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FORTY-SEVENTH

Annual Report
OF THE

BOARD OF GOVERNORS
of the Federal Reserve System

COVERING OPERATIONS FOR THE YEAR

I96O

Letter of Transmittal

BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM,

Washington, March 9, 1961.
THE SPEAKER OF THE HOUSE OF REPRESENTATIVES.

Pursuant to the requirements of Section 10 of the Federal
Reserve Act, as amended, I have the honor to submit
the Forty-seventh Annual Report of the Board of Governors of the Federal Reserve System. This report covers operations for the year 1960.

Yours respectfully,
W M . M C C . MARTIN, JR.,

Chairman.

Contents
Page
INTRODUCTION

DIGEST OF PRINCIPAL FEDERAL RESERVE POLICY ACTIONS, 1960

MONETARY POLICY AND BANK RESERVES

Vault cash and reserve requirements
Margin requirements
BALANCE OF PAYMENTS AND MONETARY POLICY

Mechanisms of adjustment
Balance of payments in recent years
Nature of the balance-of-payments problem
MONEY AND OTHER LIQUID ASSETS

Money supply and turnover
Other liquid assets
FINANCIAL MARKETS IN 1960

Funds raised in credit markets
Federal Government obligations
Corporate securities
Business loans of banks
State and local obligations
Mortgages
Consumer credit
Credit supplies
Consumers
Savings institutions
Life insurance and pension funds
Commercial banks
Other sources
Pattern of market yields

11
12
12

14
15
17
18

19
19
21

22
23
24
24
25
25
26
26
26
27
28
28
30
31

RECORD OF POLICY ACTIONS—FEDERAL OPEN MARKET COMMITTEE

RECORD OF POLICY ACTIONS—BOARD OF GOVERNORS

Page
BANK SUPERVISION BY THE FEDERAL RESERVE SYSTEM

Examination of Federal Reserve Banks
Examination of member banks
Federal Reserve membership
Bank holding companies
Trust powers of national banks
Foreign branches of member banks
Acceptance powers of member banks
Foreign banking and financing corporations
Inter-Agency Bank Examination School

89
89
91
91
92
93
94
94
95

LEGISLATION ENACTED

Mergers and consolidations of insured banks
Power of a subsidiary bank to invest in small business investment company
Uniform basis for reporting deposits
Extension of Defense Production Act of 1950
Federal Reserve Banks as depositories or fiscal agents for the
International Development Fund
Extension of authority of Federal Reserve Banks to purchase
Government obligations
Federal Reserve Banks subject to Federal unemployment
compensation tax
PROPOSED AMENDMENTS TO THE BANK HOLDING COMPANY ACT

96
97
97
97
97
97
98
98

LITIGATION

100

RESERVE BANK OPERATIONS

101

Loan guarantees for defense production
Volume of operations
Earnings and expenses
Holdings of loans and securities
Foreign and international accounts
Bank premises
BOARD OF GOVERNORS—INCOME AND EXPENSES

Tables
1. Statement of Condition of all Federal Reserve Banks
Combined (in detail), Dec. 31, 1960

101
101
102
104
105
106
106

110

Page
Tables—cont.
2. Statement of Condition of Each Federal Reserve Bank at
End of 1960 and 1959
3. Holdings of U.S. Government Securities by Federal
Reserve Banks, End of December 1960,1959, and 1958
4. Federal Reserve Bank Holdings of Special Short-Term
Treasury Certificates Purchased Directly from the
United States, 1953-60
5. Open Market Transactions of the Federal Reserve System during 1960
6. Earnings and Expenses of Federal Reserve Banks during
1960
7. Earnings and Expenses of Federal Reserve Banks,
1914-60
8. Bank Premises of Federal Reserve Banks and Branches,
Dec. 31, 1960
9. Number and Salaries of Officers and Employees of
Federal Reserve Banks, Dec. 31, 1960
10. Volume of Operations in Principal Departments of
Federal Reserve Banks, 1957-60
11. Federal Reserve Bank Discount Rates (in effect Dec. 31,
1960)
12. Maximum Interest Rates Payable on Time Deposits
13. Margin Requirements
14. Fees and Rates Established under Regulation V on
Loans Guaranteed Pursuant to Defense Production
Act of 1950 (in effect Dec. 31, 1960)
15. Member Bank Reserve Requirements
16. Principal Assets and Liabilities, and Number of All
Banks, by Classes, Dec. 31, 1960 and 1959
17. Member Bank Reserves, Reserve Bank Credit, and Related Items, End of Year 1918-60 and End of Month
1960
18. Member Bank Earnings, by Class of Bank, 1960 and 1959
19. Analysis of Changes in Number of Banking Offices in the
United States during 1960
20. Number of Banking Offices on Federal Reserve Par List
and Not on Par List, Dec. 31, 1960

vii

112
116

117
117
118
120
122
123
123
124
124
125

125
126
127

128
130
131
132

Page
Tables—cont.
21. Description of Each Merger, Consolidation, Acquisition
of Assets, or Assumption of Liabilities Approved by
the Board of Governors, May 13-Dec. 31, 1960
134
Federal Reserve Directories and Meetings
Board of Governors of the Federal Reserve System
Federal Open Market Committee
Federal Advisory Council
Federal Reserve Banks and Branches

150
152
153
154

Map of Federal Reserve Districts

175

Index

176

Vlll

Annual Report of The Board of Governors
of The Federal Reserve System
*
was a year of high-level output.
VMost broadA measures1960of activity,
such as gross national
IEWED AS

WHOLE,

product, consumption, personal income, total employment, and
industrial production, were at record levels moderately above the
highs attained in 1959. Per capita real income and consumer
expenditures also averaged somewhat higher.
During the year, however, economic activity began to recede,
and at the year-end it was still moving downward. While the
declines were generally moderate, an appreciable proportion of
productive capacity was not being utilized and unemployment at
the end of the year was not far below the postwar high reached
in the 1958 recession.
With demands abroad generally strong, U.S. exports rose
rapidly until about the middle of 1960 and continued at a high
level during the remainder of the year. For the entire year they
exceeded those of 1959 by about 20 per cent. Imports fell off,
particularly in the latter part of the year. Despite the resulting
large increase in the export surplus, the over-all deficit in the
U.S. balance of payments became unusually large in the second
half because of outward movements of capital.
Early in 1960 there was an abatement of inflationary expectations. Such expectations had played an important role in economic decisions for several preceding years and had affected
commodity markets, valuations of capital assets, and the volume
and structure of credit and debt. The shift away from inflationary expectations exerted a pervasive influence on consumer,
business, and financial decisions. Stock market prices underwent reappraisal in the light of the change in such expectations
and a downturn in current profits. The long upward trend in
farm land values was arrested despite a small increase in farm

ANNUAL REPORT OF BOARD OF GOVERNORS

income, and the increases in urban real estate values and in construction costs slackened.
Fiscal policy contributed to the marked reduction in the inflationary pressures and expectations at the beginning of the year.
The Federal Government's budget submitted in January indicated
a swing from an exceptionally large deficit in calendar year 1959
to a sizable surplus for 1960.
The Federal Reserve policy of restraint on expansion of bank
credit and money, which carried over from 1959, was progressively moderated over the first half of 1960—as demands for
credit became less intense, speculative pressures diminished, and
market rates of interest declined. Thereafter, as output declined,
especially in the materials-producing industries, monetary policy
became increasingly stimulative.
As 1960 progressed, the Federal Reserve System faced a
dilemma. On the one hand, rising unemployment and declining
output called for credit ease and lower interest rates. On the
other hand, the continued adverse balance of payments, together
with increased outflow of gold, gave rise to concern about the
interest rate differentials between the United States and the rest
of the world that, along with other factors, were inducing capital
to leave this country.
Monetary policies directed toward stimulating the domestic
economy were concerned mainly with increasing the liquidity
and lending capacity of commercial banks. In 1959 these banks
had increased their loans relative to their deposits by reducing their
holdings of Government securities. Consequently, in 1960 they
made use of additional reserves first to reduce their borrowings,
and then to replenish their holdings of short-term Government
securities, especially Treasury bills. In the face of other forces
tending to raise interest rates on short-term Government securities, the demand by commercial banks for such securities was a
factor in maintaining their yields at the lower levels reached at
midyear. Abroad, on the other hand, short-term rates rose further around midyear. The effect of these developments was to

FEDERAL RESERVE SYSTEM

widen the differential between rates on short-term securities in
markets here and abroad.
Two reductions were made in Federal Reserve Bank discount
rates in 1960 to bring them into closer alignment with market
rates on short-term issues. These reductions lowered the cost of
member bank borrowing from the Federal Reserve. Thus, they
decreased the relative advantage to banks of meeting temporary
deficiencies in their reserve positions through operations in the
money market rather than through direct borrowing from the
Reserve Banks. This change in the relative cost of obtaining
bank reserves in alternative ways was consistent with maintaining the degree of ease considered appropriate at the time.
In the last few months of the year the Federal Reserve sought
to supply reserves to member banks in ways that might limit the
direct impact of its operations upon the level of short-term interest rates. The tabular statement on the following two pages
summarizes Federal Reserve policy actions in 1960 and the
reasons for them.
Among the economic developments taken into consideration
by the Federal Reserve was the comparative stability in prices
in 1960. Wholesale commodity prices continued approximately
stable for the third consecutive year. Prices of industrial commodities tended downward, while prices of farm and food products rose somewhat and the consumer price index continued to
rise. Prices of consumer goods other than foods declined slightly,
and there was a slackening in the rise in prices of consumer services. Industrial wage rates continued to move upward, although
more slowly than in most other postwar years.
Contrary to some earlier expectations, steel prices were not
raised after the protracted strike in late 1959. The strike
settlement provided for wage increases that were sizable but
much less than those in the preceding contract. With prices
steady and supplies readily available from record domestic output and from continued imports, steel consuming industries began to curtail inventory commitments early in the year. Reappraisal of inventory needs in the light of ample capacity and

ANNUAL REPORT OF BOARD OF GOVERNORS
DIGEST OF PRINCIPAL FEDERAL RESERVE POLICY ACTIONS,

Period
JanuaryMarch

Late MarchJuly

Action
Reduced System holdings of
U.S. Government securities
by about $1.6 billion. Member bank borrowings at the
Federal Reserve Banks
dropped from an average of
$900 million in December to
$635 million in March.
Increased System holdings of
Government securities by
nearly $1.4 billion. Member
bank borrowings at Reserve
Banks declined to an average
of less than $400 million in
July.

1960

Purpose of action
To offset the seasonal inflow
of reserve funds, mainly from
the post-holiday return of
currency from circulation,
while permitting some reduction in borrowed reserves.
To promote further reduction in the net borrowed reserve positions of member
banks and, beginning in May,
to provide reserves needed
for moderate bank credit and
monetary expansion.

June

Reduced discount rates from
4 to 3*4 per cent at all
Reserve Banks.

To reduce the cost of borrowed reserves for member
banks and to bring the discount rate closer to market
interest rates.

July

Reduced margin requirements on loans for purchasing or carrying listed securities from 90 to 70 per cent of
market value of securities.

To lower margin requirements from the high level in
effect since October 1958 in
recognition of decline in volume of stock market credit
outstanding and lessened
danger of excessive speculative activity in the market.

August

Authorized member banks to
count about $500 million of
their vault cash as required
reserves, effective for country
banks August 25 and for
central reserve and reserve
city banks September 1.
Reduced reserve requirements against net demand
deposits at central reserve
city banks from 18 to \ll/i
per cent, effective September
1, thereby releasing about
$125 million of reserves.

To provide mainly for seasonal needs for reserve funds,
and to implement 1959 legislation directed in part toward
equalization of reserve requirements of central reserve
and reserve city banks.

FEDERAL RESERVE SYSTEM
DIGEST OF PRINCIPAL FEDERAL RESERVE POLICY

ACTIONS, 1960—Cont.
Action

Period

Purpose of action

AugustSeptember

Reduced discount rates from
V/i to 3 per cent at all
Reserve Banks.

To reduce further the cost of
borrowing from the Reserve
Banks and reduce the differential between the discount
rate and market rates of
interest.

AugustNovember

Bought or sold at different
times varying amounts of
Government securities with a
net increase in System holdings of about $1 billion,
including securities held under repurchase agreement
and issues with short maturities other than Treasury
bills. Member bank borrowing declined further to average below $150 million in
October and November.

To encourage bank credit
and monetary expansion by
meeting changing reserve
needs and offsetting the impact of a large gold outflow
without exerting undue
downward pressure on shortterm Treasury bill rates that
might stimulate further outflow of funds.

Late
NovemberDecember

Authorized member banks
to count all their vault cash
in meeting their reserve requirements and increased
reserve requirements against
net demand deposits for
country banks from 11 to 12
per cent. The net effect of
these two actions, effective
November 24, was to make
available about $1,050
million of reserves.
Reduced reserve requirements against net demand
deposits at central reserve
city banks from 17% to 16y2
per cent, effective December
1, thereby releasing about
$250 million of reserves.
Sold U.S. Government securities except for seasonal
purchases in last week of
December. Member bank
borrowings at the Reserve
Banks averaged less than $90
million in December.

To provide, on a liberal basis,
for seasonal reserve needs, to
complete implementation of
legislation directed in part
toward equalization of reserve requirements of central
reserve and reserve city
banks, and to offset the
effect of continued gold outflow, while avoiding direct
impact on short-term rates
that might stimulate further
outflow of funds.

ANNUAL REPORT OF BOARD OF GOVERNORS

supplies then spread to producers of other industrial materials
and manufactured goods.
Business inventory investment was reduced sharply over the
course of the year, as accumulation at a near-record rate in the
first quarter was followed by lower rates of accumulation and,
in the final quarter, by substantial liquidation. Declining inventory investment and reduction in home building were important
factors in the mild contraction in general activity after midyear.
Despite sharp reduction in inventory investment during the
year and the associated reduction in industrial production and
employment, final demands for goods and services continued to
increase, although the pace diminished over the year. Continued
expansion in such demands, facilitated by easier credit conditions, provided support to the economy in the face of inventory
and other adjustments that were taking place. The increases in
demands, however, were not sufficient to prevent the development of slack in utilization of resources, evidenced particularly
by more unemployment.
Although personal incomes continued to increase until late in
the year, consumer expenditures in the aggregate increased less
than income, and consumer savings increased. Following a record
increase in indebtedness in 1959, consumers in 1960 stepped up
their repayments of debt in the latter part of the year and reduced
their borrowings for purchases of homes and for other purposes.
Total holdings of liquid assets by consumers increased less than
they had in 1959 when acquisitions of Government securities
were exceptionally large.
Business outlays for fixed capital, though larger in 1960 than
in 1959, declined slightly in the last half of 1960. Confidence in
the underlying strength of the economy and expectations for
resumed growth, however, were evidenced by the recovery in
stock market prices late in the year and by the relatively modest
contraction in current and prospective expenditures for business
plant and equipment as economic activity receded and business
profits declined.
The unemployment problem was one of growing concern dur-

FEDERAL RESERVE SYSTEM

ing the year. Beginning in late spring unemployment began to
rise from already high levels, and by the year-end had reached
a seasonally adjusted rate of 6.8 per cent of the labor force. In
addition to losses in employment, average hours of work in
manufacturing were reduced and weekly earnings declined somewhat despite a further increase in hourly wages.
Continuing gradual change in the occupational structure and
location of employment made reemployment difficult for many
of the unemployed. At the same time improved technology and
equipment continued to reduce manpower requirements in many
industries. These secular forces tended to intensify the increase
in unemployment that stemmed from cyclical declines in activity.
Meanwhile, the rate of growth in the labor force increased in
1960. This growth foreshadowed further increases as the high
birth rates of the 1940's are increasingly reflected in the population of working age.
MONETARY POLICY AND BANK RESERVES

Early in 1960 the policy of restraining credit and monetary
expansion that had been in effect in 1959 was relaxed, and in ensuing months policy began actively to stimulate such expansion.
The Federal Reserve used open market operations and other
policy instruments to increase the supply and reduce the cost of
bank reserves. These actions provided a reserve base to facilitate expansion of bank credit and money in a period when economic activity was showing signs of recession, over-all credit
demands were contracting, and interest rates were declining. In
this situation commercial banks extended $8.4 billion of credit
during 1960, or more than twice as much as the year before
(after allowance for changes in bank structure). The money
supply (seasonally adjusted), after declining during the first half
of the year, rose during the second.
During the first four months of the year, the reserve position
of banks was eased as Federal Reserve open market sales of
securities absorbed only a part of the required reserves released

ANNUAL REPORT OF BOARD OF GOVERNORS

by the decline in deposits and the reserve funds made available
from currency inflow and other sources. Reserve funds were
available in sufficient volume to allow member banks to reduce
their borrowings at Federal Reserve Banks by about $300 million
on the average. By late May-early June, member banks had reduced their borrowings to a level slightly below excess reserves,
that is, they had a small net free reserve position.
Net free reserves of member banks expanded sharply during
the last part of the year, and by December they averaged $680
million. Three-fifths of the increase took place at country banks.
Easing of bank reserve positions, along with a much greater than
seasonal expansion in commercial bank credit in the second half,
reflected the effects of various Federal Reserve actions to increase
the availability of reserves.

RESERVES AND BORROWINGS
A i t JRlJUttt* *AMtS

...

NOTE.—Monthly averages of daily figures. Beginning with December 1959,
total reserves include reserves allowable in cash.

FEDERAL RESERVE SYSTEM

Total member bank reserves declined in the early months of
1960 but thereafter rose by more than customary seasonal
amounts to an average of $19.3 billion in December. This was
about $350 million more than the total held in December 1959.
During much of the year the Federal Reserve was adding on
balance to its holdings of securities in order to help ease credit
market conditions and to offset the impact of large foreign acquisitions of gold on member bank reserves. In late October and
in November, the Federal Reserve purchased short-term U.S.
CHANGES IN MEMBER B A N K

RESERVES

[Based on averages of daily figures for December; in billions of dollars]
Item

1959

Member bank reserves
Total reserves
Reserves held with Federal Reserve Banks
Vault cash allowable as reserves
Required reserves
Effect of:
Change in reserve requirement percentages...
Change in deposits
Excess reserves
Principal factors affecting reserves
Federal Reserve credit:
Discounts and advances to member^banks
Holdings of U.S. Govt. securities 2
Float
Vault cash allowable as reserves
Currency in circulation
Gold stock and foreign accounts
Other factors
1
2

+0.3
-0.4
3-1.2
3+0.3

Less than $50 million.
Includes acceptances.
3 Changes in gold stock and Treasury cash (included in other factors) include the effect of a payment
of $344 million in gold from Treasury cash holdings to the International Monetary Fund in connection
with the increase in the U.S. subscription to the Fund; these changes were offsetting and had no effect
on total reserves.
NOTE.—Figures may not add to totals because of rounding.

ANNUAL REPORT OF BOARD OF GOVERNORS

Government securities other than Treasury bills for the first time
since 1958. These purchases, which amounted to $315 million,
were made at a time when the System was engaged in large
operations to meet seasonal and other reserve needs and when
the spread between rates on short-term Treasury bills and those
on securities maturing in 9 to 15 months was unusually wide.
During 1960 reserve funds were released on balance by measures that affected vault cash and reserve requirements. As the
economy was entering the fall and pre-Christmas periods of seasonal expansion in credit needs, additional amounts of vault cash
were made eligible to meet reserve requirements. The net effect
of all these actions was to add about $1.9 billion to reserves.
Reserves were absorbed, however, by large foreign acquisitions
of gold from the United States, mainly in the second half of the
year, as discussed in more detail later. Other factors—currency
in circulation, Federal Reserve float, and Treasury operations—
had little net effect on reserves over the year.
MSCOIMT AND BILL RATES

TREASURY BILLSv
MARKET YIELDS

Besides increasing the availability of reserve funds, and thus
enabling banks both to reduce their borrowings and to expand
credit, the Federal Reserve took actions to reduce the cost of

FEDERAL RESERVE SYSTEM

borrowed reserves to member banks. Federal Reserve discount
rates—the rates charged member banks for short-term borrowing
to meet temporary reserve deficiencies—were reduced from 4 to
3V2 per cent in June and to 3 per cent in August and early September. While these reductions were less marked than declines
that had occurred in short-term market rates, which reflected
both reduced demand for funds and the easing in reserve positions, they were consistent with System policy of keeping discount
rates related to market rates.
Vault cash and reserve requirements. During 1960 the Board of
Governors, in implementation of legislation enacted in 1959
(described in the Annual Report for 1959), authorized member
banks to count all their vault cash in meeting reserve requirements. The authorization was conferred gradually. The first
step had been taken in December 1959 and two more steps were
taken in 1960. The second step released $500 million of reserve
funds in the last week of August and the first week of September,
and the final step released an additional $1.4 billion in the last
week of November. The timing of these actions was related
mainly to seasonal needs for expansion in bank reserves and
currency. A more detailed description of the various actions
related to vault cash and reserve requirements is contained in the
Federal Reserve Bulletin for December 1960, pages 1326-31.
The comparatively rapid expansion in the free reserve position
of country banks and the maintenance of that position at high
levels is explained in part by the incidence of these actions. These
banks held almost two-thirds of the vault cash made eligible
for reserves in 1960. Some of the impact of the vault cash provisions on the reserve position of these banks was offset, however,
by an increase from 11 to 12 per cent in their reserve requirements against net demand deposits. After these actions many
member banks, especially smaller country banks, apparently preferred to hold higher excess reserves than they had customarily
been holding.
Also in implementation of the 1959 legislation, reserves required against demand deposits at central reserve city banks were

ANNUAL REPORT OF BOARD OF GOVERNORS

reduced in September and December from 18 to I6Y2 per cent
and are now the same as requirements at reserve city banks. By
provision of the 1959 legislation the separate classification of
"central reserve city" banks is to be terminated in 1962.
Margin requirements. In addition to actions affecting bank reserves, the Federal Reserve in 1960 also reduced margin requirements on credit used for purchasing or carrying stock market
securities. During thefirstseveral months of the year, the volume
of stock market credit outstanding generally declined. Effective
July 28, the Board of Governors reduced margin requirements
from 90 per cent, the level in effect since October 1958, to 70
per cent. During the balance of the year customer credit in
the stock market rose almost $300 million to a level just below
the total at the beginning of the year.
BALANCE OF PAYMENTS AND MONETARY POLICY

A striking development in 1960, along with the marked increase in the U.S. export surplus, was a large movement of
private liquid capital, both U.S. and foreign, from the United
States to foreign countries. Conditions of strong demand for
goods and for capital prevailed in many countries. Relatively
high interest rates in some of those countries attracted short-term
investments, as did also the prospects of capital gains on both
fixed-income and equity securities. At the same time loans and
credits by U.S. lenders to borrowers abroad were stimulated by
the increasing availability of funds in the United States. The
movements of funds attained sizable magnitude after the middle
of the year.
Outflows of capital in 1960 were intensified by various uncertainties, including those arising from concern in financial
markets about the prospects for equilibrium in the international
transactions of the United States. Persistent balance-of-payments
surpluses in some other countries, particularly Germany, were a
disturbing factor.
The movements of private capital resulted in large accretions

FEDERAL RESERVE SYSTEM

to official gold and dollar reserves of several countries, and foreign monetary authorities exchanged large amounts of dollars for
gold. The drain on the U.S. gold stock during the year amounted
to $1.7 billion.
Developments in international trade and capitalflowsare kept
constantly under review in the determination of monetary policy.
During 1960 fundamental adjustments in the basic elements of
the balance of payments appeared to be going forward, as a result
SHORT-TERM INTEREST RATES
3-MGHTH PAPIR
Per

p*t

U. K.

\
-

v4 <

GERMANY ^ ^ s J ^ C ^

/u. s.

1958

NOTE.—U. S.: monthly averages of daily market yields for Treasury bills.
U. K.: monthly averages of weekly tender rates for Treasury bills. Germany:
averages of high and low quotations during month for money market loans,
Frankfurt.

in part of the marked diminution of inflationary pressures on the
U.S. cost-price structure. Moreover, renewed expansion in U.S.
economic activity, toward which monetary policy was directed,
would help sustain conditions of total demand in world trade that
would foster further expansion of U.S. exports. Meanwhile, U.S.
gold reserves were large, and short-term outflows of capital could

ANNUAL REPORT OF BOARD OF GOVERNORS

be expected to cease or be reversed as conditions in financial
markets changed.
The spread between British Treasury bill rates in London and
U.S. Treasury bill rates reached its maximum around midyear,
and became somewhat smaller when London rates were reduced
in October and December. In this country, although increased
demand for short-term securities on the part of member banks
with easier reserve positions necessarily tended to push Treasury
bill rates downward, other demand and supply factors were operating to hold Treasury bill rates up throughout the second half of
1960. One of these factors, directly related to international
capital flows and foreign acquisitions of gold, was the diminished
foreign demand for U.S. Government short-term securities. Reported foreign holdings of U.S. Treasury bills and certificates
increased only $200 million in 1960, compared with $2.1 billion
the year before.
Mechanisms of adjustment. Except for the movements of private
liquid capital and the related foreign acquisitions of gold from
the United States, developments in 1960 tended toward restoration of equilibrium in the U.S. balance of payments. The increase in the export surplus reflected not only short-run changes
in demand conditions but also forces that should prove more
persistent.
A development of great importance was the abatement of inflation and inflationary expectations in the United States. Under
conditions of general price stability and of relatively free access
of foreign goods to the U.S. market, U.S. producers are in a position to take constructive steps to counter foreign competition by
product improvement, cost reduction, and selling effort.
In retrospect it is evident that this country's competitive position was beginning to be threatened in the mid-1950's. Although
price indexes of industrial products in other leading countries
increased about as much as U.S. prices from 1953 to the end of
1957, some of those countries at the same time were achieving
large gains in productivity and in productive capacity. During
1958 and the first part of 1959, when European demand was

FEDERAL RESERVE SYSTEM

slack, these gains were translated into price reductions for European exports. In this country, however, the rise in prices paused
only briefly in 1958 and then resumed, until the autumn of 1959
brought a definite check to the advance.
After rapid expansion in European economic activity resumed
early in 1959, an upward trend in European industrial prices
began to reassert itself. During 1960 this trend became particularly marked in Germany, a country in which resistance to inflation had been relatively successful during the 1950's. Germany's
success in maintaining its export surplus without large-scale longterm lending to other countries intensified the pressures of demands on its industrial capacity and its labor supply. During
1960 German wage rates rose on the average by about 8 per
cent. Average domestic wholesale prices of industrially produced
materials rose by about 2 per cent, and those of manufactured
consumer and capital goods by as much as 4 per cent. Retail
prices of nonfood products rose about 2 per cent. Even with
these price increases, Germany's export capabilities remained
very strong, and its balance of payments continued heavily in
surplus.
The developments in 1960 that worked in the direction of
restoring equilibrium in international payments included further
measures abroad to end quota restrictions on imports of U.S.
products into various countries. Also, the U.S. Government took
action to curtail future expenditures abroad in connection with
economic aid and defense programs. By these actions and also
through international negotiations, interest was enlisted in an
expansion of efforts by other countries to carry larger shares of
the common burdens of economic aid and defense. Preparations
were made for negotiations in 1961 to obtain new tariff reductions abroad in favor of U.S. exports. Developments such as
these have been made possible and necessary by the successful
restoration during the 1950's of vitality and strength to the economies of other industrial countries.
Balance of payments in recent years. Wide swings have occurred during the lastfiveyears in the merchandise export surplus

ANNUAL REPORT OF BOARD OF GOVERNORS

of the United States and in flows of private capital between this
country and others. These two kinds of swings, while varying in
magnitude, have shown some tendency to offset each other in the
over-all balance of payments. Changes in the relative strength
of demands for goods here and abroad tend to be accompanied
by corresponding shifts in the relative strength of demands for
O X lAfcAtiCi Of PAYHI8TS

A^wo! rolw

CAPITAL AND OTHER

NOTE.—Seasonally adjusted annual rates. "Capital and other" includes
private U. S. capital and private long-term foreign capital; U. S. Government
economic aid grants and loans; pensions and remittances; and unrecorded
transactions, both capital and current. "Over-all balance" reflects changes in
U. S. gold holdings and in recorded foreign holdings of dollar liquid assets.

capital and by opposite shifts in the availability of liquid funds.
Despite such offsetting tendencies, the over-all balance of payments was persistently adverse during the three years 1958-60.
There was a drain of $5 billion from the U.S. gold stock and a
net increase of more than $6 billion in foreign holdings of dollar
liquid assets. In 1960, the adverse balance was $3.8 billion.
At first—up to about mid-1959—the large adverse payments

FEDERAL RESERVE SYSTEM

balance reflected not only short-run changes in demand conditions here and abroad but also the longer run improvement that
had been occurring in the competitive efficiency of foreign industrial countries. After mid-1959, when U.S. imports ceased to
rise and U.S. exports began to recover rapidly, the adverse payments balance was due less and less to insufficiency of export
earnings and more and more to unusually large short-term capital outflows.
In the second half of 1960, under conditions of relatively
strong demand abroad, U.S. merchandise exports were at a rate
of nearly $20 billion a year and imports at a rate of about $14
billion. The export surplus was enough to cover—with the help
of investment income, other private service earnings, and repayments on Government loans—all economic aid loans and grants,
all military expenditures abroad, and a substantial part of the
normal outflow of long-term private investment. But the actual
outflow of U.S. and foreign private capital during the last six
months was apparently $3.5 billion or more, mainly in short-term
and unidentified forms. This unusually large outflow of private
funds brought an increase in this period of $1.4 billion in official
dollar holdings of foreign countries and international institutions
and a decline of more than $1.5 billion in U.S. gold reserves.
Considering only the last three months of the year, U.S. gold
reserves would have declined $1.2 billion except for receipt of
$300 million in gold from the International Monetary Fund, as
the Fund in that period exchanged gold for dollars. In these three
months short-term official dollar holdings of foreign countries
increased only $300 million.
Nature of the balance-of-payments problem. Stability of the
dollar is necessary for efficient functioning of the system of international commerce and investment based on the dollar as a reserve currency and standard of value. Restoration of a satisfactory equilibrium in our international payments is therefore
important both for the United States and for the rest of the
world. A satisfactory equilibrium requires two things: first, that
current and long-term capital transactions be in balance, on the

ANNUAL REPORT OF BOARD OF GOVERNORS

average, over a period of years, rather than only when foreign
demand conditions are exceptionally strong; and second, that
short-term capital flows not be a source of apprehension about
the value of the dollar in relation to gold.
To achieve equilibrium in current and long-term capital transactions over a period of years requires further adjustments, both
in the United States and in foreign countries, of the kinds that
were already occurring in 1960 or were foreshadowed in actions
taken then. Of the efforts that lie ahead for the United States,
one of the most important will be to maintain a cost-price structure in this country that is competitive with other countries when
expansion of U.S. economic activity resumes.
To prevent future flows of short-term capital from feeding on
themselves and creating unjustified apprehensions may require
new measures of international cooperation. Under conditions of
widespread convertibility of currencies, large swings between inflow and outflow of liquid capital must be expected to recur, in
response to recurrent shifts in the demand for and supply of
funds. The problem is not to halt such movements, but to minimize their potential for causing speculative reactions and
disturbances.
The two objectives involved in achieving full equilibrium are
not entirely independent of each other. Whatever the strength
of a country's reserve position may be, and whatever may be
done to help prevent unwarranted apprehensions, a necessary
step in minimizing abnormal outflows of capital is to establish
sustainable balance in the more basic elements of the country's
international transactions.
MONEY AND OTHER LIQUID ASSETS

Expansion in commercial bank credit in 1960, which reached
record proportions for the postwar period in the second half of
the year, was accompanied by rapid growth in time and savings
deposits. The money supply—that is, curency and demand
deposits other than those held by the U.S. Government and
domestic commercial banks—rose more than seasonally in the

FEDERAL RESERVE SYSTEM

second half, after declining in the first half. Savings and loan
shares increased substantially more than they had in 1959. Holdings of short-term U.S. Government securities by the nonbank
public declined markedly after the early months of the year, as
compared with a sharp increase the year before.
Money supply and turnover. The money supply declined, on a
seasonally adjusted basis, about $2 billion during the first half
of 1960, but contraction in the early months of the year was
accompanied by a continued increase in nonbank holdings of
Government securities and other liquid assets. After midyear
the money supply rose moderately at an average annual rate of
about 1.5 per cent and by the second half of December had
risen to $140.5 billion. Nevertheless, it was still about $1 billion,
or almost 1 per cent, below the end-of-1959 level; all the decline
from 1959 was in demand deposits. Thus, most of the expansion
in commercial bank credit during 1960 was reflected in increases
in time and savings deposits.
Such deposits at commercial banks expanded by about $5.5
billion in 1960, with most of the expansion, about $4 billion,
occurring after midyear. This was the largest July-December increase in the postwar period and reflected increased holdings not
only of individuals but also of businesses and State and local
governments. Holdings of foreign banks also increased in the
second half. These increases were influenced in part by the
decline in yields on Treasury bills, from 4.6 per cent in early
January to an average of about 2.3 per cent in the last half.
The rate of use of money—as measured by the annual rate of
turnover of demand deposits at banks outside financial centers—
was at the highest level of the postwar period during 1960. For
the year as a whole, the turnover rate averaged 25.7, 5 per cent
above the average of 24.5 in 1959. Most of the increase took
place in the early part of 1960. In the latter part of the year
deposit activity tended to recede.
Other liquid assets. The nonbank public holds liquidity in many
forms in addition to currency and demand and time deposits at
commercial banks. Among other liquid assets are deposits at

ANNUAL REPORT OF BOARD OF GOVERNORS

mutual savings banks, savings and loan shares, U.S. savings
bonds, and short-term U.S. Government securities.
MONEY AND OTHER LIQUID ASSETS

I960

NOTE.—Seasonally adjusted data for holdings by the public, excluding the
banking system and U. S. Government agencies and trust funds. Money
supply: semimonthly averages of daily figures for demand deposits adjusted
and currency outside banks. Time deposits: time and savings deposits at
commercial and mutual savings banks and deposits in the Postal Savings
System as of the last Wednesday of the month except for June 30 and December 31, when call data were used if available. Other series: end-ofmonth.

Deposits in mutual savings banks rose $1.4 billion in 1960,
mainly in the second half. This increase was about one-tenth
more than in 1959, but less than in other recent years. Inflows
of funds to savings and loan associations have risen rapidly over
the entire postwar period. During 1960 savings shares increased

FEDERAL RESERVE SYSTEM

by $7.5 billion, nearly $1 billion more than the previous year.
Net redemptions by the public of U.S. savings bonds were less
than one-third as much as in 1959.
Although the nonbank public added more to its aggregate
holdings of savings deposits, shares, and bonds in 1960 than in
1959, it reduced its holdings of short-term U.S. Government
securities. Holdings of marketable Government securities maturing within a year declined by an estimated $5.3 billion, after
increasing by $10.8 billion the year before. The reductions in
1960 were associated with net purchases of short-term securities
by banks during most of the year and with a lengthening of the
Federal debt, as total marketable debt outstanding changed little.
The increase in public holdings in 1959, and also in the early
part of 1960, accompanied heavy net sales of securities by banks
as well as an increase through January 1960 in the total volume
of securities outstanding.
Reflecting mainly the decline in holdings of short-term Government securities, the nonbank public's holdings of liquid assets
increased much less in the aggregate in 1960 than in 1959.
Businesses drew down liquid asset holdings, and consumers
increased theirs less than in 1959. Total saving by consumers
was about the same as in 1959, but more of their saving flowed
directly into purchases of capital goods and into debt repayments
than in 1959.
FINANCIAL MARKETS IN 1960

Interest rates in financial markets generally fell back to lower
levels in 1960, as Federal Government financing was reduced,
compared with a sharp expansion in 1959, and as other credit
demands moderated in response to the slower pace of business
activity. Federal Reserve actions to ease the reserve position of
banks and to increase the availability of bank credit contributed
to easier market conditions.
Yields on most types of securities declined sharply through
late summer and then changed little on balance, some declining
a little further, others drifting upward. Market yields on long-

ANNUAL REPORT OF BOARD OF GOVERNORS

term U.S. Government securities declined more than those on
corporate and municipal obligations, new offerings of which in
total were about the same as in 1959. The larger net outflow of
domestic and foreign capital from the United States in the second
half of the year was one factor keeping interest rates in this
country from falling significantly lower after late summer.
Funds raised in credit markets. Total funds raised in financial
markets in 1960 were an estimated $37 billion, substantially less

mi FUNDS
&«*& saint? WARKITS

6ilii<?fti

OTHER SECTORS
20

NOTE.—Based on flow-of-funds data. Second half 1960 preliminary.

than the record $61.4 billion in 1959 but about the same as in
1957. Slightly more than half of the decline from 1959 represented a reduction in Federal Government financing, and the
remainder reflected smaller demands by private borrowers and
State and local governments. Net funds raised by private sectors
through all types of credit market instruments were about onefourth less than in 1959 and only slightly more than annual
amounts in the 1956-58 period.

FEDERAL RESERVE SYSTEM

Federal Government obligations. In calendar year 1960 the
Federal Government had a cash surplus of $3.6 billion in contrast with deficits of $7 to $8 billion in each of the two preceding
years. Most of the turnabout was accounted for by larger cash
receipts, principally from increases in corporation and social
security tax receipts. Federal expenditures showed a small decline
following several years of increases.
Net cash repayment of Federal debt amounted to about $2.7
billion last year, as compared with net cash borrowing of $8.6
billion in 1959. There was an increase of about $750 million in
marketable debt, which had increased by $12.7 billion in 1959,
and nonmarketable debt declined. Total U.S. savings bonds outstanding declined for the fifth year in a row, but the decline
was much less than in 1959. In 1960 there were small net sales
of Series E and H bonds, as the higher rates paid on these issues
since September 1959 and the decline in yields on competing
securities made these issues more attractive.
There was a decline of $4.6 billion during 1960 in outstanding
U.S. Government securities maturing within a year. A larger
than usual reduction in the first half of the year more than offset
the increase in the second. Outstanding securities maturing in
from one to five years rose by $10.7 billion over the year.
The average maturity of the Treasury's marketable debt was
lengthened during 1960 from 51.5 to 54.8 months. In all but
two other years of the postwar period the average maturity had
decreased. The lengthening in 1960 was due in part to retirement of maturing issues, but the major factor was the refunding
of outstanding issues with new longer term securities. The decline
in market yields permitted the Treasury to offer these longer term
issues at interest rates below the AVA per cent maximum permitted by law.
The Treasury offered the greater part of the new longer term
securities in two advance refundings, in June and September, of
2Vi per cent bonds. These were the first Treasury operations
involving an exchange by the public of outstanding marketable
securities well before their maturity for new longer term secu-

ANNUAL REPORT OF BOARD OF GOVERNORS

rities. More than $8 billion of securities were exchanged in these
operations.
Corporate securities. Corporate short-term debt, including
bank loans and trade credit, expanded less in 1960 than in 1959.
In addition, total corporate issues for new capital, excluding those
of finance companies, were somewhat below their 1959 total.
Issues of sales finance companies, however, were much larger
than in 1959, and total corporate demands on long-term security
markets therefore were somewhat greater in 1960 than the year
before.
The decline in externalfinancingby nonfinancial corporations
in 1960 accompanied a reduction in their needs for funds and an
increased use of their ownfinancialresources. These corporations
met their financing requirements in part by drawing down liquid
assets and in part from the continued large volume of internal
saving.
As sales volume slackened during the year, growth in inventories and accounts receivable also fell off, and in the last few
months of the year businesses reduced inventories. The smaller
net growth in these assets more than offset the over-all increase in plant and equipment outlays; such outlays rose in the
first half, but turned down after midyear. Meanwhile, internal
funds available to corporations were little changed in 1960; retained earnings were lower, reflecting smaller corporate profits
and larger dividend payments, but depreciation allowances continued to grow.
Sales finance companies not only sold a larger volume of new
issues in 1960, but also made greater use of short-term open
market financing than in 1959. The large volume of funds acquired in credit markets made it possible for these companies to
reduce bank debt while at the same time financing growth in
their customer receivables. At times during the year other corporations also took advantage of more favorable terms in capital
markets to fund bank debt.
Business loans of banks. Demand by businesses for commercial bank loans was comparatively strong during the first half of

FEDERAL RESERVE SYSTEM

1960, and outstanding loans rose $1.7 billion, or about the same
as a year earlier. Demand was very strong in the first quarter as
businesses financed the inventory restocking that followed settlement of the steel strike late in 1959.
As economic activity slackened and purchases for inventory
declined, businesses made less use of bank loans. In the
second half of 1960 business loans at banks rose only $500
million in contrast with $2.4 billion in the comparable period of
the previous year. For the year as a whole these loans increased
by less than half as much as in 1959. As demand for loans
eased, the prime loan rate—the rate that large city banks charge
on short-term loans to businesses with the highest credit rating—
was reduced to AVi per cent in August 1960 from the 5 per cent
level reached in September 1959.
State and local obligations. State and local debt outstanding
increased about one-fourth less in 1960 than it had in 1959.
Bond sales were somewhat lower than in 1959 and short-term
financing was also reduced. Borrowing to finance public power
systems was the principal type of financing to decline in 1960.
Although outlays for such facilities increased, they were financed
in part with proceeds from several large revenue bond issues sold
in 1959. Bond sales for financing both school construction and
highways increased but were still below the record 1958 total.
The backlog of State and local bonds authorized but unsold
rose to a record level in 1960, as voters approved nearly all of
the large dollar volume of bond proposals submitted in the
November general election. Some of these issues are expected to
be sold gradually over a long period of years.
Mortgages. The value of new private construction put in place
in 1960 was about 2 per cent less than the record total in 1959.
Nonresidential construction outlays were larger, but smaller outlays for new residential building more than offset this increase.
Along with reduced construction activity, new mortgage borrowing was less than in 1959. The amount of nonfarm mortgage
recordings of $20,000 or less, chiefly on new and existing houses,
was about 10 per cent lower in 1960 than the record amount in

ANNUAL REPORT OF BOARD OF GOVERNORS

1959. As a result of the smaller volume of new mortgage loans
and little change in the flow of repayments and retirements, the
growth in mortgage debt was about one-fifth less than in 1959,
a year of record increase.
Consumer credit. Outstanding short- and intermediate-term
consumer credit increased $3.9 billion in 1960, compared with
a record $6.6 billion in 1959. The decline in the pace of growth,
most of which occurred in the second half of the year, was general for all major types of instalment and noninstalment credit.
Extensions of instalment credit were 3 per cent higher in 1960
than in 1959, but repayments rose even more. After reaching
record levels in the second quarter of 1960, extensions declined
in the final half, accompanying somewhat reduced consumer
outlays on durable goods. Extensions of automobile credit
showed little change from 1959 to 1960 despite an increase in
the number of cars sold. The average size of contract on new
and used cars declined as a larger proportion of new car sales
were "compact" models and as prices of used cars declined.
Credit supplies. On the supply side, consumers and nonfinancial
businesses accounted for most of the reduction in the volume of
funds flowing into credit markets during 1960. Funds supplied
through consumer purchases of securities declined, and businesses on balance sold securities, after acquiring fairly large
amounts in 1959. The volume of funds supplied to capital
markets by insurance companies and major savings institutions,
which obtain most of their new funds from consumers, changed
little, but there was an increase in the net flow of credit supplied
by commercial banks.
Consumers. Consumers are estimated to have saved more on
a gross basis in 1960 than in 1959, but they acquired smaller
amounts of financial assets. They spent somewhat less on durable goods and homes combined, but they financed a smaller
portion of these outlays through incurrence of new debt. Thus
these purchases absorbed a larger amount of their saving, and
they had less available for financial assets. Net acquisitions of
such assets last year were about 30 per cent less than the postwar

FEDERAL RESERVE SYSTEM

record total in 1959. The decline reflected smaller acquisitions
of credit market instruments.
Consumer holdings of marketable Federal obligations declined
by an estimated $1.5 billion in 1960, in contrast with a record
increase of $9.4 billion in 1959. Net sales in 1960 occurred in
a period when interest rates were declining, while net purchases
in 1959 took place in a period of rising interest rates and an
expanding public debt. Acquisitions of other securities in the
aggregate were also reduced during 1960.
CONSUMER FINANCIAL SAVING

CREDIT AND EQUITY
MARKET INSTRUMENTS

SAVINGS DEPOSITS
AND SHARES

pil

p
1

•

NOTE.—Flow-of-funds data; included are all categories under net acquisition of financial assets except demand deposits and currency, U. S. savings
bonds, and net investment in unincorporated business. Preliminary estimates
for 1960.

As in other periods of declining interest rates, a larger growth
in saving through financial institutions offset a part of the reduction in security purchases. Reflecting mainly developments in the
second half of the year, consumer holdings of time and savings
deposits and saving shares rose more than in 1959, as did saving
through life insurance and pension funds combined.
Savings institutions. Savings and loan associations had a record inflow of savings capital in 1960, but they supplied smaller

ANNUAL REPORT OF BOARD OF GOVERNORS

amounts to credit markets than in 1959. With demand for residential mortgages less intense, they increased their mortgage
holdings less than in 1959. They also invested considerably less
in Federal obligations. Instead of increasing their acquisitions
of assets, the associations used part of their increased funds to
repay short-term debt to Federal home loan banks and others
and to rebuild cash balances. The pattern of funds advanced by
mutual savings banks changed little in 1960, with mortgage
acquisitions continuing to predominate.
Life insurance and pension funds. The net flow of funds into
life insurance companies was about the same in 1960 as in 1959,
but the allocation of these funds among alternative financial uses
differed substantially. These companies increased their mortgage
holdings by about one-sixth more than in 1959, but they acquired
smaller amounts of corporate securities and they continued to
reduce Government security holdings by moderate amounts. At
the same time, the increase in loans to policyholders was larger
than in 1959. The flow of saving to pension funds continued its
steady increase in 1960, and these institutions enlarged their
holdings of corporate securities by more than in 1959.
Commercial banks. The greater expansion of commercial
bank credit in 1960 as compared with 1959 reflected mainly a
record growth of $11.2 billion in the last half of the year, following a larger than usual decline in the first quarter and a substantial increase in the second. Rapid growth in time deposits
contributed to the greater pace of credit expansion. Banks increased their loans less in 1960, as demand for credit slackened
after being very strong in 1959, but they added to security holdings whereas they had been heavy net sellers the year before.
Total bank loans (other than interbank) rose only $5.8 billion
over the whole year, compared with $12 billion in 1959 (after
allowance for changes in bank structure). Loans outstanding
expanded at a moderate pace during the first half of the year. In
the second half they increased by $3.2 billion, less than half as
much as in the comparable period of 1959 but more than in late
1957, when economic activity also had slackened.

FEDERAL RESERVE SYSTEM

Loans in almost all categories increased less than in 1959.
The smaller increase in loans to businesses and to nonbank financial institutions reflected not only reduced demand for funds but
also changes in the relative cost of financing, as mentioned
earlier. Banks also made smaller amounts of consumer and real
estate loans in 1960 than in 1959. Outstanding real estate loans
declined at city banks, but rose at other banks, though at a slower
rate than in 1959.
v
CHANGES IN COMMERCIAL BANK CREDIT
2d
1st H

tfidi

LOANS
JOTJU LOANS
AND iMVtSTMfNtS
US. GOVERNMENT
5£CURtri£S s

NoTE.—Based on data for Dec. 31, 1958; June 24 and Dec. 31, 1959;
and June 29 and Dec. 28, 1960. Interbank loans excluded. Changes for
1959 exclude increases resulting from addition of banks in Alaska and Hawaii
and from the absorption of one large mutual savings bank by a commercial
bank. These changes increased total loans and investments about $1 billion;
total loans, $600 million, and U. S. Government securities, $300 million.
Total loans and investments include other securities not shown separately.

For the year as a whole, banks added $2.7 billion to all security holdings in contrast with heavy net sales the year before.
Banks continued to sell securities on balance through the early
months of 1960, but after midyear they added about $7 billion
to their U.S. Government security portfolio and $900 million to

ANNUAL REPORT OF BOARD OF GOVERNORS

their holdings of other securities, mainly State and local government obligations. This was a substantially larger increase than
had occurred in any other July-December during the postwar
period. Additions to U.S. Government security holdings were
particularly large in the shorter term maturity range.
Banks used proceeds from security sales in the early months
of the year not only to help finance the moderate loan expansion
that followed usual January repayments but also to reduce their
own indebtedness at Reserve Banks. They continued to reduce
these borrowings as the year progressed. The fact that market
yields on Treasury bills were below the discount rate for most of
the year was an incentive for banks to reduce such borrowings either by selling securities or by adding less than they otherwise would have to their portfolios. The reduction in borrowings,
the increase in holdings of short-term U.S. Government securities
that accompanied the reduced loan expansion, and the sharp
growth of time and savings as contrasted with demand deposits
all represented an improvement in the over-all liquidity position
of the nation's banks.
Other sources. Funds supplied to U.S. credit markets by other
domestic and foreign sources were substantially reduced in 1960.
Corporate businesses drew down credit market assets, mainly
U.S. Government securities, to help meet their financing needs
and in some cases to increase their assets abroad, instead of adding to U.S. Government security holdings as they had the year
before. Advances through credit markets by Federal and by
State and local governments were also less than in 1959.
The net supply of funds to U.S. credit markets by foreigners
declined. Some of the reduced investment by foreigners in U.S.
credit markets reflected withdrawals of foreign funds from this
country, as discussed in an earlier section. Foreign monetary
authorities acquired very large amounts of dollar funds through
international transactions, but used a considerable amount of
these funds to buy gold and additional sums to make payments
to the International Monetary Fund, which in turn obtained noninterest-bearing demand notes from the U.S. Treasury. Net pur-

FEDERAL RESERVE SYSTEM

chases of U.S. Government marketable securities and other U.S.
securities by foreign monetary authorities, banks, and others
(including international institutions) amounted to only about
$600 million in 1960, as compared with more than $3 billion in
1959.
There was some movement of foreign and other funds away
from Federal obligations to time deposits as Treasury bill rates
fell below 3 per cent. State and local governments and foreign
banks and governments, in particular, added to their time deposits, whereas in 1959, when Government security yields were
rising, they had reduced such deposits.
Pattern of market yields. Yields on debt securities of all types
declined in 1960 from the high levels that had prevailed early
in the year. For long-term securities these reductions were
most pronounced during the late spring and early summer. During the autumn market expectations for further reductions in
long-term interest rates based on growing indications of slackening economic activity were counterbalanced by the effects of
capital movements abroad and the associated decline in the U.S.
monetary gold stock.
After rising to postwar highs at the beginning of the year,
market rates of interest on U.S. Government securities declined
substantially during the first eight months of 1960. During the
first seven months rates on Treasury bills and intermediate-term
issues fell much more sharply than rates on bonds, as is usual in
a period of declining rates, but the spread between short- and
long-term rates widened less than from the autumn of 1957 to
mid-1958, the previous period of declining interest rates. After
late summer the average level of rates was relatively unchanged
and the spread between long- and short-term rates widened only
slightly further.
Through late summer yields on the highest grade State
and local and corporate issues declined less than those on longterm U.S. Government bonds. In the last few months of the year
yields on corporate bonds drifted upward. The disparity in
movements between U.S. Government and other long-term rates

ANNUAL REPORT OF BOARD OF GOVERNORS

reflected in part the relatively high yields of Government bonds
in late 1959 and in part the volume of other securities offered
as rates tended to decline and market conditions eased.
SELECTED YIELDS

* .

NOTE.—Monthly averages for (1) 500 common stocks (90 before mid1957) from Standard and Poor's Corporation; (2) 30 corporate bonds, from
Moody's Investors Service; (3) 5 State and local government bonds, from
Moody's Investors Service; and (4) U. S. Government bonds maturing or
callable in 10 years or more. FHA mortgage data are Federal Reserve computations based on average prices reported by FHA (dashed lines indicate
periods when averages were adjusting to changes in contractual interest rates
and no data were available).

Mortgage yields, which had risen less between mid-1958 and
late 1959 than had returns on most other obligations, tended to
decline throughout 1960. According to past experience, changed
market conditions are likely to be reflected more in changed
availability of mortgage loan funds than in a sharp rise or fall in
their interest cost.

FEDERAL RESERVE SYSTEM

Common stock prices moved irregularly downward during the
first nine months of 1960 but recovered most of this loss late in
the year. Sharp price declines were recorded for stocks of companies in industries where profits usually respond to changes in
levels of business activity, but stocks of many less cyclically sensitive companies increased in price.

ANNUAL REPORT OF BOARD OF GOVERNORS
RECORD OF POLICY ACTIONS
FEDERAL OPEN MARKET COMMITTEE

The record of policy actions of the Federal Open Market
Committee is presented in the Annual Report of the Board of
Governors pursuant to the requirements of Section 10 of the
Federal Reserve Act. That section provides that the Board shall
keep a complete record of the actions taken by the Board and
by the Federal Open Market Committee upon all questions of
policy relating to open market operations, that it shall record
therein the votes taken in connection with the determination of
open market policies and the reasons underlying each such
action, and that it shall include in its Annual Report to the
Congress a full account of such actions.
In the pages that follow, there is an entry with respect to the
policy actions taken at each of the 17 meetings of the Federal
Open Market Committee during the calendar year 1960, including the votes on the policy decisions as well as a resume of the
basis for the decisions, as reflected by the minutes of the Committee. It will be noted that in some cases the policy decisions
were by unanimous vote, and that in other cases dissents were
recorded. Further, as this record indicates, the fact that a decision in favor of a general policy was by a large majority, or
even that it was by unanimous vote, does not necessarily mean
that all members of the Committee were equally agreed as to the
reasons for the particular decision or as to the precise operations
in the open market that were called for to implement the general
policy. The Manager of the System Open Market Account attends the meetings of the Committee, and the shades of opinion
expressed at those meetings provide him with guides to be used
in the conduct of open market operations, within the framework
of the policy directive adopted by the Committee.
The policy directive of the Federal Open Market Committee
that was in effect at the beginning of 1960 had first been adopted
in such form at the meeting on May 26, 1959, and had been
continued in that form at succeeding meetings during the re-

FEDERAL RESERVE SYSTEM

mainder of the calendar year. The last such meeting was held on
December 15, 1959. The directive, which was issued to the
Federal Reserve Bank of New York as the Bank selected by the
Committee to execute transactions for the System Open Market
Account, instructed that Bank:
(1) To make such purchases, sales, or exchanges (including replacement of maturing securities, and allowing maturities to run off without
replacement) for the System Open Market Account in the open market
or, in the case of maturing securities, by direct exchange with the
Treasury, as may be necessary in the light of current and prospective
economic conditions and the general credit situation of the country, with
a view (a) to relating the supply of funds in the market to the needs of
commerce and business, (b) to restraining inflationary credit expansion in
order to foster sustainable economic growth and expanding employment
opportunities, and (c) to the practical administration of the Account; provided that the aggregate amount of securities held in the System Account
(including commitments for the purchase or sale of securities for the
Account) at the close of this date, other than special short-term certificates
of indebtedness purchased from time to time for the temporary accommodation of the Treasury, shall not be increased or decreased by more
than $1 billion;
(2) To purchase direct from the Treasury for the account of the Federal Reserve Bank of New York (with discretion, in cases where it seems
desirable, to issue participations to one or more Federal Reserve Banks)
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 at any
one time by the Federal Reserve Banks shall not exceed in the aggregate
$500 million.

January 12, 1960
Authority to effect transactions in System Account.

The Federal Open
change the directive to
most recently renewed
calling for operations

Market Committee continued without
the Federal Reserve Bank of New York,
at the meeting on December 15, 1959,
with a view to restraining inflationary
35

ANNUAL REPORT OF BOARD OF GOVERNORS

credit expansion in order to foster sustainable economic growth
and expanding employment opportunities.
Votes for this action: Messrs. Martin, Hayes, Allen, Balderston, Deming, Erickson, Johns, King, Robertson, Shepardson,
and Szymczak. Vote against this action: Mr. Mills.

Indicators of business activity were almost all moving upward
at the time of this meeting. Settlement of the steel strike, accomplished several days earlier following operations under a TaftHartley Act injunction for approximately two months, removed
a major element of uncertainty from the economic picture, although it left unresolved questions with respect to steel prices and
also with respect to wage and price consequences in other industries. The Board's revised index of industrial production, at
156 per cent of the 1947-49 average in November 1959, was
estimated to have risen to 163 or 164 in December and in January appeared almost certain to surpass the prestrike peak of 166.
On a seasonally adjusted basis, construction activity, which had
been lagging for several months, was up in December. Gross
national product was estimated at an annual rate of $481 billion
in the fourth quarter of 1959 and was expected to come close to
an annual rate of $500 billion in the first quarter of 1960.
Wholesale prices were substantially unchanged from year-ago
levels.
Increases in interest rates and severe pressures on the money
market during December were attributed in part to large credit
demands to cover seasonal needs, in part to restoration of inventories run down by the steel strike, and in part to market expectations as to forthcoming developments. With a lessening of
seasonal financing pressures, some slackening in deferred inventory demands, and tardiness in the pickup of new issue flotations
in the capital markets, interest rates steadied or declined slightly
after the turn of the year. Factors influencing the money market
included prospective Treasury financing operations, the announcement by the President of an anticipated small budget surplus for fiscal 1960, and the prospect of a larger surplus for fiscal
1961.

FEDERAL RESERVE SYSTEM

The consensus that developed from the examination by the
Committee of the business and financial situation favored no
change in credit and monetary policy, which had been directed
for several months toward restraint on credit expansion. There
was some sentiment for a slight lessening in the degree of restraint within the framework of the existing policy on the grounds
that some moderate growth in the country's money supply should
be encouraged in order to support the anticipated business expansion and to avoid excessive upward pressures on interest
rates. However, other members of the Committee felt that the
general attitude was clearly one of extreme optimism, that this
was likely to stimulate excesses in credit use, that it was incumbent upon the System to maintain a posture of firmness in limiting credit expansion at this stage of the business cycle, and that
any lessening of the existing degree of restraint ran the risk of
increasing inflationary pressures, with resulting accelerated expansion in the dollar volume of activity, followed by painful
readjustments. One or two of those present leaned slightly in the
direction of a firmer degree of restraint than had prevailed
recently.
The Committee's decision to continue without change the
existing policy directive calling for operations to restrain inflationary credit expansion in order to foster sustainable economic
growth and expanding employment opportunities was reached
after considering these several shades of opinion. Mr. Mills, who
voted against the directive, renewed a proposal that the wording
be changed to provide for operations fostering sustainable economic growth and expanding employment opportunities while
guarding against inflationary expansion. He expressed the belief
that current conditions called for a policy of monetary restraint
over the expansion of commercial bank credit, but he disagreed
with the wording of the existing directive and its implementation
to the extent that he did not think it allowed sufficient leeway
for the volume of new credit that would foster an appropriate
growth of the money supply.

FEDERAL RESERVE SYSTEM

imminent, several Committee members would have preferred, in
view of reported economic developments, to move slightly in the
direction of reducing the degree of pressure on bank reserve positions. No Committee member favored increasing the degree of
restraint at this time.
Mr. Mills voted against renewal of the policy directive because
of his continued preference for a directive that would provide for
fostering sustainable economic growth and expanding employment opportunities while guarding against inflationary credit
expansion, wording which he felt called for somewhat less restraint than had been applied during the past few months.
February 9, 1960
Authority to effect transactions in System Account.

Indicators of economic output continued to show strength.
Gross national product was still expected to attain an annual rate
close to $500 billion for the first quarter, and earlier estimates of
the Board's index of industrial production for January were being
revised upward as preliminary data became available. Employment apparently was being well maintained. After a record
Christmas trade, seasonally adjusted department store sales continued at about the same level in January as in December, while
construction activity, seasonally adjusted, moved upward to an
annual rate that represented the highest January on record. Recent figures indicated that exports were likely to provide somewhat greater stimulus to the economy than in the past year.
While economic activity was clearly proceeding at a satisfactory pace, nevertheless the extremely optimistic attitudes that had
prevailed in some quarters around the turn of the year were being
reevaluated. Evidence of the boom widely anticipated following
termination of the steel strike had not yet appeared, and there
were few, if any, signs of undue fervor.
The abatement of enthusiasm concerning the business outlook
had been reflected infinancialdevelopments. Following extreme
tightness in the money market in December, with sharply rising

ANNUAL REPORT OF BOARD OF GOVERNORS

January 26, 1960
Authority to effect transactions in System Account.

The Federal Reserve Bank of New York was directed by the
Federal Open Market Committee to conduct open market operations that would continue the policy of restraining inflationary
credit expansion in order to foster sustainable economic growth
and expanding employment opportunities.
Votes for this action: Messrs. Martin, Hayes, Allen, Balderston, Deming, Erickson, Johns, King, Robertson, Shepardson,
and Szymczak. Vote against this action: Mr. Mills.

Reports at this meeting, both national and regional, continued
to reflect the high level of economic activity that had been noted
at the meeting of the Committee two weeks earlier. Recovery in
production and employment from the lower levels reached during
the steel strike had been rapid. The reports indicated a somewhat less buoyant attitude among businessmen than had been
reported at the preceding meeting, however, and contrasted to
some degree with earlier expectations in some quarters of an explosive surge of activity following settlement of the steel strike.
Seasonal contraction in bank credit appeared to be occurring
about as usual, and signs of strain in the credit and capital
markets were less than a few weeks earlier. A marked easing of
Treasury bill rates, reflecting heavy demand from nonbank investors, had taken place despite substantial sales of bills from the
System Account portfolio. Nevertheless, a feeling of tightness in
credit markets was reported, and the question was raised as to
whether growth of savings, increased velocity of the money
supply, and willingness of member banks to increase their borrowings from the Reserve Banks would be sufficient in the aggregate to meet the credit demands needed to support prospective
expansion in economic activity.
The Committee's decision as to policy for the period immediately ahead was to continue substantially the same degree of
restraint on credit expansion that had been followed for some
weeks past. However, had a large Treasury financing not been

ANNUAL REPORT OF BOARD OF GOVERNORS

interest rates and an unusually heavy seasonal loan demand,
money conditions eased notably in January. Interest rates declined, and bank loans were reduced, about as much as they had
increased in December. Stock prices, after rising close to the
1959 high at the end of December, declined sharply thereafter
and presently were near the low of the past 12 months. In contrast, bonds had risen in price since the first of the year, and
yields on long-term U.S. Government bonds were back to
November levels. Yields on intermediate-term Government
securities had declined to around the lowest levels of October
1959, while yields on Treasury bills had fallen to the lowest
levels since late August.
Together, figures for money supply and turnover of bank deposits indicated a rate of growth in total monetary transactions
of nearly 4 per cent a year since mid-1957, but the money supply, which appeared to have declined slightly in January, was
only about one-half of 1 per cent larger than the year-ago level.
The current figure was a little more than $5 billion larger than
the peak of mid-1957, representing an average annual rate of
increase of less than 2 per cent.
In appraising open market policy at this juncture, the Committee took into account all of the aforementioned elements,
along with the fact that the easier money situation had resulted
from market forces rather than any change in monetary policy.
There was unanimity of opinion that any tightening in the degree
of restraint should be avoided. On the contrary, while a majority
favored watchful waiting during the period immediately ahead,
there were several within that group who leaned toward slightly
less restraint, and the views of some members of the Committee
were more positively in that direction. It was felt rather generally that a moderate increase in the money supply would be
desirable.
In the light of the current situation, consideration was given
to the possibility of a modification of the policy directive to the
Federal Reserve Bank of New York so as to place emphasis, in

FEDERAL RESERVE SYSTEM

clause (b), upon the fostering of sustainable growth in economic
activity and employment rather than upon restraint of inflationary credit expansion. In support of such a modification it
was pointed out, among other things, that business and financial
attitudes and trends were less exuberant than in May 1959, when
the existing policy directive was first adopted. The consensus,
however, did not favor a change at this time, on the grounds that
it would indicate a basic shift in open market policy and that
such a shift was not called for at present.
Therefore, the action taken was to renew the directive, which
called for restraining inflationary credit expansion in order to
foster sustainable economic growth and expanding employment
opportunities.
Votes for this action: Messrs. Martin, Hayes, Allen, Balderston, Erickson, Johns, King, Robertson, Shepardson, Szymczak,
and Leedy. Vote against this action: Mr. Mills.

Mr. Mills continued to favor a change in the directive along
the lines he had suggested at the past several meetings, which
would provide for fostering sustainable economic growth and
expanding employment opportunities while guarding against inflationary credit expansion,

March 1, 1960
1. Authority to effect transactions in System Account.

Clause (b) of the first paragraph of the Committee's policy
directive was revised at this meeting so as to provide that open
market operations should be conducted with a view "to fostering
sustainable growth in economic activity and employment while
guarding against excessive credit expansion." This replaced the
clause of the directive that had been in effect since May 26,
1959, calling for operations with a view "to restraining inflationary credit expansion in order to foster sustainable economic
growth and expanding employment opportunities."

ANNUAL REPORT OF BOARD OF GOVERNORS
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Bryan, Fulton, King, Leedy, Mills, Robertson, Shepardson, and Szymczak. Votes against this action: none.

National and regional reports at this meeting indicated continuance of underlying economic strength, with evidence lacking
to suggest that 1960 would be other than a prosperous year. It
appeared, however, that some of the earlier exuberant expectations were not being fully realized and that excesses in commitments and in credit extensions were not developing. The rapid
inventory accumulation that occurred in January and which appeared to have continued in February, combined with a slight
decline in new orders in January, suggested to some observers
that the spurt of activity attributable to the resumption of production upon conclusion of the steel strike might be nearing an
end before any other expansive factor had emerged to take its
place. Also, while retail trade remained at a high level, there
had been an edging-off from December to January in total retail
sales, other than sales of automobiles, and data for the first three
weeks in February suggested that department store sales, seasonally adjusted, had slipped slightly. It appeared that industrial
production would show no further increase in February. In the
stock market, prices were fluctuating erratically at levels slightly
above the low reached early in February.
Abroad, near-boom conditions appeared to be developing in
many countries. Interest rates in industrialized countries had
been tending to rise in response to increased economic activity
and speculative developments, and official policies were moving
further in the direction of restraint. Following a substantial increase in U.S. exports in December, preliminaryfiguresfor January indicated a level which, if anything, was higher than December, along with a considerable drop in imports. However, a
substantial over-all deficit in the balance of payments still was
indicated.
During the first three weeks in February, loans of banks in
leading cities expanded substantially, with the increase in busi-

FEDERAL RESERVE SYSTEM

ness loans particularly large. In order to meet loan demands,
banks continued to reduce their holdings of U.S. Government
securities. However, demand deposits adjusted at city banks declined by a larger amount during February than in the same
month of any other recent year except 1956, and country bank
figures for the first half of the month failed to show the increase
that occurred in the corresponding period of 1959. It appeared
that the seasonally adjusted money supply may have declined
further in February to a level below that of a year earlier.
System open market operations during the period since the
previous meeting of the Committee had continued generally to
maintain pressure on the reserve positions of banks. The midMarch tax and dividend dates were now approaching, and the
money market might be under some degree of pressure to accommodate seasonal liquidity needs. In view of this short-run consideration, along with considerations relating to business and
financial developments generally, the Committee concluded that
it would be appropriate to supply reserves to the banking system
somewhat more readily. Accordingly, the consensus favored, for
the immediate future, a policy of moderately less restraint.
In the light of existing conditions, a policy directive calling for
fostering sustainable growth in economic activity and employment, while guarding against excessive credit expansion, was
deemed more appropriate than a directive emphasizing restraint
on inflationary credit expansion, and the Committee unanimously
agreed to change clause (b) accordingly.
2. Repurchase agreements covering U.S. Government securities.

The Committee voted to renew the existing authorization to
the Federal Reserve Bank of New York to enter into repurchase
agreements with nonbank dealers in U.S. Government securities,
subject to the following conditions and to the understanding that
the authority would be used sparingly in entering into repurchase
agreements at rates below the discount rate:
1. Such agreements
(a) In no event shall be at a rate below whichever is the lower of

ANNUAL REPORT OF BOARD OF GOVERNORS
(1) the discount rate of the Federal Reserve Bank on eligible
commercial paper, or (2) the average issuing rate on the most
recent issue of 3-month Treasury bills;
(b) Shall be for periods of not to exceed 15 calendar days;
(c) Shall cover only Government securities maturing within 15
months; and
(d) Shall be used as a means of providing the money market with
sufficient Federal Reserve funds to avoid undue strain on a
day-to-day basis.
2. Reports of such transactions shall be included in the weekly report
of open market operations which is sent to the members of the
Federal Open Market Committee.
3. In the event Government securities covered by any such agreement
are not repurchased by the dealer pursuant to the agreement or a
renewal thereof, the securities thus acquired by the Federal Reserve
Bank of New York shall be sold in the market or transferred to
the System Open Market Account.
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Bryan, Fulton, King, Leedy, Mills, Shepardson, and
Szymczak. Vote against this action: Mr. Robertson.

The foregoing authorization had been renewed by the Committee in March of each year since it was approved unanimously
by the Committee at a meeting on August 2, 1955. At this meeting, Mr. Robertson expressed the view that in recent times there
had been a tendency to use repurchase agreements more frequently than had been contemplated at the time of the Committee's action in August of 1955. He felt that the Committee
should minimize the use of such agreements and maximize cash
trading. In addition, he suggested amendment of the authorization so as to confine the rates to the discount rate at the Federal
Reserve Bank of New York, rather than to allow under some
circumstances the use of a rate lower than the discount rate. This
was because he considered it inequitable to permit nonbank
dealers to borrow from the Federal Reserve System at rates below
those prescribed for member banks.
In voting to renew the authority in its existing form, the majority of the Committee took the position that the repurchase
instrument had proved to be a convenience to the Federal Re-

FEDERAL RESERVE SYSTEM

serve System and of great importance in carrying out monetary
policy, that its use should not be minimized, and that the authorization should not be changed to eliminate the right to use a rate
lower than the discount rate under certain circumstances, if that
appeared desirable.
Mr. Robertson dissented from the renewal of the existing authorization for the reasons indicated by him.
3. Review of continuing authorities or statements of policy.

This being the first meeting of the Federal Open Market Committee following the election of and assumption of duties by new
members from the Federal Reserve Banks for the year beginning
March 1, 1960, the Committee reviewed and reaffirmed all continuing statements of policy and authorities for operations.
These included three statements of policy that had been renewed
by the Committee each year since 1953 regarding the objectives
of monetary and credit policy, the confining of operations for the
System Account generally to short-term securities, and the preclusion unless expressly authorized by the Committee of transactions for the purpose of altering the maturity pattern of the
System's portfolio by means of offsetting purchases and sales of
securities.
By prearrangement, extensive consideration was given to the
three statements of policy relating to these matters, but at the
conclusion of the discussion the Committee decided to review the
subject further in the light of certain suggestions that had been
made. Accordingly, the action taken was to continue these three
operating policies on a temporary basis with the understanding
that they would be brought up again at a subsequent meeting.
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Bryan, Fulton, King, Leedy, Mills, Robertson, Shepardson, and Szymczak. Votes against this action: none.

March 22, 1960
1. Authority to effect transactions in System Account.

Although underlying forces in the economy continued to re-

ANNUAL REPORT OF BOARD OF GOVERNORS

fleet strength, moderate declines had occurred in certain indices
of activity. Industrial production, as measured by the Board's
index, slipped slightly from January to February, while housing
starts in February were at a seasonally adjusted annual rate approximately 20 per cent below the peak reached in the spring of
1959. Retail sales had been affected in the past several weeks by
adverse weather conditions that prevailed throughout large areas
of the country. On the other hand, unemployment and employment statistics showed improvement in February, new orders
were up slightly in that month, and a recent survey of plant and
equipment expenditure expectations indicated that plans were in
line with earlier estimates. In summary, the balance of economic
forces showed little change from three weeks earlier, and the
more moderate appraisal of business prospects that had developed after the turn of the year continued to prevail generally.
Financial developments were highlighted by a continued decline in money rates, in contrast to the usual increase in such
rates over the March tax and dividend period. During the three
weeks since the previous Committee meeting, a significant decline
occurred in rates on U.S. Government securities, particularly
short-term issues, as exemplified by the establishment of a rate of
3.03 per cent in the weekly auction of 3-month Treasury bills
on March 21, compared with 4.28 per cent in the auction on
February 29. A heavy demand for Government securities from
nonbank sources persisted. Federal Reserve operations, after absorbing a portion of the reserves released by the decline in bank
deposits and in required reserves during February, subsequently
added somewhat to the availability of reserves. Currently available figures indicated that the money supply, defined in terms of
currency and demand deposits, had declined by about a billion
dollars in February, accompanied by an accelerated rate of
deposit turnover, and preliminary statistics for early March suggested that the downward trend of the money supply had not
been reversed.
There was a clear consensus, in the light of current business

FEDERAL RESERVE SYSTEM

uncertainties, the nature of financial developments, and the imminence of Treasury financing, scheduled for announcement
around the end of the month, that open market operations during
the period immediately ahead should be directed toward maintaining about the existing situation, with no tightening and with
no further relaxation.
In the circumstances, the Committee continued the policy
directive adopted at the preceding meeting (March 1, 1960),
which provided for fostering sustainable growth in economic
activity and employment while guarding against excessive credit
expansion.
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Bryan, Fulton, Leedy, Mills, Robertson, Shepardson,
and Szymczak. Votes against this action: none.
2. Review of continuing authorities or statements of policy.

At the meeting on March 1, 1960, it was agreed to continue
the Committee's statements of certain operating policies on a
temporary basis, with the understanding that the matter would be
brought up again at a subsequent meeting. After additional discussion at this meeting, the operating policies were reaffirmed,
as follows:
a. It is not now the policy of the Committee to support any pattern
of prices and yields in the Government securities market, and intervention in the Government securities market is solely to effectuate the
objectives of monetary and credit policy (including correction of disorderly markets).
b. Operations for the System Account in the open market, other
than repurchase agreements, shall be confined to short-term securities
(except in the correction of disorderly markets), and during a period
of Treasury financing there shall be no purchases of (1) maturing
issues for which an exchange is being offered, (2) when-issued securities, or (3) outstanding issues of comparable maturities to those being
offered for exchange; these policies to be followed until such time as
they may be superseded or modified by further action of the Federal
Open Market Committee.

ANNUAL REPORT OF BOARD OF GOVERNORS
c. Transactions for the System Account in the open market shall be
entered into solely for the purpose of providing or absorbing reserves
(except in the correction of disorderly markets), and shall not include
offsetting purchases and sales of securities for the purpose of altering
the maturity pattern of the System's portfolio; such policy to be followed until such time as it may be superseded or modified by further
action of the Federal Open Market Committee.
Votes for this action: Messrs. Martin, Balderston, Bryan,
Fulton, Leedy, Mills, Robertson, Shepardson, and Szymczak.
Votes against this action: Messrs. Hayes and Bopp.

In voting to reaffirm these policies, it was noted that any of
them could be changed by majority vote at any meeting of the
Federal Open Market Committee and that, according to their
wording, the policies were to be followed only until such time as
they might be superseded or modified by further action of the
Committee. These policies had been carried as Committee statements since 1953, and, as provided therein, exceptions had been
made on certain occasions when authorized by the Committee.
It being felt that the experience with the operating policies had
been satisfactory, the majority of the Committee found no sufficient reason to change their wording at this time.
Mr. Hayes voted against reaffirmation of the operating policies
in their existing form, since he felt that the Committee should not
take any action which, in his opinion, would voluntarily tie its
hands, and it should not create an impression of an excessively
rigid approach to open market operations. Further, he felt that
the operating policies did not reflect his view that monetary
policy involved more than consideration of bank reserves alone.
He would have accepted various suggestions for reformulating
the operating policies, including the rewording that he had suggested in March 1958 and in March 1959, except that, in statement "a," in order that there be no question of his belief that
monetary policy involved more than concern with bank reserves
alone, he would substitute the word "primarily" for the word
"solely."
Mr. Bopp felt that inasmuch as the Federal Open Market

FEDERAL RESERVE SYSTEM

Committee was meeting regularly on approximately a three-week
basis, it was not necessary to have these continuing operating
policies. If the operating policies were to be retained, however,
he believed they should be so phrased as to indicate that exceptions might be made as circumstances warranted.

April 12, 1960
1. Authority to effect transactions in System Account.

While economic activity continued generally at a satisfactory
level, developments in the 3-week period since the preceding
Committee meeting were somewhat mixed and did not serve to
dispel the atmosphere of uncertainty with respect to the business
outlook that had prevailed since shortly after the turn of the current year. With the advent of more favorable weather, substantial improvement occurred in department store and automobile sales during the latter part of March, while surveys of
consumer attitudes and buying plans suggested continued optimism. Less favorable factors included a contraseasonal rise in
unemployment in March, a declining trend in the rate of steel
production, and a persistent downward movement in construction activity. Commodity prices were substantially unchanged.
The latest available statistics on exports and imports reflected
continuation of the encouraging trend of the past several months,
and boom or near-boom conditions continued to develop in most
industrialized countries abroad.
Total credit demands in the first quarter of the current year
had not been as large as during the similar period of 1959. The
Federal Government retired more debt than in the first quarter
of any year since 1956, and borrowing in the long-term capital
market by corporations and by State and local governments was
substantially smaller than in recent years. Although short-term
borrowing by business at banks continued at a high level in
March, and consumer borrowing showed an increase, the total
volume of bank credit continued to decline as the aforementioned

ANNUAL REPORT OF BOARD OF GOVERNORS

increases were more than offset by a decline in other loans and
by a further reduction in bank holdings of securities. Reserves
released by the greater than seasonal decline in deposits had been
used by banks principally to reduce indebtedness. Final statistics
on the money supply through the end of March were not yet
available, but it appeared that the declining trend of the past
several months may have continued for at least part of the month.
Although some members of the Committee were inclined to
feel that conditions were such as to warrant continuation of the
prevailing degree of restraint, the consensus as to open market
policy for the ensuing three weeks favored easing further the
reserve positions of member banks, and thus encouraging an increase in the money supply, this to be done, however, in a modest
way. Subject to this understanding, the Committee renewed the
outstanding directive to the Federal Reserve Bank of New York
which called for fostering sustainable growth in economic activity
and employment while guarding against excessive credit expansion.
Votes for this action: Messrs. Martin, Balderston, Bopp,
Bryan, Fulton, Leedy, Mills, Robertson, Shepardson, Szymczak,
and Treiber. Votes against this action: none.
2. Authority to acquire Treasury bills through "swap" transactions.

The Committee authorized the Management of the System
Account to acquire up to $150 million of 1-year Treasury bills
maturing July 15, 1960, between this date and the date of the
next Committee meeting, by means of outright purchases or by
swap transactions for other Treasury bills.
Votes for this action: Messrs. Martin, Balderston, Bopp,
Bryan, Fulton, Leedy, Mills, Shepardson, Szymczak, and
Treiber. Vote against this action: Mr. Robertson.

This authorization represented an exception to two of the
Committee's continuing operating policies, last renewed at the
meeting on March 22, 1960. One of the exceptions was the de-

FEDERAL RESERVE SYSTEM

parture in some degree from the policy that "intervention in the
Government securities market is solely to effectuate the objectives of monetary and credit policy," since the purpose of these
proposed transactions was to smooth the refinancing of an instrument—the 1-year Treasury bills maturing on July 15, 1960—
that had not as yet been afforded a full test of market receptivity.
The other exception was to the operating policy providing that
transactions for the System Account in the open market shall be
entered into "solely for the purpose of providing or absorbing
reserves . . . and shall not include offsetting purchases and sales
of securities for the purpose of altering the maturity pattern of
the System portfolio."
While the express purpose of the acquisitions of the July 15
bills, whether by outright purchases or by swap transactions,
would be to assist the Treasury in a forthcoming refinancing,
such acquisitions would nevertheless be consistent with the objectives of credit and monetary policy to the extent that they were
outright purchases and supplied additional reserves to the market
in accordance with current Committee policy. The Committee's
decision that acquisitions might be on a swap basis, if the specific
issue of Treasury bills was not available for outright purchase or
if outright purchase was not in accord with the reserve position
at a particular time, reflected a view that it would be appropriate
to experiment with swap transactions to the extent authorized as
a means of helping to bring some of the specified securities into
the System's portfolio in order to help a subsequent refinancing
of these Treasury securities. The view was also expressed that
the acquisition of securities in this manner would help to increase
the flexibility and usability of the System's short-term portfolio,
and thus contribute to the effectiveness of the operations for the
Account.
In voting against this action, Mr. Robertson expressed the
view that the authorization to engage in offsetting purchases and
sales of securities for the System Account for the purpose of aiding the Treasury in its debt management functions would not be

ANNUAL REPORT OF BOARD OF GOVERNORS

justified by the possible benefits to be derived therefrom by the
Treasury. In his opinion, such an arrangement would inject an
additional element of uncertainty into the Government securities
market which might have the effect of providing a disincentive
for dealers to take positions in issues that the System might be
likely to buy or sell for purposes other than providing or absorbing reserves. In addition, he felt that this would appear to be a
first step toward more general interference with market forces in
all areas of the Government securities market and might lead
ultimately to relatively frequent operations for purposes other
than providing or absorbing reserves. At least, it might lead to
a fear thereof, which in itself would be disruptive to a freely
functioning market. It was his belief that, with institutional relationships like those prevailing within the Federal Reserve System
and between the System and the Treasury, it was desirable to
keep the lines of precedent as clear and clean as possible and to
avoid muddying them by moves that might subsequently be used
as levers for compromising basic monetary policy objectives,
especially when the potential benefits of such moves appeared to
be so limited.

May 3, 1960
1. Authority to effect transactions in System Account,

Available data suggested either fair strength or improvement
in general economic indicators during the month of April, particularly in the area of consumer spending. With the advent of
more favorable weather conditions, department store sales, seasonally adjusted, approached the peak level of July 1959, and
automobile sales likewise strengthened. Thus, despite further
cutbacks in steel output, it appeared that the Board's index of
industrial production may have held at the March level or
dropped only slightly. In summary, while the extent of unemployment continued to be a matter of concern in a number of
areas, economic activity was generally at a relatively high level.

FEDERAL RESERVE SYSTEM

Business attitudes, however, were characterized by lack of exuberance and, although continued dominance of expansive forces
seemed probable, current economic developments pointed to a
moderate rather than a boom pace of expansion. The inflationary psychology that had been prevalent last year and earlier
this year seemed definitely to have diminished.
The lack of exuberance in the business picture was evident
also in the financial area, and interest rates had resumed a downward trend. Stock market prices, after a relatively brief thrust
toward higher levels in late March and early April, had fallen
back close to the lows of the first quarter of the year. Private
demands for credit, although not as heavy as had been anticipated by some observers at the turn of the year, were generally
quite strong, but banks were said to be less willing lenders because the trend of their liquidity positions had carried to a point
regarded by many of them as undesirable.
It was the consensus of the Committee that current conditions
justified moving modestly in the direction of increasing the supply of reserves available to the banking system. The Committee
concluded that this further relaxation of restraint could be accomplished within the scope of the existing policy directive,
which called for fostering sustainable growth in economic activity and employment while guarding against excessive credit
expansion. Accordingly, although some question was raised with
regard to the appropriateness of the last part of that statement,
the directive was renewed without change.
Votes for this action: Messrs. Martin, Balderston, Bopp,
Bryan, Fulton, King, Leedy, Robertson, Shepardson, Szymczak,
and Treiber. Votes against this action: none.
2. Authority to acquire Treasury bills through "swap" transactions.

On April 12, 1960, the Committee had authorized the acquisition, in the period between that date and the next meeting of
the Committee, of up to $150 million of 1-year Treasury bills
maturing July 15, 1960, either by outright purchase or by swapping other bills. Following discussion of a report on acquisitions

ANNUAL REPORT OF BOARD OF GOVERNORS

of the July bills pursuant to that action, the previous authorization was renewed, effective until the date of the next Committee
meeting.
Votes for this action: Messrs. Martin, Balderston, Bopp,
Bryan, Fulton, King, Leedy, Shepardson, Szymczak, and
Treiber. Vote against this action: Mr. Robertson.

Mr. Robertson's negative vote reflected the views he had stated
at the meeting on April 12, 1960, with respect to "swap" transactions.
May 24, 1960
1. Authority to effect transactions in System Account.

Clause (b) of the first paragraph of the Committee's policy
directive was changed at this meeting to provide that open market operations should be conducted with a view "to fostering
sustainable growth in economic activity and employment by providing reserves needed for moderate bank credit expansion." The
preceding directive, in effect since March 1, 1960, had called for
operations with a view "to fostering sustainable growth in economic activity and employment while guarding against excessive
credit expansion."
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Fulton, King, Leedy, Mills, Robertson, Shepardson,
and Irons. Votes against this action: none.

Preliminary information for the first part of May suggested
that the rates of gain, in sectors of the economy where gains were
recorded from March to April, may not have continued. In addition, the improvement during April was not shared by certain
basic industries; new orders in durable goods manufacturing
were off somewhat further in that month. Steel output continued
to decline through April and thefirstweeks of May as new orders
ran considerably below current production.
Recent credit developments indicated that neither borrowers
nor lenders had responded with alacrity to the increased avail-

FEDERAL RESERVE SYSTEM

ability of lendable funds at the commercial banks. Interest rates
continued below the peak levels reached several months earlier
but tended to fluctuate widely in reflection of actual or anticipated variations in supply or demand conditions. The most significant point of contrast between the credit situation this year
and a year ago was the shift in the fiscal position of the Federal
Government to one of debt reduction, and other credit demands
had not increased sufficiently to offset the decline in Government
borrowing. Although bank reserve positions, over-all, were
under somewhat less pressure at this time than during the latter
half of 1959, total member bank borrowing, including Federal
Reserve advances, resort to the Federal funds market, interbank
loans, and reverse repurchase agreements with nonbank sources,
continued to be substantial. The volume of borrowing, together
with the margin between the Reserve Bank discount rate and
short-term market rates, was partly responsible for wide fluctuations in Treasury bill rates in response to variations in market
forces.
International developments had been highlighted by the breakdown during the past week of the so-called Summit Conference,
a meeting of the chiefs of state of principal nations in Paris.
However, it was not yet possible to appraise the extent, or even
the direction, of the impact of this occurrence upon the U.S.
economy.
The consensus resulting from evaluation of the current situation favored a further supplying of reserves through open market
operations with a view to permitting a moderate expansion of
bank credit and encouraging an increase in the money supply,
which thus far had failed to respond to the easing steps taken by
monetary policy. In line with this consensus, and since the prospect of undue credit expansion in the near-term future seemed to
have become remote, the Committee changed clause (b) of the
directive so as to emphasize that the providing of reserves needed
for moderate expansion of bank credit constituted an objective
of policy at this stage.

ANNUAL REPORT OF BOARD OF GOVERNORS
2. Authority to acquire Treasury bills through "swap" transactions.

The authorization given at the meeting on April 12, 1960, and
renewed at the May 3 meeting, to acquire up to $150 million of
1-year Treasury bills maturing July 15, 1960, either by outright purchase or by swapping other bills, was continued until the
date of the next meeting of the Committee.
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Fulton, King, Leedy, Mills, Shepardson, and Irons.
Mr. Robertson voted "no" on this action insofar as it extended
to the acquisition of the 1-year bills by "swap" transactions.

June 14, 1960
1. Authority to effect transactions in System Account.

The data presented for the Committee's consideration included
an extensive review of domestic and international business and
financial developments since the recession low of 1958. Attention was drawn to the developing business investment boom
abroad and to the fact that in many foreign countries the current
problems of adjusting monetary policy to economic events stood
in contrast to those in the United States. The domestic situation
reflected an absence of dramatic business or financial developments since the breakdown of the Summit Conference in Paris
four weeks earlier. While exports were expanding relative to imports, in none of the broad categories of domestic demand—
inventory accumulation, capital goods, residential building, consumer spending, or Government activity—was a marked upsurge
evident. In general, activity continued at a comparatively high
level, with prices relatively stable.
The privately held money supply declined substantially in
May while, on the other hand, the rate of turnover of deposits
continued at an advanced level, and holdings of liquid assets
other than money appeared to have risen further. Interest rates
in markets for both short-term and long-term funds had been
moving downward recently, reflecting not only the sharp reduction in Treasury requirements this year but also some slackening
of other credit demands.

FEDERAL RESERVE SYSTEM

Net borrowed reserves of member banks had been progressively reduced since the beginning of the year as required reserves declined more than seasonally. In recent weeks the Federal Reserve System had purchased Government securities, and
the net borrowed reserve position of banks gave way in early
June to small free reserve positions. A reduction from 4 per cent
to 3Vi per cent in the discount rates of the Federal Reserve
Banks, accomplished within the past two weeks, also tended further to ease restraint on bank credit expansion. Despite the easing
of reserve positions, however, no significant expansion of total
bank credit had occurred. Although borrowings from the Federal
Reserve Banks were considerably below the levels prevailing
earlier in the year, city banks still had a large volume of other
indebtedness, consisting mostly of purchases of Federal funds
from other banks. The banking system also continued to dispose
of holdings of Government securities, principally Treasury bills
and other short-term securities. In view, however, of the continued demand for short-term investments from nonbank investors, bill rates declined further and the gap between such rates
and the discount rate continued to be substantial.
Since no marked shifts in the economic situation were visible,
and since the degree of responsiveness of the banking system to
the recent easing of reserve positions and to interest rate differentials was still uncertain, the consensus at this meeting favored
waiting watchfully in the period immediately ahead, although
with the understanding that any deviations in the conduct of open
market operations should be on the side of ease rather than
restraint. In the light of this consensus, the policy directive
adopted at the meeting on May 24, 1960, which provided for
fostering sustainable growth in economic activity and employment by providing reserves needed for moderate bank credit
expansion, was renewed without change.
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Bryan, Fulton, King, Leedy, Mills, Robertson, and
Szymczak. Votes against this action: none.

ANNUAL REPORT OF BOARD OF GOVERNORS
2. Authority to acquire Treasury bills through "swap" transactions.

The authorization given at the meeting on April 12, 1960,
and renewed at the two subsequent meetings, to acquire up to
$150 million of 1-year Treasury bills maturing July 15, 1960,
either by outright purchase or by swapping other bills, was continued until the date of the next meeting of the Committee.
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Bryan, Fulton, King, Leedy, Mills, and Szymczak.
Mr. Robertson voted "no" on this action insofar as it extended to the acquisition of the 1-year bills by "swap"
transactions.

July 6, 1960
Authority to effect transactions in System Account.

Available data indicated that at midyear economic activity
was at a high, probably close to record, level. Little upward
momentum was evident, however, and uncertainty regarding
future trends continued to be widespread in business circles. According to preliminary estimates, industrial production had been
maintained in June at approximately the May level, which was
slightly higher than April, while gross national product in the
second quarter of the year appeared to have shown a modest
advance over the first quarter, due principally to a somewhat
greater seasonally adjusted rate of inventory accumulation than
had been anticipated earlier. Retail sales of automobiles and
consumer goods increased in June following declines in May, and
prices, particularly at wholesale, continued to be quite stable.
The level of unemployment remained relatively high, steel mill
operations declined further through the month of June, and the
seasonally adjusted rate of total construction outlays also had
declined. April data on U.S. foreign trade and preliminary May
figures indicated a slow but steady increase in exports and, if
anything, a slight decline in imports; thus, improvement in the

FEDERAL RESERVE SYSTEM

trade sector of the balance of payments was tending to offset an
opposite trend in the capital sector.
In the period since the preceding Committee meeting there
had been varied and substantial pressures on money and credit
markets, but for the period as a whole large net Federal Reserve
purchases of Government securities kept those pressures from
constricting bank reserve positions. During the month of June
there was a further drop in interest rates, particularly in the
short-term sector; except for the summer of 1958, Treasury bill
rates were lower than at any time since early 1956. The decline
in interest rates reflected mainly fundamental market forces that
had been in process earlier, including the changed position of the
Federal budget from large deficit to small surplus, the lessened
fear of inflation, and a tendency to shift a greater part of the
public's liquid asset holdings from cash to securities. However,
the reduced pressure on the reserve position of banks and the reduction of Federal Reserve discount rates in thefirsthalf of June
also exerted an influence. In June there was a substantial expansion in the volume of new financing in private capital markets,
but the seasonal increase in bank loans and the seasonal decline
in bank holdings of securities were both moderate in amount.
While demand and time deposits increased, it seemed unlikely
that the seasonally adjusted rise in demand deposits was sufficient
to offset the sharp drop in May. Treasury deposits continued at
a high level in June, and at the time of this meeting financing
operations that would help to meet large cash needs during the
next two months were in process.
Although some Committee members favored moving somewhat further in the direction of making reserves available to the
banking system, the consensus for the period immediately ahead
was to continue to provide reserves at approximately the present
rate, within the general framework of the existing policy directive to the New York Bank which called for fostering sustainable
growth in economic activity and employment by providing reserves needed for moderate bank credit expansion. Accordingly,
the directive was renewed.

ANNUAL REPORT OF BOARD OF GOVERNORS
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bryan, Fulton, King, Leedy, Mills, Robertson, Shepardson,
Szymczak, and Leach. Votes against this action: none.
2. Authority to acquire Treasury bills through "swap" transactions.

Transactions under the authorization given at the meeting on
April 12, 1960, and renewed at the three subsequent meetings,
to acquire up to $150 million of 1-year Treasury bills maturing July 15, 1960, either by outright purchase or by swapping
other bills, had resulted in acquisitions of such bills to the full
extent of the authorization. In the circumstances, and since there
appeared to be no need for acquiring additional quantities of
such bills through "swap" transactions, the outstanding authorization was terminated, effective immediately.
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bryan, Fulton, King, Leedy, Mills, Robertson, Shepardson,
Szymczak, and Leach. Votes against this action: none.

July 26, 1960
Authority to effect transactions in System Account.

Available information indicated that during the period since
the previous meeting of the Open Market Committee there had
been no significant change in the over-all economic situation.
Activity continued at a high level, although with a gradual increase in unutilized plant capacity and manpower and without
indication of any significant upward thrust. A continued high
rate of consumer spending was one of the more favorable aspects
of the picture, but in general favorable signs in some sectors of
the economy were being counterbalanced by signs of weakness
in other sectors. The existing uncertainties were being reflected
in reports of some deterioration of sentiment regarding business
prospects.
Longer term interest rates had declined further during July,
and credit demands did not appear to be particularly vigorous.
While the reserve positions of city banks had eased, the positions

FEDERAL RESERVE SYSTEM

of country banks continued to reflect tightness, largely because
of seasonal factors. A renewal of the gold outflow had occurred
recently, evidently due in some part to a movement of capital
attracted by higher interest rates available in other markets. The
Treasury had announced its intention to carry out the refunding
of a large issue of notes maturing August 15, 1960, through a
cash refunding technique, with the terms of the offering to be
announced shortly.
Upon appraisal of business and financial developments, it was
the consensus of the Committee that open market operations
should continue to make reserves for bank deposit expansion
readily available. Accordingly, the directive to the New York
Bank which called for fostering sustainable growth in economic
activity and employment by providing reserves needed for moderate bank credit expansion was renewed.
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Bryan, Fulton, Leedy, Mills, Robertson, and Shepardson. Votes against this action: none.

August 16, 1960
Authority to effect transactions in System Account.

At this meeting clause (b) of the first paragraph of the Committee's policy directive was changed to provide that open market
operations should be conducted with a view "to encouraging
monetary expansion for the purpose of fostering sustainable
growth in economic activity and employment." The preceding
directive, in effect since May 24, 1960, had called for operations
with a view to "fostering sustainable growth in economic activity
and employment by providing reserves needed for moderate bank
credit expansion."
Votes for this action: Messrs. Balderston, Bopp, Bryan,
Leedy, Mills, Robertson, and Treiber. Votes against this action: Messrs. King, Shepardson, Szymczak, and Allen.

ANNUAL REPORT OF BOARD OF GOVERNORS

Relative steadiness in industrial production, construction activity, employment, retail trade, and prices tended to support the
view that economic activity was continuing at about the same
over-all rate as had prevailed at the end of the second quarter of
the year. Business inventories, in the aggregate, did not appear
excessive in relation to product sales, especially final sales to
consumers; indeed, consumer demand seemed to be a sustaining
influence in maintaining the level of economic activity, although
there was no evidence that it was providing a further stimulus to
the economy. Recently released data on second-quarter corporate profits showed declines from the high year-ago level and
from the first quarter, and perhaps more importantly the declines
were quite general throughout the various industrial categories.
As to the U.S. balance of payments, data for the second quarter
of the year reflected improvement in the trade balance at an
annual rate of nearly $1 billion. Beginning in July, however, the
outflow of gold had been intensified, reflecting the continuing
deficit in the over-all balance of payments.
The strong demand for bank loans that had been evident during the first half of the year appeared now to have tapered off,
and a shift from loans toward investments had contributed to
some improvement in bank liquidity positions. The seasonally
adjusted end-of-month money supply increased in July for the
second consecutive month, while total reserves, nonborrowed
reserves, and required reserves all increased over the 3-month
period through July. Market interest rates, on balance, had
shown substantial further declines, with most yield series on
U.S. Government securities close to their lows for the year.
Federal Reserve actions announced since the previous Open
Market Committee meeting included a reduction of margin requirements, a reduction of the discount rate to 3 per cent at
several Reserve Banks, a further release of vault cash to be
counted by banks toward meeting required reserves, and a reduction of the reserve requirement for central reserve city banks.
These actions were effective, or to become effective, on dates
from late July to the first of September.

FEDERAL RESERVE SYSTEM

For several months Committee policy had been directed toward providing reserves needed for moderate bank credit expansion, and the consensus of the meeting was that this objective
should be emphasized. For the period immediately ahead, it was
also the consensus, particularly in view of the uncertainty as to
the extent to which banks would use released vault cash to expand
credit, that doubts arising in the conduct of open market operations should be resolved on the side of ease and that such operations should take into account, even more than usual, the tone of
the market rather than statistical measures.
After consideration of several suggestions for revision of the
policy directive in a manner that would more strongly suggest a
positive attitude toward increasing the availability of reserves, it
was voted to change clause (b) of the directive in the manner
heretofore indicated. The members of the Committee who voted
against a change in the directive were not in disagreement with
the aforementioned consensus as to open market operations.
They felt, however, that such operations could be carried out
within the framework of the existing directive or, to express it
another way, that the consensus did not contemplate a sufficient
modification in the course and objectives of open market operations to necessitate a change in the directive.
September 13, 1960
Authority to effect transactions in System Account.

Although the trend of aggregate economic activity continued
to be sideways at a relatively high level, reports at this meeting
suggested more strongly than before that a renewed upsurge of
activity was not an immediate prospect and that the greater likelihood was for an extension of the sideways movement or some
downward drift. Unfavorable developments, in addition to the
continued underutilization of manpower and industrial resources,
included evidence of a weakening in the demand for residential
construction and a leveling off of current and prospective plant
and equipment expenditures, apparently reflecting in part a re-

ANNUAL REPORT OF BOARD OF GOVERNORS

duction of profit margins. Moreover, there now appeared to be
some signs that the strength of consumer demand might be
faltering.
On the financial side, the August statistics on bank credit and
the money supply were disappointing, the increases in both figures having been rather small and less than in July. The rate of
growth in consumer credit had slowed down in July. In addition,
the pace of new security financing had moderated in recent
weeks, and at the date of this meeting common stock prices were
back to the lows of the summer. A continued slack demand for
commercial bank loans, particularly on the part of business concerns, indicated that the upturn in credit demand normally associated with the fall season had been slow in developing. Despite
a statistical appearance of greater ease, reserve positions of city
banks had been under somewhat more pressure in recent weeks
and money market rates had risen; reasons included the large
demands for cash that normally occur in September and the slowness with which reserves made available to country banks in late
August through the release of vault cash had permeated the
banking system. The Treasury had announced a program of
advance refunding of certain intermediate-term bond issues, with
the books to remain open for a period of several days beyond the
date of this meeting.
Balance-of-payments data reflected continuation of the improvement in the trade balance. However, in view of large capital movements, the outflow of gold continued and foreigners
added further to their accumulation of dollar balances.
The consensus as to open market operations called for supplying needed reserves readily, avoiding the development of seasonal
strain in bank reserve positions, and resolving doubts on the side
of ease, with the understanding, as at the previous meeting, that
such operations would be conducted more on the basis of the
tone of the market than on the basis of statistical yardsticks. This
being the consensus, the directive to the New York Bank providing for open market operations with a view to encouraging

FEDERAL RESERVE SYSTEM

monetary expansion for the purpose of fostering sustainable
growth in economic activity and employment was renewed without change.
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Bryan, Fulton, King, Leedy, Mills, Robertson, Shepardson, and Szymczak. Votes against this action: none.

October 4, 1960
Authority to effect transactions in System Account.

Although some of the most recent economic data reflected
further downward drift, many indicators were showing a continued sideways movement, and some data suggesting a possible
strengthening of economic forces had appeared. The general
situation in regard to economic activity thus appeared to be
mixed, with the direction of further movement highly uncertain.
The employment and unemployment situation continued to be
a matter of primary concern; after allowance for seasonal influences, initial and continuing claims for unemployment compensation rose in September and both series stood at unusually high
levels for this time of the year. In spite of increased automobile
assemblies associated with introduction of the new models, steel
operations continued at only a little more than 50 per cent of
capacity. Both the number of business failures and the total
liabilities of failing firms were running at levels close to postwar
peaks. Retail sales, seasonally adjusted, appeared to have been
off slightly from August to September, although the second half
of September seemed to have been somewhat stronger than the
first. There were persistent reports of price concessions, especially for durable goods, with some indications that such concessions might be generating consumer response. In the two weeks
prior to this meeting, stock market prices declined sharply to the
lowest average level since 1958, evidently reflecting a growing
realization that corporate profits were not likely to be as large as
had been anticipated.

ANNUAL REPORT OF BOARD OF GOVERNORS

Following moderate credit expansion in July and August, total
bank credit expansion in September, according to preliminary
data, was larger than in the corresponding month of other recent
years. Business loans at city banks increased fully as much as is
usual in September, loans on securities rose much more than
seasonally, and bank holdings of securities increased substantially
in contrast to the usual decline. These developments appeared
to have been associated primarily with heavy tax payments in
September. Their liquidity having declined since early in the
year, corporations were compelled to sell securities, as well as
borrow, in order to meet tax payments. As a result of the pressures on banks and securities markets engendered by the heavy
demands for liquidity, there had been some rise in interest rates
from the low levels reached in August, notwithstanding actions
on the part of the Federal Reserve System to make reserves
readily available. The money supply increased slightly more than
seasonally in August, and it appeared that there may have been
some further increase in September. The Treasury was expected
to announce within a few days the terms of refunding of the 1year Treasury bills maturing in mid-October, along with the
terms of an offering to raise new cash.
The latest available information indicated no deterioration in
the trade sector of the U.S. balance of payments, but the shortterm capital outflow had intensified, apparently due in part to the
spread between short-term rates of interest in the United States
and the higher rates elsewhere. Net gold purchases by foreigners
in September were equal to total purchases for the two preceding
months.
In the prevailing circumstances, it was agreed that open market operations should continue to supply needed reserves readily
in order to avoid seasonal strain on bank reserve positions, and
that doubts should be resolved on the side of ease. The feel and
tone of the market were to be emphasized more than statistical
guidelines, since the free reserve figure, for example, was still
distorted by the inclusion of a widely scattered volume of newly

FEDERAL RESERVE SYSTEM

created reserves that were slow in becoming a factor in the
market. To the extent practicable, it was hoped that downward
influences on short-term rates could be minimized. The policy
directive, which called for encouraging monetary expansion for
the purpose of fostering sustainable growth in economic activity
and employment, was again renewed without change.
Votes for this action: Messrs. Martin, Balderston, Bopp,
Fulton, King, Leedy, Mills, Robertson, Shepardson, Szymczak,
Irons, and Treiber. Votes against this action: none.

October 25, 1960
Authority to effect transactions in System Account.

At this meeting the Committee's policy directive was changed
in two respects. Clause (b) of the first paragraph, which since
August 16, 1960, had provided for open market operations with
a view "to encouraging monetary expansion for the purpose of
fostering sustainable growth in economic activity and employment" was amended to add the words "while taking into consideration current international developments." In addition, the
first paragraph of the directive, as approved at this meeting, specified that the aggregate amount of securities held in the System
Open Market Account (including commitments for the purchase
or sale of securities for 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, was not to be increased or decreased by more than
$1.5 billion. The comparable figure contained in the preceding
directive was $1 billion.
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Fulton, King, Leedy, Mills, Robertson, Shepardson,
and Irons. Votes against this action: none.

Gross national product in the third quarter of the current year
was estimated to have declined from the second quarter by a

ANNUAL REPORT OF BOARD OF GOVERNORS

fraction of one per cent, and industrial production, as measured
by the Board's index, appeared to have contracted by approximately 3 per cent from July to September. Thus, although economic activity remained at a relatively high level, a downward
drift continued. In September, factors on the favorable side included an increase in new orders for durable goods, a slight
decline in unemployment, and maintenance of a high level of
personal income. However, industrial production, nonfarm employment, the average workweek in manufacturing, and retail
sales were down from August, while housing starts decreased
about 17 per cent to a rate one-third below the peak reached in
1959. Such information as had become available for the first
part of October suggested no significant change in the over-all
trend, although it appeared that some improvement in consumer
spending may have occurred in view of a modest strengthening
of department store sales and satisfactory, though not spectacular, public acceptance of new model automobiles. Initial unemployment compensation claims continued at high levels in early
October, and the rate of steel output showed little change.
While no downturn in the volume of exports was indicated by
available statistics, the outflow of short-term capital from the
United States appeared to have continued through the first three
weeks of October, apparently reflecting at least in part the relative attractiveness of short-term rates in foreign centers. The
outflow of gold also persisted, and within the week preceding
this meeting speculative demand from private sources had pushed
the gold price in the London market substantially above $35 an
ounce.
Analysis of bank loan developments during the four weeks
prior to this meeting indicated that most of the record-breaking
expansion during the previous four weeks was attributable to
temporary factors, particularly heavy borrowing for tax payment
purposes, and did not reflect a basic change in the economic
climate. For the 8-week period as a whole, the net change in
bank loans appeared to have been close to the customary sea-

FEDERAL RESERVE SYSTEM

sonal pattern. Yields on Treasury bills, which had advanced
substantially during the first ten days of October, declined
sharply thereafter to approximately the low levels of early
August, but yields on medium- and long-term securities remained
relatively high and in fact had been following an upward trend
until the past few days.
Projected movements in required reserves and market factors
indicated a need for additional reserves in the amount of approximately $1,300 million for seasonal purposes during the
remainder of the calendar year, and the projections also indicated
substantial drains on reserves in the forthcoming 2-week period
due to market factors. The Treasury was expected to announce
shortly the terms of refunding of a large quantity of securities
maturing in mid-November.
It was the consensus that seasonal reserve needs should continue to be met on a liberal basis, with doubts arising in the
conduct of open market operations resolved on the side of ease
and with emphasis placed on the tone of the market. At the same
time, there was a general view that it would be desirable if the
objective indicated by the consensus could be accomplished with
a minimum of downward pressure on the 90-day Treasury bill
rate, particularly in light of the disparity already existing between
that rate and short-term rates abroad. If, however, a conflict
should arise between providing additional reserves and a further
decline in the bill rate, it was understood that the first of these
considerations would take precedence.
The prevailing circumstances suggested that during the forthcoming period occasions might: arise when it would be found
advisable to conduct open market transactions not only in bills
but also in other Treasury securities, to the extent permissible
within the framework of the Committee's operating policy which
limited open market transactions to short-term securities except
in the correction of disorderly markets. Reference also was made
to possible alternative methods of supplying reserves, including
adjustment of member bank reserve requirements through the re-

ANNUAL REPORT OF BOARD OF GOVERNORS

lease of additional vault cash to be counted as required reserves
or through a reduction of the reserve requirement against demand deposits of member banks in central reserve cities, both of
which actions would serve to implement the reserve requirement
legislation enacted in 1959.
Insofar as it described the objectives of domestic monetary
policy, the existing directive to the New York Reserve Bank was
regarded as continuing to be appropriate. However, in view of
the increasing import of international developments in relation
to problems within the Open Market Committee's jurisdiction, a
matter to which the Committee had been giving close attention
for some time, it was considered desirable that specific reference
now be made to such developments in the policy directive. Accordingly, clause (b) of the directive was amended for that purpose. The other change in the first paragraph of the directive,
enlarging the permissible magnitude of Open Market Account
operations until the next Committee meeting, was made in recognition of the volume of transactions that might have to be conducted by the Account in pursuing a program such as envisaged
by the consensus.

November 22, 1960
Authority to effect transactions in System Account.

Although the downward drift of certain key statistical indicators that had been in process since about the middle of the
year leveled off in October, this appeared to be attributable for
the most part to temporary or unusual factors; no fundamental
moderation of recessionary tendencies in the general economy
was believed to have occurred. As to prospects for the near-term
future, recently released surveys of the expectations of business-

FEDERAL RESERVE SYSTEM

men and consumers failed to provide a basis for optimism regarding any significant reversal of trends. The October rise in the
seasonally adjusted rate of unemployment was a matter of concern, especially since normal seasonal trends might be expected
to result in a further increase in the number of unemployed over
the next several months. The prevailing tone was therefore one
of mild deterioration, but the declines in economic activity that
had occurred thus far were less severe than those in 1954 and
1957-58, and the available evidence did not seem to suggest
impending acceleration of the rate of decline.
Statistics through the end of October indicated that some
monetary expansion, in accordance with the objectives stated by
the Committee in its current policy directive, had been taking
place. Over a 4-month period total loans and investments of all
commercial banks had increased almost 4 per cent, with the
growth concentrated in holdings of Government securities. While
most of this growth in earning assets reflected expansion in time
deposits, the active money supply (demand deposits and currency) also had risen. The increase in member bank total reserves in the 6-month period ending with October was a direct
reflection of the credit-easing actions taken by the Federal Reserve, which, in the attainment of domestic credit policy objectives, had more than compensated for the impact on reserves of
the outflow of gold.
The fairly large outflows of capital from the United States that
began earlier in the year appeared to have been continuing, and
foreign gold purchases thus far in November exceeded the total
for each of the two preceding months. Apart from capital movements, however, the United States apparently was close to
equality of its international receipts and payments, with the merchandise trade surplus continuing to be substantial.
It was the consensus that no change in the current degree of
monetary ease was called for and that a comfortable reserve
position should be maintained in the market. One member of the

ANNUAL REPORT OF BOARD OF GOVERNORS

Committee, however, expressed the strong feeling that, in the
light of prevailing economic conditions and in order to give
monetary policy a chance to contribute toward reversing the
trend of the economy, the total volume of bank reserves should
be permitted to rise further—an action that he felt would fall
within the bounds of the present directive.
In view of the fact that the recent actions of the Board of Governors with respect to member bank reserve requirements, including the release of all vault cash to be used in meeting required
reserves, were soon to become effective, statistical yardsticks
seemed likely to be less indicative than usual of the actual state
of the money market, making it necessary in the forthcoming
period to rely more than usual on the feel of the market in
gauging operations for the System Open Market Account. The
weight of opinion within the Committee was to the effect that the
Management of the Account should not act hastily to counteract
temporary bulges in reserves that might result from the action on
vault cash, particularly since previous experience suggested that
it might take some little time for the newly available reserves at
banks located outside of central reserve and reserve cities to find
their way into the money market. The rather general hope continued to be expressed that System open market operations could
be so conducted as not to contribute to any significant reduction
of short-term market rates below prevailing levels.
The directive to the New York Reserve Bank, which provided
for encouraging monetary expansion for the purpose of fostering
sustainable growth in economic activity and employment, while
taking into consideration current international developments, was
renewed except that the latitude for increasing or decreasing the
portfolio of the System Account, which at the preceding meeting
had been raised to $1.5 billion, was restored to the customary
figure of $1 billion.
Votes for this action: Messrs. Martin, Balderston, Bopp,
Bryan, Fulton, King, Leedy, Mills, Robertson, Shepardson,
Szymczak, and Treiber. Votes against this action: none.

FEDERAL RESERVE SYSTEM

December 13, 1960
Authority to effect transactions in System Account.

The slowing of the downward drift of economic activity suggested by some October statistics had now proved to be clearly
temporary as subsequently available evidence revealed further
mild contraction in November and early December. The labor
market had weakened further, and industrial production in November fell to a point about 5 per cent below the peak reached in
the second quarter of the year. New orders for durable goods
declined, order backlogs were further reduced, and inventory
liquidation was sizable, while retail sales showed little change
from the October level. According to a survey that had recently
become available, business outlays for plant and equipment decreased in the third quarter of the year and business plans indicated additional decline in the fourth quarter.
The demand for bank loans, especially business loans, continued to be slack in November, and the money supply was down
sharply. The decline in the U.S. gold stock in November had
been about $500 million, reflecting continued outflows of capital
and some purchases of gold by smaller countries to increase the
gold proportion of their reserves.
It was agreed by the Committee that ample reserves should be
available in the market to meet seasonal credit needs and any
revival in credit demands, and to compensate for the outflow of
gold. In view of the persistent downward drift of domestic economic activity and in light of the monetary contraction that
occurred in November following the rise in October, some Committee members were inclined to feel that a moderately greater
degree of ease than had prevailed recently should be sought, and
at least one urged an increase in the volume of bank reserves
even if the level of short-term interest rates were to decline. It
was the majority view, however, that a continuation of the current degree of ease would be the preferable objective. This view
reflected the feeling that, at a time when signs of cyclical revival
in credit demands were not more definite, little would be accom-

ANNUAL REPORT OF BOARD OF GOVERNORS

plished by supplying reserves more liberally, that action to supply
additional reserves might serve only to accentuate the difficulty
of open market operations after the turn of the year, and that,
because of the continuing balance-of-payments deficit, it would
be desirable if short-term interest rates, including the Treasury
bill rate, were to continue at about prevailing levels. For similar
reasons/one member of the Committee expressed the view that
a moderate move away from the degree of ease of the past few
weeks might be appropriate.
Accordingly, the policy directive calling for the encouragement of monetary expansion for the purpose of fostering sustainable growth in economic activity and employment, while taking
current international developments into consideration, was again
renewed.
Votes for this action: Messrs. Martin, Hayes, Balderston,
Bopp, Bryan, Fulton, King, Leedy, Mills, Robertson, Shepardson, and Szymczak. Votes against this action: none.

As indicated by the foregoing record, the policy directive of
the Federal Open Market Committee in effect at the beginning
of 1960 was aimed at restraining inflationary credit expansion in
order to foster sustainable economic growth and expanding employment opportunities. For reasons set forth in the record, the
directive was changed four times in the course of the year. On
March 1, the directive was revised to provide that transactions
should be undertaken with a view to fostering sustainable growth
in economic activity and employment while guarding against excessive credit expansion. The next change, made on May 24,
provided that open market operations should seek to foster sustainable growth in economic activity and employment by providing reserves needed for moderate bank credit expansion. On
August 16 the directive was revised so as to call for encouraging
monetary expansion for the purpose of fostering sustainable
growth in economic activity and employment. The final change,

FEDERAL RESERVE SYSTEM

made on October 25, added the words "while taking into consideration current international developments." In addition to
the changes during the year in the language of the directive, there
were occasions, as indicated in the entries for the respective meetings, when the directive was issued subject to certain understandings with regard to the manner in which open market operations
were to be conducted.
The directive in effect at the end of 1960 instructed the Federal Reserve Bank of New York in the same terms as the directive
quoted on page 35 of this Report, except that clause (b) of the
first paragraph directed that transactions be with a view, among
other things, "to encouraging monetary expansion for the purpose of fostering sustainable growth in economic activity and
employment, while taking into consideration current international developments."

ANNUAL REPORT OF BOARD OF GOVERNORS
RECORD OF POLICY ACTIONS
BOARD OF GOVERNORS

February 10, 1960
Suspension of Triennial Review of Reserve City Classifications.
Paragraph (4) of section (b) of the Board's Rule for Classification of
Central Reserve and Reserve Cities was suspended until further notice.
Votes for this action: Messrs. Martin, Balderston, Szymczak, Mills, Robertson, Shepardson, and King. Votes against
this action: none.

In December 1947 the Board adopted, effective March 1,
1948, a Rule for Classification of Central Reserve and Reserve
Cities, one part of which provided for a triennial review of such
classifications. A triennial review therefore was due to be made
as of March 1, 1960. However, Public Law 86-114, approved
July 28, 1959, amended in certain respects the authority of the
Board with respect to the reserves required to be maintained by
member banks. Except that the new law terminated the central
reserve city classification three years from the date of enactment
of the legislation, i.e., July 28, 1962, it did not make necessary
any change in the existing standards for the classification of cities
for reserve purposes. Nevertheless, pending decisions as to the
manner in which provisions of the statute would be implemented
and as to whether revised standards for the classification of cities
should be promulgated, the Board suspended the paragraph of
the Rule for Classification of Central Reserve and Reserve Cities
which contemplated a triennial review.
March 3, 1960
Amendment to Regulation U, Loans by Banks for the Purpose of
Purchasing or Carrying Registered Stocks.
Effective March 8, 1960, paragraph 3(b)(l) of Regulation U was
amended to read as follows:
No loan, however it may be secured, need be treated as a loan for
the purpose of "carrying" a stock registered on a national securities

FEDERAL RESERVE SYSTEM
exchange unless the loan is as described in subparagraph (2) of this
paragraph or the purpose of the loan is to enable the borrower to
reduce or retire indebtedness which was originally incurred to purchase such a stock, or, if he be a broker or a dealer, to carry such
stocks for customers.
Votes for this action: Messrs. Martin, Balderston, Mills,
Shepardson, and King. Votes against this action: Messrs.
Szymczak and Robertson.

Prior to June 15, 1959, Regulation U excluded from loans for
the purpose of "carrying" registered stocks all loans except a
limited specified group, principally loans to enable the borrower
to reduce or retire indebtedness originally incurred to purchase
such stock. Effective June 15, 1959, the Regulation was
amended to broaden the application of "carrying" and to describe
affirmatively certain situations in which a loan would not be
deemed to be for the purpose of "carrying" registered stocks.
Reports received thereafter by the Board indicated that banks
were experiencing substantial difficulty in interpreting the
amended language of the Regulation and also were encountering
severe administrative problems in applying it. Accordingly, after
consideration of the views received, the Board published in the
Federal Register for comment on December 7, 1959, a proposed
clarifying amendment. However, upon consideration of the comments submitted with respect to that proposal and of a suggested
modification prepared in the light of those comments, the Board
concluded that, in view of the apparent difficulties involved in
administering the provisions of the June 1959 amendment or
even the subsequently proposed modification thereof, it would
be advisable to restore the language of the pertinent paragraph of
Regulation U to the form in which it stood prior to June 15,
1959. In announcing its action, the Board emphasized that it
was concerned with evasive extensions of bank credit for the
purpose of carrying registered stocks and that it expected banks
to be alert in detecting and preventing attempts to circumvent
the basic purposes of paragraph 3 (b) (1) of Regulation U.
Governor Szymczak's negative vote was based on his view that

ANNUAL REPORT OF BOARD OF GOVERNORS

every effort should be made to clarify the meaning of "carrying"
in order that the purpose of the law might be accomplished. In
his opinion, hearings and correspondence had provided the Board
with information on the basis of which clarifying language could
have been adopted to improve the operation of the June 1959
amendment. With experience under such amended language, he
felt that additional steps could be taken eventually to make
"carrying" purposeful and practical of administration.
Governor Robertson, in voting against this action, pointed out
that the June 1959 amendment to the "carrying" provisions of
Regulation U was adopted to close one of several loopholes in
the Regulation that had given the Board serious concern. Although the amendment was admittedly experimental and needed
to be refined in the light of experience, he felt that the Board
should not abdicate its responsibility for applying the Regulation
to a large number of loans that were closely related to the financing of positions in stocks on the ground that its first attempt was
unpalatable, or because other gaps in the Regulation remained
unfilled. By restoring the provisions of the Regulation to the
form in which they stood prior to June 15, 1959, he felt that the
Regulation could again be circumvented by purchasing registered
stock for cash and then borrowing on the security of that stock
to replenish funds used in making the purchase.
May 27, 1960
Amendment to Regulation Y, Bank Holding Companies.

Effective July 1, 1960, subsections (d) and (e) of Section 4 of Regulation Y, relating to the manner of submission of applications under the
Bank Holding Company Act of 1956 for approval of the acquisition of
bank shares or bank assets, and the procedure for handling such applications, were amended to provide for public notice of the receipt of applications received by the Board on and after that date.
Votes for this action: Messrs. Martin, Balderston, Szymczak,
Robertson, Shepardson, and King. Votes against this action:
none. Mr. Mills abstained from voting on this matter.

Since September 1958, the Board had been following a pro-

FEDERAL RESERVE SYSTEM

cedure, as to applications under the Bank Holding Company Act
in cases where a hearing was not held, of publishing in the Federal Register a notice of tentative decision and allowing 15 days
from the date of publication for the submission of comments by
interested persons, after which the Board would reach and publish a final decision.
The revised procedure established by this amendment to Regulation Y provided that, following the receipt of an application,
the Board would publish in the Federal Register a notice of such
receipt, stating the names and addresses of the applicant and the
bank or banks involved, indicating the general nature of the proposed transaction, and allowing 30 days (or a shorter period in
exceptional circumstances) for the submission of written comments or views, after which the Board would consider the application and reach and publish its decision. This new procedure,
which eliminated the issuance of a "tentative" decision, was
adopted with a view to removing certain problems that had developed under the former procedure and facilitating the disposition of applications.
Governor Mills' abstention from voting reverted to a position
that he had previously taken on the proposed amendment to the
effect that an application under the Bank Holding Company Act
of 1956 should be treated in confidence except under circumstances clearly demanding a public hearing, and should not be
published for the information of competitors of the applicant or
others claiming to have an interest in the transaction. As under
the Act a decision of the Board of Governors is subject to judicial
review, any directly aggrieved party is afforded an opportunity
through this means for adequate relief. To invite and admit the
views and objections of parties other than those directly at interest in a proposed transaction is contrary to the spirit of a competitive free enterprise system, which properly allows a premium
for alertness and planning foresight in the same way that legal
recognition is given to patents and copyrights. Furthermore, it
was his opinion that for the Board of Governors to entertain in
advance comments on transactions that must by statute be decided

ANNUAL REPORT OF BOARD OF GOVERNORS

in its sole discretion would be a tacit admission of lack of confidence in its adjudicatory competence in thisfieldof action.
June 2, 1960
Reduction of rates on discounts and advances by Federal Reserve Banks.

Effective June 3, 1960, the Board approved action by the Boards of
Directors of the Federal Reserve Banks of Philadelphia and San Francisco establishing a rate of ZVi per cent (a decrease from 4 per cent) on
discounts and advances to member banks under Sections 13 and 13a of
the Federal Reserve Act.
Votes for this action: Messrs. Martin, Szymczak, Mills,
Robertson, and King. Votes against this action: none.
Pursuant to the policy established by this action, the Board subsequently approved the same rate for the remaining Federal Reserve Banks
effective on the following dates:
New York
Cleveland
Richmond
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
Atlanta
Boston

June
June
June
June
June
June
June
June
June
June

10,
10,
10,
10,
10,
10,
10,
10,
13,
14,

1960
1960
1960
1960
1960
1960
1960
1960
1960
1960

Effective on the same dates, the Board approved for the respective
Federal Reserve Banks a rate of 4 per cent on advances to member
banks under Section 10(b) of the Federal Reserve Act. In addition, the
Board approved changes at some of the Banks in rates on advances to
individuals, partnerships, and corporations under the last paragraph of
Section 13 of the Act.
(In accordance with the provisions of the Federal Reserve Act, the
Federal Reserve Banks establish rates on discounts for and advances to
member banks at least every 14 days, and submit such rates to the Board
for review and determination. Prior to this date, no changes had been
made in these rates since those referred to on pages 78-80 of the Board's
Annual Report for 1959.)

FEDERAL RESERVE SYSTEM

Although economic activity was at a high level throughout the
early part of 1960, the expansionary surge that had been anticipated in many quarters around the turn of the year failed to develop and inflationary expectations gradually moderated. Some
easing of the aggregate demand for credit also occurred, reflecting in large part the sharp shift in the fiscal position of the
Federal Government from one of large deficit to moderate surplus. Other credit demands did not increase sufficiently to offset
the decline in Government borrowing, and saving continued at
a high level. Beginning in March, the monetary policy of the
Federal Reserve System turned increasingly toward less restraint
and the reserve positions of member banks eased, but neither
borrowers nor lenders responded with any alacrity to the increased availability of bank reserves. As interest rates declined
from the peaks reached around the beginning of the year, a significant differential developed between those rates and the discount rates of the Federal Reserve Banks, thus tending to make
the latter an effective penalty rate. Therefore, with few, if any,
indications that there were excessive uses of credit that needed
to be restrained, the discount rates were reduced from 4 per cent
to 3V2 per cent in order to bring them into better alignment with
the lower level of short-term interest rates that had resulted from
developments in the credit market.
July 27, 1960
Reduction in margin requirements.

Effective July 28, 1960, the supplements to Regulation T, Credit by
Brokers, Dealers, and Members of National Securities Exchanges, and
Regulation U, Loans by Banks for the Purpose of Purchasing or Carrying
Registered Stocks, were amended to reduce the margin requirements from
90 per cent to 70 per cent, these requirements to be applicable both to
purchases of securities and to short sales.
Votes for this action: Messrs. Martin, Balderston, and
Shepardson. Votes against this action: Messrs. Mills and
Robertson.

ANNUAL REPORT OF BOARD OF GOVERNORS

The amount of stock market credit outstanding had followed
a generally declining trend since mid-1959, when more stringent
limitations were placed on withdrawals from restricted accounts.
This decline had brought the volume of credit outstanding back
to the levels prevailing in mid-1958 when margin requirements
were raised to 70 per cent.
Experience following earlier reductions in margin requirements indicated that such reductions were not likely to stimulate
pronounced speculative activity under economic conditions such
as prevailed at this time. Since early June, moreover, stock prices
had been declining and trading had been in moderate volume.
The pattern of price movements—in which declines were substantial for issues in industries which normally experience wide
cyclical fluctuations in earnings—suggested that moderate relaxation of margin requirements would not, under current economic
conditions, encourage the excessive use of credit in the stock
market.
In these circumstances, the Board concluded that a 90 per
cent margin requirement was no longer necessary or justified.
Governor Mills dissented from this action because in his view
the character of transaction being handled in the stock market
indicated that unsophisticated investors were using credit to participate in market trading at a time of receding business activity
which, when reflected in the values of securities traded for their
accounts, could expose them to speculative losses. According to
his interpretation, the statute giving the Board of Governors responsibility to prevent "the excessive use of credit for the purchase or carrying of securities" extends to the duty of potentially
limiting access to market trading through the use of credit by
individuals unfamiliar with the risks involved in such practices.
Governor Robertson dissented from this action because in his
view it indicated undue emphasis upon stock market prices rather
than credit in that market. Furthermore, he felt that such action,
if taken, should be accompanied by repeal of the regulatory
provisions affording preferential treatment to existing users of

FEDERAL RESERVE SYSTEM

margin accounts as against those seeking new credit with which
to invest or speculate in the stock market.
August 8, 1960
Amendments to Regulation D, Reserves of Member Banks.

Effective August 25, 1960, the supplement to Regulation D was
amended to permit member banks not classified as central reserve city
or reserve city banks to count currency and coin in excess of IVz per
cent (rather than 4 per cent) of net demand deposits as part of their
required reserves, and effective September 1, 1960, the supplement was
amended to permit central reserve city and reserve city banks similarly to
count currency and coin in excess of 1 per cent (rather than 2 per cent)
of their net demand deposits.
Votes for this action: Messrs. Balderston, Szymczak, Mills,
Robertson, Shepardson, and King. Votes against this action:
none.
Effective September 1, 1960, the reserve requirement of central reserve
city banks against their net demand deposits was reduced from 18 per
cent to 11 VL per cent.
Votes for this action: Messrs. Balderston, Szymczak, Mills,
and King. Votes against this action: Messrs. Robertson and
Shepardson.

These actions were taken in further implementation of an Act
of Congress approved July 28, 1959, relating to vault cash and
reserve requirements.
The reduction of the reserve requirement of central reserve
city banks was a first step in recognition of a provision of the
1959 Act which terminated the central reserve city classification
three years after the date of enactment of the statute. Thus, by
no later than such date, the differential between the reserve requirements applicable to central reserve and reserve city banks
would be eliminated. Since the requirement for reserve city
banks was currently 1 6 ^ per cent, the Board's action reduced
the differential from W2 to 1 percentage point.
The action authorizing member banks to count an additional
portion of their vault cash in meeting reserve requirements was

ANNUAL REPORT OF BOARD OF GOVERNORS

the second action taken by the Board in that area pursuant to the
permissive provision of the 1959 Act that "the Board of Governors, under such regulations as it may prescribe, may permit
member banks to count all or part of their currency and coin . . . "
as required reserves. The first action by the Board under that
provision of the statute had been taken on November 30, 1959,
effective in December of that year.
The Board's current action was expected to make available
about $600 million of additional reserves for expanding bank
credit as the economy entered the season of rising credit needs.
It was estimated that the total amount of reserves released by the
action on vault cash would be around $480 million, of which
somewhat more than half would be at country banks and almost
all of the remainder at reserve city banks. The balance of around
$120 million of reserves that would be made available for credit
expansion would result from the reduction in reserve requirements of central reserve city banks. About four-fifths of the
approximately 6,200 member banks would be placed in a position to count a part of their vault cash in meeting required
reserves.
Although Governors Robertson and Shepardson favored action, and announcement thereof at this time, with respect to the
release of additional vault cash to be counted as part of member
bank required reserves, they voted against reduction of the reserve requirement applicable to central reserve city banks because
of their view that such action should be deferred and considered
by the Board in relation to other steps that might be decided
upon incident to further implementation of the provisions of the
1959 Act of Congress, Public Law 86-114.
August 10, 1960
Amendment to Regulation J, Check Clearing and Collection.

Effective immediately, Regulation J was amended by inserting after
the first sentence of Section 6 a new sentence specifying that the rules
promulgated by each Federal Reserve Bank with regard to the details of
its operations in clearing and collecting checks and other cash items may,

FEDERAL RESERVE SYSTEM
among other things, prescribe the types of checks and other items that
will be received as cash items, classify cash items, require separate sorts
and cash letters, and provide different closing times for the receipt of
different types or classes of cash items.
Votes for this action: Messrs. Balderston, Szymczak, Mills,
Robertson, Shepardson, and King. Votes against this action:
none.

An increasing volume of so-called "headache checks" was being received for collection by the Federal Reserve Banks, including items such as "envelope drafts" which, for physical reasons
(such as thickness), are not adapted for processing on high-speed
document-handling equipment. As long as they constitute
"checks," such items are required by law to be collected by the
Reserve Banks. However, the law does not preclude the Reserve
Banks from handling the items as noncash rather than cash items
or from handling them as cash items subject to reasonable conditions. After study within the System, it was concluded that
checks of this type should be handled as cash items but with the
reservation of the right to require separate sorts or earlier closing
times for the receipt of such items. While it was felt that such
conditions could be specified under the existing terms of Regulation J, the Board decided that it would be desirable to amend the
Regulation in order to make it clear that the Reserve Banks
might not be able to avoid the need for prescribing special conditions for handling "headache checks." The amendment also
made it clear that the statutory requirement that the Federal
Reserve Banks must collect "checks" for their member banks
does not prevent them from collecting checks as noncash items.
August 11, 1960
Reduction of rates on discounts and advances by Federal Reserve Banks.

Effective August 12, 1960, the Board approved action by the Boards
of Directors of the Federal Reserve Banks of New York, Cleveland,
Richmond, and Kansas City establishing a rate of 3 per cent (a decrease
from 3Vi per cent) on discounts for and advances to member banks under
Sections 13 and 13a of the Federal Reserve Act.

ANNUAL REPORT OF BOARD OF GOVERNORS
Votes for this action: Messrs. Balderston, Szymczak, Mills,
Robertson, and Shepardson. Votes against this action: none.
Pursuant to the policy established by this action, the Board subsequently approved the same rate for the remaining Federal Reserve Banks
effective on the following dates:
Minneapolis
Atlanta
Philadelphia
Chicago
St. Louis
Boston
San Francisco
Dallas

August 15,
August 16,
August 19,
August 19,
August 19,
August 23,
September 2,
September 9,

1960
1960
1960
1960
1960
1960
1960
1960

Effective the same dates, the Board approved for the respective Federal Reserve Banks a rate oi2>Vi per cent on advances to member banks
under Section 10(b) of the Federal Reserve Act. In addition, the Board
approved changes at some of the Banks in rates on advances to individuals, partnerships, and corporations under the last paragraph of
Section 13 of the Act.

The period of about two months since the reduction of the discount rates of the Federal Reserve Banks from 4 per cent to 3V4
per cent had been marked by continuation of economic activity
at a high level. However, there were sizable amounts of unutilized plant capacity and labor, and the economy was not
exhibiting any significant upward thrust. Inflationary psychology
had greatly diminished, and credit demands were not particularly
vigorous. Although the previous reduction of the discount rate
temporarily narrowed the differential between that rate and shortterm market rates, including the Treasury bill rate, further declines in the latter rates had again resulted in the appearance of
a significant differential. This further reduction to 3 per cent
served to place the discount rate in better relationship to shortterm market rates and also to reduce the cost to member banks
of meeting temporary reserve deficiencies through borrowing
from the Federal Reserve.

FEDERAL RESERVE SYSTEM

October 26, 1960
Amendments to Regulation D, Reserves of Member Banks.

Effective November 24, 1960, the supplement to Regulation D was
amended to permit member banks to count all of their currency and coin
as part of their required reserves; effective the same date, the supplement
was amended to increase the reserve requirement against net demand
deposits of banks not classified as central reserve or reserve city banks
from 11 per cent to 12 per cent; and effective December 1, 1960, the
supplement was amended to reduce the reserve requirement of central
reserve city banks against net demand deposits from 1 7 ^ per cent to
\&/i per cent.
Votes for this action: Messrs. Martin, Balderston, Szymczak,
Mills, Shepardson, and King. Vote against this action: Mr.
Robertson.

This was the third in a series of actions taken by the Board
over the course of a year in implementation of an Act of Congress approved July 28, 1959, relating to vault cash and reserve
requirements.
It was estimated that the action would make available to the
System's member banks, numbering approximately 6,200, about
$1,300 million of additional reserves as the economy entered,
between Thanksgiving and Christmas, the peak season of rising
cash and credit needs. Of the $1,300 million total, it appeared
that $400 million would be released at central reserve city banks,
$380 million at reserve city banks, and $520 million at country
banks. The net amount of $520 million of additional reserves to
be made available to country banks reflected the release of $900
million of vault cash, partly offset by an increase of $380 million
in reserve requirements.
Before the 1959 Act, country banks, on average, were in the
position of having 14.5 per cent of their net demand deposits
immobilized in the form of reserve balances (which they are
required to keep with the respective Federal Reserve Banks)
and needed vault cash. In consequence of the 1959 legislation
and the series of actions taken by the Board in relation to it,
this amount for country banks was changed to a uniform 12 per

ANNUAL REPORT OF BOARD OF GOVERNORS

cent, effective November 24, 1960. For reserve city banks, the
reduction was from an average of 18.2 per cent to a uniform
16.5 per cent. For central reserve city banks, the reduction was
from 18.7 per cent to 16.5 per cent, the latter figure taking into
account the decrease in the reserve requirement against their net
demand deposits effective December 1, 1960. This decrease
eliminated the differential between the reserve requirement of
central reserve and reserve city banks, in anticipation of the provision of the 1959 Act which terminated the central reserve city
classification three years from the date of enactment of that
legislation.
Governor Robertson voted against these amendments because,
in his opinion, it would have been preferable to postpone the
action, and announcement thereof, to a date closer to the time
when the bulk of the reserves thereby made available would be
needed, particularly in view of the imminent announcement of a
substantial Treasury refunding operation. Aside from the question of timing, however, he felt that this action should not be
taken unless the Board also announced, effective January 15,
1961, an increase from two days to three days in the maximum
period of deferment provided in the time schedule for granting
of credit to member banks on checks collected through the Federal Reserve System. This would be a means of withdrawing in
January a portion of the reserves made available during November and December through the release of vault cash and otherwise to meet seasonal and holiday needs. He felt that if the announcement of the Board's action on vault cash and reserve
requirements included the statement that a substantial portion of
the reserves thus made available was to be absorbed in January
by a lengthening of the deferment schedule, that not only would
tend to confirm that the action taken in releasing reserves was for
the purpose of meeting some of the seasonal needs (rather than
merely for the sake of reducing reserve requirements), but also
would avoid the necessity for absorbing excess reserves early in
the new year by open market operations, which in his judgment
would be an inferior procedure.

FEDERAL RESERVE SYSTEM
BANK SUPERVISION BY THE FEDERAL RESERVE SYSTEM
Examination of Federal Reserve Banks. The Board's Division of

Examinations examined the 12 Federal Reserve Banks and their
24 branches during the year as required by Section 21 of the
Federal Reserve Act. In conjunction with their annual examination of the Federal Reserve Bank of New York, the Board's
examiners also made a detailed audit of the accounts and holdings of the System Open Market Account maintained at that
Bank, and rendered a report thereon to the Federal Open
Market Committee. The techniques and procedures employed
by the Board's examiners were surveyed and appraised by a
private firm of certified public accountants during the course of
the examination of one of the Federal Reserve Banks.
As a supplement to its own examinations, and continuing a
longstanding practice, the Division of Examinations received
and reviewed the reports of audits made periodically during the
year by the internal auditing staffs of the respective Federal
Reserve Banks.
Examination of member banks. Although authorized to examine
all member banks, both State and national, as a matter of practice neither the Federal Reserve Banks nor the Board of Governors examines national banks because the Comptroller of the
Currency is directly charged with that responsibility by law.
The Comptroller furnishes reports of examinations to the respective Federal Reserve Banks and also makes them available
to the Board of Governors in Washington.
Likewise, because all member banks are insured, the Federal
Deposit Insurance Corporation is empowered to make examinations of both national and State member banks in special cases.
Such examinations have been infrequent. The Comptroller of
the Currency and the Board of Governors make available to the
Federal Deposit Insurance Corporation their reports of examination of national and State member banks, respectively, and the
Corporation in turn makes its reports available to them. At the
request of the Comptroller of the Currency, the Board makes

ANNUAL REPORT OF BOARD OF GOVERNORS

recommendations to his office concerning applications that he
receives for charters of national 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 conduct 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.
Here again, in order to avoid duplication, wherever it is
practicable joint examinations are made in cooperation with the
State banking authorities or alternate examinations are made by
agreement with State authorities. The 1960 program for examining State member banks was practically completed, since
only 18 of the 1,644 banks were not examined during the year.
In its supervision of State member banks, the Board passes
upon applications to establish branches and upon investments
in bank premises that will exceed 100 per cent of the capital
stock of the member bank. Also, under Section 18(c) of the
Federal Deposit Insurance Act, as amended effective May 13,
1960, the Board must pass upon each merger, consolidation,
purchase of assets, or assumption of liabilities in which the
acquiring, assuming, or resulting bank is to be a State member
bank. Unless the Board finds that it must act immediately to
prevent the probable failure of one of the participating banks, it
must request reports from the Attorney General, the Comptroller
of the Currency, and Federal Deposit Insurance Corporation on
the competitive factors involved. The Board in turn responds to
requests by the Comptroller or the Corporation for reports on
the competitive factors involved in similar transactions in which
the acquiring, assuming, or resulting bank is to be a national
bank or insured State nonmember bank.
During the period May 13-December 31, 1960, the Board
approved 17 and disapproved three mergers, consolidations, purchases of assets, or assumptions of liabilities. As required by

FEDERAL RESERVE SYSTEM

Section 18 (c) of the Federal Deposit Insurance Act, as amended,
a description of each of the 17 cases approved by the Board,
together with other pertinent information, is shown in Table 21
on pages 134-49. A Board action in approving an application
does not necessarily mean that all members of the Board concurred in the decision or in the basis for approval stated in the
table.
Federal Reserve membership. At the end of 1960 member
banks accounted for 46 per cent of the number and held approximately 84 per cent of the deposits of all commercial banks
in the United States. State member banks accounted for 18 per
cent of the number, 31 per cent of the banking offices, and
about 65 per cent of the deposits of all State commercial banks.
The 6,174 member banks of the Federal Reserve System at
the end of 1960 included 4,530 national and 1,644 State member banks. There were net declines of 12 and 47, respectively,
in these two categories during the year. These declines, continuing the trend of recent years, were due largely to consolidations and mergers. Reductions from other causes included 26
State banks that withdrew from membership and nine national
banks that converted into nonmember banks. The membership
losses were partly offset by 32 newly established national and
five newly established State member banks, the admission of seven
nonmember banks to membership, and the conversion of six
nonmember banks into national banks.
The total number of member bank offices increased as a result of both the conversion of merged banks into branches and
the establishment of de novo branches. At the end of the year,
member banks were operating 7,895 branches, 636 more than
at the close of 1959.
Detailed figures on changes in the banking structure for 1960
are shown in Table 19 on page 131.
Bank holding companies. During 1960, pursuant to Section 3 (a)
(2) of the Bank Holding Company Act of 1956, the Board
approved the acquisition by nine bank holding companies of
voting shares of 13 banks and denied an application by another

ANNUAL REPORT OF BOARD OF GOVERNORS

holding company for such acquisition with respect to one bank.
Under Section 4(c)(6) of the Act, the Board, after hearings,
denied with respect to three subsidiaries and approved with
respect to another, the request by a bank holding company for
an order determining that these subsidiaries were so closely
related to the banking activities of its holding company system
as to be a proper incident thereto and as to make it unnecessary
for the prohibitions of Section 4 to apply in order to carry out
the purposes of the Act; such a request as to a proposed subsidiary by another holding company was approved. As required
by the tax-relief provisions of the Act, during 1960 the Board
issued five certifications regarding asset distributions by holding
companies. To provide necessary current information, annual
reports for the year 1959 were obtained from all registered bank
holding companies.
During 1960, pursuant to the Banking Act of 1933, the
Board authorized the issuance of 13 voting permits for general
purposes and nine permits for limited purposes to holding company affiliates of member banks. In accordance with established
practice, a number of 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 that 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 four organizations.
Trust powers of national banks. During 1960 the Board granted
to 33 national banks authority 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 three banks that previously had been granted certain

FEDERAL RESERVE SYSTEM

trust powers. One national bank acquired additional trust
powers as a result of consolidation. Trust powers of 28 national banks were terminated, 27 by consolidation, merger, or
conversion, and one by voluntary surrender. At the end of 1960,
1,736 national banks held permits to exercise trust powers.
Foreign branches of member banks. At the end of 1960, eight
member banks had in active operation a total of 124 branches
in 33 foreign countries and overseas areas of the United States.
(These figures exclude 21 branches nationalized by the Cuban
government in 1960.) Three national banks were operating 93
of these branches, and five State member banks were operating
31. The branches were distributed geographically as follows:
Latin America
Argentina
Bahamas
Brazil
Chile
Colombia
Ecuador
Jamaica
Mexico
Panama
Paraguay
Peru
Uruguay
Venezuela
Continental Europe
Belgium
France
Germany

55
15
2
13
2
4
1
1
3
6
1
1
2
4
6
1
3
2

England

Africa
Nigeria

1
1

Near East
Egypt
Lebanon
Saudi Arabia

4
1
2
1

Far East
Hong Kong
India
Japan
Malaya
Okinawa
Philippines
Singapore
Thailand

23
1
2
10
1
1
5
2
1

U. S. Overseas Areas
Canal Zone
Guam
Puerto Rico
Virgin Islands

22
4
1
13
4

Total

124

Under the provisions of Section 25 of the Federal Reserve
Act, the Board during 1960 approved 16 applications made by
member banks for permission to establish branches in foreign

ANNUAL REPORT OF BOARD OF GOVERNORS

countries and overseas areas of the United States. During the
year three member banks opened branches in London; another
a branch in Campinas, Brazil; and another a branch in Nassau,
Bahamas. One opened branches in Naha, Okinawa; Buenos
Aires, Argentina; and Lagos, Nigeria. Another opened branches
in Guayaquil, Ecuador; Kingston, Jamaica; Lomas de Zamora
and Mendoza, Argentina; and Frankfurt am Main, Germany.
Eight of these branches had been authorized by the Board
prior to 1960.
Acceptance powers of member banks. During the year the Board
approved an application of one member bank, pursuant to the
provisions of Section 13 of the Federal Reserve Act, for increased acceptance powers. It granted the bank permission to
accept commercial drafts or bills of exchange to an amount not
exceeding at any time, in the aggregate, 100 per cent of its paidup and unimpaired capital stock and surplus.
Foreign banking and financing corporations. In 1960 one corporation was organized under State law and opened for business to operate under agreement with the Board pursuant to
Section 25 of the Federal Reserve Act relating to investment by
member banks in the stock of corporations engaged principally
in international or foreign banking. A national member bank in
the Virgin Islands with one branch, upon acquisition by a State
member bank in Philadelphia, began operating as an "agreement" corporation. At the end of 1960 there were five "agreement" corporations in operation.
During the year examiners for the Board examined the four
"agreement" corporations with head offices in New York. Two
of these four each have an English fiduciary affiliate. Another
operates three agencies at the New York International Airport,
has a branch in England, and owns the stock of two banks organized under the laws of, and operating in, Liberia and the Union
of South Africa, respectively. The fourth owns the stock of
another bank organized under the laws of, and operating in, the
Union of South Africa.
During 1960, under the provisions of Section 25 (a) of the

FEDERAL RESERVE SYSTEM

Federal Reserve Act, the Board issued final permits to five corporations to engage in international or foreign banking or other
international or foreign financial operations. Another corporation, following the sale of its assets to a foreign corporation, was
liquidated during the year. At the end of 1960 there were 10
corporations in active operation under that Section; four are
"banking corporations," and six are "financing corporations."
The home offices of eight of these corporations are located in
New York City, while those of the other two are in Boston and
Philadelphia. Examiners for the Board of Governors examined
all but one during the year.
Six of these corporations have no subsidiaries or foreign
branches. One has a Canadian subsidiary, a branch in France,
and an English fiduciary affiliate that has a branch in Canada.
Two have subsidiaries organized under the laws of Panama. And
one operates branches in France, Germany, Guatemala, Hong
Kong, Lebanon, Malaya, and Singapore; it also has an agency
in Guatemala, and it owns substantially all of the stock of a
bank organized under the laws of, and operating in, Italy.
Inter-Agency Bank Examination School. Two sessions of the
School for Examiners and four sessions of the School for Assistant Examiners were held in 1960. The Inter-Agency Bank
Examination School is conducted in Washington by the Board
of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, and the Office of the Comptroller of the
Currency. Since the establishment of the School in 1952, 1,495
men have attended the various sessions. This number includes
representatives of the three Federal bank supervisory agencies;
another Federal agency; the State Banking Departments of California, Connecticut, Indiana, Louisiana, Maine, Michigan,
Mississippi, Montana, Nebraska, New Hampshire, New Jersey,
New Mexico, New York, North Dakota, Ohio, Oklahoma,
Oregon, Pennsylvania, and Virginia; the Treasury Department
of the Commonwealth of Puerto Rico; and two foreign countries.

ANNUAL REPORT OF BOARD OF GOVERNORS
LEGISLATION ENACTED
Mergers and consolidations of insured banks. The Act of Congress

approved May 13, 1960 (12U.S.C. 1828 (c)) amended Section
18 (c) of the Federal Deposit Insurance Act with respect to the
merger or consolidation of insured banks so as to provide that no
insured bank shall merge or consolidate with any other insured
bank, or directly or indirectly acquire the assets of or assume
liability for deposits in any other insured bank unless prior written approval shall have been obtained from the Comptroller of
the Currency where the resulting bank is a national bank, the
Board of Governors of the Federal Reserve System where the
resulting bank is a State member bank, or the Federal Deposit
Insurance Corporation where the resulting bank is an insured
nonmember bank. Unless it determines that immediate action is
necessary to prevent the probable failure of one of the banks
involved, the appropriate approving authority shall, prior to deciding upon the application, request the Attorney General and
the other approving agencies to submit reports on the competitive factors involved in the proposed action. Such reports shall
be furnished within 30 calendar days, unless the requesting
agency advises that expeditious action is required, in which case
the reports will be furnished within 10 calendar days. During a
like period, notice of the proposed action shall be published at
intervals in a local newspaper.
In acting upon an application, the appropriate agency is to
consider as to each bank involved (1) its financial history and
condition; (2) the adequacy of its capital structure; (3) its future
earnings prospects; (4) the general character of its management;
(5) the convenience and needs of the community; and (6)
whether or not its corporate powers are consistent with the purposes of the Act. The appropriate agency shall also take into
consideration the effect of the transaction on competition, and
shall not approve the transaction unless it finds that the transaction will be in the public interest. Each approving agency is
required to include in its Annual Report to Congress a description

FEDERAL RESERVE SYSTEM

of each case approved, including the names and total resources
of each bank involved, whether the Attorney General submitted
a report and, if so, what the substance of the report was and the
basis upon which approval was granted.
Power of a subsidiary bank to invest in small business investment

company. The Act of Congress approved June 11, 1960 (15
U.S.C. 682(b)) amended Section 302(b) of the Small Business
Investment Act so as to allow a bank that is a subsidiary of a
bank holding company to invest up to 1 per cent of its capital
and surplus in any small business investment company even
though the small business investment company is a subsidiary of
the same bank holding company. This had been prohibited by
Section 6 ( a ) ( l ) of the Bank Holding Company Act of 1956.
Uniform basis for reporting deposits. The Act of Congress approved July 14, 1960 (12 U.S.C. 1813(1), among other things,
provided a uniform method of reporting deposits for purposes of
deposit insurance assessment and condition reports of all insured
banks, and of reserve requirements of member banks of the Federal Reserve System.
Extension of Defense Production Act of 1950. By Act of Congress
approved June 30, 1960 (50 U.S.C. app. 2166), the Defense
Production Act of 1950 (Section 301 of which is the basis for
guarantees of loans for defense production) was extended until
June 30, 1962.
Federal Reserve Banks as depositories or fiscal agents for the International Development Fund. The Act of Congress approved June 30,
1960 (Public Law 86-565) authorized any Federal Reserve
Bank to act as depository or fiscal agent for the International
Development Fund.
Extension of authority of Federal Reserve Banks to purchase Government obligations. By Act of Congress approved July 1, 1960
(12 U.S.C. 355) the authority of Federal Reserve Banks
under Section 14(b) of the Federal Reserve Act to purchase and
sell direct or fully guaranteed obligations of the United States
directly from or to the United States was extended until June 30,
1962.

ANNUAL REPORT OF BOARD OF GOVERNORS
Federal Reserve Banks subject to Federal unemployment compensation

tax. The Act of Congress approved September 1.3, I960 (Public
Law 86-778) amended Section 3306(c)(6) of the Internal
Revenue Code of 1954 in such a manner as to make the Federal
Reserve Banks subject to Federal unemployment compensation
tax (26 U.S.C. 3301 et seq.) with respect to remuneration
paid after 1961 for services performed after 1961.
PROPOSED AMENDMENTS TO THE BANK
HOLDING COMPANY ACT

The Board is required by Section 5(d) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1844) to include in its
Annual Report to Congress any recommendations for changes
in that Act that the Board thinks would be desirable. In a
special report submitted to Congress on May 7, 1958 (published
in the Federal Reserve Bulletin for July 1958), the Board
recommended a number of amendments to the Bank Holding
Company Act designed to improve its effectiveness, facilitate its
administration, and clarify ambiguities. The Board believes that
the suggested amendments (with the exception of the proposal
discussed in the next two paragraphs) merit early congressional
consideration and legislative action.
Under present law, a bank in a holding company system may
expand by absorbing another bank without obtaining the prior
approval of the Board of Governors under the Bank Holding
Company Act. In its May 7, 1958 Report, the Board expressed
the view that effectuation of the purposes of the Act required
that a holding company bank's absorption of an independent
bank, by merger or otherwise, should be subject to the provisions
of the Act.
On May 13, 1960, Section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1828) was amended to provide that, in
practically all cases, bank mergers and absorptions must have the
prior approval of one of the Federal bank supervisory agencies
and that those agencies must take into consideration factors that
are substantially similar to those enumerated in the Bank Holding

FEDERAL RESERVE SYSTEM

Company Act. In view of the provisions of this so-called Bank
Merger Act, the Board believes that extending the coverage of
the Holding Company Act to comprise bank mergers involving
holding company banks would produce an unjustified duplication of supervision. Accordingly, the Board withdraws its recommendation (Recommendation 15 of the May 7, 1958 Report)
that the Holding Company Act be amended in this respect.
The Board particularly emphasizes the desirability of prompt
amendment of the Holding Company Act in three respects:
(1) The Act now exempts from its provisions a company that
was registered under the Investment Company Act of 1940
before May 15, 1955, and certain of its related corporations. As
pointed out in Recommendation 7 of the May 7, 1958 Report,
this exemption has no logical basis. The exemption has been
actively utilized to expand a bank holding company system, free
from regulatory control, in a manner inconsistent with the basic
principles of the Bank Holding Company Act. The Board urges
prompt amendment of the Act to eliminate this unwarranted
exemption.
(2) In administering the Bank Holding Company Act the
Board has confirmed its view (explained in Recommendation 23
of the May 7, 1958 Report) that Section 6 of the Act should be
repealed or, at least, amended. That provision, broadly speaking,
prohibits intrasystem investments and extensions of credit by
banks in holding company systems. This constitutes a severe
and, in the Board's judgment, an unnecessary restriction upon
the operations of banks controlled by holding companies, and
therefore should be repealed or amended as soon as possible.
(3) Prior to enactment of the Bank Holding Company Act of
1956, Federal regulation in thisfieldconsisted principally of provisions of the Banking Act of 1933 relating to "holding company
affiliates." As pointed out in Recommendation 25 of the May 7,
1958 Report, the effectiveness of the laws relating to holding
company affiliates is open to question and it is doubtful whether,
in view of the enactment of the Bank Holding Company Act,
these laws are sufficiently useful to justify their retention. Their

FEDERAL RESERVE SYSTEM

motion to dismiss the bank's complaint was filed on the Board's
behalf. It was anticipated that these and other related motions
would be argued early in 1961.
A petition filed in September 1959 in the U. S. Court of
Appeals for the Eighth Circuit seeking review of an order
of the Board of Governors denying an application of First Bank
Stock Corporation under Section 4(c) (6) of the Bank Holding
Company Act of 1956 was dismissed by entry of judgment by
that Court on March 16, 1960.
RESERVE BANK OPERATIONS
Loan guarantees for defense production. Incident to the Defense
Production Act of 1950, the Departments of the Army, Navy,
Air Force, Commerce, Interior, and Agriculture, the General
Services Administration, the National Aeronautics and Space
Administration, and the Atomic Energy Commission are authorized to guarantee loans made by commercial banks and other
private financing institutions in connection with defense contracts. The Federal Reserve Banks act as fiscal agents of the
guaranteeing agencies under Regulation V.
During 1960 the guaranteeing agencies authorized the issuance of 11 guarantee agreements covering loans totaling $102
million. Guaranteed loan authorizations outstanding on December 31, 1960, totaled $340 million, of which $280 million
represented outstanding loans and $60 million additional credit
available to borrowers. Of total loans outstanding, 68 per cent
on the average was guaranteed. During the year approximately
$716 million was disbursed on guaranteed loans, most of which
are revolving credits.
Authority for the V-loan program, unless extended, will terminate on June 30, 1962.
Volume of operations. Table 10 on page 123 shows the volume
of operations in the principal departments of the Federal Reserve Banks for 1957-60. Changes from 1959 were mixed,
with some activities decreasing and others increasing. Discounts

101

ANNUAL REPORT OF BOARD OF GOVERNORS

elimination would remove the confusion and the administrative
burden that result from the existence of two sets of laws that relate to the same general subject but are based on different
definitions of what constitutes a holding company. Consequently,
it would be desirable promptly to repeal the "holding company
affiliate" laws and to amend the "affiliate" laws along the lines
discussed in detail in the 1958 Report.
LITIGATION

In April 1960 the U. S. Court of Appeals for the District of
Columbia Circuit, in reversing a judgment rendered in the
Board's favor by the U. S. District Court (Annual Report for
1959, p. 94), held in substance that Old Kent Bank and Trust
Company, Grand Rapids, Michigan, did not "establish any new
branch" when it retained branches of another bank acquired by
merger. Accordingly, the Court held that the Board had no
authority to pass upon such retention. The Court of Appeals
denied a petition for rehearing filed on the Board's behalf, and
on December 12 an order consistent with the opinion of the
Court of Appeals was entered in the District Court.
A suit filed by Wachovia Bank and Trust Company, WinstonSalem, North Carolina, in 1959, involving the same issues as in
the Old Kent Bank case, was, at the Board's initiative and by
agreement of the parties, dismissed on February 9, 1961, in
accordance with the opinion of the Court of Appeals in the
Old Kent Bank case.
On July 18, 1960, the Board issued an order following the
administrative proceeding regarding capital adequacy instituted
by the Board with respect to The Continental Bank and Trust
Company, Salt Lake City, Utah (Annual Report for 1959, p.
95). The bank was ordered to increase its capital in a stated
amount within six months of the Board's order. On September
19, 1960, the bank filed suit in the U. S. District Court for the
District of Columbia for declaratory judgment, injunction, and
other relief. On December 2, 1960, the bank filed a motion for
summary judgment in the matter. On December 15, 1960, a

100

ANNUAL REPORT OF BOARD OF GOVERNORS

and advances declined sharply from the previous year and postal
money orders continued their downward trend.
The number of pieces of paper currency received and counted
and the aggregate dollar value thereof established new highs
during 1960. Coin received and counted also increased in
aggregate dollar value but declined substantially in number, reflecting a shortage of coin. Conversely, an increase in the number of issues, redemptions, and exchanges of Government
securities was accompanied by a considerable drop in value.
Checks handled (other than Government and postal money
orders) continued their upward trend, establishing a record
peak. As part of a program designed to enable the Reserve
Banks to cope more efficiently with the ever increasing volume
of checks, pilot systems of new electronic check handling equipment were installed at the Federal Reserve Banks of New York
and Chicago near the end of 1960, and similar installations will
be made by the Federal Reserve Banks of Boston, Philadelphia,
and San Francisco early in 1961. These pilot installations will
test the operational suitability and economic feasibility of the
equipment to meet the varied requirements of check collection
procedures in different Federal Reserve offices.
These installations mark the culmination of several years'
negotiations with the companies that submitted proposals to
supply equipment. Each of the five pilot installations will use
equipment manufactured by a different company. The electronic
procedures are based on the use of Magnetic Ink Character
Recognition (MICR), a common language system of characters
developed by the American Bankers Association in cooperation
with equipment manufacturers and check printers.
Earnings and expenses. Current earnings, current expenses, and
the distribution of net earnings of each Federal Reserve Bank
during 1960 are shown in detail in Table 6 on pages 118-19, and
a condensed historical statement is shown in Table 7 on pages
120-21. The following table summarizes the earnings and expenses and the distribution of net earnings for 1960 and 1959.

102

FEDERAL RESERVE SYSTEM
EARNINGS, EXPENSES, AND DISTRIBUTION OF NET EARNINGS
OF FEDERAL RESERVE BANKS, 1960 AND 1959

[In thousands of dollars]
Item

1960

Current earnings
Current expenses
Current net earnings
Net additions to current net earnings1
Net earnings before payments to U.S. Treasury
Dividends paid
Paid U.S. Treasury (interest on F.R. notes)
Transferred to surplus

1959

1,103,385
153,882

886,226
144,703

949,503

741,523

13,875

98,248

963,378

839,771

23,949
896,816

22,722
910,650

42,613

-93,601

i Includes net profits on sales of U.S. Government securities of $2,429,000 in 1960
and $190,000 in 1959; and transfers from reserves for contingencies of $11 million
in 1960 (reserves for registered mail losses) and $98 million in 1959.

Current earnings of $1,103 million in 1960 were 25 per cent
more than in 1959, reflecting mainly a higher average rate of
interest on U. S. Government securities. Current expenses of
$154 million were about 6 per cent above 1959. Current net
earnings amounted to $950 million, an increase of 28 per cent
from 1959.
After allowing for net additions of $14 million to current net
earnings, resulting largely from the discontinuance of the reserves for registered mail losses, net earnings before dividends
and before payments to the U. S. Treasury amounted to $963
million.
Statutory dividends to member banks amounted to $24 million, about $1 million more than in 1959. This expansion reflected an increase in the capital and surplus of member banks
and a consequent increase in the paid-in capital of the Federal
Reserve Banks.
Payments to the U. S. Treasury as interest on Federal Reserve notes amounted to $897 million. The remaining $43
million of net earnings was added to the surplus accounts in

103

ANNUAL REPORT OF BOARD OF GOVERNORS

order to bring the surplus of the Reserve Banks up to the level
of their subscribed capital.
Expenses of the Federal Reserve Banks include costs of
$29,220.68 for a series of 26 regional meetings in connection
with the Treasury Department Savings Bond program.
Holdings of loans and securities. Average daily holdings of loans
and securities during 1960 amounted to $26,847 million, $189
million less than during 1959. Holdings of discounts and advances decreased $373 million, and holdings of U. S. Government securities increased $178 million. The average interest
rate on discounts and advances was 3.80 per cent in 1960 compared with 3.42 per cent in 1959; the higher rate in 1960 reflected heavier borrowings during the first part of the year when
discount rates were higher than they were later in the year. The
average rate of interest earned on Government securities rose
from 3.27 to 4.11 per cent. The table below shows holdings,
earnings, and average interest rates on loans and securities held
by the Federal Reserve Banks during the past three years.
RESERVE BANK EARNINGS ON LOANS AND SECURITIES,
[Dollar amounts in thousands]
Item and year
Average daily holdings2
1958
,
1959
1960
Earnings:
1958
1959
1960
Average rate of interest
(percent):

1958
1959
1960

1958-60

Totali

Discounts
and
advances

Acceptances

U.S.
Government
securities

$24,982,770
27,035,989
26,846,881

$295,250
810,981
437,627

$38,904
32,246
38,511

$24,648,616
26,192,762
26,370,743

741,763
885,831
1,102,786

6,745
27,728
16,634

806
1,075
1,385

734,212
857,028
1,084,767

2.97
3.28
4.11

2.28
3.42
3.80

2.07
3.34
3.60

2.98
3.27
4.11

1 Excludes industrial loans, the authority for which expired Aug. 21,1959.
Based on holdings at opening of business.

104

FEDERAL RESERVE SYSTEM
Foreign and international accounts. Gold and dollar assets held

for foreign account at the Federal Reserve Banks increased
$3,249 million in 1960. At the end of the year holdings
amounted to $16,673 million, consisting of $9,975 million of
earmarked gold (an increase of $1,943 million during the
year), $5,726 million of U. S. Government securities, largely
Treasury bills, (+ $1,249 million), $217 million in dollar deposits (— $128 million), $230 million of bankers' acceptances
purchased through Federal Reserve Banks (+ $148 million),
and $525 million of miscellaneous assets (+ $37 million). The
latter item includes mainly dollar bonds issued by foreign countries and international institutions.
Gold and dollar assets held for international institutions (Inter-American Development Bank, International Development
Association, International Bank for Reconstruction and Development, International Finance Corporation, and the International Monetary Fund) increased $1,108 million to $7,039
million. The increase reflected principally repayments to the
Monetary Fund and payments of the gold portions of increased
subscriptions. The accounts of the Inter-American Development
Bank and the International Development Association were
opened in 1960.
Accounts were opened also for the central banks of Morocco,
Nigeria, Ruandi-Urundi, and Sudan.
Gold collateral loans of $5 million outstanding at the beginning of 1960 were repaid in January and February. New
arrangements, including a stand-by commitment, amounted to
$152 million, of which $8 million was outstanding at the end
of the year. Loans on gold are made to foreign monetary authorities to help them meet dollar requirements of a clearly
temporary nature.
The Federal Reserve Bank of New York continued to act as
depositary and fiscal agent for the international institutions mentioned above. As fiscal agent of the United States, the Bank
continued to operate the United States Exchange Stabilization
Fund pursuant to authorization and instructions of the Treasury

105

ANNUAL REPORT OF BOARD OF GOVERNORS

Department. Also on behalf of the Treasury Department it
continued to administer foreign assets control regulations pertaining to assets in the United States of, and transactions with,
Communist China and North Korea and their nationals.
Bank premises. During the year the Board authorized the construction of an addition to, and alteration of, the Oklahoma
City Branch building, and enlargement of the Federal Reserve
Bank building garage in Atlanta.
BOARD OF GOVERNORS—INCOME AND EXPENSES

The accounts of the Board for the year 1960 were audited by
the public accounting firm of Price Waterhouse & Co., whose certificate follows:
To the Board of Governors
of the Federal Reserve System
In our opinion the accompanying financial statements present fairly the
assets, liabilities and fund balances of the operating fund and the property
and equipment fund of the Board of Governors of the Federal Reserve
System as at December 31, 1960, and the related assessments and expenditures for the year then ended, in conformity with generally accepted
accounting principles applied on a basis consistent with that of the preceding year. Our examination of the financial statements was made in
accordance with generally accepted auditing standards, and accordingly
included such tests of the accounting records and such other auditing
procedures as we considered necessary.
Price Waterhouse & Co.
Washington, D. C.
February 6, 1961

106

FEDERAL RESERVE SYSTEM
ASSETS, LIABILITIES AND FUND BALANCES — DECEMBER 31,

1960

ASSETS

Cash, exclusive of $194,431 representing withheld taxes
Miscellaneous receivables and travel advances
Stockroom and cafeteria inventories, at cost
Total assets of operating fund
Property and equipment, at cost:
Land and improvements
Building
Furniture and equipment

$ 922,657
20,668
18,022
961,347

792,852
3,966,501
632,284

Total assets of property and equipment fund
Total assets

5,391,637
6,352,984

LIABILITIES AND FUND BALANCES

Accounts payable and accrued expense

$ 358,076

Fund balances:
Operating fund —
Balance December 31, 1959
$ 595,911
Excess of assessments over expenditures for the year.
7,360
Property and equipment fund —
Balance December 31, 1959
5,339,621
Expenditures for additions
72,293
Excess of cost of assets disposed of over trade-in
allowances
(20,277)
Total liabilities and fund balances

107

603,271

5,391,637
6,352,984

ANNUAL REPORT OF BOARD OF GOVERNORS
ASSESSMENTS AND EXPENDITURES
YEAR E N D E D DECEMBER 31,

1960

ASSESSMENTS LEVIED ON FEDERAL RESERVE BANKS:

For Board expenses and additions to property and equipment
For expenditures made on behalf of the Federal Reserve Banks
Total assessments

$ 6,533,700
6,213,276
12,746,976

EXPENDITURES:

For printing, issue and redemption of Federal Reserve Notes,
paid on behalf of the Federal Reserve Banks

6,213,276

For expenses of the Board:
Salaries
Retirement and insurance contributions
Traveling expenses
Professional and contractual services:
Economic surveys
Legal, consultant and audit fees
Other
Printing and binding, net
Telephone and telegraph
Postage and expressage
Equipment and other rentals
Operation of cafeteria, net
Heat, light and power
Stationery and office and other supplies
Repairs, maintenance and alterations
Books and subscriptions
Insurance
Miscellaneous, net

6,454,995

$4,178,782
599,136
280,156

For property and equipment

424,189
71,265
32,367
219,588
98,319
75,100
148,835
53,072
53,597
53,250
121,192
19,939
4,161
22,047

71,345

Total expenditures

12,739,616

EXCESS OF ASSESSMENTS OVER EXPENDITURES FOR THE YEAR.

7,360

The Board's expenses for 1960 include the following special
items: (1) an expenditure of $214,162 incurred in connection
with the continuation of the Small Business Financing Study
initiated in 1957; (2) an expenditure of $135,028 for Quarterly
Surveys of Consumer Buying Intentions; and (3) an expenditure
of $53,584 incident to Civil and Defense Mobilization.

108

NO. 1 — DETAILED STATEMENT OF CONDITION OF ALL FEDERAL RESERVE BANKS
COMBINED, DECEMBER 31, 1960
[Amounts in boldface type are those shown in the Board's weekly statement. In thousands of dollars]
ASSETS
Gold certificates on hand:
Held by Federal Reserve Banks
Held by Federal Reserve Agents
Gold certificates due from U.S. Treasury:
Interdistrict Settlement Fund
Federal Reserve Agents' Fund

1,016,055
1,800,000
6,012,587
7,585,000 16,413,642

Redemption fund for Federal Reserve notes

1,065,793

Total gold certificate reserves
Federal Reserve notes of other Federal Reserve Banks
Other cash:
United States notes
Silver certificates
Standard silver dollars
National bank notes and Federal Reserve Bank notes
Subsidiary silver, nickels, and cents
Total other cash
Discounts and advances secured by U.S. Govt. securities:
Discounted for member banks
Discounted for others
Other discounts and advances:
Discounted for member banks
Foreign loans on gold

17,479,435
525,056
28,375
279,079
7,131
709
47,432
362,726
24,939

8,000

Total discounts and advances
Acceptances:
Bought outright
Held under repurchase agreement
U.S. Government securities:
Bought outright:
Bills
Certificates
Notes
Bonds

8,000
32,939
53,335
20,262

2,900,173
9,059,743
12,481,298
2,543,071

Total bought outright

26,984,285

Held under repurchase agreement

400,000

Total U.S. Government securities

27,384,285

Total loans and securities
Due from foreign banks
Cash items in process of collection:
Transit items
Exchanges for clearing house
Other cash items
Total cash items in process of collection
Bank premises:
Land
Buildings (including vaults)
Fixed machinery and equipment
Total buildings
Less depreciation allowances
Total bank premises
Other assets:
Assets acquired—industrial loans
Less valuation allowances

27,490,821
15
6,370,872
230,310
207,892
6,809,074
107,343
46,256
153,599
70,156

24,220

83,443
107,663

25
25

Net

Reimbursable expenses and other items receivable
Interest accrued
Premium on securities
Deferred charges
Real estate acquired for banking house purposes
Suspense account
All other
Total other assets

3,514
199,148
1,603
1,827
1,532
632
776
209,032

Total assets

24,939

NO. 1 — DETAILED STATEMENT OF CONDITION OF ALL FEDERAL RESERVE BANKS
COMBINED, DECEMBER 31, 1960 — Continued
LIABILITIES
Federal Reserve notes:
Outstanding (issued to Federal Reserve Banks)
Less: Held by issuing Federal Reserve Banks
Forwarded for redemption

1,197,097
84,161

29,730,339
1,281,258

Federal Reserve notes, net (includes notes held by U.S. Treasury and by Federal
Reserve Banks other than issuing Bank)
28,449,081
Deposits:
Member bank reserves
17,080,617
U.S. Treasurer — general account
484,740
Foreign
217,216
Other deposits:
Nonmember bank—clearing accounts
66,519
Officers'and certified checks
8,279
Reserves of corporations doing foreign banking or
financing
19,143
International organizations *
116,805
All other
342,916
Total other deposits

553,662

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

18,336,235
4,941,102
153
27,255
3,565
238
61

Total other liabilities

31,272

Total liabilities

51,757,690

CAPITAL ACCOUNTS
Capital paid in
Surplus
Other capital accounts 2
Total liabilities and capital accounts
Contingent liability on acceptances purchased for foreign correspondents

408,709
817,423
52,983,822
230,399

1
Includes International Bank for Reconstruction and Development, International Monetary
Fund, International Finance Corporation, etc.
2 During the year this item includes the net of earnings, expenses, profits, etc., which are closed
out on December 31; see Table 6, pp. 118-19.

Ill

NO. 2 —STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT END OF 1960 AND 1959
Un thousands of dollars]
Total

Item
1960

New York

Boston
1959

1960

1959

1960

Philadelphia

1959

1960

1959

Cleveland
1960

Richmond

1959

1960

1959

ASSETS
Redemption fund for Federal Reserve n o t e s . .

16,413,642 18,185,642
978,083
1,065,793

832,461
62,354

889,340
59,652

3,819,405
254,584

4,685,959 1,055,712 1,050,113 1,357,218 1,634,684 1,035,163 1,067,069
213,325
92,224
66,251
87,708
60,965
81,220
79,240

Total gold certificate reserves

17,479,435 19,163,725

4,899,284 1,121,963 1,111,078 1,449,442 1,722,392 1,116,383 1,146,309

894,815

948,992

4,073,989

Federal Reserve notes of other Banks

525,056
362,726

524,450
359,396

52,713
25,464

40,058
20,849

118,167
58,805

90,056
54,975

42,519
10,793

43,544
18,085

31,022
33,051

34,133
32,180

42,922
21,479

69,408
25,494

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

24,939
8,000

452,417
5,309

200
392

700
385

200
2,280

201,380
1,400

3,720
472

42,725
330

752

300
450

150
360

5,050
250

Acceptances:
Bought outright
Held under repurchase agreement

53,335
20,262

44,168
31,173

53,335
20,262

44,168
31,173

U.S. Government securities:
Held under[repurchase agreement

26,984,285 26,606,827 1,450,136 1,442,489
41,500
400,000

6,730,744
400,000

6,695,661 1,545,012 1,517,281 2,318,409 2,303,566 1,707,970 1,705,178
41,500

Total loans and securities

27,490,821 27,181,394 1,450,728 1,443,574

7,206,821

7,015,282 1,549,204 1,560,336 2,319,161 2,304,316 1,708,480 1,710,478

14
1,456,311
9,386
51,860

14
1,280,699
9,858
65,069

Cash items in process of collection

Total assets

15
6,809,074
107,663
209,032

15
6,437,306
99,575
261,740

1
483,292
3,913
11,072

412,324
3,791
12,043

1
394,830
4,036
14,639

1
555,899
8,617
17,767

I
565,404
9,315
22,452

1
482,196
6,113
13,171

1
502,789
6,651
16,639

52,983,822 54,027,601 2,921,998 2,939,099 12,975,343 13,415,227 3,152,638 3,146,549 4,414,960 4,690,193 3,390,745 3,477,769

i After deducting $11,000 participations of other Federal Reserve Banks.

1
467,341
4,328
13,956

LIABILITIES
Federal Reserve notes
Deposits'.
Member bank r e s e r v e s . . . .
U.S. Treasurer — general account
Foreign
Other

28,449,081 28,261,967 1,624,943 1,614,203

6,662,953

6,646,973 1,867,323 1,807,990 2,574,550 2,570,372 2,185,035 2,131,600

17,080,617 18,173,970
503,778
484,740
344,788
217,216
693,735
553,662

778,470
35,818
10,486
4,097

800,636
28,362
19,140
26,422

4,581,510
72,160
2 64,206
396,898

5,092,824
65,278
2 94,228
367,074

831,788
27,038
12,626
5,700

892,994 1,253,849 1,460,303
32,804
37,645
37,749
31,320
22,968
20,116
26,294
32,548
6,602

726,682
24,627
9,630
6,138

789,451
56,937
17,400
28,317

Total deposits
Deferred availability cash items
Other liabilities

18,336,235 19,716,271
4,941,102 4,847,216
28,620
31,272

828,871
406,188
1,501

874,560
390,252
M74

5,114,774
844,369
9,593

5,619,404
808,203
7,453

877,152
334,971
1,697

986,155 1,318,316 1,550,721
281,609 406,097 457,026
2,597
2,439
1,513

767,077
380,482
1,813

892,105
399,444
1,592

Total liabilities

51,757,690 52,854,074 2,861,503 2,880,489 12,631,689 13,082,033 3,081,143 3,077,267 4,301,560 4,580,558 3,334,407 3,424,741

CAPITAL ACCOUNTS
Capital paid in
Other capital accounts
Total liabilities and capital accounts
Ratio of gold certificate reserves to deposit
and F.R. note liabilities combined
Contingent liability on acceptances purchased
for foreign correspondents

408,709
817,423

387,403
774,808
11,316

20,165
40,330

19,166
38,332
1,112

114,551
229,103

110,452
220,905
1,837

23,832
47,663

22,819
45,638
825

37,800
75,600

36,265
72,530
840

18,779
37,559

17,283
34,566
1,179

52,983,822 54,027,601 2,921,998 2,939,099 12,975,343 13,415,227 3,152,638 3,146,549 4,414,960 4,690,193 3,390,745 3,477,769
39.9%

36.5%

38.1%

34.6%

39.9%

40.9%

39.8%

37.2%

41.8%

37.8%

37.9%

82,006

11,378

4,526

3 64,376

3 22,750

13,700

5,432

21,827

7,407

10,449

4,115

Federal Reserve notes:
Issued to Federal Reserve Bank by Federal
Reserve Agent and outstanding
Less held by issuing Bank, and forwarded

29,730,339 29,447,692 1,691,706 1,703,036

6,993,061

88,833

330,108

Federal Reserve notes, n e t 4

28,449,081 28,261,967 1,624,943 1,614,203

6,662,953

6,646,973 1,867,323 1,807,990 2,574,550 2,570,372 2,185,035 2,131,600

500,000 530,000
9,385,000 10,650,000
99,778
19,164
21,065,000 19,530,000 1,250,000 1,250,000

2,000,000

2,900,000

5,100,000

650,000 700,000 920,000 920,000 700,000 700,000
3,720
42,725
4,200,000 1,325,000 1,200,000 1,830,000 1,750,000 1,590,000 1,550,000

30,469,164 30,279,778 1,750,000 1,780,000

7,100,000

7,100,000 1,978,720 1,942,725 2,750,000 2,670,000 2,290,000 2,250,000

37.4%
230,399

FEDERAL RESERVE NOTE
STATEMENT

Collateral held by Federal Reserve Agent for
notes issued to Bank:
Gold certificate account
U.S. Government securities
Total collateral

1,281,258

1,185,725

66,763

6,945,921 1,936,951 1,867,380 2,721,461 2,645,846 2,269,349 2,222,859
298,948

69,628

59,390

2 After deducting $153,010,000 participations of other Federal Reserve Banks on Dec. 31, 1960, and $250,560,000 on Dec. 31, 1959.
3 After deducting $166,023,000 participations of other Federal Reserve Banks on Dec. 31, 1960, and $59,256,000 on Dec. 31, 1959.
* Includes Federal Reserve notes held by U.S. Treasury and by Federal Reserve Banks other than the issuing Bank.

146,911

75,474

84,314

91,259

NO. 2 — STATEMENT OF CONDITION OF EACH FEDERAL RESERVE BANK AT END OF 1960 AND 1959 — Continued
[In thousands of dollars]

Item

Atlanta
1960

1959

Chicago
1960

1959

St. Louis
1960

1959

Minneapolis
1960

1959

Kansas City
1960

1959

Dallas
1960

San Francisco

1959

1960

1959

ASSETS
Gold certificate account
Redemption fund for Federal Reserve notes.

918,222
63,625

899,380 2,790,451 3,000,460 675,065
64,628 188,793 182,357 46,646

723,963
46,241

344,572
26,033

358,239
23,410

775,490
49,237

707,873
45,167

731,395
32,693

713,196 2,078,488 2,455,366
31,037 102,133
84,353

981,847

964,008 2,979,244 3,182,817 721,711

744,233 2,180,621 2,539,719

770,204

370,605

381,649

824,727

753,040

764,088

59,546
27,793

62,570
28,685

39,969
63,751

39,909
65,447

21,670
23,196

20,751
23,922

19,713
7,986

23,009
11,722

20,518
16,547

24,273
15,272

24,647
15,265

33,442
16,519

51,650
58,596

43,297
46,246

1,900
416

45,300
235

1,575
1,104

43,470
939

7,500
264

14,600
185

1,400
184

17,589
120

7,944
328

42,453
195

350
464

8,650
260

984

30,200
560

1,479,575 1,402,286 4,618,576 4,604,365 1,090,624 1,082,100

626,170

606,024 1,158,193 1,146,887 1,087,467 1,061,985 3,171,409 3,039,005

Total loans and securities.

1,481,891 1,447,821 4,621,255 4,648,774 1,098,388 1,096,885 627,754

623,733 1,166,465 1,189,535 1,088,281 1,070,895 3,172,393 3,069,765

Due from foreign banks
Cash items in process of collection.
Bank premises
Other assets

1
1
1
517,047 514,749 1,111,469 1,036,246 329,743 270,271 18U34
7,036
9,542 22,159 15,597
6,625
4,974
11,424
8,357 10,528
4,815
14,899 34,963 44,898
12,226

Total gold certificate reserves
Federal Reserve notes of other Banks
Other cash
Discounts and advances:
Secured by U.S. Govt. securities.
Other
Acceptances:
Bought outright
Held under repurchase agreement.
U.S. Government securities:
Bought outright
Held under repurchase agreement.

Total assets.
5 Less than $500.

163^981
5,059
5,938

1
1
1
1
1
2
328,640 309,923 259,468 294,454 691,551 636,619
13,900 11,339
5,147
4,636
11,614 12,178
8,620 10,599 24,767 29,966
9,371
12,157

3,091,775 3,042,275 8,872,812 9,033,690 2,209,690 2,199,598 1,216,981 1,215,091 2,371,416 2,308,837 2,174,270 2,181,482 6,191,194 6,377,791

LIABILITIES
Federal Reserve notes
Deposits:
Member bank reserves
U.S. Treasurer—general account
Foreign
Other

1,640,861 1,604,441 5,302,418 5,324,442 1,232,140 1,245,164
,

Total deposits
Deferred availability cash items.
Other liabilities
Total liabilities

595,187

608,162 1,152,289 1,117,824

906,121
31,886
11,128
3,884

875,240 2,495,252 2,637,889
26,581
62,973
39,321
16,356
29,532
51,504
13,693
13,001
65,504

650,877
26,542
7,062
46,939

620,895
41,412
12,876
20,532

418,679 404,178
23,393
23,771
4,922
8,352
1,942
10,390

863,606 840,994
44,445
30,350
13,572
8,774
14,654
3,594

953,019
430,758
1,622

931,870 2,600,758 2,794,218
443,145 791,125 747,318
1,473
5,032
5,236

731,420
203,701
1,133

695,715
218,371
1,085

448,936
143,476
1,143

906,324
259,372
1,171

446,691
132,062
1,512

835,973

815,895 2,775,409 2,774,901

971,083
53,390
12,412
3,423

973,362 2,602,700 2,785,204
44,231
58,814
62,991
18,096
26,322
38,976
11,903
61,444
76,404

913,665 1,040,308 1,047,592 2,749,280 2,963,575
228,113 226,450 249,555 514,113 492,118
1,141
1,027
959
2,943
2,743

3,026,260 2,980,929 8,699,333 8,871,214 2,168,394 2,160,335 1,188,742 1,188,427 2,319,156 2,260,743 2,103,758 2,114,001 6,041,745 6,233,337

CAPITAL ACCOUNTS
Capital paid in
Surplus
Other capital accounts.
Total liabilities and capital
accounts
. j
I*

Ratio of gold certificate reserves to deposit
and F.R. note liabilities combined
Contingent liability on acceptances purchased for foreign correspondents.......

21,838
43,677

20,153
40,306
887

57,826
115,653

53,667
107,334
1,475

13,765
27,531

12,931
25,862
470

9,413
18,826

8,790
17,580
294

17,420
34,840

15,860
31,720
514

23,504
47,008

22,322
44,645
514

49,816
99,633

47,695
95,390
1,369

3,091,775 3,042,275 8,872,812 9,033,690 2,209,690 2,199,598 1,216,981 1,215,091 2,371,416 2,308,837 2,174,270 2,181,482 6,191,194 6,377,791
37.9%
12,074

38.0%

37.7%

39.2%

36.8%

39.7%

35.5%

36.2%

40.1%

37.1%

40.7%

39.9%

39.5%

44.3%

3,868

32,043

12,180

7,662

3,045

5,341

1,975

9,520

3,210

13,468

4,280

28,561

9,218

FEDERAL RESERVE NOTE
STATEMENT
Federal Reserve notes:
Issued to Federal Reserve Bank by
Federal Reserve Agent and outstanding
1,717,539 1,684,882 5,452,953 5,483,344 1,278,568 1,307,000
Less held by issuing Bank, and forwarded for redemption
76,678
80,441 150,535 158,902
46,428
61,836
Federal Reserve notes, n e t 4
Collateral held by Federal Reserve Agent
for notes issued to Bank:
Gold certificate account
Eligible paper
U.S. Government securities
Total collateral.

1,640,861 1,604,441 5,302,418 5,324,442 1,232,140 1,245,164

550,000

500,000 1,800,000 1,900,000

1,200,000

,200,000 3,800,000 3,700,000

674,318
79,131
595,187

622,690 1,184,910 1[,155,248 882,235
14,528

869,505 2,927,288 2,939,981
53,610

151,879

165,080

37,424

46,262

608,162 1,152,289 1,117,824

835,973

815,895 2,775,409 2,774,901

300,000
7,944
900,000

290,000 1,100,000 1,300,000

410,000 430,000
7,500
14,600
935,000 935,000

180,000

180,000
450,000

300,000
42,453
870,000

275,000

510,000

625,000

625,000 2,000,000 1,800,000

1,750,000 1,700,000 5,600,000 5,600,000 1,352,500 1,379,600

690,000

630,000 1,207,944 1,212,453

900,000

915,000 3,100,000 3,100,000

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

32,621

NO. 3—HOLDINGS OF U.S. GOVERNMENT SECURITIES BY FEDERAL RESERVE
BANKS, END OF DECEMBER 1960, 1959, AND 1958
[In thousands of dollars]

Type of issue
and date

Rate of
interest
(per cent)

Treasury bonds:
1959-62 June....
1959-62 Dec
1961 Sept
1961 Nov
1962-67
1963-68
1964-69 June....
1964-69 Dec
1965 Feb
1965-70
1966-71
1966 Aug
1967-72 June....
1967-72 Sept
1967-72 Dec
1985 May
1990 Feb
Total.
Treasury notes:
Aug. 15, 1960-C
May 15,1961-B.
Aug. 1, 1961-A.
Oct. 1,1961-EO.
Feb. 15, 1962-F.
Feb. 15,1963-A.
May 15,1964-A.
Nov. 15, 1964-C
Total.

1960

1959

1958

319,849
693,765
16,500
42,800
56,610
122,585
203,890
266,999
20,300
521,490

319,849
693,765

56,610
122,585
203,890
266,999
20,300
521,490

132,707
7,000

22,800

49,266
2,552
58,758
5,200
22,800

56,610
122,585
203,890
266,999
20,300
521,490
132,707
7,000
49,266
2,552
58,758
5,200
22,800

2,543,071

2,483,771

5,500,000
2,857,565

2,857,565

49,266
2,552
58,758
5,200

2,815,565
15,000
5,000
4,993,000
10,000
2,642,733
2,000,000
12,481,298

Certificates:
Feb. 14, 1959.
Aug. 1, 1959.
Nov. 15, 1959
Feb. 15, 1960.
Nov. 15, 1960
Feb. 15, 1961.
May 15, 1961.
Aug. 1, 1961.

3,582,993
34,500
5,442,250

Total.

9,059,743

Treasury bills:
Tax anticipation.
Other, due:
Within 3 mos,
3-6 mos
After 6 mos..
Total.

Change during:

December 31

10,000
2,642,733

10,000

11,010,298

2,867,565

5,506,993
5,000,000

10,506,993

1960

+ 16,500
4-42,800

+59,300
-5,500,000
-42,000
+ 15,000
+5,000
+4,993,000
+2,000,000

5,506,993
8,142,733
5,000,000

1959

+ 1,471,000

-5,506,993
-5,000,000
+3,582,993
+34,500
+5,442,250

+5,500,000

+2,642,733
+8,142,733
-5,506,993
-8,142,733
-5,000,000
+5,506,993
+5,000,000

18,649,726

-1,447,250

-8,142,733

65,623

47,000

+ 18,623

+47,000

2,035,400
652,350
146,800

2,162,000
380,365
16,400

2,233,950
16,500

-126,600
+271,985
+ 130,400

-71,950
+363,865
+ 16,400

2,900,173

2,605,765

2,250,450

+294,408

+355,315

Repurchase
agreements.

400,000

41,500

95,000

+358,500

-53,500

Total holdings..

27,384,285

26,648,327

26,346,512

+735,958

+301,815

116

NO. 4 —FEDERAL RESERVE BANK HOLDINGS OF SPECIAL SHORT-TERM TREASURY
CERTIFICATES PURCHASED DIRECTLY FROM THE UNITED STATES, 1953-60»
[In millions of dollars]
Date

Amount

1953—Mar. 18
19
20
21
22*
23
24
25
26
June 5
6
7*
8
9
10

110
104
189
189
189
333
186
63
49
196
196
196
374
491
451

Date

Amount

358
1953—June 11
12
506
13
506
14* 506
15
999
16 1,172
17
823
18
364
19
992
20
992
21* 992
22
908
23
608
296
24

Date

Amount

1954—Jan. 14
15
16
17*
18
19
20
21
22
23
24*
25
26
Mar. 15
16

22
169
169
169
323
424
323
306
283
283
283
203
3
134
190

Date

Amount

1955 )
1956 V no transactions
1957 )

1958—Mar. 17
18

1959 ) n o
1960 }

143
207

transactions

• Sunday or holiday.
i Under authority of Section 14(b) of the Federal Reserve Act. On Nov. 9,1953, the Reserve Banks
sold directly to the U.S. Treasury $500 million of Treasury notes; this is the only use that has been made
under the same authority to sell U.S. Government securities directly to the United States.
NOTE.—Interest rate VA per cent through Dec. 3, 1957, and 1/A per cent below prevailing discount
rate of Federal Reserve Bank of New York thereafter. Rate on purchases in 1958 was 2 per cent. For
data for prior years beginning with 1942, see previous Annual Reports. No holdings on dates not shown.

NO. 5 — OPEN MARKET TRANSACTIONS OF THE FEDERAL RESERVE SYSTEM
DURING 1960
[In millions of dollars]
Net change in
holdings

Month

Outright
U.S.
transactions
U.S.
GovernGovernment
ment
securities
Gross
Cash
Gross
securities
and
market redempmarket
acceptsales
purchases
tions
ances
28

592
109
83
22

Repurchase
agreements
Gross
purchases

Gross
sales
113
370
450
815
600
82
580
1,040
624
532
1,328
206
6,739

January
-1,218
February....
-262
March
+54
April
+290
May
+477
June
+489
July
+360
August
-119
September...
+271
October
+375
November...
+96
December...
-78

-1,185
-255
+56
+293
+477
+488
+362
-123
+262
+378
+86
-104

395
397
500
687
441
63
638
808
658
71

580
205
197
82
38
107
79
168
297
389
162
562

129
63
25
173
203
35
11

71
429
390
815
615
119
644
1,046
719
693
953
605

+734

+736

4,685

2,863

1,445

7,097

Total

NOTE.—Details may not add to totals because of rounding.

Bankers'
acceptances

U.S. Government securities

117

Net
outright

Net
repurchases

-2
-7
-1
-5

-31

+1
+3
+3

•3

+20

-11

NO. 6 —EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS DURING 1960

Item

Total

Boston

New
York

Philadelphia

Cleveland

Richmond

Atlanta

Chicago

St. Louis

Minneapolis

Kansas
City

Dallas

San
Francisco

CURRENT EARNINGS
Discounts and advances.
Acceptances
U.S. Govt. securities
AH other

$16,633,762 $551,754 $1,750,097 $845,845 $769,086 $819,821 $1,980,105 $4,097,753, $686,396 $1,134,086 $1,826,595 $1,210,595 $961,629
1,384,8131
1,384,813
1,084,766,883 58,235,551 273,849,371 61,842,973 93,077,176 68,654,176 58,698,614 185,580,969 43,769,326 24,971,839 46,457,699 43,466,853 126,162,336
599,799
28,070
108,852
62,408
83,967
18,859
20,846
45,148
55,372
58,265
32,931
53,385
31,696

Total current earnings. 1,103,385,257 58,815,375 277,093,133 62,721,749 93,899,647 69,505,693 60,741,127 189,762,689144,474,581 26,126,771 48,329,442 44,732,820 127,182,230
CURRENT EXPENSES

Salaries:
Officers
Employees
Director's and other fees
Retirement contributions
Traveling expenses
Postage and expressage
Telephone and telegraph
Printing, stationery, and
supplies
Insurance
Taxes on real estate
Depreciation (building)
Light, heat, power, and water.
Repairs and alterations
Rent
Furniture and equipment:
Purchases
Rentals
All other
Interbank expenses
Subtotal
F.R. currency
Assessment for expenses of
Board of Governors
Total.

615,587
525,736
370,31
484,086 421,283
544,963 486,829
6,576,278
386,465 1,193,688 419,003 586,460
86,976,399 5,374,099 19,663,082 4,699,429 7,486,243 5,706,393 5,441,215 13,199,584 4,805,533 2,826,160 4,511,896 3,850,014
52,054
36,706
31,156
38,710
34,460
58,554
69,887
546,799
21,388
74,536
53,683
28,234
727,979 1,642,999 631,068
359,049
607,574 528,536
660,776 2,380,296 604,380 948,518
745,958
11,027,750
230,696
142,101
121,631
105,19f
116,760 115,034
118,729
307,749
89,410
180,986
142,483
1,886,395
18,914,866 1,599,842 2,691,849 951,669 1,502,016 1,798,206 1,606,203 2,595,677 1,025,957 682,466 1,166,478 950,404
111,361
164,920
182,527
86,514
56,882
92,706
120,167
111,83:
1,561,521
81,789
322,085
73,063

541,866
9,412,751
47,431
1,190,617
215,624
2,344,099
157,675

7,085,750
1,938,726
4,355,619
5,571,936
1,733,248
890,318
179,931

514,778
117,294
649,515
414,858
109,924
44,068
4,873

1,399,577
329,261
802,313
487,519
250,061
98,674
6,519

388,418
93,836
149,284
270,538
98,644
54,834
6,215

541,764
172,000
396,919
905,769
171,491
57,825
43,074

438,318
175,973
193,695
544,485
154,343
72,202
2,380

535,810
151,909
241,305
418,551
114,550
43,982
2,558

1,112,480
263,444
534,912
628,066
249,044
58,802
97,674

461,088
125,170
184,793
444,953
130,668
152,580
1,705

217,274
90,615
303,879
336,973
85,829
143,150
121

419,222
127,751
191,237
168,853
129,565
63,952
198

359,605
93,326
238,174
265,706
110,787
32,409
11,768

697,416
198,147
469,593
685,665
128,342
67,840
2,846

2,251,792
6,234,755
2,231,290

113,220
462,781
99,559
40,201

270,252
771,167
491,909
-547,104

144,088
363,274
78,635
48,095

234,627
455,322
356,247
77,094

134,379
410,149
91,292
-12,579

144,695
458,484
140,176
46,050

304,058
1,122,780
368,287
113,732

175,296
336,526
87,241
28,800

131,286
206,628
83,280
19,421

74,870
406,408
130,777
35,590

390,477
331,749
143,607
48,631

134,544
909,487
160,280
102,069

159,963,373 10,814,159 30,993,433 8,567,275 14,290,205 11,282,706 10,925,871 23,372,403 9,361,965 6,049,673 8,797,810 8,041,581 17,466,292
242,436 427,560 322,502
7,455,011
865,321
222,971 1,381,543 690,859 418,849
570,910 916,564 1,121,254 274,242
6,533,700

323,600

1,862,200

384,100

610,500

292,800

340,600

904,900

218,200

148,600

268,500

376,500

803,200

173,952,084 11,360,730 34,237,176 9,642,234 15,319,554 12,146,416 12,183,035 25,398,557 9,854,407 6,440,709 9,493,870! 8,740,583 19,134,813

Less reimbursement for certain
fiscal agency and other exNet expenses

20,069,809

1,080,774

3,485,246

973,280 1,941,206 1,107,026 1,476,668

3,652,299 1,219,148

659,633 1,464,257

960,036

2,050,236

153,882,275 10,279,956 30,751,930 8,668,954 13,378,348 11,039,390 10,706,367 21,746,258 8,635,259 5,781,076 8,029,613 7,780,547 17,084,577
PROFIT AND LOSS

Current net earnings
Additions to current net
earnings:
Profits on sales of U.S.
Govt. securities (net)
Transferred from reserves
for contingencies
All other
Total additions.
Deductions from current net
earnings
Net additions

949,502,982 48,535,419 246,341,203 54,052,795 80,521,299 58,466,303 50,034,760 168,016,431 35,839,322 20,345,695 40,299,828 36,952,272 110,097,653

2,429,174

607,327

139,931

209,320

153,387

131,479

417,446

98,618

55,983

104,362

97,523

282,740

11,315,698 1,112,404 1,837,333
2,026|
26,143
173,407

824,458
163

840,170 1,178,351
278
817

886,967
606

1,474,704
132,125

470,496
759

294,453
2,498

513,585
1,542

513,705
687

1,369,072
5,763

13,918,278

964,552 1,050,307 1,332,016 1,019,052

2,024,276

569,873

352,933

619,489

611,915

1,657,575

131,058

1,245,488

2,470,802

43,577

2,637

5,562

13,874,701

1,242,851

2,465,240

569

818

5,589

2,679

10,590

1,213

1,714

921

956,769 1,049,738 1,328,514 1,018,234

2,018,687

567,194

342,344

618,276

610,201

1,656,653

7,783

3,502

Net earnings before payments
to U.S. Treasury

963,377,684 49,778,271 248,806,443 55,009,564 81,571,038 \ 59,794,817 51,052,994 170,035,117 36,406,516 20,688,039 40,918,104 37,562,473111,754,306

Dividends paid
Paid U.S. Treasury (interest on
F.R. notes)
,

6,191 18,891,558 36,794,934 33,818,920 104,585,376
896,816,359 46,597,203 233,806,145 51,585,421 76,281,883 55,718,988 46,417,055 158,382,686 33,936,

Transferred to surplus.
Surplus, January 1 . . . .

42,613,100 1,998,000! 8,198,000 2,025,300 3,070,000 2,992,400 3,371,000 8,318,800 1,668,500 1,245,800 3,119,700 2,362,900 4,242,700
774,807,800 38,332,200 220,904,600 45,638,100 72,530,000 34,566,100 40,305,800 107,333,800 25,862,300 17,579,700 31,720,100 44,644,900 95,390,200

Surplus, December 31.

817,420,900 40,330,200 229,102,600 47,663,400 75,600,000 37,558,500 43,676,800 115,652,600 27,530,800 18,825,500 34,839,800 47,007,800 99,632,900

23,948,225

1,183,068

6,802,299 1,398,843 2,219,154 1,083,429 1,264,939

NOTE.—Details m a y not add to totals because of rounding.

3,333,632

801,826

550,681 1,003,470 1,380,653

2,926,231

NO. 7 — EARNINGS AND EXPENSES OF FEDERAL RESERVE BANKS, 1914-60

Paid to U.S.
Treasury
(Sec. 13b)

Paid to U.S.
Treasury
(interest on
F.R. notes)

Transferred
to surplus
(Sec. 13b)

Transferred
to surplus
(Sec. 7)

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

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

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

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

$1,134,234
2,703,894

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

1920
1921
1922
1923
1924

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

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

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

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

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

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

1925
1926
1927
1928
1929

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

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

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

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

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

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

1930
1931
1932
1933
1934

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

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

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

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

17,308
2,011,418
$-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
1948
1949

142,209,546
150,385,033
158,655,566
304,160,818
316,536,930

48,717,271
57,235,107
65,392,975
72,710,188
77,477,676

92,662,268
92,523,935
95,235,592
197,132,683
226,936,980

10,182,851
10,962,160
11,523,047
11,919,809
12,329,373

247,659
67,054
35,605

262,133
27,708
86,772

81,969,625
81,467,013
8,366,350
18,522,518
21,461,770

Dividends
paid

Franchise tax
paid to U.S.
Treasury

Current
expenses

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

Net earnings
before payments to
U.S. Treasury *

Current
earnings

Period or Bank

$75,223,818
166,690,356
193,145,837

1950
1951
1952
1953
1954

275,838,994
394,656,072
456,060,260
513,037,237
438,486,040

80,571,771
95,469,086
104,694,091
113,515,020
109,732,931

231,561,340
297,059,097
352,950,157
398,463,224
328,619,468

13,082,992
13,864,750
14,681,788
15,558,377
16,442,236

196,628,858
254,873,588
291,934,634
342,567,985
276,289,457

21,849,490
28,320,759
46,333,735
40,336,862
35,887,775

1955
1956
1957
1958
1959

412,487,931
595,649,092
763,347,530
742,068,150
886,226,116

110,060,023
121,182,496
131,814,003
137,721,655
144,702,706

302,162,452
474,443,160
624,392,613
604,470,670
839,770,663

17,711,937
18,904,897
20,080,527
21,197,452
22,721,687

251,740,721
401,555,581
542,708,405
524,058,650
910,649,768

32,709,794
53,982,682
61,603,682
59,214,569
-93,600,791

1,103,385,257

153,882,275

963,377,684

23,948,225

Total 1914-1960,

9,280,278,838

2,435,825,389

6,899,454,781

477,154,124

149,138,300

2,188,893

5,324,884,019

Aggregate for each
Federal Reserve Bank,
1914-60:
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta

558,310,743
2,366,192,521
594,110,441
828,889,951
563,933,744
484,681,860

172,785,979
538,220,254
159,847,122
223,223,943
161,775,692
139,472,238

390,686,427
1,846,577,850
441,637,418
608,924,393
405,960,857
346,019,969

29,542,333
155,287,247
37,711,989
46,793,551
20,650,863
19,238,913

7,111,395
68,006,262
5,558,901
4,842,447
6,200,189
8,950,561

280,843
369,116
722,406
82,930
172,493
79,264

303,191,417
1,356,989,466
335,359,838
468,381,578
335,570,520
268,802,398

Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

1,483,293,541
414,293,271
248,232,093
420,716,506
374,975,176
942,648,992

342,134,603
134,181,744
83,402,476
130,798,249
111,854,966
238,128,125

1,144,880,721
280,795,484
167,142,595
291,834,163
265,143,776
709,851,124

59,173,992
16,425,215
11,157,031
17,211,464
19,679,237
44,282,285

25,313,526
2,755,629
5,202,900
6,939,100
560,049
7,697,341

151,045
7,464
55,615
64,213
102,083
101,421

Total

9,280,278,838

2,435,825,389

6,899,454,781

477,154,124

149,138,300

2,188,893

1960

42,613,100

896,816,359
-3,657

2 946,093,102

135,411
290,661
-9,906
-71,517
5,491

50,425,025
266,359,171
61,993,622
88,833,793
43,438,308
48,943,340

929,249,121
228,983,263
127,959,466
228,648,310
193,461,792
548,286,850

11,682
-26,515
64,874
-8,674
55,337
-17,089

130,981,354
32,650,428
22,702,713
38,979,750
51,285,278
109,500,317

5,324,884,019

-3,657

946,093,102

-433,413

1
Current earnings less current expenses, plus and minus profit and loss additions and deductions.
2 The $946,093,102 transferred to surplus was reduced by direct charges of $139,299,557 for contributions to capital of the Federal Deposit Insurance Corporation, $500,000 for
charge-off on bank premises, and $3,657 net upon elimination of surplus (Sec. 13b), and was increased by $11,131,013 transferred from reserves for contingencies, leaving a balance of
$817,420,900 on Dec. 31, 1960.

NOTE.—Details may not add to totals because of rounding.

NO. 8 — BANK PREMISES OF FEDERAL RESERVE BANKS AND BRANCHES
DECEMBER 31, 1960
Cost
Federal Reserve Bank
or branch

Net
book value

Land

Buildings
(including
vaults)i

Fixed machinery and
equipment

Total

$1,628,132

$5,929,169

$2,966,116

$10,523,417

$3,912,906

5,215,656
592,679
406,069

12,183,528
1,451,569
2,555,197

4,886,521
673,458
1,565,400

22,285,705
2,717,706
4,526,666

4,569,738
841,532
3,974,744

Philadelphia....

1,884,357

4,839,506

2,154,452

8,878,315

3,791,220

Cleveland
Cincinnati
Pittsburgh

1,295,490
400,891
1,656,418

6,602,752
1,164,917
2,953,531

3,200,784
1,429,434
2,431,260

11,099,026
2,995,242
7,041,209

2,207,143
1,356,145
5,053,734

Richmond
Baltimore
Charlotte

469,944
250,487
117,479

4,164,663
2,009,381
1,069,026

2,435,198
1,062,747
607,294

7,069,805
3,322,615
1,793,799

2,801,821
2,006,057
1,305,326

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

633,387
93,931
338,917
164,004
592,342
277,078

3,984,437
137,100
1,982,184
1,686,250
1,474,678
762,456

362,731
103,867
948,236
694,291
1,009,863
265,700

4,980,555
334,898
3,269,337
2,544,545
3,076,883
1,305,234

3,348,600
285,731
2,872,490
1,728,995
2,815,923
372,264

6,019,757
1,147,734

21,411,837
2,844,138

2,846,061
1,214,162

30,277,655
5,206,034

18,932,569
3,226,344

1,675,780
241,105
523,353
128,542

3,171,719
391,611
2,859,819
287,469

2,154,782
206,575
1,003,708
167,755

7,002,281
839,291
4,386,880
583,766

1,936,899
439,174
3,999,357
249,853

Minneapolis....
Helena

600,521
15,709

4,689,718
126,401

2,688,921
62,977

7,979,160
205,087

4,903,808
70,126

Kansas C i t y . . . .
Denver
Oklahoma City.
Omaha........

545,764
592,271
2 563,025
445,663

3,521,361
523,041
602,899
1,491,117

1,316,319
86,910
97,588
723,843

5,383,444
1,202,222
1,263,512
2,660,623

1,256,207
750,536
832,255
2,308,304

Dallas
El Paso
Houston
San Antonio....

686,243
262,477
695,615
448,596

8,668,316
787,728
1,408,574
1,400,390

466,692
393,301
744,758
570,847

9,821,251
1,443,506
2,848,947
2,419,833

7,975,792
1,278,252
2,566,667
2,079,721

San Francisco...
Annex
Los Angeles....
Portland
Salt Lake City..
Seattle

476,768
247,201
736,867
207,380
480,222
274,772

3,783,530
124,000
4,074,380
1,678,512
1,878,238
1,891,564

1,458,028
30,000
1,592,708
649,432
707,575
661,987

5,718,326
401,201
6,403,955
2,535,324
3,066,035
2,828,323

1,057,356
366,241
3,936,266
1,598,069
2,849,390
1,805,796

Total

33,032,626

122,566,706

46,642,281

202,241,613

107,663,351

Boston
New York
Annex
Buffalo

Chicago
Detroit
St. Louis
Little Rock
Louisville
Memphis

OTHER REAL ESTATE ACQUIRED FOR BANKING HOUSE PURPOSES
Richmond
New Orleans
Kansas City
Los Angeles
Total

157,953
806,326
3 396,219
78,812
40,747

317,336
29,464

112,111

1,480,057

346,800

112,111

157,953
806,326
396,219
508,259
70,211

157,953
806,326
396,219
101,416
70,211

1,938,968

1,532,125

* May include expenditures in construction account pending allocation to appropriate accounts.
Includes cost of building on site of addition.
Includes cost of building on property.

2
3

122

NO. 9 —NUMBER AND SALARIES OF OFFICERS AND EMPLOYEES OF
FEDERAL RESERVE BANKS
[December 31, 1960]

Federal Reserve
Bank (including
branches)

Other officers

President
Annual
salary

Number

Annual
salaries

Employees *
Number

Total

Annual
salaries

Number

Annual
salaries

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

$35,000
60,000
35,000
35,000
35,000
35,000
50,000
35,000
35,000
35,000
35,000
40,000

24
62
30
37
36
34
38
35
25
31
30
38

$ 347,000
1,126,500
421,232
532,100
498,000
435,600
547,450
491,700
350,250
424,600
388,700
484,400

1,373
3,861
1,026
1,529
1,354
1,353
2,964
1,121
683
1,094
964
2,177

$ 5,391,868
19,991,075
4,549,663
7,246,343
5,747,142
5,245,210
12,805,296
4,557,196
2,773,715
4,379,065
3,857,085
9,129,594

1,398
3,924
1,057
1,567
1,391
1,388
3,003
1,157
709
1,126
995
2,216

$ 5,773,868
21,177,575
5,005,895
7,813,443
6,280,142
5,715,810
13,402,746
5,083,896
3,158,965
4,838,665
4,280,785
9,653,994

Total

$465,000

420

$6,047,532

19,499

$85,673,252

19,931

$92,185,784

Includes 966 part-time employees.

NO. 10 —VOLUME OF OPERATIONS IN PRINCIPAL DEPARTMENTS OF FEDERAL
RESERVE BANKS, 1957-60
[Number in thousands; amounts in thousands of dollars]
Operation

1960

1959

1958

1957

19
4,746,665
9,767,544

26
4,631,081
9,929,912

14
4,547,668
9,574,474

25
4,631,676
9,089,460

407,333
270,307
3,419,093

393,860
279,939
3,257,839

388,541
295,350
3,085,185

469,158
324,161
2,974,940

16,357
21,513

13,915
20,853

13,564
20,429

12,546
19,308

197,825
2,918

196,063
2,695

193,665
2,426

207,246
2,302

58,057,685
31,553,482
1,095,870

105,058,505
30,730,461
1,022,660

41,306,072
29,596,570
956,235

114,469,820
29,926,319
922,742

105,212,842
5,029,890
1,154,120,907

106,724,118
5,078,641
1,130,235,860

99,942,372
5,297,341
1,044,984,066

102,062,972
5,796,279
1,044,553,457

4,798,446
5,793,218

3,866,402
5,838,199

3,695,458
5,663,684

3,032,805
5,758,976

527,444,784
2,428,083,100

545,489,154
1,882,069,626

526,037,271
1,643,532,069

493,391,267
1,345,185,037

NUMBER OF PIECES
HANDLED l
Discounts and advances 2
,
Currency received and counted.
Coin received and counted
Checks handled:
U.S. Govt. checks
,
Postal money orders
,
All other 3
Collection items handled:
U.S. Govt. coupons paid
,
All other
Issues, redemptions, and exchanges
of U.S. Govt. securities
,
Transfers of funds
,
AMOUNTS HANDLED
Discounts and advances 2
Currency received and counted.
Coin received and counted
Checks handled:
U.S. Govt. checks
Postal money orders
,
All other 3
Collection items handled:
U.S. Govt. coupons paid
All other
Issues, redemptions, and exchanges
of U.S. Govt. securities
Transfers of funds

1 Packaged items handled as a single item are counted as one piece.
Exclusive of industrial loans.
3 Exclusive of checks drawn on the Federal Reserve Banks.
2

123

NO. 11 —FEDERAL RESERVE BANK DISCOUNT RATES
In effect December 31, 1960 1
[Per cent per annum]
Discounts for and advances to member banks
Federal Reserve
Bank

Advances secured by
Government obligations
and discounts of and
advances secured by
eligible paper
(Sees. 13 and 13a) 2

Other secured advances
[Sec. 10(b)]

Advances to individuals,
partnerships, or corporations other than member
banks secured by direct
obligations of the U.S.
(last par. Sec. 13)

Boston
New Y o r k . . . ,
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco
1 For changes during year, see record of policy actions of the Board of Governors.
2
Rates shown also apply to advances secured by obligations of Federal intermediate credit banks
maturing within 6 months.
NOTE.—Maximum maturities. Discounts for and advances to member banks: 90 days for discounts
and advances 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 advances secured by obligations of Federal intermediate credit banks maturing
within 6 months are limited to maximum maturities of 15 days; 4 months for advances under Section
10(b). Advances to individuals, partnerships, or corporations under the last paragraph of Section 13:
90 days.

NO. 12 — MAXIMUM INTEREST RATES PAYABLE ON TIME DEPOSITS
[Per cent per annum]
Nov. 1, 1933—
Jan. 31, 1935

Feb. 1, 1935—
Dec. 31, 1935

Jan. 1, 1936—
Dec. 31, 1956

Savings deposits

21/2

2i/2

Postal savings deposits

Other time deposits payable:
In 6 months or more
In 90 days to 6 m o n t h s . . . .
In less than 90 days

3
3
3

21/2

f1A

Type of deposit

Effective
Jan. 1, 1957

NOTE.—Maximum rates that may be paid by member banks as established by the Board of Governors under provisions of Regulation Q. Under this Regulation 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. Effective Feb. 1, 1936,
maximum rates that may be paid by insured nonmember commercial banks, as established by the
F.D.I.C., have been the same as those in effect for member banks.

124

NO. 13 — MARGIN REQUIREMENTS 1
Prescribed by Board of Governors of the Federal Reserve System in accordance with
Securities Exchange Act of 1934
[Per cent of market value]
Feb. 20, Jan. 4, Apr. 23, Jan. 16, Aug. 5, Oct. 16, Effec195519551958195819581953tive
Jan. 4, Apr.22, Jan. 15, Aug. 4, Oct. 15, July 27, July 28,
1955
1958
1958
1958
1960
1955
1960
Regulation T:
For extension of credit by
brokers and dealers on
For short sales
Regulation U:
For loans by banks on stocks..

50
50

60
60

70
70

50
50

70
70

90
90

70
70

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. Changes on Feb. 20, 1953, and Jan. 4, 1955, were effective after
the close of business on these dates.

NOTE.—For earlier data, see Banking and Monetary Statistics, Table 145, p. 504, and Annual
Report for 1948, p. 77, and 1953, p. 76.

NO. 14 — FEES AND RATES ESTABLISHED UNDER REGULATION V ON LOANS
GUARANTEED PURSUANT TO DEFENSE PRODUCTION ACT OF 1950
[In effect December 31, 1960]
Fees Payable to Guaranteeing Agency by Financing Institution on Guaranteed Portion of Loan

Percentage of loan guaranteed

70 or less
75
80.
..
85
90
95..
..
Over 95

..
. .

..
. . . .

Guarantee fee
(percentage of
interest payable
by borrower)

Percentage of
any commitment
fee charged
borrower

10
15
20
25
30
35
40-50

Maximum Rates Financing Institution May Charge Borrower
[Per cent per annum]
Interest rate
Commitment rate.

125

NO. 15 —MEMBER BANK RESERVE REQUIREMENTS
[Per cent of deposits]
Net demand deposits 1
Effective date of change

Central
reserve
city banks

Reserve
city banks

1917—June 21

1936—Aug.
1937—Mar.
May
1938—Apr.

i9y 2
22%
26
22!4

16
1
1
16

1941_Nov. 1
1942_Aug. 20
Sept. 14
Oct. 3

26
24
22
20

1948—Feb. 27
June 11
Sept. 16, 24*
1949—May 1,5*
June 30, July 1*
Aug. 1,11*
Aug. 16,18*
Aug. 25
Sept. 1
1951 Jan. 11, 16*
Jan. 25, Feb. 1*
1953_j u ly 1,9*
1954—June 16,24*
July 29, Aug. 1*.

22
24
26
24

1958—Feb. 27, Mar. 1*
Mar. 20, Apr. 1*
Apr. 17
Apr. 24
1960—Sept. 1
Nov. 24
Dec. 1
In effect Jan. 1, 1961
Present legal requirements:
Minimum
Maximum

i*
g»
,

2*
17%

22
21
20

g*
\tA
19
20
19
18

\VA

16%
16%
2 10
2 22

Country
banks

Central
reserve and
reserve city
banks

Country
banks

m
14
12
14

23
24
22
21
20

17%

Time deposits

16
15
14
13
12

V6 A

13
14
13

7
14

3
6

6
5

11%
11

16%
12
16%
10
2 22

* First-of-month or midmonth dates record changes at country banks, and other dates (usually
Thursday) record changes at central reserve or reserve city banks.
1 Demand deposits subject to reserve requirements which, beginning with Aug. 23, 1935, have
been total demand deposits minus cash items in process of collection and demand balances due from
domestic banks (also minus war loan and Series E bond accounts during the period Apr. 13, 1943June 230, 1947).
From August 23, 1935 to July 28, 1959, the minimum and maximum legal requirements against
net demand deposits of central reserve city banks were 13 and 26 per cent, respectively, and the maximum for reserve city banks was 20 per cent.

126

NO. 16 — PRINCIPAL ASSETS AND LIABILITIES, AND NUMBER OF ALL BANKS, BY CLASSES, DECEMBER 31, 1960 AND 1959 i
[In millions of dollars]
Mutual savings banks

Commercial banks
Item

All
banks

Member banks

Total 2
Total

National

State

Insured
nonmember

Noninsured

Total

Insured

Noninsured

December 31,1960 3
Loans and investments, total
Loans
U.S. Govt. obligations
Cash assets

to
Other time

238,010
143,900
94,110
67,660
26,450
52,060

198,810
116,660
82,150
61,320
20,830
51,200

164,740
99,040
65,700
49,120
16,580
44,990

106,980
63,240
43,740
32,710
11,030
28,390

57,760
35,800
21,960
16,410
5,550
16,600

32,560
17,080
15,480
11,620
3,860
5,880

1,530
550
980
590
390
330

39,200
27,240
11,960
6,340
5,620
860

31,910
22,690
9,220
4,540
4,680
700

7,290
4,550
2,740
1,800
940
160

263,750
18,210
137,950
107,590
24,690

227,380
18,210
137,920
71,250
21,120

190,670
17,450
116,330
56,890
17,470

123,570
10,060
74,310
39,200
11,150

67,100
7,390
42,020
17,690
6,320

35,250
450
20,720
14,080
3,280

1,480
310
870
300
370

36,370

29,690

6,680

30
36,340
3,570

30
29,660
2,820

6,680
750

13,986

13,472

6,174

4,530

1,644

6,948

352

514

325

189

December 31,1959
Loans and investments, total
Investments
U.S. Govt. obligations
Other securities
Deposits, total
Interbank
Other time
Total capital accounts

227,831
135,958
91,873
65,801
26,071
50,296

190,270
110,832
79,438
58,937
20,501
49,467

157,879
94,779
63,100
46,813
16,287
43,509

102,615
59,962
42,653
31,761
10,892
27,464

55,264
34,817
20,447
15,052
5,396
16,045

30,939
15,534
15,404
11,546
3,859
5,651

1,480
534
947
589
358
309

37,561
25,126
12,435
6,864
5,570
829

30,580
20,942
9,638
5,016
4,622
686

6,981
4,184
2,797
1,848
949
143

254,885
17,093
136,676
101,116
22,915

219,903
17,091
136,643
66,169
19,556

184,706
16,387
115,493
52,827
16,264

119,638
9,460
73,757
36,421
10,302

65,069
6,926
41,737
16,406
5,962

33,795
471
20,264
13,059
2,944

1,429
233
886
311
350

34,983
2
33
34,948
3,359

28,577
2
31
28,544
2,654

6,405

13,991

13,474

6,233

4,542

1,691

6,878

366

517

268

249

1
6,404
705

1 All banks in the United States. Figures for Dec. 31, 1959, include data for 17 commercial banks in Alaska (including six national members) and 11 commercial banks in Hawaii
(including
one national member); previously only one national bank in Alaska and one in the Virgin Islands that became members in 1954 and 1957, respectively, had been included.
2
Excludes three member mutual savings banks in 1959 and two in 1960.
3 Estimated.

NO. 17 — MEMBER BANK RESERVES, RESERVE BANK CREDIT, AND RELATED ITEMS — END OF YEAR 1918-60 AND END OF MONTH 1960
[In millions of dollars]
Reserve Bank credit outstanding

End of
year or
month

U.S. Government
securities

Total

H*
tO
OO

Bought
outright

Held
under
repurchase
agreement

Discounts
and
advances

Float

All
other 1

Total

Gold
stock 2

Treasury
currency
outstanding 3

Currency
in
circulation

Treasury
cash
hold-4
ings

Deposits,
other than member
bank reserves,
with F. R. Banks

Member bank reserves
Other
F.R.
accounts 5

Other

25
28

118
208

1,636
1,890

18
15
26
19
20

298
285
276
275
258

1,781
1,753
1,934
1,898
2,220

1918....
1919

239
300

1,766
2,215

199
201

294
575

2,498
3,292

2,873
2,707

1,795
1,707

4,951
5,091

288
385

51
31

1920
1921
1922
1923....
1924....

287
234
436
134
540

287
234
436
80
536

54
4

2,687
1,144
618
723
320

119
40
78
27
52

262
146
273
355
390

3,355
1,563
1,405
1,238
1,302

2,639
3,373
3,642
3,957
4,212

1,709
1,842
1,958
2,009
2,025

5,325
4,403
4,530
4,757
4,760

218
214
225
213
211

57
96
11
38
51

96
73
5
12
3
4
19

1925....
1926
1927....
1928
1929....

375
315
617
228
511

367
312
560
197
488

8
3
57
31
23

643
637
582
1,056
632

63
45
63
24
34

378
384
393
500
405

1,459
1,381
1,655
1,809
1,583

4,112
4,205
4,092
3,854
3,997

1,977
1,991
2,006
2,012
2,022

4,817
4,808
4,716
4,686
4,578

203
201
208
202
216

16
17
18
23
29

8
46
5
6
6

21
19
21
21
24

272
293
301
348
393

1930....
1931
1932....
1933
1934

729
817
1,855
2,437
2,430

686
775
1,851
2,435
2,430

43
42
4
2

251
638
235
98
7

21
20
14
15
5

372
378
41
137
21

1,373
1,853
2,145
2,688
2,463

4,306
4,173
4,226
4,036
8,238

2,027
2,035
2,204
2,303
2,511

4,603
5,360
5,388
5,519
5,536

211
222
272
284
3,029

19
54
8
3
121

6
79
19
4
20

22
31
24
128
169

1935....
1936
1937
1938....
1939

2,431
2,430
2,564
2,564
2,484

2,430
2,430
2,564
2,564
2,484

5
3
10
4
7

12
39
19
17
91

38
28
19
16
11

2,486
2,500
2,612
2,601
2,593

10,125
11,258
12,760
14,512
17,644

2,476
2,532
2,637
2,798
2,963

5,882
6,543
6,550
6,856
7,598

2,566
2,376
3,619
2,706
2,409

544
244
142
923
634

29
99
172
199
397

1940
1941
1942....
1943
1944

2,184
2,254
6,189
11,543
18,846

3
3
6
5
80

80
94
471
681
815

8
10
14
10
4

2,274
2,361
6,679
12,239
19,745

21,995
22,737
22,726
21,938
20,619

3,087
3,247
3,648
4,094
4,131

8,732
11,160
15,410
20,449
25,307

2,213
2,215
2,193
2,303
2,375

368
867
799
579
440

1,133
774
793
1,360
1,204

With
F.R.
Banks

Treas- Forury
eign

Allowable
in
cash

ExRequired 6 cess 6

1,585
1,822

51
68

1,654

1,884
2,161

14
59

2,212
2,194
2,487
2,389
2,355

2,256
2,250
2,424
2,430
2,428

-44
-56
63
-41
-73

375
354
355
360
241

2,471
1,961
2,509
2,729
4,096

2,375
1,994
1,933
1,870
2,282

96
-33
576
859
1,814

226
160
235
242
256

253
261
263
260
251

5,587
6,606
7,027
8,724
11,653

2,743
4,622
5,815
5,519
6,444

2,844
1,984
1,212
3,205
5,209

599
586
485
356
394

284
291
256
339
402

14,026
12,450
13,117
12,886
14,373

7,411
9,365
11,129
11,650
12,748

6,615
3,085
1,988
1,236
1,625

1945...
1946...
1947...
1948...
1949...

24,262
23,350
22,559
23,333
18,885

1950...
1951...
1952...
1953...
1954...

20,778
23,801
24,697^
25,916
24,932

20,725
23,605
24,034
25,318
24,888

1955...
1956...
1957...
1958...
1959...

24,785
24,915
24,238
26,347
26,648

24,391
24,610
23,719
26,252
26,607

25,464
25,209
25,264
25,558
26,035
26,523
26,885
26,762
27,024
27,402
27 488
27,384

25,464
25,149
25,264
25,558
26,020
26,472
26,770
26,640
26,808
27,025
27,486
26,984

1960—
Jan...
Feb..
Mar..

N
vo

May!
June.
July..
Aug..
Sept..
Oct...
Nov..
Dec.

25,091
24,093
23,181
24,097
19,499

20,065
20,529
22,754
24,244
24,427

4,339
4,562
4,562
4,589
4,598

28,515
28,952
28,868
28,224
27,600

2,287
977
2,272
393
1,336
870
1,325 1,123
1,312
821

862
508
392
642
767

446
314
569
547
750

495
607
563
590
706

15,915
16,139
17,899
20,479
16,568

14,457
15,577
16,400
19,277
15,550

1,458
562
1,499
1,202
1,018

5
4
2
1

22,216
25,009
25,825
26,880
25,885

22,706
22,695
23,187
22,030
21,713

4,636
4,709
4,812
4,894
4,985

27,741
29,206
30,433
30,781
30,509

1,293
1,270
1,270
761
796

668
247
389
346
563

895
526
550
423
490

565
363
455
493
441

714
746
777
839
907

17,681
20,056
19,950
20,160
18,876

16,509
19,667
20,520
19,397
18,618

1,172
389
-570
763
258

1,585
1,665
1,424
1,296
1,590

29
70
66
49
75

26,507
26,699
25,784
27,755
28,771

21,690
21,949
22,781
20,534
19,456

5,008
5,066
5,146
5,234
5,311

31,158
31,790
31,834
32,193
32,591

767
775
761
683
391

394
441
481
358
504

402
322
356
272
345

554
426
246
391
694

925
901
998
1,122
841

19,005
19,059
19,034
18,504
18,174

310

18,903
19,089
19,091
18,574
r
18,623

102
-30
-57
-70
-139

1,245
979
1,050
972
856
1,058
874
707
1,155
1,096
1,095
1,868

42
35
33
30
29
30
29
33
42
39
48
74

27,613
26,961
27,103
27,131
27,262
27,869
28,131
27,907
28,402
28,729
28,731
29,359

19,444
19,421
19,408
19,360
19,352
19,322
19,144
19,005
18,685
18,402
17,910
17,767

5,320
5,329
5,341
5,346
5,351
5,354
5,359
5,368
5,378
5,387
5,393
5,398

31,569
31,552
31,633
31,600
31,879
32,065
32,039
32,027
32,022
32,144
32,632
32,869

437
427
413
406
412
395
406
388
396
389
410
377

567
453
549
619
462
504
477
481
489
437
512
485

249
191
184
194
215
254
215
204
223
251
252
217

324
326
355
313
346
427
353
432
456
477
390
554

834
1,008
944
855
1,031
960
883
1,013
936
865
1,069
941

18,396
17,754
17,773
17,850
17,619
17,941
18,261
17,735
17,942
17,956
16,770
17,081

285
305
218
275
315
241
320
695
837
942
2,669
2,601

18,052
17,667
17,465
17,892
17,653
17,883
18,062
17,844
18,157
18,265
18,559
18,993

629
392
526
233
281
299
519
586
622
633
880
689

249
163
85
223
78

578
580
535
541
534

53
196
663
598
44

67
19
156
28
143

1,368
1,184
967
935

394
305
519
95
41

108
50
55
64
458
862
739
756
571
342
258
343
405
181
193
101
33

60
15
51
115
122
216
377
2
400

r
Revised.
1 Principally acceptances and industrial loans; authority for industrial loans expired Aug. 21, 1959.
Prior to Jan. 30, 1934, included gold held by Federal Reserve Banks and in circulation.
3 The stock of currency, other than gold, for which the Treasury is primarily responsible — silver bullion at monetary value and standard silver dollars, subsidiary silver and minor
coin, and United States notes; also, Federal Reserve Bank notes and national bank notes for the retirement of which lawful money has been deposited with the Treasurer of the United
States.
Includes currency of these kinds held in the Treasury and the Federal Reserve Banks as well as that in circulation.
4
Gold other than that held against gold certificates and gold certificate credits, including the reserve against United States notes and Treasury notes of 1890, monetary silver other
than that held against silver certificates and Treasury notes of 1890, and the following coin and paper currency held in the Treasury: subsidiary silver and minor coin, United States
notes,
Federal Reserve notes, Federal Reserve Bank notes, and national bank notes.
5
The total of Federal Reserve Bank capital paid in, surplus, other capital accounts, and other liabilities and accrued dividends, less the sum of bank premises and other assets.
6 These figures are estimated. Prior to 1929 available only on call dates (in 1920 and 1922, the call dates were December 29).
NOTE.—For description of figures and discussion of their significance, see Banking and Monetary Statistics, Sec. 10, pp. 360-66.
2

NO. 18 — MEMBER BANK EARNINGS, BY CLASS OF BANK, 1960 AND 1959 i

Total

Central reserve city banks
New York

Item
1960

1959

1960

1959

Chicago
1960

1959

Reserve
city banks

1960

1959

Country
banks

1960

1959

In millions of dollars
Earnings
On U.S. Govt.
securities
On other securities....
On loans
All other

8,913 8,075
1,412 1,399
466
445
5,721 5,021
1,313 1,210

Expenses
Salaries and w a g e s . . . .
Interest on deposits....
All other

5,644
2,284
1,432
1,928

1,474 1,306

353

308 3,461 3,205 3,625 3,256

187
70
941
276

182
68
812
244

56
20
225
52

60
476
508
693
649
18
153
156
223
202
182 2,323 2,059 2,232 1,968
47
508
482
477
437

5,140
2,118
1,280
1,742

774
345
131
298

699
315
123
261

181
75
39
67

158 2,174 2,040 2,515 2,243
888
71
833
976
899
558
31
534
703
592
728
56
672
836
752

Net current earnings
before income taxes... 3,268 2,935

700

607

172

150 1,287 1,165 1,109 1,013

87
129

48
222

18
34

Recoveries and profits 2 . . 463
206
Losses and charge-offs 3 . . 592 1,066
Net increase (or decrease, + ) in valua214
44
tion reserves
Profits before income taxes 2,925 2,032
Taxes on net income
1,239
775

638
293

411
171

149
65

Net profits
1,686 1,257
690
Cash dividends declared 4 .
731

344
175

240
166

84
29

72
346

16
72

181
221

69
426

+ 16

92 1,159
529
35
57
630
28
293

824
316

979
352
627
235

704
252

509
278

177
209

452
217

In per cent
Ratios:
Net current earnings
before income taxes
to—
Average total capital
19.4
accounts
Average total assets.. 1.62
Net profits to—
Average total capital
10.0
accounts
Average total assets.. 0.84
Average return on U.S.
3.10
Govt. securities
Average return on loans.. 5.92
1
2
3
4

18.5
1.48

20.3 18.3 22.2 20.2 20.6 19.6 17.4 17.2
1.99 1.77 1.97 1.73 1.65 1.49 1.39 1.32

7.9
0.64

10.0
0.98

2.79
5.65

3.32
5.29

7.2 10.8
0.70 0.97

7.6 10.1
0.65 0.81

8.6
0.65

9.8
0.79

7.7
0.59

2.84
4.83

2.64
4.85

2.74
5.67

3.13
6.27

2.83
6.16

3.06
5.30

2.97
5.94

Data for 1960 are preliminary; final figures will be published later in the Federal Reserve Bulletin,
Includes recoveries credited to valuation reserves.
Includes losses charged to valuation reserves.
Includes interest on capital notes and debentures.

130

NO. 19 —ANALYSIS OF CHANGES IN NUMBER OF BANKINGr OFFICES IN THE
UNITED STATES DURING 1960 i
Commercial and stock savings banks
and nondeposit trust companies
Type of office and
type of change

Member
banks

All
banks
Total

Number of banks, Dec. 31,1959. 13,991
Changes during 1960
New banks3 . . . .

+ 135
—2
Consolidations and absorptions:
Banks converted into branches -109
-25
Other
4
Conversions:
National into State

Nonmember
banks

Na.
tional1

State
member 2

Insured

13,474

4,542

1,691

6,878

366

+ 135

+32

+77

+21

-106
-25
-4

-40
-10

-19
-5

-45
-8

-2
-2
-4

+ 15

Federal Reserve membership 5
Admissions of State banks
Withdrawals of State banks..
Federal Deposit Insurance: 6

-9

-6

Mutual
savings
banks

NonIninsured 2
sured 2

Noninsured

268

249

-2

-1

-5

-2

-12

-47

-7
+25
+27
+70

Number of banks, Dec. 31,1960. 13,986

13,472

4,530

1,644

6,948

352

325

189

9,388

4,769

2,490

2,087

318

129

+429
+67
-25
+58
+529

+ 148
+ 19
-18
-42
+ 107

+ 188
+6
+21
-9
- 1 3 ""ill'
+ 187
+5

+30

+1
"+32*
+63

+9
+1

+867

+771
+ 107
-52
+2
+828

"-34*
-24

Number of branches and additional offices, Dec. 31,1960 ?. 10,702

10,216

5,298

2,597

2,274

381

105

264

204

-2

-1

±\

Net increase or decrease

Number of branches and additional offices, Dec. 31,1959 ?.

-26

9,835

Changes during 1960
+810
De no vo branches
Banks converted into branches. + 109
-52
Discontinued

Number of banking
facilities,
Dec 31 19599 . . .

264

Changes during 1960
Established
Discontinued
Interclass changes:
State member to nonmember.
Nonmember to State member
Net increase or decrease

Number of banking
facilities,
Dec 31. I960 9

267

211

+ 12
-9

-27
-14

+59
+57

-59
-60

-2

29
1
Includes a national bank in the Virgin Islands with one branch; other banks in possessions
are excluded.
2
State member bank and insured mutual savings bank figures for December 31, 1959 both include
three member mutual savings banks not included in the total for commercial banks; and subsequent
figures reflect the withdrawal of one from membership in 1960. State member bank figures also include
one noninsured
trust company without deposits.
3
Exclusive of new banks organized to succeed operating banks.
4
Exclusive of liquidations incident to the succession, conversion, and absorption of banks.
5 Exclusive of conversions of State member banks into national banks.
6
Exclusive of insured nonmember banks converted into national banks or admitted to Federal
Reserve
membership, and vice versa.
7
Except banking facilities, which are shown separately; see note 9.
8
For details of interclass branch changes, see Federal Reserve Bulletin for February 1961, p. 230.
^ Banking facilities (other than branches) that are provided at military and other Government
establishments through arrangements made by the Treasury Department.

131

NO. 20 — NUMBER OF BANKING OFFICES ON FEDERAL RESERVE PAR LIST AND NOT
ON PAR LIST, DECEMBER 31, 1960 i

Federal
Reserve
district, State,
or other area

On par list

Total 2
-rotal

Member

Not on par list
(nonmember)

Nonmember

Banks Branches Banks Branches Banks Branches Banks Branches Banks Branches
& offices
& offices
& offices
& offices
& offices

DISTRICT
New York 2.
Philadelphia..

408
585
636

756
1,897
688

408
585
636

756
1,897
688

268
491
488

603
1,665
548

140
94
148

153
232
140

Cleveland
Richmond...
Atlanta

928
928
1,367

956
1,255
546

928
785
809

956
1,117
498

565
435
418

826
697
410

363
350
391

130
420
88

143
558

138
48

Chicago
St. Louis
Minneapolis..

2,470
1,476
1,306

1,147
350
139

2,470
1,187
708

1,147
274
95

997
480
474

697
184
47

1,473
707
234

450
90
48

289
598

76
44

Kansas City..
Dallas
San Francisco

1,774
1,140
365

108
150
2,593

1,770
1,063
362

108
139
2,593

756
632
165

84 1,014
101
431
197
2,285

24
38
308

4
77
3

10,585 11,711

10,268

6,169

8,147

5,542

2,121

1,672

317

83
3
106

Total.... 13,383
STATE
Alabama
Alaska
Arkansas....
California

238
13
9
237
112

90
33
171
46
1,671

155
10
9
131
112

89
33
171
26
1,671

93
7
4
76
61

83
31
139
22
1,501

62
3
5
55
51

6
2
32
4
170

Colorado....
Connecticut..
Delaware....
District of
Columbia..
Florida

164
66
20

7
198
54

164
66
20

7
198
54

96
32
5

6
155
24

68
34
15

1
43
30

12
301

65
14

12
259

65
13

9
129

59
11

3
130

6
2

Georgia. . . .
Hawaii
Idaho
Illinois . . . .
Indiana

421
7
32
963
442

106
85
83
4
311

140
7
32
962
442

104
85
83
4
311

67
2
18
523
224

89
29
76
4
213

73
5
14
439
218

15
56
7
98

Iowa.. .
Kansas
Kentucky
Louisiana....
M^aine

672
587
355
190
46

183
25
146
176
132

672
587
355
82
46

183
25
146
148
132

164
213
103
53
29

15
18
100
118
93

508
374
252
29
17

168
7
46
30
39

Maryland....
Massachusetts
Michigan....
Minnesota...
Mississippi...

133
170
380
688
193

251
373
578
6
136

133
170
380
291
54

251
373
578
6
68

58
123
216
208
35

123
309
469
6
42

75
47
164
83
19

128
64
109

Missouri
Montana....
Nebraska. .
Nevada
New Hampshire •

622
120
420
7

25
1
12
37

568
120
420
7

25
1
12
37

171
86
139
5

18
1
11
32

New Jersey...
New Mexico.
New Y o r k . . .
North
Carolina...
North Dakota

250
55
399

436
56
1,376

250
55
399

436
56
1,376

175
156

508
29

100
58

378
9

281

108

397
139

397
34
281
2

215
37
347

394
32
1,306

35
18
52

42
24
70

39
40

205
3

61
18

173
6

For notes see opposite page.

132

1
5

75
98

130
20

NO. 20 — NUMBER OF BANKING OFFICES ON FEDERAL RESERVE PAR LIST AND NOT
ON PAR LIST, DECEMBER 31, 1960 * — Continued

Federal
Reserve
district, State,
or other area

On par list

Total 2

rotal

Member

Not on par list
(nonmember)

Nonmember

Banks Branches Banks Branches Banks Branches Banks Branches Banks Branches
& offices
& offices
& offices
& offices
& offices

STATE—Cont.

Ohio
Oklahoma...
Oregon
Pennsylvania.
Rhode Island.

585
388
50
697
9

638
23
195
793
91

585
382
50
697
9

638
23
195
793
91

372
226
14
533
5

552
23
169
674
69

213
156
36
164
4

South
Carolina...
South Dakota
Tennessee....
Texas
Utah

145
174
295
1,009
50

147
59
216
28
74

78
71
217
979
50

139
35
201
28
74

31
59
83
574
20

105
28
147
28
63

47
12
134
405
30

34
7
54

Vermont
Virginia
Washington..
West Virginia.
Wisconsin....
Wyoming....

55
305
87
182
558
55

33
284
291

31
198
35
111
157
40

17
205
280
28
1

24
106
52
71
401
15

16
79
11

55
304
87
182
558
55

121

i58

158
1

26
119
22
67
103
78
30

8
24
15

11
1

130

OTHER AREA

Puerto Rico 2 .
Virgin
Islands 2 . . .

108

1
Comprises all commercial banking offices on which checks are drawn, including 267 banking
facilities. Number of banks and branches differs from Table 19 because this table includes banks in
Puerto Rico and the Virgin Islands but excludes banks and trust companies on which no checks are
drawn
and two mutual savings member banks.
2
Puerto Rico and the Virgin Islands assigned to the New York District for check clearing and
collection purposes. Member branches in Puerto Rico and all except one in the Virgin Islands are
branches of New York banks.

133

No. 21—DESCRIPTION OF EACH MERGER, CONSOLIDATION, ACQUISITION OF ASSETS, OR ASSUMPTION OF LIABILITIES APPROVED
BY THE BOARD OF GOVERNORS, May 13-December 31, I960 1
Name of bank, and type of transaction 2
(in chronological order of determination)

No. 1—Petersburg Sayings and American Trust
Company, Petersburg, Va.

Banking offices
Resources
(in thousands
of dollars)

In
To be
operation operated

16,900

2,600

to merge with

The Bank of Colonial Heights, Colonial
Heights, Va.

SUMMARY REPORT BY ATTORNEY GENERAL (7-1-60)

Colonial Heights, Va., lies directly across the Appomattox River from
Petersburg, Va. The two banks are competitive with one another and
with the Petersburg and Hopewell, Va., branches of State-Planters Bank
of Commerce & Trust, Richmond, Va., and with the Petersburg branch
of The Bank of Virginia, Richmond, Va. The merger will eliminate a
competitive factor which has been able to secure 3.4 per cent of the
loan business and 5 per cent of the deposits of the area.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (7-15-60)

Stockholders of Petersburg Savings and American Trust Company
own over 85 per cent of the stock of an investment corporation which,
in turn, owns 67 per cent of the stock of Bank of Colonial Heights.
Colonial Heights was organized by stockholders of Petersburg Savings in
1949, and, for all practical purposes, has been operated as a branch of
the latter institution under common ownership, management, and policies.
The banks have many common depositors and borrowers, since customers
have been encouraged to move accounts or split accounts to serve their
convenience. Consequently, the proposed merger will bring into unified
corporate form a bank-branch relationship that has existed for a number
of years without having any significant effect on the competitive situation
in the trade areas of the banks. This formalization of an existing relationship is believed to be in the public interest.

No. 2—Peoples Trust Company of Wyomissing,
Wyomissing, Pa.

47,600

City Bank and Trust Company of Reading,
Reading, Pa.;
change its title to Peoples Trust City
Bank, and move its head office to
Reading, Pa.

39,000

to merge with

\ 11

SUMMARY REPORT BY ATTORNEY GENERAL (6-22-60)

The proposed merger involves banks ranking third and fourth in
assets, loans, and deposits in their trading area, Berks County, Pennsylvania. The merged bank would rank second in the area. It would be in
For notes see p. 149.

134

No. 21—DESCRIPTION OF EACH MERGER, CONSOLIDATION, ACQUISITION OF ASSETS, OR ASSUMPTION OF LIABILITIES APPROVED
BY THE BOARD OF GOVERNORS, May 13-December 31, I9601—Continued
Name of bank, and type of transaction2
(in chronological order of determination)

Resources
(in thousands
of dollars)

Banking offices
In
To be
operation operated

SUMMARY REPORT BY ATTORNEY GENERAL—CONT.

competition (other than limited) with a larger bank, with one smaller
bank of substantial size, and three relatively small banks. The merger
would eliminate substantial actual and potential competition between the
merging banks and increase concentration of the banking business in the
Reading area and in Berks County, Pennsylvania.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (7-21-60)

The head office of Peoples Trust Company of Wyomissing is approximately two and one-half miles west of the head office of City Bank and
Trust Company of Reading. The branches of Peoples Trust are situated
southwest, west, and northwest of Reading. City Bank has two branches
in Reading and one southeast of the city. There is only limited direct
competition between the two banks because of the distances separating
their head offices and branches. Although the proposed merger would
eliminate present and potential competition of the fourth largest bank in
Berks County, it would provide a bank of such size as to compete on
better terms with the largest bank in the county (resources $131 million). Since the resulting bank will have larger and more widespread
lending and other banking services, it will contribute to the convenience
and needs of the community and intensify rather than diminish competition.

No. 3—Portland Trust Bank, Portland, Oreg.
to merge with
The Valley National Bank of Milton,
Milton-Freewater, Oreg., and
change its title to The Oregon Bank

31,800
3,100

SUMMARY REPORT BY ATTORNEY GENERAL (6-20-60)

The Department of Justice reports that the proposed merger of Portland Trust Bank of Portland, Oreg., and Valley National Bank of Milton,
Milton-Freewater, Oreg., would not have significant adverse competitive
effects.
Portland Trust Bank has assets of approximately $31.8 million, loans
and discounts of $15.4 million, deposits of $29.2 million, and capital
accounts of slightly more than $2 million. There are far larger banks
headquartered in Portland: First National Bank of Oregon, Portland,
and United States National Bank of Portland, each with more than $900
million in assets. And Bank of California with a branch in Portland has
assets in excess of $600 million. Organized in the 1880's, Portland Trust
has had no history of mergers, acquisitions, or consolidations with other
banks.
For notes see p. 149.

135

Resources
(in thousands
of dollars)

Banking offices
In
operation

To be
operated

BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (7-25-60)

Milton-Freewater is situated in Umatilla County in the northeastern
corner of the State approximately 250 miles east of Portland. A branch
of Portland Trust has been authorized for Pendleton, located about 35
miles southwest of Milton-Freewater, but is not yet in operation. Portland Trust makes the bulk of its loans to commercial and urban borrowers in the Portland area, whereas Valley National's lending is confined to farmers and agricultural enterprises in the Milton-Freewater
community. While the proposed merger and the establishment of the
approved branch in Pendleton will give the resulting bank—The Oregon
Bank—two branches in the Milton-Freewater trade area, many of the
existing competing offices of other banks are considerably larger and have
been serving the area a number of years. The proposed merger would
not appear to change the competitive position of the Portland Trust in the
Portland area, and it will provide expanded banking services for the
Milton-Freewater area.

No. 4—The Bank of Virginia, Richmond, Va.
to acquire the assets and assume the
liabilities of
Chesterfield County Bank, Chester, Va.

140,500

16
20

2,600

SUMMARY REPORT BY ATTORNEY GENERAL (7-1-60)

The Bank of Virginia, with seven offices and two facilities in the
competitive area, including Richmond, proposes to purchase the assets
and assume the liabilities of Chesterfield County Bank, Chester, Va.,
which operates three offices and one facility south of Richmond. Among
the 10 banks in the area, The Bank of Virginia is the third largest and has
16.4 per cent of total assets; Chesterfield County Bank is tenth and has
0.3 of 1 per cent of total assets.
It does not appear that the proposed transaction would have a substantial adverse effect on competition in banking in the trade area.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (7-27-60)

Chesterfield County Bank is the only bank in Chesterfield County and
through three small branches and a military facility enjoys a technical
100 per cent monopoly in the county. However, significant competition
throughout the trade area, of which Chesterfield County is but a part,
is provided by offices of large and medium-size banks in Richmond,
Petersburg, and Hopewell, as well as offices of other types of saving and
lending institutions. The proposed purchase of assets and assumption
of liabilities of Chesterfield County Bank by Bank of Virginia will inFor notes see p. 149.

136

Banking offices
Resources
(in thousands
of dollars)

In
To be
operation operated

BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS—CONT.

tensify rather than diminish competition in the trade area in that it will
bring to the communities served by the Chesterfield Bank expanded and
improved banking facilities.

No. 5—Harris Trust and Savings Bank,
Chicago, 111.
to merge with
Chicago National Bank, Chicago, 111.

754,400
190,400

SUMMARY REPORT BY ATTORNEY GENERAL (7-24-60)

The merger of the Harris Trust and Savings Bank with the Chicago
National Bank would have the following effects upon competition in
commercial banking in the Chicago area:
(1) It would increase banking concentration in the Chicago area to
the point where the four largest banks in the area would account for
over 85 per cent of the deposits and over 88 per cent of the loans in the
Chicago central business district and over 62 per cent of the deposits
and 71 per cent of the loans in the city of Chicago as a whole. This
increase in banking concentration would further the already existing
tendency toward monopoly by the largest commercial banks in the
Chicago area.
(2) It would eliminate Chicago National as an independent competitive entity, thereby eliminating an alternative source of commercial
banking services.
(3) Although Harris and Chicago National offer banking services
which differ in a number of important respects, the merger would eliminate some presently existing competition between the banks, and, more
important, would eliminate potential competition between them.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (7-27-60)

As of December 31, 1959, there were 79 banks with total deposits of
$10,821 million in the city of Chicago. Twelve banks, including the
Harris Trust and Savings Bank and its three largest competitors, were
located in the central business district and had total deposits of $7,917
million. Chicago National Bank is the seventh largest bank and is
located one block from Harris Trust. Harris Trust, the third largest bank,
has 6.8 per cent of the total deposits of all banks in the city of Chicago
and 9.3 per cent of the total deposits of the 12 banks in the central business district. Following the proposed merger, Harris Trust will remain
the third largest bank and will have 8.7 per cent of the total deposits
of all banks in the city of Chicago and 11.9 per cent of the total deposits of the 11 remaining banks in the central business district. The
For notes see p. 149.

137

No. 21—DESCRIPTION OF EACH MERGER, CONSOLIDATION, ACQUISITION OF ASSETS, OR ASSUMPTION OF LIABILITIES APPROVED
BY THE BOARD OF GOVERNORS, May 13-December 31, I9601—-Continued
Name of bank, and type of transaction2
(in chronological order of determination)

Resources
(in thousands
of dollars)

Banking offices
In
operation

To be
operated

BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS—CONT.

three largest competitors of Harris Trust will have, respectively, 25.0,
22.1, and 6.5 per cent of the total deposits of all banks in Chicago and
34.2, 30.2, and 8.9 per cent of the total deposits of the banks in the
central business district.
The business of Harris Trust can be characterized as "wholesale
banking" whereas that of Chicago National is confined largely to "retail
banking." While the proposed merger will eliminate a sizable competing
bank in the Chicago area, the lessening of competition in banking would
not be significant in view of the proximity of the resulting bank to other
important banking sources. Furthermore, the transaction will result in a
somewhat stronger competitor with larger resources and more diversified
services that will enable it to compete more effectively with the two far
larger banks in Chicago.

No. 6—Depositors Trust Company, Augusta,
Maine
to merge with
The First National Bank of Belfast, Belfast,
Maine

92,500

6,400

SUMMARY REPORT BY ATTORNEY GENERAL (7-12-60)

The First National Bank of Belfast, with assets of $6.4 million, deposits of $5.4 million, and capital accounts of $0.7 million serves a trade
area of Belfast, Maine, and surrounding Waldo County, with a population of approximately 24,000 persons. The Depositors Trust Company
has branches in 22 cities and towns and is the largest commercial bank in
Maine, with assets of $92 million and deposits of $81 million. The trade
area served by Depositors Trust is comprised of 10 counties with approximately 332,000 persons.
According to the information submitted, Depositors Trust and First
National Bank of Belfast do not serve the same trade areas, have no
common borrowers, and only three common depositors. Trade areas
presently served by the two banks are contiguous. Of the combined
trade areas served by the banks, Depositors Trust would account for
approximately 15 per cent of total deposits and First National approximately 1 per cent, giving a combined percentage of approximately 16
per cent of the total trade area bank deposits. In the area presently
served by First National, banking services are also provided by two
branches of the Merrill Trust Company.
In view of the fact that the applicant banks do not presently compete,
that the trade areas served by The First National Bank of Belfast are also
served by branch offices of another bank, it does not appear that the
merger will have a substantial adverse effect upon competition.
For notes see p. 149.

138

Resources
(in thousands
of dollars)

Banking offices
In
To be
operation operated

BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (8-4-60)

The proposed merger would not appear to alter the competitive position of Depositors Trust Company in the Augusta area or in the State
of Maine. Strong competition would continue to be provided in the
service area of The First National Bank of Belfast, principally by a
branch of another large bank in that city. The proposed merger would
provide present customers of The First National Bank with expanded
banking services and a larger source of credit and would increase banking competition in the community.

N o . 7—Commercial Trust Company of New

Jersey, Jersey City, N J .
to acquire the assets and assume the
liabilities of
Weehawken Trust Company, Union City,
NJ.

139,800
11
27,700

SUMMARY REPORT BY ATTORNEY GENERAL (7-20-60)

On the basis of the information submitted it does not appear that the
merging banks are in active competition in the area affected. Thus it
appears that there will not be any substantial elimination of competition
as a result of the acquisition. One effect of the acquisition on competition in the area involved will be the entry of a fourth large Jersey City
bank to compete with those already there.
The increase in the size and power of Commercial Trust as a result
of the acquisition, although substantial, would not seem to be sufficient
to cause any marked tendency toward monopoly, either within the Union
City banking area or the larger banking area in Hudson County. After
the acquisition, Commercial Trust would still be appreciably smaller than
First National Bank of Jersey City and closely competitive with Trust
Company of New Jersey and Hudson County National Bank. However,
any further acquisition by Commercial Trust might raise substantial
questions in this particular.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (8-15-60)

The Jersey City-Union City area constitutes a single, contiguous residential, commercial, and industrial complex. As of December 31, 1959,
the area was served by nine commercial banks operating 47 banking
offices and having aggregate deposits of $731 million, as well as three
savings banks with aggregate deposits of $183 million. The proposed
purchase of assets and assumption of liabilities of the Weehawken Trust
Company by Commercial Trust Company of New Jersey will combine
For notes see p. 149.

139

Resources
(in thousands
of dollars)

Banking offices
In
operation

To be
operated

BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS—CONT.

the second largest commercial bank with the ninth largest, and the resulting bank will remain the second largest in the Jersey City-Union City
area. It will control 20.6 per cent of commercial bank deposits and 16.4
per cent of all bank deposits in that area. The resulting bank would
neither be so large as to enjoy an undesirable competitive advantage nor
would it operate so many branches as to have a monopoly of banking
outlets in Jersey City, Union City, or the larger banking area of
Hudson County. Since the two banks involved serve completely different
parts of the over-all Jersey City-Union City area, the proposed acquisition will result in very little if any elimination of competition. Contrariwise, it appears probable that entrance of the resulting larger Commercial Trust into Union City should provide greater services for customers
of Weehawken Trust and stimulate competition in the area.

N o . 8—Security-Mutual Bank and Trust

Company, St. Louis, Mo.
to merge with
The Plaza Bank of St. Louis, St. Louis, Mo.

86,100
15,800

SUMMARY REPORT BY ATTORNEY GENERAL (6-17-60)

While the merger will eliminate The Plaza Bank as a competitor in
St. Louis, the competition eliminated does not appear to be substantial
in the context of the available banking resources in St. Louis.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (8-19-60)

This merger will result in the elimination of The Plaza Bank of St.
Louis, as an independent, competitive banking unit, and in the conversion
of its premises into a limited service drive-in/walk-up facility of SecurityMutual Bank and Trust Company. There will be some lessening of
services to customers of The Plaza Bank on the premises. However,
banks within the trade area would continue to offer a generally wide
choice of convenient, adequate, and competitive banking services to meet
the needs of individuals, businesses, and the community. Furthermore,
the increase in total resources and loaning limits of Security-Mutual will
enable that institution to compete more effectively with four larger banks
in the city.
N o . 9—Marine Midland Trust Company of
Central New York, Syracuse, N.Y.
to merge with
Auburn Trust Company, Auburn, N.Y.
For notes see p. 149.

140

378,000

21,700

Resources
(in thousands
of dollars)

Banking offices
In
To be
operation operated

SUMMARY REPORT BY ATTORNEY GENERAL (8-18-60)

The Marine Midland Trust Company of Central New York and the
Auburn Trust Company are both subsidiaries of the Marine Midland
Corporation, a bank holding company. Because of this fact, it is our conclusion that any lessening of competition or tendency toward monopoly
which might result from the combination of these banks took place
when control of both banks was obtained by the Marine Midland Corporation. We therefore believe that no further substantial anticompetitive
effects would result from the presently proposed merger. This conclusion
is also supported by the fact that these banks serve different communities
and that there appears to be little or no presently existing competition
between them.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (9-9-60)

Marine Midland Corporation, Buffalo, N. Y., a bank holding company,
owns a majority of the common stock of Marine Midland Trust Company
of Central New York and Auburn Trust Company. Permitting the holding company to merge the two banks into a single unit will not change
the existing competitive situation.

No. 10—The Liberty Trust Company,
Cumberland, Md.
to merge with
First State Bank of Grantsville, Grantsville, Md.

29,700
3,100

SUMMARY REPORT BY ATTORNEY GENERAL (8-26-60)

The Liberty Trust Company is at the present time the largest of the
three commercial banks in Cumberland, Md. The First State Bank of
Grantsville is the only bank in that town, a community of approximately
500 persons. Because of the fact that these banks are located in different trade areas, no presently existing competition would be eliminated by
their merger. Furthermore, the merger would not appear to substantially
increase the advantages of The Liberty Trust Company over its smaller
competitors, nor would it further any tendency toward monopoly. For
these reasons, it is our conclusion that this merger would have no substantial adverse effects on competition.
For notes see p. 149.

141

Resources
(in thousands
of dollars)

Banking offices
In
operation

To be
operated

BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (9-9-60)

First State Bank has its only office in Grantsville, about one mile
south of the Pennsylvania State line and 24 miles west of Cumberland, Md.
It serves a distinctive trade area depending largely on marginal farming,
coal mining and lumbering, and does not compete actively with The
Liberty Trust Company, the largest of three commercial banks in Cumberland. The moderate increase in total resources resulting from the
merger will not materially enhance the competitive position of The
Liberty Trust Company, but the extension of its larger resources and
broader services to Grantsville should contribute substantially to the
convenience and needs of that community and the surrounding area.

104,000

No. 11—Peoples Union Bank and Trust
Company, McKeesport, Pa.
to merge with

The First National Bank of Duquesne,
Duquesne, Pa.

13,100

SUMMARY REPORT BY ATTORNEY GENERAL (8-15-60)

Peoples Union Bank and Trust Company, McKeesport, Pa., and The
First National Bank of Duquesne, Duquesne, Pa., are both located in
Allegheny County, Pa.
Subsequent to the merger the resulting commercial bank would have
about 31 per cent of the total resources of the commercial banking
institutions located in the trading area described by the Applicants. As
such it would rank second to Western Pennsylvania National which with
its 26 branches within a 20 or 30-mile radius presently has 57 per cent
of total resources in such area. Except for the banks in and around
Pittsburgh which could be expected to offer competition, at least in the
case of individual loans, to Peoples-First National, the merged bank along
with Western Pennsylvania National would dwarf the four remaining
smaller commercial banking institutions in the trading area on the basis
of total resources.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (9-19-60)

Both the Peoples Union Bank and Trust Company, McKeesport, and the
First National Bank of Duquesne are situated within the metropolitan area
of Pittsburgh in which there are 15 commercial banks. The respective cities
are located on opposite sides of the Monongahela River and the banks in
McKeesport are not in active competition with the banks in Duquesne.
However, there are five branches of large Pittsburgh commercial banks
located within a radius of nine miles of the McKeesport-Duquesne area
For notes see p. 149.

142

No. 21—DESCRIPTION OF EACH MERGER, CONSOLIDATION, ACQUISITION OF ASSETS, OR ASSUMPTION OF LIABILITIES APPROVED
BY THE BOARD OF GOVERNORS, May 13-December 31, I9601—Continued

Name of bank, and type of transaction2
(in chronological order of determination)

Resources
(in thousands
of dollars)

Banking offices
To be
In
operation operated

BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS—CONT.

and various of these branches furnish competition to each of the merging banks and the other six banks in that area. If the proposed merger
is effected, The First National Bank of Duquesne, a relatively small unit
bank operating under ultra-conservative management, would be replaced by
a branch of a larger, more aggressively managed institution. The public
in the Duquesne area would benefit from improved and broader banking
services, and competition would be stimulated to that extent. In the city
of McKeesport, the resulting Peoples Union Bank and Trust Company,
with increased resources and lending limits, would be able to compete
more effectively with a larger local competitor, as well as with banks
in Pittsburgh.

No. 12—Bankers Trust Company, New York,
N.Y.
to merge with
The South Shore Bank of Staten Island,
Great Kills, New York, N.Y.

3,044,800

4,100

SUMMARY REPORT BY ATTORNEY GENERAL (9-12-60)

The Department of Justice has reported to the Board of Governors
of the Federal Reserve System that the proposed merger of the Bankers
Trust Company, New York, N. Y., and The South Shore Bank of Staten
Island, Great Kills, Staten Island, N. Y., would not have any substantial
adverse effects on competition.
The Bankers Trust Company operates 46 banking offices in Manhattan,
the Bronx, Brooklyn, and Queens; its total assets are over $3 billion and
its deposits are approximately $2.6 billion. It does not operate any
banking offices on Staten Island. It is the sixth largest bank in New York
City and the ninth largest commercial bank in the United States.
The South Shore Bank of Staten Island operates a single banking office
in Great Kills on the southern shore of Staten Island. As of May 31,
1960, it had total assets of approximately $4 million and deposits of approximately $3.5 million.
Including the South Shore Bank, there are five commercial banks on
the Island with 13 banking offices. Three of New York City's largest
commercial banks operate banking offices on the Island, although none
of these offices is in the primary trade area of the South Shore Bank.
The South Shore Bank has not been a vigorous competitive factor on
Staten Island in recent years. Its deposits and earnings have fallen off
despite the fact that the surrounding communities have been growing
steadily and its potential market has been constantly expanding. There
is no reason to believe that the bank will be able to compete any more
For notes see p. 149.

143

No. 21—DESCRIPTION OF EACH MERGER, CONSOLIDATION, ACQUISITION OF ASSETS, OR ASSUMPTION OF LIABILITIES APPROVED
BY THE BOARD OF GOVERNORS, May 13-December 31, I960 1 —Continued

Name of bank, and type of transaction 2
(in chronological order of determination)

Resources
(in thousands
of dollars)

Banking offices
In
operation

To be
operated

SUMMARY REPORT BY ATTORNEY GENERAL—CONT.

successfully for the new business which will be available even within its
own trade area as a result of the intensified industrial, commercial, and
residential development anticipated during the next 10 years. If the
merger is effected, the Bankers Trust Company will become a major
competitive factor on Staten Island for the first time and a serious competitor of the existing branches of the large New York City banks. The
merger will result in the elimination of a relatively ineffective competitive
factor which has been unable to hold its own position with respect to
the other commercial banks on the Island. The resulting increase in concentration in the greater New York City area would be minimal.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (9-21-60)

Bankers Trust Company has total resources of more than $3 billion and
operates 45 branches in New York City and 2 branches in London, England. The in-town branches are located in 4 of 5 boroughs: 17 in Manhattan, 10 in the Bronx, 9 in Brooklyn, and 9 in Queens. Bankers has
no branches in Richmond County, and none of its branches are within
the trade area of The South Shore Bank of Staten Island, which has
deposits of about $4 million and no branches. The population of the
Great Kills trade area has increased from 16,000 in 1957 to an estimated
18,000 in 1960, and accelerated growth is expected upon the opening of
the new Narrows Bridge connecting Staten Island and Brooklyn. The
fact that The South Shore Bank has not contributed its fair share to the
growing area is indicated by its deposits, which have been virtually unchanged since the mid-1940's, and by its loans, which now represent only
26 per cent of total assets. There is no reason to believe the policies of
the bank will change in view of its current management. It is believed the
establishment of a branch of Bankers Trust Company in Great Kills will
stimulate competition, particularly at the county level, and will also make
available to residents of the Great Kills area more and better services. It
will have little effect on the competitive situation in the New York metropolitan area outside Great Kills and Richmond County.

No. 13—York Trust Company, York, Pa.
to consolidate with
The York National Bank and Trust Company, York, Pa.
under the new charter and title of The
York Bank and Trust Company, York,
Pa.
For notes see p. 149.

144

36,600
53,500

No. 21—DESCRIPTION OF EACH MERGER, CONSOLIDATION, ACQUISITION OF ASSETS, OR ASSUMPTION OF LIABILITIES APPROVED
BY THE BOARD OF GOVERNORS, May 13-December 31, I9601—Continued

Name of bank, and type of transaction2
(in chronological order of determination)

Resources
(in thousands
of dollars)

Banking offices
In
operation

To be
operated

SUMMARY REPORT BY ATTORNEY GENERAL (10-11-60)

The consolidating banks are undoubtedly competitors and offer generally equivalent types of services. Thus, the consolidation will result
in the total elimination of existing competition between these two banking
institutions.
The proposed consolidation will introduce into York, Pa., a commercial
bank significantly larger than the four remaining banks in the city of
York and would thus tend to create an environment wherein these banks
may have greater difficulty competing. There is a serious question as to
the extent and degree of competition given banks in the city of York
on the part of other banks located throughout the county, some of which
are at some distance from the city of York, and this fact also recommends against increasing concentration in York City. Thus, the proposed
consolidation would have an adverse effect on competition in banking
in the city and county of York, Pa.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (11-8-60)

There are 20 banks with head offices in York County operating 27
offices and holding deposits of individuals, partnerships, and corporations
(IPC deposits) varying from about $1 million to more than $61 million.
The proposed consolidation would combine the second and fourth
largest banks in the county and the resulting York Bank and Trust Company, with IPC deposits of $69 million, would become the largest bank in
the city and county of York. York is an active industrial area, and there is
a strong need for a second large bank to serve the business community.
Although the proposal would eliminate one competing bank, the resulting bank, because of its increased size, lending capacity, and broader
banking services as well as improved management, would be able to compete more effectively with the currently largest bank, thereby stimulating
competition in both the city and county. There would remain a number
of alternative banking facilities in the city and county of York, and it is
not believed that the proposed consolidation would create an environment tending to make it more difficult for these banks to compete with
the resulting bank or the currently largest bank in the area.

No. 14—Wells Fargo Bank American Trust
Company, San Francisco, Calif.
to merge with
Northern Counties Bank, Marysville, Calif.
For notes see p. 149.

145

2,524,500

119

123
52,500

No. 21—DESCRIPTION OF EACH MERGER, CONSOLIDATION, ACQUISITION OF ASSETS, OR ASSUMPTION OF LIABILITIES APPROVED
BY THE BOARD OF GOVERNORS, May 13-December 31, I9601—Continued

Name of bank, and type of transaction2
(in chronological order of determination)

Resources
(in thousands
of dollars)

Banking offices
In
operation

To be
operated

SUMMARY REPORT BY ATTORNEY GENERAL (9-26-60)

The merger of the Wells Fargo Bank American Tnist Company, now
the third largest bank in California, and Northern Counties Bank would
have the following effects upon competition in the State of California:
(1) It would increase banking concentration in the State of California.
Within the current year Applicant has already increased its deposits by
nearly one-third by acquisition.
(2) It would eliminate Northern Counties as an independent competitive entity, thereby eliminating another source of commercial banking
services.
(3) Eight of the nine banking offices in the Sutler-Yuba Counties
area would be controlled by Bank of America and Applicant.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (11-30-60)

Marysville, population 9,600, is located 125 miles northeast of San
Francisco and 40 miles north of Sacramento, and serves an area that
includes parts of Sutter, Yuba, and Butte Counties. There are four banks
with a total of 13 banking offices in the service area of Northern Counties
Bank. The nearest offices of Wells Fargo Bank American Trust Company are located in Sacramento, North Sacramento, and Woodland, approximately 35 to 40 miles south of Marysville. Because of the distances
involved, competition between these offices and those of Northern
Counties Bank is negligible; however, Northern is subject to intense
competition from other large banks with which Wells Fargo actively
competes in other areas. The proposed merger would replace Northern
Counties with a stronger banking institution offering a wider variety of
banking services, and would intensify competition with offices of other
large banking organizations, and eliminate a current management succession problem in Northern Counties Bank.

N o . 15—Wachovia Bank and Trust Company

Winston Salem, N.C.
to merge with
Commercial National Bank of Kinston,

623,500

11,000

579

Kinston, N.C.
SUMMARY REPORT BY ATTORNEY GENERAL (11-16-60)

Wachovia Bank and Trust Company, with its main office in WinstonSalem, N. C , and 66 branches across the State, proposes to acquire
Commercial National Bank of Kinston, operating three offices in Kinston
and one each in Morehead City and Sealevel, all in eastern North Carolina. As of June 30, 1960, Wachovia, the biggest bank in the State and
For notes see p. 149.

146

No. 21—DESCRIPTION OF EACH MERGER, CONSOLIDATION, ACQUISITION OF ASSETS, OR ASSUMPTION OF LIABILITIES APPROVED
BY THE BOARD OF GOVERNORS, May 13-December 31, I9601—Continued

Name of bank, and type of transaction2
(in chronological order of determination)

Resources
(in thousands
of dollars)

Banking offices
To be
In
operation operated

SUMMARY REPORT BY ATTORNEY GENERAL—CONT.

one of the biggest in the nation, had total assets of $623,503,000, total
net loans and discounts of $316,139,000, total deposits of $540,287,000,
and total capital funds of $49,527,000.
Commercial, as of the same date, had total assets of $10,956,000,
total net loans and discounts of $5,964,000, total deposits of $9,430,000,
and total capital funds of $1,166,000.
There is some competition presently between a branch of Wachovia in
LaGrange and Commercial in Kinston which would be eliminated by the
merger.
The principal reason for the merger is the death of the founder-president of Commercial and the apparent inability of the bank to obtain a
successor even though its search was aided by Wachovia, its correspondent. This special circumstance may outweigh the anticompetitive effects
which would flow from the merger.

BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (12-16-60)

Wachovia Bank and Trust Company has total resources of $623.5
million and operates 71 offices in 25 cities and towns situated in 18 of
the 100 counties in the State. The counties in which branches are domiciled extend in a somewhat scattered pattern from east to west across the
State and include one of the two counties—Lenoir and Carteret—in
which Commercial National Bank of Kinston, N. C. (total resources
approximately $11 million) operates its head office and four branches.
Wachovia Bank has no office in the city of Kinston, Lenoir County,
and its only branch in the county, located in the town of LaGrange, has
but 6.5 per cent of all deposits in the county. Wachovia has no office in
Carteret County. The proposed merger would give Wachovia 44.6 per
cent of all deposits and four of the 10 banking offices in Lenoir County
and 20.3 per cent of all deposits and two of the four banking offices in
Carteret County. Competition in Lenoir County would continue to be
afforded by four offices of the third largest bank in the State (total resources $238 million), which has 31.5 per cent of county deposits, and
two offices of the fifth largest bank (total resources $98 million) with
23.9 per cent of county deposits. Competition in Carteret County would
be afforded by four offices of the fifth largest bank with 79.7 per cent of
all deposits in the county. Although one relatively small independent
bank would be eliminated, the competition between three larger institutions, having broader services, would be intensified in the area. No one
institution would have a monopoly in either Lenoir or Carteret Counties
after the merger, and statewide Wachovia's aggregate deposits would be
increased only from 21.5 to 22.0 per cent of total deposits.
For notes see p. 149.

147

No. 21—DESCRIPTION OF EACH MERGER, CONSOLIDATION, ACQUISITION OF ASSETS, OR ASSUMPTION OF LIABILITIES APPROVED
BY THE BOARD OF GOVERNORS, May 13-December 31, I9601-—Continued
Banking offices
Name of bank, and type of transaction2
(in chronological order of determination)

Resources
(in thousands
of dollars)

In
operation

To be
operated

BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS—CONT.

In addition, the merger will eliminate a serious management succession
problem in Commercial National Bank of Kinston growing out of the
death of its chief managing officer and the concurrent; incapacitating illness of his intended replacement.
No. 16—Security Bank, Lincoln Park, Mich.
to merge with
The Peoples State Bank, New Boston,
Mich.

95,600

2,200

SUMMARY REPORT BY ATTORNEY GENERAL (10-27-60)

With 22 other banks, some much larger in size than the combined
operations of both Peoples State and Security Bank, doing business within
a relatively short distance of New Boston, and the resulting bank, after
merger, acquiring control (as of Dec. 31, 1959) of but 1.82 per cent
of demand and time deposits and 2.19 per cent of the loans and discounts
business in the area, the proposed merger would not appear to have a
substantial adverse effect on competition or tend to create a monopoly.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (12-16-60)

The competition between the Security Bank and The Peoples State
Bank is negligible, and the smaller Peoples State Bank, which will be
eliminated, is competing with a number of larger banks that dwarf it in
size and ability to render additional services. Its replacement by a branch
of the resulting bank will provide expanded service and bring more effective competition to a developing area.

N o . 17—Provident Tradesmens Bank and Trust

Company, Philadelphia, Pa.
to merge with
The Collegeville National Bank, Collegeville, Pa.

533,800

6,700

SUMMARY REPORT BY ATTORNEY GENERAL (12-19-60)

Provident Tradesmens Bank and Trust Company, Philadelphia, Pa.,
proposes to merge with Collegeville National Bank, Collegeville, Pa.
Provident, the fourth largest bank in Philadelphia with total assets of
$533,827,000, operates 20 offices in and around Philadelphia, including
one office at Ambler, Montgomery County, and two in Bucks County at
Sellersville and Quakertown, all three of which are not far from CollegeFor notes see p. 149.

148

No. 21—-DESCRIPTION OF EACH MERGER, CONSOLIDATION, ACQUISITION OF ASSETS, OR ASSUMPTION OF LIABILITIES APPROVED
BY THE BOARD OF GOVERNORS, May 13-December 31, I9601—Continued

Name of bank, and type of transaction 2
(in chronological order of determination)

Resources
(in thousands
of dollars)

Banking offices
In
operation

To be
operated

SUMMARY REPORT BY ATTORNEY GENERAL—CONT.

ville. Collegeville has total assets of $6,664,000 and operates only the
one office. It does not offer trust services.
Major competitors of Collegeville National include Montgomery
County Bank and Trust, with 11 offices in the county; Peoples National
Bank of Norristown, with five offices in the county; and Philadelphia
National Bank, the second largest bank in Philadelphia, with seven offices
in the county.
The merger, if consummated, would mean the elimination of another
independent competitive factor and when considered together with Philadelphia National's proposed merger with Girard Trust Corn Exchange
Bank, the third largest bank in the city, would have serious adverse effects
on competition in banking in the service area.
The only mitigating factor is that Collegeville National has been without senior management since August 1960, following the resignation of
its two principal full-time officers. The morale of the bank's personnel
and community relations have both been adversely affected by top management friction and inadequacies. Following the decision to merge,
two assistant vice presidents of Provident were loaned to Collegeville
National to relieve the shortage of experienced management personnel.
In the light of this special situation, the anticompetitive effects of this
merger may be outweighed by the need for senior management.
BASIS FOR APPROVAL BY THE BOARD OF GOVERNORS (12-28-60)

Provident Tradesmens Bank and Trust Company has far greater resources and offers much broader banking services than The Collegeville
National Bank. The proposed merger would solve an acute management
problem, which the small national bank has been experiencing during
the past five months, and would end concern with respect to unfavorable
earnings prospects by blending its activities into those of a larger and
more efficiently operated bank. There is currently very little competition
between the two institutions. It may be expected that the conversion of
the national bank into a branch of Provident Tradesmens Bank will
stimulate competition with branches of an even larger Philadelphia bank
and other large banks operating in the area.
1
During this period the Board disapproved three mergers, etc. However, under Section 18(c)
of the Federal Deposit Insurance Act, as amended effective May 13, 1960, only those transactions
approved by the Board must be described in its Annual Report to the Congress.
2
Except where specifically stated the merger, consolidation, acquisition of assets, or assumption
of
liabilities
was effected under the charter of the first named bank.
3
Includes two branches of Portland Trust Company authorized but not yet established.
4
Head
office
of
Chicago National Bank will be closed.
5
Includes three branches of Wachovia Bank and Trust Company authorized but not yet
established.

149

BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM
[December 31, 1960]
Term expires
W M . M C C . MARTIN, JR., of New York, Chairman
January 31,1970
C. CANBY BALDERSTON of Pennsylvania, Vice Chairman. January 31, 1966
M. S. SZYMCZAK of Illinois
January 31, 1962
A. L. MILLS, JR., of Oregon
January 31,1972
J. L. ROBERTSON of Nebraska
January 31, 1964
CHAS. N. SHEPARDSON of Texas

January 31, 1968

G. H. KING, JR., of Mississippi

January 31, 1974

WOODLIEF THOMAS, Adviser to the Board
RALPH A. YOUNG, Adviser to the Board
JEROME W. SHAY, Legislative Counsel
CHARLES MOLONY, Assistant to the Board
CLARKE L. FAUVER, Assistant to the Board
OFFICE OF THE SECRETARY
MERRITT SHERMAN, Secretary

KENNETH A. KENYON, Assistant Secretary
ELIZABETH L. CARMICHAEL, Assistant Secretary
LEGAL DIVISION

HOWARD H. HACKLEY, General Counsel

DAVID B. HEXTER, Assistant General Counsel
G. HOWLAND CHASE, Assistant General Counsel
THOMAS J. O'CONNELL, Assistant General Counsel
WILSON L. HOOFF, Assistant General Counsel
DIVISION OF RESEARCH AND STATISTICS

GUY E. NOYES, Director
FRANK R. GARFIELD, Adviser
ALBERT R. KOCH, Adviser
ROLAND I. ROBINSON, Adviser

DANIEL H. BRILL, Associate Adviser
LEWIS N. DEMBITZ, Associate Adviser
KENNETH B. WILLIAMS, Associate Adviser
DIVISION OF INTERNATIONAL FINANCE
ARTHUR W. MARGET, Director

J. HERBERT FURTH, Associate Adviser

A. B. HERSEY, Associate Adviser
ROBERT L. SAMMONS, Associate Adviser

150

FEDERAL RESERVE SYSTEM
BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM—Conk
DIVISION OF BANK OPERATIONS
JOHN R. FARRELL, Director

GERALD M. CONKLING, Assistant Director

M. B. DANIELS, Assistant Director
JOHN N. KILEY, JR., Assistant Director
DIVISION OF EXAMINATIONS
FREDERIC SOLOMON, Director

ROBERT C. MASTERS, Associate Director

C. C. HOSTRUP, Assistant Director
FRED A. NELSON, Assistant Director
GLENN M. GOODMAN, Assistant Director
HENRY BENNER, Assistant Director
JAMES C. SMITH, Assistant Director

LLOYD M. SCHAEFFER, Chief Federal Reserve Examiner
DIVISION OF PERSONNEL ADMINISTRATION
EDWIN J. JOHNSON, Director

H. FRANKLIN SPRECHER, JR., Assistant Director
DIVISION OF ADMINISTRATIVE SERVICES
JOSEPH E. KELLEHER, Director

HARRY E. KERN, Assistant Director
OFFICE OF THE CONTROLLER

J. J. CONNELL, Controller
SAMPSON H. BASS, Assistant Controller
OFFICE OF DEFENSE PLANNING
INNIS D. HARRIS, Coordinator

151

FEDERAL OPEN MARKET COMMITTEE
[December 31, 1960]
MEMBERS
W M . M C C . MARTIN, JR., Chairman (Board of Governors)
ALFRED HAYES, Vice Chairman (Elected by Federal Reserve Bank of New
York)
C. CANBY BALDERSTON (Board of Governors)

KARL R. BOPP (Elected by Federal Reserve Banks of Boston, Philadelphia,
and Richmond)
MALCOLM BRYAN (Elected by Federal Reserve Banks of Atlanta, St. Louis,
and Dallas)
W. D. FULTON (Elected by Federal Reserve Banks of Cleveland and Chicago)
G. H. KING, JR. (Board of Governors)
H. G. LEEDY (Elected by Federal Reserve Banks of Minneapolis, Kansas City,
and San Francisco)
A. L. MILLS, JR. (Board of Governors)
J. L. ROBERTSON (Board of Governors)
CHAS. N. SHEPARDSON (Board of Governors)

M. S. SZYMCZAK (Board of Governors)
OFFICERS
RALPH A. YOUNG,

DAVID P. EASTBURN,

Secretary

Associate Economist

MERRITT SHERMAN,

L. MERLE HOSTETLER,

Assistant Secretary

Associate Economist

KENNETH A. KENYON,

ARTHUR W. MARGET,

Assistant Secretary

Associate Economist

HOWARD H. HACKLEY,

GUY E. NOYES,

General Counsel

Associate Economist

DAVID B. HEXTER,

ROBERT V. ROOSA,

Assistant General Counsel

Associate Economist

WOODLIEF THOMAS,

CLARENCE W. TOW,

Economist

Associate Economist

HARRY BRANDT,

Associate Economist

AGENT
FEDERAL RESERVE BANK OF N E W YORK

ROBERT G. ROUSE, Manager of System

Open Market Account
During 1960 the Federal Open Market Committee met approximately
every three weeks as indicated in the Record of Policy Actions taken by the
Committee (see pp. 34-75 of this Report).

152

FEDERAL ADVISORY COUNCIL
[December 31, 1960]
MEMBERS
District No. 1—OSTROM ENDERS, President, Hartford National Bank and
Trust Company, Hartford, Connecticut
District No. 2—JOHN J. MCCLOY, Chairman of the Board, The Chase Manhattan Bank, New York, New York.
District No. 3—CASIMIR A. SIENKIEWICZ, President, Central-Penn National
Bank of Philadelphia, Philadelphia, Pennsylvania
District No. 4—REUBEN B. HAYS, Chairman of the Board, The First National Bank of Cincinnati, Cincinnati, Ohio
District No. 5—JOHN S. ALFRIEND, Chairman of the Board, National Bank of
Commerce, Norfolk, Virginia.
District No. 6—JOHN C. PERSONS, Chairman of the Board, The First National Bank of Birmingham, Birmingham, Alabama.
District No. 7—HOMER J. LIVINGSTON, Chairman of the Board, The First
National Bank of Chicago, Chicago, Illinois
District No. 8—NORFLEET TURNER, Chairman of the Board, The First National Bank of Memphis, Memphis, Tennessee.
District No. 9—GORDON MURRAY, President, First National Bank of Minneapolis, Minneapolis, Minnesota.
District No. 10—R. OTIS MCCLINTOCK, Senior Chairman of the Board, The
First National Bank and Trust Company of Tulsa, Tulsa, Oklahoma.
District No. 11—I. F. BETTS, President, The American National Bank of
Beaumont, Beaumont, Texas.
District No. 12—CHARLES F. FRANKLAND, President, The Pacific National
Bank of Seattle, Seattle, Washington.
OFFICERS
HOMER J. LIVINGSTON, President
CASIMIR A. SIENKIEWICZ, Vice President
HERBERT V. PROCHNOW, Secretary
WILLIAM J. KORSVIK, Assistant Secretary

EXECUTIVE COMMITTEE
HOMER J. LIVINGSTON, ex officio
CASIMIR A. SIENKIEWICZ, ex officio
JOHN J. MCCLOY
REUBEN B. HAYS
GORDON MURRAY

Meetings of the Federal Advisory Council were held on February 15-16,
May 16-17, September 14-15, and November 14-15, 1960. The Board of
Governors met with the Council on February 16, May 17, September 15, and
November 15. 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.

153

FEDERAL RESERVE BANKS
AND BRANCHES
[December 31, 1960]
CHAIRMEN AND DEPUTY CHAIRMEN OF BOARDS OF DIRECTORS

Federal Reserve Bank of—

Chairman and
Federal Reserve Agent

Deputy Chairman

Boston

Robert C. Sprague

Nils Y. Wessell

New York

Philip D. Reed

Forrest F. Hill

Philadelphia

Henderson Supplee, Jr

Walter E. Hoadley

Cleveland

Arthur B. Van Buskirk... Joseph H. Thompson

Richmond

Alonzo G. Decker, Jr

Edwin Hyde

Atlanta

Walter M. Mitchell

Henry G. Chalkley, Jr.

Chicago

Bert R. Prall

Robert P. Briggs

St. Louis

Pierre B. McBride

J. H. Longwell

Minneapolis

O. B. Jesness

Atherton Bean

Kansas City

Raymond W. Hall

Joe W. Seacrest

Dallas

Robert J. Smith

Lamar Fleming, Jr.

San Francisco

F. B. Whitman

Y. Frank Freeman

CONFERENCE O F CHAIRMEN
The Chairmen of the Federal Reserve Banks are organized into a conference of Chairmen that meets from time to time to consider matters of
common interest and to consult and advise the Board of Governors. A meeting of the Conference of Chairmen was held on December 1-2, 1960, and was
attended by members of the Board of Governors and also by the Deputy
Chairmen of the Federal Reserve Banks.
Mr. Mitchell, Chairman of the Federal Reserve Bank of Atlanta, was
elected Chairman of the Conference and of the Executive Committee in
December 1959. Mr. Van Buskirk, Chairman of the Federal Reserve Bank
of Cleveland, and Mr. McBride, Chairman of the Federal Reserve Bank of

154

FEDERAL RESERVE SYSTEM
FEDERAL RESERVE BANKS AND BRANCHES,
Dec. 31, 1960—Cont.
St. Louis, served with Mr. Mitchell as members of the Executive Committee,
Mr. Van Buskirk also serving as Vice Chairman of the Conference.
At the meeting held in December 1960, Mr. Van Buskirk was elected
Chairman of the Conference and of the Executive Committee; Mr. McBride
was elected Vice Chairman and a member of the Executive Committee; and
Mr. Whitman, Chairman of the Federal Reserve Bank of San Francisco, was
elected as the other member of the Executive Committee.

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 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.

(Directors of each Federal Reserve Bank and branch
are listed on the following pages.)

155

ANNUAL REPORT OF BOARD OF GOVERNORS
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.

DIRECTORS
Class A:
Arthur F. Maxwell

District 1—Boston

Term
expires
Dec. 31

President, The First National Bank of Biddeford,
Biddeford, Maine
1960
William M. Lockwood.. .President, The Howard National Bank and Trust
Company, Burlington, Vt
1961
William D. Ireland
President, State Street Bank and Trust Company,
Boston, Mass
1962

Class B.William R. Robbins

Vice President and Controller, United Aircraft
Corporation, East Hartford, Conn
1960
Eugene B. Whittemore.. .President and Treasurer, The Morley Company,
Portsmouth, N.H
1961
Milton P. Higgins
President, Norton Company, Worcester, Mass... 1962

Class C.Robert C. Sprague
Erwin D. Canham
Nils Y. Wessell

Chairman and Treasurer, Sprague Electric Company, North Adams, Mass
1960
Editor, The Christian Science Monitor, Boston,
Mass
1961
President, Tufts University, Medford, Mass
1962
District 2—New York

Class A:
Cyrus M. Higley
Henry C. Alexander
Cesar J. Bertheau
Class B.Augustus C. Long
B. Earl Puckett
Kenneth H. Hannan
Class C.Forrest F. Hill

President and Trust Officer, The Chenango
County National Bank and Trust Company
of Norwich, Norwich, N.Y
1960
Chairman of the Board, Morgan Guaranty Trust
Company of New York, New York, N.Y
1961
Chairman of the Board, Peoples Trust Company
of Bergen County, Hackensack, N.J
1962
Chairman of the Board, Texaco Inc., New York,
N.Y
1960
Chairman of the Board, Allied Stores Corporation, New York, N.Y
1961
Executive Vice President, Union Carbide Corporation, New York, N.Y
1962
Vice President, The Ford Foundation, New
York, N.Y
1960

156

FEDERAL RESERVE SYSTEM
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
expires
DIRECTORS—Cont.

James DeCamp Wise
Philip D. Reed

Dec. 31

Chairman of the Board, Bigelow-Sanford Carpet
Company, Inc., New York, N.Y
1961
Formerly Chairman of the Board, General
Electric Company, New York, N.Y
1962
Buffalo Branch

Avpointed by Federal Reserve Bank:
E. Perry Spink
President, Liberty Bank of Buffalo, Buffalo, N.Y.
John W. Remington
President, Lincoln Rochester Trust Company,
Rochester, N.Y
Denton A. Fuller
President, The Citizens National Bank of Wellsville, Wellsville, N.Y
Howard N. Donovan
President, Bank of Jamestown, Jamestown, N.Y.

1960
1961
1961
1962

Appointed by Board of Governors:
Thomas E. LaMont
Farmer, Albion, N.Y
1960
Whitworth Ferguson
President, Ferguson Electric Construction Co.,
Inc., Buffalo, N.Y
1961
Raymond E. Olson
President, Taylor Instrument Companies,
Rochester, N.Y
1962
District 3—Philadelphia
Ctass A:
William B. Brosius
O. Albert Johnson
Frederic A. Potts
Class B:
Bayard L. England
Frank R. Palmer
R. Russell Pippin
Class C.Walter E. Hoadley

President, National Bank of Chester County and
Trust Company, West Chester, Pa
1960
President, The First National Bank of Eldred,
Eldred, Pa
1961
President, The Philadelphia National Bank,
Philadelphia, Pa
1962
Chairman, Atlantic City Electric Company,
Atlantic City, N.J
1960
Chairman, The Carpenter Steel Company, Reading, Pa
1961
Treasurer, E. I. du Pont de Nemours & Company, Wilmington, Del
1962
Vice President and Treasurer, Armstrong Cork
Company, Lancaster, Pa
1960

157

ANNUAL REPORT OF BOARD OF GOVERNORS
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
expires
DIRECTORS—Cont.

Henderson Supplee, Jr
David C. Bevan

Dec. 31

President, The Atlantic Refining Company,
Philadelphia, Pa
1961
Vice President, Finance, The Pennsylvania Railroad Company, Philadelphia, Pa...
1962
District 4—Cleveland

Class A:
Paul A. Warner
Ray H. Adkins
Francis H. Beam
Class B:
Joseph B. Hall
Charles Z. Hardwick
W. Cordes Snyder, Jr

President, The Oberlin Savings Bank Company,
Oberlin, Ohio
1960
President, The National Bank of Dover, Dover,
Ohio
1961
Chairman of the Board, The National City Bank
of Cleveland, Cleveland, Ohio.
1962
President, The Kroger Co., Cincinnati, Ohio... 1960
Executive Vice President, The Ohio Oil Company, Findlay, Ohio
1961
Chairman and President, Blaw-Knox Company,
Pittsburgh, Pa
1962

Class C.Aubrey J. Brown

Professor of Agricultural Marketing and Head
of Department of Agricultural Economics,
University of Kentucky, Lexington, Ky
1960
Arthur B. Van Buskirk.. .Vice President and Governor, T. Mellon and
Sons, Pittsburgh, Pa
1961
Joseph H. Thompson... .Vice Chairman, The M. A. Hanna Company,
Cleveland, Ohio
1962
Cincinnati Branch

Appointed by Federal Reserve Bank:
Roger Drackett
President, The Drackett Company, Cincinnati,
Ohio
Thomas M. Wolfe
President, The Athens National Bank, Athens,
Ohio
Frank J. Van Lahr
President, The Provident Bank, Cincinnati, Ohio
LeRoy M. Miles
President, First National Bank and Trust Company of Lexington, Lexington, Ky
Appointed by Board of Governors:
W. Bay Irvine
President, Marietta College, Marietta, Ohio

158

1960
1960
1961
1962
1960

FEDERAL RESERVE SYSTEM
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
expires
DIRECTORS—Cont.

Ivan Jett
Howard E. Whitaker

Dec, 31

Farmer, Georgetown, Ky
1961
Chairman of the Board, Mead Corporation,
Dayton, Ohio
1962
Pittsburgh Branch

Appointed by Federal Reserve Bank:
Lawrence O. Hotchkiss... President, The First National Bank of Mercer,
Mercer, Pa
Irving W. Wilson
Chairman of the Finance Committee, Aluminum
Company of America, Pittsburgh, Pa
A. B. Bowden
Vice President, Mellon National Bank and Trust
Company, Pittsburgh, Pa
Samuel R. Evans
President, Windber Trust Company, Windber,
Pa

1960
1960
1961
1962

Appointed by Board of Governors:
John C. Warner
President, Carnegie Institute of Technology,
Pittsburgh, Pa
1960
William A. Steele
President, Wheeling Steel Corporation, Wheeling, W. Va
1961
John T. Ryan, Jr
President, Mine Safety Appliances Company,
Pittsburgh, Pa
1962
District 5—Richmond
Class A:
Denver L. Morgan
A. Scott Offutt
H. H. Cooley
Class B:
Robert O. Huffman
L. Vinton Hershey
R. E. Salvati
Class C.William H. Grier

Executive Vice President, The Charleston
National Bank, Charleston, W.Va
1960
President, The First National Bank of Washington, Washington, D.C
1961
President, The Round Hill National Bank,
Round Hill, Va
1962
President, Drexel Furniture Company, Drexel,
N.C
1960
President, Hagerstown Shoe Company, Hagerstown, Md
1961
President, Island Creek Coal Company, Huntington, W.Va
1962
President, Rock Hill Printing & Finishing Company, Rock Hill, S.C
1960

159

ANNUAL REPORT OF BOARD OF GOVERNORS
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
expires
DIRECTORS—Cont.

Edwin Hyde
Alonzo G. Decker, Jr

Dec. 31

President, Miller & Rhoads, Inc., Richmond, Va. 1961
President, The Black & Decker Manufacturing
Company, Towson, Md
1962
Baltimore Branch

Appointed by Federal Reserve Bank:
J. N. Shumate
President, The Farmers National Bank of
Annapolis, Annapolis, Md
Harvey E. Emmart
Senior Vice President and Cashier, Baltimore
National Bank, Baltimore, Md
John W. Stout
President, The Parkersburg National Bank,
Parkersburg, W.Va
James W. McElroy
President, First National Bank of Baltimore,
Baltimore, Md

1960
1961
1961
1962

Appointed by Board of Governors:
Clarence R. Zarfoss
Vice President, Western Maryland Railway
Company, Baltimore, Md
1960
J. T. Menzies, Jr
President, The Crosse & Blackwell Company,
Baltimore, Md
1961
Gordon M. Cairns
Dean of Agriculture, University of Maryland,
College Park, Md
1962
Charlotte Branch

Appointed by Federal Reserve Bank:
Ernest Patton
Chairman of the Board, The Peoples National
Bank of Greenville, Greenville, S.C
I. W. Stewart
Honorary Chairman of the Board, North Carolina National Bank, Charlotte, N.C
G. G. Watts
President, The Merchants & Planters National
Bank, Gaffney, S.C
Charles D. Parker
Vice Chairman of the Board and First Executive
Vice President, First Union National Bank of
North Carolina, Asheville, N.C

1960
1961
1961
1962

Appointed by Board of Governors:
George H. Aull
Agricultural Economist, Clemson College, Clemson, S.C
1960
Clarence P. Street
Secretary and General Manager, McDevitt &
Street Company, Charlotte, N.C
1961
J. C. Cowan, Jr
Vice Chairman, Burlington Industries, Inc.,
Greensboro, N.C
1962

160

FEDERAL RESERVE SYSTEM
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.

DIRECTORS—Cont.
Class A:
W. C. Bowman
William C. Carter
M. M. Kimbrel
Class B:
Pollard Turman
Donald Comer
McGregor Smith

District 6—Atlanta

Term
expires
Dec. 31

Chairman of the Board, The First National Bank
of Montgomery, Montgomery, Ala
1960
Chairman and President, Gulf National Bank,
Gulfport, Miss
1961
Executive Vice President, First National Bank,
Thomson, Ga
1962

President, J. M. Tull Metal & Supply Company,
Inc., Atlanta, Ga
1960
Chairman of the Board, Avondale Mills, Birmingham, Ala
1961
Chairman of the Board, Florida Power & Light
Company, Miami, Fla
1962

Class C.Henry G. Chalkley, Jr... .President, The Sweet Lake Land & Oil Company, Lake Charles, La
1960
Walter M. Mitchell
Vice President, The Draper Corporation,
Atlanta, Ga
1961
J. M. Cheatham
President, Dundee Mills, Griffin, Ga
1962
Birmingham Branch

Appointed by Federal Reserve Bank:
Frank A. Plummer
President, Birmingham Trust National Bank,
Birmingham, Ala
George W. Hulme
Senior Vice President, First National Bank,
Alexander City, Ala
Marshall Dugger
Vice President and Cashier, First National Bank,
Tuscumbia, Ala
R. J. Murphy
Executive Vice President, Citizens-Farmers &
Merchants Bank, Brewton, Ala

1960
1961
1961
1962

Appointed by Board of Governors:
Selden Sheffield
Cattleman, Greensboro, Ala
1960
John E. Urquhart
Chairman, Woodward Iron Company, Woodward, Ala
1961
Jack W. Warner
Chairman of the Board and President, Gulf
States Paper Corporation, Tuscaloosa, Ala... 1962

161

ANNUAL REPORT OF BOARD OF GOVERNORS
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
DIRECTORS—Cont.

Jacksonville Branch

President, Bank of Crestview, Crestview, Fla...
Chairman and President, Florida National Bank
of Jacksonville, Jacksonville, Fla
Chairman of the Board, First National Bank in
Tarpon Springs, Tarpon Springs, Fla
President, Peoples National Bank of Miami
Shores, Miami Shores, Fla

1960

Appointed by Federal Reserve Bank:

C. B. McLeod
Roger L. Main
A. L. Ellis
Leonard A. Usina

1961
1961
1962

Appointed by Board of Governors:

J. Wayne Reitz
John M. Fox
Claude J. Yates

President, University of Florida, Gainesville,
Fla
1960
President, Minute Maid Corporation, Orlando,
Fla
1961
Vice President and General Manager, Southern
Bell Telephone and Telegraph Company,
Jacksonville, Fla
1962
Nashville Branch

Appointed by Federal Reserve Bank:

P. D. Houston, Jr
C. A. Whelchel
W. E. Newell
D. L. Earnest

Vice Chairman of the Board, First American
National Bank, Nashville, Tenn
President, First Farmers and Merchants National Bank of Columbia, Columbia, Tenn...
President, The First National Bank, Kingsport,
Tenn
President, The Blount National Bank of Maryville, Maryville, Tenn

1960
1961
1961
1962

Appointed by Board of Governors:

W. N. Krauth
V. S. Johnson, Jr
Andrew D. Holt

President and General Manager, Colonial Baking Company of Nashville, Nashville, Tenn... 1960
Chairman of the Board and President, Aladdin
Industries, Inc., Nashville, Tenn
1961
President, University of Tennessee, Knoxville,
Tenn
1962
New Orleans Branch

Appointed by Federal Reserve Bank:

D. U. Maddox

President, The Commercial National Bank and
Trust Company of Laurel, Laurel, Miss
1960

162

FEDERAL RESERVE SYSTEM
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
expires
Dec. 31

DIRECTORS—Cont.
W. P. McMullan
Wallace M. Davis
Frank A. Gallaugher

Chairman of the Board, Deposit Guaranty Bank
and Trust Company, Jackson, Miss
1961
President, The Hibernia National Bank in New
Orleans, New Orleans, La
1961
President, Jeff Davis Bank & Trust Company,
Jennings, La
1962

Appointed by Board of Governors:
Frank A. Godchaux, III. .Vice President, Louisiana State Rice Milling
Company, Inc., Abbeville, La
1960
Gerald L. Andrus
President, New Orleans Public Service Inc., New
Orleans, La
1961
J. O. Emmerich
Editor, State Times, Jackson, Miss
1962
District 7-—Chicago
Class A:
Walter J. Cummings
John H. Crocker
Vivian W. Johnson
Class B:
G. F. Langenohl
William J. Grede
William A. Hanley

Class C:
Bert R. Prall
Robert P. Briggs
James H. Hilton

Chairman of the Executive Committee, Continental Illinois National Bank and Trust Company of Chicago, Chicago, 111
1960
Chairman of the Board and President, The
Citizens National Bank of Decatur, Decatur,
111
1961
President, First National Bank, Cedar Falls, Iowa 1962

Treasurer and Assistant Secretary, Allis-Chalmers Manufacturing Company, Milwaukee,
Wis
1960
President, J. I. Case Co., Racine, Wis
1961
Director, Eli Lilly and Company, Indianapolis,
Ind
1962

President and Chairman of the Board, H. L.
Green Company, New York, N.Y. (Residence:
Winnetka, 111.)
1960
Executive Vice President, Consumers Power
Company, Jackson, Mich
1961
President, Iowa State University of Science and
Technology, Ames, Iowa
1962

163

ANNUAL REPORT OF BOARD OF GOVERNORS
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.

DIRECTORS—Cont.

Detroit Branch

Term
expires

3r
Dec. 31

Appointed by Federal Reserve Bank:
William A. Mayberry
Chairman of the Board, Manufacturers National
Bank of Detroit, Detroit, Mich
Ernest W. Potter
President, Citizens Commercial & Savings Bank,
Flint, Mich
Donald F. Valley
Chairman of the Board, National Bank of
Detroit, Detroit, Mich
C. Lincoln Linderholm.. .President, Central Bank, Grand Rapids, Mich...

1960
1960
1961
1962

Appointed by Board of Governors:
John A. Hannah
President, Michigan State University, East
Lansing, Mich
1960
C. V. Patterson
Director, The Upjohn Company, Kalamazoo,
Mich
1961
J. Thomas Smith
President, Dura Corporation, Oak Park, Mich.. 1962
District 8—St. Louis
Class A:
H. Lee Cooper
Arthur Werre, Jr
Kenton R. Cravens

President, Ohio Valley National Bank of
Henderson, Henderson, Ky
1960
Executive Vice President, First National Bank
of Steeleville, Steeleville, 111
1961
President, Mercantile Trust Company, St. Louis,
Mo
1962

Class B:
Leo J. Wieck
S. J. Beauchamp, Jr

Leo J. Wieck & Co., St. Louis, Mo
1960
President, Terminal Warehouse Co., Little Rock,
Ark
1961
Harold O. McCutchan.. .Executive Vice President, Mead Johnson &
Company, Evansville, Ind
1962

Class C.Jesse D. Wooten
J. H. Longwell
Pierre B. McBride

Executive Vice President, Mid-South Chemical
Corporation, Memphis, Tenn
1960
Director, Special Studies and Programs, College
of Agriculture, University of Missouri, Columbia, Mo
1961
President, Porcelain Metals Corporation, Louisville, Ky
1962

164

FEDERAL RESERVE SYSTEM
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.

DIRECTORS—Cont.

Little Rock Branch

Term
expires

Appointed by Federal Reserve Bank:

J. W. Bellamy, Jr
E. C. Benton
J. V. Satterfield, Jr
H. C. Adams

President, National Bank of Commerce of Pine
Bluff, Pine Bluff, Ark
President, Fordyce Bank and Trust Company,
Fordyce, Ark
President, The First National Bank in Little
Rock, Little Rock, Ark
Executive Vice President, The First National
Bank of De Witt, De Witt, Ark

1960
1960
1961
1962

Appointed by Board of Governors:

Frederick P. Blanks
Waldo E. Tiller
T. Winfred Bell

Planter, Parkdale, Ark
1960
President, Tiller Tie and Lumber Company, Inc.,
Little Rock, Ark
1961
President, Bush-Caldwell Company, Little Rock,
Ark
1962
Louisville Branch

Appointed by Federal Reserve Bank:

W. Scott Mclntosh
John G. Russell
John R. Stroud
Merle E. Robertson

President, State Bank of Hardinsburg, Hardinsburg, Ind
President, The Peoples First National Bank &
Trust Company of Paducah, Paducah, Ky....
Executive Vice President, The First National
Bank of Mitchell, Mitchell, Ind
Chairman of the Board and President, Liberty
National Bank and Trust Company of Louisville, Louisville, Ky

1960
1960
1961
1962

Appointed by Board of Governors:

Philip Davidson
J. D. Monin, Jr
William H. Harrison

President, University of Louisville, Louisville,
Ky
1960
Farmer, Oakland, Ky
1961
President, Taylor Drug Stores, Inc., Louisville,
Ky
1962
Memphis Branch

Appointed by Federal Reserve Bank:

John E. Brown
Simpson Russell

President, Union Planters National Bank of
Memphis, Memphis, Tenn
1960
President, The National Bank of Commerce of
Jackson, Jackson, Tenn
1960

165

ANNUAL REPORT OF BOARD OF GOVERNORS
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
expires
Dec. 31

DIRECTORS—Coat.
J. H. Harris
Charles R. Caviness

Chairman of the Board, The First National
Bank of Wynne, Wynne, Ark
1961
President, National Bank of Commerce of
Corinth, Corinth, Miss
1962

Appointed by Board of Governors:
S. L. Kopald, Jr
Executive Vice President, HumKo Division,
National Dairy Products Corporation, Memphis, Tenn
1960
Frank Lee Wesson
President, Wesson Farms, Inc., Victoria, Ark... 1961
Clay Lyle
Dean and Director, Division of Agriculture,
Mississippi State University, State College,
Miss
1962
District 9—Minneapolis
Class A:
Harold C. Refling
John A. Moorhead
Harold N. Thomson
Class B:
Ray C. Lange
T. G. Harrison
J. E. Corette
Class C:
O. B. Jesness
John H. Warden
Atherton Bean

Cashier, First National Bank in Bottineau,
Bottineau, N.D
1960
President, Northwestern National Bank of
Minneapolis, Minneapolis, Minn
1961
Vice President, Farmers & Merchants Bank,
Presho, S.D
1962
President, Chippewa Canning Company, Inc.,
Chippewa Falls, Wis..
1960
Chairman of the Board, Super Valu Stores, Inc.,
Hopkins, Minn
1961
President and General Manager, The Montana
Power Company, Butte, Mont
1962
Agricultural Economist, St. Paul, Minn
1960
.President, Upper Peninsula Power Company,
Houghton, Mich..
1961
President, International Milling Company,
Minneapolis, Minn
1962
Helena Branch

Appointed by Federal Reserve Bank:
Roy G. Monroe
President, The First State Bank of Malta, Malta,
Mont
1960

166

FEDERAL RESERVE SYSTEM
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
expires
DIRECTORS—Cont.

Harald E. Olsson
O. M. Jorgenson.

Dec. 31

President, Ronan State Bank, Ronan, Mont
Chairman, Security Trust and Savings Bank,
Billings, Mont

1960
1961

Appointed by Board of Governors:
John D. Stephenson
Partner, Jardine, Stephenson, Blewett & Weaver,
Attorneys, Great Falls, Mont
1960
John M. Otten
Farmer and rancher, Lewistown, Mont
1961
District 10—Kansas City
Class A:
Harold Kountze
W. S. Kennedy
Burton L. Lohmuller
Class B:
Max A. Miller
Robert A. Olson
K. S. Adams
Class C:
Toe W. Seacrest
Raymond W. Hall
Oliver S. Willham

Chairman of the Board, The Colorado National
Bank of Denver, Denver, Colo
1960
President and Chairman of the Board, The First
National Bank of Junction City, Junction
City, Kans
1961
President, The First National Bank of Centralia,
Centralia, Kans
1962
Livestock rancher, Omaha, Neb
1960
President, Kansas City Power & Light Company, Kansas City, Mo
1961
Chairman of the Board, Phillips Petroleum Company, Bartlesville, Okla
1962
President, State Journal Company, Lincoln,
Neb
1960
Hillix, Hall, Hasburgh, Brown & Hoffhaus,
Attorneys, Kansas City, Mo
1961
President, Oklahoma State University, Stillwater, Okla
1962
Denver Branch

Appointed by Federal Reserve Bank:
J. H. Bloedorn
President, The Farmers State Bank of Fort
Morgan, Colorado, Fort Morgan, Colo
1960
Cale W. Carson
President, First National Bank in Albuquerque,
Albuquerque, N. Mex
1960
Stewart Cosgriff
Director, Denver United States National Bank,
Denver, Colo
1961

167

ANNUAL REPORT OF BOARD OF GOVERNORS
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
expires
Dec. 31

DIRECTORS—Cont.
Appointed by Board of Governors:
Ray Reynolds
Cattle feeder and farmer, Longmont, Colo
1960
Robert T. Person
President, Public Service Company of Colorado,
Denver, Colo
1961
Oklahoma City Branch

Appointed by Federal Reserve Bank:
R. L. Kelsay
Chairman of the Board and President, The First
National Bank in Hobart, Hobart, Okla
1960
C. L. Priddy
President, The National Bank of McAlester,
McAlester, Okla
1960
C. P. Stuart
Chairman of the Board, The Fidelity National
Bank & Trust Company, Oklahoma City,
Okla
1961
Appointed by Board of Governors:
Don H. Dennis
Rancher, Grady, Okla
James E. Allison
President, Warren Petroleum
Tulsa, Okla

1960
Corporation,
1961

Omaha Branch

Appointed by Federal Reserve Bank:
John F. Davis
President, First National Bank, Omaha, Neb... 1960
R. E. Barton
President, The Wyoming National Bank of
Casper, Casper, Wyo
1961
C. Wheaton Battey
Chairman, First Continental National Bank &
Trust Company, Lincoln, Neb
1961
Appointed by Board of Governors:
Homer A. Scott
Vice President and District Manager, Peter
Kiewit Sons' Company, Sheridan, Wyo
1960
James L. Paxton, Jr
President, Paxton-Mitchell Company, Omaha,
Neb
1961
District 11—Dallas
Class A:
Sam D. Young
J. Edd McLaughlin
John M. Griffith

President, El Paso National Bank, El Paso, Tex. 1960
President, Security State Bank & Trust Company, Rails, Tex
1961
President, The City National Bank of Taylor,
Taylor, Tex
1962

168

FEDERAL RESERVE SYSTEM
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
expires
DIRECTORS—Cont.

Class B:
D. A. Hulcy
H. B. Zachry
J. B. Perry, Jr
Class C.Robert J. Smith
Lamar Fleming, Jr
Robert O. Anderson

Dec. 31

Chairman of the Board, Lone Star Gas Company, Dallas, Tex
1960
President, H. B. Zachry Co., San Antonio, Tex.. 1961
President and General Manager, Perry Brothers,
Inc., Lufkin, Tex
1962
President, Pioneer Hydrotex Industries, Inc.,
Dallas, Tex
1960
Chairman of the Board, Anderson, Clayton &
Co., Inc., Houston, Tex
1961
President, Hondo Oil & Gas Company, Roswell,
N. Mex
1962
£1 Paso Branch

Appointed by Federal Reserve Bank:
John P. Butler
President, The First National Bank of Midland,
Midland, Tex
Floyd Childress
Vice President, The First National Bank of
Roswell, Roswell, N. Mex
Joseph F. Irvin
President, Southwest National Bank of El Paso,
El Paso, Tex
Chas. B. Perry
President, First State Bank, Odessa, Tex

1960
1960
1961
1962

Appointed by Board of Governors:
William R. Mathews
Editor and Publisher, The Arizona Daily Star,
Tucson, Ariz
1960
Dysart E. Holcomb
Director of Research, El Paso Natural Gas Products Company, El Paso, Tex
1961
Roger B. Corbett
President, New Mexico State University, University Park, N. Mex
1962
Houston Branch

Appointed by Federal Reserve Bank:
W. B. Callan
President, The Victoria National Bank, Victoria,
Tex
Marvin K. Collie
President, The National Bank of Commerce of
Houston, Houston, Tex
J. W. McLean
President, Texas National Bank of Houston,
Houston, Tex
M. M. Galloway
President, First Capitol Bank, West Columbia,
Tex

169

1960
1960
1961
1962

ANNUAL REPORT OF BOARD OF GOVERNORS
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
expires
DIRECTORS—Cont.

Dec. 31

Appointed by Board of Governors:
John C. Flanagan
Vice President and General Manager, Texas
Distribution Division, United Gas Corporation, Houston, Tex
1960
Tyrus R. Timm
Head, Department of Agricultural Economics
and Sociology, A. & M. College of Texas,
College Station, Tex
1961
A. E. Cudlipp
Vice President and Director, Lufkin Foundry
& Machine Company, Lufkin, Tex
1962
San Antonio Branch

Appointed by Federal Reserve Bank:
J. W. Beretta
Director, First National Bank of San Antonio,
San Antonio, Tex
Donald D. James
Vice President, The Austin National Bank,
Austin, Tex
Burton Dunn
Chairman of the Executive Committee, Corpus
Christi State National Bank, Corpus Christi,
Tex
Dwight D. Taylor
President, Pan American State Bank, Brownsville, Tex

1960
1960
1961
1962

Appointed by Board of Governors:
Alex R. Thomas
Vice President, Geo. C. Vaughan & Sons, San
Antonio, Tex
1960
Harold Vagtborg
Executive Chairman, Board of Governors,
Southwest Research Center, San Antonio, Tex. 1961
John R. Stockton
Professor of Business Statistics and Director of
Bureau of Business Research, The University
of Texas, Austin, Tex
1962
District 12—San Francisco
Class A:
Carroll F. Byrd
John A. Schoonover
M. Vilas Hubbard

Chairman of the Board and President, The First
National Bank of Willows, Willows, Calif.... 1960
Chairman of the Board, The Idaho First National Bank, Boise, Idaho
1961
President and Chairman of the Board, Citizens
Commercial Trust and Savings Bank of Pasadena, Pasadena, Calif.
1962

170

FEDERAL RESERVE SYSTEM
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, I960—Cont.

DIRECTORS—Cont.
Class B:
Joseph Rosenblatt
Walter S. Johnson
N. Loyall McLaren
Class C.Philip I. Welk
Y. Frank Freeman
F. B. Whitman

Term
expires
Dec. 31
President, The Eimco Corporation, Salt Lake
City, Utah
1960
Chairman of the Board, American Forest Products Corporation, San Francisco, Calif.
1961
Partner, Haskins & Sells, San Francisco, Calif... 1962
Wheat grower, Vancouver, Wash
1960
Vice President, Paramount Pictures Corporation, Hollywood, Calif.
1961
President, The Western Pacific Railroad Company, San Francisco, Calif.
1962
Los Angeles Branch

Appointed by Federal Reserve Bank:
Robert S. Beasley
President, The Beverly Hills National Bank &
Trust Company, Beverly Hills, Calif.
1960
Roy A. Britt
President, Citizens National Bank, Los Angeles,
Calif.
1960
Joe D. Paxton
Chairman of the Advisory Board, Santa Barbara
Main Office, Crocker-Anglo National Bank,
Santa Barbara, Calif.
1961
Appointed by Board of Governors:
John D. Fredericks
President and Chief Executive Officer, Pacific
Clay Products, Los Angeles, Calif.
1960
Robert J. Cannon
President, Cannon Electric Company, Los
Angeles, Calif.
1961
Portland Branch

Appointed by Federal Reserve Bank:
D. S. Baker
President, The Baker-Boyer National Bank,
Walla Walla, Wash
1960
J. H. McNally
President, The First National Bank of Bonners
Ferry, Bonners Ferry, Idaho
1960
C. B. Stephenson
President, The First National Bank of Oregon,
Portland, Portland, Ore
1961
Appointed by Board of Governors:
Raymond R. Reter
Reter Fruit Company, Medford, Ore
1960
Paul De Koning
President and General Manager, Jantzen, Inc.,
Portland, Ore
1961

171

ANNUAL REPORT OF BOARD OF GOVERNORS
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
Term
expires
DIRECTORS-Cont.

Salt Lake City Branch

Appointed by Federal Reserve Bank:
Russell S. Hanson
Executive Vice President, The First National
Bank of Logan, Logan, Utah
1960
Reed E. Holt
President, Walker Bank & Trust Company, Salt
Lake City, Utah
1960
Oscar Hiller
President, Butte County Bank, Arco, Idaho
1961
Appointed by Board of Governors:
Thomas B. Rowland
Rowland Bros. Dairy, Pocatello, Idaho
1960
Howard W. Price
Executive Vice President and General Manager,
The Salt Lake Hardware Co., Salt Lake City,
Utah
1961
Seattle Branch

Appointed by Federal Reserve Bank:
S. B. Lafromboise
President, The First National Bank of Enumclaw, Enumclaw, Wash
1960
James Brennan
President, First National Bank in Spokane,
Spokane, Wash
1960
Joshua Green, Jr
President, Peoples National Bank of Washington, Seattle, Wash
1961
Appointed by Board of Governors:
Lyman J. Bunting
President, Rainier Fruit Company, Yakima,
Wash
1960
Henry N. Anderson
President, Twin Harbors Lumber Company,
Aberdeen, Wash
1961

172

FEDERAL RESERVE SYSTEM
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, I960—Cont.
PRESIDENTS AND VICE PRESIDENTS

Federal
Reserve
Bank of—

President
First Vice President

Vice Presidents

D. H. Angney
Dana D. Sawyer
O. A. Schlaikjer
Ansgar R. Berge
Charles E. Turner
George H. Ellis
Benjamin F. Groot
Robert V. Roosa
H. A. Bilby
New York.... Alfred Hayes
Charles A. Coombs Robert G. Rouse
William F. Treiber
Howard D. Crosse Walter H.Rozell, Jr.
H. L. Sanford
M. A. Harris
H. H. Kimball
T. G. Tiebout
Joseph R. Campbel] P. M. Poorman
Philadelphia.. Karl R. Bopp
W. M. Catanach
J. V. Vergari
Robert N. Hilkert
David P. Eastburn Richard G. Wilgus
Murdoch K. Goodwin
Roger R. Clouse
L. Merle Hostetler
W. D. Fulton
Cleveland
Martin Morrison
Donald S. Thompson E. A. Fink
C. Harrell
Paul C. Stetzelberger
W. Braddock Hickman
N. L. Armistead
Hugh Leach
J. M. Nowlan
Richmond
Aubrey N. Heflin Benj. U. Ratchford
Edw. A. Wayne
Upton S. Martin James M. Slay
J. E. Denmark
L. B. Raisty
Malcolm Bryan
Atlanta
Harold T. Patterson J. E. McCorvey
Brown R. Rawlings
E. T. Baughman
L. H. Jones
Carl E. Allen
Chicago
A. M. Gustavson C. T. Laibly
C. J. Scanlon
H. J. Helmer
George W. Mitchell
Paul C. Hodge
H. J. Newman
Robert C. Holland Harry S. Schultz
Marvin L. Bennett Dale M. Lewis
St. Louis . . Delos C. Johns
Homer Jones
H. H. Weigel
Darryl R. Francis
Geo. E. Kroner
J. C. Wotawa
Kyle K. Fossum
A. W. Johnson
Minneapolis.. Frederick L. Deming
C. W. Groth
H. G. McConnell
A. W. Mills
M. B. Holmgren
M.H.Strothman,Jr.
John T. Boysen
L. F. Mills
Kansas City.. H. G. Leedy
George H. Clay
E. U. Sherman
Henry O. Koppang
C. A. Cravens
Clarence W. Tow
James L. Cauthen J. A. Parker
Watrous H. Irons
Dallas
P. E. Coldwell
Harry A. Shuford
T. W. Plant
T. A. Hardin
L. G. Pondrom
G. R. Murff
J. L. Barbonchielli H. E. Hemmings
San Francisco. H. N. Mangels
R. S. Einzig
R. H. Morrill
Eliot J. Swan
E. H. Galvin
John A. O'Kane
Boston

J. A. Erickson
E. O. Latham

173

ANNUAL REPORT OF BOARD OF GOVERNORS
FEDERAL RESERVE BANKS AND BRANCHES, Dec. 31, 1960—Cont.
VICE PRESIDENTS IN CHARGE OF BRANCHES

Federal Reserve Bank of—
New York....
Cleveland
Richmond....
Atlanta

Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco

Branch

Vice President

Buffalo
Cincinnati
Pittsburgh
Baltimore
Charlotte
Birmingham
Jacksonville
Nashville
New Orleans
Detroit
Little Rock
Louisville
Memphis
Helena
Denver
Oklahoma City
Omaha
El Paso
Houston
San Antonio
Los Angeles
Portland
Salt Lake City
Seattle

I. B. Smith
R. G. Johnson
J. W. Kossin
D. F. Hagner
E. F. MacDonald
H. C. Frazer
T. A. Lanford
R. E. Moody, Jr.
M. L. Shaw
R. A. Swaney
Fred Burton
Donald L. Henry
E. Francis DeVos
C. A. Van Nice
Cecil Puckett
H. W. Pritz
P. A. Debus
Howard Carrithers
J. L. Cook
Carl H. Moore
W. F. Volberg
J. A. Randall
E. R. Barglebaugh
A. B. Merritt

CONFERENCE OF PRESIDENTS
The Presidents of the Federal Reserve Banks are organized into a Conference of
Presidents that meets from time to time to consider matters of common interest and
to consult with and advise the Board of Governors.
Mr. Johns, President of the Federal Reserve Bank of St. Louis, and Mr. Bryan,
President of the Federal Reserve Bank of Atlanta, who were elected Chairman of
the Conference and Vice Chairman, respectively, in June 1959, were reelected as
such in March 1960, and continued to serve in those capacities during 1960.
Mr. Gerald T. Dunne, Counsel and Assistant Secretary of the Federal Reserve
Bank of St. Louis, was appointed Secretary of the Conference in July 1959, was
reappointed in March 1960, and continued to serve as such during 1960.

174

• > i > ;

' • • • • • •

»[ THE FEDERAL RESERVE SYSTEM~^|*
; '• *

\WCMMXO8

m mamm aksaatvE BISIIUCSS AND THEIR BRANCH TERRITORIES

HAWAII

' Legend

of Foetal Kesem Bisects
Bmmdaries of Federal Reserve Bimeh
p Boar«| of Govemors oC the Fed^M Reserve System
^ Federal Reserve Bank Cities
* Federal R^$erve Branch Cife
t o ^ 6 ' ^ ? ^ ^ d b r a n C h t e r r i t o r i e s described to ^ « « ^ ^^Port for 1953, p. 124; later changes in branch territories, in Annual Report for
1954, p. 57, and in Federal Reserve Bulletin for January 1959, p. 17, and September 1959, p. 1,141.

Index
Page
Acceptance powers of member banks
94
Acceptances, bankers':
Federal Reserve Bank holdings
104, 110, 112
Open market transactions during 1960
117
Assets and liabilities:
Banks, by classes
127
Board of Governors
107
Federal Reserve Banks
110-15
Balance of payments
12
Bank holding companies:
Board actions with respect to
91
Litigation
101
Power of subsidiary bank to invest in small business investment company..
97
Regulation Y, amendment of Section 4
78
Bank Holding Company Act, proposed amendments
98
Bank mergers and consolidations:
Applications acted upon by Board
90, 134
Federal Deposit Insurance Act, amendment of Section 18(c)
90, 96
Bank premises, Federal Reserve Banks and branches
106, 110, 112, 114, 122
Bank reserves {See Reserves)
Bank supervision by Federal Reserve System
89
Banking offices:
Changes in number
131
On, and not on, Par List, number
132
Board of Governors:
Audit of accounts of
106
Income and expenses
106-08
Litigation
100
Members and officers
150
Policy actions
76-88
Regulations {See Regulations)
Branch banks:
Domestic:
Board's branch authority, litigation involving
100
Changes in number
131
Federal Reserve {See Federal Reserve Banks)
Foreign
93
Capital accounts:
Banks, by classes
127
Federal Reserve Banks
I l l , 113, 115

176

INDEX
Page
Central reserve cities:
Provision for termination of
11, 76, 83, 87
Reserve requirements, reductions in
11, 83, 87
Chairmen of Federal Reserve Banks
154
Charts:
Changes in commercial bank credit
29
Consumer financial saving
27
Credit and equity markets
22
Discount and bill rates
10
Money and other liquid assets
20
Reserves and borrowings
8
Selected yields
32
Short-term interest rates
13
U.S. balance of payments
16
Check clearing and collection:
Check mechanization program
102
Regulation J, amendment of Section 6
84
Volume of operations
123
Commercial banks:
Assets and liabilities
127
Banking offices, changes in number
131
Number, by classes
127
Condition statement of Federal Reserve Banks
110-15
Continental Bank and Trust Company, Salt Lake City, Utah,
litigation involving
100
Defense Production Act, extension of
97
Defense production loans
101, 125
Deposits:
Banks, by classes
127
Federal Reserve Banks
I l l , 113, 115, 128
Savings and other time deposits, maximum rates
124
Uniform basis for reporting
97
Deputy Chairmen of Federal Reserve Banks
154
Directors, Federal Reserve Banks and branches
155
Discount rates at Federal Reserve Banks:
Reductions in
80, 85
Table of
124
Discounts and advances by Federal Reserve Banks
104, 110, 112, 114, 128
Dividends:
Federal Reserve Banks
103, 119, 120
Member banks
130
Earnings:
Federal Reserve Banks
102, 104, 118, 120
Member banks
130
Economic review
1

177

INDEX
Examinations:
Federal Reserve Banks
89
Foreign banking and financing corporations
94
Holding company affiliates
92
Member banks
89
State member banks
90
Expenses:
Board of Governors
106-08
Federal Reserve Banks
102, 118, 120
Member banks
130
Federal Advisory Council
153
Federal Deposit Insurance Act:
Section 18(c):
Amendment with respect to bank mergers and consolidations
90, 96
Mergers and consolidations acted upon by Board
90, 134
Federal Open Market Committee:
Meetings
34, 152
Members and officers
152
Policy actions
34-75
Review of continuing authorities or statements of policy
45, 47
Federal Reserve Act:
Section 14(a), amendment extending authority of Federal Reserve Banks to
purchase Government obligations direct from Treasury
97
Federal Reserve Banks:
Assessment for expenses of Board of Governors
108, 118
Bank premises
106, 110, 112, 114, 122
Branches:
Bank premises
106, 122
Directors
155
Vice Presidents in charge of
174
Capital accounts
I l l , 113, 115
Chairmen and Deputy Chairmen
154
Check mechanization program
102
Condition statement
110-15
Directors
155
Discount rates:
Reductions in
80, 85
Table of
124
Dividends
103, 119, 120
Earnings and expenses
102, 104, 118, 120
Examination of
89
Federal unemployment compensation tax
98
Fiscal agents or depositories for International Development Fund
97
Foreign and international accounts
105
Officers and employees, number and salaries
123

178

INDEX
Page
Federal Reserve Banks—Continued
Presidents and Vice Presidents
173
Profit and loss
119
U.S. Government securities:
Authority to purchase direct from Treasury, extension of
97
Holdings of
104, 110, 112, 114, 116, 128
Open market transactions during 1960
117
Special certificates purchased direct from Treasury
117
Volume of operations
101, 123
Federal Reserve notes:
Condition statement data
110-15
Cost of issue, printing and redemption
108
Interest paid to Treasury
103, 119, 120
Federal Reserve System:
Bank supervision by
89
Map of Federal Reserve districts
175
Membership
91
Financial markets in 1960
21
First Bank Stock Corporation, litigation under Bank Holding Company Act. 101
Foreign banking and financing corporations
94
Foreign branches of member banks
93
Gold certificate reserves of Federal Reserve Banks
110, 112, 114
Government securities {See U.S. Government securities)
Holding company affiliates
92, 99
Insured commercial banks
127, 131
Inter-Agency Bank Examination School
95
Interest rates:
Discount rates at Federal Reserve Banks:
Reductions in
80, 85
Table of
124
Regulation V loans
125
Savings and other time deposits, maximum rates
124
Investments:
Banks, by classes
127
Federal Reserve Banks
110, 112, 114
Legislation:
Bank Holding Company Act, proposed amendments
98
Bank mergers and consolidations, Public Law 86-463
90, 96
Defense Production Act, extension of
97
Deposits, uniform basis for reporting
97
Federal Reserve Banks:
Authority to purchase Government obligations direct from Treasury,
extension of
97
Depositories or fiscal agents for International Development Fund
97
Federal unemployment compensation tax
98
Small Business Investment Act, amendment
97

179

INDEX
Page
Litigation
100
Loans:
Banks, by classes
127
Federal Reserve Banks
104, 110, 112, 114, 128
Regulation V loans
101, 125
Margin requirements:
Reduction in
12, 81
Table of
125
Member banks:
Acceptance powers
94
Assets, liabilities, and capital accounts
127
Banking offices, changes in number
131
Earnings, expenses, and dividends
130
Examination of
89
Foreign branches
93
Number
91, 127, 131
Reserve requirements:
Changes in
11, 83, 87
Table of
126
Vault cash
11, 83, 87
Reserves and related items
128
Membership in Federal Reserve System
91
Mergers (See Bank mergers and consolidations)
Monetary policy:
Digest of principal policy actions
4
Review of
1
Money and other liquid assets
18
Mutual savings banks
127, 131
National banks:
Assets and liabilities
127
Banking offices, changes in number
131
Foreign branches
93
Number
91, 127, 131
Trust powers
92
Nonmember banks
127, 131, 132
Old Kent Bank and Trust Company, Grand Rapids, Mich.,
litigation involving
100
Open market operations
34-75, 117
Par List, banking offices on, and not on, number
132
Policy actions, Board of Governors:
Discount rates at Federal Reserve banks, reductions in
80, 85
Margin requirements, reduction in
81
Regulation D, Reserves of Member Banks:
Amendments with respect to vault cash and changes in reserve
requirements
83, 87

180

INDEX
Policy actions, Board of Governors—Continued
Regulation J, Check Clearing and Collection:
Amendment of Section 6
84
Regulation U, Loans by Banks for the Purpose of Purchasing or Carrying
Registered Stocks:
Amendment of Section 3(b)(l)
76
Regulation Y, Bank Holding Companies:
Amendment of Section 4
78
Reserve city classifications, suspension of triennial review
76
Policy actions, Federal Open Market Committee:
Authority to acquire Treasury bills through "swap"
transactions
50, 53, 56, 58, 60
Authority to effect transactions in System Account
34-75
Repurchase agreements covering U.S. Government securities
43
Review of continuing authorities or statements of policy
45, 47
Presidents of Federal Reserve Banks:
Conference of, and meetings
174
List of
173
Salaries
123
Profit and loss, Federal Reserve Banks
119
Record of policy actions {See Policy actions)
Regulations, Board of Governors:
D, Reserves of Member Banks:
Amendments with respect to vault cash and changes in
reserve requirements
11, 83, 87
J, Check Clearing and Collection:
Amendment of Section 6
84
T, Credit by Brokers, Dealers, and Members of National
Securities Exchanges:
Margin requirements, reduction in
12, 81
U, Loans by Banks for the Purpose of Purchasing or
Carrying Registered Stocks:
Amendment of Section 3(b)(l)
76
Margin requirements, reduction in
12, 81
Y, Bank Holding Companies:
Amendment of Section 4
78
Repurchase agreements:
Bankers' acceptances
110, 112, 117
U.S. Government securities
43, 110, 112, 116, 117, 128
Reserve city classifications, suspension of triennial review
76
Reserve requirements, member banks:
Changes in
11, 83, 87
Table of
126
Vault cash
11, 83, 87

181

INDEX
Page
Reserves:
Federal Reserve Banks
110-15
Member banks
128
Salaries:
Board of Governors
108
Federal Reserve Banks
118,123
Savings deposits (See Deposits)
Small Business Investment Act, amendment
97
State member banks:
Assets and liabilities
127
Banking offices, changes in number
131
Examination of
90
Foreign branches
93
Litigation
100
Mergers and consolidations acted upon by Board
90, 134
Number
91, 127,131
System Open Market Account:
Audit of
89
Authority to acquire Treasury bills through "swap"
transactions
50, 53, 56, 58, 60
Authority to effect transactions in
34-75
Time deposits (See Deposits)
Treasury bills (See U.S. Government securities)
Trust powers of national banks
92
U.S. Government securities:
Authority of Federal Reserve Banks to purchase direct from Treasury,
extension of
97
Bank holdings, by class of bank
127
Federal Reserve Bank holdings
104,110,112, 114,116,117, 128
Open market operations
34-75,117
Repurchase agreements
43
Special certificates purchased direct from Treasury
117
Treasury bills, authority of System Account to acquire through
"swap" transactions
50, 53, 56, 58, 60
V-loans.
101,125
Vault cash of member banks
11, 83, 87
Voting permits issued to holding company affiliates
92
Wachovia Bank and Trust Company, Winston-Salem, N. C ,
litigation involving
100

182

Full text of Annual Report of the Board of Governors of the Federal Reserve System : 1960

FRASER