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FEDERAL RESERVE BANK
OF NEW YORK

A N N U A L REPORT

1975

FEDERAL

RESERVE

BANK OF

NEW YORK

F eb ru a ry 24 , 1976
To the M em b er Banks in the
Secon d F e d e r a l R e s e r v e D is tr ic t
I am p le a s e d to p r e s e n t our s i x t y - f i r s t Annual R ep o rt,
r e v ie w in g m a jo r e co n o m ic and fin a n c ia l d ev e lo p m en ts and th is B ank's
o p e r a tio n s in 1975.
The p a st y e a r w a s again a pain fu l one for the w orld
eco n o m y . A s 1975 b egan , m an y in d u str ia l n a tio n s, in clu d in g the U nited
S ta te s , w e r e in the th r o e s of th e ir d e e p e st r e c e s s io n s of the p ostw ar
p e r io d . The U nited S ta te s e co n o m y b egan to r e c o v e r in the seco n d
q u a rter and, by the y e a r -e n d , r e c o v e r y had sp rea d throughout m u ch of
the w o r ld . S till, u n em p lo y m en t continued c lo s e to p o stw a r p eak l e v e l s ,
and in fla tio n r em a in e d a s e r io u s p r o b le m .
S tr a in s in the fin a n c ia l m a r k e ts w e r e a ls o fe lt th ro u g h
out m uch of the y e a r , a s the com b in ation of in fla tio n and r e c e s s io n
e x p o se d som e w e a k n e s s e s in both the p r iv a te and the pu blic s e c t o r s .
New Y ork C ity 's fin a n c ia l d iffic u ltie s w e r e the m o s t d r a m a tic , but m an y
oth er c o n sp ic u o u s p r o b le m s ca m e to lig h t. D e sp ite th e se s t r a in s , s e c o n d
a r y r e p e r c u s s io n s in the e con om y p roved to be of m o d e st d im e n s io n s , and
b u s in e s s e s and fin a n c ia l in stitu tio n s m ade p r o g r e s s in im p r o v in g th eir
liq u id ity and c a p ita l p o s itio n s .
In the y e a r a h ead , im p ortan t ta sk s confront p o lic y m a k e r s .
A red u ctio n in u n em p lo y m en t is c le a r ly req u ire d . Y et w e m u st do th is
w ithou t e x a ce rb a tin g in fla tio n or e ls e our e ffo r ts are lik e ly to be th w arted .
H ap p ily, w e b egin the new y e a r in the m id s t of an ongoing r e c o v e r y w ith a
sh a rp ly lo w e r ra te of in fla tio n than one y e a r a go. The c h a lle n g e is to s u s
tain the upw ard m om en tu m in e co n o m ic a c tiv ity w h ile continuin g to m ake
p r o g r e s s on the in fla tio n fron t.

O(Jp&bsi
P A U L A. VOLCKER
P re sid en t

Federal Reserve Bank
of New York

SIXTY-FIRST
ANNUAL REPORT
For the Year
Ended
December 31,1975

Second Federal Reserve District

Contents
Page
THE ECONOMY IN 1 9 7 5 ....................................................................................................................

Monetary policy and financial d evelopm ents..............................................................................

New York’s financial p ro b lem s.......................................................................................................

International developments .............................................................................................................

The economy in perspective ...........................................................................................................

THE BANK’S OPERATIONS IN 1 9 7 5 ..............................................................................................

The Year in R eview .............................................................................................................................

Expanded initiatives in the area o f bank examinations and regu lation .............................

Trading Desk activity and Bank op eration s.................................................................................

Servicing the payments mechanism ..............................................................................................

Management and staff support se r v ic e s.......................................................................................

Financial S ta tem en ts..........................................................................................................................

Statement of condition ....................................................................................................................

Statement of earnings and expenses ............................................................................................

Changes in Directors and Senior O fficers...................................................................................

Changes in directors .........................................................................................................................

Changes in senior o ffic e r s................................................................................................................

Member of Federal Advisory Council— 1976 ............................................................................

List of D irectors and O fficers.........................................................................................................

CHARTS
Chart 1. Production and Prices in the United States.................................................................

Chart 2. M oney and Interest R a tes..............................................................................................

Chart 3 . Production and Prices in Selected C o u n tr ie s ..........................................................

Chart 4. Current-Account Balances, 1973-75

..........................................................................

Sixty-first Annual Report
Federal Reserve Bank of New York

The Economy in 1975
The industrial world began 1975 in the midst of a severe international reces
sion and an alarmingly virulent inflation. Starting in the second quarter, however,
the United States became one of the first major industrial nations to mount a
substantial recovery. By the end of the year, recovery had become rather general
throughout the world. Under the pressure of inventory liquidation and other
factors, inflation had slowed in varying degrees. Nevertheless, both inflation
and unemployment remained very serious problems. At the year-end, the stay
ing power of the recovery was still in some doubt and the prospects for sus
tained growth appeared closely related to those for bringing inflation in check.
One potential obstacle to continued expansion was the financial strains faced
by a wide range of the world’s business and governmental units in the aftermath
of the long inflationary boom, the increase in energy prices, and the subsequent
steep recession. The problems of New York City were a particular focus of
attention for much of the year. To be sure, these and other points of strain
were contained without substantial secondary repercussions, and clear progress
was achieved in strengthening the liquidity and profitability of many business
and financial institutions. Yet, more cautious attitudes remained evident on the
part of lenders and borrowers alike.
The pattern of the recent recession in the United States was quite unusual.

The starting point is generally dated in late 1973, when the impact of the energy
crisis curtailed growth. There was little further change until economic weakness
suddenly intensified in the fall of 1974 with an almost wholly unanticipated
severity. What happened in fact was that, after many months of sluggish final
demand, an unexpected inventory correction of major proportions broke out
and production and employment dropped sharply in the winter of 1974-75.
When the worst of the inventory adjustment had spent itself, the bottom of the
recession came rather quickly, sooner than generally expected. Indeed, the econ
omy began to recover in early spring, spurred in part by a sizable tax cut and
a more expansionary monetary policy. However, the drop in unemployment
was limited by the rise in the civilian labor force and by the usual reluctance
of firms to take on new workers in the early stages of an upturn. In December
the overall jobless rate stood at 8.3 percent, only slightly below its postwar
peak of 8.9 percent reached in May. To some extent, the impact of unem
ployment was cushioned by rising expenditures on social programs, such as
unemployment compensation, food stamps, and welfare. Yet many workers had
exhausted their jobless benefits by the year-end, and there could be no doubt
that unemployment in 1975 constituted a source of major private and social
costs.
Differences of opinion will probably persist with respect to the relative
importance of various factors in generating the recent recession. However, the
generally unexpected severity of the downturn undoubtedly reflected, in part,
reactions to both higher oil prices and, more importantly, the unusual virulence
of inflation in 1973-74. Given the absence of much postwar experience with
such factors, their influence was difficult to anticipate and, in retrospect, was
underestimated by most government and private sector analysts. The almost
fourfold increase in the price of crude oil in late 1973 disrupted normal expen
diture patterns and diverted income to the major oil-exporting nations. A more
serious depressant was the strong inflation over recent years which was
prompted by the worldwide boom and exacerbated by rises in the prices of both
oil and food. As households became more uncertain about the purchasing
power of existing income and wealth, measures of consumer confidence plum
meted to record lows, and spending on new homes, automobiles, and other
durables fell sharply. With corporate tax liabilities calculated on the basis
of historical rather than inflated replacement costs, aftertax cash flows of firms
were squeezed. Inflationary expectations helped boost inventory stocks in early
1974 to unsustainable levels, triggering the subsequent liquidation in 1975.
4

Expectations of inflation also pushed up interest rates, which in turn diverted
savings from thrift institutions and the housing industry. Moreover, inflation
strained financial markets and liquidity positions generally. Overall, the recent
experience has served to demonstrate the difficulty of maintaining steady eco
nomic expansion in an inflationary climate.
While the severity of the recent recession was certainly substantial, it never
theless seemed to belong more closely to the family of postwar recessions than
to the major economic catastrophies of the prewar period. To be sure, the
1973-75 decline in real gross national product (GNP) is estimated to have
been significantly larger than the drops recorded in earlier postwar downturns.
On the other hand, the percentage declines in some of the more direct mea
sures of real activity, such as industrial production and employment, whose
measurement, unlike that of real GNP, avoids the difficulties of deflating nom
inal expenditures, were more similar to those recorded in some previous post
war recessions (see Chart 1). By contrast, the drop in real activity during the
recent recession was very much smaller than the sharp declines of 1920-21,
1929-33, and 1937-38. Capacity utilization fell significantly in the 1973-75
recession but had been so high in 1973 that the trough in early 1975 for some
measures was not much different from either the 1957-58 or 1960-61 reces
sions. While the unemployment rate reached new postwar peaks during 1975,
this measure appeared for technical reasons to overstate somewhat the amount
of slack in the labor market relative to past episodes. By the end of 1975 some
of the slack in the economy had already been taken up and, while a good deal
of resource underutilization remained at the year-end, its extent was by no
means unprecedented even for the relatively prosperous postwar period.
In one major respect, at least, the 1973-75 recession did differ markedly
from its postwar predecessors: it left in its wake a still extremely high and
clearly unacceptable rate of inflation. Inflation did slow during the late
1974-early 1975 period by as much if not more than in previous postwar down
turns. In part, this was a normal response to sharply reduced demand. To an
unknown degree, however, it also reflected the fact that the bulk of the 1974
shocks emanating from higher oil prices and food shortages, as well as from
the effects of the earlier termination of domestic price controls and a major
depreciation of the dollar, seem to have filtered through the cost-price structure
by the end of 1974. After soaring at annual rates in excess of 30 percent during
the second and third quarters of 1974, the advance in industrial wholesale prices
fell by the second quarter of 1975 to a modest 2Vi percent annual rate, the low

Ch art 1.

P R O D U C T IO N A N D P R IC E S IN T H E U N ITED S T A T E S

Shaded areas represent periods of recession as defined by the National Bureau of Economic
Research, except for the latest recession period where the dates are estim ates. Changes
in consumer prices are expressed at compound annual rates. All data are seasonally adjusted.

est pace in three years. Similarly, the increase in consum er prices slowed to
about a 6 percent rate by the second quarter, sharply below the 12 percent
rate prevailing in the last half of 1974. T o some extent, indeed, the price picture
looked deceptively favorable in the spring of 1975, when m any sellers tem po
rarily cut prices below cost in a m ajor effort to reduce excessive inventories.
T hough actual price statistics were highly volatile on a m onth-to-m onth basis in
1975, as is norm ally the case, the underlying rate of inflation at the year-end
appeared to be in the neighborhood of 7 percent. A t this level, inflation was
actually running above the rates experienced in m ost postw ar periods of boom .
6

The 1975 experience with continued inflation in the midst of recession
provided still further evidence that in the contemporary setting, while inflation
does respond to demand conditions, it does so only very gradually, creating
exceedingly painful problems for economic policy. The inflationary period that
reached an acute stage in 1974 was a long time in building. It was fostered by
many years of intermittently excessive demand pressures and was brought to a
climax in 1974 by the various adverse special factors that converged in that
year. Because this experience has embedded itself in inflationary expectations,
in costs, and in a seemingly endless round of catch-ups for past price rises in
renewing long-term contracts, its legacy cannot be quickly overcome. At the
same time, recent experience with the many ways in which inflation can gener
ate recessionary forces strongly suggests that the restoration of price stability
has become desirable not only in itself, but also as a precondition for sustain
able economic expansion.
During much of the postwar period of relatively stable prosperity, inflation
was modest, interest rates were lower and relatively less volatile, and the
financial position of markets, firms, and governmental units remained quite
comfortable. The relatively greater robustness of financial conditions reflected
partly the absence of serious inflation and partly the legacy of caution left by
the experience of the Great Depression of the 1930’s. Under the conditions
of the 1950’s and 1960’s, policymakers could perhaps choose to concentrate
their attention either on stimulating real growth and employment or on foster
ing price stability. Under present conditions, however, sustainable real growth
depends upon controlling inflation. Thus, the task of policy is now to seek a
moderate course, one that will deal with both unemployment and inflation.

In response to the
acute dilemma of recession and continued inflation, the Federal Reserve
sought to ease monetary policy enough to support recovery while not under
mining the struggle to reduce inflation. Longer term System targets for the
monetary aggregates were publicly disclosed for the first time when Chairman
Burns announced in May growth targets covering the period March 1975 to
March 1976 for several measures: 5 to IV2 percent for Mt (the narrowest
definition of money including only currency and demand deposits), 8 V2 to
IOV2 percent for M3 (which also includes consumer-type time and savings
deposits at commercial banks), and 10 to 12 percent for M3 (which equals M2
MONETARY POLICY AND FINANCIAL DEVELOPMENTS.

plus deposits at thrift institutions). At subsequent meetings of the Federal Open
Market Committee (FOMC), the one-year horizon was moved forward to en
compass the June 1975 to June 1976 time span and later was changed to the
period from the second quarter of 1975 through the second quarter of 1976.
In October the FOMC advanced the one-year horizon to the third quarter of
1975 through the third quarter of 1976. Growth ranges remained the same as
those announced earlier except that the lower bounds for expansion in the
broader measures of the money stock were decreased by 1 percentage point.
The announcement of one-year targets for expansion of the aggregates did
not signal any major change in the System’s operating procedures. Flexibility
was retained, as both the ranges and the particular aggregates for which such
ranges are specified remained subject to modification as conditions might
warrant. Moreover, experience suggests that it is neither desirable nor feasible
to change reserve and money market conditions rapidly enough to main
tain steady month-to-month expansion of the aggregates. Monthly growth
rates have often fallen well outside the ranges specified for annual periods
in response to short-run factors largely beyond the System’s control. Finally,
the announcement of target ranges was by no means intended to imply
an exclusive concern on the part of policy with the monetary aggregates. The
Federal Reserve still relies upon a multifaceted approach, paying close attention
also to interest rates and the liquidity positions of institutions and the general
public. Overall, by setting out the general dimensions of intended policies, the
longer run target ranges can provide the System with a bench mark against
which to evaluate shorter run movements, and announcement of the targets
can help shape private decision making.
As the year began, the FOMC was seeking to promote monetary ease. This
policy, which had been adopted in September 1974, was maintained throughout
most of the first half of 1975. At the same time, the recession prompted weak
ness in demands for money and short-term credit and, consequently, interest
rates on money market instruments dropped sharply. During the first quarter
the Federal funds rate fell 3 percentage points to around 5 Vi percent in March,
the lowest monthly level since December 1972 (see Chart 2 ), while other short
term rates posted similar declines.
On four separate occasions during the first five months of the year the
directors of this Bank voted reductions in the discount rate. Similar actions
were taken by other Reserve Banks and were approved by the Board of
Governors. By mid-May the discount rate had been reduced to 6 percent at
8

all twelve Banks. A Jan u ary reduction of betw een V2 and 1 percentage point
in reserve requirem ents on net dem and deposits at m em ber banks released about
$1.1 billion in reserves. In early A pril, reserve requirem ents were low ered on
E u ro -d o llar borrow ings. D espite these various developm ents, the grow th of M x
failed to accelerate over the first fo u r m onths of the year from the m odest pace
registered in late 1974. T he grow th of the b roader m oney stock m easures did
pick up som ew hat, however.

C h a rt 2 .

M O N EY A N D IN TE R E ST R A T E S

1975

The money stock growth rates are computed from daily average levels in the final quarter
of the preceding period and the final quarter of the period covered. Quarterly figures for
1975 are expressed at seasonally adjusted annual rates. Rates for Federal funds and
seasoned Aaa-rated corporate bonds are m onthly averages of daily figures. Rates for
long-term municipal bonds are monthly averages of Thursday quotations.

The May-June period was marked by a dramatic step-up in the expansion
of the aggregates. This jump reflected, in part, a temporary accumulation
of deposit balances by the public following the Federal income tax rebates
in May and the supplementary payments to social security recipients in June. To
some extent, temporary monetary impacts from these fiscal measures were antic
ipated by the FOMC. At its April meeting, the April-May tolerance ranges for
the growth of Mt and M2 were raised above the annual target bands, and at the
May meeting the May-June tolerance ranges were set at 7 to 9 V2 percent and at
9 to WV2 percent, respectively. As it became apparent that growth rates were
coming in at well above even these high ranges, the System sought some tighten
ing of bank reserve and money market conditions. At the meeting held on June
16-17 the upper limit on the Federal funds rate was increased, as the Committee
voted to achieve “moderate growth in the monetary aggregates”. During most
of the late-June to September period the Federal funds rate hovered between 6
percent and 6 V2 percent. As anticipated by the FOMC, monthly growth of the
monetary aggregates slowed over this period when the higher money balances
due to tax rebates and social security payments were gradually run down.
By early October, it appeared that the monetary aggregates were growing
at rates well below those expected and desired by the FOMC. Taking into
consideration both the weakness of the aggregates and the unsettled market for
municipal securities—which was reacting to the troubled fiscal situation in New
York— the Committee agreed on October 2 to decrease the lower bound of
the Federal funds rate. Given the sizable overrun in monetary expansion that
had occurred in May and June, the subsequent shortfall was not initially
considered too serious, but it was decided to take steps to insure that it would
not persist. On October 15, the Board of Governors voted to reduce reserve
requirements on member bank time deposits with an original maturity of four
years or more from 3 percent to 1 percent. This action was designed primarily
to encourage the lengthening of the structure of bank liabilities but also to
meet seasonal reserve needs and facilitate moderate growth in the monetary
aggregates. On December 24, the Board of Governors announced a reduction
from 3 percent to 2.5 percent in reserve requirements on time deposits maturing
in 180 days to four years. In the meantime the System willingly provided re
serves at lower interest rates, and the Federal funds rate and other short-term
rates edged back down to the lows recorded in the second quarter. By the yearend, the Federal funds rate had fallen below 5Va percent. Over 1975 as a
whole, Mi rose 4.4 percent as compared with 5 percent in 1974. A modest
10

acceleration was recorded for M2 growth, which increased 0.5 percentage point
in 1975 to 8.2 percent, while Ms expanded 11.1 percent, up sharply from 7.1
percent in the previous year.
In contrast to the sharp declines in short-term interest rates from their peaks
in mid-1974, long-term interest rates did not drop so much as in other periods
of economic slack and remained relatively high by historical standards. While
the System purchased a substantial volume of coupon issues of the Treasury
and Federal agencies during the year, these actions contributed only modestly
and temporarily to lowering long-term rates. Indeed, such rates reflect mainly
factors over which the Federal Reserve has no short-run control. Undoubtedly,
a major reason for the continuing high long-term interest rates has been the
persistence of inflationary expectations. In addition, during much of the year
the market for long-term funds was under considerable pressure from unusually
heavy offerings of corporate and Treasury securities, as well as from a substan
tial volume of new municipal securities.
In reaction to the financial difficulties experienced by a wide range of
borrowers, interest premiums paid by those with less than the highest
credit ratings rose sharply, reaching postwar record levels in the municipal
bond market. The recession exposed financial problems in a number of indus
tries and increased public awareness of the extent to which adverse trends had
developed in liquidity and capital positions. These trends probably reflected,
in turn, a number of factors, including gradually fading memories of the
depression of the 1930’s and a consequent weakening of the standards of
prudence created by exposure to that trauma as well as an increasingly wide
spread belief that Government policy had reduced the sources of economic risk.
And inflation itself contributed to a deterioration in balance-sheet positions by
enlarging cash requirements at a time when market conditions made it unattrac
tive to raise proportionate increases in equity capital. Thus, when the recession
reduced revenues, some borrowers proved more vulnerable than in the past to
temporary shortfalls in cash flows. Against this background, business failures
increased substantially in 1975, highlighted by the bankruptcy of one of the
nation’s largest retailing chains. At the same time, the financial problems of the
real estate investment trusts continued. As a result, some major commercial
banks experienced rather sizable loan losses during the year. Nevertheless, the
basic stability of the banking system remained strong. In fact, by the year-end,
banks had increased their provisions for loan loss reserves and had begun
to make substantial progress in improving their capital positions.

n e w Y o r k ’s f i n a n c i a l p r o b l e m s .
Among the most severe manifesta
tions of credit strains were the financing problems of New York City, which
came to the fore early in the year, and the subsequent problems of New York
State and some of its independent agencies. New York City’s financial problems
had been building for a number of years. To some extent, they stemmed from
long-run demographic and economic forces that have afflicted many older
cities and have resulted in a declining economic base. Even as its revenueproducing powers were eroding, however, New York City’s expenses kept rising
rapidly as a result of the combined effects of socio-economic changes, the
growth of legally mandated programs, and the provision of services and em
ployee benefits beyond those normally available in other cities. For years the
inevitable reconciliation of an eroding tax base and an escalating level of
expenses was postponed by various fiscal strategems, such as pushing expendi
tures into the next fiscal year, borrowing at short term against anticipated
revenues that were not realized, and capitalizing current expenses. The inevitable
day of reckoning arrived in early 1975 when the city found itself unable to roll
over maturing short-term debt.
Default by the city was averted by a number of emergency measures, such
as advancing state-aid payments and the creation of the Municipal Assistance
Corporation for the City of New York (MAC) to redeem maturing New York
City short-term debt with the proceeds of long-term bonds. These bonds were
backed by statutory provisions for the appropriation of funds for debt service
out of the proceeds of earmarked state taxes collected in the city. However,
amidst investors’ concern that the city’s fiscal problems were not going to be
solved quickly, MAC experienced considerable difficulty in marketing its
securities. To fill the void left by other investors, the state, various state and
city employee pension funds, and the major New York City banks provided
funds for the city to meet its obligations through the purchase of MAC bonds
and city notes. Eventually the state legislature enacted a three-year moratorium
on the repayment of certain New York City notes, with holders granted the
option of exchanging their holdings into long-term MAC bonds.
These various palliatives were necessary to afford the city time to make
needed budgetary adjustments in an orderly manner. Such adjustments are
imperative if the city is to avoid an even larger crisis in the future. In fact,
some steps toward fundamental budgetary reform were taken during the year.
The state established an Emergency Financial Control Board to take control
of the city’s finances and to bring the city’s budget into balance within three

years. Late in the year, satisfied that the city and state were embarked upon a
program of fundamental reform, President Ford proposed and the Congress
approved a plan providing direct Federal loans to the city to meet its seasonal
cash needs through mid-1978. To ensure that the Federal funds would not be
used to finance deficits, the loans must be repaid fully by the end of each fiscal
year, and their continued availability is contingent upon the city’s progress in
achieving a balanced budget. Even after enactment of this legislation, concern
persisted over the near-term borrowing ability of New York State and its agen
cies. In late December, Governor Carey proposed and the state legislature
passed a tax package representing a step in closing the state’s own budget gap.
Thus, by the end of the year, the city and state appeared to be confronting
the budgetary problems that underlay the crisis in their fiscal affairs. To be
sure, much remains to be accomplished in repairing their financial condition.
In particular, stringent efforts are needed to control outlays. These efforts will
entail decisions in allocating scarce public resources among competing worthy
objectives. The New York City fiscal crisis, however, has enhanced public
awareness of the limits to which local fiscal resources can be stretched. It has
become abundantly clear that the failure of a state or local government to
exercise persistent fiscal discipline is a very short-sighted strategy with ulti
mately quite painful consequences for all its citizens.
During the course of the year, questions arose from time to time over a pos
sible role for this Bank in particular, or the Federal Reserve generally, in
resolving the financial problems of state or local governments. At one point, New
York State forwarded a tentative but incomplete application for such aid to
certain state agencies. In this connection, it should be understood that the Federal
Reserve Act provides the System with very limited emergency powers
to lend to nonbank borrowers. Among the conditions attached to the granting
of such loans, which have never been made to a state or local governmental
entity, are requirements that an applicant has exhausted all other sources of
funds, that it is basically creditworthy and offers adequate security, and that it
requires only short-term accommodation.
Apart from the statutory limitations on the Federal Reserve’s ability to pro
vide emergency credit to state and local government entities, other important
policy questions could be raised by the possibility of such lending. Establishing
access to Federal Reserve credit to relieve state or local financial problems
could reduce the intensity of efforts to find local solutions to such problems and
could impair the ability of the Federal Reserve to meet its responsibilities for

executing general monetary policy. Moreover, such lending could inject the
System into a sphere that more properly should be reserved for elected public
officials.
This Bank and other elements in the Federal Reserve System did follow
closely the emerging financial problems of New York City and New York State
and consulted frequently with city and state officials. The System also gave con
siderable attention to the financial difficulties that might have occurred in the
event of a city default and developed plans to limit the repercussions consistent
with its clear responsibilities to assure the stability of the banking and pay
ments system. Under these plans, loans would be made available to member
banks through the Federal Reserve discount window beyond the amounts re
quired by such banks for their normal operations. In addition to helping banks
meet their temporary liquidity needs, the proceeds of such loans could also be
used by the banks to assist municipalities, municipal securities dealers, and other
customers temporarily short of cash because of unsettled conditions in the se
curities markets. System spokesmen emphasized readiness to stabilize markets,
if necessary, through open market purchases of Treasury or Federal agency
securities. Furthermore, the Federal Reserve and other bank regulatory agen
cies reviewed and publicly clarified procedures for valuing municipal securities
held by banks in the event of default. Serious difficulties were not expected to
be widespread, since cases of particular banks with exceptionally heavy con
centrations of New York City and New York State debt relative to their capital
and assets were almost entirely confined to small institutions rather widely scat
tered throughout the country.

in t e r n a t io n a l d e v e lo r m e n ts .
Like the United States, the economies
of most other industrial countries moved in 1975 from recession toward recov
ery, with reduced rates of inflation. Following the lead of the United States
and Japan, output in other major countries began to increase in the later months
of the year. However, inflation—though abating—remained generally worse
abroad than here, and unemployment rose to record postwar levels. A bright
spot was the spectacular improvement of the payments imbalance between the
industrial and the major oil-exporting countries. With economic activity
depressed, the volume of oil imports by the industrial nations declined. Simul
taneously, spending under development programs adopted by the members of
the Organization of Petroleum Exporting Countries (OPEC) shifted into high

gear, and their imports soared. Most of these purchases were from the industrial
countries, whose combined current-account balance shifted into surplus from the
substantial deficit of the previous year. At the same time, OPEC’s huge surplus
was reduced by almost one half. However, this improvement in the international
balance failed to encompass the oil-importing less developed countries (LDCs),
whose large current-account deficits grew even bigger under the impact of high
oil prices and recession.
Despite this and other serious difficulties, the year ended with a sense of
purpose and even hope that had long been absent from the international eco
nomic scene. The brighter atmosphere stemmed only in part from the nascent
recovery and the improved international payments balance. International finan
cial markets, contrary to gloomy predictions, had weathered the strains stemming
from inflation and recession, and exchange rate fluctuations, though wide, were
no longer so erratic as they had been in the previous three years. In the field of
policy, constructive initiatives were afoot. Negotiations were in progress to deal
with the still growing differences in per capita wealth between the industrial
and oil-producing countries on the one hand and the LDCs on the other. Steps
were undertaken to help finance the deficits not only of these countries but of
such industrial countries as might, in case of extreme need, require assistance.
A substantial expansion in the regular financing facilities of the International
Monetary Fund (IMF) was in prospect. Equally important, there were signs
that international differences about exchange rate policies were being substan
tially narrowed. With governments working in greater harmony, there was some
basis to hope that, if recovery were accompanied by a continued abatement of
inflation and reasonable balance in payments, the worst of the international eco
nomic disturbances of the 1970’s might now be past.
While 1975 closed on a better note, the earlier months of the year had
seen production languish, especially on the European continent. In Germany,
industrial production peaked in the first quarter of 1974 and then contracted
until mid-1975 when a moderate upturn began (see Chart 3). The pattern in
France lagged that of Germany by several months, with industrial activity
declining sharply in late 1974 and the first quarter of 1975 and remaining almost
flat throughout the rest of the year. In Italy, industrial production began to con
tract in the third quarter of 1974 and continued to fall until late in 1975. By the
year-end, unemployment in the major European countries was about double the
level of two years earlier.
The decline in economic activity in Europe was accompanied by a drop in

Ch art 3.

P R O D U C T IO N A N D P R IC E S IN S E L E C T E D C O U N T R IE S

Industrial production data are seasonally adjusted. Consumer
price data are not seasonally adjusted. Changes in consumer
prices are expressed at compound annual rates.

the rate of inflation. H ow ever, price perform ance varied widely. T h e record
was best in G erm any and Sw itzerland, w here consum er prices rose over the
year by 4 to 5 Vi percent. F ran ce registered a gradual slowing in its inflation rate
to about a 9 percent annual rate in the second half of 1975. M eanw hile, the rate
of increase in Italy’s consum er prices, w hich had been nearly 17 percent over
the first half of the year, dropped to around 10 percent in the final six-m onth
period. W ith inflation generally at intolerable levels early in 1975, initial attem pts
to stim ulate production and em ploym ent were relatively mild. N otw ithstanding
som e m oderation, inflation continued to be regarded as a serious danger and
16

these countries moved cautiously in adopting monetary and fiscal measures to
counteract the recession.
Among industrial countries elsewhere, Japanese production bottomed out in
the first quarter, advanced strongly through July, and then changed little over
the balance of the year. At the same time, the rate of increase in consumer
prices, which had climbed to over 35 percent during the first half of 1974, de
clined to about 5 percent by the end of 1975. The turnaround in the Japanese
economy was facilitated by a shift to expansionary policies early in 1975. In the
third quarter, when output faltered and the number of bankruptcies rose alarm
ingly, further expansionary measures were adopted. Canada’s contraction,
which began in early 1974, was marked by its relative mildness. Unemployment
rose somewhat over the 1974 level but remained fairly constant at a level
significantly below that of the United States. With inflationary pressures build
ing, the authorities tightened monetary restraints and initiated a wage-price
control program in the autumn of 1975.
The inflation-recession dilemma was most difficult in the United Kingdom.
Its government had pursued accommodative policies during 1974, while other
countries were adopting anti-inflationary measures. In the first half of 1975,
when British inflation exceeded 35 percent on an annual-rate basis, the authori
ties shifted to restraint, and a comprehensive incomes policy was announced in
July. The United Kingdom began to experience a recession at a time when eco
nomic conditions elsewhere were starting to stabilize. By the end of 1975,
industrial production was little above its 1970 level and unemployment
had increased to about 5 percent, almost double the rate of a year earlier. The
inflation rate in consumer prices dropped in the final quarter of the year to the
neighborhood of 15 percent.
Partly because economic activity was depressed, most industrial countries
made substantial progress in redressing their external positions (see Chart 4 ).
Imports lagged, especially those of oil and other primary commodities. At the
same time, exports to OPEC members continued to surge. France, Italy, and
Japan moved into approximate balance on current account from the large
deficits of 1974, while Britain’s huge deficit was cut by more than half. A reduc
tion of almost half in Germany’s current-account surplus also contributed to
the improved international balance.
The swing in the current-account balance of the United States was as dra
matic as those registered by industrial countries abroad. This nation’s mer
chandise exports were $8.9 billion higher in 1975 than the year before,

with exports to OPEC members increasing by nearly $4 billion. Particularly
sharp gains were shown in exports of capital goods and automotive equipment
(including trucks and buses), while agricultural exports remained at the record
level of 1974. Simultaneously, United States imports dropped $5.5 billion.
Consequently, the merchandise trade balance shifted to a record $9.1 billion
surplus from the $5.3 billion deficit of 1974. At the same time, the surplus
on service account was somewhat reduced. The net result was a rise in the
United States current-account balance of about $13 billion, the 1975 surplus
being estimated at $15 billion exclusive of government grants. This sharp swing
combined with interest rate movements and growing confidence in the dollar
to generate an appreciation in the exchange value of the dollar from early
March until September, after which it changed little on balance through the end
of the year.
Most of the 1975 improvement in the industrial countries’ current-account
balances arose, as already noted, from transactions with OPEC. Oil exports
by OPEC members fell to approximately 27 million barrels per day in 1975
from about 30 million in 1974. This was attributable not only to the world
recession but also to higher prices for petroleum products and conservation
efforts. Even with the further increase in oil prices in 1975, major exporters’
oil revenues, measured on a transactions basis, declined to about $100 billion,
down roughly 7 percent from the previous year. On the other hand, merchan
dise imports of the major oil-producing countries escalated to some $60 billion
from less than $40 billion recorded in 1974. Primarily for these reasons, the
combined current-account surplus of these countries appears to have dropped
to about $35 billion in 1975 from over $65 billion in 1974.
The decline in the major oil producers’ current-account surplus was ac
companied by notable shifts in the pattern of their investments. Placements
in Euro-currency markets slowed considerably, as OPEC members increased
their funding of international institutions, their direct loans to oil-consuming
countries, and their placements in domestic capital markets outside the United
Kingdom and the United States. The latter’s share in the placement of OPEC
funds was virtually unchanged in 1975, while the maturity of these placements
lengthened considerably as funds were increasingly invested in bonds and
equities rather than in time deposits and money market instruments.
In contrast to the striking improvement of the industrial countries’ currentaccount balances, the deficits of other oil-importing countries continued to
grow. The LDCs had to contend with a substantial worsening of their terms of
18

trade as well as with a decline in their exports brought about by the recession
in the industrial countries. T he aggregate current-account deficit of these coun
tries w idened to some $35 billion in 1975 from roughly $28 billion in 1974.
They covered p art of this deficit by using about $2 billion of reserves, which had
risen by $10 billion during the two previous years. T he bulk of the deficit was
financed by increased foreign official assistance and private loans, with the
E uro-currency m arkets rem aining an im portant source of funds.
The plight of the LD Cs highlighted the need for intensified international co-

C h a rt 4 .

C U R R E N T -A C C O U N T B A L A N C E S , 1 9 7 3 -7 5

-4 0

Current-account balances include goods, services, and private tra n sfe rs but exclude all
government transfers. More developed primary-producing countries and com m unist countries
are not included in these groupings. Data for foreign countries are estimated by the International
Monetary Fund. All 1975 figures are preliminary estimates.

operation in financing their large external deficits. Both the industrial and the
OPEC countries expanded their financial assistance to them, directly and through
international institutions. The IMF Oil Facility was continued for 1975 on an
enlarged basis and made $1 Vi billion equivalent available to the LDCs. At the
close of the year, there was progress toward agreement on the establishment of
the United States proposed trust fund, managed by but separate from the IMF,
to provide concessional balance-of-payments assistance to the poorest of the
developing countries. In addition, at the end of the year, liberalization of the
IMF’s compensatory financing facility was approved. This, and other arrange
ments adopted early in the new year, should be of substantial benefit to devel
oping countries in 1976.
Clear progress was also made in the task of achieving consensus on the
reform of the international monetary system. In September, at the IMF annual
meeting in Washington, key understandings in principle were reached regarding
the role of gold in the monetary system and upward revisions in Fund quotas.
The understanding on gold involved abolishing the official price of gold and
ending the obligation to use gold in transactions with the Fund. In addition, a
sixth of the Fund’s gold holdings would be returned to members in proportion
to their quotas and another sixth sold, with the differential between the former
official price and the selling price being used to benefit developing countries.
Under an agreement subject to review after two years, the Group of Ten also
barred any increase in the total stock of gold possessed by the IMF and the
monetary authorities of the ten countries. Moreover, they agreed not to peg
the market price of gold, which dropped in London to about $140 per ounce at
the end of 1975 from the all-time high of $195 a year earlier.
The major changes in the exchange rate structure of the early 1970’s facili
tated much needed balance-of-payments adjustment, and the exchange flexibility
of the past three years helped to cushion and absorb serious strains in the
world economy. Nevertheless, swings in the exchange markets were at times very
sizable. Daily fluctuations were often much larger than under Bretton Woods and,
more important, changes in dollar exchange rates vis a vis the currencies in the
European common float, the so-called “snake”, cumulated to as much as 15 to
20 percent over a few months, only to be reversed in the following months. It
was clear that short-term fluctuations of these magnitudes reflected not only un
derlying economic factors but also sharp swings in market sentiment.
Under these circumstances, the possibility of erratic and disorderly exchange
market developments impeding the international economy was recognized. In
20

early 1975 the dollar declined under bearish pressures, as the recession in the
United States became severe and interest rates fell more steeply than those in
many other countries. In February, the Federal Reserve, the Bundesbank, and
the Swiss National Bank reached agreement on coordinated and more forceful
intervention to counter the selling pressures on the dollar and to avoid the devel
opment of disorderly conditions. By March, the atmosphere in the exchange
markets had improved and the dollar began to appreciate, as the United States
trade balance moved into substantial surplus and interest rate differentials shifted
in favor of New York. A desire for greater stability with major trading partners
was exhibited in mid-July, when the French franc rejoined the snake. This was
followed in November by the Rambouillet agreement between the United States
and France, affirming the desirability of greater economic and exchange rate
stability and calling for improved cooperation to counter erratic exchange rate
fluctuations within the context of a system in which major countries have float
ing exchange rates.
It was understood of course that, while cooperative efforts could do much
to improve the functioning of the exchange markets, no amount of official
intervention would be useful if it ran against fundamental market forces or if
intervention were viewed as a substitute for fundamental policy actions. Stability
in exchange markets cannot be sought independently of stability in domestic
economies. Of course, there are great difficulties in coordinating policies interna
tionally. Dilemmas and conflicts in domestic and external policies are unavoid
able. And, because the exchange market is multisided, the difficulties increase
when numerous countries are involved.
Nevertheless, there is solid ground on which to build. The central problem
primarily concerns a small number of major countries. If their currencies are
reasonably stable, given appropriate domestic policies, the rest are likely to
fall into place. Indeed, there is room for a considerable variety of exchange
rate practices. These would not cause great difficulty so long as the exchange
rate relationships between the United States and its major trading partners in
Europe and Japan provide a reasonably stable and well-adjusted nucleus.
Already much has been done to develop informal consultative arrangements
among leading countries. Acting within the framework of their economic poli
cies, the authorities can take into account the mutual desirability of relatively
stable exchange markets. This might be possible, for instance, in shaping the
precise mix of fiscal and monetary policies and their timing. In some areas, a
common view can emerge as to conditions and policies that are consistent with

balance-of-payments equilibrium and adjustment as well as with internal eco
nomic stability.
Such a view must not be static and rigid if the important element of flexibility
afforded by floating rates is to be retained. Basically, it is the market that deter
mines the structure of exchange rates. But the market at times has moved
erratically, and it is the fluctuations reflecting such disorderly conditions that
could usefully be dampened. Expectations in the market that rates are likely to
be governed in the main by fundamentals will contribute to greater stability.
Those expectations, of course, will need to find support and justification in our
economic policies.

e c o n o m y in p e r s p e c t iv e .
The past two years were a period of
painful economic readjustment in the United States and in the world as a
whole. A long inflationary boom turned into a major worldwide recession
and, in the process, exposed significant financial and economic weaknesses
in both the private and the public sectors. At one level, the problems of
inflation and the resulting recession might be traced to overly expansive
economic policies throughout much of the industrial world during the early
1970’s. On top of these forces had been imposed a large rise in world oil prices
with associated significant impacts on the international distribution of income
and wealth and on the direction of financial flows. Given this background, it
indeed was fortunate that the recessionary problems of 1974 and 1975 were not
even more serious than they proved to be. While there were a number of dis
ruptive events to unsettle the domestic and international economic and financial
scene, at no time did markets here or abroad show any real signs of panic or
breakdown; nor was there any serious threat of a cumulative economic collapse
of the sort that had marked some earlier junctures in economic history. Evi
dently, many of the safeguards adopted since the Great Depression of the
1930’s have done their work well.
Nevertheless, the events of the past two years or so should serve as a warn
ing. The long and relatively steady period of prosperity in the postwar period
seems gradually to have loosened the bounds of prudent restraint and weak
ened the matching of expectations with the limits of the possible in the finan
cial affairs of governments, businesses, and individuals. Close to home, the
clearest example of this process, and of its ultimate result, was of course the
fiscal crisis in New York City. Yet there were many other examples of less

th e

dramatic but also pervasive importance. In the business world, these included
a progressive deterioration of liquidity and of balance-sheet soundness which
reflected not only inflation itself, but a gradual weakening of the restraints of
normal caution. In the area of government, New York City was scarcely the
only example of excess, with spending outrunning levels for which taxpayers
were willing directly to pay. Nor, in some instances, was labor exempt from
the failure to hold demands within reasonable bounds.
There are many signs that these attitudes are undergoing reevaluation
on a wide front, and in this perhaps lies the best hope that we can now build
a period of stable, noninflationary prosperity. Certainly, monetary policy has a
major role to play in this process. Control of the supply of money and credit
has only a partial and uncertain impact over the course of economic events
in the short run— and one that is sometimes exaggerated. Nevertheless, there
is no doubt that a relatively steady expansion in money and credit geared to
the economy’s capacity to produce is a necessary condition for stable, non
inflationary growth in the long run. Starting as we do with both a high level
of unemployment and a high rate of persistent inflation, there will be many
perplexing difficulties in working toward such a path. Moreover, monetary
policy does not operate in a vacuum. It requires widespread public support
and understanding of its aims, especially when they seem to run counter to
some momentary objective. Given the more sober appraisals of what is eco
nomically possible generated by recent history, however, there is every reason
to be hopeful that the country can make progress in solving its present problems.

TH E BANK’S OPERATIONS IN 1975
The Year in Review
During 1975, the volume of most of the Bank’s operations continued to rise
and overall economic and financial conditions interacted to produce strong
operational pressures on a number of the Bank’s organizational units. The
general economic situation, along with the particular financial problems of
New York City and New York State, placed further strains on financial insti
tutions. These developments occupied much of the attention of the Bank’s
senior management and underscored the need for the expansion of the Bank’s
and the Federal Reserve System’s programs relating to the examination, super
vision, and regulation of banks and bank holding companies that had been
initiated in 1974. At the same time, developments here and abroad combined
to increase sharply the volume and complexity of open market transactions im
plemented by this Bank on behalf of the System Open Market Account and
on behalf of foreign central banks and monetary authorities.
These special developments, together with the growth in the volume of many
of the Bank’s operations and continued rapid increases in the prices of goods
and services purchased by the Bank, put strong upward pressure on Bank
expenditures. However, the Bank was able to limit the growth in its overall
expenses, net of reimbursements and recoveries, to approximately 6.5 percent
and to achieve a small reduction in staffing levels. The modest rise in expenses
in the face of strong volume and cost pressure was, in large part, achieved by
increased employee productivity. In turn, the productivity gains were facilitated
by the full implementation of the Bank’s new planning and budgetary control
system, discussed in last year’s report, and the initiation of a formal Bankwide
operations improvement program which draws upon the analytical framework
of the new planning and budgetary system.
The year was also characterized by important changes in the Bank’s organi
zation. Paul A. Volcker, formerly Under Secretary of the Treasury for Monetary
Affairs, was appointed the Bank’s fifth chief executive officer effective August 1,
1975. He succeeded Alfred Hayes who retired after nineteen years of distin
guished service as President and chief executive officer of the Bank. Earlier in
the year, Charles A. Coombs and Thomas O. Waage, Senior Vice Presidents,
elected early retirements after many years of service in senior management
positions. The Bank’s internal structure was reorganized, and Alan R.
24

Holmes and Thomas M. Timlen were appointed to the newly created position
of Executive Vice President. The Bank also consolidated its three principal
operating areas— the Cash and Collection Function, the Check Processing Func
tion, and the Government Bond and Safekeeping of Securities Function—into
a newly created “Operations Group” and assigned overall management respon
sibility for the group to a Senior Vice President.

EXPANDED INITIATIVES IN THE AREA OF BANK EXAMINATIONS AND
.
During 1975 the strains on the nation’s banking system
that had been witnessed in 1974 continued as the recession, together with
special problems in certain industries, triggered sizable increases in problem
credits and loan losses in the banking system. In the Second Federal Reserve
District, the financial difficulties of New York City, New York State, and a
number of New York State agencies posed additional problems for financial
institutions. These developments served to underscore the need for new and
expanded programs to examine, monitor, and supervise banks and bank hold
ing companies. Such an effort had been initiated by this Bank and the Federal
Reserve System in 1974 but was intensified in 1975.
During 1975 the Bank implemented a number of new bank examination
procedures and techniques, including the development of accelerated report
ing timetables, more detailed reviews of bond trading and foreign exchange
trading accounts, and the expansion of programs relating to the on-site exam
inations of foreign branches of Second Federal Reserve District state member
banks. New training programs for examining personnel were introduced, and
further progress was made in the development of “early warning” techniques
for anticipating problem bank situations and monitoring the performance of
banks between examination dates. In addition, a comprehensive program for
analyzing and monitoring the activities of bank holding companies was com
menced.
These initiatives required the commitment of a sizable volume of additional
resources during the year. As a result, the bank examinations and related sup
port areas were among the few areas of the Bank that increased their work
force during the year. However, the size of this increase was moderated in part
by higher productivity and in part by a decline in the volume of bank and bank
holding company applications work which permitted a reallocation of existing
resources.

r e g u l a t io n

During 1975 the
volume of open market transactions conducted by this Bank for its own ac
count and for the System Open Market Account increased by approximately
20 percent, while the dollar value of such transactions nearly doubled to a
level of $670 billion. Over the past decade, the dollar value of these opera
tions has risen at a compound average annual rate of 33 percent. At the same
time, the volume of transactions conducted in the domestic securities markets
by this Bank on behalf of foreign central banks and monetary authorities con
tinued to rise sharply. The number of transactions increased by approximately
16 percent in 1975, with their dollar value more than doubling to a level of
$334 billion.
While the direct impact of expansion in the volume of securities trading
operations occurs in this Bank’s open market and foreign areas, these opera
tions contribute in a major way to the growth in the work volume of other
areas of the Bank. For example, a sizable share of the daily work flow in this
Bank’s Accounting, Government Bond and Safekeeping, and Data Services
areas is a direct outgrowth of Trading Desk activities.
In part, the growth in the volume of open market operations during 1975
was a continuation of the trend experienced in recent years. However, during
1975, the Treasury altered its cash management policies in such a way as to pro
duce frequent and sharp swings in its cash balances in the commercial bank
ing system. These swings result in equally pronounced oscillations in bank
reserve positions which, in many instances, must be offset by open market
operations.
TRADING DESK ACTIVITY AND BANK OPERATIONS.

th e pa y m en ts
m e c h a n is m .
The effective operation of the
nation’s payments mechanism, including the money and securities markets, is
one of the major responsibilities of this Bank and the Federal Reserve System
as a whole. The importance of these responsibilities stems in part from the fact
that an efficient payments system is essential to economic growth. Beyond this,
efficient money and securities markets contribute to the System’s ability to
conduct open market operations and to the Treasury’s ability to formulate and
implement effective debt management policies.
The primary responsibilities of the three functional areas of this Bank that
constitute its Operations Group relate to servicing the payments mechanism
and the Government securities markets. These areas account for about 45
s e r v ic in g

percent of the Bank’s total staff. The activities of these areas include, among
others, conventional check processing operations, the provision of currency and
coin to the banking system, the electronic processing of various types of finan
cial transactions, and the issuance, servicing, and redemption of securities as
fiscal agent of the United States Government and certain Government agencies.
The volume of electronic transfers of securities and Federal funds processed
by this Bank’s telecommunications system rose by about 22 percent during
1975, as the daily average dollar value of such traffic reached $57 billion.
Since 1970, when the Bank’s telecommunications system was introduced, the
daily average volume of transactions processed has risen from about 8,000 to
23,000 items, or by almost 200 percent. The continued sharp rise in the volume
of traffic handled by the telecommunications system during 1975 reflected a
number of developments, including a substantial increase in the amount of
Treasury debt outstanding, frequent Treasury financing operations, and a fur
ther expansion of the number of Treasury and agency securities that are eligible
to be held in book-entry form and to be transferred through this Bank’s Gov
ernment securities clearing arrangement. In this regard, by the year-end, some
$285 billion, or 78.5 percent, of the Treasury’s marketable public debt was in
book-entry form, compared with $201.4 billion or 71.6 percent a year earlier.
The amount of Federal agency obligations in book-entry form also rose sharply,
reaching $40.5 billion or 54.4 percent of the total outstanding.
At times during 1975, the volume of traffic processed on the telecommuni
cations computers strained the capacity of the system. As a result, at the yearend the Bank was actively considering steps that might be taken to insure the
continued effective functioning of the system through 1980-81, when a new
Systemwide facility is scheduled to become operative.
The Bank initiated or participated in a number of new programs designed
to provide further efficiencies in the payments mechanism. In the area of elec
tronic transfers of funds, the Bank implemented the Air Force payroll project
in this District, which provides for the direct deposit of payrolls to the bank
accounts of payment recipients. The Bank also proceeded with plans for the full
implementation in 1976 of similar arrangements for processing social security
payments.
The volume of conventional checks processed by this Bank during 1975
rose by 5 percent to 1.3 billion items. Overall productivity of the Bank’s check
operations rose sharply during the year, while the amount of holdover float
generated by such operations continued to decline from the excessively high

levels recorded in 1973. Throughout 1975 the level of holdover float remained
within the Bank’s and the System’s holdover target. During the year detailed
plans were completed for the installation of third-generation check process
ing systems at the Head Office, and the necessary computer hardware was
in place by the year-end for testing in early 1976. Plans were also completed
for the Districtwide implementation of overnight check clearing operations,
which will be achieved with the commencement of operations in 1976 of two
new Regional Check Processing Centers, including a new facility in the Utica,
New York, area and the expansion of existing facilities in Jericho, Long Island.
The Utica facility will serve banks located in thirty-four counties in the upstate
region, and the expanded Jericho facility will serve the seven counties just
north of New York City.
The Bank’s cash and collection operations experienced a small rise in the
volume of operations and a slight decline in staffing levels. Late in the year,
the Bank, in connection with a Federal Reserve System project, completed ar
rangements for the delivery in 1976 of a high-speed automatic currency process
ing system. If tests of this equipment prove successful, a substantial increase
in the productivity and overall effectiveness of currency processing operations
should be realized.

m anagem ent
a n d s t a f f s u p p o r t s e r v ic e s .
By midyear the Bank’s
new planning and budgetary control program was installed in six additional
functional areas and at the Buffalo Branch, thereby completing a process
that began in mid-1973. The program involves such techniques as the setting
of goals and objectives, budgeting based on productivity targets and volume
projections, and the integration of project planning into the budgeting processes.
The program is supported by a new budget and expense reporting system that
permits Bank management to monitor and evaluate data on key volume, unit
cost, and productivity measures, as well as conventional expense data.
In a separate but closely related effort, a formal Bankwide operations im
provement program was initiated during 1975. The broad purpose of the pro
gram is to improve the cost effectiveness of the Bank through the selective
review and analysis of its major operations. Policy direction for the program
is provided by a committee of senior officers that is responsible for the
Bank’s overall budget and control program. Nine major studies— ranging from
a review of more effective methods for processing currency deposits to a re

view of procedures for cleaning Bank facilities—were undertaken during the
year and have resulted in substantial cost and personnel savings. Another
aspect of this overall effort was the initiation of an employee suggestion pro
gram in mid-1975. Under the program, Bank employees are encouraged to
submit suggestions for cost improvement opportunities and are eligible for
awards for deserving suggestions.
The attainment of an improved data-processing operation has been one of
the primary near-term objectives of the Bank. Plans have focused on consoli
dating and standardizing processing equipment, providing improved physical
facilities, identifying the Bank’s systems support needs, and developing compre
hensive procedures for meeting those needs. During 1975 progress relative to
these objectives was realized.
In January the Bank purchased two third-generation general-purpose com
puters and, in the process, released a multiplicity of first- and second-generation
processing equipment. In addition to reducing cost, this consolidation en
abled the Bank to achieve a greater degree of stability in the general-purpose
processing area. Similarly, a review of alternatives for meeting the Bank’s
analytical and statistical processing computer needs was completed and, by the
year-end, detailed plans had been completed for conversion to a new computer
system by mid-1976. Also, work began on establishing improved facilities for
housing computers and computer-related facilities, so that all the Bank’s com
puter operations can be centralized in one building and provided with an ade
quate and stable electrical power supply.

Financial Statements
S T A T E M E N T O F C O N D IT IO N
In dollars

D E C . 3 1 , 197 5

D EC . 31, 1974

Gold certificate account ..........................................
Special Drawing Rights certificate a c c o u n t...............

3,330,061,781
124,000,000

3,413,162,149
93,000,000

Federal Reserve notes of other B a n k s .....................

275,087,350

232,852,190

Other cash ................................................................

22,551,259

14,250,442

3,751,700,390

3,753,264,781

78,290,000

90,750,000

Assets

Total

Acceptances:
Bought outright .......................................................

741,485,034

578,949,486

Held under repurchase agreements .........................

385,095,974

420,270,980

...................................................

20,810,610,000

17,783,692,000

Held under repurchase agreements............................

1,216,700,000

443,350,000

Bought outright .......................................................

1,457,196,416

1,044,519,193

Held under repurchase agreements ..........................

118,200,000

510,500,000

24,807,577,424

20,872,031,659

Cash items in process of co llectio n .........................

1,784,801,951

1,456,275,750

Bank premises .........................................................

20,107,521

11,736,752

1,125,000,000

1,723,472,055

724,396,964

305,377,071

3,654,306,436

3,496,861,628

United States Government securities:
Bought outright *

Federal agency obligations:

Total loans and securities
Other assets:

Due from Federal Deposit Insurance Corporation-]- . .
All others

................................................................
Total other assets

Interdistrict settlement account§ ..............................
Total Assets

★ Includes securities loaned— fully secured ...........................
f

In connection with the closing of Franklin National Bank,

Includes assets denominated in foreign currencies.

Effective May 1, 1975, this account was established to reflect the
settlement of interdistrict transactions.

(2,609,895,974)

29,60 3,688,276

28,1 2 2,1 58,0 6 8

114,645,000

154,600,000

S T A T E M E N T O F C O N D IT IO N

In dollars

Liabilities

d ec

. 3 1 , 197 5

D E C . 3 1 , 1 974

Federal Reserve n o te s ..............................................................

19,703,279,957

17,979,728,841

Deposits:
Member bank reserve acco u n ts...............................................

4,717,700,951

6,139,479,997

United States Treasury— general a c c o u n t................................

2,292,381,380

1,080,151,319

Foreign * .................................................................................

159,007,957

201,978,234

Other .......................................................................................

769,063,124

812,646,165

7,938,153,412

8,234,255,715

Total deposits

Other liabilities:
Deferred availability cash it e m s ...............................................

1,202,944,267

1,157,281,010

All o th e r...................................................................................

280,699,540

281,588,702

Total other liabilities

1,483,643,807

1,438,869,712

Total Liabilities

29,12 5,077,17 6

27,65 2,854,26 8

Capital paid i n ........................................................................

239,305,550

234.651.900

Surplus

239,305,550

234.651.900

Capital Accounts

...................................................................................
Total Capital Accounts

478,6 11,100

469 ,3 03,800

Total Liabilities and Capital Accounts

29,60 3,688,27 6

28,12 2,158,06 8

Contingent liability on acceptances purchased for foreign
correspondents! ..................................................................

248,632,059

★ After deducting participations of other Federal Reserve Banks
amounting to ......................................................................................

193,798,800

216.050.000

732.186.000

After deducting participations of other Federal Reserve Banks
amounting to ......................................................................................

The guaranteeing by the Federal Reserve System of acceptances pur
chased for foreign correspondents was discontinued on November 12,
1974.

S T A T E M E N T O F EA R N IN G S AN D E X P E N S E S FO R
T H E C A L E N D A R Y E A R S 1 9 7 5 A N D 1 9 7 4 (In dollars)

1975

1974

Total current earn in g s..............................................................

1,660,070,216

1,686,669,672

Net expenses ..........................................................................

125,660,806

118,226,676

1,534,409,410

1,568,442,996

Current net earnings
Additions to current net earnings:
Profit on sales of United States Government securities
and Federal agency obligations (net) ..................................

8,824,743

Ail other

.................................................................................

1,024,713

1.252.160

Total additions

9,849,456

1.252.160

Deductions from current net earnings:
Loss on sales of United States Government securities
and Federal agency obligations (net) .................................. ........................ 0

10,575,644

Loss on foreign exchange transactions (net) ............................

63,350,936*

8,661,015

All o t h e r ...................................................................................

716,231

1,598,928

Total deductions
Net dedu ctio ns........................................................................
Net earnings available for distribution

64,067,167

20,835,587

54,217,711

19,583,427

1,480,191,699

Dividends paid ........................................................................

13,918,891

Payments to United States Treasury (interest on
Federal Reserve notes) .......................................................

1,461,619,158

Transferred to su rp lu s ..............................................................

4,653,650

1,548,859,569

13,627,935
1,515,542,484
19,689,150

SUR PLUS AC CO U N T

Surplus— beginning of y e a r .....................................................

234,651,900

214,962,750

Transferred from net earnings for y e a r ....................................

4,653,650

19,689,150

Surplus— end of year

★ Reflects revaluation of pre-1971 swap drawings.

23 9,3 05,550

234 ,6 51,900

Changes in Directors and Senior Officers
in d ir e c t o r s . In December 1975, member banks in Group 3
elected Harry J. Taw a Class A director and reelected Jack B. Jackson a Class
B director, each for a three-year term beginning January 1, 1976. Mr. Taw is
President of First National Bank of Cortland, Cortland, N.Y. Mr. Jackson,
President of J. C. Penney Co., Inc., has been a Class B director since January 1,
1973.
Also in December, the Board of Governors of the Federal Reserve System
reappointed Frank R. Milliken a Class C director for the three-year term
beginning January 1, 1976, and designated him as Chairman of the board of
directors and Federal Reserve Agent for the year 1976. Mr. Milliken, President
of Kennecott Copper Corporation, New York, N.Y., has been serving as a
Class C director and Deputy Chairman since January 1, 1973; he served as a
Class B director in 1972. As Chairman and Federal Reserve Agent, he suc
ceeded Roswell L. Gilpatric, who resigned as a Class C director effective
December 31, 1975. Mr. Gilpatric, a partner in the New York law firm of
Cravath, Swaine & Moore, had served as a Class C director since January 1,
1969, as Deputy Chairman in 1971, and as Chairman and Federal Reserve
Agent since January 1, 1972.
In February 1976, the Board of Governors appointed Robert H. Knight a
Class C director for the remainder of Mr. Gilpatric’s term ending December 31,
1977, and appointed him Deputy Chairman for the year 1976. Mr. Knight is a
partner in the New York law firm of Shearman & Sterling.

changes

Buffalo Branch. In December, the board of directors of this Bank appointed
Avery H. Fonda, who is President of Liberty National Bank and Trust Com
pany, Buffalo, N.Y., and Charles A. Marks, who is President of Alden State
Bank, Alden, N.Y., as directors of the Buffalo Branch beginning January 1,
1976. Mr. Fonda was appointed for a three-year term and Mr. Marks for the
unexpired portion of the three-year term expiring December 31, 1977. On the
Branch board, they succeeded, respectively, Claude F. Shuchter, Chairman of
the Board of Manufacturers and Traders Trust Company, Buffalo, N.Y., who
had been a Branch director since January 1, 1973, and Stephen T. Christian,
Chairman of the Board of Marine Midland Bank-Chautauqua, National Asso
ciation, Jamestown, N.Y., who resigned from the Branch board effective De
cember 31, 1975. Also in December, the board of directors of this Bank desig

nated Rupert Warren as Chairman of the Branch board for the year 1976. Mr.
Warren, former President of Trico Products Corporation, Buffalo, N.Y., has
been a director of the Branch since January 1, 1971 and was Chairman of the
Branch board in 1973. At the same time, the Board of Governors reappointed
Donald R. Nesbitt a director of the Buffalo Branch for a three-year term be
ginning January 1, 1976. Mr. Nesbitt, owner and operator of Silver Creek
Farms, Albion, N.Y., has been a director of the Branch since January 1, 1973,
and was Chairman of the Branch board in 1975.

in s e n io r o f f ic e r s .
The following changes in the official staff,
at the level of Vice President and above, have been made since January 1975:
Alfred Hayes, President of this Bank, retired August 1, 1975, after com
pleting nineteen years of distinguished service in that position. Mr. Hayes, who
joined the Bank as its fourth chief executive officer on August 1, 1956, had
previously been a commercial banker. Immediately prior to his career with
the Bank, he had been Vice President in charge of the Foreign Division of
New York Trust Company.
Paul A. Volcker was appointed President, effective August 1, 1975, for the
unexpired portion of the five-year term of Mr. Hayes ending February 29, 1976.
Mr. Volcker held a number of positions with this Bank from 1949 to 1957,
with Chase Manhattan Bank in 1957-62 and 1965-69, and with the Depart
ment of the Treasury in 1962-65. From 1969 to 1974 he served as Under Secre
tary of the Treasury for Monetary Affairs. During the 1974-75 academic year
he had been Senior Fellow at the Woodrow Wilson School of Public and Inter
national Affairs of Princeton University.
Thomas O. Waage, Senior Vice President, elected learly retirement effective
April 1, 1975. He joined the Bank’s staff in 1950 and became an officer in
1951. At the time of his retirement, Mr. Waage had senior management re
sponsibility for the Cash and Collection, Check Processing, Government Bond
and Safekeeping of Securities, and Public Information Functions.
Charles A. Coombs, Senior Vice President in charge of the Foreign Func
tion, elected early retirement effective June 1, 1975. He joined the Bank’s
staff in 1940 and became an officer in 1953. From 1962 until February 1975,
Mr. Coombs served as Special Manager of the System Open Market Account
for Foreign Currency Operations. Between February 20 and June 1., 1975, he
had responsibility for special studies for the President and First Vice President.
changes

Alan R. Holmes, formerly Senior Vice President, was appointed to the
newly established position of Executive Vice President, effective February 20,
1975, and assigned senior management responsibility for the Foreign Function
and the Open Market Operations and Treasury Issues Function. On February
19, 1975, the Federal Open Market Committee broadened the responsibilities
of Mr. Holmes as Manager of the System Open Market Account to include
foreign currency operations. At the same time, the Committee appointed Peter
D. Sternlight and Scott E. Pardee, Vice Presidents of this Bank, to the positions
of Deputy Manager for Domestic Operations and Deputy Manager for Foreign
Operations, respectively.
Thomas M. Timlen, formerly Senior Vice President, was appointed Executive
Vice President, effective February 20, 1975, and assigned senior management
responsibility for the Accounting Control, Bank Supervision and Relations,
Building and Planning, Data Services, Loans and Credits, Personnel, and Service
Functions. In addition, effective April 18, 1975, Mr. Timlen was assigned senior
management responsibility for the newly established Operations Group—
consisting of the Cash and Collection, Check Processing, and Government Bond
and Safekeeping of Securities Functions— and the Public Information Function.
As a result of these changes, the senior management of the Bank consists of
Mr. Volcker, President and chief executive officer, Richard A. Debs, First Vice
President and chief administrative officer, and Messrs. Holmes and Timlen,
Executive Vice Presidents.
Edward G. Guy, formerly Vice President and General Counsel, was appointed
Senior Vice President and General Counsel, effective April 18, 1975. Mr.
Guy’s assignment as the officer in charge of the Legal Function was continued.
Fred W. Piderit, Jr., formerly Vice President, was appointed Senior Vice
President, effective April 18, 1975. Mr. Piderit’s assignment as the officer in
charge of the Bank Supervision and Relations Function was continued.
Thomas C. Sloane, formerly Vice President, was appointed Senior Vice
President, effective April 18, 1975, and assigned as the officer in charge of the
Operations Group.
Robert L. Cooper, formerly Assistant Vice President, was appointed Vice
President, effective April 18, 1975, and assigned as the officer in charge of the
Government Bond and Safekeeping of Securities Function.
Ronald B. Gray, formerly Assistant Vice President and Cashier, Buffalo
Branch, was appointed Vice President and Branch Manager, effective April 18,
1975, in anticipation of the retirement of Angus A. Maclnnes, Jr., Vice Presi

dent, whose assignment as the officer in charge of the Branch was terminated
on that date. Mr. Maclnnes joined the Bank’s staff in 1934, became an officer
in 1951, and was appointed Vice President in charge of the Buffalo Branch
on October 1, 1966.
Leonard Lapidus, Vice President, resigned from the Bank, effective Novem
ber 1, 1975, to accept the position of First Deputy Superintendent of Banks in
the New York State Banking Department. Mr. Lapidus joined the Bank’s staff
in 1962 and became an officer in 1965.
James H. Oltman, formerly Assistant General Counsel, was appointed
Deputy General Counsel, effective January 1, 1976, and assigned supervisory
responsibility for the operations of the Legal Function under Mr. Guy.
Robert C. Thoman, formerly Assistant Vice President, was appointed Vice
President, effective January 1, 1976, and assigned to the Check Processing
Function, where he will have responsibility, under Karl L. Ege, Vice President,
for the Northeastern New York Regional Check Processing Center to be located
in Utica, N.Y.

The board of direc
tors of this Bank selected Ellmore C. Patterson to serve during 1976, for the
second successive year, as the member of the Federal Advisory Council repre
senting the Second Federal Reserve District. Mr. Patterson is Chairman of the
Board of Morgan Guaranty Trust Company of New York, New York, N.Y.
m em ber

of federal

a d v is o r y

c o u n c il

—1976.

Directors of the Federal Reserve Bank of New York
D IR E C T O R S

Term expires Dec. 31 Class Group

D a v id R o c k e f e l l e r .....................................................................................................................
Chairman of the Board, The Chase M anhattan Bank (National Association), New York, N.Y.

1976

S t u a r t M c C a r t y .........................................................................................................................
President, First-City National Bank of Binghamton, Binghamton, N.Y.

1977

H a r r y J. T a w ...............................................................................................................................
President, First National Bank of Cortland, Cortland, N.Y.

1978

M a u r i c e F . G r a n v i l l e ..............................................................................................................
Chairman of the Board, Texaco Inc., New York, N.Y.

1976

W i l l i a m S. S n e a t h .....................................................................................................................
President, Union Carbide Corporation, New York, N.Y.

1977

J a c k B. J a c k s o n ...........................................................................................................................
President, J. C. Penney Co., Inc., New York, N.Y.

1978

F r a n k R . M i l l i k e n , Chairm an , and Federal Reserve A g e n t ...............................................
President, Kennecott Copper Corporation, New York, N.Y.

1978

R o b e r t H . K n i g h t , D eputy C h a irm a n .....................................................................................
Partner, Shearman & Sterling, Attorneys, New York, N.Y.

1977

A l a n P i f e r ....................................................................................................................................
President, Carnegie Corporation of New York, New York, N.Y.

1976

D IR E C T O R S — B U F F A L O B R A N C H

R u p e r t W a r r e n , C h a ir m a n ......................................................................................................
Former President, Trico Products Corporation, Buffalo, N.Y.

1976

J. W a l l a c e E l

y ....................................................................................................................................................
Chairman of the Board, Security New York State Corporation. Rochester, N.Y.

1976

D a n i e l G. R a n s o m ...............................................................................................................................................
President, The Wm. Hengerer Co., Buffalo, N.Y.

1976

C h a r l e s A . M a r k s ...............................................................................................................................................
President, Alden State Bank, Alden, N.Y.

1977

P a u l A . M i l l e r .................................................................................................................................................
President, Rochester Institute of Technology, Rochester, N.Y.

1977

A v e r y H. F o n d a ....................................................................................................................................................
President, Liberty National Bank and Trust Company, Buffalo, N.Y.

1978

D o n a l d R . N e s b i t t ............................................................................................................................................
Owner and operator, Silver Creek Farms, Albion, N.Y.

1978

M E M B E R O F F E D E R A L A D V IS O R Y C O U N C I L ------1 9 7 6

E l l m o r e C. P a t t e r s o n ..................................................................................................................................
Chairman of the Board, Morgan Guaranty Trust Company of New York, New York, N.Y.

1976
37

Officers of the Federal Reserve Bank of New York
P a u l A. V o l c k e r , President
R ic h a r d A. D e b s , First Vice President
A l a n R . H o l m e s , Executive Vice President
Foreign; Open Market Operations and Treasury
Issues

THOMAS M . TlM LEN, Executive Vice President
Operations Group; Accounting Control; Bank Supervision and Relations; Building and Planning; D ata
Services; Loans and Credits; Personnel; Public Infor>
mation; Service

E d w a r d G. G u y , Senior Vice President
and General Counsel

F r e d W. PlDERIT, J r ., Senior Vice President
Bank Supervision and Relations

Legal
T h o m a s C. S l o a n e , Senior Vice President
Operations Group (Cash and Collection; Check
Processing; Government Bond and Safekeeping
of Securities)

A C C O U N T IN G C O N TR O L

b u il d in g

A . M a r sh a l l P u c k e t t , Vice President
W a l t e r S. R u s h m o r e , Assistant Vice President

R o b e r t E . L l o y d , J r ., Vice President
L o u is J . B r e n d e l , Assistant Vice President
A . T h o m a s C o m b a d e r , Buildings Administrator

C a t h y E . M in e h a n , Operations Analysis Officer
J o h n J. S t r ic k ,

Manager, Accounting Department
S t e p h e n G . T h ie k e ,

Manager, Management Information Department,
and Assistant Secretary
A U D IT

G e o r g e C . S m i t h , General Auditor
J o h n E. F l a n a g a n , Assistant General Auditor
D o nald R . A n d e r so n ,

Manager, Auditing Department
W . W il l ia m B a u m g a r d t ,

Manager, Auditing Department
G er a ld I. I sa a c so n ,

Manager, Audit Analysis Department
B A N K S U P E R V IS IO N A N D R E L A T IO N S

F r e d W . P id e r it , J r ., Senior Vice President
F r e d e r ic k C . S c h a d r a c k , Vice President
L e o n K o r o b o w , Assistant Vice President
B e n e d ic t R a f a n e l l o , Assistant Vice President
Jam es H . Booth,

Manager, Bank Regulations Department
F r e d e r ic k L . F r e y , Chief Examiner
R o b e r t A . J a c o b s e n , Assistant Chief Examiner
E dw ard F . K ip f s t u h l ,

Manager, Foreign Banking
Applications Department
F r a n k l in T . L o v e ,

Manager, Bank Relations Department
D o n a l d E . S c h m id ,

Manager, Bank Analysis Department
B e n St a c k h o u s e ,

Manager, Domestic Banking
Applications Department

an d

p l a n n in g

M atthew C. D rexler,

Manager, Building Operating Department
R onald E . L o n g ,

Manager, Planning Department
D A T A S E R V IC E S

P a u l B. H e n d e r s o n , J r ., Vice President
H o w a r d F . C r u m b , Adviser
E d w in R . P o w e r s , Assistant Vice President
W il l ia m M . W a l s h , Assistant Vice President
D e n is L . C o n w a y ,

Manager, User Operations Department
P e t e r J. F u l l e n ,

Manager, Telecommunications Department
G er a ld H a y d e n , Data Services Officer
O leg H o ffm a n ,

Manager, Computer Operations Department
A n g u s J. K e n n e d y , Data Services Officer
H e r b e r t M . Q u in n ,

Manager, Custom Systems Department
R a l p h C . S c h in d l e r , Data Services Officer
I sr a e l S e n d r o v ic ,

Manager, Common Systems Department
E Q U A L O P P O R T U N IT Y

C e c il A . S h e p h e r d , Equal Opportunity Officer
F O R E IG N

A l a n R . H o l m e s , Executive Vice President
S c o t t E . P a r d e e , Vice President
H . D avid W il l e y , Vice President
R o b e r t J. C r o w l e y , Assistant Vice President
M a r g a r et L . G r e e n e , Assistant Vice President
F r e d H . K l o p s t o c k , Adviser

Officers

(Continued)

T homas C . Barman,

Foreign Exchange Officer
G e o r g e H . B o ssy ,

Manager, Foreign Department
R o g e r M. K u b a r y c h ,
Foreign Exchange Officer
G eo rg e W . R y an,

Manager, Foreign Department

OPERATIONS GROUP
THOMAS C . S l o a n e ,

Senior Vice President

C A S H A N D C O L L E C T IO N

W il l ia m H . B r a u n , J r ., Vice President
J e r r y B e r k o w it z ,

Operations Analysis Officer
J oh n C h ow ansky,

Manager, Cash Custody Department, and
Manager, Collection Department
L eon R . H o lm es,

Manager, Cash Department
C H E C K P R O C E S S IN G

K a rl L . E g e , Vice President
R o b e r t C . T h o m a n , Vice President

(Utica Office)

J a m e s O . A s t o n , Assistant Vice President
W h it n e y R . I r w i n , Assistant Vice President

(Cranford Office)
J o s e p h M. O ’C o n n e l l , Assistant Vice President
(Jericho Office)
L eo n a r d I. B e n n e t t s ,

Manager, Check Adjustment and
Return Items Department
R a l p h A. C a n n III,
Operations Analysis Officer
F r ed A . D e n e s e v ic h ,

Manager, Check Processing Department
E dw ard H . D e n h o f f ,

Manager, Utica Office
J o h n C . H o u h o u l is ,

Manager, Payment Systems Department
J ero m e P. P erlongo,

Manager, Cranford Office
J o h n F . Sobala,

R ic h a r d V o l l k o m m e r ,

Manager, Government Bond and
Safekeeping Department
S t e p h e n P . W e is , Operations Analysis Officer
LEGAL

E d w a r d G . G u y , Senior Vice President

and General Counsel

J a m e s H . O l t m a n , Deputy General Counsel
L e o p o l d S. R a s s n ic k , Assistant General Counsel
R o b e r t Y o u n g , J r ., Legal Adviser
R ic h a r d D . C o o p e r s m it h , Associate Counsel,

and Assistant Secretary
E r n e s t T . P a t r ik is , Associate Counsel
M ary J. R o d g e r s , Associate Counsel
D o n a l d L . B it t k e r , Assistant Counsel
R o b e r t N . D a v e n p o r t , J r ., Assistant Counsel
C l if f o r d N . L ip s c o m b , Assistant Counsel
D o n N . R i n g s m u t h , Assistant Counsel
L O A N S A N D C R E D IT S

H . D avid W il l e y , Vice President
CHESTER B. FELDBERG, Vice President
H e n r y S. F u j a r s k i , J r ., Assistant Vice President
E ugene P. E m on d ,

Manager, Credit and Discount Department
H erbert H . R u ess,

Manager, Credit and Discount Department
O P E N M A R K E T O P E R A T IO N S A N D
T R E A S U R Y IS S U E S

A l a n R . H o l m e s , Executive Vice President
P e t e r D . S t e r n l ig h t , Vice President
P a u l M e e k , Monetary Adviser
I r w i n D . S a n d b e r g , Assistant Vice President
S h e il a L . T s c h in k e l , Adviser
M ary R . C l a r k in , Securities Trading Officer
J o h n S. H i l l , Senior Economist
E d w a r d J. O z o g ,

Manager, Acceptance Department, and
Manager, Securities Department
O P E R A T IO N S A N A L Y S IS

Manager, Check Processing Department

K a r en J. B o p p . Operations Analysis Officer

G O V E R N M E N T B O N D A N D S A F E K E E P IN G
O F S E C U R IT I E S

P ERSONNEL

R o b e r t L . C o o p e r , Vice President
M a t t h e w J. H o e y , Adviser
W il l ia m H . W e t e n d o r f , Assistant Vice President
J o r g e A . B r a t h w a it e ,

Manager, Security Custody Department
P a u l J . C ie u r z o ,

Manager, Government Bond and
Safekeeping Department
F r a n c is H . R o h r b a c h ,

Manager, Savings Bond Department

J o h n T . K e a n e , Vice President
P h i l i p V an O r m a n , Assistant Vice President
Bruce G . A lexander,

Manager, Personnel Department
T e r r e n c e J. C h e c k i ,

Manager, Personnel Department
R o b e r t a J. G r e e n ,

Manager, Personnel Department
P U B L IC IN F O R M A T IO N

R ic h a r d H . H o e n ig , Assistant Vice President

Officers

(Continued)

R ES E A R C H A N D S T A T IS T IC S

R ic h a r d G . D a v is , Vice President
P e t e r F o u s e k , Economic Adviser

S E C R E T A R Y ’S O F F IC E
E . G er a ld C o r r ig a n , Adviser, and Secretary
R ic h a rd D . C o o p e r s m it h , Assistant Secretary,

M ic h a e l J . H a m b u r g e r , Adviser
A n t o n S. N is s e n , Assistant Vice President
R u d o l f T h u n b e r g , Assistant Vice President

S u z a n n e C u t l e r , Assistant Secretary
T h e o d o r e N . OvPEimEiMER, Assistant Secretary
S t e p h e n G . T h ie k e , Assistant Secretary, and

MARCELLE V . A r a k , Senior Economist
E d n a E . E h r l ic h ,

S E R V IC E

and Associate Counsel

Manager, Management Information Department

Manager, International Research Department
F r e d J . L e v in ,

Manager, Domestic Research Department
C h a r l e s M . L u c a s,

Manager, Statistics Department

F r e d e r ic k L . S m e d l e y , Vice President
W il l ia m M . S c h u l t z , Assistant Vice President
L ouis J. C o n r o y , Operations Analysis Officer
F r a n k W . L u n d b l a d , J r .,

G ary H . S t e r n ,

Manager, Protection Department

Manager, Domestic Research Department

R u t h A n n T y l e r , Manager, Service Department

OFFICERS—BUFFALO BRANCH
R o n a l d B. G ra y , Vice President and Branch Manager
P e t e r D . L u c e , Cashier
A C C O U N T I N G ; B A N K R E L A T IO N S A N D
P U B L IC I N F O R M A T IO N ; C H E C K

C O L L E C T IO N , L O A N S , A N D F I S C A L A G E N C Y ;
P E R S O N N E L ; S E R V IC E

R o b e r t J. M c D o n n e l l , Assistant Cashier

G ary S. W e in t r a u b , Assistant Cashier

B U I L D I N G O P E R A T IN G ; C A S H ; P R O T E C T IO N

M A N A G E M E N T IN F O R M A T IO N

H a r ry A . C u r t h , J r ., Assistant Cashier

P e t e r D . L u c e , Cashier

Full text of Annual Report of the Federal Reserve Bank of New York : Annual Report : 1975

FRASER