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ANNUAL REPORT
Federal Reserve Bank
Of Cleveland
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Federal Reserve Bank of St. Louis
9
8
9
The Federal Reserve System is responsible for formulating and
implementing U.S. monetary policy.
It also supervises banks and bank
holding companies, and provides
financial services to depository institutions and to the federal government.
The Federal Reserve Bank
of Cleveland is one of l2 regional
Reserve Banks in the United States
that, together with the Board of
Governors in Washington, DC., comprise the Federal Reserve System.
The F'ederal Reserve Bank ot
Cleveland, its two branches in
Cincinnati and Pittsburgh, and its
Regional Chec.k Processing Center
in Columbus serve the Fourth Federal Reserve District. The Fourth
District includes Ohio, western
Pennsylvania, the northern panhandle of West Virginia, and eastern
l{entucl~y.
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Federal Reserve Bank of St. Louis
The Presidem's Foreword
2
•
Central Bank independence
22
Directors
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Federal Reserve Bank of St. Louis
24
20
Comparative Financial Statements
Officers
This essay presents chis Bank's views aLout th~ importance of' central-bank i(ldepe11de11ce, a<:counl•
ab ility, and candor for achievi ng important nat1on:1I economic goals. Tbe views expr.,sscd in th,s
e!say are 1101 r,ecessaril,y ohnreJ by the other Federal Reserve Banks or by the Board of' Governors uf'
d,e federal
Reserve S.vstcm.
Neverlheless, our experience io
the 1970s should remind us that trying to prolong the expansion at the
cost of more inflation is a mistake.
There is no trade-off between inflation and expansion because
ultimately inflation causes recession,
The President's
Foreword
and inflation results in less-thanoptimum economic performance.
Maximum production and output
The Federal Reserve's independence
can be achieved only when inflation
has once again come under review.
is eliminated.
Legislation was introduced in Congress last year that would increase
in performing its central bank func-
political influence over the nation's
tJOns and in providing financial
central bank. Jn the months ahead,
services by our 25 directors, to whom
such initiatives will evoke question
we extend our deepest appreciation.
by elected officials about monetar.v
We ar·e especially grateful to
policy and the Federal Reserve's
Daniel M. Galbreath, president ol
independence.
John W. Galbreath & Co. ,
This year's annual report essay
Columbus, Ohio, who resigned from
argues that an independent central
the Cleveland board earlier this year
bank is crucial in order for any na-
due to other commitments. We also
tion to maintain price stability and,
appreciate the contributions of our
ultimately, economic growth. In addi-
retiring Branch chairmen: Owen B.
tion, increased central bank candor
Buder (retired chairman of the
about its goals and methods would
board of The Procter & Gamble
enhance the effectiveness of mone-
Company), chairman of the
tary policy and would provide great-
Cincinnati board; and James E. Haas
er accountability for its actions to
(president and chief operating
the public and Congress.
officer· ol'National Intergroup, Inc.),
Our own history and the his-
chairman of the Pittsburgh board.
tories of many other nations teU us
Their leadership has been valuable
that economic policies that are politi-
and will be missed.
cally appealing in the short run often
Special thanks go to those
can lead to inflation in the long run.
who have completed their term of
Clearly, elected leaders have a far
service on our Branch boards:
more likely conflict between short-
Robert M . Duncan (president of the
and long-term goals in monetary
First National Bank of Louisa) , who
policymaking than does an indepen-
served on our Cincinnati Branch
dent central bank.
The year ahead seems likely to
board; and Thomas G. Dove (chairman of the Executive Committee
pose significant challenges for the
and chief executive officer of Wheel-
Federal Reserve. As 1989 drew to a
ing Dollar Bank) and Karl M. von
close, there was discernible evidence
der Heyden (formerl_y senior vice
of slowing in the pace of the economic expansion . Whether the slowing is but a pause in an otherwise
healthy expansion or is the precursor
of a more severe s!owi ng is, of
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Federal Reserve Bank of St. Louis
The Fourth District is guided
course, unknown.
.. . AN INDEPENDENT CENTRAL BANK
president-finance and chief financial
IS CRUCIAL IN ORDER FOR ANY NATION TO MAINTAIN
officer of H.J. Heinz Company, currently executive vice president and
chief financial officer of R.J .R.
PRICE STABILITY AND,
Nabisco, Inc.), who served on our
Pittsburgh Branch board.
Our directors represent a vari-
ULTIMATELY, ECONOMIC GROWTH.
ety of banking and business interests
from throughout the District. Their
dedicated service and guidance is
valued, as is that of Thomas H.
O'Brien (chairman, president, and
chief executive officer of PNC
Financial Corp). who is currently
representing the Fourth Federal
Reserve District on the Federal
Advisory Council and is currently
president of the council. The contributions made by members of the
1989 Small Bank and Small Business
Advisory Councils are also very
much appreciated.
Finally, I wish to extend my
personal gratitude to the officers and
staff of the Bank, whose energy,
creativity, and commitment made
1989 a successful year.
W. Lee Hoskins
President
March 8. 1990
3
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Federal Reserve Bank of St. Louis
CONGRESS
Central Bank
DISPERSED THE CENTRAL BANK 's
Independence
es that it is in the naThis essay argu
F d al Reserve,
al • est for the e er
tion inter
1banks, to be
ell as for all centra
as
• hin government
dent wit
. .
• dw
epen
d
dence
is necesm
W. believe t h at •in epen
POWER AMONG
e for a centra I bank to pursue
sary
• that foster Iong- term ecopo li c1es
ic growth.
nom
. .
• our v·•1ew t h a t maintammg
It 1s
h
•ce level should be t e .
a stable pn
.
objective.
Federal Reserve'spnmary
.
h.
h
I
run
relations
ip d
G•
g
t e on nd inflation, an
iven
b tween money a
.
bility
e
d
I Reserves' unique a
the Fe era
this
• monetary po icy,
to determme . [ ct be the only one
b" tive may m a
oit can
1ec direct
•
IY and consistently
r
achieve.
b lieve that the
h more, we e
Furt er
"bl for
• re spons1 e
d al Reserve is
b
Fe er
. d fr m pu •
denve
0
• po Ii c1es
.
purswng
. b candor, comm1tlic consensus, wit
..
ment, an d accountab1hty.
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Federal Reserve Bank of St. Louis
4
money to operate the central bank.
the Federal Reserve uses revenues
from its own operations to pay its
bills, and contributes its excess earnings to the Treasury. 2 The appropriations process would not be a
potential tool for influencing Federal
THE FEDERAL RESERVE'S
Foundation
Reserve policy.
For Independence
THIRTEEN ENTITIES -
Second, Congress dispersed the
central bank's power among the Fed-
THE TWELVE REGIONAL
The history of our nation is rich with
RESERVE BAf,IKS AND
. •: i
,;,. :
'
'· ,•
THE BOARD OF GOVERNORS
'',.
..
~~
·I,
·'.v/ ..
IN WASHINGTON, D.C.
twelve regional Reserve Banks and
wariness of executive-branch con-
the Board of Governors in Washing-
trol of money and credit. One of the
ton, 0.C. The seven governors on the
reasons our Constitution gives the
Board must be chosen so that, at any
power to coin money to the Con-
time, there is no more than one
gress, rather than to the President, is
governor from any one District. This
that the Founding Fathers were
dispersion of power makes it
aware of the tendency of sovereigns
difficult -
to debase the currency.
specific geographic areas or special
1
even a semblance of a government
central bank for 97 of its first 137
years of independence. The First
Bank of the United States (1791-1811)
and the Second Bank of the United
States (1816-1836) account for the
other 40 years. Both banks were
essentially independent of the executive branch. Moreover, the fact that
neither bank's 20-year charter was
renewed illustrates the suspicion
of any centralized control of money
and credit.
FLEXIBLE DESIGN,
In
designing the Federal Reserve System in 1913, Congress was careful to
assure, to the e..xteot possible, the
central bank's independence from
the turbulent and shifting political
pressures that could innuence its
operation. That sense of independence has been incorporated into the
Federal Reserve in several ways.
First, Congress granted the Federal Reserve self-financing authority.
fnstead of Congress appropriating
5
the
episodes testifying to a pervasive
Tbe United States did not have
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Federal Reserve Bank of St. Louis
eral Reserve's thirteen entities -
perhaps impossible -
for
interest groups to unduly influence
Federal Reserve policies.
Ttl~OUCH THE YEA R S, Co t~ GRESS HAl> AFFIRMED ITS INTENTIOtl THAT
Third, Congress incorporated a
blend of publ-ic and private elements
into the Federal Reserve's structure.
Commercial banks hold aU the stock
of the Reserve Banks, entitling them
to elect six of the nine directors on
the board of directors of each
Reserve Bank. The other three direc-
approval of the Federal Reserve's
tors on each board are appointed
Board of Governors. Federal
by the Board of Governors.
However; banking interests are
Reserve governors are nominated by
the President and confirmed by the
not a dominant force on Federal Re-
Senate, a method of appointment
serve Bank boards, since three of the
intended to make the Board more
six directors elected by bankers and
sensitive to political concerns. How-
all three of the directors appointed
ever; lheir long terms -
14 years -
by the Board of Governors must 110/
and the fact that they <cannot be
be bankers. In addition, the chair-
reappointed after serving a fuU term,
man and vice chairman of each Fed-
removes them to a significant degree
eral Reserve Bank board must be
from the pressures of the political
chosen from among the non banker
process.
group of directors appointed by
the Board.
Fourth, Congress directed that
U.S. monetary policy be decided by
CONTINUING REINFORCEMENT.
Through the years, Congress
has affirmed its intention that the
Federal Reserve should be indepen-
majority vote in the Federal Reserve's
dent. For e.."<ample , the original Fed-
policymaking Federal Open Market
eral Reserve Act of 1913 created e.'C
Committee (FOMC). Voting privileges
officio positions for the Secretary of
in the FOMC are held by the seven
the Treasury and the Comptroller of
members of the Federal Reserve's
the Currency on the Board of Gover-
Board of Governors, by the president
nors. But with the passage of the
of the Federal Reserve Bank of
Banking Act of 1935, Congress
New York, and by a rotating group of
removed these positions in recogni-
four of the other eleven Reserve Bank
presidcnts.3
Federal Reserve's FOMC and Board
Reserve Bank presidents are
of Governors be even more indepen-
appointed by the boards of directors
of the Reserve Banks, subject to the
• ., CURRE'4T LAW REQUIRES THE
FEDERAL RESERVE TO PIIOMOTE MAXIMUM
tion of the desirability of having the
EMPLOYMENT, STABLE PRICES AND
dent of the administration .4
Nor did Congress object when,
in 1951, the Federal Reserve reasserted its independence from the
Treasury. ln what is now known as
The Accord, the Federal Reserve
and the Treasury affirmed the central bank's freedom to conducL an
independent monetary policy. They
agreed to abandon the wartime
practice of pegging interest rates on
'Il-easury debt issues at a low level
for the convenie nce of the Treasury's
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Federal Reserve Bank of St. Louis
borrowing activity. 5
MODERATE LOHO-'TERM INTEREST RATES ,
TH
FEDERAL RESERVE SHOULD BE I
DEPENDE!,IT.
., THI\T ll•DEPENDENCE DOES N
MEAN FREEOOM Fi:tOM RESP0t4S IBILITV TO
COOPERATE, COORDINATE , I\ND BE HELD ACCOUt-lTA6LE
Framework For
Achieving Goals
Although Congress has given the
Federal Reserve a substantial degree
of independence, that independence
does not mean freedom from respon-
the a twas an expression of goals to
sibility to cooperate, coordinate, and
be pursued by all agencies of the
be held accountable. Congress can,
government to the extent that their
at any time, change the Federal
usual operations and powers
Reserve if it believes that the central
enabled them to do so.
bank is not acting in the nation's
long-run best interest.
Beyond what was specified in
HUMPHREY-HAWKINS
AcT. A mending the Employment Act
of 1946 is the FuU Employment
the original Federal Reserve Act of
and Balanced Growth Act of 1978, also
19l3, Congress has adopted various
known as the Humphrey-Hawkins
pieces ol' legislation that spell out the
Ac.t. The Humphrey-Hawkins
goals of the Federal Reserve, with-
Act requires the government to pursue
out indicating specifically what
methods should be used to achieve
several national goals, including
" ... full employment and production,
increased real income, balanced
these goals.
EMPLOYMENT ACT OF
growth, a balanced federal budget,
1946. The Employment Act of 1946
adequate produ tivity growth ... an
requires the government to pursue
improved trade balance ... and
''maximum employment, production,
and purchasing power. "6 This law
reasonable price stability."0
Like the original Employment
was enacted when, at the end of
Act of 1946, the Humphrey-Hawkins
World War II, Congress and the
Ac.t establishes general goals for aU
President were concerned that sharp
agencies of government rather than
reductions in government purchases
specific assignments for each one.
of military equipment and the dis-
However, the Humphrey-Hawkins
charge of millions of military person-
Act is more specific. in that it requires
nel might cause unemployment to
the President to establish economic
rise to the levels experienced in the
goals consistent with eventually
l930s.
achieving total and adult unemploy-
7
Responsibility for achieving the
goals of the Employment Act of 1946
was not assigned specifically to the
Federal Reserve System or to any
other agency of government. Rather,
1
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Federal Reserve Bank of St. Louis
ment rates of 4 percent and 3 percent, respectively.
It also establishes procedures
to help coordinate the policies of the
various agencies of government
\
to achieve those goals. For example,
the Federal Reserve is required
to report its monetary policy plans to
\
\
....
\
Congress semiannually, and to
comment on the relationship of those
plans to the President's goals. 9
FEDERAL RESERVE
REFORM ACT OF 1977.
·,
✓•
,,.,.- /
.
/
In contrast
to those laws, the Federal Reserve
Act, as amended, assigns some specific goals to the Federal Reserve.
The Federal Reserve Reform Act of
1977 amended the Federal Reserve
Act of 1913 so that it now requires the
Federal Reserve " ... to promote effectively the goals of maximum employment, stable prices, and moderate
increases the likelihood that political
long-term interest rates."
and special-interest groups could
10
However,
it is the Federal Reserve's respon-
try to influence the Federal Reserve
sibility to decide how best to pursue
to pursue the policy that is currently
those goals.
important to that group."'
RESPONDING TO MULTI-
PLE GOALS.
The multiplicity of goals
In this respect, the Federal
Reserve's situation is different from
the Federal Reserve to choose which
that of West Germany's central bank,
which is also independent. More ,.-
goal it emphasizes at any moment,
than one goal is specified by law for
rather than committing it to a partic-
that bank, but German law s~aies. that
ular goal." This type of discretion
the goal of price stability i~? 'be
"". -~-~:~,...::... :.
given highest priority ,when_e¥er ab,- ·_;;• ,:;~_.:_f': f·
r >' ..
.;· . - ?.·. --=-~~.
other goal might conll~w.ith
-~·
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---~-~:· ·.•'
•• -- ,:::.: •=: _r...-
established by Congress permits
maintaining price s~f>~µty. 13 Jh!1~{iJf{'.-,_.i
1
major reaso~ why' i~any'i-pp'_~-. ~level rose by only i.i'12;.~rc.epi: , ;,~' ''., ;:-between 1950 and
•
19akw6.ile
ffi~ V.s.
~-~
I
-.•~'••·
•
price level rose by 3?1:;:-PSF_cenL·
. ;.
~
CHARTING A -COURSE.
since currentlaw requires the Fed"' era.I.Reserve to promote maximum
employment, stab!~ prices, and
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Federal Reserve Bank of St. Louis
B
moderate long-term interest rates, the
Federal Reserve must choose a
viable strategy to accomplish this
.i,
mission. Two approaches seem
plausible.
One approach would be for
the central bank to try to achieve a
•
..,__"-•-
t)
balance among its three Congres-
\
'\
~
sionally mandated objectives. The
I..
"'
Federal Reserve could use its own
.'l\
,: ·\
' ......
\
•(
'··
.
judgment about what balance among
the objectives to pursue, and could
~
. '
. ,. change that balance from time to time
··ae~e~ding on its view of how the
'i
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l
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i,
,. economy works and what course is
·I
broadly acceptable to the public.
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t
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In essence, this is the practice
·•
'it·,,
that the Federal Reserve has followed .
It has strived to balance desirable
economic conditions such as
full employment, economic growth,
and low long-term interest rates
with low rates of inflation.
But the major drawback to this
approach is its feasibility. To strike
I
a balance among the mandated goals
requires that they be reliably linked
to one another. Furthermore, mone-
T,HE MULTIPLICITY
I
tary policy would need to be capable
of influencing simultaneously
all three economic dimensions in the
desired directions and quantities.
/
Both economic theory and
CONGRESS PERMITS
\, actual experience indicate that fine-
I
\ tuning the economy through mone-
THE FEDERAL RESERVE TO
1
,
tary policy is fraught with peril.
.,
CHOOSE WHICH GOAL IT EMPHASIZES \,
(. ~
,,
--
AT ANY MOMENT,
--c.;:;::;=,;::-:-. ---
'
"
..:.,:._- .t,
j
•1
PARTICULAR GOAL,
\
I
'
RATHER THAN COMMITTING IT TO A
J•
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Federal Reserve Bank of St. Louis
.
l
•
-·-----.t
9 ---
l
While monetary policy is capable of
influencing che economy in the shorl
to intermediate run, over longer
periods of time, monetary poLlcy can
only affect the rate of inflation. The
rate of inflation, in turn, affects all
Using this approach, the Fed-
dimensions of economic perfor-
eral Reserve would seek to maintain
mance, including employment and
a stable price level over time. Price
interest rates. Maximum production
stability could be defined as an infla-
and employment and low interest
tion rate that averages zero over time
rates can be achieved only at low
and bas only small and offsetting
inflation rates.
deviations from zero, or as an infla-
By its very nature. a balancing
tion rate so small that it does not
act among complex economic goals
affect economic decisions. An econ-
causes substantial confusion about
omy with price stability would expe-
the Federal Reserve's intentions.
rience changes in individual prices,
Such confusion could be avoided to
but decisions about the future could
a large degree if Congress or the
be made with.out concern for persis-
Federal Reserve assigned priorities
tent, long-run inflation.
to the goals, or if the Federal Reserve
publicly explained the balance it was
Choosing between these two
alternative methods of pursuing the
seeking among its goals, and
Federal Reserve's goals -
promptly notified the public of any
balancing several goals or focusing
policy changes.
on price stability -
THE MONEY-INFLATION
LtNK, A
at
more promising approach,
least for the long run, is to select
one objective -
the only one that
the Federal Reserve can influence
that is,
requires a
thorough understanding of how the
economy operates and how monetary policy affects the economy.
Many aspects of these economic
linkages are poorly understood, lead-
directly. This approach builds on the
ing to spirited debates about bow
long-run relationship between
the Federal Reserve should
money and inflation .
conduct its business.
Most participants in this debate
are likely to concede that only a central bank can produce price stability,
that much of the movement in Long-
, . ,OIIEA I.ONCER PERIODS O
'TIME.
t◄ ONETARV
POI.ICV
term interest rates can be traced to
changes in expected inflation, and
that employment and income growth
over time depends essentially on
CAN ON Y ~FFECT T IE RATE OS: IHl"L.ATIOH.,.{WttlCH) AFFECTS
developments in technology, efficiency , and labor-force growth. Consequently, the real issue in the debate
concerns the trade-off between the
,,.
COi OMICPERl"ORMANCE .
short-run costs and the long-run
, benefits of pursuing price stability.
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Federal Reserve Bank of St. Louis
10
Price Stability
And Independence
Why is price stability -
that is, the
elimination of any upward trend in
the general level of pri es -
an
important goal, and why does a cen•• INFLATION
IIAMPERS EFFICIENCY, •.
OISCOURAGE\S) SAVlt+G
(ANO) ENGENDERS
SOCIALLY WASTEFUL
because the tax code alJows depreci-
pursue it?
ation only with respect to the pur-
Without price tability, an
rather than its current replacement
tion, and inflation is costly in several
cost.
redistributes wealth and earned in-
price signals. When a price or wage
come. Wealth is shifted from lenders
rises during an inflation, it is often
to borrowers, or more specifically,
unclear how much, if any, of the
from net monetary creditors to net
increase is a relative increase, and
monetary debtors, including the gov-
how much merely reflects the rise in
ernment, by reducing the purchasing
the general price level.
power of the funds being used for
repayment.
efficiency with which decisions can
Real earned income is shifted
be made by households about occu-
from people with inflexible wage
pations, employment, and consump-
contracts to those who are able
tion; and by fi1·ms about output
to raise their wages or prices faster
levels, equ.ipment-labor ratios, and
than the rate of inflation. These
materials inputs to their production
redistributions are unjust because
processes. Uncertainty about future
they are not legislated in a demo-
rates of inflation adds to investment
cratic process by representatives
risk and increases the risk premiums
of the people.
in interest rates, reducing investment
capital goods.
Second, in the United States,
inflation interacts with the tax code
ro discourage saving and investment.
Interest earned on financial assets is
truced in fult, even though part of the
interest income is merely an inflation
premium. Investment is discouraged
11
Third, unanticipated inflation
efficiency by reducing the clarity of
and shifting it toward shorter-lived
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Federal Reserve Bank of St. Louis
chase price of capital equipment,
economy becomes vulnerable to mfla-
This lack of clarity reduces rhe
ACTIVITY,
stated, and therefore overtaxed,
tral bank need independence to
ways. First, inflation hampers
REDISTRIBUTES WEALTH ,
because business profits are over-
Fourth, inflation engenders
socially wasteful but personally necessary activity to hedge against and
to profit from inflation's redistribution of wealth. Households hedge
against inflation by buying houses,
land, buildings, and nonproductive
assets such as gold, for which they
otherwise would have no need. During hyperinflations, households even
hoard foodstuffs and other basic
commodities.
Firms increase inventories as an
inflation hedge. Analysts sell forecasts to help people know how much
CENTR
inflation to expect, consultants sell
advice on methods of hedging
,...,...
against the inflation, and financial
institutions develop financial instruments to be used as inflation hedges.
ACCOUN
--
I
APPRt
Although these activities are
IN A DEMO
sensible for the firms and people
who engage in them, they are socially
IN FACT,
wasteful because they merely
alter the pattern of inflation's redis-
HA
tribution of wealth, rather than
adding to that wealth.
PRICE STABILITY.
ULTIMATE
If the
aggregate price level is predictably
TOC
stable, lenders do not need compensation for the inflation they expect
THE FEDEi
between the times the loans are
made and repaid. With price stabil-
G
ity, the inflation premium would
become nearly zero, in contrast to
the 4 to 5 percent built into current
rates. Reducing the size of the premium for expected inflation is, in
fact, the only method that the Federal Reserve has for achieving lasting reductions in long-term interest
rates.
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Federal Reserve Bank of St. Louis
12
By pursuing a policy of price
stability, the Federal Reserve would!
have the maximum possible impact
on employment. Businesses would
be able to plan with some certainty
and without the concern that
inflation could adversely affect
their plans.
An economy with a stable price
AL-BANK
level is more efficient and more
likely to grow, because con.fusing
"ABILITY IS
price signals and disincentives for
saving and investment are reduced.
IPRIATE
Price stability promotes fairness
because it eliminates unlegislated
CRACY AND,
redistribution of weahh and income
caused by inflation. The resources
:oNCRESS
once used for hedging against inflation's redistributions can be freed
,THE
for other uses.
A criticism of using a stable
AUTHORITY
price level as the Federal Reserve's
primary goal is that the Federal
-IANCE
Reserve would not be directly
attempting to achieve a balance
among inflation, employment, and
growth. That criticism is invalid
JAL.
because monetary policy cannot
bring about lasting increases in employment or economic growth,
except by providing a stable price
environment.
SUPPOIIT FOR INDEPEN·
DENCE.
How important is political
independence for central banks as
they pursue price stability? Substantial evidence indicates a link between
central-bank independence and the
ability to achieve price stability.
Assessments of the degree of
independence of the central banks of
several major nations and their
correspond1ng rates of inflation in
recent decades indicate that countries
whose central banks have a greater
degree of independence have
13
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Federal Reserve Bank of St. Louis
experienced lower rates of inflation. 1 "
.,.THE NATION'S CENT~A&. B"NI( MUST HAVE PRICE STABILITY
IF
TrlE UNITED STATES IS TO ACHIEVE f"ftlCE STABILITY
The wisdom of having an
independent Federal Reserve is supported by U.S. experience. The
Federal Reserve's independence,
which is greater than that of all but
a few ol' the central banks of the
world, has resulted in the United
States having had less inflation than
The Goal Of
Monetary Policy
most other countries ,
From 1950 to 1988, consumer
ti' the United States is to achieve
prices rose by 391 percent in Lhe
price stability and enjoy its benefits,
United States, while they were rising
the nation's central bank must have
by a weighted average of Sil percent
price stability as its monetary
in industrialized nations (including
policy goal.
the United States) and by about
32,000 percent in developing nations.
This evidence leads naturally to
The Federal Reserve's control of
money creation gives it the power to
control the price level over time. No
the conclusion that independence is
other agency of our government can
a necessary condition for the Federal
do that. Fun:hermore, while mone-
Reserve to successfully pursue price
tary policy may affect employment
stability, or even to seek a balance
or interest rates for short periods of
among employment , stable prices,
time, the lasting effect on employ-
_and long-term interest rates. if that
ment or interest rates results only
should be the desired course of
through control of inflation_
action.
Moreover, it appears that the
Therefore, if this nation is to
enjoy the benefits of price stability
degree of independence is an impor-
and, at the same time, to have maxi-
tant determinant of avoiding infla-
mum employment, output, and the
tion, even when other sociopolitical
other benefits of free markets,
factors thaL might e."plain differences in national inflation rates are
considered. For example, even taking into account other possible
causes of inflationary pressure, the
degree of central-bank independence appears to have an important
effect on a nation 's price stability., s
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Federal Reserve Bank of St. Louis
14
AS ITS MONETARY POLICY GOAL. MONETARY POLICY
(HAS A) LASTING EFFECT ON EMPLOY ME NT OR I N TEREST RATES ONLY T H ROUGH CONTROL OF INF LATION ,
the Federal Reserve must pursue
price stability.
A PUBLIC COMMITMENT ,
It is
our view that the Federal
Reserve should commit itself to the
goal of price stability.,"
Announcement of such a com-
short-run goals that might be incom-
mitment would serve three purposes.
patible with long-term performance.
First, establishing a specific goal
Third, Lhe Federal Reserve's
would enhance the ability of Con-
public commitment to price stability
gress to hold the Federal Reserve
would foster the expectation of price
accountable for achieving the goal.
stability in the economy. Price and
Central-bank accountability is
wage decisions that are consistent
appropriate in a democracy and, in
with price stability would be encour-
fact, Congress has the ultimate
aged. thereby making price stability
authority to change the Federal
easier to achieve and maintain.
Reservc's goal.
lt,1PLEMENTING PRICE
Second, a commitment to price
STABI L1Tv.
Commitment to price sta-
stability would enhance the Federal
bility requires more than just saying
Reserve's freedom from political
that price stability is the goal the
pressures as it pursued that goal.
Federal Reserve will pursue. To be
The absence of any prioritization of
useful and effective, the commitment
t he legally mandated goals creates
must include some important details.
circumstances in which various par-
Because the United States has not
ties are likely to try to influence the
had a long-term policy of price sta-
Federal Reserve to emphasize one
bility, the Federal Reserve will need
or another of those goals.
• , IT /U>PEARS TIIAT
A public commitment to price
to implement such a strategy gradually. The initial step would be to
stability. would reduce the effective-
establish and announce a specific
ness of political pressure
timetable for reducing inflation and
to
deviate
from that goal. Thus, a distinction
can be made between a central bank
eventually eliminating it.
TIH! DEOREE OF INOE'1ENDENC£
The Federal Reserve should
that is accountable for long-run
then announce and explain the
performance and a central bank that
actions it will take to achieve its spe-
can be influenced by government
cified trajectory for the inflation
rate. Whenever decisions are made
officials who might be pursuing
IS AN tM,>ORTAHT DETERMl~lANT
about the money growth or the
interest rates that the FederaJ Reserve
is seeking in order to follow its timetable, those decisions should be
announced immediately,1 7
OF AVOUJUIC IUFLATIOH ,
15
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Federal Reserve Bank of St. Louis
While we believe that decisions
should be announced immediately,
we think that the details of discus-
FEDERAL RESERVE INDEPENDENCE,
sions in FOMC meetings should not
be released because to do so could
inhibit discussion in those meetings.
Finally, if the inflation rate deviates from the announced timetable,
the Federal Reserve should explain
why the deviation has occurred, and
announce and explain the actions
·:, :··----r-..
being taken to get back on track.
Federal Reserve independence,
-----~ -~... _.
and candor about objectives and
timetables, would interact to aid the
Federal Reserve's pursuit of price
_,..--....._ ·
·-'-~•i •.;~~
-r. ·.I L___,__
,, -·1~· · ·
,
........
stability in several ways. Independence in determining monetary policy is necessary if the Federal
Reserve is to have credibility when it
announces how it will conduct monetary policy. Candor in announcing
its goals and methods will only
enhance Federal Reserve credibility,
which will facilitate achieving
price stability.
....
I,
•
•
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
·~
., ..,... ____...,.
I
.
t
16
AND CANDOR
•
AND TIMETABLES, WOULD INTERACT TO AID THE FEDERAL RE5ERVE'S
Inflation interferes with a
nation's pursuit of other economic
goals such as full employment, eco-
PURSUIT OF PRICE STABILITY.
nomic growth, and low interest
rates, while price stability supports
the pursuit of those goals.
The Federal Reserve's independence has served this nation
well. While U.S. price-level experience
has not been as good as it should
have been, it has certainly been much
better than those nations whose
ConcJusions
"
"'- f ' . ~
~
I
..
I'
'!
central banks are controlled by their
executive branches of government.
t
.,
f
There is much to recommend the
Our nation's prospects for greater
continued independence of the Fed-
price-level stability, and thus the
eral Reserve System. Clearly, the
opportunity for greater overall
authors of the Constitution
long-run prosperity, will be enhanced
intended, as one aspect of the sep-
if the Federal Reserve's indepen-
aration of powers, that the e.xecutive
dence is maintained and its commit-
branch of government should not
ment to price stability is strengthened
have tbe power to coin money. And it
and made more explicit .
is clear that Congress, in its design
\:
~
of the central bank, intended that the
Federal R eserve should have
substantial independence from both
the executive and the legislative
branches in conducting its
.. •.
operations .
Expert opinion here and abroad
has, through the years, urged that
the executive branch of government
in any nation should not have the
power to create money and credit.
Moreover, empirical evidence
indicates that those nations whose
central banks have greater independence also have less inflation than
17
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
other nations.
4. S ee Milton Friedman
and Anna Jacobson Schwartz, A
Monetary History of the United
States 1867-1960, (Princeton University Press for the National Bureau
of Economic Research, 1963),
pp. 445-46, footnote 25.
s. Annual Report of the
Secretary of1J1e 1reasury on the
State of the Finances for the Fiscal
Footnotes
1.
See Lawrence Gipson,
The Coming of the Revolution:
Year Ended June 30, 1951 (Government Printing Office, 1951), p . 271.
6. Employment Act of
1946, Section 2, as recorded in the
1763-1175 (Harper and Row, 1954),
United States Code: Congressional
pp. 40-54. Another reason was to
Service, Laws of79tb Congress, Sec-
keep the states from having the
power to coin money. See Edward
Meade Earle, ed., The Federalist,
ond Session (West Publishing Company). p . 20.
nos. 42 and 44 (Madison, 1788),
(Modern Library, 1937), pp. 275-76
and 289-91.
2. In 1988, the Federal
Reserve System had $17.55 billion of
net income after expenses. From that
net income, $17.36 billion was contributed to the U. . Treasury. See
75th Annual Report 1988, Board of
Governors or the Federal Reserve
System, p. 216.
3.
The voting records of
Federal Reserve Bank presidents
and governors in the FOMC are
Economic Report of
che President, January 1947, (GPO.
1947), p. vii.
7.
s. Full Employment and
Balanced Growth Act of 1978, as
recorded in the United States Code;
Congressional Service and Adminisrrarive News, La..vs of9Stfi Con-
9. Economic Report of
tbe President, January 1919, (GPO,
1979), pp. 106-08.
10. Federal Reserve
Reform Act of 1977, as recorded in
notion that the struclUre of the Fed-
lhe United States Code: Congressional Service and Administrative
News, Laws of95th Congress,
First Session (West Publishing
Company).
of different views or what is best for
the nation. When voting at FOMC
meetings during the last quarter cen-
H4S SERYEOTHIS NATION WELL,
gress, Second Session (West
Publishing Company).
quite different, which supports the
eral Reserve provides representation
THE FEDERAL RESERVE'S INDEPENDENCE
tury, presidents have been twice as
likely as governors to dissent from
the FOMC's majority in favor of a
tighter monetary policy, while gover•
nors have been five times as likely as
presidents to dissent from the majority in favor of an easier monetary
policy.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
18
.. . ev,oe .. ce
ltlOICATES Tt-lAT NAl lOHS
ALSO I AVE LESS 1,-.FlATIOM .
HOSE
CENTRAL BANl(S HAVE C.REATEft NDEPEHDENCE
(April 1989) , p. 274: "Ma.-ximum sustainable economi growth over time is
the Federal Reserve's ulrimate
objective. The primary role of monetary policy in the pursuit of trus
goal is to foster price stability."
11. "Statement by Alan
17. For a detailed rebut-
Greenspan , Chairman, Board of
tal of the argument that delayed
Governors of the Federal Reserve
release of the FOMC's decisions is
System, before the Subcommittee on
necessary, ee Marvin Goodfriend,
Domestic Monetary Policy of tbe
Commjrtee on Banking, Finance and
Urban Affairs, U.S. House of Representatives, October 25, 1989, ''
14.
See Alberto Alessina,
"Macroeconomics and Politics,"
Macroeconomics Annual (The MIT
"Monetary Mystique: Secrecy and
Central Banking." Journal oflifone-
Federal Reserve Bulletin. vol. 75
Press for the National Bureau for
Economic Research, 1988), pp. 38-43
tary Economics (January 1986),
pp. 63-92. For a study showing that
prompt release of the Federal
(December 1989), p. 797.
and table 9. See also King Banaian,
Reserve's one-quarter-ahead money
Leroy O . 1,aney, and Thomas D .
projections would improve the accuracy oftbe public's expectations of
12. See Robert L.
Hetzel, ''Central Banks' Independence in Historical Perspective,"
Journal of Monetary Economic ,
vol. 25, no. I (January 1990). Hetzel
distinguishes between central banks
lhat have independence with commitment to a particular goal, and
Willett, "Central Bank Independence: An International Comparison ," Federal Reserve Bank of
Dallas, Economic Review, (March
future money growth, see Michael
Hutchison and John R. Judd,
1983), pp. 6-8.
Surprises: International Evidence,"
1 s.
Alessina, Ma cro-
independence with autonomy to
economics Annual, p. 42; and
Banaian and others, Economic
choose a goal or goals, He argues
Review, pp. 12-13.
that the latter type of independence
tempts special interest groups to try
to influence the central bank's
choice of goal.
13. See Manfred
16.
Federal Reserve
Chairman Alan Greenspan appa rently agrees. See Alan Greenspan,
Chairman, Board of Governors of
the Federal Reserve System, "Mone-
Willms, "The Monetary Policy
tary Policy Report to the Congress,"
Decision Process in the Federal
Federal Reserve Bulletin, vol. 75
(August 1989), pp. 527-38: "... the fun-
Republic of Germany." in Donald R.
Hodgman, ed .. Tbe Political Econ omy ofMonetary Policy: National
and International Aspects, Conlerence Series no. 26 (Federal Reserve
Bank of Boston, July 1983), p. 36.
damental objective of our policy ...
remains to maximize sustainable
economic growth which in turn
requires the achievement of price
stability over time;" and "Any inflalion that persists will hinder the
economy's ability to perform at peak
efficiency and to create jobs."
See also Alan Greenspan, Chairman,
Board of Governors of the Federal
Reserve System, ''Monetary Policy
Report to the Congress, '' Fed-
19
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Federal Reserve Bank of St. Louis
~ral Reserve Bulletin, vol. 75
''Central Bank Secrecy and Money
Worbng Paper89-02 (Federal
Reserve Bank of San Francisco.
June 1989).
1989
STATEMENT OF CONDITION
1988
Assets
Gold certificate account
$
Special drawing rights certificate account
Coin
661,000,000
$
655,000,000
508,000,000
314,000,000
35,198,010
25,465,147
260,490,000
890,000,000
375,348,521
402,430,203
Loans and securities:
Loans to depository institutions
Federal agency obligations bought
Comparative Financial
Statement
outright
For years ended December 31
U.S. government securities
Bills
6,016,323,386
6,515,038,679
Notes
5,256,981,596
5,253,906,524
1,772,647,794
1,728,921,594
Total U.S. government securities
13,045,952,776
13,497,866,797
Total loans and securities
13,681.79},297
14,790,297,000
Cash items in process of collection
311,132,941
243,970,219
Bonds
35,636,690
31.674,850
Other assets
1,996,567,172
793,404,407
lnterdistrict settlement account
1,213,581,514
(659,500,560)
Bank premises
Total Assets
$18,440,907,624
$16,294,309,063
$15,565,816,189
$13,703,779,373
2,107,236,707
1,893,425,046
Liabilities
Federal Reserve notes
Deposits:
Depository institutions
Foreign
Other deposits
8,100,000
8,250,000
62,171.052
13,993,166
2,177,507,759
1.915,668,212
Deferred availability cash items
287,754,553
266,000,247
Other liabilities
162,828,823
179,054,731
$ 18, 193,907,324
$16,064,502,563
Total deposits
Total Liabilities
Capital accounts
Capital paid in
$
123,500,150
247,000,300
Total Capital Accounts
$
Total Liabilities and Capital Accounts
$18,440,907,624
114,903,250
114,903,250
123,500,150
Surplus
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Federal Reserve Bank of St. Louis
$
$
229,806,500
$16,294,309,063
20
CONGRESS GRANTED THE FEDERAL RESERVE
SELF•FINANCING AUTHORITY.
1989
INCOME AND EXPENSES
1988
Current Income
Interest on loans
2,429,631
$
$
L,149,099,468
Interest on government securities
1,384,919
1,055,774,529
Earnings on foreign currency
56,068,247
16,607,328
Income from services
42,968,475
40,109,734
AU other income
Total current income
592,146
571,323
$ l,251,l57,967
$1,114,447,833
Current operating expenses
66,379,062
65 ,237,787
Cost of earnings credits
11, 691,875
11,043,526
$ L 173,087,030
$1,038,166,520
Current Net Income
~
Profit and Loss
Additions to current net income
Profit on foreign exchange transactions
$
Profit on sales of government securities
$
$
0
l,369,885
68,403,659
3,270
All other additions
Total additions
702,956
5,886
69,109,885
$
1,376,770
0
Deductions from current net income
s
28,098,147
l, 190
108,533
Total deductions
$
1,190
$
28,206,680
Net additions or deductions
$
69, 108.695
$
26,830,910
$
3,338,604
$
1,924,431
Loss on foreign exchange transactions
$
All oth¢r deductions
Assessments by Board of Governors
Cost ofUnreimbursable Treasury Services
4,877,500
4,620,100
10,402,141
10,064,330
18,618,245
16,608,861
$1,223,577,480
$ 994,726,749
$
$
Board of Governors expenditures
Federal Reserve currency costs
Total assessments by Board of Governors
et Income Available for Distribution
Distribution of Net Income
Dividends paid
7,054,527
6,811,391
Payments to U.S. Treasury
(interest on Federal Reserve notes)
Transferred to surplus
Total distributed
21
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Federal Reserve Bank of St. Louis
1,207,926,053
985,705,508
8,596,900
2,209,850
$1,223,577,480
$
994,726,749
CONGRESS INCORPORATED
Federal Reserve
Bank of Cleveland
Directors
As of December 31, 1989
Chairman & Federal Reserve Agent
CHARLES W. PARRY
Retired Chairman & Chief Executive Officer
Aluminum Company of America
Pittsburgh, Pennsylvania
Deputy Chairman
JOHN
R.
MILLER
Former President & ChiefOpera1ing Officer
Standard Oil Company of Ohio
Cleveland, Ohio
President, Federal Advisory Council
DANI ELM. GALBREATH
President, John W. Galbrea1h & Co.
Columbus, Ohio
(Resigned July l. 1989)
VERNA
K.
G,asoH
TH0MA9 H. O'BRIEN
Chairman, Presiden1
& Chief Executive Officer
PNC Financial Corp
Pittsburgh, Pennsylvania
Presidenl, The Limi1ed Stores, Inc.
Columbus, Ohio
LABAN
P.
JACKSON, JA.
Chairman, Clearcreek Properties
Lexington, Ken1ucky
Cincinnati Directors
WtLLIAM H. MAY
Chairman & President
First National Bank of Nelsonville
Nelsonv,lle, Ohio
WILLIAM
T.
McCONNELL
Presidenl, The Park National Bank
Newark, Ohio
D0UCLAS E. OLESEN
President and ChiefExecu1ive Officer
Bauelle Memorial Institute
Columbus, Ohio
(Term began Augusl 22, 1989)
ROBERT 0. STOREY
Partner, Burke, Haber & Berick
Cleveland, Ohio
FRANK WoesT
Chairman & Chief Executive Officer
Huntington Bancshares Incorporated
Columbus, Ohio
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Chairman
OWEN B. BUTLER
Retired Chairman of1he Board
The Procter & Gamble Company
Cincinnati, Ohio
JACK
W.
BUCHANAN
President, Sphar & Company, Inc.
Winchester, Kentucky
ROBERT
M.
DUNCAN
President
First National Bank of Louisa
Louisa, Kentucky
ALLEN
L.
DAVIS
President & Chief Executive Officer
The Provident Bank
Cincinnati, Ohio
KATE IRELAND
National Chairman
Frontier Nursing Service
Wendover, Kentucky
JERRY
L.
K1R8Y
Cincinnati Directors
Marvin Rosenberg
Robert M. Duncan
Kate Ireland
Jerry L. Kirby
Jack W. Buchanan
Chairman of the Board,
President & Chief Execulive Officer
Citizens Federal Savings & Loan Association
Dayton, Ohio
MARVIN R0S£Nl3ERC
Partner, Towne Properties, Ltd.
Cincinnati, Ohio
22
A BLEND OF PUBLIC AND PRIVATE ELEMENTS INTO
THE FEDERAL RESERVE'S STRUCTURE.
Pi tts bur g h Dir e ct o rs
Chairman
JAM ES
E.
HAAS
President & Chief Operating Officer
National Intergroup, Inc.
Pittsburgh, Pennsylvania
(Resigned September 20. 1989)
Chairman
ROBER T P . BO ZZ ON E
President & Chief Operating Officer
Allegheny Ludlu m Corporation
Pittsburgh, Pennsylvania
(Term began October 5, 1989)
A.
GEOR GE
DAVI D SON , JR .
Chairman & Chief Executive Officer
Consolidated Natural Gas Company
Pittsburgh, Pennsylvania
THOMAS
G. Dove
Chairman or the Executive Committee
& Chief Executive Officer
Wheeling Dollar Bank
W heeling, West Virginia
STEPHEN C. HANSEN
President & Chief Executive Officer
Dollar Bank, FSB
Pittsburgh, Pennsylvania
JACK B . PtATT
Chairman, Millcraft Industries
Washington, Pennsylvania
(Term began November 3, 1989)
E . JAM E S TR I MAR C H I
President & Chief Executive Officer
First Commonwealth Financial Corporat ion
Indiana, Pennsylvania
KARL
M . VON D E R H E YD E N
Senior Vice President-Finance
& Chief Financial Officer
H.J. Heinz Com pa ny
Pittsburgh, Pennsylvania
(Resigned July 6, 1989)
MILTON
A.
WASHIHO TO H
President & Chief Executive Officer
Allegheny Housing Rehabilitation Corporation
Pittsburgh, Pennsylvania
Pittsburgh Directors
S1ephen C. Hansen
George A. Davidson
E. James Trimarchi
Cleveland Directors
Frank Wobst
Chairman Charles W. Parry
William H. May
23
William T. McConnell
Deputy Chairman John R. Miller
Laban P. Jackson. Jr.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Milton A. Washington
Thomas G. Dove
J1L l. GO UB E.AUi< CLARI<
V1cc Pre•idenl & Associate
General Counsel
V.
PATRICK
Co.ST
Vic~ Pre;;,dent & General Auditol
Cuv
LAWRENCE
Vice Pre>idcm
CAEICH "T OH R. FRICIEK
Vice President
ELENA
M.
McCALL
R. CHRIS
Vice P,esiden,
MOORE
Vice President & Seer •tary
McGoWAI•
w. PRICE
ROBERT
JAMES
W.
RAKOWSKV
OAv,o E. R1CH
Assis1an( Vice President
Vice Presldenf
JOHN P. ROBINS
Examining Officer
EDWARO E. RICHARDSON
Vke President
TERRENCE J. Ron~
A$.Sisnrnt Vice President
MARKS , SNIOERMAN
Vice Presidenl & Associate Director of Research
w. Lee
K.
Assistant Vice President
SANDRA PtAtrl.Al.TO
As of March I, 1990
LA\IRA
Assisrnn1 Vice !'resident
Bank of Cleveland
Officers
WILLIAM MAJOR
Assist"-n l Vice President
Vice President
Federal Reserve
JOHN E. KLEINHEN Z
As.sis!ant Vice President
SUSAN G . SCHUELLER
As,s,stant Vice Presidcnl
HOSKINS
JOSEPH C , THORP
President
V ite President
BURTON
G.
SHUTACK
Assistant Vice President
WILLIAM H . HENORICl<S
RoaERT VANVALKENBURG
Firot Vice Prosid~nt
Vice President
J.
WILLIAM
S"'ITH
Assi~ani Vice Pre5ident
RANDOLPH G. COLEMAN
W,
A>4DREW
Senior Vice President
WATTS
V,ce President& Regulatory Counsel
JOHN
M.
EDWARD
J,
STEVENS
Aosi5!alll Vice President & Econi;,mi51
DAVIS
Senior Vice Pre>ident & Dir~ctor of Research
A.
MARGRET
BEEKEL
Assistant Vice Pres ido111
JAMES
B.
THOMSON
A~is1:1nt Vice President & 1::conomist
JOHN J. RITCHEY
Senior Vice President & General Counsel
TERRY
N.
BENNETT
Assistant Vice Pres,denl
D.
SAMUEL
SMITH
J_ CALLAHAN
TI-IOMAS
Stmior Vice Presiden1
As!oistant V\,'. c President & AssisLn.1n Se~1·etar_v
G.
DONALD
VINCEL
RANDA.LL W . EBEAT5
Senior Vice President
Assistant Vice President & Economist
ROBERT
F.
W,.R E
JOMNJ, ERCEG
Senior Vice President
Assistant Vice President & Economisl
WALt<ER
F.
TODD
Ass,stant Ge11e1 al Counsel
& Research Oflicer
HENRY P. TROLIO
Assistant Vice President
ROBERT E . WHITE
Assistant Vice Presidenl & Assisra111
General Auditor
JOHN J, WIXT E D, J!I- ,
s~jor Vice Pre.side,-, I
WILLIAM
DAREt.L R , WIT"TRUP
T.
GAVIN
Assistan t Vire President & Econom,st
Assist1tnl Vice Pr~idenl
ANDREW J . 8A:tAR
ELAINE
Vice President
G.
GELLER
Assistant Vice Pre idcnt
JAKE D , BRELAND
AoeERT
Vice President
J.
GoR1\ls
Assistant Vice President
WtLl. tAM
s.
BROWN
Vice President
NORMAN k.
Assislanl Vice Pr~s,denr
HACEN
ANDREW C . BURKLE, JR .
Vice President
Et>DI£ L , HAROV
Examining Ot'liccr
LYNN M. HARTIG
A:His,aot Viee Pre$iJent
DAVID P. JACER
Assistant Vice President
RAV FORD P. kALICH
Assistant Vic" President
KEVIN
P.
K~LLEV
1\.u,srant Vice P,·c•iclenl
24
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ci n ci nnat i Br.:inr:f.
CHARLES
A.
CERINO
~nior Vic~ Presidient
Roscoe E.
/\ssisuu11 Vic, President
HARR,sON
DAVID F. W1=1saROO
llssislant Vier Presidenl
J EARY S. WILSOfr,f
_.\ssis1ant Vice President
l'iusburgh Branch
J.
HAROLD
SWART
Senior Vice President
RAYMOND
L.
BR,Ntc.MAN
Assistnn 1 Vice PrC$iden1
Lo,s A. R1BACk
Assistant Vice President
RoBeRT
e. ScttAUB
A.ssist:UH Vice President
Columb us Orficc,
CHARLES
F.
Wtt. l. lAM S
Vice Pr~sident
MAIN O FFICE
Eas( bth Street and Superior Awnue
Cleveland, 011 ~-111~
2105;9.2()()0
CINCINNATI BRANCH
150 l°fosl ~lh lreei Cin~innali, 01-1 46202
:\15 721 ~,8i
PITTSBURGH BRANCH
i l f Gram Street Pi1tsburgh, PA 15219
This annual report wu prepared Ly Lhe Research Department and the Public Affairs and Bank
Rda.tions D~partment, Federal Reserve Bank of Cleveland. for additional copies of this rcpor1 ,
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c:onui.cL rla, Public Affairs and Bank Relalmns D~par"ltl'lent, Federn l Reserve Ba.nk of C leveland,
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