including a marked rise in world prices, unfavorable weather conditions in the winter of 1946-47, and the insistence by
most countries selling to Britain that payment be made in dollars or other
convertible currencies. Most of the other Government lending in 1947 was
done by the Export-Import Bank, which made net disbursements, after allowing for some repayments on earlier loans, amounting to 729 million dollars.
Private gifts and investments assisted substantially in financing net exports
from the United States in 1947. The net amount of charitable contributions
and personal remittances was 700 million dollars. The net outflow of private

ANNUAL REPORT OF BOARD OF GOVERNORS

capital, amounting to 640 million dollars, consisted mainly of advances by
parent companies in this country to their subsidiaries abroad.
Two international institutions, the International Monetary Fund and the
International Bank, commenced active operations in 1947. The Fund, which
is designed to provide short-term assistance to countries confronted with temporary balance-of-payments deficits, made its first advance in May, and during
the year made a total of 464 million dollars available to its members. The
Bank, which was created for the purpose of making long-term loans for reconstruction and development, began lending operations in June. By the end of
the year, it had made loan commitments of about 500 million dollars and
actual disbursements of 300 million.
In spite of the large foreign grants and loans made by the United States
during 1947, many foreign countries found it necessary to make substantial
drafts on their holdings of gold and dollar resources. Net sales of gold to the
United States by foreign countries amounted to 2.8 billion dollars during the
year. Foreign production (outside the U.S.S.R.), which remained at the 1946
level of about 700 million dollars, was approximately offset by the gold subscribed by foreign countries to the International Monetary Fund during the
year. There appears to have been some movement of gold into private hoards
in foreign countries. The total gold reserves of foreign central banks and
governments are estimated to have declined from approximately 16 billion
dollars at the end of 1946 to less than 13 billion at the end of 1947.
Argentina was the principal loser of gold reserves, with an estimated
decline during the year of 750 million dollars. The United Kingdom and
Canada also lost heavily; from the reports published by these countries concerning their total holdings of gold and United States dollars, it may be
deduced that during 1947 their gold reserves declined by about 400 and 250
million dollars respectively. Among the other countries which sustained losses
of gold reserves, France showed a decline during the year of 310 million
dollars; Sweden, 275 million; South Africa, 175 million; the Netherlands,
160 million; and Belgium, 140 million. Only the U.S.S.R., which apparently
retained most of the new domestic production, made any substantial net gain.
Drawings on dollar banking funds held in the United States by foreign
countries supplied a net amount of 1,150 million dollars toward meeting foreign requirements during 1947* The dollar balances of foreign central banks
and governments were drawn upon to the extent of over 1,200 million dollars net, mainly as a result of heavy drafts upon the Canadian, British,
Chinese, and Italian accounts. This decline in official balances was partly
compensated by a small net increase in private banking funds. At the end of
the year, official balances stood at T.8 billion dollars and private balances at
3.0 billion.
Foreign countries also made net sales to the United States of marketable
dollar securities (both stocks and bonds, including United States Government

FEDERAL RESERVE SYSTEM

bonds) amounting to 170 million dollars during 1947. The Netherlands and
France were the largest sellers.
CHANGES IN BANKING STRUCTURE
Number of banking offices.1 In 1947, for the fourth successive year, there
was an increase in the number of banking offices in the United States, exclusive of banking facilities at military reservations. Net growth was not quite as
large as in 1946, although considerably larger than in 1945. The figures for
the four years were: 207 in 1947, 225 in 1946, i n in 1945, and 12 in 1944.
The sum of these increases is larger by about 75 than the decreases that
occurred between 1939 and 1943. The total number of newly organized
banks and branches was 271 in 1947, 301 in 1946, 185 in 1945, and 108 in
1944. The number that went out of existence for various reasons was about
the same in 1947 as in the preceding two years. At the end of 1947 there
were 18,975 banking offices (14,714 banks and 4,261 branches and additional
offices). There were also 71 banking facilities at military reservations, a
decrease of 8 during the year.
The number of banks (head offices) increased by 14 in 1947, as compared
with 32 in 1946 and 18 in 1945. During 1947 there were i l l banks opened
for business, of which 33 were member banks, 66 insured nonmember banks,
and 12 noninsured banks. On the other hand, 97 banks were discontinued
through consolidation, liquidation, etc.; of these, 55 became branches. The
number of banks in operation at the end of 1947 was 14,714 (14,181 commercial banks and 533 mutual savings banks).
The number of branches and additional offices, exclusive of offices at military reservations, increased by a net of 193 during 1947. This compares with
increases of 193 in 1946 and 94 in 1945. The number of such offices has
increased every year since 1933, except when it remained unchanged in 1942.
Increase in Federal Reserve membership. Membership in the Federal
Reserve System continued to increase; in 1947 there was a net gain of 23
banks as compared with gains of 16 in 1946 and 70 in 1945. The number of
national banks decreased by a net of 2 and the number of State member banks
increased by a net of 25. Of the 73 banks admitted to membership, 21 were
national banks and 52 were State banks; of the latter, 14 were newly organized and 38 were already in operation. All but one of the 38 had previously
been admitted to membership in the Federal Deposit Insurance Corporation
and their total deposits amounted to about 157 million dollars. About onehalf of the 73 banks admitted to membership were located in three Federal
Reserve districts.

ANNUAL REPORT OF BOARD OF GOVERNORS

The 6,923 member banks in operation at the end of 1947 accounted for
47 per cent of the number and 85 per cent of the deposits of all commercial
banks in the country. Both percentages were practically the same as in 1946.
The State member banks accounted for 21 per cent of the number and 65 per
cent of the deposits of all State commercial banks, the same percentages as
in 1946.
Par and nonpar banks. During 1947 there was a net increase of 69 in the
number of banks on the Federal Reserve Par List and a net decrease of 42
in the number of nonpar banks.2 These changes continued the trend of several years. During the year 158 banks were added to the Par List, 2 were
withdrawn, and 87 banks formerly on the list terminated existence. Of the
87 discontinued par banks, 80 were absorbed by other par banks and 53 of
the 80 were converted into branches. There were net increases of 10 or more
par banks in two States, Texas (23) and Georgia (12).
At the end of 1947 there were 12,037 banks remitting at par and 2,041
nonpar banks; the latter represented only 14 per cent of all banks on which
checks are drawn and held a very small portion of the deposits of all commercial banks in the country. Of the 4,090 branches of commercial banks in
existence at the end of the year, 3,823 were remitting at par.
All banks in 27 States and the District of Columbia are on the Federal
Reserve Par List and the number of nonpar banks in each of 5 other States
was less than 10. Approximately 99 per cent of the banks not on the Par List
were in the following 16 States: Minnesota 413, Georgia 280, Mississippi
167, Arkansas 129, North Carolina 118, Alabama n o , Wisconsin 109,
Louisiana and North Dakota 102, South Dakota 101, Tennessee 99, South
Carolina 93, Missouri 68, Florida 63, Texas 60, and Oklahoma 10.
Check routing symbols. Pursuant to the program inaugurated by the
American Bankers Association and the Federal Reserve System in June 1945,
further progress was made during 1947 in the use of routing symbols on
checks to facilitate their collection.
Approximately 96 per cent of the banks on the Federal Reserve Par List as
of December 1, 1947 have had check routing symbols printed on some of
their checks in the approved location, i.e., in the upper right-hand corner. On
the basis of a survey made in December 1947, it was found that 46 per cent
of all checks clearing through Federal Reserve Banks carried routing symbols
in the approved location.
Designation of reserve cities. The Federal Reserve Act, Section 11 (e), empowers the Board to add to or reclassify central reserve and reserve cities or
to terminate their designation as such. Late in 1947, after consideration over
2
The Federal Reserve Par List comprises all member banks, which are required under the law to remit
at par for checks forwarded to them by the Reserve Banks for payment, and also such nonmember bank s
as have agreed to do so. The revision referred to in the preceding footnote, although it added 115 banks
that had not previously been included in the all-bank series, added only 11 par and 3 nonpar banks that
had not previously been included in par and nonpar statistics. These additions are not included in figures
describing changes during the year but are included in year-end totals.

FEDERAL RESERVE SYSTEM

a long period, the Board of Governors adopted a standard or basis for the
classification of these cities.
On October 24, 1947, the Board published in the Federal Register notice
of a proposed action with respect to the reclassification of certain cities. In
accordance with the notice, a number of banks submitted letters, and representatives of banks in a number of the cities whose status would be changed
appeared before the Board and presented their views.
After due and careful consideration of relevant matter presented, the
Board concluded that a logical, fair, and appropriate standard for determining
the designation and termination of reserve cities is one determined (1) by
the ratio of interbank demand deposits held by member banks in each city to
the aggregate amount of interbank demand deposits held by all member banks
of the Federal Reserve System, and (2) by such a ratio in combination with
a ratio of interbank demand deposits held by member banks in each city to
the aggregate amount of all demand deposits held by member banks in such
city. The Board also concluded that the standard should be applied at threeyear intervals.
In accordance with these conclusions, the Board adopted a basis for classification of central reserve and reserve cities to become effective March 1, 1948,
in effect as follows:
Central reserve cities. The cities of New York and Chicago are
classified (and continued) as central reserve cities.
Reserve cities:
1. The City of Washington, D. C. and every city except New
York and Chicago in which there is situated a Federal Reserve
Bank or a branch of a Federal Reserve Bank are classified
(and continued) as reserve cities.
2. Every city in which, on the dates of official call reports of condition in the two years ended June 30, 1947, member banks
of the Federal Reserve System, exclusive of their offices in
other cities, held an aggregate amount of demand deposits
owing to banks equal, on the average, to one-third of one per
cent or more of the aggregate amount of demand deposits
owing to banks by all member banks of the Federal Reserve
System.
3. Every city in which, on the dates of official call reports of condition in the two years ended June 30, 1947, member banks
of the Federal Reserve System, exclusive of their offices in
other cities, held an aggregate amount of demand deposits
owing to banks equal, on the average, to one-fourth of one per
cent or more of the aggregate amount of demand deposits
owing to banks by all member banks of the Federal Reserve

ANNUAL REPORT OF BOARD OF GOVERNORS

System and also equal, on the average, to 33{/£ per cent or
more of the aggregate amount of all demand deposits held by
member banks in such city.
4. The Board of Governors, prior to March 1, 1948, will also
designate (and continue) as a reserve city, any city now classified as a reserve city (although not within the scope of paragraphs 1, 2, or 3 above) if a written request for the continuance of such city as a reserve city is received by the Federal
Reserve Bank of the district in which the city is located on or
before February 16, 1948 from every member bank which has
its head office or a branch in such city (exclusive of any member bank in an outlying district of such city permitted by the
Board of Governors to maintain reduced reserves) together
with a certified copy of a resolution of the board of directors
of such member bank duly authorizing such request.
5. Effective as of March 1 of each third year after March 1,
1948, the Board of Governors will reconsider the designations
according to the standards outlined above.
In accordance with paragraph 4 above, requests for continuance of reserve
city status were received from member banks in nine cities which would
otherwise have been discontinued as reserve cities; and, acting pursuant to
that paragraph, the Board classified and continued those cities as reserve cities.
As the result of Board action, the following changes were made in the
classification of reserve cities, effective March 1, 1948: the city of National
City (National Stock Yards), Illinois was classified as a reserve city, and the
designations of the following cities as reserve cities were terminated: Grand
Rapids, Michigan; Ogden, Utah; and JSpokane, Washington. The Board's
action resulted in a net reduction in required reserves of member banks of less
than one million dollars.
BANK SUPERVISION BY THE FEDERAL RESERVE SYSTEM
Continuation during 1947 of the high level of banking activity, with
generally expanding loan portfolios, brought increasing responsibilities to
bank managements and supervisory authorities.
Total loans of all commercial banks in the United States increased during
the year by 7.1 billion dollars, reaching 38.2 billion at the end of 1947.
At a time when national output and employment are close to a maximum
limit, an increase in the total loans of the banking system makes for inflation, even though any particular bank may have contributed little or
nothing to such an outcome. This was recognized in the joint statement
issued on November 24, 1947 by the Board of Governors, the Comptroller

FEDERAL RESERVE SYSTEM

of the Currency, the Federal Deposit Insurance Corporation, and the Executive Committee of the National Association of Supervisors of State
Banks. The statement stressed the need for bankers, as a means of combating inflationary developments, to exercise extreme caution in their lending
policies and to confine their extensions of credit, so far as practicable, to
productive purposes.
The prime responsibility for maintaining any bank in sound condition
rests by law and logic upon its directors and managing officers. Bank
supervisory authorities have the function of pointing out to bank management, as occasion requires, what appear to be elements of risk and weakness
in bank assets and management, and any adverse banking trends. The extent to which each bank reduces and eliminates undue risks and weaknesses,
and adapts its policies to changing conditions and foreseeable trends, determines, to a major degree, the collective strength of the nearly 15,000
banks in the American banking system. Assets of individual banks may be
sound but, paradoxically, the aggregates of specific types of assets held by
the banking system may at times reach proportions dangerous to the system
as a whole and thus affect an individual bank. Such situations have arisen
in the past, and can develop again.
Past experience has clearly shown that many problems and subsequent
losses have their origin in assets acquired during boom conditions such as
prevailed during 1947. High levels of business activity tend to obscure underlying weaknesses in bank assets and to increase the difficulty of their proper
appraisal both by examiners and by managements.
During the year there were some instances of deterioration in the quality
of loan portfolios, particularly in cases where the managements aggressively
expanded loan accounts. Although such cases were scattered geographically
and fairly limited in number, they were the cause of concern inasmuch as
they evidenced an apparent willingness to take undue risks.
The volume of loans in State member banks adversely classified during
the year was small in the aggregate, but in an increasing number of instances
the examiners pointed out hazards in certain loans or groups of loans unless
conditions continued to be favorable. •
In recent years bank credit has been extended in a period of generally
rising prices enabling many credit lines, weak when made, to be paid out
without loss. It seems probable that this fact may not be fully realized
by some of the younger credit men in banks and by newcomers in the field
of bank management who are not conditioned by experience to visualize
the problems of wTorking out credit extensions under less favorable and
more variable economic conditions. The problem of maintaining adequate
and capable credit and loan supervisory staffs in banks has been accentuated
also by the retirement from active duties of many older bankers. Because

ANNUAL REPORT OF BOARD OF GOVERNORS

of the apparent lack of appreciation on the part of some banks of the necessity
for maintaining adequate and current credit data, supervisory stress was
continued on the need for such information and the importance of close
supervision of all credit lines.
Continuation of the shift from large holdings of cash and United States
Government securities into other assets, largely loans, in many cases accentuated the need for larger aggregate capital to offset the expansion in risk
assets and the high level of deposits. In many banks, increasing costs of
operations reduced the proportion of earnings available for this purpose.
Some State member banks sold new common stock but others, in need of
additional capital, have seemingly been reluctant to issue stock notwithstanding favorable conditions, or have professed inability to raise capital locally.
In such cases it is incumbent upon management to exercise proper restraint
in credit policies in order to maintain a reasonable relation of capital to
risk assets.
During the year the Board requested each Federal Reserve Bank to
review cases of State member banks in its district in which the Reconstruction
Finance Corporation owned preferred capital, with a view to developing
concrete plans for retiring as much as possible of such capital where it could
be done on a basis consistent with the public interest. Investment of Government funds in bank capital was an emergency and temporary measure made
necessary by the Banking Holiday in 1933, and was not intended to become
a permanent arrangement. It was thought that private investment funds
were generally available to supply the capital needs of banks, and that banks
should rely thereon for their full requirements.
During the year the Board maintained formal and informal contacts on
matters of mutual supervisory interest with the Comptroller of the Currency,
the Federal Deposit Insurance Corporation, and the National Association of
Supervisors of State Banks.
Examination of Federal Reserve Banks. The Board's Division of Examinations examined each of the twelve Federal Reserve Banks and their
twenty-four branches during the year as required by law.
Examination of State member banks. State member banks are subject to
examinations made by direction of the Board of Governors or of the Federal
Reserve Banks by examiners selected or approved by the Board of Governors.
The established policy is to have at least one regular examination of each
State member bank, including its trust department, during each calendar
year, by examiners for the Reserve Bank of the district in which the bank
is situated, with additional examinations if considered desirable. The 1947
program for the examination of State member banks was substantially completed. In order to avoid duplication and to minimize inconvenience to the
banks examined, wherever practicable joint examinations are made in co-

FEDERAL RESERVE SYSTEM

operation with the State banking authorities or alternate examinations are
made by agreement with State authorities.
The annual convention of the National Association of Supervisors of
State Banks held in Washington September 23 through 26 afforded a convenient occasion for the holding of the annual conference of representatives
of the bank examination departments of the twelve Federal Reserve Banks.
The conference was held in the Board's offices in Washington on September
22, 23, and 26, allowing representatives of the Reserve Banks and of the
Board to attend the open sessions of the convention of the Association and
discuss matters of mutual interest with the State bank supervisors. In view
of the problems affecting the supervisory activities of the Board and the
Reserve Banks, emphasis of the conference was placed upon the supervisory
aspects rather than the more detailed aspects of examination procedure.
Representatives of the Insurance and Protective Committee of the American
Bankers Association and The National Association of Bank Auditors and
Comptrollers addressed the conference.
Bank holding companies. During 1947 the Board acted upon applications
for voting permits submitted by holding company .affiliates of banks and
authorized the issuance of six permits for general purposes and five permits
for limited purposes.
The regular annual reports were obtained from holding company affiliates
to provide information with respect to the organizations to which voting
permits have been granted. As in previous years, a substantial number of
the holding company affiliates were examined during the year by examiners
for the Federal Reserve Banks in whose districts the principal offices of
the holding companies are located.
Section 301 of the Banking Act of 1935 provides that the term "holding
company affiliate" shall not include, except for the purposes of Section 23A
of the Federal Reserve Act, any organization which is determined by the
Board not to be engaged, directly or indirectly, as a business in holding
the stock of, or managing or controlling, banks, banking associations, savings
banks, or trust companies. During the year the Board made such determinations with respect to seven organizations.
The existing statutes do not provide adequate means for regulation of
bank holding companies. As discussed elsewhere in this report, recommendations have been made by the Board with a view toward the strengthening
of such regulation.
Trust powers of national banks. During the year, 14 national banks were
granted authority by the Board to exercise one or more trust powers under
the provisions of Section 11 (k) of the Federal Reserve Act. This number
includes the grant of additional powers to one bank which previously had
been granted certain trust powers. Trust powers of 11 national banks

ANNUAL REPORT OF BOARD OF GOVERNORS

were terminated, 9 by voluntary liquidation or consolidation and 2 by
voluntary surrender. At the end of 1947, there were 1,785 national banks
holding permits to exercise trust powers. A list of such banks, with indication
of the power or powers each bank is authorized to exercise, will be supplied
to those requesting it.
Acceptance powers of member banks. One application by a member bank
for increased acceptance powers, made pursuant to the provisions of Section
13 of the Federal Reserve Act, was received during the year and approved
by the Board.
As was mentioned in the Annual Report for 1946, the Reserve Banks
reviewed the list of member banks in their districts holding increased acceptance powers to ascertain whether in such cases the additional powers
were needed. The powers had been granted many years ago in most cases
and, at the end of the year, there was a cumulative aggregate of 59 voluntary
surrenders of such powers.
At the end of the year, 93 member banks held authority granted by the
Board to accept drafts or bills of exchange to an amount not exceeding at
any one time, in the aggregate, IOO per cent of the bank's paid-up and
unimpaired capital stock and surplus, and 30 member banks (29 of which
also held IOO per cent acceptance powers) held authority granted by the
Board to accept drafts or bills drawn to furnish dollar exchange.
Foreign branches and banking corporations. During 1947 the Board
approved 11 applications made by member banks pursuant to the provisions
of Section 25 of the Federal Reserve Act for permission to establish foreign
branches. Member banks opened 9 foreign branches during the year, distributed geographically as follows: Brazil 1, Germany 2, Japan 3, Philippines
3. No foreign branches wrere closed. Branches operating in Germany and
Japan are restricted as to the types of banking operations conducted by the
terms of the licenses issued by the military occupation authorities.
At the end of 1947, seven member banks were operating a total of 82
branches in 22 foreign countries and possessions of the United States. Of
the 82 branches, four national banks were operating 76, and three State
member banks were operating 6. The foreign branches were distributed
geographically as follows:
Latin America
Argentina
Brazil
Chile
Colombia
Cuba
Mexico
Panama
Peru
Uruguay
Venezuela
Continental Europe. .
Belgium
France
Germany

England
2
3
16
I
3
1
1
1

Far East
China
Hong Kong
India
Japan
Philippines
Singapore

2
1
2
4
4
1

U. S. Possessions
Canal Zone
Puerto Rico

4
7

Total

FEDERAL RESERVE SYSTEM

No change occurred during the year in the list of the five corporations
organized under State laws which operate under agreements entered into
with the Board pursuant to Section 25 of the Federal Reserve Act relating
to the investment by member banks in the stock of corporations engaged
principally in international or foreign banking. These corporations are:
First of Boston International Corporation, French American Banking Corporation, International Banking Corporation, Morgan & Cie. Incorporated,
and Bankers Company of New York. Two of the five have no foreign
branches, one operates a branch in England, one operates a branch in France,
and one has an English fiduciary affiliate.
There is in operation one banking corporation, The Chase Bank, organized
under the provisions of Section 25(a) of the Federal Reserve Act to engage
in international or foreign banking. The bank has a fiduciary affiliate in
England and operates a branch in France, two branches in China, and a
branch in Hong Kong. Its head office was examined during the year by
the Board's Division of Examinations.
CHANGES IN REGULATIONS OF THE BOARD OF GOVERNORS
Margin requirements for purchasing securities. As stated in the Board's
Annual Report for 1946, the Board's Regulation T, entitled "Extension and
Maintenance of Credit by Brokers, Dealers, and Members of National Securities Exchanges," and Regulation U, entitled "Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities
Exchange," were amended effective February 1, 1947, to reduce margin
requirements from 100 per cent to 75 per cent, both for purchases of registered securities and for short sales.
Consumer credit. The Board's Regulation W, relating to consumer credit,
ceased to be operative after November 1, 1947, in accordance with a resolution of Congress approved on August 8, 1947.
LITIGATION
Suit regarding removal of bank directors. The Supreme Court of the
United States on January 6, 1947, sustained an order of the Board, issued
under Section 30 of the Banking Act of 1933, removing from office two
directors of a national bank in Paterson, New Jersey, on the basis of a finding by the Board that the directors had violated Section 32 of the Banking
Act of 1933. The opinions of the Supreme Court were published in the
Board's Annual Report for 1946, and also appear in 329 U. S. 441 and 67
S. Ct. 411.
Conviction for violating Regulation W. The United States Circuit Court
of Appeals for the Sixth Circuit on April 7, 1947, affirmed the judgments

ANNUAL REPORT OF BOARD OF GOVERNORS

of the District Court, described in the Board's Annual Report for 1946,
adjudging Consumers Home Equipment Co. and A. B. Chereton, its President, guilty of contempt for violating an injunction issued by the District
Court restraining the defendants from violating the Board's Regulation W .
Certiorari was denied by the United States Supreme Court on June 23, 1947.
The opinion of the Court of Appeals was published in the Federal Reserve
Bulletin for May 1947 at page 532, and also appears in 161 Fed. (2d) 360.
Suit regarding condition of membership. In the suit of the Peoples Bank,
Lakewood Village, California, against the individual members of the Board,
described in the Board's Annual Report for 1946, the United States Court of
Appeals for the District of Columbia on April 14, 1947, reversed the District
Court which had refused to enjoin the members of the Board from enforcing
a condition of membership imposed upon the bank at the time of its admission to the Federal Reserve System. The Court of Appeals by a divided vote
held that the condition was invalid if construed literally. However, the Court
held that if the condition were construed in the manner stated in its opinion,
there would be no inconsistency between it and the statute. The Court therefore remanded the case to the District Court for the entry of a judgment
so construing the condition and denying the injunction. The United States
Supreme Court granted certiorari; and on March 15, 1948, with two Justices dissenting, the Supreme Court reversed the judgment on the ground that
the plaintiff's grievance was too remote, insubstantial, and speculative in
nature to justify consideration by the courts. The opinions of the Court of
Appeals were published in the Federal Reserve Bulletin for May 1947 at
pages 533-540, and also appear in 161 Fed. (2d) 636. The opinions of the
Supreme Court were published in the Federal Reserve Bulletin for April
1948.
LEGISLATION
Purchase of Government obligations by Federal Reserve Banks. An Act
approved April 28, 1947, amended Section I4(b) of the Federal Reserve Act
to authorize until July 1, 1950, the purchase or sale by Federal Reserve Banks,
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, provided the aggregate amount acquired
directly from the United States held at any one time by the twelve Federal
Reserve Banks shall not exceed 5 billion dollars. Similar authority granted
by an amendment to Section I4(b) which was contained in the Second War
Powers Act had expired on March 31, 1947.
Federal Reserve branch bank buildings. Under a provision of Section 10

FEDERAL RESERVE SYSTEM

of the Federal Reserve Act, the cost of a branch bank building of a Federal
Reserve Bank, exclusive of the cost of vaults, permanent equipment, furnishings, and fixtures, is limited to $250,000. This provision was amended by an
Act approved July 30, 1947, to provide that the limitation shall not apply as
long as the aggregate of such costs subsequently incurred by all Federal
Reserve Banks for branch bank buildings with the approval of the Board
does not exceed 10 million dollars.
Stock of Federal Deposit Insurance Corporation. An Act approved
August 5, 1947, provided for the retirement and cancelation under certain
conditions of the capital stock of the Federal Deposit Insurance Corporation,
including both that subscribed to by the United States and that subscribed
to by the Federal Reserve Banks. The Act provided that the amount received
by the Corporation for such stock should be paid in both instances to the
Treasury of the United States. Pursuant to this Act, the stock subscribed to
by the Federal Reserve Banks was retired and canceled on October 7, 1947.
Consumer credit. A Joint Resolution approved August 8, 1947* continued
the authority of the Board to exercise regulatory control of consumer credit
pursuant to Executive Order No. 8843 for a temporary period but provided
that such control should not be exercised after November 1, 1947, except during the time of war beginning after the enactment of the resolution or a
national emergency subsequently declared by the President.
War loan deposits. The provisions of Section i 2 B ( h ) ( i ) and Section 19
of the Federal Reserve Act, as amended by the Act of April 13, 1943, exempting war loan accounts of the United States from deposit insurance assessments and from member bank reserve requirements, expired on June 30, 1947,
as a result of the Proclamation of the President of the United States, issued
on December 31, 1946, terminating the period of hostilities of World War II.
RESERVE BANK OPERATIONS
Volume of operations. Except for checks and paper currency and coin
handled, which increased to new high levels, the volume of operations at the
Federal Reserve Banks generally declined again during 1947. The principal
declines were in issues, redemptions, and exchanges of Government securities.
The decline in Government security issues and redemptions was offset to some
extent by the substantial redemptions of Armed Forces Leave Bonds subsequent to September 1, 1947. Table 5 on page 69 shows the volume of operations in the principal departments of the Federal Reserve Banks for the past
five years.
Reserve Bank holdings of loans and securities during 1947 were below the
1946 levels. Average daily holdings of loans and securities and earnings
thereon are given in the first table on the following page.

A N N U A L REPORT OF BOARD OF GOVERNORS
RESERVE BANK EARNINGS ON LOANS AND SECURITIES, 1944-47

[Dollar amounts in thousands]

Item and year

Daily average holdings:
1944
1945 .
1946
19471

22
8,457
384

$14,772,201
21,363,244
23,250,195
22,331,740

$9,936
3,365
1,300
1,612

724
1,977
2,497
2,195

(2)
43
4

102,810
139,553
147,125
155,564

303
101
38
60

0.53
0.53
0.80
1.00

6.50
0.51
1.01

0.70
0.65
0.63
0.70

3.05
2.99
2.90
3.75

$14,917,596
21,742,589
23,570,260
22,552,491

$135,459
375,958
310,308
218,755

103,837
141,631
149,703
157,823
0.70
0.65
0.64
0.70

Average rate of earnings
(per cent):
1944
1945
1946
1947
1

Industrial
loans

Discounts
and
advances

Earnings:
1944
1945
1946
1947

U. S.
Government
securities,
direct and
guaranteed

Total

Acceptances
purchased

Based on holdings at opening of business.
Less than $500.

Earnings and expenses. Current earnings, current expenses, and the distribution of net earnings of the various Federal Reserve Banks are given in
detail in Table 6 on pages 70-71, and a condensed annual statement since 1914
for all the Reserve Banks combined is shown in Table 7 on pages 72-73. A
condensed comparative summary for all of the Reserve Banks for the years
1946-47 is given below.
EARNINGS, EXPENSES, AND DISTRIBUTION OF N E T EARNINGS OF FEDERAL RESERVE BANKS

1947 and 1946
[In thousands of dollars]
Item

1947

1946

158,656
65,393

150,385
57,235

Current net earnings
Net additions to current net earnings
Net earnings before payments to U. S. Treasury

93,263
1,973
95,236

93,150
1,626
92,524

Paid U. S. Treasury (Sec. 13b)
Paid U. S. Treasury (Interest on outstanding F. R. notes)

36
75,224

19,976

92,457

11,523
87

10,962
28

8,366

81,467

Current earnings
Current expenses

Net earnings
Dividends paid
Transferred to surplus (Sec. 13b)
Transferred to surplus (Sec. 7)

Current earnings were 158 million dollars in 1947, or about 8 million
dollars more than the year before. Current expenses increased commensurately so that current net earnings were approximately the same as in 1946.
After adding profits on sales of Government securities and deducting noncurrent charges, net earnings for the year before payments to the United

FEDERAL RESERVE SYSTEM

States Treasury amounted to 95 million dollars, or about 3 million dollars
more than in 1946. After payment of 12 million dollars for the dividend
to member banks, as provided in the Federal Reserve Act, $36,000 to the
United States Treasury under Section 13b of the Federal Reserve Act relating to industrial loans, and 75 million dollars to the United States Treasury
as interest on outstanding Federal Reserve notes not covered by gold certificates pledged with the Federal Reserve agents as collateral for such notes,
8 million dollars was added to the surplus of the Reserve Banks.
Since the Federal Reserve Act does not contemplate Federal Reserve payments to the Treasury under Section 13b after cancelation of the Federal
Deposit Insurance Corporation stock held by the Reserve Banks, and since
the stock was retired on October 7, 1947, the $36,000 payment referred to
above reflects only industrial loan and commitment operations for the period
January I to October 7. The payments to the United States Treasury of
interest on Federal Reserve notes outstanding not covered by gold certificates
pledged with the Federal Reserve agents were in accordance with the Board's
policy adopted in April 1947 of paying into the Treasury approximately
90 per cent of net earnings after dividends of the Federal Reserve Banks.
Foreign transactions. Continued foreign requirements for dollars resulted
in a decline of approximately 2 billion dollars in 1947 in total assets held by
the Federal Reserve Banks for account of foreign central banks and governments. At the end of the year dollar deposits, earmarked gold, and securities
held for all such accounts, including those maintained by foreign depositors
with the Federal Reserve Bank of New York acting as fiscal agent of the
United States, amounted to approximately 3.4 billion dollars as compared
with slightly more than 5.3 billion dollars at the end of 1946 and a high of
about 7 billion dollars in September 1945. A decline of more than one billion
dollars in the amount of gold held under earmark for foreign central banks
and governments was largely responsible for the reduction in total assets and
the remainder occurred mainly in holdings of United States Government securities and dollar deposits. There was, on the other hand, a substantial increase
in the amount of gold and dollar assets held by the Federal Reserve Bank of
New York for the International Monetary Fund and the International Bank
for Reconstruction and Development, both of which first entered upon active
operations during 1947.
Increased activity in loans to foreign central banks and governments by the
Federal Reserve Banks against gold held under earmark in the Federal
Reserve Bank of New York, which first became evident in 1946, continued
during the past year. The total of such loans outstanding, however, declined
from about 150 million dollars at the end of 1946 to about 50 million dollars
at the end of 1947. Interest on these loans, which were all made for periods
not exceeding three months, was at the discount rate of the Federal Reserve
Bank of New York, which remained at one per cent throughout the year.

ANNUAL REPORT OF BOARD OF GOVERNORS

Loans against gold to five foreign central banks were outstanding at the
beginning of 1947. During the year new loans were made to the central
banks of six countries, while seven central banks repaid outstanding loans in
full. As a result, loans against gold to four central banks were outstanding
at the end of the year.
One regular foreign central bank account was opened during the year and
two accounts were opened by the Federal Reserve Bank of New York acting
as fiscal agent of the United States. On the other hand, three fiscal agency
accounts, which were established during the war to facilitate this Government's operations abroad, were closed.
The Federal Reserve Bank of New York, as fiscal agent of the United
States, continued to operate the United States Exchange Stabilization Fund
in accordance with authorization and instructions from the Treasury Department, and it acted as agent for the Treasury in the administration of foreign
funds control. In cooperation with the other Reserve Banks, the New York
Reserve Bank also rendered service during the year to the Export-Import
Bank, in its capacity as fiscal agent for the participation of commercial banks
in the 200 million dollar Export-Import Bank credit to the Kingdom of the
Netherlands. Acting under the Executive Order of January 15, 1934, and
Treasury regulations issued thereunder, the Federal Reserve Banks continued to collect and analyze reports from banks, security brokers and dealers,
and others covering the international movement of capital.
The Federal Reserve Bank of New York performed rather extensive
operations during the year as depositary for the International Bank for
Reconstruction and Development and the International Monetary Fund.
The New York Reserve Bank was also requested, as provided in the Bretton
Woods Agreements Act, to act as fiscal agent of the International Bank
in connection with that Bank's first two bond issues, dated July 15, 1947.
Bank premises. Reference is made elsewhere in this report to the amendment of Section 10 of the Federal Reserve Act providing that the $250,000
limitation on the cost of branch buildings, exclusive of the cost of the vaults,
permanent equipment, furnishings, and fixtures, shall not apply as long as
the aggregate of such costs subsequently incurred by all the Reserve Banks,
with approval of the Board, does not exceed 10 million dollars. The Board's
policy under this authorization is to approve the preparation of plans for
needed building construction but not to authorize commencement of construction during present conditions of inflationary pressures and shortages
of labor and materials unless the need therefor is of an emergency, as distinguished from an urgent, character. The Federal Reserve Banks have
been informed that this policy also applies to head-office buildings.
In September the Federal Reserve Bank of Cleveland acquired at a cost
of $1,221,000 the building in which its Cincinnati Branch has occupied
rented quarters since 1927. This building was constructed in 1927 by the

FEDERAL RESERVE SYSTEM

Cincinnati Chamber of Commerce on land owned by the Federal Reserve
Bank and included certain improvements, principally a vault, constructed by
the Bank when quarters in the building were leased for occupancy by the
branch. Only minor alterations and repairs were necessary upon acquisition
of the building, although extensive rehabilitation is contemplated when building conditions are more favorable.
The Federal Reserve Bank of Atlanta filled in the light court at its headoffice building and razed an old building on property adjoining the New
Orleans Branch quarters, which was purchased in 1945 as a site for a future
addition. The lot will be used for loading and unloading purposes upon
completion of certain improvements.
RESERVE BANK PERSONNEL
Chairmen and Deputy Chairmen. One of the three Class C directors
appointed by the Board of Governors for each Federal Reserve Bank is
designated annually to serve as Chairman of the Board of Directors and as
Federal Reserve Agent, and another Class C director is appointed annually
as Deputy Chairman. A list of the Chairmen and Deputy Chairmen is shown
on page 103.
The Chairmen and Deputy Chairmen at the Federal Reserve Banks were
redesignated to serve as such for the year 1947, except for the following
changes:
Donald K. David, Dean, Graduate School of Business Administration,
Harvard University, Boston, Massachusetts, who had been a Class C director of the Federal Reserve Bank of Boston since January 1, 1946, was
appointed Deputy Chairman for the year 1947.
W. G. Wysor, General Manager, Southern States Cooperative, Inc.,
Richmond, Virginia, who had been a Class C director of the Federal Reserve
Bank of Richmond since January 8, 1937, and Deputy Chairman since
January 1, 1938, was designated Chairman and Federal Reserve Agent for
the year 1947.
Charles P. McCormick, President, McCormick & Company, Inc., Baltimore, Maryland, who had been a Class C director of the Federal Reserve
Bank of Richmond since August 31, 1939, was appointed Deputy Chairman
for the year 1947.
Clarence W. Avery, President and Chairman, The Murray Corporation
of America, Detroit, Michigan, who had been a Class B director of the
Federal Reserve Bank of Chicago since November 17, 1942, was appointed
a Class C director on'March 6, and designated Chairman and Federal Reserve Agent for the remaining portion of the year 1947.
Paul G. Hoffman, President, The Studebaker Corporation, South Bend,
Indiana, who had been a Class C director of the Federal Reserve Bank of

ANNUAL REPORT OF BOARD OF GOVERNORS

Chicago since November 16, 1942, Avas appointed Deputy Chairman for
the year 1947.
Brayton Wilbur, President, Wilbur-Ellis Company, San Francisco, California, who had been a Class C director of the Federal Reserve Bank of
San Francisco since July 5, 1944, was designated Chairman and Federal
Reserve Agent on May 2, 1947.
Directors. A list of the directors of the Federal Reserve Banks and
branches as of the close of the year is shown on pages 104-11.
The Board made the following appointments of new directors either for
terms beginning January 1, 1947, or to fill vacancies during the year:
Class C Directors. Harold D. Hodgkinson, Vice President, General Manager and Chairman of Management Board, Wm. Filene's Sons Company,
Boston, Massachusetts, was appointed a Class C director of the Federal
Reserve Bank of Boston for the term beginning January I, 1947.
Edward R. Stettinius, Jr., Rector, University of Virginia, Charlottesville,
Virginia, was appointed a Class C director of the Federal Reserve Bank of
Richmond on July 3.
Clarence W. Avery, President and Chairman, The Murray Corporation
of America, Detroit, Michigan, was appointed a Class C director of the
Federal Reserve Bank of Chicago on March 6.
William R. Wallace, Jr., Attorney at Law, San Francisco, California,
was appointed a Class C director of the Federal Reserve Bank of San
Francisco on September 30.
Branch Directors. L. Vinton Hershey, President, Hagerstown Shoe Company, Hagerstown, Maryland, was appointed a director of the Baltimore
Branch of the Federal Reserve Bank of Richmond for the term beginning
January 1, 1947W. A. L. Sibley, Vice President and Treasurer, Monarch Mills, Union,
South Carolina, was appointed a director of the Charlotte Branch of the
Federal Reserve Bank of Richmond for the term beginning January 1, 1947.
Thad Holt, President and Treasurer, Voice of Alabama, Inc., Radio
Station WAPI, Birmingham, Alabama, was appointed a director of the
Birmingham Branch of the Federal Reserve Bank of Atlanta on April 1.
W. T . Bland of Lake Jem, Florida, was appointed a director of the
Jacksonville Branch of the Federal Reserve Bank of Atlanta on March 11.
Mr. Bland is a citrus fruit grower and nurseryman.
E. O. Batson, President, Batson-McGehee Company, Inc., Millard,
Mississippi, was appointed a director of the New Orleans Branch of the
Federal Reserve Bank of Atlanta on June 24.
Ralph E. Plunkett, President, Plunkett-Jarrell Grocer Company, Little
Rock, Arkansas, was appointed a director of the Little Rock Branch of the
Federal Reserve Bank of St. Louis for the term beginning January 1, 1947.
Hugh M. Brinkley of Hughes, Arkansas, was appointed a director of

FEDERAL RESERVE SYSTEM

the Memphis Branch of the Federal Reserve Bank of St. Louis for the
term beginning January i, 1947. Mr. Brinkley is engaged in farming.
Rufus Green of Duncan, Oklahoma, was appointed a director of the
Oklahoma City Branch of the Federal Reserve Bank of Kansas City for
the term beginning January 1, 1947. Mr. Green is engaged in ranching
and farming.
Hiram S. Corbett, President, J. Knox Corbett Lumber Company, Tucson,
Arizona, was appointed a director of the El Paso Branch of the Federal
Reserve Bank of Dallas for the term beginning January 1, 1947.
R. B. Taylor of Adams, Oregon, was appointed a director of the Portland
Branch of the Federal Reserve Bank of San Francisco for the term beginning
January 1, 1947. Mr. Taylor is engaged in livestock and farm operations.
Merle G. Hyer of Lewiston, Utah, was appointed a director of the Salt
Lake City Branch of the Federal Reserve Bank of San Francisco for the
term beginning January 1, 1947. Mr. Hyer is engaged in livestock and
farm operations.
Change in First Vice Presidents. H. N. Mangels, who had been a
member of the staff of the Federal Reserve Bank of San Francisco since 1916,
and an officer since 1920, was appointed First Vice President, effective January 1, 1947. Mr. Mangels succeeded Mr. C. E. Earhart, who was appointed
President of the Federal Reserve Bank of San Francisco.
Staff. At the end of 1947 the total number of officers and employees of the
twelve Federal Reserve Banks and their twenty-four branches was 19,364,
representing a decline of 2,066 since the end of 1946. This was the fourth
successive year of decline following several successive years of increase due
to the great expansion in the volume of operations during the war years. The
total number of officers aird employees of the Reserve Banks and branches at
the end of each year beginning with 1940 was as follows:
1940
1941
1942
1943

11,640
14,083
19,972
24,741

1944
1945
1946
1947

24,442
23,522
21,430
19.364

BOARD OF GOVERNORS—STAFF

Appointment of Board Member. The nomination of Lawrence Clayton of
Boston, Massachusetts, to be a member of the Board of Governors of the
Federal Reserve System for the unexpired portion of the term ending January 31, 1952, was confirmed by the Senate on February 10, 1947. Mr. Clayton took the oath of office on February 14, 1947.
Death of Vice Chairman Ransom. Ronald Ransom, who had been a member of the Board of Governors since February 3, 1936, and had served as
Vice Chairman since August 6, 1936, died on December 2, 1947.
Staff. On December 31, 1947, the Board's staff, exclusive of those on leave
without pay, numbered 504, as compared to 480 at the end of 1946.

ANNUAL REPORT OF BOARD OF GOVERNORS

Leo H . Paulger, Special Adviser to the Board of Governors, retired as a
member of the Board's staff, under the provisions of the Federal Reserve
Retirement System, April I, 1947. He joined the Board's staff in January
1932, and served continuously as Director of the Division of Examinations
until August 1946, when he was made Special Adviser to the Board of
Governors.
Chandler Morse, resigned as an Assistant Director of the Board's Division
of Research and Statistics, effective September 5, 1947, in order to accept a
position on the faculty of Williams College, Williamstown, Massachusetts.
Bonnar Brown was appointed an Assistant Director of the Board's Division
of Research and Statistics, effective October 19, 1947. Mr. Brown, after two
years of service at the Federal Reserve Bank of San Francisco, had been
serving as Assistant Director of the Board's Division of Security Loans since
July 1, 1944.
Lowell Myrick was appointed an Assistant Director of the Board's Division of Bank Operations, effective November 4, 1947. Mr. Myrick has
served continuously with the Division of Bank Operations since his original
appointment on December 16, 1921.
The designation of J. Leonard Townsend was changed from Assistant
General Counsel to Associate General Counsel, and that of Ralph A. Young
from Assistant Director, Division of Research and Statistics, to Associate
Director, Division of Research and Statistics, effective December 28, 1947.
BOARD OF GOVERNORS—INCOME AND EXPENSES
The following table shows the income and expenses of the Board for the
year 1947:
OPERATING SURPLUS, January 1, 1947

Adjustment in 1947 for expenses applicable to preceding years

335,294.13

119.04

$ 335,413.17

2,639,666.74
12,774.02
24,333.93
10,491.50

2,687,266. 19

INCOME:

Assessments on Federal Reserve Banks
Sale of Federal Reserve Bulletin
Sale of other publications
Miscellaneous

3,022,679.36
EXPENSES:

Salaries
Retirement contributions
Traveling expenses
Postage and expressage
Telephone and telegraph
Printing and binding
Stationery and supplies
Furniture and equipment, including rental
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:
Consumer finances and liquid assets surveys
Cafeteria loss
Allother
OPERATING SURPLUS, December 31, 1947

1,936,166.40
135,011.64
110,743.80
21,896.45
51,876.22
156,953.81
22,070.47
34,175.90
8,426.42
30,972.28
5,363.43
5,160.41
897.05
3,316.85
$119,890.56
26,838.71
12,851.29

159,580.56

2,682,611.69
$ 340,067.67

FEDERAL RESERVE SYSTEM

In addition to the foregoing, the Board made certain expenditures on a
reimbursable basis for which it received reimbursements in 1947 as follows:
Printing Federal Reserve notes.
Leased wire service (telegraph)
Leased telephone lines
Federal Reserve Issue and Redemption Division
(Comptroller of the Currency)
Miscellaneous

$3,051,674.00
93,045.14
10,162.00
67,619.89
14,573.38

The accounts of the Board for the year 1947 were audited by the Auditor
of the Federal Reserve Bank of New York, who certified them to be correct.
RESEARCH AND ADVISORY SERVICES
The Board's research activities during 1947 continued to be directed toward
analyzing current developments in the fields of money and credit, Treasury
financing, production and employment, national income, prices, and international finance. Procedures for making projections of the gross national
product and related factors were further developed. Investigations of the
conditions affecting the availability and use of money and credit were continued and from time to time the results of special studies were released to
the public.
An important feature of the research work was the study of inflationary
developments in banking, business, housing, and agriculture. Members of
the Board's staff assisted congressional committees which were investigating
these problems and participated in public and private conferences relating to
agricultural credit, home mortgage credit, national income, and productivity.
Staff members also served on many interdepartmental committees concerned
with the analysis of national economic developments as well as with the
improvement of statistics and other information which would contribute to a
better understanding of current developments. Special assistance was provided to groups preparing reports on the effects of foreign aid on the nation's
resources and on domestic, economic, and fiscal problems.
Important facts concerning member bank loans to commercial and industrial concerns, determined by a sample survey as of November 20, 1946 conducted by the Reserve Banks and the Board of Governors, were published in
the Federal Reserve Bulletin during 1947. The survey provided information of value to bankers in formulating loan policies, to commercial and
industrial concerns in planning to meet their credit requirements, and to the
Federal Reserve authorities in considering national credit policies.
A special survey of loans outstanding to farmers at insured commercial
banks in mid-1947 was made by the Federal Reserve System, in cooperation
with the Federal Deposit Insurance Corporation. This survey was similar to

ANNUAL REPORT OF BOARD OF GOVERNORS

the Federal Reserve survey of member bank loans to commercial and industrial concerns in that it provided valuable information concerning the purpose,
characteristics, geographic distribution, and prevalence of an important type
of bank credit. Findings relating to various aspects of the loans were published in the Bulletin during the last quarter of the year.
For the second successive time, the Board of Governors sponsored a national
survey of consumer finances early in the year. These annual surveys provide
insight into the shifting financial positions of consumers; their purchases and
plans to purchase durable goods and houses; their current attitudes and plans
with regard to saving, liquid asset holdings, and investment; and their
expectations as to general economic conditions. At the request of the President's Council of Economic Advisers, as well as for the information of the
Federal Reserve System and the public, the second annual survey was supplemented at mid-year by an interim survey on the basis of a smaller national
sample than had been used in the primary survey. In addition to supplying
needed current information, this interim survey was a useful experiment in the
further development of research work in this area. Both surveys were conducted for the Board by the Survey Research Center, University of Michigan, and the results were published in the Bulletin. A third annual survey
is being conducted in the early part of 1948.
On July 1 the Board of Governors took over the conduct of a project
begun under other auspices and designed to trace flows of money payments
by accounting techniques. The feasibility and potential significance of annual
financial statement estimates designed to reveal money inflows and outflows
for various sectors of the economy had previously been demonstrated through
an exploratory private study covering the years 1936-42. This study was
conducted by the National Bureau of Economic Research at the suggestion of
and under a grant from the Committee for Economic Development; the
Board of Governors cooperated in its planning and execution. The project
the Board has now undertaken aims to develop similar financial statements on
a current basis, so far as that proves feasible. The first completed step in this
task is a comprehensive consolidated condition statement for the banking
system which relates banking assets to the money supply for selected dates
from June 30, 1929 to September 23, 1947. It is expected that this balance
sheet will hereafter be compiled for the end of each quarter.
Some of the Board's regular statistical series were revised, including revisions made to increase and improve the coverage of the weekly series of
statistics reported by member banks in leading cities. As of June 30, 1947, a
single semi-annual series of assets and liabilities of all banks in the United
States and its possessions was announced by the Comptroller of the Currency,
the Federal Deposit Insurance Corporation, and the Board of Governors.
This series, compiled by the Federal Deposit Insurance Corporation, replaced

FEDERAL RESERVE SYSTEM

the three series previously compiled and published separately by the three
agencies. In December the Board inaugurated a new monthly series of assets
and liabilities of all banks in the United States (excluding possessions). The
series presents separate figures, which are partly estimated, for all banks, all
commercial banks, and for all member banks by class of bank.
The cooperative arrangement whereby the Federal Reserve System and
the Robert Morris Associates had provided annual financial statement data
for manufacturing and trade concerns for the years 1939-46 continued in
1947, covering 1946 reports. This arrangement, however, has been discontinued. Similar data for analytical purposes became available in the new
quarterly series compiled by the Securities and Exchange Commission and
the Federal Trade Commission.
Work in the international field continued at an intensive pace as a result
of the critical problems which developed in the international economic and
financial relationships of the United States. A large part of the work was
closely geared to the activities of the National Advisory Council on International Monetary and Financial Problems and was carried out in close
collaboration with the other agencies represented on the Council. Members
of the Board's staff in the international field were active in interdepartmental
committees and working groups preparing material for use by the Council in
connection with foreign lending activities of the United States and with
operations of the International Fund and Bank. During the last months of
the year they were also heavily absorbed with interdepartmental work on
the European Recovery Program, especially in the preparation of legislation
and documentation for submission to the Congress.
A number of special studies were prepared during the year for the Department of State covering economic and financial conditions in various foreign
countries. Continuing attention was also devoted to the special problems and
operating responsibilities of the Federal Reserve System in the international
field.
The Board continued to cooperate in projects in the international field by
supplying members of its staff for assignments abroad. The Assistant Director of the Division of Research and Statistics in charge of international matters attended the annual meeting of the Governors of the International Fund
and Bank in London as a member of the United States Delegation headed
by the Secretary of the Treasury. Another member of the Board's staff
devoted much of his time to the development of improved monetary and
banking organizations and practices in Latin American countries; he spent
two and a half months in Ecuador participating in the preparation of new
central bank legislation. A third spent five months in the Philippine Islands
as a member of the Joint Philippine-American Finance Commission, which
was charged with the preparation of a study of financial and budgetary prob-

ANNUAL REPORT OF BOARD OF GOVERNORS

lems of the Philippine Government. The services of members of the staff,
on leave without pay, were also made available to the Military Government
authorities in Germany and Korea.
The Board had numerous visitors from foreign central banks and governments, who had come to the United States on official negotiations, or for
consultation with financial authorities, international organizations, bankers,
and others. It also facilitated the work of visitors who had come for the
study of American banking and supervisory methods and related matters.
PUBLICATIONS AND RELEASES
The demand for Board publications and releases continued to increase
during the year 1947. Schools and colleges particularly made extensive use
of material issued by the Board. There was considerable interest in the
Board's announcement of the publication of the Federal Reserve Charts on
Bank Credit, Money Rates, and Business on a monthly basis beginning in
June 1947. Several periodic releases were initiated. In addition to amendments to regulations and various reprints, the following publications were
issued:
FEDERAL RESERVE BULLETIN. Issued monthly.
FEDERAL RESERVE CHARTS ON BANK

CREDIT, MONEY RATES, AND

Issued monthly, beginning in June.
MEMBER BANK CALL REPORT. Three issues, one each in April, October,
and December.
PAR LIST, and list of STATE BANK MEMBERS OF THE FEDERAL RESERVE
BUSINESS.

SYSTEM
COUNTS.

AND NONMEMBER

BANKS

THAT

MAINTAIN

CLEARING AC-

Monthly supplements for each and complete list for latter in

January.
LIST OF STOCKS REGISTERED ON NATIONAL SECURITIES EXCHANGES.

Quarterly supplements in May, August, and November.
BANKING STUDIES (1941). Reprinted in March.
FEDERAL RESERVE CHARTS ON CONSUMER CREDIT. Published in April.
THIRTY-THIRD ANNUAL REPORT OF THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM.
RETAIL CREDIT SURVEY—1946.

Published in June.
Published in July.

DEBITS AND CLEARINGS STATISTICS, T H E I R BACKGROUND AND INTER-

PRETATION. Published in October.
INTERNATIONAL MONETARY POLICIES

(Postwar Economic Studies No. 7)

Published in October.
FEDERAL RESERVE POLICY (Postwar Economic Studies No. 8 ) . Published

in November.
T H E FEDERAL RESERVE SYSTEM—ITS PURPOSES AND FUNCTIONS

Edition).

Published in November.

(Second

FEDERAL RESERVE SYSTEM

FEDERAL RESERVE MEETINGS
The Federal Open Market Committee met in Washington on February
27-28, March i, June 5-6, October 6-7, and December 9, 1947, and the
executive committee of the full Committee met from time to time during the
year. Under the provisions of Section 12A of the Federal Reserve Act, the
Federal Open Market Committee has responsibility for determining the
policies under which the open market operations of the Reserve Banks will
be carried out. A record of the actions taken by the Committee on questions
of policy will be found on pages 88-97 of this report.
A Conference of the Chairmen of the Federal Reserve Banks was held on
December 1-2, 1947, and was attended by members of the Board of Governors.
The Conference of Presidents of the Federal Reserve Banks held meetings
on February 25-26, June 4-5, October 3-4, and December 8, and the Board
of Governors met with the Presidents on February 28, June 6, October 7,
and December 9.
Meetings of the Federal Advisory Council were held on March 9-11, May
18-20, September 21-23, and November 16-18. The Board of Governors
met with the Council on March 11, May 20, September 23, and November
18. The Council is required by law to meet in Washington at least four
times each year and is authorized by the Federal Reserve Act to consult with
and advise the Board on all matters within the jurisdiction of the Board.
During the year a conference was held at the offices of the Board of Governors in Washington by each of the following: counsel for the various
Reserve Banks, Federal Reserve Bank officers in charge of examinations, and
Federal Reserve Bank auditors. Other meetings participated in by representatives of the Board of Governors and of the Reserve Banks were held to
discuss questions relating to international monetary and credit matters,
research and credit problems and policy, Federal Reserve Bank collection
systems, personnel administration, expense accounting, and System publications and public relations.

TABLES

ANNUAL REPORT OF BOARD OF GOVERNORS

NO. I—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL)
DECEMBER 31, 1947 1
ASSETS
[Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars.]
Interdistrict settlement fund
Gold certificates on hand
Gold certificates with Federal Reserve Agent.

7,080,726
1,010,444
12,719,000

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

20,810,170
687,127
21,497,297
30,767
207,476
2,244
5,217
26,927

Total other cash
Discounts and advances secured by U. S. Government securities:
Discounted for member banks
Discounted for others
'

34,444

272,631

Other discounts and advances:
Discounted for member banks
Foreign loans on gold

381
50,600

34,444

Total discounts and advances
Industrial loans
U. S. Government securities in System Open Market Account:
Bills
Certificates
Notes
Bonds

50,981
85,425
1,387

11,433,410
6,796,505
1,476,550
2,852,869

Total U. S. Government securities

22,559,334

Total loans and securities

22,646,146

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

95
162,242
2,713,257
197,962
73,780

Total uncollected items
Bank premises:
Land
Buildings (including vaults)
Fixed machinery and equipment

2,984,999
13,070
45,562
17,502

Total bank premises
Less depreciation
Bank premises, net
Other assets:
Industrial loans past due
Miscellaneous assets acquired account industrial loans
Miscellaneous assets acquired account closed banks

76,134
42,906
33,228
(2)

Total

182

Less valuation allowances

:..

Net

3,932
53,185
52,437
1,114
1,895
1,944
593
46
115,260

Total assets
Before closing books at end of year.

68
114

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

139
43

47,711,898
2

Less than $500.

FEDERAL RESERVE SYSTEM

NO. 1—STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS (IN DETAIL)
—Continued
LIABILITIES
Federal Reserve notes outstanding (issued to Federal Reserve Banks)
25,705,984
Less: Held by issuing Federal Reserve Banks
839,380
Forwarded for redemption
46,170
885,550
Federal Reserve notes, net (includes notes held by Treasury
and by Federal Reserve Banks other than issuing Bank)
24,820,434
Deposits:
Member bank—reserve account
17,898,468
U. S. Treasurer—general account
870,026
Foreign
391,849
Other deposits:
Nonmember bank—clearing accounts
134,505
Officers' and certified checks
7,969
Federal Reserve exchange drafts
1,340
All other
425,596
Total other deposits
569,410
Total deposits
Deferred availability items
Other liabilities^
Accrued dividends unpaid
Unearned discount
Discount on securities
Sundry items payable
Suspense account
All other liabilities

19,729,753
2,449,763
902
8
12,208
2,406
183
17

Total other liabilities
Total liabilities
CAPITAL ACCOUNTS
Capital paid in
Surplus (Sec. 7)
Surplus (Sec. 13b)
Other capital accounts:
Reserves for contingencies:
Reserve for registered mail losses
All other
Earnings and expenses:
Current earnings
Current expenses
Current net earnings
Add—profit and loss
Deduct—dividends accrued since January 1
Interest on Federal Reserve notes
Unallocated net earnings
Total other capital accounts
Total liabilities and capital accounts

15,724
47,015,674
195,517
439,823
27,455
6,599
18,000
158,656
65,393
93,263
2,314
11,523
75,224
8,830
33,429
47,711,898

NO. 2—STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT E N D OF 1947 A N D 1946
[In thousands of dollars]
Total

Item

Boston

1947

759,612

726,779

6,259,354

56,120

55,555

120,919

815,732
24,804

782,334
20,586

2,235
3,238

1,285
8,736

24,955
16,905

2,680
56,255

3,455
3,386

4,217
11,330

1,704
5,086

2,316
12,694

615
2,479

901
6,415

163,079
550

5,473

10,021
27

41,860

58,935

6,841
1,357

15,547
523

6,790

15,010

3,094
30

7,316

U. S. Government securities:
Bills
Certificates
Notes
Bonds

11,433,-?
L4,744,983
6,796,505 7,496,012
1,476,550
355,300
2,852,869
753,390

771,910
442,209
96,070
185,619

825,149
554,672
26,291
55,748

798,366 1,026,460 1,040,322 1,452,547
468,634 538,956
647,980 632,265
101,811
140,776
25,546
29,968
196,711
271,995
63,546
54,168

636,584
485,785
105,536
203,909

799,397
448,280
21,248
45,054

85,425
1,387

1946

1947

5,061,375 1,016,538
124,008

60,691

6,380,273 5,185,383 1,077,229
39,412
44,537
14,687

1946

1947

Richmond

1946

21,497,297 18,381,293
Total gold certificate reserves
267,890
272,631
Other cash
Discounts and advances:
34,444
15,779
Secured by U. S. Govt. securities..
50,981
147,300
Other

1947

Cleveland

1947

ASSETS
20,810,170 17,587,177
Gold certificates
Redemption fund for Federal Reserve
687,127
794,116
notes

Total discounts and advances....
Industrial loans

Philadelphia

New York

1946

1947

1946

858,145 1,434,229 1,124,166 1,044,281 1,103,170
61,009

75,702

77,620

60,479

59,914

919,154 1,509,931 1,201,786 1,104,760 1,163,084
19,620
25,076
19,235
21,706
23,878

3,270,067 3,630,224
1,482,995 1,890,027
322,183
89,585
189,958
622,496

22,559,334 23,349,685 1,495,808 1,461,860

5,697,741 5,799,794 1,565,522 1,645,130 2,101,073 2,178,326 1,431,814 1,313,979

Total loans and securities

22,646,146 23,513,314 1,501,281 1,471,908

5,739,601

Total assets
1

5,858,729 1,573,720 1,661,200 2,107,863 2,193,336 1,434,938 1,321,295
134

102

162,242
163,385
2,984,999 2,599,574
33,007
32,406
115,237
48,449

9,130
244,218
1,241
7,544

5,897
193,426
1,297
3,399

17,676
670,430
8,239
25,057

19,882
576,280
8,459
11,182

10,866
192,379
3,182
7,455

8,181
157,813
3,170
2,912

8,922
275,270
4,938
10,780

10,825
227,369
3,850
4,320

22,291
253,489

2,637
8,219

37,399
227,699
2,686
2,746

47,711,654 45,006,413 2,603,956 2,478,854 12,880,719 11,704,486 2,879,526 2,771,673 3,941,591 3,663,201 2,845,959 2,779,990

After deducting $64,000 participations of other Federal Reserve Banks on Dec. 31, 1947, and $68,000 on Dec. 31, 1946.

w
o
*3

Total U. S. Govt. securities

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

c
>

td
O
>

d
O

LIABILITIES
Federal Reserve notes

24,820,434 24,945,304 1,472,299 1,491,783 5,765,916 5,714,364 1,681,880 1,699,277 2,139,963 2,124,731 1,741,896 1,781,923

Deposits:
Member bank—reserve account. . . 17,899,371 16,138,878
392,869
870,031
U. S. Treasurer—general account. .
508,016
391,849
Foreign
313,638
569,433
Other

766,622
66,431
21,125
7,444

715,408 5,573,276 4,903,039
229,639
94,716
29,866
1168,000
1189,873
30,769
472,411
224,947
5,027

867,114
26,649
4,707

77,363

818,125 1,386,873 1,199,768
79,221
34,511
32,896
30,597
39,555
44,320
12,185
2,424
10,896

784,772
43,913
16,121
2,062

733,111
13,889
22,398
2,317

19,730,684 17,353,401
2,449,763 2,019,896

861,622
224,606

781,070 6,443,326
161,770
449,937

5,412,575
362,569

975,833
164,635

894,615 1,508,876 1,287,880
122,081 227,328 187,075

846,868
221,555

771,715
192,135

9,392

901

4,109

2,811

898

762

385

Total deposits
Deferred availability items
Other liabilities including
dividends

accrued

14,806

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

and

capital

448

528

1,383

824

47,015,687 44,327,993 2,559,428 2,435,071 12,663,288 11,492,319 2,823,246 2,716,501 3,877,550 3,600,510 2,811,081 2,746,158
195,517
448,189
27,543
24,718

186,830
439,823
27,455
24,312

11,243
28,117
3,011
2,157

11,095
27,557
3,012
2,119

68,888
138,596
7,319

65,801
136,549
7,253

2,628

2,564

14,370
35,350
4,489
2,071

13,926
34,720
4,489
2,037

18,843
42,173
1,006
2,019

18,304
41,394
1,007
1,986

8,220
21,210
3,349
2,099

7,771
20,676

3,325
2,060

47,711,654 45,006,413 2,603,956 2,478,854 12,880,719 11,704,486 2,879,526 2,771,673 3,941,591 3,663,201 2,845,959 2,779,990

Contingent liability on bills purchased
2
6,547
2,460
199
543
2787
228
157
609
for foreign correspondents
2,181
308
8,309
7,434
1,642
490
1,281
Commitments to make industrial loans.
1,596
78
37
FEDERAL RESERVE NOTE
STATEMENT
Federal Reserve notes:
Issued to Federal Reserve Bank 25,705,984 25,741,606 1,535,998 1,537,175 5,929,626 5,876,605 1,746,101
1,747,079 2,229,858 2,191,393 1,805,525 1,835,075
by Federal Reserve Agent
796,302
885,550
63,699
163,710
162,241
47,802
45,392
64,221
89,895
63,629
53,152
66,662
Held by Federal Reserve Bank... .
24,820,434 24,945,304 1,472,299 1,491,783 5,765,916 5,714,364 1,681,880 1,699,277 2,139,963 2,124,731 1,741,896 1,781,923
Federal Reserve notes, net 3
Collateral held by Federal Reserve
Agent for notes issued to Bank:
460,000 455,000 3,570,000 3,470,000
12,719,000 11,053,000
550,000 550,000
Gold certificates
12,812
2,235
4,217
1,285
24,880
2,680
32,410
3,455
Eligible paper
..
13,550,000 15,226,565 1,100,000 1,100,000 2,400,000 2,500,000 1,200,000 1,200,000
U. S. Government securities
Total collateral held

26,301,410 26,292,377 1,562,235 1,556,285

735,000
675,000
760,000
645,000
615
800
i 500',666 !550^000 1,150,000 1,100,000

5,994,880 5,972,680 1,753,455 1,754,217 2,235,000 2,195,000 1,825,615 1,860,800

1 After deducting $223,720,000 participations of other Federal Reserve Banks on Dec. 31, 1947, and $317,868,000 on Dec. 31, 1946
2 After deducting $1,673,000 participations of other Federal Reserve Banks on Dec. 31, 1947, and $4,366,000 on Dec. 31, 1946.
Includes Federal Reserve notes held by the U. S. Treasury and by Federal Reserve Banks other than the issuing Bank.

NO. 2—STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT END OF 1947 AND 1946—Continued
[In thousands of dollars]

Item

1947

St. Louis

Chicago

Atlanta

1947

1946

1947

1946

ASSETS

Minneapolis

1946

1947

1946

Kansas City
1947

Dallas

1946

1947

1946

Gold certificates .
.
. . . . 1,013,770 1,024,326 4,182,995 3,369,273
Redemption fund for Federal Reserve
90,074 136,644
46,254
40,529
notes

620,743

596,006

431,975

357,057

750,224

586,156

505,160

46,693

46,456

22,880

21,360

35,619

34,018

26,180

Total gold certificate reserves. . . 1,054,299 1,070,580 4,273,069 3,505,917
31,560
42,326
20,753
23,750
Other cash

667,436
15,047

642,462
15,515

454,855
6,793

378,417
5,734

785,843
10,380

620,174
18,520

531,340
12,455

Discounts and advances:
Secured by U. S. Government
securities
Other

San Francisco
1947

1946

466,064 2,791,289 2,314,660
25,003

51,241

106,275

491,067 2,842,530 2,420,935
39,479
12,396
32,272

80
2,075

550
5,187

175
6,882

18,291

50
1,771

280
4,641

1,265

3,413

700
1,771

3,450
4,504

1,670

4,368

475
4,453

100
11,466

2,155

5,737

7,057

18,291

1,821

4,921

1,265

3,413

2,471

7,954

1,670

4,368

4,928

11,566

702,577 1,535,867 2,362,852
381,352 946,565 951,778
45,113
18,075 205,644
95,659
38,328 397,328

568,921
390,354
84,804
163,852

631,259
412,831
19,567
41,492

298,577
223,788
48,618
93,936

374,253
228,144
10,814
22,929

522,437
328,193
71,300
137,759

648,399
372,398
17,651
37,428

395,279
363,390
78,947
152,534

Total U. S. Govt. securities... 1,181,355 1,140,332 3,085,404 3,455,402 1,207,931 1,105,149

664,919

636,140 1,059,689 1,075,876

990,150

918,253 2,077,928 2,619,444

Total loans and s e c u r i t i e s . . . . 1,183,510 1,146,069 3,092,461 3,473,693 1,209,752 1,110,070

666,184

639,553 1,062,160 1,083,830

991,820

922,621 2,082,856 2,631,010

Total discounts and advances.
Industrial loans
U. S. Government securities:
Bills
.
. . . .
Certificates
Notes
. .
Bonds

Due from foreign banks
. ..
Federal Reserve notes of other
Federal Reserve Banks . . . . . . . .
Bank premises
Other assets
Total assets

CJ
>
d

o
&
H
O

w
o
>
J0
d

531,611
396,910
86,229
166,605

487,959 1,063,469 1,803,907
374,852 619,702 710,457
17,767 134,632
33,675
37,675 260,125
71,405

16,919
174,514
1,559
6,700

14,290
168,736
1,526
2,641

22,440
464,388
3,064
15,992

22,944
387,336
3,057
6,938

10,191
161,999
1,973
7,162

9,669
148,065
2,011
3,199

8,158
67,641
1,208
3,657

4,338
62,219
1,240
1,475

10,128
159,158
2,456
5,726

7,583
136,969
2,527
2,308

7,051
109,719

4,815
100,078

18,470
211,794
1,713
10,933

17,562
213,584
1,788
4,974

797

795

6,012

2,355

2,461,255 2,424,599 7,913,753 7,431,459 2,073,563 1,930,994 1,208,498 1,092,979 2,035,854 1,871,914 1,659,197 1,534,130 5,207,783 5,322,134

O
*4

w
7*
O
J0

LIABILITIES
1,397,716 1,449,774 4,636,568 4,573,144
Federal Reserve notes
Deposits:
Member bank—reserve account. 789,320 748,101 2,655,849 2,366,137
21,855 101,88"
65,227
55,31
U.S. Treasurer—general account
18,109
13,489
44,744
63,860
Foreign
2,34
1,814
5,724
4,303
Other
860,468 789,879 2,808,204 2,499,52
Total deposits
173,03. 156,051 372,809 265,651
Deferred availability items
Other liabilities including accrued
365
619
dividends
2,337
1,886

1,143,968 1,120,120

626,969

592,688

949,067

922,170

624,739

604,311 2,639,453 2,871,019

868,410
40,670
11,515
4,325

772,506
19,010
15,727
635

863,227
39,504
10,857
2,292

783,090 2,201,521 2,093,668
19,791
18,835
50,383
15,250
40,038
29,012
869
48,541
45,130
819,000 2,326,046 2,201,082
86,868 179,501 189,333

691,845
41,733
11,515
8,161

607,336

450,542
43,975
8,225
2,645

398,589
20,505
11,914
2,527

753,254
150,013

654,645
130,928

505,387
57,024

433,535
48,689

924,920
135,688

807,878
116,746

915,880
93,632

678

364

867

285

601

332

446

21,768
16,203
9,338

241

1,205

923

2,431,838 2,396,069 7,819,918 7,340,208 2,047,913 1,906,057 1,190,247 1,075,197 2,010,276 1,847,126 1,634,697 1,510,420 5,146,205 5,262,357
Total liabilities
CAPITAL ACCOUNTS
7,109
23,827
22,435
6,404
6,167
7,304
7,514
18,089
6,103
4,071
6,522
17,183
6,865
4,293
Capital paid in
18,663
66,217
65,078
16,972
10,997
16,148
15,729
14,111
19,110
38,106
13,777
16,577
38,952
11,233
Surplus (Sec. 7)
1,429
1,429
2,140
762
521
1,073
1,137
1,307
762
1,307
521
1,137
2,140
1,073
Surplus (Sec. 13b)
2,362
2,309
1,996
1,753
1,641
1,771
1,778
2,031
2,348
1,761
1,736
1,755
2,397
1,652
Other capital accounts
Total liabilities and capital
1,534,130 5,207,783 5,322,134
2,461,255 2,424,599 7,913,753 7,431,459 2,073,563 1,930,994 1,208,498 1,092,979 2,035,854 1,871,914 1
accounts
-rContingent liability on bills pur222
164
550
217
209
86
62
216
chased for foreign correspondents.
335
877
86
101
Commitments to make industrial
3,750
183
155
4,225
450
143
loans
580
400
351
382
FEDERAL RESERVE NOTE
STATEMENT
Federal Reserve notes:
Issued to Federal Reserve Bank ,458,483 1,503,304 4,769,011 4,694,621 1,187,366 1,160,309 644,064 608,201 972,664 949,614 660,981 641,294 2,766,307 2,996,936
by Federal Reserve Agent
36,242
60,767
36,983 126,854 125,917
40,189
15,513
23,597
43,398
17,095
53,530 132,443 121,477
27,444
Held by Federal Reserve Bank. .
Federal Reserve notes, net1.. . 1,397,716 1,449,774 4,636,568 4,573,144 1,143,968 1,120,120 626,969 592,688 949,067 922,170 624,739 604,311 2,639,453 2,871,019
Collateral held by Federal Reserve
Agent for notes issued to Bank:
Gold certificates
675,000 615,000 2,990,000 2,020,000 315,000 300,000 200,000 189,000 280,000 280,000 169,000 169,000 2,100,000 1,600,000
100
700
475
50
280
3,450
Eligible paper
U. S. Government securities. . . . 800,000 900,000 1,800,000 2,700,666 950,000 951,565 '450,666 425,666 700,000 700,000 500,606 Vob.ooo 1,000,000 1,600,000

Total collateral held.

,475,000 1,515,000 4,790,000 4,720,000 ,265,050 1,251,845

650,000

614,000

980,700

^Includes Federal Reserve notes held by the U. S. Treasury and by Federal Reserve Banks other than the issuing Bank.

983,450

669,000

669,000 3,100,475 3,200,100

A N N U A L REPORT OF BOARD OF GOVERNORS

NO. 3—HOLDINGS OF UNITED STATES GOVERNMENT SECURITIES BY FEDERAL
RESERVE BANKS, END OF DECEMBER 1945, 1946, A N D 1947
[In thousands of dollars]
Type of issue

Rate of
interest
(Per cent)

December 31,

Change during

1946
Treasury bonds:
1946-56
1946-48
1946-49
1947-52
1948-50*
1948-51
1948*
1949-51*. June
1949-51*, Sept
1949-51*. Dec
1949-52
1949-53
1950-52*, Mar
1950-52*. Sept
1950-52. Sept
1951-54
1951-55
1951-53*
1951-53
1951-55*
1952-54*. Mar
1952-54*. June
1952-55*. June
1952-54*. Dec
1953-55
1954-56
1955-60
1956-58*
1956-59*
1956-59
1958-63
1959-62*', June
1959-62*', Dec
1960-65
1962-67*'
1963-68*'
1964-69*', June
1964-69*', Dec
1965-70*'
1966-71*'
1967-72*', June
1967-72*, Sept
1967-72*', Dec

4K
2

2
2
2
2
2

2
2%
2
2K
2
2K
2
2
2K
2%
2K
2%
2H

2K
2H
2H
2%

12.000
39,600
100.500
25,000
7,750
500

31,500
74,100

36,800
70,000
81,800
16,000
21,150
31,500

31,600

13^700

14,500
6,940

5,000
40,900

37,250

2K
2K
2K
J2K
2K

2%
2K
2K

Total Treasury
bonds
Treasury notes:*
Tan. 1,1946
Mar. 15, 1946
July 1,1946
Dec. 15, 1946
Mar. 15. 1947
Sept. 15, 1947
Sept. 15, 1947
Sept. 15, 1948
Oct. 1,1948

43,950
99,700
47,952
12,000
39,600
100,500
25,000
7,750
500

.90
.90

IK
IK
IK
IK

57,200

55,300

946,892

753,390

576,550
74,400
899,500
273,800

1946
-43,950
-99,700
-47,952

2,852,869

'+41^660

-3,050
+5,206
+ 18,551
+500
+3,500
+8,065
+20,461
+ 1,350
+4,600
+3,520
+379,516
+ 12,770
+3,700
+38,242
+ 174,796
+ 18,636
+283,810
+2,538
+3,150
+16,045
+56,329
+291,591
+ 16,316
+31,691
+55,524
+ 113,693
+58,935
+ 16,260
+20,672
+8,437

-1,900
-193,502
-576,550
-74,400
-899,500
-273,800

3,500
10,000
46,400

-12,000

+ 10,000

49,600
100,500
66,000
4,700
5,706
18,551
32,000
77,600
8,065
57,261
71,350
86,400
19,520
400,666
44,270
3,700
38,242
174,796
50,236
283,810
16,238
3,150
30,545
63,269
291,591
21,316
72,591
55,524

113,693
96,185
16,260
20,672
8,437
13,328
51,017
3,152
61,840
110,777
210,316

1947

+ 13,328
+51,017
+3,152
+61,840
+55,477
+210,316

+2,099,479

+3,500
+ 10,000
+46,400

-3,500
-10,000
-46,400
+252,750
+928,400

295,400

548,150
928,400

Total Treasury
notes

2,119,650

355,300

1,476,550

-1,764,350

+1,121,250

Certificates of indebtedness*

8,364,461

7,496,012

6,338,863
457,642

-868,449

-1,157,149
+457,642

Total certificates

8,364,461

7,496,012

6,796,505

-868,449

-699,507

Treasury bills:*
Bought under repurchase option
System account

4,851,923
7,979,322

4,905,617
9,839,366 11,433,410

+53,694 -4,905,617
+ 1,860,044 + 1,594,044

12,831,245 14,744,983 11,433,410

+ 1,913,738 -3,311,573

Total Treasury
bills

Total holdings. .
24,262,248 23,349,685 22,559,334
r
* Taxable issues.
Restricted as to commercial bank ownership.

-912,563

-790,351

FEDERAL RESERVE SYSTEM

NO. 4—HOLDINGS OF SPECIAL SHORT-TERM TREASURY 1CERTIFICATES BY THE
FEDERAL RESERVE BANKS, 1942-47
[In millions of dollars]
Date

Amount

1942—June 16
19
20
22
23
Sept. 15
16
17
18
19
Nov. 27
28
30
Dec. 1
10
15
1943—Jan. 29
30
Mar. 2
4
5
1

58
70
47
34
94
324
189
286
76
53
139
329
422
98
16
145
115
202
3
174
354

Date

Amount

1943—Mar. 6
8 .
9
10
11
12
13 .
15
16
17
18
19
20
22
23
24
25
26
27
29
30

543
591
648
632
790
940
1,043
1,302
1,250
981
836
778
768
603
700
512
432
384
304
104
40

Date

Amount

I943—j u n e is...
16
17...
18 .
19...
Sept. 8
9 ..
10
11
13
14
15 ..
16
1945—Mar. 15 . .
Dec. 4
5
6
7
8
10

805
659
350
256
212
11
126
243
246
214
179
424
258
4
107
318
374
484
484
202

There were no issues during the years 1944, 1946, and 1947. Interest rate X per cent throughout.

NO. 5—-VOLUME OF OPERATIONS I N PRINCIPAL DEPARTMENTS OF FEDERAL
RESERVE BANKS, 1943-47
[Number in thousands; amounts in thousands of dollars]
1943
NUMBER OF PIECES HANDLED

1944

1945

1946

1947

Discounts and advances:
Notes discounted and advances made
Industrial loans:
Loans made
Commitments to make industrial loans
Currency received and counted...
Coin received and counted
Checks handled:
U. S. Government checks
All other
Collection items handled:
U. S. Government coupons
paid
All other
Issues, redemptions, and exchanges of U. S. Government
securities
Transfer of funds

.1
2,874,099
3,810,300

()

3,006,898
4,167,265

3,016,719
4,562,709

3,423,547
5,743,862

3,491,962
6,159,697

266,686
1,246,384

426,460
1,288,465

510,608
1,341,342

380,634
1,597,377

331,914
1,668,651

16,527
5,072

17,054
4,622

18,292
4,483

20,192
4,551

19,003
37,135

270,608
865

357,782
906

382,067
939

245,904
1,059

177,351
1,148

2,840,341

14,922,128

34,778,804

20,133,819

17,234,926

60,265

20,381

14,043

3,445

9,296

10,221
15,599,680
381,254

4,769
17,157,034
417,014

2,350
18,307,687
445,892

8,845
20,945,847
519,892

6,069
22,099,562
622,054

113,791,554
509,640,311

127,931,710
532,755,045

124,610,917
563,498,349

1,481,520
7,882,053

1,840,647
7,962,994

2,348,172
9,295,666

211,749,395
203,510,209

264,138,176
215,006,532

302,353,553
223,490,280

()

AMOUNTS HANDLED

Discounts and advances
Industrial loans:
Loans made
Commitments to make industrial loans
Currency received and counted...
Coin received and counted
Checks handled:
U. S. Government checks
All other
Collection items handled:
U. S. Government coupons
paid
All other
Issues, redemptions, and exchanges of U. S. Government
securities
Transfer of funds
1

80,419,096
72,577,329
651,457,054 719,630,054
2,817,311
9,312,790

278,422,685 254,060,950
252,991,164 316,459,625

Two or more checks, coupons, etc., handled as a single item are counted as one "piece."
23 Less than 50.
Increase reflects change in method of counting items.

2,491,424
6,455,968

NO. 6—EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS DURING 1947
Item

System

Boston

New York

Cleveland

Philadelphia

Richmond

Atlanta

Chicago

St. Louis

Minneapolis

Kansas
City

Dallas

San
Francis*

CURRENT EARNINGS
$84,408 $242,863 $144,406
$675,838 $152,126 $216,756 $134,814
$96,444 $110,819
$2,194,546 $151,040
$44,232 $140,800
Discounted bills
3,890
3,890
Purchased bills
57,475
512
2,033
60,438
418
Industrial loans
Commitments to make in885
14
7,359
633
602
7,369
440
1,798
19,205
105
dustrial loans
U. S. Government securities. . 155,563,861 10,388,433 38,130,991 11,193,237 14,783,785 9,884,765 8,236,962 20,934,866 8,078,124 ' 4,506,670 7,551,605 6,749,713 15,124,710
140,354
10,381
181,582
20,642
82,579
96,641
25,206
9,994
49,049
172,169
813,626
14,798
10,231
All other...
Total current earnings. . 158,655,566 10,554,689 38,907,360 11,413,233 15,189,482 10,041,366 8,349,211 21,318,968 8,312,478 4,613,108 7,835,033 6,804,281 15,316,357
CURRENT EXPENSES
Operating expenses:
Salaries:
3,290,148
Officers
Employees
48,754,014
Retirement System contributions
5,033,943
19,378
Legal fees
Directors' fees and expenses
238,525
Federal Advisory Coun21,355
cil, fees and expenses. .
Traveling expenses
(other than of directors and members of
Federal Advisory
Council)
646,469
Postage and expressage.. 7,289,327
Telephone and telegraph.
491,114
Printing, stationery, and
3,666,589
supplies
618,707
Insurance
1,786,651
Taxes on real estate
Depreciation (building).. 1,121,087
Light, heat, power, and
645,449
water
523,259
Repairs and alterations..
648,624
Rent
Furniture and equipment,
2,966,705
including rental
1,058,264
All other
Inter-Bank expenses....

402,207
175,058
284,008
223,806
222,308
678,029
215,621
173,329
207,029
180,374
215,786
312,593
2,959,295 11,802,120 2,948,926 4,178,482 3,017,815 2,436,559 7,449,938 2.852,430 1,452,293 2,558,932 2,380,043 4,717,181

297,220
11,599

423,550
7,017

313,788
8

273,795

751,954
250

306,638

145,221

278,432
119

252,100

503,717
20

15,868

15,251

16,191

35,424

17,308

19,959

15,617

23,634

21,511

30,474

1,028

1,778

970

2,448

1,720

2,140

1,843

2,053

1,615

3,303

21,016

87,427
1,127,117
89,692

24,747
497,121
30,496

56,214
635,763
45,962

54,186
632,255
27,123

43,139
587,275
42,015

80,784
946,173
36,622

57,540
369,457
41,721

39,836
257,711
23,448

43,466
412,133
38,600

49,796
372,629
32,112

71,481
746,066
62,307

271,773
46,267
166,396
79,684

704,812
161,959
457,810
221,060

242,367
29,198
91,436
100,242

287,806
49,455
227,469
203,202

202,415
36,319
86,421
92,606

281,581
29,318
77,725
42,548

604,007
85,610
229,113
98,420

233,383
41,365
79,992
66,260

94,180
18,084
84,943
31,406

192,940
34,568
105,540
70,312

194,024
27,694
45,940
40,493

357,301
58,870
133,866
74,854

43,607
21,676
21,106

150,955
61,708
5,833

36,288
15,345
37,398

80,977
114,745
74,418

43,760
14,224
14,948

37,569
36,940
67,357

81,193
58,238
233,211

43,860
78,652
14,072

24,976
22,143
4,533

29,021
65,530
28,444

36,811
23,775
15,299

36,432
10,283
132,005

109,520
74,894
23,227

620,807
146,376
-246,783

222,406
68,295
29,396

289,642
152,240
33,751

183,192
49,458
17,783

238,818
52,128
14,880

396,778
159,818
49,357

205,033
86,954
12,702

69,280
62,073
9,073

127,449
55,876
12,701

214,337
48,989
11,976

289,443
101,163
31,937

301,361
358
12,524
1,390

37,853
705,627

1,186,167
7
14,764
1,067

Total operating ex-

penses . f
78,819,608

5,077,948 17,270,927 4,874,434 7,161,730 5,027,268 4,521,827 11,682,701 4,727,779 2,529,989 4,295,536 3,976,173 7,673,296

Less reimbursement for
certain fiscal agency
and other expenses.... 20,628,180

1,095,409

Net operating expenses. . 58,191,428

3,982,539 13,324,542 3,886,797 5,595,813 3,841,667 3,052,384 7,752,398 3,554,710 1,888,830 3,098,962 2,860,241 5,352,545

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

Total deductions. . .

167,648

845,995

214,164

244,862

128,360

107,131

358,628

93,699

65,186

93,049

88,714

232,231

243,522
28,477

739,438
103,915

274,870
41,346

386,905
50,183

316,494
47,954

320,429
63,790

627,555
104,516

274,752
35,955

90,472
18,610

165,500
31,180

155,014
31,255

323,240
86,508

2,886,892

4,422,186 15,013,890 4,417,177 6,277,763 4,334,475 3,543,734 8,843,097 3,959,116 2,063,098 3,388,691 3,135,224 5,994,524
PROFIT A N D LOSS
6,132,503 23,893,470 6,996,056 8,911,719 5,706,891 4,805,477 12,475,871 4,353,362 2,550,010 4,446,342 3,669,057 9,321,833

185,598

636,645

199,902

255,338

167,375

728
314

94,871
3,063

5,166

24,210
1,738

935

107,449

4,045

783

2,729

571

288

186,640

734,579

205,068

255,381

193,323

140,983

447,858

134,418

75,516

131,193

116,205

265,728

100,000

143,553

37,862
17,064

64,383
5,752

34,947
2,839

32,643
1,896

38,602
8,065

34,463
1,012

52,647
1,858

17,008
82

11,289
594

16,611
479

17,140
1,115

48,868
2,175

464,497
406,463
42,931

140,048

220,944

340,409

130,373

74,733

128,464

115,634

265,440

913,891

54,926

70,135

37,786

255,483

46,667

35,475

154,505

160,643

11,883

17,090

18,255

51,043

1,973,001

131,714

664,444

167,282

-102

146,656

105,508

293,353

-26,225

63,633

114,103

97,950

214,685

Net earnings before payments to U. S. Treasury. .. 95,235,592
Paid to U. S. Treasury (Sec.
35,605
13b)
. .
Paid U.S. Treasury (interest
on outstanding* Federal
75,223,818
Reserve notes)
Netearnings.
Dividends paid
Transferred to surplus (Sec.
13b)

641,159 1,196,574 1,115,932 2,320,751

3,918,191
643,689

Current net earnings
93,262,591
Additions to current net
earnings:
Profits on sales of U. S.
Government securities. 2,639,959
Recoveries of, and withdrawals from allowances for, losses on
119,809
industrial loans (net) . .
127,124
All other

Net additions

987,637 1,565,917 1,185,601 1,469,443 3,930,303 1,173,069

2,639,667

Total current expenses.. 65,392,975

Total a d d i t i o n s . . . .
Deductions from current net
earnings:
Charge-offs and special
depreciation on bank
premises
Reserves for contingencies
All other

3,946,385

6,264,217 24,557,914 7,163,338 8,911,617 5,853,547 4,910,985 12,769,224 4,327,137 2,613,643 4,560,445 3,767,007 9,536,518
24,808

7,059

1,992

427

401

500

236

5,034,646 18,367,942 5,672,116 7,010,672 4,808,290 4,022,554 10,249,336 3,553,033 2,124,282 3,757,934 3,005,545 7,617,468

19,976,169
11,523,047

1,229,571
671,129

86,772

-1,214

6,165,164 1,484,163 1,900,945 1,043,265
4,052,771
853,837 1,123,393
485,085
65,566

-1,461

888,343 2,519,461
441,270 1,380,234

773,703
378,794

488,861
253,251

802,500
383,667

761,379 1,918,814
427,300 1,072,316

23,881

846,498
630,326
334,079
Transferred to surplus (Sec. 7) 8,366,350
559,656 2,046,827
779,013
235,610
418,833
534,299
447,073 1,139,227
394,909
Surplus (Sec. 7), January 1. . 439,822,258 27,557,220 136,549,126 34,719,890 41,393,697 20,676,051 18,662,812 65,077,906 16,577,077 10,996,958 15,729,093 13,776,736 38,105,692
Surplus (Sec. 7), December 31 448,188,608 28,116,876 138,595,953 35,350,216 42,172,710 21,210,350 19,109,885 66,217,133 16,971,986 11,232,568 16,147,926 14,110,815 38,952,190

NO. 7—CURRENT EARNINGS, CURRENT EXPENSES, AND NET EARNINGS OF FEDERAL RESERVE BANKS AND DISPOSITION OF NET
EARNINGS, 1914-47
Disposition of net earnings

Earnings and expenses
Bank and period

All Federal Reserve Banks, by years:
1914-15
1916.
.
1917
1918
.
.
. . . .
1919

Current
earnings

Current
expenses

Net earnings
before payments to
U. S. Treasuryi

Dividends
paid

Franchise tax Paid to U. S. Paid to U. S.
Treasury
Treasury
paid to U. 2S.
(Sec. 13b)
(interest on
Treasury
F. R. notes)

Transferred
to surplus
(Sec. 13b)

2 173 252 $ 2,320 586 $
—141 459 $
217,463
5,217,998
2,273,999
2,750,998
1,742,774
16,128 339
5,159 727
9 582 067
6 804 186 $ 1 134,234
67,584,417 10,959,533
52,716,310
5,540,684
102,380 583 19,339 633
5 011 832
2 703,894
78 367 504

Transferred
to surplus
(Sec. 7)

1 134 234
48,334,341
70 651 778

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

163
182
443
810
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

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 Oil 418
$-60,323

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

1935
1936
1937
1938
1939

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

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

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

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

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

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

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

1940
1941
1942
1943
1944

43,537,805
41 380 095
52,662,704
69 305 715
104,391,829

29,165,477
32,963 150
38,624,044
43,545 564
49,175,921

25,860,025
9,137,581
12,470,451
49 528,433
58,437,788

8,214,971
8,429,936
8,669,076
8,911,342
9,500,126

82,152
141,465
197,672
244,726
326,717

-54,456
-4,333
49,602
135,003
201,150

17,617,358
570,513
3,554,101
40,237,362
48,409,795

1945
1946
1947

142,209,546
150,385 033
158,655,566

48,717,271
57,235 107
65,392,975

92,662,268
92,523,935
95,235,592

10,182,851
10,962,160
11,523,047

262,133
27,708
86,772

81,969,625
81,467,013
8,366,350

1920
1921
1922
1923
1924

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

1925
1926
1927
1928
1929

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

27 528
27,350
27 518
26,904
29 691

1930
1931
1932
1933
1934

Total—1914-47

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

2,078,338,411 982,291,468 1.058.114,581 254.710.074 149,138,300

247,659
67,054
35,605 $75,223,818
2,188,893

75,223.818

-3,658

576,857,154

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Aggregate for each Federal Reserve Bank,
1914-47:
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
1
2
3

139,708,931 69,957,051
585,206,213 236,212,348
74,180,856
159,114,802
189,577,300 91,315,384
108,742,692 57,260,854
99,122,827 47,461,973
284,623,153 129,358,367
93,145,607 51,255,509
63,801,117 33,650,904
99,665,807 57,274,153
77,173,899 43,832,719
178,456,063 90,531,350

68,775,119
349,007,049
85,368,477
93,039,690
48,853,478
46,558,116
146,948,458
37,231,327
28,787,915
39,587,972
30,437,267
83,519,713

2,078,338,411 982,291,468 1,058,114,581

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

280,843
369,115
722,406
82,930
172,493
79,265
151,045
7,464
55,615
64,213
102,083
101,421

5,034,646
18,367,942
5,672,116
7,010,673
4,808,290
4,022,554
10,249,335
3,553,033
2,124,282
3,757,934
3,005,545
7,617,468

+ 135,412
-433,413
+290,661
-9,907
-71,516
+5,491
+11,681
-26,514
+64,875
-8,674
+55,336
-17,090

38,347,113
175,419,111
49,971,099
55,396,597
27,018,642
24,381,916
81,557,570
22,065,099
15,174,655
20,279,204
18,443,629
48,802,519

254,710,074 149,138,300

2,188,893

75,223,818

-3,658

576,857,154

17,865,710
87,278,032
23,153,294
25,716,950
10,725,380
9,118,329
29,665,301
8,876,616
6,165,588
8,556,195
8,270,625
19,318.054

Current earnings less current expenses, plus other additions and less other deductions.
The Banking Act of 1933 eliminated the provision in the Federal Reserve Act requiring payment of a franchise tax.
On Dec. 31, 1947, surplus (Sec. 13b)—relating to funds received from the Secretary of the Treasury under Section 13b of the Federal Reserve Act for the purpose of
making loans to industry—amounted to $27,542,653 ($27,546,311 received from the Secretary of the Treasury minus the $3,658 net debits shown here).
4 On Dec. 31. 1947, surplus (Sec. 7)—accumulated pursuant to Section 7 of the Federal Reserve Act—amounted to $448,188,608 ($576,857,154 retained net earnings,
shown here, minus $139,299,557, charge-off cost of Federal Deposit Insurance Corporation stock, and $500,000, charge-off on bank premises, plus $11,131,011 transferred from
reserves for contingencies).

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A N N U A L REPORT OF BOARD OF GOVERNORS
NO. 8—BANK PREMISES OF FEDERAL RESERVE BANKS AND BRANCHES
DECEMBER 31, 1947
Cost
Federal Reserve Bank or
branch
Land

Boston

Building
(Including
vaults)

Fixed machinery and
equipment

$ 1,246,726 $ 3,542,603 $

Total

Net
book value

662,157 $ 5,451,486

1,240,780

22,222,307
2,259,667
720,707

6,987,215
872,665
379,200

911,987

7,268.287

3,181,969

1,626,573
279,462
379.694

9,386,316
1,961,923
2,210,509

2,463,791
1,200,000
1,273,736

663,667
109,132
331,970
150,107

3,036,769
671,947
1,829,719
546,983

1,105,176
153,489
935,815
442,921

1,423,762
330.680
238,231
211,616
762,455

287,941
65,491
39,669
35,091
212,281

1,994,703
520,308
323,742
294,707
1,251,814

702,870
141,209
90,767
102,149
522,116

2,963,548
1,022,064

6,371,915
1,052,107

1,443,104
174,116

10,778,567
2,248,287

2.125,740
937,767

1,355,374
85,007
131,177
128,542

2,111,809
240,733
226,259
287.468

1,296,893
151,092
72,463
106,062

4,764,076
476,832
429,899
522,072

1,335,905
192,833
171,275
272,615

Minneapolis. . .
Helena

600,521
15,710

2,316,746
126,401

660,969
44,142

3,578,236
186,253

1,093,493
114,946

Kansas City...
Denver
Oklahoma City
Omaha

495,300
101,512
65,021
176,427

3,391,101
449,876
409,890
397,938

931,949
79,268
95,480
91,455

4,818,350
630,656
570,391
665,820

1,588,658
283,024
229,168
355,355

Dallas
El Paso
Houston.......
San Antonio...

189,831
39,003
78,812
75,002

1,350,945
114,644
313,335
159,743

452,161
30,191
112,111
54,619

1,992,937
183,838
504,258
289,364

457,616
46,030
163,891
129.873

San Francisco..
Los Angeles
Salt Lake City.

412,996
443,488
114,075

3,144,407
988,109
341,449

784,102
323,195
84,814

4,341,505
1,754,792
540,338

976,155
506.138
230,868

21,631,928

61,814,488

17,781,949

101,228,365

33,007,218

New York
Annex....
Buffalo

5,215,656
592,679
255,000

12,183,528
1,451,570
465,707

Philadelphia...

1,884,357

4,471,943

Cleveland
Cincinnati
Pittsburgh

1,295,490
380,744
781,364

6,464,253
1,301,717
1.049,451

Richmond
Annex. . . .
Baltimore
Charlotte

271,924
80,333
250,487
105,701

2,101,178
482,482
1,247,262
291,175

Atlanta
Birmingham. . .
Jacksonville. . .
Nashville
New Orleans...

283,000
124,137
45,842
48,000
277,078

Chicago
Detroit
St. Louis
Little Rock
Louisville
Memphis

Total

4,823,123
215,418

OTHER REAL ESTATE ACQUIRED FOR BANKING HOUSE PURPOSES
Boston
New York
Pittsburgh....
Richmond
Charlotte...
Atlanta
Jacksonville
St. Louis.. .
San Francisco
Los Angeles
Portland 2 ...
Seattle*
Total .
1
2

$ 78,793
125,864

389,828

146 ,456

1,714,746

595,584

146 ,456

1,099

Includes building on site.
The Portland and Seattle Branches occupy rented quarters.

364,188
45,000
1316,537
106 481
10,868
35 000
»155,617
176,055
60 000
35,000
160,000
1250,000

442,981
170,864
316,537
107,580
10,868
35,000
155,617
712,339
60,000
35,000
160,000
250,000

2,456,786

282,941
64,800
220,000
72,147
10,868
35,000
155,617
597,205
60,000
35,000
160,000
250,000
1 ,943,578

NO. 9—NUMBER A N D SALARIES OF OFFICERS A N D EMPLOYEES OF FEDERAL RESERVE BANKS
[December 31, 1947]
President

Federal Reserve Bank
(Including branches)
Boston
.
New York
Philadelphia .
Richmond,
Atlanta
Chicago.
.

Kansas City
Dallas

San Francisco
Total
1

. . .

Employees1

Other officers

Annual Salary

Number

$ 25,000
50,000
25,000
25,000

15
49
13
28

25,000
25,000
35,000
25,000
25,000
25,000
25,000
25,000
$335,000

Annual salaries

Number

Annual salaries

Number

Annual salaries

157,250
617,770
145,000
252,500

1,250
3,935
1,103
1,801

$ 3,024,340
11,049,204
2,876,482
4,024,584

1,266
3,985
1,117
1,830

$ 3,206,590
11,716,974
3,046,482
4,302,084

23
29
34
23'

201,500
206,100
366,950
190,490

1,333
1,055
2,860
1,195

2,802,347
2,236,592
7,090,112
2,713,652

1,357
1,085
2,895
1,219

3,028,847
2,467,692
7,492,062
2,929,142

17
22
23
34

150,350
189,500
185,800
289,100

639
1,105
896
1,870

1,436,740
2,367,518
2,124,881
4,651,176

657
1,128
920
1,905

1,612,090
2,582,018
2,335 681
4,965,276

310

$2,952,310

19,042

$46,397,628

19,364

$49,684,938

Includes 553 part-time employees.
NOTE: During the year 1947, $13,620,781 was reimbursed to the Banks on account of salaries.

Total
W

ANNUAL REPORT OF BOARD OF GOVERNORS
NO. 10—FEDERAL RESERVE BANK DISCOUNT, INTEREST, AND COMMITMENT
RATES, AND BUYING RATES ON BILLS
[Per cent per annum]
In effect December 31, 1947

Type of transaction

Boston

Discounts for and advances to
member banks under Sees.
13 and 13a of the Federal
Reserve Act
1
Advances to member banks
under Sec. 10(b) of the Federal Reserve Act
Advances to individuals, partnerships, or corporations
other" than member banks
secured by direct obligations
of the United States (last
paragraph of Sec. 13 of the
Federal Reserve Act)
2
Loans to industrial or commercial businesses under Sec.
13b of the Federal Reserve
Act, direct or in participation
withfinancinginstitutions...
Discounts for and purchases
from financing institutions
under Sec. 13b of the Federal
Reserve Act:
On portion for which institution is obligated....
On remaining portion
Commitments to make loans
under Sec. 13b of the Federal
Reserve Act:
To industrial or commercial businesses
K-l
Tofinancinginstitutions..

New
York

Phil- Cleve- Rich- Atadel- land mond lanta
phia

ChiSt. Min- Kancago Louis neap- sas
olis City

2K-5

8 8

Dal- San
las Francisco

2K-5

00 2

2K-5

w<*)

1-5
1-1K
1-5 23^-5

H-iH H-iH (4) K - H-iH (4) K -

Minimum buying rates on
prime bankers' acceptances
payable in dollars
1-90 days
91-120 days
121-180 days

H-iH

(

H-iH

(5)

1
Rate charged borrower byfinancinginstitution less commitment rate.
2
May charge same rate as charged borrower byfinancinginstitution, if lower.
8
Rate
charged borrower.
4
Financing institution is charged 34 per cent on undisbursed portion of loan.
5

The same minimum rates in effect at the Federal Reserve Bank of New York generally apply to any purchases made
by other Federal Reserve Banks.
NOTE: Maximum maturities for discounts and advances to member banks are: 15 days for advances secured by
obligations of the Federal Farm Mortgage Corporation or the Home Owners Loan Corporation guaranteed as to principal
and interest by the United States, or by obligations of Federal Intermediate Credit Banks maturing within 6 months; 90
days for other advances and discounts made under Sections 13 and 13a of the Federal Reserve Act (except that discounts of
certain bankers' acceptances and of agricultural paper may have maturities not exceeding 6 months and 9 months respectively); and 4 months for advances under Section 10(b). The maximum maturity for advances to individuals, partnerships,
or corporations made under the last paragraph of Section 13 is 90 days. Industrial loans and commitments made under
Section 13b of the Federal Reserve Act may have maturities not exceeding 5 years.
SPECIAL NOTE: Federal Reserve Bank discount rates on eligible paper were increased during January 1948.
See text, p. 6. Discount rates currently in effect are published in the Federal Reserve Bulletin.

FEDERAL RESERVE SYSTEM
NO. 11—MEMBER BANK RESERVE REQUIREMENTS
[Per cent of deposits]
Net demand deposits1
Period in effect

June
Aug.
Mar.
May
Apr.
Nov.
Aug.
Sept.
Oct.
Feb.

Central reserve
city banks

21, 1917-Aug. 15, 1936
16, 1936-Feb. 28, 1937
1, 1937-Apr. 30, 1937
1, 1937-Apr. 15, 1938
16, 1938-Oct. 31, 1941
1, 1941-Aug. 19, 1942
20, 1942-Sept. 13, 1942
14, 1942-Oct. 2, 1942
3, 1942-Feb. 26, 1948
27, 1948

13
19K
22K
26
22K
26
24
22
20
22

•

Country
banks

Reserve
city banks
10
15

17H
20
17K

20
20
20
20
20

Time deposits
(All member
banks)

7
10K

14
12
14
14
14
14
14

6
5
6
6
6
6
6

1
Demand deposits subject to reserve requirements, i.e., total demand deposits minus (1) cash items in
process of collection, (2) demand balances due from domestic banks, and (3) war loan and Series E bond
accounts during the period Apr. 13, 1943 to June 30, 1947, and all U. S. Government demand accounts
Apr. 24, 1917 to Aug. 23, 1935.

NO. 12—MAXIMUM RATES ON TIME DEPOSITS
Maximum rates that may be paid by member banks as established by the Board of Governors under
provisions of Regulation Q
[Per cent per annum]

Types of deposit

Savings deposits
Postal Savings deposits
Other time deposits payable:
In 6 months or more
In 90 days to 6 months
In less than 90 days

Nov. 1, 1933,
to
Jan. 31, 1935

Feb. 1, 1935,
to
Dec. 31, 1935

In effect
beginning
Jan. 1, 1936

3
3

2K
2K

3
3
3

2K
2K
2K

2K
2V*
2
1

NOTE : Maximum rates that may be paid by insured nonmember banks as established by the Federal
Deposit Insurance Corporation, effective Feb. 1, 1936, are the same as those in effect for member banks.
Under Regulation Q the rate payable by a member bank may not in any event exceed the maximum
rate payable by State banks or trust companies on like deposits under the laws of the State in which the
member bank is located.
NO.

1 3 — MARGIN REQUIREMENTS i

Prescribed by Board of Governors of the Federal Reserve System in accordance with Securities Exchange
Act of 1934
[Per cent of market value]
Nov. 1, 1937- F e b . 5 , 1 9 4 5 - July 5, 1945- Jan. 21, 1946Effective
Feb. 4, 1945 July 4, 1945 Jan. 20, 1946 Jan. 31, 1947 Feb. 1, 1947
Regulation T:
For extensions of credit by
brokers and dealers on
listed securities
For short sales
Regulation U:
For loans by banks on stocks.

40
50

50
50

75
75

100
100

75
75

100

1
Regulations T and U limit the amount of credit that may be extended on a security by prescribing a
maximum loan value, which is a specified percentage of its market value at the time of the extension; the
"margin requirements" shown in this table are the difference between the market value (100 per cent)
and the maximum loan value.

ANNUAL REPORT OF BOARD OF GOVERNORS
NO. 14—MINIMUM DOWN PAYMENTS AND MAXIMUM MATURITIES ON CONSUMER
CREDIT SUBJECT TO REGULATION W
Prescribed by Board of Governors of the Federal Reserve System in accordance with Executive Order
No. 8843 dated August 9, 1941, until November 1, 1947. Consumer credit controls under Regulation W
ceased to be operative after November 1, 1947, in accordance with the Joint Resolution of Congress
(S.J.Res. 148) approved on August 8, 1947.
As revised effective
December 1, 1946
Type of credit

Instalment sales:
Mechanical refrigerators
Washing machines, dishwashers, and ironers ,
Cooking stoves and ranges.
Combination units incorporating foregoing.
Sewing machines and vacuum cleaners
Radios and phonographs.
Room-unit air conditioners
Furniture and soft-surface floor coverings.
Automobiles
Instalment loans:
To purchase listed articles.
Other
Renewals, revisions, and consolidations of instalment credit.
1
8

Down
payment
(Per cent) i

33K
33K
33^

Maximum
maturity
(Months)
15
15
15
15
15
15
15
15
15

15
15

Down payments determined after deduction of any trade-in, except in case of automobiles.
Where credit was to purchase listed articles, requirements same as on instalment sales of the respective
articles.
NOTE: The above limitations were subject to various exceptions; for exceptions in detail, and for
additional provisions not reflected in this table, the regulation should be consulted.

FEDERAL RESERVE SYSTEM

NO. 15—ANALYSIS OF CHANGES IN NUMBER OF BANKING OFFICES DURING 1947
All
banks

Commercial and stock savings banks
and nondeposit trust companies
Member
Nonmember
banks
banks
Total
InNaState
Nontional member sured insured

Mutual

savings
banks
Insured

Noninsured

1191
Number of banks, Dec. 31, 1946. 14,585 14,044
5,007 U.893 6,457
690
350
Changes
during 1947:
2
New banks
+ 111
+66
+ 19
+14
+ 12
+111I
-1
Suspensions
-1
Consolidations and absorptions:
-23
-55
-11
-2
Banks converted into branches.
-55
-19
-4
-13
-29
-29
-5
Other
-7
-1
-11
-3
-11
-5
Voluntary liquidations 3
-2
-1
Unclassified
-1
-1
Inter-class changes:
Conversions—
National into State
...
-1
+1
State into national
+8 ' " - 6
Federal Reserve membership: 4
-37
+38
-1
Admissions of State b a n k s . . . .
-5
Withdrawals of State banks . .
+5
Federal deposit insurance: 6
+28
-28
Admissions of State banks
-3
+3
+1
Withdrawals of State banks.. .
-1
-30
Net increase or decrease
-3
-2
+21
+14
+14
+3
+25
Number of banks, Dec. 31,1947
before revision...
347
660
14,599 14,058
5,005 1,918 6,478
194
+123
-8
+ 123
Changes due to revision of series6. . + 115
6,478
194
5,005 1,918
Number of banks after revision. 14,714 14,181
339
783
Number of branches, 7 Dec. 31,
115
1,721 1,118 1,001
42
62
1946
3,902
4,059
Changes during 1947:
+47
+64
+32
+146
De novo branches...
+ 160
+9
+3
+5
+9
+30
+ 16
+55
+55
Banks converted into b r a n c h e s . . . .
-13
-21
-3
Branches discontinued
-21
-1
Unclassified .
-1
-1
Inter-class branch changes:
National to State member
-1
+1
State member to national
-4
+4
-7
Nonmember to State member.
+7
-1
Insured to noninsured
+1
+1
Noninsured to insured
+36
+193' ' +i79 ' " *+9i ' •+49"
+9
+5
Net increase or decrease
+3
Number on Dec. 31,1947, before
1,812 1,167 1,037
4,081
4,252
124
revision
47
65
Changes in number of 6branches due
+5
+1
+9
+9
to revision of series
+1
+2
Number of branches ,7 after
revision
1,817 1,168 1,038
4,090
4,261
124
47
67
Number of banking facilities
at
8
military reservations, Dec.
5
31, 1946
60
14
79
79
Changes during 1947:
Established
+2
+2
+2
Reopened at veterans hospital . . .
Q
i
Discontinued
-10
-10
Inter-class change •
" "-8
-7
-1
-8
Net decrease
Number of banking facilities
at
military reservations, 8 Dec.
13
5
31, 1947
71
53
71
1
The State member bank figures and the insured mutual savings banks figures both include three
member mutual savings banks. These banks are not included in the total for "commercial banks" and
are included
only once in "all banks."
2
Exclusive of new banks organized to succeed operating banks.
8
Exclusive
of liquidations incident to the succession, conversion, and absorption of banks.
4
Exclusive of conversions of national banks into State member banks, or vice versa. Such changes do
not affect
Federal
Reserve membership; they are included under "conversions."
5
Exclusive of insured nonmember banks converted into national banks or admitted to Federal Reserve
membership, or vice versa. Such changes do not affect Federal Deposit Insurance Corporation membership;6 they are included in the appropriate groups under "inter-class bank changes."
As of June 30, 1947 the series was revised to conform (except that it excludes possessions) with the
number of banks in the revised all bank series announced in November 1947 by the Federal bank supervisory
authorities.
The revision resulted in a net addition of 115 banks and 9 branches.
7
Covers all branches and other additional offices at which deposits are received, checks paid, or
money lent.
* "Banking facilities" are provided through arrangements made by the Treasury Department with
banks designated as depositaries and financial agents of the Government. The figures shown do not
include branches that have also been designated by the Treasury Department as "banking facilities."

ANNUAL REPORT OF BOARD OF GOVERNORS

NO. 16—NUMBER OF BANKING OFFICES ON FEDERAL RESERVE PAR LIST AND NOT
ON PAR LIST, BY FEDERAL RESERVE DISTRICTS AND STATES, DECEMBER 31, 1947*
Total banks,
branches, and
offices on which
Federal Reserve checks are drawn

district or State

Banks

Branches
and
offices

On par list
Total
Banks

Member

Not on par list
(Nonmember)

Nonmember

Branches
Branches
Branches
3ranches
and
and
Banks
Banks
Banks
and
and
offices
offices
offices
offices

DISTRICT

Boston
New York
Philadelphia. . .
Cleveland
Richmond
Atlanta
Chicago
St. L o u i s . . . . . .
Minneapolis. . .
Kansas City. . .
Dallas
San Francisco..

Total

493
926
844
1,145
1,010
1,166
2,484
1,467
1,278
1,751
1,007
507

289
835
134
247
430
163
561
131
111
7
36
1,204

493
926
844
1,145
790
547
2,428
1,115
609
1,740
897
503

289
835
134
247
305
127
535
71
41
7
28
1,204

336
797
647
710
475
340
1,000
495
475
758
613
271

157
214
129
770
99
197
214
435
200
315
111
207
216 1,428
40
620
26
134
4
982
19
284
232
1,138

75
65
35
33
105 ' 220' ' " 1 2 5 '
619
16
36
56
319
26
352
31
60
669
15
70
11
3
110
9
8
4
66

14,078

4,148

12,037

3,823

6,917

3,051 5,120

772 2,041

222
10
228
192
142
115
39
19
178
379
48
878
487
664
609
385
160
63
166
182
442
677
206
594
112
410
8
73
340
47
658
205
151
668
384
69
990
19
150
170
295
889
60
69
314
123
182
552
55

22
40
19
896

112
10
99
192
142
115
39
19
115
99
48
876
487
664
607
385
58
63
166
182
442
264
39
526
112
410
8
73
340
47
658
87
49
668
374
69
990
19
57
69
196
829
60
69
307
119
180
443
55

22
40
5
896
1
22
14
38
2
27
45
3
89
162

87
5
66
115
92
65
17
16
71
64
26
503
237
163
214
113
46
38
78
147
229
208
31
180
82
145
6
52
292
33
575
53
41
424
225
32
758
11
31
63
81
563
34
40
202
54
108
163
38

325

STATE

Alabama
Arizona
Arkansas
California
Colorado
Connecticut. . .
Delaware
Dist. of Col.. . .
Florida
Georgia
Idaho

Illinois
Indiana

Iowa
Kansas . . .
Kentucky
Louisiana
Maine
Maryland
Massachusetts.
Michigan
Minnesota .
Mississippi. . . .
Missouri
....
Montana
Nebraska
Nevada
New Hampshire
New J e r s e y . . . .
New Mexico. . .
New York.. . . .

North Carolina.
North Dakota.
Ohio
Oklahoma
Oregon
Pennsylvania. ..
Rhode Island. .
South Carolina.
South Dakota..

Tennessee
Texas
Utah
Vermont
Virginia
Washington....
"West Virginia
Wisconsin
Wyoming
1

14
38
2
31
45
3
89
162
36
63
69
101
152
206
6
55
2
18
2
137
8
714
170
24
189
1
81
149
41
33
47
74
4
15
10
88
119
150

36
41
69
101
152
206
6
7
2
18
2
137
8
714
48
5
189
1
81
149
41
31
21
58
4
15
10
87
119
99

22
30
1
854
1
11
4
35
2
26
43
3
33
25
36
37
68
140
160
6
1
2
17
1
121
661
28
165
1
76
125
29
27
20
46
4
13
2
42
112
21

25
5
33
77
50
50
22
3
44
35
22
373
250
501
393
272
12
25
88
35
213
56
8
346
30
265
2
21
48
14
83
34
8
244
149
37
232
8
26
6
115
266
26
29
105
65
72
280
17

4
42

110
129

63
280

10
3
1
2

56
162
2

11
5
32
33
12
46
6

102

413
167
68

*"iis*

in'

102

1
16
8
53
20
5
24

5
24
12
4
1
12
2
8
45
7
78

93
101
99
60

2
26
16

7
4
2

109

Does not include mutual savings banks, on a few of which some checks are drawn, but does include 71
banking facilities (see footnote 8, Table 15). The difference in the number of member banks on Dec.
31, 1947 shown in this table and in Table 15 is due to the fact that this table excludes 3 nondeposit trust
companies and 3 mutual savings banks on which no checks are drawn. The difference between the number
of nonmember commercial banks is due to the fact that this table excludes 100 banks and trust companies
on which no checks are drawn.
Back figures.—See Banking and Monetary Statistics, Table 15, and previous Annual Reports.

RECORD OF POLICY ACTIONS

JANUARY 17,

1947

Members present: Mr. Eccles, Chairman; Mr. Draper; Mr. Evans.
Amendments to Regulation T, Extension and Maintenance of Credit by Brokers,
Dealers, and Members of National Securities Exchanges, and Regulation U,
Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered
on a National Securities Exchange.

By unanimous vote and effective February i, 1947, Regulations T
and U were amended to reduce from, 100 per cent to 75 per cent the
margin requirements prescribed on registered securities (other than
exempted securities) in a general account and on short sales under
Regulation T and on stocks under Regulation U. The change restored
margin requirements to the levels prevailing prior to January 21, 1946.
When the Board increased margin requirements from 75 per cent to 100 per
cent, effective January 21, 1946, accumulated and prospective inflationary pressures had reached dangerous proportions because of the vast expansion of the
country's money supply resulting from war financing, the rising level of current
incomes, the huge backlog of public wants and needs, and the acute shortage
of most goods to satisfy this demand. Under these circumstances, the Board
felt that any growth in the use of credit for the purpose of buying securities
could only intensify inflationary pressures. While it was recognized that
margin requirements would have only a minor influence in combating general
inflation, the Board nevertheless felt that it should do what it could to curb
inflationary developments brought about by speculative activity in the stock
markets.
In the intervening year economic conditions and prospects had altered somewhat. The supply of money was reduced during the year as a result of a substantial decrease of the Government debt held by the banking system, and this
had had a salutary effect.
In contrast with the behavior of most prices, stock prices, which had risen
sharply for several months prior to January 1946 and continued to rise somewhat further after that time, subsequently declined materially. The level at
the beginning of 1947 was about the same as that existing when margin requirements were increased to 75 per cent. At the same time, the volume of credit
in the stock market had been substantially reduced until that used for carrying listed securities was at about the lowest level in the last thirty years.
In these circumstances some readjustment in margin requirements was appropriate. By its action the Board restored the 75 per cent level in effect
from July 5, 1945 until January 21, 1946. The resulting requirement, with
this adjustment to changed economic conditions, continued to be restrictive
without being prohibitive.
82

FEDERAL RESERVE SYSTEM
APRIL 23,
r

1947

Members present: Mr. Draper, Chairman pro tern; Mr. Evans; Mr.
ardaman; Mr. Clayton.

Establishment of Interest Rate Payable by the Federal Reserve Banks on Federal
Reserve Notes.

Under authority of the fourth paragraph of Section 16 of the Federal
Reserve Act, the Board, by unanimous vote, established for each Federal
Reserve Bank for the three months' period ending March 31, 1947, a
specified rate of interest per annum on that amount of the Federal Reserve
notes of each such Bank which equalled the average daily total amount
of its outstanding Federal Reserve notes during such period less the average daily amount of gold certificates held during such period by the
Federal Reserve Agent as collateral security for such notes.
Interest in an amount calculated in the manner and at the rate specified
for each Federal Reserve Bank was required to be paid by such Bank to
the United States on April 24, 1947.
The reasons for and the purpose of the Board's action are contained in the
following announcement released in the press on April 24, 1947:
"As a result of operations essential to Government financing during
and since the war, and operations required by the needs of business and
the public for credit and currency, earnings of the twelve Federal Reserve
Banks have been at relatively high levels. On the basis of present estimates, it is expected that net earnings of the Federal Reserve Banks for
1947, after payment of the statutory dividends to member banks, will
aggregate more than $60,000,000. In view of these facts, and of the fact
that at the end of 1946 the surplus of each Federal Reserve Bank was
equal to its subscribed capital, the Board has decided to invoke the authority, granted to it under Section 16 of the Federal Reserve Act, to levy
an interest charge on Federal Reserve notes issued by the Federal Reserve
Banks. The purpose of this interest charge is to pay into the Treasury
approximately 90 per cent of the net earnings of the Federal Reserve
Banks for 1947.
"The authority to levy an interest charge on Federal Reserve notes not
covered by gold certificates has not been used previously, chiefly because
of the existence, prior to 1933, of so-called franchise tax provisions of the
law which had a similar effect; that is, of transferring excess earnings of
the Reserve Banks to the Treasury. Under these provisions, which were
repealed in 1933, each Federal Reserve Bank was required to pay a franchise tax to the Government equal to 90 per cent of its net earnings after
it had accumulated a surplus equal to its subscribed capital. To the end
of 1932, the Federal Reserve Banks had paid franchise taxes to the United
States Treasury amounting to $149,000,000, and at that time the Federal
Reserve Banks had accumulated surplus accounts of $278,000,000, as
compared with subscribed capital aggregating $302,000,000. In the
amendment of the Federal Reserve Act, contained in the Banking Act of
I
933> providing for the establishment of the Federal Deposit Insurance Corporation, Congress required each Federal Reserve Bank to pay
an amount equal to one-half of its surplus on January 1, 1933, as a subscription to the capital stock of the FDIC on which no dividends would

FEDERAL RESERVE SYSTEM
DECEMBER 19,

1947

Members present: Mr. Eccles, Chairman; Mr. Szymczak; Mr. Draper;
Mr. Evans; Mr. Vardaman; Mr. Clayton.
Standard for Classification of Reserve Cities.
By unanimous vote, the following standard for classification of reserve
cities was adopted, for the reasons set forth in the statement, to become
effective March 1, 1948:
For a considerable period of time, the Board of Governers of the Federal
Reserve System has been considering the adoption of a standard or basis for
the classification of central reserve and reserve cities in order to enable it properly to discharge its responsibilities under the provision of the Federal Reserve
Act which empowers the Board to add to or reclassify such cities or to terminate
their designation as such.
For many years prior to the enactment of the Federal Reserve Act in 1913,
national banks had been permitted by law to carry a part of their reserves
with other national banks in cities known as central reserve or reserve cities,
and accordingly national banks in such cities were required to maintain higher
reserves against their deposits. The Federal Reserve Act, following the National Bank Act in this respect, provided for differentials in the reserve requirements of member banks of the Federal Reserve System according to their location in central reserve cities, reserve cities, or elsewhere. Central reserve and
reserve cities existing in 1913 were continued as such by the Federal Reserve
Act, but the Board of Governors was given authority to make changes in the
designations of such cities. From time to time since the enactment of the
Federal Reserve Act, the Board has designated cities as reserve cities and terminated the reserve city status of other cities. Such determinations by the Board
have been made on the basis of the facts of particular cases without the consistent application of any uniform guiding principle; and consequently certain
anomalous and illogical situations have developed in the classifications of
reserve cities. The Board, therefore, concluded that the existing classifications
are unsatisfactory and that there is a need for the establishment of a logical,
fair, and appropriate basis for the designation and termination of reserve cities.
On October 24, 1947, the Board, acting in accordance with Section 4 of the
Administrative Procedure Act and Section 2 of the Rules of Procedure of the
Board of Governors of the Federal Reserve System, published in the Federal
Register notice of a proposed action with respect to the classification of cities
as reserve and central reserve cities and the termination of the designation of
certain cities as reserve cities. This notice stated that interested persons might
submit to the Board written data, views, and arguments with respect to the
proposal, and accordingly a number of banks submitted letters expressing their
views and comments. In addition, representatives of banks in a number of the
cities whose status would be affected by the proposal appeared before the Board
and made an oral presentation of their views.
After due and careful consideration of all* relevant matter thus presented
to the Board with respect to the proposal, the Board has concluded that a
logical, fair, and appropriate standard for determining the designation and
termination of reserve cities is one that is determined by the ratio of interbank
demand deposits held by member banks in each city to the aggregate amount of
interbank demand deposits held by all member banks of the Federal Reserve
System, or by such a ratio considered in connection with the ratio of interbank

ANNUAL REPORT OF BOARD OF GOVERNORS

demand deposits held by member banks in each city to the aggregate amount
of all demand deposits held by the member banks in such city; and that such
standard for the designation and termination of reserve cities should be reapplied at three-year intervals.
In opposition to the discontinuance of certain cities as reserve cities under
the Board's proposal it was contended by the representatives of member banks
in such cities that such discontinuance would adversely affect the business of
banks in those cities, would detract from their prestige, would not take into
account their geographical situation, or would . deprive them of certain advantages with respect to deposits under applicable State law. The Board
feels that such objections, while they may be important to the banks involved,
are not to be regarded as controlling factors in determining whether cities
should be classed as reserve cities in view of the purpose of such classifications.
However, the Board recognizes the fact that certain cities now classified as
reserve cities have held this status for many years, in some instances since before the enactment of the Federal Reserve Act, and, since the continuance of
such cities as reserve cities would mean that member banks therein must carry
higher reserves than would be required of them if such cities were discontinued
as reserve cities in accordance with the standard indicated above, the Board is
willing that such cities be continued as reserve cities if all the member banks
in such cities request that this be done.
In accordance with the conclusions reached above and pursuant to authority
conferred upon it by Section n (e) of the Federal Reserve Act and other provisions of that Act, the Board hereby adopts the rule set forth below, to become
effective March i, 1948:
Classification of Central Reserve and Reserve Cities.
(a) Central reserve cities. The cities of New York and Chicago are hereby
classified (and continued) as central reserve cities.
(b) Reserve cities. (1) The city of Washington, D. C , and every city
except New York and Chicago in which there is situated a Federal Reserve
Bank or a branch of a Federal Reserve Bank are hereby classified (and continued) as reserve cities.
(2) The following are also classified as reserve cities: (A) Every city in
which, on the dates of official call reports of condition in the two years ended
June 30, 1947, member banks of the Federal Reserve System, exclusive of their
offices in other cities, held an aggregate amount of demand deposits owing to
banks equal, on the average, to one-third of one per cent or more of the aggregate amount of demand deposits owing to banks by all member banks of the
Federal Reserve System; and (B) Every city in which, on the dates of official call reports of condition in the two years ended June 30, 1947, member
banks of the Federal Reserve System, exclusive of their offices in other cities,
held an aggregate amount of demand deposits owing to banks equal, on the
average, to one-fourth of one per cent or more of the aggregate amount of
demand deposits owing to banks by all member banks of the Federal Reserve
System and also equal, on the average, to 33V3 P e r c e n t or more of the aggregate amount of all demand deposits held by the member banks in such city.
On the basis of (A) and (B) above, the following cities, in addition to the
reserve cities classified as such under paragraph (1) above, are hereby classified
(and continued) as reserve cities:
Columbus, Ohio; Des Moines, Iowa; Indianapolis, Indiana; Milwaukee, Wis

FEDERAL RESERVE SYSTEM

consin; St. Paul, Minnesota; Lincoln, Nebraska; Tulsa, Oklahoma; Wichita,
Kansas; Fort Worth, Texas; Cedar Rapids, Iowa; and Sioux City, Iowa; the
following city is hereby added and is hereby classified as a reserve city: National City (National Stock Yards), Illinois; and the designation of the following cities as reserve cities is hereby terminated (unless the present classification of such cities is continued in accordance with paragraph (3) below) :
Toledo, Ohio; Dubuque, Iowa; Grand Rapids, Michigan; Peoria, Illinois;
Kansas City, Kansas; Pueblo, Colorado; St. Joseph, Missouri; Topeka,
Kansas; Galveston, Texas; Waco, Texas; Ogden, Utah; and Spokane,
Washington.
(3) The Board of Governors of the Federal Reserve System, prior to
March 1, 1948, will also designate (and continue) as a reserve city any city
now classified as a reserve city (although not within the scope of paragraphs
(1) or (2) above) if a written request for the continuance of such city as a
reserve city is received by the Federal Reserve Bank of the district in which
the city is located on or before February 16, 1948 from every member bank
which has its head office or a branch in such city (exclusive of any member
bank in an outlying district of such city permitted by the Board of Governors
to maintain reduced reserves) together with a certified copy of a resolution of
the board of directors of such member bank duly authorizing such request.
(4) Effective as of March 1 of each third year after March 1, 1948, the
Board of Governors (a) will continue as reserve cities or designate as additional reserve cities all cities then falling within the scope of paragraph (1)
above and all cities which then meet the standard prescribed in paragraph (2)
above based upon official call reports of condition in the two-year period ending on June 30 of the year preceding such third year; and (b) will terminate
the designation as reserve cities of all other cities, except that the Board will
continue the designation as a reserve city of any city which then has the designation of a reserve city and does not then fall within the scope of paragraph (1)
or of paragraph (2) based upon the new two-year period, if a request for the
continuance of such designation is made by every member bank (as specified in
paragraph (3) above) in such city and, together with a certified copy of a
resolution of the bank's board of directors authorizing such request, is received
by the Federal Reserve Bank of the district not later than the 15th day of
February of such third year.

RECORD OF POLICY ACTIONS
FEDERAL OPEN MARKET COMMITTEE

MARCH I,

1947

Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman;
Mr. Clayton; Mr. Davis; Mr. Draper; Mr. Evans; Mr. Gidney; Mr.
Peyton; Mr. Vardaman; Mr. Whittemore.
(A meeting of the Federal Open Market Committee—the last before the
members of the Committee took office who were elected as representatives
of the Federal Reserve Banks for terms of one year beginning March 1, 1947—
was held on February 27 for the purpose of ratifying actions which had been
taken under existing policies and of discussing developments in the international and domestic monetary and credit situation. At that meeting no policy
actions were taken.)
1. Authority to Effect Transactions in System Account.

Upon motion duly made and seconded, and by unanimous vote, the
following direction to the executive committee was approved:
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 an orderly market in Treasury securities and
a general level of prices and yields of Government securities which will
support the Treasury issuing rates of % per cent for one-year certificates
and 2 ^ per cent for 27-year bonds restricted as to ownership; provided
that the aggregate amount of securities held in the account at the close
of this date [other than (1) bills purchased outright in the market on a
discount basis at the rate of Y& per cent per annum and bills redeemed at
maturity and (2) special short-term certificates of indebtedness purchased
from time to time for the temporary accommodation of the Treasury]
shall not be increased or decreased by more than 1.5 billion dollars.
That the executive committee be further directed, until otherwise
directed by the Federal Open Market Committee, to arrange for the
purchase for the System open market account direct from the Treasury
of such amounts of special short-term certificates of indebtedness as may
be necessary from time to time for the temporary accommodation of the
Treasury; provided that the amount of such certificates held in the account at any one time shall not exceed 1.5 billion dollars.

ANNUAL REPORT OF BOARD OF GOVERNORS

be paid. These stock subscriptions amounted to $139,000,000 and reduced the surplus of the Federal Reserve Banks to an equivalent figure,
or considerably less than one-half of their subscribed capital. Congress,
therefore, eliminated the franchise tax in order to permit the Federal
Reserve Banks to restore their surplus accounts from future earnings.
"Net earnings for the next ten years were relatively small, and at the
end of 1944 t n e combined surplus accounts of the Federal Reserve Banks
were less than 75 per cent of their subscribed capital. During the next
two years, however, net earnings increased substantially, due primarily
to large holdings of Government securities accumulated through open
market operations. This made possible transfers to surplus accounts
which increased the combined surplus of the Federal Reserve Banks to
$439,823,000 at the end of 1946, as compared with subscribed capital of
$373,66o,ooo.
"Under the circumstances, the Board concluded that it would be appropriate for the Federal Reserve Banks to pay to the Treasury the bulk
of their net earnings after providing for necessary expenses and the
statutory dividend. In effect, this will involve paying currently to the
Treasury funds which, under existing law, would otherwise come to it
only in the event of liquidation of the Federal Reserve Banks. The Federal Reserve Act still provides that, in case of liquidation of the Federal
Reserve Banks, any surplus remaining after the payment of all claims shall
be paid to the Treasury. It is expected that the present payments will be
made at quarterly intervals. By invoking its authority under Section 16
of the Federal Reserve Act, the Board is able to accomplish the same
results as were accomplished by the payment of a franchise tax, i. e., the
transfer of excess earnings to the Government. The payments can thus
be reflected in current revenues and taken into account in the Government's budget without further legislation.
"In the event of restoration of a franchise tax by the Congress, the
Board would, of course, withdraw the requirement that Federal Reserve
Banks pay interest on Federal Reserve notes, as there would be no justification for utilizing both means of accomplishing the same purpose—
namely, payment of excess earnings of the Federal Reserve Banks to the
Treasury.
"In his Budget Message for 1948 the President recommended that
Congress authorize the Federal Deposit Insurance Corporation to repay
the $139,000,000 of capital furnished by the Federal Reserve Banks, and
accepted the proposal of the Board of Governors that Congress at the
same time authorize the payment of this sum to the Treasury instead of to
the Reserve Banks. Similarly, the President in his Budget Message concurred in the Board's further recommendation that Congress release to
the Treasury general fund approximately $139,000,000 earmarked for
payments to the Reserve Banks to enable them to make loans to industry
under Section 13b of the Federal Reserve Act. Legislation has been introduced in Congress to repeal Section 13b and to substitute therefor authority for the Reserve Banks, upon request of any commercial bank, to
guarantee in part loans made by such bank to business enterprises. If this
legislation be enacted, the Federal Reserve Banks would rely upon their
own surplus funds for this purpose, without resort to Government funds."

FEDERAL RESERVE SYSTEM

When this meeting was held the members of the Committee had the benefit
of recent discussions of the members of the executive committee, and of representatives of the full Committee with representatives of the Treasury, with
respect to the changes that might be made in Treasury financing, debt management, and System credit policies to adjust them to changing conditions.
Since the previous meeting there had been further discussions of the desirability
of the termination by the Federal Open Market Committee of the y% per cent
rate at which the Federal Reserve Banks stood ready to purchase bills, a
change in procedure to provide for the direct replacement of maturing Treasury bills held by the Federal Reserve Banks, an increase in the rate at which
bills were issued by the Treasury, and steps that might be taken to return to
the Treasury the increased earnings of the Federal Reserve Banks which would
result from an increase in the bill rate. Consideration was also given to the
means available to combat the resumption, when the current debt retirement
program came to an end, of pressure on the long-term rate which would result
from sales by banks of short-term Treasury issues and the purchase of longterms for the purpose of improving earnings.
The Treasury debt retirement program, which was designed to keep the
reserve position of member banks under pressure, had been continued and, with
the announced retirement of 2.9 billion dollars of securities maturing in March
1947, would result in cash payments on maturing securities of 4.2 billion in
the first three months of 1947 and of 27.4 billion since March 1, 1946, with a
net reduction in the debt of 21 billion dollars during the 13-month period.
Treasury receipts had been higher and expenditures lower than anticipated
and it appeared that additional amounts of Government securities could be
retired during the remaining months of the fiscal year.
It was the view of the Committee that the posted rate of Y% per cent for the
purchase and sale of Treasury bills by the Federal Reserve Banks no longer
served its original purpose and should be discontinued. It was felt that action
should not be taken, however, until the question of future policy with respect
to Treasury bills had been more fully established. It was agreed, therefore,
that action to terminate the rate might be deferred temporarily.
For the reasons which prompted the open market policy actions of the Committee in 1946 and because of the continued inflationary conditions which are
reviewed in the Annual Report of the Board of Governors of which this record
is a part, the Committee continued to be of the opinion that monetary and
credit policy should be directed, as a part of the program of the Government
for combating inflation, toward restraining the further expansion of bank
credit without increasing the cost of carrying the Government debt. The
above direction was issued in order to continue the existing open market policies of the System, which were designed to keep pressure on the reserves of
member banks while, at the same time, maintaining orderly conditions in the
Government securities market. This involved the continuation of a general
level of prices and yields of Government securities which would support the
Treasury issuing rates on Treasury certificates and long-term Treasury bonds.
The direction set forth above was in the same form as the direction issued
at the previous meeting of the committee on October 3, 1946, except that the
limitation contained in the first paragraph on the amount by which the total
securities held in the account could be changed was reduced from 2 billion
dollars to 1.5 billion. This change was made for the reason that it was anticipated that smaller Treasury operations in connection with the retirement of
public debt would make the larger authority unnecessary.

ANNUAL REPORT OF BOARD OF GOVERNORS
J U N E 5,

1947

Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman;
Mr. Clayton; Mr. Davis; Mr. Draper; Mr. Evans; Mr. Gidney; Mr.
Peyton; Mr. Szymczak; Mr. Whittemore.
1. Increase in Authority to Effect Transactions in System Account.

Upon motion duly made and seconded, and by unanimous vote:
The action of the members of the Federal Open Market Committee on
April 2, 1947, pursuant to a recommendation of the executive committee,
increasing from 1.5 billion to 2 billion dollars the limitation on the
authority of the executive committee with respect to increasing or decreasing the total amount of securities in the System account, contained in the
first paragraph of the direction issued at the meeting on March 1, 1947,
was approved, ratified, and confirmed.
Under the direction issued at the last meeting of the Federal Open Market
Committee, the total amount of securities held in the System account had been
reduced on April 1 by more than 1.1 billion dollars. At a meeting of the executive committee of the Federal Open Market Committee on the latter date it appeared that further contemplated retirement of the Government debt might
result in further substantial reductions in System account holdings of securities. The executive committee recommended, therefore, and the members of
the Committee approved, the increase of 500 million dollars referred to above.
2. Tender of Maturing Treasury Bills for New Issues.
Upon motion duly made and seconded, and by unanimous vote:
The actions of the members of the Federal Open Market Committee on
April 24, 1947, (a) authorizing each Federal Reserve Bank to place
weekly tenders for new Treasury bills in an amount not exceeding the
amount of weekly maturities in the option account and authorizing the
Federal Reserve Bank of New York to place tenders for new Treasury
bills in an amount not exceeding the amount of weekly maturities in the
System open market account, and (b) amending the direction issued by
the Committee on March 1, 1945, with respect to the purchase of Treasury bills to read as follows, were approved, ratified, and confirmed.
"Until otherwise directed by the Federal Open Market Committee, the
12 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 to be upon the condition that the Federal
Reserve Bank, upon the request of the seller on or before the last business
day preceding the closing day on which the Treasury will accept tenders
of the bills for new Treasury bills, will sell to him Treasury bills of like
amount and maturity at the same rate of discount. All bills purchased
under this direction are to be held by the purchasing Federal Reserve
Bank in its own account and prompt reports of all transactions in Treasury bills are to be made to the Manager of the System Open Market
Account."
Following the meeting of the Federal Open Market Committee on March 1,
1947, there were further discussions with representatives of the Treasury of a

FEDERAL RESERVE SYSTEM

program looking toward the elimination of certain wartime financing methods
and controls which were considered to be no longer desirable or necessary.
These discussions included ( i ) the establishment by the BoaTd of Governors
of an interest charge on Federal Reserve notes, which would have the effect
of transferring surplus earnings of the Federal Reserve Banks to the Treasury,
(2) permission to bidders for future issues of Treasury bills to make payment
in cash or by the surrender of maturing bills, and (3) the elimination of the
posted % per cent buying rate and repurchase option on Treasury bills. On
April 24 the first two of these steps were announced and put into effect.
The above stated actions on April 24 by the members of the Federal Open
Market Committee were for the purpose of adjusting open market procedure
to the changed arrangement with respect to Treasury bills. The direction of
March 1, 1945, provided that the original seller of the bills could repurchase
bills at his request at any time before their maturity. The revised direction set
forth above required that the request to repurchase be made on or before the
last business day preceding the closing day on which the Treasury would accept
tenders of bills for new Treasury bills. This change, however, applied only to
bills issued on or after April 25, 1947.
On May 5, 1947, the members of the Federal Open Market Committee
approved a procedure which provided for the transfer each week of maturing
bills held by the individual Reserve Banks to the System account and for a
single tender of all maturing bills in payment for new bills to be held in the
System account. This action was for the purpose of improving and simplifying the handling of tenders of maturing bills for new bills and involved no
question of open market policy.
3. Authority to Effect Transactions in System Account.
Upon motion duly made and seconded, and by unanimous vote, the
following direction to the executive committee was approved:
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 an orderly market in Treasury securities and a general level of prices and yields of Government securities which
will support the Treasury issuing rates of % per cent for one-year certificates and 2^/2 per cent for 27-year bonds restricted as to ownership;
provided that the aggregate amount of securities held in the account at
the close of this date [other than (1) maturing bills transferred to the
System account from the option accounts of the Federal Reserve Banks
pursuant to the direction issued by the Federal Open Market Committee
on May 5, 1947, bills purchased outright in the market on a discount
basis at the rate of Y% per cent per annum, bills redeemed or exchanged
at maturity, and bills taken in exchange for maturing bills, and (2) special short-term certificates of indebtedness purchased from time to time
for the temporary accommodation of the Treasury] shall not be increased
or decreased by more than 2 billion dollars.
That the executive committee be further directed, until otherwise
directed by the Federal Open Market Committee, to arrange for the pur

ANNUAL REPORT OF BOARD OF GOVERNORS

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 1.5 billion dollars.
Following the actions announced on April 24, 1947, there were further discussions with representatives of the Treasury of the proposed elimination of
the ^8 per cent posted rate and repurchase option on Treasury bills, but no
decision as to the timing of this action was reached. There were also discussions of questions relating to Treasury financing, including an increase in the
rate on Treasury certificates, and the issuance by the Treasury of a long-term
Series G type security. The retirement of Government debt, for anti-inflationary purposes, had been continued and while the steps that had been taken
by the System and the Treasury apparently had stopped temporarily the decline in yields on long-term securities resulting from "playing the pattern of
rates," it was expected by the Committee that the long-term rate would continue to be under pressure. In that event, the Committee would be faced with
the alternative of allowing the long-term rate to decline further or of permitting the short-term rate to rise to a point where there would be no incentive for banks to continue to "play the pattern of rates" with the resulting
increase in member bank reserves.
The Committee therefore decided that, until a decision was reached on
action to discontinue the posted rate on Treasury bills and to increase the
short-term rate, no change should be made in existing open market policies,
and that the direction issued by the Federal Open Market Committee on
March 1, 1947, and amended on April 2, 1947, with respect to the purchase
of Treasury bills, should be changed only to the extent necessary to bring the
direction into conformity with the procedure approved on May 5, 1947, for
transferring maturing bills held by the Federal Reserve Banks to the System
account and the exchange of bills in the System account for new bills.
OCTOBER 6-7,

1947

Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman;
Mr. Clayton; Mr. Davis; Mr. Draper; Mr. Evans; Mr. Gidney; Mr.
Peyton; Mr. Szymczak; Mr. Vardaman; Mr. Whittemore.
1. Elimination of Posted Rate on Treasury Bills.
Upon motion duly made and seconded, and by unanimous vote:
The action of the members of the Federal Open Market Committee
on July 2, 1947, discontinuing the posted rate on Treasury bills issued
on or after July 10, 1947, in accordance with the following amended
direction to the Federal Reserve Banks, was approved, ratified, and
confirmed.
"Until otherwise directed by the Federal Open Market Committee,
the 12 Federal Reserve Banks are directed to purchase all Treasury bills
issued prior to July 10, 1947, that may be offered to such Banks on a discount basis at the rate of % per cent per annum, any such purchases to be
upon the condition that the Federal Reserve Bank, upon the request of
the seller on or before the last business day preceding the closing day on

FEDERAL RESERVE SYSTEM

which the Treasury will accept tenders of the bills for new Treasury bills,
will sell to him Treasury bills of like amount and maturity at the same
rate of discount. All bills purchased under this direction are to be held
by the purchasing Federal Reserve Bank in its own account and prompt
reports of all transactions in Treasury bills are to be made to the Manager
of the System Open Market Account."
Following the meeting of the Federal Open Market Committee on June 5,
1947, there were further discussions with the Treasury of the proposed discontinuance of the posted % per cent rate on Treasury bills and agreement
was-reached that the rate should be terminated as to all bills issued on or
after July 10, 1947. The above direction was issued to accomplish that result.
The reasons for the action are set forth in the following statement released to
the press for publication in the morning papers of July 3, 1947:
"The Federal Open Market Committee of the Federal Reserve System
has directed the Federal Reserve Banks to terminate the policy of buying
all Treasury bills offered to them at a fixed rate of y% per cent per annum
and to terminate the repurchase option privilege on Treasury bills. The
new policy will apply to bills issued on or after July 10, 1947. Existing
policy will continue to apply to bills issued prior to that date.
"The above action was taken by the Committee after consultation with
the Secretary of the Treasury.
"The so-called posted rate on Treasury bills was a wartime measure
adopted in 1942 to facilitate war financing and to stabilize the market
for Government securities. It was designed primarily to encourage banks
to make fuller use of their excess reserves and thus bring about a wider
distribution of Treasury bills. Under current peacetime conditions these
arrangements no longer serve their original purpose and tend to distort
conditions in the money market and the securities market. Certificates of
indebtedness, which bear a higher rate than Treasury bills, have largely
replaced bills in the market, not only as a medium for the investment of
short-term funds but also as a means by which banks adjust their reserve
positions.
"Increased amounts of Treasury bills have been sold to the Federal
Reserve Banks by the market, and bills have gradually ceased to be a
market instrument. Currently, only about 1.5 billion dollars of the nearly
16 billion total of Treasury bills outstanding are held outside the Federal
Reserve Banks. The Treasury bill rate has thus been eliminated as a
factor in the money market. The need for large-scale borrowing of new
money by the Treasury ceased with the completion of the Victory Loan
Drive and since that time the public debt has been reduced substantially.
Consequently there is no reason for continuing this wartime mechanism.
On the contrary, its elimination will serve a useful purpose in restoring
the bill as a market instrument and giving added flexibility to the Treasury's debt management program.
"Under the new policy the Treasury bill rate will be expected to find
its level in the market in proper relation to the yields on certificates of
indebtedness. The Federal Reserve System will continue to purchase
and hold Treasury bills as well as other Government securities in amounts
deemed necessary in the maintenance of an orderly Government security
market and the discharge of the System's responsibility with regard to the
general credit situation of the country.

ANNUAL REPORT OF BOARD OF GOVERNORS

"As a result of the action taken by the Board of Governors of the
Federal Reserve System in April to transfer to the Treasury the excess
earnings of the Federal Reserve Banks, the Reserve Banks are now paying
into the Treasury approximately 90 per cent of their net earnings after
dividends. Since most of the Treasury bills now outstanding are held
by the Federal Reserve Banks, whatever increase in interest cost to the
Treasury results from the termination of the posted buying rate and repurchase option will be largely offset by increased Reserve Bank payments to the Treasury."
2. Revised Authority to Effect Transactions in the System Account.
Upon motion duly made and seconded, and by unanimous vote:
A change made by the members of the Federal Open Market Committee on August 8, 1947, in the direction issued to the executive committee
on June 5, 1947, so as to provide for supporting the current issuing rate
on Treasury certificates instead of the % rate previously prevailing, was
approved, ratified, and confirmed. The direction as revised read as
follows:
"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 an orderly market in Treasury securities and
a general level of prices and yields of Government securities which will
support the Treasury current issuing rate for certificates and 2j4 per
cent for 27-year bonds restricted as to ownership; provided that the
aggregate amount of securities held in the account at the close of this
date [other than (1) maturing bills transferred to the System account
from the option accounts of the Federal Reserve Banks pursuant to the
direction issued by the Federal Open Market Committee on May 5, 1947,
bills purchased outright in the market on a discount basis at the rate of
Y& per cent per annum, bills redeemed or exchanged at maturity, and bills
taken in exchange for maturing bills, and (2) special short-term certificates of indebtedness purchased from time to time for the temporary
accommodation of the Treasury] shall not be increased or decreased by
more than 2 billion dollars.
"The executive committee be further directed, until otherwise directed
by the Federal Open Market Committee, to arrange for the purchase for
the System open market account direct from the Treasury of such amounts
of special short-term certificates of indebtedness as may be necessary from
time to time for the temporary accommodation of the Treasury; provided
that the amount of such certificates held in the account at any one time
shall not exceed 1.5 billion dollars."
As the first step in a program which contemplated an increase to one per cent
in the issuing rate on Treasury certificates, the Treasury in July announced
that the August 1 maturity of certificates would be refunded into an 11-month
% per cent certificate. The direction issued by the Federal Open Market
Committee on June 5, 1947, provided for support of an issuing rate of Y% per

FEDERAL RESERVE SYSTEM

cent for one-year certificates, and the anticipated issuance by the Treasury
of certificates at a higher rate made necessary the approval of the change in the
above direction, which required that the current issuing rate on Treasury certificates be supported instead of the % per cent rate as previously.
3, Increase in Authority to Effect Transactions in System Account.
Upon motion duly made and seconded, and by unanimous vote:
The action of the members of the Federal Open Market Committee on
September 4, 1947, increasing from 2 billion dollars to 2.75 billion the
authority of the executive committee contained in the first paragraph of
the direction issued at the meeting of the full Committee on June 5 and
amended on August 8, 1947, was approved, ratified, and confirmed.
When the action was taken on September 4, the authority granted to the
executive committee had been used to the extent of increasing the amount of
securities held in the System account by 1.8 billion dollars. In view of the
program for refunding Treasury securities maturing on September 1, September 15, and October 1, and of possible open market transactions over the
tax payment period, it appeared that the executive committee would need
further authority to increase the amount of securities in the System account to
carry out the existing policies. The increase in the authority was granted for
that reason.
4. Authority to Effect Transactions in System Account.
Upon motion duly made and seconded, and by unanimous vote, the
following direction to the executive committee was approved:
The executive committee is 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 light of the general credit situation of
the country, for the practical administration of the account, for the
maintenance of stable and orderly conditions in the Government security
market, and for the purpose of relating the supply of funds in the market
more closely to the needs of commerce and business; provided that the
aggregate amount of securities held in the account at the close of this date
other than special short-term certificates of indebtedness purchased from
time to time for the temporary accommodation of the Treasury shall not
be increased or decreased by more than 2 billion dollars.
The executive committee is further directed, until otherwise directed by
the Federal Open Market Committee, to arrange for the purchase for
the System open market account direct from the Treasury of such amounts
of special short-term certificates of indebtedness as may be necessary from
time to time for the temporary accommodation of the Treasury; provided
that the total amount of such certificates held in the account at any one
time shall not exceed 1.5 billion dollars.
In the period since the previous meeting of the Committee conditions
affecting the money market had changed considerably. Inflationary pressures
had increased and there were indications that they would continue to be strong
in the months immediately ahead. Conditions were favorable to further credit

ANNUAL REPORT OF BOARD OF GOVERNORS

growth, bank loans were expanding rapidly and the demand for capital funds
was strong, and there were further substantial gold imports. Because of the
policy of supporting the Government securities market, which the Committee
felt was a sound policy and should be continued, banks had ready access to
additional reserves by the sale of securities to the System account. There was
no prospect of the accumulation of substantial Treasury cash balances that
could be used for the retirement of Government debt at this time, and therefore, the restraining influence of such accumulation could not be imposed.
It was also recognized that the strongest forces working toward inflation lay
outside the field of monetary policy and debt management and that measures
available to the System and the Treasury could have only limited effectiveness.
It was the view of the Committee that, since further credit expansion would
add to the inflationary pressures, the situation was such as to justify the
Treasury and the Federal Reserve System taking such actions as were available
to them to eliminate or moderate excessive credit expansion. While continuing
the existing policy of maintaining orderly conditions in the Government
security market, it was agreed that with a view to preventing to the extent
possible further expansion of bank credit, there should be action by the appropriate authorities to carry out an anti-inflationary program which would contemplate ( i ) continued use of Treasury balances when available to retire
Government debt, particularly bills and certificates held by the Federal
Reserve Banks, (2) a further increase in the short-term rate on Government
securities to 1]/% per cent, (3) an increase in the discount rates at the Federal
Reserve Banks in keeping with the increase in the rate on short-term Government securities, (4) an increase in reserve requirements of member banks in
central reserve cities, (5) a statement by the Board of Governors emphasizing, in connection with the termination of Regulation W , the dangers of more
liberal instalment credit terms and a further growth of outstanding consumer
credit, (6) a joint statement by the Federal and State bank supervisory agencies which would point out the dangers of further overall expansion of bank
credit through the medium of bank loans, and (7) a change in the policy with
respect to the refunding of maturing savings bonds to encourage the reinvestment of proceeds of maturing bonds in new issues of savings bonds.
The language in the first paragraph of the direction issued by the Committee, setting forth the considerations governing transactions for the System
account, was changed from the direction previously in effect for the purpose
of relating it more closely to the current policies of the Committee in the light
of existing monetary and credit conditions.
DECEMBER 9,

1947

Members present: Mr. Eccles, Chairman; Mr. Sproul, Vice Chairman;
Mr. Clayton; Mr. Draper; Mr. Evans; Mr. Gidney; Mr. Gilbert (alternate for Mr. Davis); Mr. Peyton; Mr. Szymczak; Mr. Vardaman, Mr.
Whittemore.
1. Authority to Effect Transactions in System Account.
Upon motion duly made and seconded, and by unanimous vote, the
following direction to the executive committee was approved:
The executive committee is directed, until otherwise directed by the
Federal Open Market Committee, to arrange for such transactions for

FEDERAL RESERVE SYSTEM

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 light of the general credit situation
of the country, for the practical administration of the account, for the
maintenance of stable and orderly conditions in the Government security
market, and for the purpose of relating the supply of funds in the market
more closely to the needs of commerce and business; provided that the
aggregate amount of securities held in the account at the close of this
date other than special short-term certificates of indebtedness purchased
from time to time for the temporary accommodation of the Treasury shall
not be increased or decreased by more than 3 billion dollars.
The executive committee is further directed, until otherwise directed
by the Federal Open Market Committee, to arrange for the purchase for
the System open market account direct from the Treasury of such
amounts of special short-term certificates of indebtedness as may be
necessary from time to time for the temporary accommodation of the
Treasury; provided that the total amount of such certificates held in the
account at any one time shall not exceed 1.5 billion dollars.
The above direction, which was in the same form as the direction issued at
the meeting on October 7, 1947, was adopted for substantially the same reasons as the earlier direction. Inflationary forces had continued strong, substantial amounts of long-term Government securities were being sold to the
System to meet the demands for funds, and it was felt that the existing open
market policy should be continued as a means, coupled with other actions by
the System and with debt-management policies of the Treasury, of.keeping
pressure on the market and thereby restraining the expansion of bank credit.
It was understood that, in carrying out the direction, the executive committee would continue the existing prices at which Government securities were
being supported until after the Treasury January refunding had been completed, at which time prices of bonds should be permitted to decline rapidly,
if the market did not support itself, to a level not more than 100^2 and not
less than par on the longest restricted 2^2 per cent issue and to not less than
par on 1% per cent one-year certificates. It was also understood that if,
before the completion of the January refunding, market selling should increase substantially, the executive committee would be authorized to permit
prices to decline to the level stated above as rapidly as was consistent with the
maintenance of orderly market conditions.
The limitation contained in the first paragraph of the direction was increased from 2 billion to 3 billion dollars because it was felt that it would be
desirable for the executive committee to have the enlarged authority, in order
to be in position to meet adequately the conditions that were likely to prevail
in connection with the Treasury's refunding operations and tax collections
before another meeting of the Committee.

STATEMENT OF FEDERAL ADVISORY COUNCIL
ON BANK CREDIT, CONSUMER CREDIT CONTROLS,
AND BANK RESERVES

NOVEMBER 18,

1947

The Board of Governors of the Federal Reserve System submitted the following question to the Federal Advisory Council:
"The Board is very concerned about the rapid expansion of bank credit.
The Board, therefore, desires to have the views of the Council as to the
further steps that might be taken to correct this serious situation through
monetary or fiscal means."
The Federal Advisory Council gave the Board of Governors the following
statement in answer to the foregoing question:
The Council has reviewed the question of the volume of bank credit both
in the aggregate and as shown in the banks with which they are familiar.
We do not know what "serious situation" in bank credit the Board has in
mind. For the past year the total volume of bank credit (i.e. the available
amount of bank money) as measured by adjusted demand deposits has shown
only a moderate increase. As bank loans have increased, the banks have decreased their investments.
We find nothing in bank loans themselves to suggest that growth of loans
has been an active inflationary factor. It rather appears to have been a reflection of the very high level of business activity and high prices.
To a large extent growth of loans is a direct result of Government policies.
For example, an increase of nearly 4 billion dollars in the real estate loans by
insured banks since the end of the war reflects directly the purchase of FHA
and GI mortgages in the housing program.
The Reconstruction Finance Corporation is encouraging bank lending by
guaranteeing risky loans.
Commercial loans are influenced by high prices and active movement of
agricultural and manufactured products for the foreign aid program.
High wages and high costs of materials have meant that business needed
more money to take care of its customers.
There is nothing in the figures or our experience to suggest that there exists
any substantial lending for speculation or for unnecessary uses. Loans for
carrying securities are much reduced.
In this period the Government, through various agencies, has been making
loans that the banks refrained from making because of their speculative nature.
The Reserve System itself is asking for more power to guarantee loans on the
presumption that bank lending is too cautious.
The causes of our present inflation are not in current banking policies but
are found in the great wartime expansion of buying power together with
unusual events and public policies since that time. Among recent inflationary
causes may be listed the following:
98

FEDERAL RESERVE SYSTEM

The foreign aid program.
A cycle of wage increases in excess of increases in either the cost of
living or productivity.
A shorter working week.
A short corn crop.
Veterans' bonuses and relief payments.
Agricultural price subsidies.
United States Government spending of 36 billion dollars a year.
Housing subsidies.
In the face of these developments a substantial increase in bank loans was
inevitable and the banks have shown restraint. The dangers in the present
situation are understood by bankers and there is hardly a bank in the country
which has not been warning its customers against overexpansion. The loans
being made are mostly for direct production.
The first thing to do is to reconsider Government policies which are inflationary and especially excessive Government spending and subsidies.
We recognize that even though the causes of inflation are largely outside
the sphere of monetary policy, the Reserve System has a special responsibility
for bank credit and in this situation should take all reasonable care to assure
conservative credit policies.
In this special area we suggest that the System and the Treasury already
have large powers, without new legislation, to place credit under broad
restraints.
One of these powers is the discount rate which is a recognized instrument
for serving notice on the public of the need for restraint in the use of credit.
Similarly by open market operations the System can control the reserves of
the member banks and limit their lending power.
The Board also still has the power to raise reserve requirements in central
reserve cities and so tighten money.
The Treasury by the pricing of new issues and the handling of its balances
has great influence on the rate and volume of money.
In the past year the System and the Treasury have used these powers effectively.
The money markets and the policies of business men are today so sensitive
to action of these sorts which the Reserve System and the Treasury take that
present powers are ample to place all restraints on credit expansion which the
System and the Treasury may consider necessary.
The Council wishes it clearly understood that it shares the apprehension of
the Board of Governors with respect to inflation dangers. It does, however,
most strenuously object to the singling out of the increase in bank loans as a
principal contributing factor; and it has attempted to point out above, the
vastly more important elements of inflation—of which bank loans are a
barometer.
This is not to say that there have not been unwise bank loans in some cases.
After all, banking is a form of human endeavor, operated by human beings.
It would be amazing if there were not some errors in judgment. But we
submit that, on the record, there is no evidence of bank credit expansion beyond
that which could be expected under all the circumstances. There is every

IOO

ANNUAL REPORT OF BOARD OF GOVERNORS

evidence that loans are today doing a wholesome and constructive work in their
intended place in the economy.
The Council has studied the increase in consumer credit in relation to the
termination of Regulation W. While consumer credit has increased substantially, much of this reflects the availability of automobiles and household
appliances. There is so far too little experience on which to judge the effect
of the termination of Regulation W. The American Bankers Association is
undertaking with considerable success to ensure maintenance by banks of sound
lending standards. This effort towards voluntary cooperation seems to the
Council the sensible and the democratic method of dealing with this problem,
both with respect to the banks and other lenders. The Council is opposed to
legislation giving the Board new regulatory powers in this matter.
Suggestions in the President's message to Congress with respect to credit
control indicate the possibility that the Federal Reserve Board may present to
Congress the proposal in its 1945 Annual Report for a required bank reserve
of short-term Government securities. The Council therefore wishes to state
its views on this proposal.
The proposal as we understand it is that banks should be required by law
to maintain, in addition to cash reserves, reserves of short-term Government
securities in a percentage relationship to deposits, to be fixed from time to time
by the Federal Reserve Board.
The Council is unanimously opposed to this scheme for the following
reasons:
(1) It is impractical. The operations of banks are so different, reflecting
as they do adaptation to the varying needs of their communities and customers,
that no percentage of short-term Government security holdings can be applied
fairly or practically to all banks. Any percentage high enough to offer any
measure of restraint on a substantial number of banks will have disastrous
effects on many other banks, compelling them to liquidate sound and necessary
loans and thus actually check production. The very banks which have served
the business in their communities most aggressively and helpfully would be
hardest hit.
(2) Such a plan would substitute the edicts of a board in Washington for
the judgments of the boards of directors of 15,000 banks throughout the
country as to the employment of a substantial part of the funds of their banks.
This is a step towards socialization of banking.
(3) As indicated earlier, the Federal Reserve System and the Treasury already possess large powers of credit control not now being fully used. Such
new powers as those proposed are not necessary.

BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM
[December 31, 1947]
Term Expires
January 31, 1958
January 31, 1948

MARRINER S. ECCLES, of Utah, Chairman
M. S. SZYMCZAK, of Illinois
ERNEST G. DRAPER, of Connecticut

January 31, 1950

R. M. EVANS, of Virginia
JAMES K. VARDAMAN, JR., of Missouri

January 31, 1954
January 31, i960

LAWRENCE CLAYTON, of Massachusetts

January 31, 1952

ELLIOTT THURSTON, Assistant to the Chairman

CHESTER MORRILL, Special Adviser to the Board of Governors
S. R. CARPENTER, Secretary
BRAY HAMMOND, Assistant Secretary
MERRITT SHERMAN, Assistant Secretary
GEORGE B. VEST, General Counsel

J. LEONARD TOWNSEND, Associate General Counsel
WOODLIEF THOMAS, Director, Division of Research and Statistics
RALPH A. YOUNG, Associate Director, Division of Research and Statistics
J. BURKE KNAPP, Assistant Director, Division of Research and Statistics
BONNAR BROWN, Assistant Director, Division of Research and Statistics
ROBERT F . LEONARD, Director, Division of Examinations
EDWIN R. MILLARD, Assistant Director, Division of Examinations
GEORGE S. SLOAN, Assistant Director, Division of Examinations
EDWARD L. SMEAD, Director, Division of Bank Operations
J. R. VAN FOSSEN, Assistant Director, Division of Bank Operations
J. E. HORBETT, Assistant Director, Division of Bank Operations
LOWELL MYRICK, Assistant Director, Division of Bank Operations
CARL E. PARRY, Director, Division of Security Loans
FRED A. NELSON, Director, Division of Personnel Administration
LISTON P . BETHEA, Director, Division of Administrative Services
GARDNER L. BOOTHE, II, Assistant Director, Division of Administrative Services

FEDERAL OPEN MARKET COMMITTEE
[December 31, 1947]

MEMBERS
MARRINER S. ECCLES, Chairman (Board of Governors)
ALLAN SPROUL, Vice Chairman (Elected by Federal Reserve Bank of New York)
LAWRENCE CLAYTON (Board of Governors)

CHESTER C. DAVIS (Elected by Federal Reserve Banks of Atlanta, St. Louis, and Dallas)
ERNEST G. DRAPER (Board of Governors)

R. M. EVANS (Board of Governors)
RAY M. GIDNEY (Elected by Federal Reserve Banks of Cleveland and Chicago)
J. N . PEYTON (Elected by Federal Reserve Banks of Minneapolis, Kansas City, and San
Francisco)
M. S. SZYMCZAK (Board of Governors)
JAMES K. VARDAMAN, J R . (Board of Governors)

LAURENCE F . WHITTEMORE (Elected by Federal Reserve Banks of Boston, Philadelphia,
and Richmond)
EXECUTIVE COMMITTEE
MARRINER S. ECCLES, Chairman

OFFICERS
CHESTER MORRILL, Secretary

ALLAN SPROUL, Vice Chairman

S. R. CARPENTER, Assistant Secretary

ERNEST G. DRAPER
JAMES K. VARDAMAN, J R .
CHESTER C. DAVIS

GEORGE B. VEST, General Counsel
J. LEONARD TOWNSEND, Assistant General
Counsel
WOODLIEF THOMAS, Economist

Af^xT-r
AUHJN 1

PAUL W

* MCCRACKEN, Associate Economist
ALFRED C. NEAL, Associate Economist

FEDERAL RESERVE BANK OF N E W YORK

WILLIAM H. STEAD, Associate Economist

ROBERT G. ROUSE, Manager of System Open
Market Account

DONALD S. THOMPSON, Associate Economist
JOHN H. WILLIAMS, Associate Economist

IOI

FEDERAL ADVISORY COUNCIL
[December 31, 1947]
MEMBERS
District No. 1—CHARLES E. SPENCER, JR., President, The First National Bank of Boston,
Boston, Massachusetts.
District No. 1—W. RANDOLPH BURGESS, Vice Chairman, The National City Bank of New
York, New York, New York.
District No. 3—DAVID E. WILLIAMS, President, Corn Exchange National Bank and Trust
Company, Philadelphia, Pennsylvania.
District No. 4—JOHN H. MCCOY, President, The City National Bank and Trust Company,
Columbus, Ohio.
District No. 5—ROBERT V. FLEMING, President, The Riggs National Bank, Washington,
District of Columbia.
District No. 6—J. T. BROWN, President, The Capital National Bank of Jackson, Jackson,
Mississippi.
District No. 7—EDWARD E. BROWN, Chairman, The First National Bank of Chicago, Chicago,
Illinois.
District No. 8—JAMES H. PENICK, President, Worthen Bank and Trust Company, Little
Rock, Arkansas.
District No. 9—HENRY E. ATWOOD, President, First National Bank of Minneapolis, Minneapolis, Minnesota.
District No. 10—JAMES M. KEMPER, President, Commerce Trust Company, Kansas City,
Missouri.
District No. 11—ED H. WINTON, President, Continental National Bank of Fort Worth, Fort
Worth, Texas.
District No. 12—RENO ODLIN, President, Puget Sound National Bank of Tacoma, Tacoma,
Washington.
EXECUTIVE COMMITTEE
EDWARD E. BROWN, ex officio
W. RANDOLPH BURGESS
JOHN H. MCCOY

CHARLES E. SPENCER, JR., ex officio
DAVID E. WILLIAMS
ROBERT V. FLEMING

OFFICERS
President, EDWARD E. BROWN
Vice President, CHARLES E. SPENCER, JR.

102

Secretary, WALTER LICHTENSTEIN
Acting Secretary, HERBERT V. PROCHNOW

FEDERAL RESERVE SYSTEM

IO3

DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS
[December 31, 1947]
CHAIRMEN AND DEPUTY CHAIRMEN OF BOARDS OF DIRECTORS

Federal Reserve Bank of—

Chairman and
Federal Reserve Agent

Deputy Chairman

Boston

Albert M. Creighton

Donald K. David

New York

Vacancy

William I. Myers

Philadelphia

Thomas B. McCabe

Warren F. Whittier

Cleveland

George C. Brainard

Reynold E. Klages

Richmond

W. G. Wysor

Charles P. McCormick

Atlanta

Frank H.Neely

J. F. Porter

Chicago

Clarence W. Avery

Paul G. Hoffman

St. Louis

Russell L. Dearmont

Douglas W. Brooks

Minneapolis

Roger B. Shepard

W. D. Cochran

Kansas City

Robert B. Caldwell

Robert L. Mehornay

Dallas

J. R. Parten

R. B. Anderson

San Francisco

Bray ton Wilbur

Harry R. Wellman

CONFERENCE OF CHAIRMEN

The Chairmen of the Federal Reserve Banks are organized into a Conference of Chairmen
which meets from time to time to consider matters of common interest, and to consult with
and advise the Board of Governors.
Mr. Henry F. Grady served as Chairman of the Conference and as Chairman of the
Executive Committee until May 1, when he resigned as Chairman of the Federal Reserve
Bank of San Francisco. The other members of the Executive Committee were Mr. Parten,
Chairman of the Federal Reserve Bank of Dallas, and Mr. Shepard, Chairman of the Federal
Reserve Bank of Minneapolis. Mr. Parten succeeded Mr. Grady as Chairman of the Conference and served until December 1.
At the meeting of the Conference on December 2, Mr. Shepard was elected Chairman of
the Conference and Chairman of the Executive Committee. The other members of. the
Executive Committee elected at that time were Mr. Avery, Chairman of the Federal Reserve
Bank of Chicago, and Mr. Dearmont, Chairman of the Federal Reserve Bank of St. Louis.

IO4

ANNUAL REPORT OF BOARD OF GOVERNORS

DIRECTORS A N D SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont.
DIRECTORS

Class A and Class B directors are elected by the member banks of the district. 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 of the Federal Reserve System.
District No. 1—Boston

Class A.Allan Forbes
Leon A. Dodge.
Earle W. Stamm
Class B.Philip R. Allen
Frederick S. Blackall, jr
Roy L. Patrick
Class C.Albert M. Creighton
Donald K. David
Harold D. Hodgkinson

Term
Expires
Dec. 31
President, State Street Trust. Company, Boston, Mass
President, The First National Bank of Damariscotta,
Damariscotta, Me
President, The National Bank of Commerce of New London,
New London, Conn

1949

Director, Bird & Son, inc., E. Walpole, Mass
President and Treasurer, The Taft-Peirce Manufacturing
Company, Woonsocket, R. I
President, Rock of Ages Corporation, Burlington, Vt

1948
1949

Chairman of the Board
Dean, Graduate School of Business Administration, Harvard
University, Boston, Mass
Vice President, General Manager and Chairman of Management Board, Wm. Filene's Sons Company, Boston, Mass..

1947
1948

1947

1947
1948
1949

District No. 2—New York
Class A.Harry H. Pond
Howard A. Wilson
Winthrop W. Aldrich
Class B:
Charles E. Adams
Carle C. Conway
Lewis H. Brown
Class C:
Vacancy
William I. Myers
Robert D. Calkins

Chairman of the Board, The Plainfield Trust Company,
Plainfield, N. J
President, Citizens National Bank and Trust Company of
Fulton, Fulton, N. Y
Chairman of the Board, The Chase National Bank of the
City of New York, New York, N. Y
Chairman, Air Reduction Company, Inc., New York, N. Y..
Chairman of the Board, Continental Can Company, Inc.,
New York, N. Y
Chairman of the Board, Johns-Manville Corporation, New
York, N. Y
Dean, New York State College of Agriculture, Cprnell University, Ithaca, N. Y..
V
Director and Vice President, General Education Board,
New York, N. Y

Buffalo Branch
Appointed by Federal Reserve Bank:
Charles H. Norton
President, Erie County Trust Company, East Aurora, N. Y.
Charles H. Diefendorf
President, The Marine Trust Company of Buffalo, Buffalo,
N. Y.
Raymond F. Leihen
Executive Vice President, Lincoln Rochester Trust Company,
Rochester, N. Y
C. George Niebank
President, Bank of Jamestown, Jamestown, N. Y
Appointed by Board of Governors:
Marion B. Folsom
Carl G. Wooster
Thomas Robins, Jr

Treasurer, Eastman Kodak Company, Rochester, N. Y
Farmer, Union Hill, N. Y
President, Hewitt-Robins, Incorporated, Buffalo, N. Y

1947
1948
1949
1947
1948
1949
1947
1948
1949

1947
1948
1949
1949
1947
1948
1949

FEDERAL RESERVE SYSTEM

IO5

DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont.
Term
Expires
DiRECTORS—Cont.

Dec. 31

District No. 3—Philadelphia
Class A:
Howard A. Loeb
George W. Reily
John. B. Henning
Class B.Charles A. Higgins
Albert G. Frost
William J. Meinel
Class C:
C. Canby Balderston
Thomas B. McCabe
Warren F. Whittier

Chairman, Tradesmens National Bank & Trust Company,
ir iiiiau.cipixict, Pa
rd
Philadelphia,
1947
President, Harrisburg National Bank, Harrisburg, Pa
1949
President, Wyoming National Bank, Tunkhannock, Pa
•

•

Chairman and President, Hercules Powder Company, Inc.,
Wilmington, Del
1947
President, The Esterbrook Pen Company, Camden, N. J
1948
President and General Manager, Heintz Manufacturing
4
Company, Philadelphia, Pa
1949
Dean, Wharton School of Finance and Commerce, University
of Pennsylvania, Philadelphia, Pa
1947
President, Scott Paper Company, Chester, Pa
1948
Agricultural Consultant, Chester Springs, Pa
1949

District No. 4—Cleveland
Class A:
F. F. Brooks
B. R. Conner
John D. Bainer
Class B:
George D. Crabbs
Thomas E. Millsop
Ross Pier Wright
Class C:
A. Z. Baker
Reynold E. Klages
George C. Brainard

Chairman of the Board, Peoples First National Bank & Trust
Company, Pittsburgh, Pa
1947
President, The First National Bank of Ada, Ada, Ohio
1948
President, The Merchants National Bank and Trust Company
of Meadville, Meadville, Pa
1949
Industrialist, Cincinnati, Ohio
1947
President, Weirton Steel Company, Weirton, W. Va
1948
Secretary-Treasurer, Reed Manufacturing Company, Erie, Pa. 1949
Chairman of the Board, The Cleveland Union Stock Yards
Company, Cleveland, Ohio
1947
President, Columbus Auto Parts Company, Columbus, Ohio. 1948
President and General Manager, Addressograph-Multigraph
Corporation, Cleveland, Ohio
1949

Cincinnati Branch
Appointed by Federal Reserve Bank:
Walter H. J. Behm
President, The Winters National Bank and Trust Company
of Dayton, Dayton, Ohio
1947
Neil McElroy
Vice President and General Manager, The Procter & Gamble
Company, Cincinnati, Ohio
1948
Spears Turley
Vice President and Trust Officer, State Bank and Trust
Company of Richmond, Kentucky, Richmond, Ky
1948
Waldo E. Pierson
President, The First National Bank of Cincinnati, Cincinnati,
Ohio
1949
Appointed by Board of Governors:
Paul G. Blazer
Chairman of the Board, Ashland Oil & Refining Company,
Ashland, Ky
1947
Francis H. Bird
Dean, College of Business Administration, University of
Cincinnati, Cincinnati, Ohio
1948
S. Headley Shouse
Tobacco and Livestock Raiser, Lexington, Ky
1949
Pittsburgh Branch
Appointed by Federal Reserve Bank:
T. C. Swarts
Executive Vice President, Woodlawn Trust Company,
Aliquippa, Pa
1947
Archie J. McFarland
President, Wheeling Steel Corporation, Wheeling, W. Va
1948
Laurence S. Bell
Executive Vice President, The Union National Bank of
Pittsburgh, Pittsburgh, Pa
1948
R. E. Bowie
President, Security Trust Company, Wheeling, W. Va.
1949
Appointed by Board of Governors:
Josiah M. Koch
A. H. Burchfield, Jr
Howard W. Jordan

Vice President, Quaker State Oil Refining Corporation, Oil
City, Pa
1947
Vice President and General Manager, Joseph Home Company,
Pittsburgh, Pa
1948
President, Pennsylvania Rubber Company, Jeannette, Pa.,. 1949

IO6

ANNUAL REPORT OF BOARD OF GOVERNORS

DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont.
Term
Expires
DIRECTORS—Cont,

Dec. 31

District No. 5—Richmond
Class A:
John A. Sydenstricker
James D. Harrison
Warren S. Johnson
Class B.Edwin Malloy
Charles C. Reed
H. L. Rust, Jr
Class C.Charles P. McCormick
W. G. Wxysor
Edward R. Stettinius, Jr

Cashier, First National Bank in Marlinton, Marlinton, W. Va.
President, First National Bank of Baltimore, Baltimore, Md.
President, Peoples Savings Bank and Trust Company,
Wilmington, N. C
President & Treasurer, Cheraw Cotton Mills, Inc., Cheraw,
S. C
President, Williams & Reed, Inc., Richmond, Va
President, H. L. Rust Company, Washington, D. C
President and Chairman of Board, McCormick & Company,
Inc., Baltimore, Md
General Manager, Southern States Cooperative, Inc., Richmond, Va
Rector, University of Virginia, Charlottesville, Va

1947
1948
1949
1947
1948
1949

1947
1948
1949

Baltimore Branch
Appointed by Federal Reserve Bank:
W. Bkden Lowndes
Holmes D. Baker
George M. Moore
Eugene G. Grady

President, Fidelity Trust Company, Baltimore, Md
President, The Citizens National Bank of Frederick, Frederick, Md
Vice President, The Union National Bank of Clarksburg,
Clarksburg, W. Va
Vice President, The Western National Bank of Baltimore,
Baltimore, Md

1947
1948
1949
1949

A ppointed by Board of Governors:
James M. Shriver
James E. Hooper
L. Vinton Hershey

President, B. F. Shriver Company, Westminster, Md
Vice President, William E. Hooper and Sons Company,
Baltimore, Md
President, Hagerstown Shoe Company, Hagerstown, Md.. . .
Charlotte

Appointed by Federal Reserve Bank:
N. S. Calhoun
Angus E. Bird
Allen H. Sims
George S. Crouch
Appointed by Board of Governors:
Charles L. Creech
R. Flake Shaw
W. A. L. Sibley

1947
1948
1949

Branch

President, Security National Bank, Greensboro, N. C
Chairman of Board, The Citizens & Southern National Bank
of South Carolina, Charleston, S. C
^
Executive Vice President and Trust Officer, Citizens National
Bank in Gastonia, Gastonia, N. C
President, Union National Bank, Charlotte, N. C

1947
1948
1949
1949

Chairman of Board, B. F. Huntley Furniture Company,
Winston-Salem, N. C
_
1947
Executive Secretary, North Carolina Farm Bureau Federation,
Greensboro, N. C
1948
Vice President and Treasurer, Monarch Mills, Union, S. C.. . 1949

District No. 6—Atlanta
Class A.George J. White
R. C. Williams
W. D. Cook
Class B.Ernest T. George
J. A. McCrary
Donald Comer
Class C.Frank H. Neely
J. F. Porter
Rufus C. Harris

President, The First National Bank of Mount Dora, Mount
Dora, Fla
President, The First National Bank of Atlanta, Atlanta, Ga.. .
President, First National Bank in Meridian, Meridian, Miss.
President, Seaboard Refining Company, Ltd., New Orleans,
La
Vice President and Treasurer, J. B. McCrary Company, Inc.,
Atlanta, Ga
.
Chairman of the Board, Avondale Mills, Birmingham, Ala.. .
President, Rich's, Inc., Atlanta, Ga
President, Tennessee Burley Tobacco Growers Association,
Columbia, Tenn
President, The Tulane University of Louisiana, New Orleans,
La

1947
1948
1949

1947
1948
1949
1947
1948
1949

FEDERAL RESERVE SYSTEM

IO7

DIRECTORS A N D SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 3 1 , 1947—Cont.
Term
Expires
DIRECTORS—Cont.

Dec. 31

Birmingham
Appointed by Federal Reserve Bank:
Gordon D. Palmer
M. B. Spragins
James G. Hall
R. L. Adams
Appointed by Board of Governors:
John C. Curry
Win. Howard Smith
Thad Holt

Branch

President, The First National Bank of Tuskaloosa, Tuscaloosa, Ala
President, The First National Bank of Huntsville, Huntsville,
Ala
Executive Vice President, The First National Bank of
Birmingham, Birmingham, Ala
President, Bank of York, York, Ala
Administrative Assistant to Algernon Blair, Contractor,
Montgomery, Ala
President, McQueen-Smith Farms, Prattville, Ala
President and Treasurer, Voice of Alabama, Inc., (Radio
Station WAPI), Birmingham, Ala

Jacksonville Branch
Appointed by Federal Reserve Bank:
J. L. Dart
President, The Florida National Bank of Jacksonville,
Jacksonville, Fla
J. S. Fairchild
Cashier, The First National Bank of Winter Garden, Winter
Garden, Fla
Max Losner
President, The First National Bank of Homestead, Homestead, Fla
H. S. Moody
Executive Vice President, Manatee River Bank & Trust
Company, Bradenton, Fla
Appointed by Board of Governors:
Walter J. Matherly
Dean, College of Business Administration, University of
Florida, Gainesville, Fla
Charles S. Lee
Planter and cattle raiser, Oviedo, Fla
W. T. Bland
Citrus fruit grower and nurseryman, Lake Jem, Fla
Nashville Branch
Appointed by Federal Reserve Bank:
B. L. Sadler
President, First National Bank in Harriman, Harriman, Tenn.
Edward Potter, Jr
President, Commerce Union Bank, Nashville, Tenn
L. R. Driver
President, The First National Bank in Bristol, Bristol, Tenn.
W. G. Birdwell
Cashier, Citizens Bank and Trust Company, Carthage, Tenn.

1947
1948
1949
1949

1947
1948
1949

1947
1948
1949
1949
1947
1948
1949

1947
1948
1949
1949

Appointed by Board of Governors:
Clyde B. Austin
H. C. Meacham
W. Bratten Evans

President, The Austin Company, Inc., Greeneville, Tenn.. . .
Farmer, Franklin, Tenn
President, Tennessee Enamel Manufacturing Company,
Nashville, Tenn

1947
1948
1949

New Orleans Branch
Appointed by Federal Reserve Bank:
J. F. McRae
T. G. Nicholson
John Legier
W. S. Johnson
Appointed by Board of Governors:
H. G. Chalkley, Jr
John J. Shaffer, Jr
E. O. Batson

President, The Merchants National Bank of Mobile, Mobile,
Ala
President, The First National Bank of Jefferson Parish at
Gretna, Gretna, La
President, National American Bank of New Orleans, New
Orleans, La
Executive Vice President, First National Bank of McComb
City, McComb City, Miss

1949

President, Sweet Lake Land and Oil Company, Inc., Lake
Charles, La
Planter, Ellendale, La
President, Batson-McGehee Company, Inc., Millard, Miss... .

1947
1948
1949

District No. 7—Chicago
Class A.Vivian W. Johnson
Walter J. Cummings
Horace S. French
Class .B.Nicholas H. Noyes
William C. Heath
Wm. J. Grede

President, First National Bank, Cedar Falls, Iowa
Chairman, Continental Illinois National Bank and Trust
Company of Chicago, Chicago, 111
President, The Manufacturers National Bank of Chicago,
Chicago, 111
Vice President in Charge of Finances, Eli Lilly and Company,
Indianapolis, Ind
President, A. O. Smith Corporation, Milwaukee, Wis
President, Grede Foundries, Inc., Milwaukee, Wis

1947
1948
1949
1947
1948
1949

IO8

ANNUAL REPORT OF BOARD OF GOVERNORS

DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont.
Term
Expires
DIRECTORS—Cont.

Class C.Simeon E. Leland
Clarence W. Avery
Paul G. Hoffman

Dec. 31

Dean, College of Liberal Arts, and Professor of Economics,
Northwestern University, Evanston, 111
President and Chairman, The Murray Corporation of America,
Detroit, Mich
President, The Studebaker Corporation, South Bend, Ind

Detroit Branch
Appointed by Federal Reserve Bank:
Charles T. Fisher, Jr
President, The National Bank of Detroit, Detroit, Mich
Rudolph E. Reichert
President, Ann Arbor Bank, Ann Arbor, Mich
Charles A. Kanter
President, The Manufacturers National Bank of Detroit,
Detroit, Mich
Appointed by Board of Governors:
Prentiss M. Brown
Chairman, The Detroit Edison Company, Detroit, Mich
Ernest Gilbert
Farmer, Waldron, Mich

1947
1948
1949

1947
1948
1948
1947
1948

District No. 8—St. Louis
Class A.Tom K. Smith
Phil E. Chappell
G. R. Corlis
Class B.Louis Ruthenburg
A. Wessel Shapleigh
K. August Engel
Class C.Douglas W. Brooks
J. P. Redman
Russell L. Dearmont

Chairman of Board, Boatmen's National Bank, St. Louis, Mo.
President, Planters Bank and Trust Company, Hopkinsville,
Ky
President, Anna National Bank, Anna, 111

1948
1949

President and General Manager, Servel, Inc., Evansville, Ind.
President, Shapleigh Hardware Company, St. Louis, Mo
President, Arkansas Democrat Company, Little Rock, Ark.. .

1947
1948
1949

President, The Newburger Company, Memphis, Tenn
Farmer, Cairo, 111
Chief Counsel for Trustee, Missouri-Pacific Lines, St. Louis,
Mo
v

1947
1948

Little Rock
Appointed by Federal Reserve Bank:
Geo. S. Neal
Chas, A. Gordon
Lloyd Spencer
Emmet Morris
Appointed by Board of Governors:
S. M. Brooks
Cecil C. Cox
Ralph E. Plunkett

Lee L. Persise
H. Lee Cooper
A. C. Voris
Appointed by Board of Governors:
E. J. O'Brien, Jr
Geo. O. Boomer
Rosco Stone

1949

Branch

President, Bank of Russellville, Russellville, Ark
Vice President, Simmons National Bank, Pine Bluff, Ark.. . .
President, First National Bank, Hope, Ark
.
Chairman, Worthen Bank and Trust Company, Little Rock,
Ark

1947
1948
1948

President, Brooks Advertising Agency, Little Rock, Ark
Farmer, Stuttgart, Ark
President, Plunkett-Jarrell Grocer Company, Little Rock,
Ark

1947
1948

Louisville
Appointed by Federal Reserve Bank:
Wallace M. Davis

1947

1949

Branch

Vice President, Citizens Fidelity Bank and Trust Company,
Louisville, Ky
President, The State Bank of Salem, Salem, Ind
President, Ohio Valley National Bank, Henderson, Ky
President, Citizens National Bank, Bedford, Ind

1947
1948
1948
1949

President, E. J. O'Brien & Company, Louisville, Ky
President, The Girdler Corporation, Louisville, Ky
Farmer, Hickman, Ky

1947
1948
1949

Memphis Branch
Appointed by Federal Reserve Bank:
W. P. Kretschmar
Norfleet Turner
H. W. Hicks
W. W. Campbell
A ppointed by Board of Governors:
J. Holmes Sherard
Leslie M. Stratton, Jr
Hugh M. Brinkley

Chairman
Miss
President,
President,
President,
Ark

of Board, Commercial National Bank, Greenville,
First National Bank, Memphis, Tenn
First National Bank, Jackson, Tenn
National Bank of Eastern Arkansas, Forrest City,

President, Jno. H. Sherard & Son, Sherard, Miss
Executive Vice P/esident, Stratton-Warren Hardware Company, Memphis, Tenn
Farmer, Hughes, Ark

1947
1948
1948
1949
1947
1948
1949

FEDERAL RESERVE SYSTEM

109

DIRECTORS A N D SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont.
Term
Expires
DIRECTORS—Cont.

Dec. 31

District No. 9—Minneapolis
Class A:
J. R. McKnight
F. D. McCartney
Clarence E. Hill

President, Pierre National Bank, Pierre, S. D
Vice President, First National Bank, Oakes, N. D
Chairman of the Board, Northwestern National
Minneapolis, Minn

Class B:
J. E. O'Connell
Ray C. Lange

1947
1948
Bank,

1949

President, Eddy's Bakeries, Inc., Helena, Mont
1947
President, Chippewa Canning Company, Chippewa Falls,
Wis
1948
Chairman of the Board, West Publishing Company, St. Paul,
Minn
1949

Homer P. Clark
Class C.Roger B. Shepard
Paul E. Miller

Chairman of the Board
1947
Director, Agricultural Extension Division, University of
Minnesota, Minneapolis, Minn
1948
W. D. Cochran Freight Lines, Iron Mountain, Mich
1949

W. D. Cochran

Helena Branch
Appointed by Federal Reserve Bank:
B. M. Harris
Theodore Jacobs
E. D. MacHaffie
A ppointed by Board of Governors:
Malcolm E. Holtz
R. B. Richardson

President, Yellowstone Bank, Columbus, Mont
President, First National Bank, Missoula, Mont
President, State Publishing Company, Helena, Mont

1947
1948
1948

Agriculturist, Great Falls, Mont
1947
President, Western Life Insurance Company, Helena, Mont. 1948

District No. 10—Kansas City
Class A:
W. L. Bunten.
T. A. Dines
M. A. Limbocker
Class B:
L. C. Hutson
Willard D. Hosford
J. M. Bernardin
Class C.Robert L. Mehornay
Lyle L. Hague
Robert B. Caldwell

Executive Vice President, Goodland State Bank, Goodland,
Kans
1947
Chairman of the Board and President, United States National
Bank, Denver, Colo
1948
Chairman of the Board and President, Citizens National Bank,
Emporia, Kans
1949
President and General Manager, Chickasha Cotton Oil
Company, Chickasha, Okla
1947
Vice President and General Manager, John Deere Plow
Company, Omaha, Nebr
1948
Lumberman, Kansas City, Mo
1949
President, North-Mehornay Furniture Company, Kansas
City, Mo
1947
Farmer and stockman, Cherokee, Okla
1948
Caldwell, Downing, Noble and Garrity, Kansas City, Mo
1949

Denver Branch
Appointed by Federal Reserve Bank:
P. K. Alexander
Vice President, The First National Bank of Denver, Denver,
Colo
1947
J. D. Allen
President, The First National Bank of Eagle County, Eagle,
Colo
1948
Albert K. Mitchell
Rancher, Albert, N. M
1948
Appointed by Board of Governors:
W. A. Alexander
M. E. Noonen

Vice President and Assistant General Manager, The Denver
Tramway Corporation, Denver, Colo
'. 1947
Sheep rancher, Kremmling, Colo
1948

Oklahoma City Branch
Appointed by Federal Reserve Bank:
S. A. Bryant
President, The Farmers National Bank, Cushing, Okla
D. M. Tyler
First Vice President, Dewey Portland Cement Company,
Dewey, Okla
Hugh L. Harrell
Vice President, First National Bank and Trust Company,
Oklahoma City, Okla
A ppointed by Board of Governors:
Lloyd Noble
President, Noble Drilling Corporation, Tulsa, Okla
Rufus Green
Rancher and farmer, Duncan, Okla

1947
1948
1948
1947
J94§

IIO

A N N U A L REPORT OF BOARD OF GOVERNORS

DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Com.
Term
Expires
DIRECTORS—Cont.

Dec. 31

Omaha Branch
Appointed by Federal Reserve Bank:
George W. Holmes
Walter S. Byrne
Fred W. Marble
A ppointed by Board of Governors:
L. E. Hurtz
Fred S. Wallace

President, First National Bank, Lincoln, Nebr
General Manager, Metropolitan Utilities District of Omaha,
Omaha, Nebr
President, Stock Growers National Bank, Cheyenne, Wyo.. .

1947

President, Fairmont Creamery Company, Omaha, Nebr
Farmer, Gibbon, Nebr

1947
1948

District No. 11—Dallas
Class A:
J. E. Woods
Walter P. Napier
J. Edd McLaughlin
Class B:
W. F. Beall
J. R. Milam
George L. MacGregor
Class C:
G. A. Frierson
R. B. Anderson
J. R. Parten

Chairman of Board, Temple National Bank, Temple, Texas. .
Chairman of the Board, Alamo National Bank, San Antonio,
Texas
Vice President, Security State Bank and Trust Company,
Rails, Texas

1947
1948
1949

President and General Manager, 3 Beall Brothers 3, Department Stores, Jacksonville, Texas
President, The Cooper Company, Inc., Waco, Texas
Chairman of the Board, President and General Manager,
Dallas Power and Light Company, Dallas, Texas

1947
1948

Frierson Company, Inc., Merchants, Frierson, La
General Manager, W. T. Waggoner Estate, Vernon, Texas. . .
President, Woodley Petroleum Company, Houston, Texas. . .

1947
1948
1949

El Paso

1949

Branch

Appointed by Federal Reserve Bank:
J. E. Moore
W. S. Warnock
W. Henry Wooldridge
George G. Matkin

President, First National Bank, Roswell, N. M
Vice President, El Paso National Bank, El Paso, Texas
President, Lone Star Motor Company, El Paso, Texas
Vice President, State National Bank, El Paso, Texas

1947
1948
1948
1949

Appointed by Board of Governors:
Hal Bogle
Dorrance D. Roderick
Hiram S. Corbett

Livestock and farming, Dexter, N. M..
President, Newspaper Printing Corporation, El Paso, Texas. .
President, J. Knox Corbett Lumber Company, Tucson, Ariz.

1947
1948
1949

Houston Branch
Appointed by Federal Reserve Bank:
John W. McCullough
James A. Elkins
B. C. Roberts
Melvin Rouff
A ppointed by Board of Governors:
J. E. Wheat
Ross Stewart
George A. Slaughter

President, Hutchings-Sealy National Bank, Galveston, Texas.
President, City National Bank, Houston, Texas
President, Wharton Bank & Trust Company, Wharton, Texas.
First Vice President, Houston National Bank, Houston, Texas.

1947
1948
1948
1949

Attorney-at-Law, Woodville, Texas
General Manager, C. Jim Stewart and Stevenson, Houston,
Texas
Farming, Wharton, Texas

1948
1949

1947

San Antonio Branch
Appointed by Federal Reserve Bank:
T. C. Frost
Robert D. Barclay.
C. L. Skaggs
Riley Peters
Appointed by Board of Governors:
J. M. Odom
Henry P. Drought
Holman Cartwright

Vice President, Frost National Bank, San Antonio, Texas...
President, National Bank of Commerce, San Antonio, Texas..
President, The First National Bank of Weslaco, Weslaco,
Texas
Executive Vice President, First State Bank, Kerrville, Texas..

1947
1948

General Contractor, Austin, Texas
Attorney-at-Law, San Antonio, Texas
Livestock and farming, Twin Oaks Ranch, Dinero, Texas. . . .

1947
1948
1949

1948
1949

FEDERAL RESERVE SYSTEM

I I I

DIRECTORS A N D SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Com.
Term
Expires
DIRECTORS—Cont.

Dec. 31

District No. 12—San Francisco
Class A:
Chas. H. Stewart
Carroll F. Byrd
William W. Crocker
Class B:
St. George Holden
Reese H. Taylor
Walter S. Johnson
Class C.William R. Wallace, Jr
Harry R. Wellman
Brayton Wilbur

President, Portland Trust and Savings Bank, Portland, Ore.. .
Chairman of the Board and Executive Vice President, The
First National Bank of Willows, Willows, Calif
President, Crocker First National Bank of San Francisco,
San Francisco, Calif

1947
1948
1949

St. George Holden Realty Company, San Francisco, Calif.. .
President, Union Oil Company of California, Los Angeles,
Calif
President, American Box Corporation of California, San
Francisco, Calif

1947

Attorney-at-Law, San Francisco, Calif...
Director, Giannini Foundation of Agricultural Economics,
University of California, Berkeley, Calif
President, Wilbur-Ellis Company, San Francisco, Calif

1947

1948
1949

Los Angeles Branch
Appointed by Federal Reserve Bank:
F. E. Snedecor
M. Vilas Hubbard
Frank L. King
Appointed by Board of Governors:
Y. Frank Freeman
Fred G. Sherrill

President, The First National Bank of Corona, Corona, Calif.
President, Citizens Commercial Trust and Savings Bank of
Pasadena, Pasadena, Calif
President, California Bank, Los Angeles, Calif

1947

Vice President, Paramount Pictures, Inc., Hollywood, Calif.. .
Vice President, J. G. Boswell Company, Los Angeles, Calif. .

1947
1948

1948
1948

Portland Branch
Appointed by Federal Reserve Bank:
E. B. MacNaughton
William C. Christensen
W. W. Flint
Appointed by Board of Governors:
Aaron M. Frank
R. B. Taylor

Chairman of the Board, The First National Bank of Portland,
Portland, Ore
President, The Commercial National Bank of Hillsboro,
Hillsboro, Ore
President, The First National Bank of Cottonwood, Cottonwood, Idaho
'.

1948

President, Meier and Frank Company, Inc., Portland, Ore.. .
Livestock and farming, Adams, Ore

1947
1948

Salt Lake City Branch
Appointed by Federal Reserve Bank:
D. F. Richards
Chas. L. Smith
John A. Schoonover
Appointed by Board of Governors:
Henry Aldous Dixon
Merle G. Hyer

President, American National Bank of Idaho Falls, Idaho
Falls, Idaho
President, The First National Bank of Salt Lake City, Salt
Lake City, Utah
President, The Idaho First National Bank, Boise, Idaho. . . .

1948
1948

President, Weber College, Ogden, Utah
Livestock and farming, Lewiston, Utah

1947
1948

1947

Seattle Branch
Appointed by Federal Reserve Bank:
Lawrence M. Arnold
Benj. N. Phillips
Fred C. Forrest
Appointed by Board of Governors:
John T. Tenneson
John M. McGregor

Chairman of the Board, Seattle-First National Bank, Seattle,
Wash
President, The First National Bank in Port Angeles, Port
Angeles, Wash
Chairman of the Board and President, The First National
Bank of Pullman, Pullman, Wash
President, Superior Packing Company, Seattle, Wash
Manager, McGregor Land & Livestock Company, Hooper,
Wash

1947
1948
1948
1947
1948

I 12

ANNUAL REPORT OF BOARD OF GOVERNORS

DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont.
SENIOR OFFICERS OF FEDERAL RESERVE BANKS

Federal Reserve
Bank of—

President
First Vice President

Vice Presidents

Boston.

Laurence F. Whittemore
William Willett

Robert B. Harvey1
E. G. Hult
E. O. Latham

Carl B. Pitman
O. A. Schlaikjer
R. F. Van Amringe

New York.

Allan Sproul
L. R. Rounds

E. O. Douglas
J. W. Jones
H. H. Kimball
L. W. Knoke
Walter S. Logan

A. Phelan
H. V. Roelse
Robert G. Rouse
V. Willis
R. B. Wiltse

Philadelphia....

Alfred H. Williams

Karl R. Bopp
Robert N. Hilkert
E. C. Hill

Wm. G. McCreedy
C. A. Mcllhenny
P. M. Poorman1

W. J. Davis
Cleveland.

Ray M. Gidney
Wm. H. Fletcher

W. D. Fulton
J. W. Kossin 2
A. H. Laning

B. J. Lazar
Martin Morrison
Donald S. Thompson

Richmond.

Hugh Leach
J. S. Walden, Jr.

R. L. Cherry
Claude L. Guthrie2
E. A. Kincaid

R. W. Mercer
W. R. Milford
C. B. Strathy
Edw. A. Wayne

Atlanta.

W. S. McLarin, Jr.
L. M. Clark

P. L. T. Beavers
V. K. Bowman
J. E. Denmark
Joel B. Fort, Jr.

T. A. Lanford
E. P. Paris
S. P. Schuessler

Chicago.

C. S. Young
Charles B. Dunn

Allan M. Black*
Neil B. Dawes
W. R. Diercks
J. H. Dillard
E. C. Harris

John K. Langum
O. J. Netterstrom
A. L. Olson
Alfred T. Sihler

St. Louis.

Chester C. Davis
F. Guy Hitt

O. M. Attebery
Wm. E. Peterson
William B. Pollard

C. A. Schacht
William H. Stead
C. M. Stewart

Minneapolis....

J. N. Peyton
O. S. Powell

H. G. McConnell
A. W. Mills2
Otis R. Preston

R. E. Towle
Sigurd Ueland
Harry I. Ziemer

Kansas C i t y . . . .

H. G. Leedy
Henry O. Koppang

L. H. Earhart
Delos C. Johns
R. L. Mathes

John Phillips, Jr.
G. H. Pipkin
D. W. Woolley2

Dallas

R. R. Gilbert
W. D. Gentry

E. B. Austin
R. B. Coleman
H. R. DeMoss
W. E. Eagle

W. H. Holloway
Watrous H. Irons
L. G. Pondrom2
Mac C. Smyth

W. N. Ambrose
D. L. Davis
J. M. Leisner2
W. L. Partner

C. R. Shaw
H. F. Slade
W. F. Volberg
O. P. Wheeler

San Francisco... . C. E. Earhart

H. N. Mangels

2
* Cashier.
Also Cashier.
NOTE: See p. 113 for note on Conference of Presidents,

FEDERAL RESERVE SYSTEM

113

DIRECTORS AND SENIOR OFFICERS OF FEDERAL RESERVE BANKS, Dec. 31, 1947—Cont.
VICE PRESIDENTS IN CHARGE OF BRANCHES OF FEDERAL RESERVE BANKS

Chief Officer

Federal Reserve Bank of—
New York....

Buffalo

I. B. Smith1

Cleveland

Cincinnati
Pittsburgh

j.'w. Kossin

Richmond

Baltimore
Charlotte

W. R. Milford
R. L. Cherry

Atlanta

Birmingham
Jacksonville
Nashville
New Orleans

P. L. T. Beavers
T. A. Lanford
Joel B. Fort, Jr.
E. P. Paris

Chicago

Detroit

E. C. Harris

St. Louis

Little Rock
Louisville
Memphis

C. M. Stewart
C. A. Schacht
William B. Pollard

Minneapolis. .

Helena

R. E. Towle

Kansas City. ,

Denver
Oklahoma City
Omaha

G. H. Pipkin
R. L. Mathes
L. H. Earhart

Dallas

El Paso
Houston
San Antonio

Mac C. Smyth
W. H. Holloway
W. E. Eagle

San Francisco

Los Angeles
Portland
Salt Lake City
Seattle

W. N. Ambrose
D. L. Davis
W. L. Partner
C. R. Shaw

Lazar

General Manager.

CONFERENCE OF PRESIDENTS

The Presidents of the Federal Reserve Banks are organized into a Conference of Presidents
which meets from time to time to consider matters of common interest, and to consult with
and advise the Board of Governors.
Mr. Sproul, President of the Federal Reserve Bank of New York and Mr. Davis, President
of the^Federal Reserve Bank of St. Louis, who had served during 1946 as Chairman of the
Conference and Vice Chairman, respectively, were reelected to serve until the conclusion of
the first meeting of the Conference held during or after February 1948. Mr. William F.
Treiber, Assistant Vice President and Secretary of the Federal Reserve Bank of New York,
who was appointed Secretary of the Conference in June 1946, continued to serve during 1947.

FEDERAL RESERVE SYSTEM
BOUNDARIES OF FEDERAL RESERVE DISTRICTS
AND THEIR BRANCH TERRITORIES

s
73

O
>
7*
D

o
o
w

5«

o
JO
BOUNDARIES OF FEDERAL RESERVE DISTRICTS
BOUNDARIES OF FEDERAL RESERVE BRANCH TERRITORIES
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
FEDERAL RESERVE BANK CITIES
FEDERAL RESERVE BRANCH CITIES

NOTE: There has been no change in district or branch territory boundaries since the publication of the description in the Annual
Report of the Board of Governors for 1942, pp. 138-45.

INDEX
Page
Acceptance of drafts and bills of exchange by member banks:
Applications approved
44
Bankers, buying rates on
76
Surrender of powers
44
Amendments to Federal Reserve Act: (See Federal Reserve Act)
American Bankers Association:
Check routing symbols program
38
Effort to encourage voluntary restraint on inflationary bank credit extension
7
Assets and liabilities of Federal Reserve Banks
62
Audit of accounts of Board by Federal Reserve Bank of New York
55
A very, Clarence W., appointed Class C director at Chicago and designated
Chairman and Federal Reserve Agent
51, 52
Bank credit:
Demand in 1947, discussion
2
Developments during year
15
Restraint on, effort sponsored by American Bankers Association
7
Statement of Federal Advisory Council regarding volume of
98
Bank holding companies:
Legislation to provide effective supervision and control of, recommended
to Congress
11
Voting permits granted to
43
Bank premises: (See Banking quarters)
Bank supervision by the Federal Reserve System
40
Banking offices:
Analysis of changes
79
Number of
37
Banking quarters:
Buildings of Federal Reserve branch banks, amendment to Federal Reserve
Act on cost of
46
Cincinnati Branch, purchase of building for
50
Federal Reserve Bank of Atlanta, rilling in of light court
51
Federal Reserve Banks and branches
50, 74
New Orleans Branch, improvements to
51
Batson, E. O., appointed director at New Orleans
52
Bland, W. T., appointed director at Jacksonville
52
Board of Governors:
Audit of accounts by Federal Reserve Bank of New York
55
Employees, number of
53
Income and expenses
54
Members:
Clayton, Lawrence, appointment of
53
List of
101
Ransom, Ronald, death of
53
Officers
101
Publications and releases
58
Research and advisory services
55
Staff: (See Staff of Board)
Bond market and money rates
25
Bonds: (See Government securities)
Branch banks:
Domestic:
Analysis of changes
79
Capital requirements of member banks, modification recommended to
Congress
12

115

Il6

INDEX

Branch banks—Continued
Page
Domestic—Continued
Increase during 1947
37
Number of
,
79
Federal Reserve System:
Bank premises, cost and value of
74
Buildings, amendment to Federal Reserve Act on cost of
46
Cincinnati, purchase of building for
50
Directors, list of
104
Examination of
42
New Orleans, improvement to property of
51
Vice Presidents in charge of
113
Foreign:
Applications to establish, approved
44
Number and location of
44
Brinkley, Hugh M., appointed director at Memphis
52
Brown, Bonnar, appointed Assistant Director of Division of Research and
Statistics
54
Budget expenditures and receipts and changes in public debt
13
Buying rates on bills at Federal Reserve Banks
76
Capital accounts:
Federal Reserve Banks
63, 65
Member banks
24
Capital requirements for member banks, modification recommended to Congress
12
Central reserve cities, classification of
39, 86
Chairmen of Federal Reserve Banks:
Avery, Clarence W., designated at Chicago
51
Conference of
103
Designations for year
51
Executive Committee
103
List of
103
Meeting of Conference of
59
Wilbur, Brayton, designated at San Francisco
52
Wysor, W. G., designated at Richmond
.
51
Charts:
Bank deposits and currency
19
Capital ratios of member banks
25
Commercial bank loans—all insured banks
17
Earnings ratios of member banks—percentage of capital accounts
23
Gross national product
28
Loans and investments of all commercial banks
16
Member bank reserves, reserve bank credit, and related items
4
Ownership of U. S. Government securities
14
Wholesale prices
31
Yields on Treasury and corporate securities
5
Check routing symbols, progress in use of
38
Clayton, Lawrence, appointed member of Board of Governors
53
Clearing and collection:
Check routing symbols, progress in use of
38
Federal Reserve par list:
Changes in par and nonpar banks during 1947
38
Number of banks on list and number not on list
80
Commitment rates at Federal Reserve Banks
76
Committees:
Executive, of Chairmen's Conference
103
Executive, of Federal Advisory Council
102
Executive, of Federal Open Market Committee
101

INDEX

11 7
Page

Condition reports of Federal Reserve Banks:
All banks combined
62
Each bank
64
Conferences: (See Meetings)
Consumer credit:
Conviction of Consumers Home. Equipment Company for violating Regulation W
45
Joint resolution continuing authority for temporary period but control not
to be exercised after November 1, 1947
47
Legislation recommended to Congress to help curb prevailing inflationary
credit tendencies
10
Minimum down payments and maximum maturities under Regulation W . . .
78
Regulation W terminated
45
Statement of Federal Advisory Council on control of
98
Consumer expenditures, discussion of increase in
1
Consumers Home Equipment Company, conviction for violating Regulation W . .
45
Corbett, Hiram S., appointed director at El Paso
53
Corporate securities, yields on
5
Court cases:
Consumers Home Equipment Company, conviction for violating Regulation W
45
Peoples Bank, Lakewood Village, California, suit regarding condition of
membership
46
Removal of bank directors by order of Board sustained by Supreme Court
45
Credit: (See Bank credit; Consumer credit)
David, Donald K., appointed Deputy Chairman at Boston
51
Deaths:
Ransom, Ronald, Vice Chairman of Board of Governors
53
Demand, production, and prices
27
Deposits:
Factors in expansion of holdings of individuals and businesses
20
Growth during 1947
19
Maximum rate on
yy
War loan, expiration of Act exempting from deposit insurance assessments
and reserve requirements
47
Deputy Chairmen, Federal Reserve Banks:
David, Donald K., appointed at Boston
51
Designations for year
51
Hoffman, Paul G., appointed at Chicago
51
List of
103
McCormick, Charles P., appointed at Richmond
51
Directors:
Federal Reserve Banks:
Appointments during year
51
Avery, Clarence. W., appointed Class C and designated Chairman and
Federal Reserve Agent
51, 52
Classes of
104
David, Donald K., appointed Deputy Chairman at Boston
51
Hodgkinson, Harold D., appointed at Boston
52
Hoffman, Paul G., appointed Deputy Chairman at Chicago
51
List of
104
McCormick, Charles P., appointed Deputy Chairman at Richmond
51
Stettinius, Edward R., Jr., appointed Class C at Richmond
52
Wallace, William R., Jr., appointed Class C at San Francisco
52
Wilbur, Brayton, designated Chairman and Federal Reserve Agent at
San Francisco ,
,
,
52

Il8

INDEX

Directors—Continued
Page
Federal Reserve Banks—Continued
Wysor, W . G., designated Chairman and Federal Reserve Agent at
Richmond
51
Federal Reserve branch banks:
Appointments during year
52
Batson, E. O., appointed at New Orleans
52
Bland, W . T., appointed at Jacksonville
52
Brinkley, Hugh M., appointed at Memphis
52
Corbett, Hiram S., appointed at El Paso
53
Green, Rufus, appointed at Oklahoma City
53
Hershey, L. Vinton, appointed at Baltimore
52.
Holt, Thad, appointed at Birmingham
52
Hyer, Merle G., appointed at Salt Lake City
53
List of
104
Plunkett, Ralph E., appointed at Little Rock
52
Sibley, W. A. L., appointed at Charlotte
52
Taylor, R. B., appointed at Portland
53
National banks, removal of, order of Board sustained by Supreme Court. . .
45
Directory:
Board of Governors of the Federal Reserve System
101
Federal Advisory Council
102
Federal Open Market Committee
101
Federal Reserve Banks, directors and officers
104
Discount rates at Federal Reserve Banks
6, 76
Dividends, Federal Reserve Banks
48, 71
Dollar exchange, application of member banks to accept for furnishing
44
Earnings and expenses of Federal Reserve Banks
48, 70, 72
Earnings of member banks
22
Employees:
Board of Governors, number of
53
Federal Reserve Banks:
Number of
53
Number and salaries of
75
Examinations:
Federal Reserve Banks and branches
42
State member banks
42
Expenditures of Government, total for year
13
Expenses of Board of Governors
54
Exports:
Means of financing surplus
35
Volume of
33
Federal Advisory Council:
Meetings held during year
59
Members and officers
102
Statement regarding volume of bank credit, consumer credit controls, and
bank reserves of short-term Government securities
98
Federal Deposit Insurance Corporation:
Capital stock, act providing for retirement and cancellation of
47
Federal Open Market Committee:
Meetings held during year
59
Members and officers
101
Policy actions
88
Federal Reserve Act:
Section 10, amendment on cost of Federal Reserve branch bank buildings. .
46
Section 13, amendment recommending Reserve Bank guarantee of loans
to business
12

INDEX

119
Page

Federal Reserve Act—Continued
Section 13b, repeal recommended by Board
Section 14(b) amended to authorize purchase of Government obligations
by Federal Reserve Banks
Federal Reserve Bank of Atlanta:
Building, alterations to
Federal Reserve Bank of New York:
Audit of accounts of Board
Foreign transactions of
Federal Reserve Bank of San Francisco:
Staff:
Mangels, H. N., appointed First Vice President
Federal Reserve Banks:
Assets and liabilities of
Bank premises of
Branches: (See Branch banks, Federal Reserve System)
Capital accounts
Chairmen, list of
(See also Chairmen, Federal Reserve Banks)
Condition of each bank
Deputy Chairmen, list of
(See also Deputy Chairmen, Federal Reserve Banks)
Directors: (See Directors)
Discount rates
Dividends paid
:
Earnings and expenses
Earnings on loans and securities
Employees
Examination of
Foreign transactions of
Holdings of Government securities
Holdings of Treasury certificates
Officers, list of
Officers and employees:
Number of
Number and salaries of
Operations, volume of
Presidents, list of
Real estate acquired for banking house purposes
Vice Presidents, list of
Volume of operations
Volume of operations in principal departments
Federal Reserve notes:
Cost of printing
Establishment of interest rate paid by Federal Reserve Banks
Federal Reserve System:
Map
Membership, increase in
Fiduciary powers, applications for national banks approved and powers terminated during year
First Vice Presidents:
List of
Mangels, H. N., appointment at San Francisco
*
Foreign banking corporations, number in operation
Foreign branches of American banking institutions
Foreign trade and finance

12
46
51
55
49

53
62
50, 74
63, 65
103
64
103

6, 76
48, 72
48, 72
48
53, 75
42
49
68
69
103
53
75
47, 69
112
74
112
47
69
55
83
114
37
43
112
53
44
44
32

I2O

INDEX
Page

Foreign transactions of Federal Reserve Banks
Government expenditures in 1947, discussion of
Government finance, review for year
Government securities:
Holdings by Federal Reserve Banks
Holdings of commercial banks and others
Interest rates on, changes in
Market for
Ownership of, changes during 1947
Purchase and sale by Federal Reserve Banks and effect on bank reserves. .
Purchase by Federal Reserve Banks
Purchase by Federal Reserve Banks authorized by amendment to Section 14
Statement of Federal Advisory Council on bank reserves of short-term
Yields on, discussion of
Green, Rufus, appointed director at Oklahoma City
Hershey, L. Vinton, appointed director at Baltimore.
Hodgkinson, Harold D., appointed Class C director at Boston
Hoffman, Paul G., appointed Deputy Chairman at Chicago
Holt, Thad, appointed director at Birmingham
Hyer, Merle G., appointed director at Salt Lake City
Imports:
Goods and services, review of
Inflationary developments during 1947, discussion of
Interest rates: {See Rates)
International Bank, operations of
International Monetary Fund, operations of
International trade and
finance
Joint statement of bank supervisory agencies, urging banks to curtail speculative
loans
Legislation:
Bank holding companies, to provide more effective supervision in control of,
recommended
Capital requirements for member banks, modification recommended to
Congress
Consumer credit:
Joint resolution continuing authority for temporary period
Permanent legislation to authorize regulation of, recommended by
Board
Federal Reserve branch bank buildings, amendment on cost of
Loans to business, recommendation for legislation for Reserve Bank guarantee of
Purchase of Government obligations by Federal Reserve Banks
Special reserve requirement on commercial banks, legislation recommended
to authorize establishment of
Stock of Federal Deposit Insurance Corporation, act to provide for retirement and cancellation of
War loan deposits, expiration of Act exempting from deposit insurance
assessments and reserve requirements
Loans:
Business, legislation recommended for Reserve Bank guarantee of
Expansion during 1947
Foreign, by Federal Reserve Bank of New York
Increase in, pressure on banks discussed
Securities, for purchasing and carrying by banks
Speculative, joint statement issued by bank supervisory agencies urging
banks to curtail

49
2
12
68
7
5
25
15
3
5
46
98
27
53
52
52
51
52
53
34
1
36
36
32
6
11
12
47
10
46
11
46
9
47
47
11
16
49
3
18
6

INDEX

121
Page

Loans and investments:
Member banks
24
Review of developments.
16
Mangels, H. N., appointed First Vice President at San Francisco
53
Map of Federal Reserve System
114
Margin requirements:
Amendments to Regulations T and U to reduce from 100 per cent to 75 per
cent
45, 82
Regulations T and U, table
77
McCormick, Charles P., appointed Deputy Chairman at Richmond
51
Meetings:
Auditors of Federal Reserve Banks
59
Chairmen of Federal Reserve Banks
59
Counsel for Federal Reserve Banks
59
Examination departments of Federal Reserve Banks
59
Federal Advisory Council
59
Federal Open Market Committee
59
Miscellaneous conferences attended by representatives of Board and
Federal Reserve Banks
59
National Association of Supervisors of State Banks, annual convention of. .
43
Presidents of Federal Reserve Banks
59
Member banks:
Analysis of changes
79
Capital accounts
24
Earnings and earning assets
22
Loans and investments
24
Number of
79
Membership in the Federal Reserve. System:
Capital requirements for admission of State banks, modification recommended to Congress
12
Increase during year
37
Peoples Bank, Lakewood Village, California, suit regarding condition of
membership
46
Monetary instruments, inadequacy of existing
7
Monetary policies in 1947
3
Money rates, discussion of
25
Morse, Chandler, resignation as Assistant Director of Division of Research and
Statistics
54
Municipal and corporate securities, bank holdings of
18
Mutual savings banks, analysis of changes
79
Myrick, Lowell, appointed Assistant Director of Division of Bank Operations..
54
National Association of Supervisors of State Banks, annual convention of
43
National banks:
Analysis of changes
79
Fiduciary powers, applications approved and powers terminated
43
Nonmember banks:
Analysis of changes
79
Par list, number on list and number not on list
80
Operations of Federal Reserve Banks, volume of
47, 69
Par list:
Changes during year
38
Number of banks on list and not on list by Federal Reserve districts and
States
80
Paulger, Leo H., Special Adviser to the Board, retirement of
54
Peoples Bank, Lakewood Village, California, suit regarding condition of membership
*
46

122

INDEX
Page

Plunkett, Ralph E., appointed director at Little Rock
52
Policy actions, Board of Governors:
Establishment of interest rate paid by the Federal Reserve Banks on
Federal Reserve notes
83
Regulation T, Extension and Maintenance of Credit by Brokers, Dealers,
and Members of National Securities Exchanges, amendment to
82
Regulation U, Loans by Banks for the Purpose of Purchasing or Carrying
Stocks Registered on a National Securities Exchange, amendment t o . .
82
Reserve cities, standard for classification of
85
Policy actions, Federal Open Market Committee:
Authority to effect transactions in System account:
Meeting of March 1
88
Meeting of June 5
91
Meeting of October 6-7
95
Meeting of December 9
96
Elimination of posted rate on Treasury bills
92
Increase in authority to effect transactions in System account:
Meeting of June. 5
90
Meeting of October 6-7. . .
95
Revised authority to effect transactions in System account
94
Tender of maturing Treasury bills for new issues
..
90
Postal savings deposits, rate on
..
77
Presidents of Federal Reserve Banks:
Conference of
.
113
List of
112
Meetings held during year
59
Prices, fluctuations during 1947 discussed
29
Production during 1947
29
Public debt:
Changes during year
13
Outstanding, by types of issue
15
Publications and releases of Board
58
Ransom, Ronald, member of Board of Governors, death of
53
Rates:
Buying rates on bills
76
Commitment
76
Discount:
Increase at Federal Reserve Banks
6
Table
76
Interest:
Changes during 1947
26
Establishment by Federal Reserve Banks on Federal Reserve notes
83
Government securities
5
Table
.
76
Money, during 1947
26
Postal savings deposits
77
Savings deposits
77
Time deposits
77
Real estate acquired by Federal Reserve Banks for banking house purposes. . . .
74
Receipts and disbursements of Board
54
Regulations, Board of Governors:
T, Extension and Maintenance of Credit by Brokers, Dealers, and Members
of National Securities Exchanges, amendment to reduce margin requirements
45, 82

INDEX

Regulations, Board of Governors—Continued
U, Loans by Banks for the Purpose of Purchasing or Carrying Stocks Registered on a National Securities Exchange, amendment to reduce margin
requirements
W, Consumer Credit, termination of
Relations with dealers in securities:
Suit regarding removal of bank directors, order of Board sustained by
Supreme Court
Research and Advisory Services of Board
Reserve cities, basis for classification of
Reserve requirements:
Authority to raise discussed. . .
Member banks
Reserves:
Availability of
Changes causing increase and decrease of
Effect of reduction in Federal Reserve holdings of Government securities on
Increase in requirements at central reserve cities
Special, discussion of plan
Statement of Federal Advisory Council on bank reserves of short-term
Government securities
Resignations:
Morse, Chandler, as Assistant Director of Division of Research and
Statistics
Retirements:
Paulger, Leo H., Special Adviser to the Board
Salaries of officers and employees of the Federal Reserve Banks
Securities:
Government: {See Government securities)
Municipalities and corporations, bank holdings of
Securities exchange administration:
Amendments to Regulations T and U to reduce margin requirements
Sibley, W. A. L., appointed director at Charlotte
Staff at Federal Reserve Banks, number of officers and employees
Staff of Board of Governors:
Brown, Bonnar, appointed Assistant Director of Division of Research and
Statistics
Members "of official staff
Morse, Chandler, resignation as Assistant Director of Division of Research
and Statistics
Myrick, Lowell, appointed Assistant Director of Division of Bank Operations
Number of employees
Paulger, Leo H., Special Adviser to Board, retirement of
Townsend, J. Leonard, title changed to Associate General Counsel
Young, Ralph A., title changed to Associate Director, Division of Research
and Statistics
State member banks:
Analysis of changes
Examination of
Increase during year
,
Stettinius, Edward R., Jr., appointed Class C director at Richmond
Stock, capital:
Federal Deposit. Insurance Corporation, Act providing for retirement and
cancellation of
Requirements for member banks, modification recommended
Surveys:
Consumer
finances
Loans outstanding to farmers

123
Page

45, 82
45

45
55
38, 85
8
77
21
21
3
6
9
98

54
54
75

18
45, 82
52
53, 75
54
101
54
54
53
54
54
54
79
42
37
52

47
12
56
55

124

INDEX
Page

Taylor, R. B., appointed director at Portland
53
Townsend, J. Leonard, title changed to Associate General Counsel
54
Treasury certificates, holdings by Federal Reserve Banks
69
Trust powers of national banks, changes in banks granted authority and number terminated during year
43
Volume of operations of Federal Reserve Banks
47, 6.9
Voting permits, number authorized during year
43
Wallace, William R., Jr., appointed Class C director at San Francisco....
52
W a r loan deposits, expiration of Act exempting from deposit insurance assessments and reserve requirements
47
Wilbur, Brayton, designated Chairman and Federal Reserve Agent at San
Francisco
52
Wysor, W. G., designated Chairman and Federal Reserve Agent at Richmond. .
51
Yields on Government securities, discussion of
27
Young, Ralph A., title changed to Associate Director of Division of Research
and Statistics
54

Full text of Annual Report of the Board of Governors of the Federal Reserve System : 1947

FRASER