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JANUARY 1962

BUSINESS
REVIEW

The Great Corporate Profits Mystery
Recovery, Market Interest Rates,
and Monetary Policy
Business and Banking in 1961

FEDERAL

RESERVE BANK OF PHILADELPHIA

rftttui&l defiant *)4Auc







B U S IN E S S R E V IE W
is produced in the Department o f Research.
Bernard Shull was primarily responsible
for the article “ The Great Corporate Profits
Mystery,” Clay J. Anderson for “ Recov­
ery, Market Interest Rates, and Monetary
Policy,” and Lawrence C. Murdoch for
“ Business and Banking in 1961.” The
authors will be glad to receive comments
on their articles.
Requests for additional copies should be
addressed to the Department o f Public In­
formation, Federal Reserve Bank o f Phila­
delphia, Philadelphia 1, Pennsylvania.

THE GREAT CORPORATE PROFITS
MYSTERY

A Study in Stability

In recent years businessmen have

This failure of corporate profits

worried and economists have won­

to respond to economic expansion

dered about the strange behavior

seems to represent a break with

of corporate profits. The economy

past experience.

has climbed to new heights over

1950, both gross national product

From

1929 to

the last decade, and corporate profits have shown

and profits increased substantially. Only four

an uncomfortable tendency to sit still.

times in the 21-year period did GNP and profits

Since our economy is moved primarily by the

move in opposite directions. On the other hand,

profit motive, profit stability appears incongru­
ous

with

economic

expansion.

Will

profits

continue to be depressed in the 1960’s— and, if
so, can we really expect our economy in general
and corporate investment in particular to grow
rapidly?
The answers to these questions depend in
part, at least, on what lies behind the relative

CHART I

PROFITS A N D PRODUCTION
Between 1929 and 1950, gross national product and cor­
porate profits pretty much kept pace. Over the last decade,
however, production continued to increase while profits
seemed to reach a plateau. GN P grew 77 per cent over
the fifties; profits were about the same in 1960 as they
had been in 1950.
PRO FIT-BILLIO NS OF DOLLARS

stability of corporate profits.
JUST THE FACTS
In the 1950’s, the gross national product of the
United States increased about 77 per cent; this
economic expansion provided a substantial in­
crease

in

the

material

well-being

of

most

Americans. On the other hand, corporate profits
after taxes were about the same in 1960 as they
had been in 1950.1
l In the national income accounts, corporate profits are adjusted
to eliminate "b o o k " profits or losses on inventory that arise from
changes in prices. The corporate profit figures discussed above are
not so adjusted. When profits after taxes are adjusted for inventory
price changes, an increase of $5 billion for the decade of the 1950's
is revealed. This is due to the fact that profits in 1950 were over­
estimated because the cost of replacing inventory, in that year of
rising prices, was underestimated.




3

over the last ten years they have moved in

There follows a line-up of the major com­

opposite directions five times; and each time,

ponents

profits fell while GNP was rising.2

major components of gross national product.

of

our

economy’s performance— the

Non-Income Components

Had profits kept pace with economic growth

Depreciation

over the last decade, they would have been about

Indirect business taxes

$18 billion higher in 1960 than they actually

Income Components

were— about $41 billion instead of $23 billion.
But profits did not keep pace with economic

Corporate profits after taxes

growth and the $18 billion or so dollar gap was
opened up. So the question remains: who or

Corporate profits taxes
Wages and salaries

what killed corporate profits?

Supplements to wages and salaries
Proprietors’ income

O N THE T R A CK OF THE G A P

Rent

We can view our economic growth over the last

Interest

decade— the upsurge in gross national product—
as an increase in the total value of goods and
services produced by our economy. We can also
view it as an increase in the income of our
families and institutions. For the goods and
services produced are, for the most part, dis­
tributed

among

businessmen,

the producers— the workers,

landowners,

and

lenders— who

With corporate profits after taxes about stable
over the last decade, a “ profit gap” was opened
up by the growth of the other incomes and also
the non-income items mentioned. A quick ex­
amination will help determine where the pay­
ments that might have gone to profits actually
did go.

devote their services to production.
There are two major items, however, which
are included as part of gross production but
can’t be counted as part of income received—
depreciation

and so-called

“ indirect business

D epreciation a n d indirect busin ess ta x e s
Depreciation charges grew very rapidly over the
decade; they more than doubled. The growth of
depreciation accounted for almost 11 per cent

taxes.” Depreciation allowances, more or less,

CHART II

reflect the production needed to replace wornout capital equipment. If depreciation charges
were not made, we would, as a society, be living
off our capital and counting it as income. In­
direct taxes— sales and excise— are included in
the price of goods and services sold. These
“ hidden taxes” inflate the value of gross produc­
tion; but they cannot be counted as earned
income.
2 Using the sign test, the hypothesis that the directions of change
were not related in the earlier period can be rejected with a confi­
dence of greater than 99.5 per cent. It seems reasonable that the
experience since 1950 represents a break with the earlier period but
due primarily to the briefness of the later period, this hypothesis
cannot be statistically supported with a comparable degree of
confidence.

4




A LARGER SHARE FOR DEPRECIATION
A N D TAXES
During the 1950’s, a growing share of gross national
product was composed of depreciation allowances and
payments to Government in the form of “hidden” taxes—
excise and sales taxes included in prices. Depreciation
and the so-called “ indirect business taxes” accounted for
over one-fifth of the total in GN P over the decade.
RATIO

of the total increase in gross national product.

While corporate profits after taxes were stable

We shall have more to say about this very

over the 1950’s, profits before taxes did increase

important cost later.
CHART IV

Excise and sales taxes also increased rapidly;
these taxes almost doubled. They accounted for
a little less than 10 per cent of the total increase

SLO W G O IN G FOR PROFITS

of these components to gross national product

Profits, prior to corporate profits taxes, did increase
somewhat over the 1950’s ; but they increased at a slower
rate than any other type of income and, as a result, at a
slower rate than total or national income. The ratio of
corporate profits to national income, as shown in the
bottom panel, decreased significantly over the decade.
Interest accounts for a relatively small proportion of
total income; but it increased more than 325 per cent
over the decade. Employee compensation, accounting for
well over half of total income, increased about 90 per
cent over the decade.

increased in a fairly consistent fashion.

PER CENT

in gross national product.
Non-income

components

of

gross

national

product, then, accounted for something in excess
of 20 per cent of the total economic expansion
over the decade. As Chart I I shows, the ratio

The corp orate profits ta x
The share of corporate profits taken by federal,
state, and local governments— particularly dur­
ing the Korean War— was unusually high. As
Chart I I I shows, the governments’ share was
considerably higher than in the early postwar
years.
CHART III

THE G O VERN M EN T SHARE
During the Korean War, federal, state, and local govern­
ments took, in income taxes, about 53 per cent of total
corporate profits. In more recent years, government has
taken a somewhat low er proportion of profits. But the
government’s share has not fallen back to the levels of
the early postwar years.
PERCENTAGE RATIO




PERCENTAGE RATIO

1950

'5 2

'5 4

'56

'5 8

'6 0

5

CHART V

THE CORPORATE CONTRIBUTION
The proportion of total national income created by corporations did not change much over the 1950’s. In other words,
corporations were about as important as income creators in 1960 as they had been in. 1950. But the share of the in­
come corporations created that went to profits declined considerably. All other forms of corporate income payments
— as the bar charts show— grew relatively more important.
RATIO

PER CENT

about 11 per cent. The increase in the receipts

taxes, and interest income. These accounted for

of governments from corporate profits accounted

about 86 per cent of the over-all increase.

for about 2 per cent of the total increase in
gross national product.

FITTING THE PIECES TOGETHER
Although the above items accounted for the lion’s

O th er incom es

share of economic growth in the 1950’s, they

Corporate profits, even before taxes, registered

cannot be accused, out of hand, as being re­

the slowest rate of growth of all types of in­

sponsible for the relative stability of profits.

come. As Chart IV indicates, interest income

Simply because they increased is not a reason, in

increased most rapidly, followed by employee

and of itself, for profits not to increase.
One possible reason for the poor showing of

compensation.
Compensated employees— recipients of wages,

corporate profits compared to other kinds of

salaries, and related payments— were, by far, the

income is that the corporate sector of our

most important beneficiaries of advancing out­

economy— as an income creator— might have

put. Employee compensation is the largest single

been growing less important.

component of gross national product; it absorbs

This is a possibility, but on investigation it

well over half of total output, and it almost

is not borne out. As Chart V shows, the im­

doubled over the 1950’s.

portance of the corporate sector did not change

The increase in total output over the last

much over the period. It was just that larger

decade, then, was distributed among a number

proportions of the income that corporations were

of payments. In order of importance: employee

creating

compensation,

salaries, interest, and taxes, and a smaller pro­

depreciation,

6




indirect

business

during the decade

went to wages,

portion went to profits.
The types of incomes and payments that

during the 1950’s— at a rate comparable to
gross national product.

increased rapidly do, inevitably, direct our atten­

The data available in the national income

tion. They can all be found on the corporate

accounts are meager; yet they provide a clue as

income statement— as costs of doing business.

to what kinds of costs were most important in

Since profits did not increase over the decade,

depressing profits. As Chart VI shows, corporate

corporate costs must have increased much faster

payments of wage and salary supplements, and

than corporate sales. Had costs risen no faster

depreciation allowances, increased much faster

than sales, profits would have about doubled.

than sales in the 1950’s. Tax payments increased

Sales actually increased by over 70 per cent
CHART VI

THE COST-PUSH O N PROFITS
Since 1949, corporate sales have about doubled. They
have increased at a rate comparable to gross national
product. But some costs increased much faster than sales.
Supplements to wages and salaries— including most
fringe benefits— increased much more rapidly; and so
did depreciation allowances. Tax payments, too, increased
more rapidly than sales. On the other hand, wages and
salaries— without the fringe benefits— increased at ap­
proximately the same rate as sales.
INDEX (1949 = 100)




somewhat faster than sales. Wage and salary
payments

proper— without the supplements—

increased at about the same rate as sales; an
increasing proportion of sales receipts was not
earmarked for wages and salaries proper.
For a more conclusive determination, we have
to go to the greater detail provided by the
income tax returns; and, also, to the critical
industries that largely shaped the total corporate
profit experience.
S O M E A D D IT IO N A L EVIDENCE
The corporate profit figure conceals a diversity
of experience in many different parts of the
economy. Corporations, as a whole, did not seem
to prosper in the 1950’s; but some kinds of
corporations did much better than others. Cor­
porations in the communications industry, for
example, did very well. Others, in agriculture, did
very poorly. In evaluating the profit performance
of the major industrial sectors over the past
decade, two critical industries stand out— trans­
portation and manufacturing.3* They seemed to
have had common and representative, as well
as strategic, experiences.
Over the decade, profits of corporations in
transportation declined a good deal. Profits in
3 Profits for each of the ten corporate sectors listed below were
cumulated from 1951 to I960. The impact of each sector's profit
experience on total corporate profit was determined. The sectors
were as follows: agriculture, manufacturing, mining, construction,
communications and utilities, transportation, wholesale and retail
trade, services, finance, all other.

7

manufacturing— accounting for about half of

PERCENTAGE C H A N G E *

total corporate profits— increased but the in­

TO TA L

crease was relatively small.
Detailed data on costs and receipts for these
industries are available only to mid-1958.4 But
a comparison of cost experience in the early
postwar years when profits were relatively good
(1946 to 1950) and in the more recent period
(1950 to 1958) is revealing.
In order to make this cost comparison, two

A ll industry
1946-1950
1950-1958
M anufacturing
1946-1950
1950-1958
Transportation
1946-1950
1950-1958

DEDUC TIO NS

REC EIPTS

TO TA L

DIRECT

IND IREC T

59
63

58
70

59
59

56
106

59
50

55
59

56
49

52
99

36
39

27
50

24
40

34
79

* Years are tax or fiscal rather than calendar years.

major types of costs must be broken out— (1)
those we might call the direct costs of operations

Many other industries had similar experiences

and sales; and (2) the other, less direct costs

during the 1950’s. For industry as a whole,

of doing business. In 1950, the direct costs,

direct costs did not rise any faster than receipts.

including costs of materials and wages, ac­

However, the indirect costs rose much more

counted for about 80 per cent of total costs; the

rapidly. It appears, therefore, that these indirect

multitude of other costs we have labeled “ in­

costs were chiefly responsible for the relative

direct,”

stability of profits.

including

depreciation,

depletion,

amortization, advertising expenses, pensions, and

Of the indirect costs that can be broken out,

other wage supplements, and interest payments,

depreciation, depletion, and amortization charges

accounted for the rest.

were the most important contributors to the

In

the

case

of

both

manufacturing

and

transportation, as can be seen in the accompany­

rapid increase in the total. They rose at over
twice the rate of total sales.
Some of the rapid increase in depreciation

ing table, total receipts in the 1946 to 1950
period increased more rapidly than total costs;

allowances in the 1950’s may reflect the elimina­

neither type of cost increased so rapidly as

tion, more or less, of the unrealistically low

receipts; both industries experienced substantial

allowances in the late 1940’s. In the early post­

increases in profits.

war years, depreciation charges were largely

In the 1950 to 1958 period, however, total

based on depression prices and seriously under­

costs in both industries increased more rapidly

estimated current replacement costs. As a result,

than receipts. But, as the table indicates, the in­

profits were, in all probability, seriously over­

direct costs went through the roof, while the

estimated at that time. And the “ true” growth

direct costs of operations and sales, in both

of

manufacturing

hidden.5

and

transportation,

increased

only at about the same rate as receipts. In par­
ticular, depreciation, amortization and depletion,
pensions and other wage benefits, and interest
payments increased at very rapid rates.
4 The data from income tax returns are for fiscal or tax years.

8




profits

over

the

decade

was,

therefore,

Interest charges, taxes, and wage supplements
5 The replacement and expansion of prewar plant and equipment
at postwar prices, and the 1954 liberalization of methods for cal­
culating depreciation, have tended to increase depreciation allow­
ances rapidly. The overestimation of profits because of unrealistic
depreciation allowances in, say, 1950 should be added to the over­
estimation stemming from inventory profits discussed in footnote 2.
These two sources of overestimation could explain a significant
proportion of the profit gap described above.

such as pensions also contributed importantly

Moreover, to the extent profits are restrained

to the rapid rise of indirect costs. There is no

by growing depreciation charges, our concern

reason to believe that these costs were under­

about corporate investment has to be qualified.

estimated at the beginning of the decade. Rapid

Depreciation allowances, unlike other costs of

increases represent a substantial pressure on

production, presumably represent funds that will

profits.

find their way into gross investment.

There were other cost items as well which

While depreciation allowances are different

made contributions worthy of mention. However,

from other costs, they are, nevertheless, not the

they cannot be mentioned individually because

same as profit. There is need for new, net in­

they are lumped together in the income tax

vestment as well as replacement if the economy

returns in a category called “ other deductions.”

is to grow and prosper.
Some of the factors that seriously restrained

C O N C L U S IO N S A N D CONJECTURES

profits during the 1950’s may well continue to

It turns out, then, that there were many reasons

operate in the 1960’s. There is considerable

why profits didn’t increase in the 1950’s. Just

attention being given to more liberal deprecia­

about all of them can be found on the cost side

tion allowances. If they are permitted, they will

of the income statement. The costs that appear

tend to increase costs. Government pressure for

to have exercised the largest restraining influence

increasing tax revenue seems still to be growing;

on profits were those indirectly related to opera­

corporate profits represent a very important

tions and sales— depreciation, interest, pensions

source. In addition, the demands of employees

and other wage supplements, and taxes, among

for supplemental and fringe benefits may in­

others.
But all these costs did not affect profits in

crease in the years to come.

the same way; and all of them do not have the

services represents, perhaps, one way of off­

same implications for capital spending. Gertrude

setting the

Stein, notwithstanding, a cost is not a cost is

particularly indirect costs that are frequently

not a cost.
It appears that profits were depressed in the

A rapid growth of demand for goods and
persistent

growth

of

costs— and

determined by social and political considerations.
A more rapid growth of productivity is a way

1950’s, partly because of a rapid rise in depreci­

of meeting increases in demand while restraining

ation allowances; these allowances were prob­

costs of operations and sales. The dilemma that

ably too low in 1950 and have risen rapidly

confronts us is simply this: in order to get

since. But the increase in many other indirect

increases in demand and improvements in effi­

costs— fringe benefits, taxes, and interest, for

ciency, more new investment is necessary; and

example— more clearly reflect what has com­

to get this new investment, profits, themselves,

monly been called the “ profit squeeze.”

may first have to improve.




9

RECOVERY, MARKET INTEREST RATES,
AN D MONETARY POLICY
Business activity turned upward early in 1961,

recent rate behavior. Recognizing the difficulties

and before the end of the year total output had

involved, this article attempts to analyze demand

surpassed its pre-recession peak. For the most
part, the pattern has been similar to the recov­

and supply forces in order to throw light on the
question of why the rate lag in the 1961 recovery.

eries of 1954-1955 and 1958-1959. But there

Our primary concern is market rates rather than

have been significant differences, two of the

customer loan rates charged by lending institu­

important ones being the behavior of interest

tions.

rates and monetary policy.
Market rates have responded less promptly,

U P W A R D A N D D O W N W A R D S W IN G S IN

and an easy money policy has been pursued

B U SIN E SS A N D RATES

longer than in the other two upswings. Federal

Rates, just as other prices, respond to shifts in

Reserve authorities have been confronted with a

demand and supply. An expansion in business

twofold problem— promoting recovery and sus­

activity usually generates increases in demands

tained growth without aggravating the balance-

for credit. Businessmen borrow to help finance

of-payments situation.

They have pursued a

growing inventory and working capital needs,

policy of maintaining ample reserves and ready

and larger expenditures for plant and equipment.

availability of credit in order to foster recovery,

Consumers want more credit to buy automobiles,

and to facilitate absorption of the unemployed

other

and unused productive capacity. At the same

declining

time, the Federal Reserve has attempted to

demands for credit.

durables,

and

output

homes.

result

in

Recession
reduced

and

private

supply reserves in ways that would minimize

Government demand for credit is not so

downward pressure on short-term rates and thus

closely associated with changes in the volume of

avoid

and

business activity. State and local borrowing has

stimulated

swings in business activity tend to have inverse

intensifying

the

outflow

of

gold

short-term funds.
The

lag

considerable

in

risen steadily during the postwar period. Cyclical
interest

discussion.

rates
Why

has
the

sluggish

effects on Treasury borrowing.

response of rates? What are the differences, if

The supply of credit is not geared so closely

any, in the factors influencing rates in this

as demand to cyclical swings in business activity.

recovery as compared with other postwar recov­

Saving, the principal source of funds for meeting

ery periods? Does the rate lag reflect monetary

credit demand, is fairly stable. Commercial bank

policy, debt management, a weak demand for

credit, the other source of funds, tends to vary

Factors

inversely with business activity. With cyclical

influencing interest rates are too diverse, too

swings in credit demand impinging on a more

intangible, to be able to pin down the causes of

stable supply, tighter credit and rising rates

credit, or a large flow of savings?

10




YIELDS O N UNITED STATES G O VERN M ENT SECURITIES
PER CENT PER ANNUM

* Change in series.

usually accompany business expansion; greater

earlier periods. (It is too soon to tell whether

credit availability and falling rates are charac­

the rise in the bill rate in the latter part of last

teristic of recession.

year marks the beginning of a general upward
trend.)

By the same length of time after the

THE RATE LAG

1958 upturn began, the bill rate was two and

It is clear from the charts that market interest

a half times its level at the recession trough,

rates have responded more slowly to business

and had risen about 60 per cent in 1954^1955.

expansion

than

in

of

Rates on intermediate- and long-term Gov­

1958-1959 and 1954-1955.* The three-month

ernments have moved upward, but the rise has

Treasury bill rate has moved within a narrow

been considerably less than in the corresponding

range, with no observable upward trend, in

phases of the 1954-1955 and 1958-1959 up­

contrast to

substantial increases in the two

swings. The average yield on intermediate-term

* Statistical comparisons, unless otherwise noted, are for the same
length of time from recession trough for the three latest recovery
periods: 1961, 1958-1959, and 1954-1955. Data, except personal sav­
ing and corporate retained earnings, are not seasonally adjusted.

Governments is only slightly higher than when




the recovery

periods

the recovery began, as compared with increases

YIELDS O N G O VERN M EN T SECURITIES
3-MONTH TREASURY BILLS

never dropped as low as 2 per cent in the latest
recession, but dipped below 1 per cent in each
of the other two. The fact that recovery began
with rates at a higher level might tend to retard
or moderate the rise; however, it seems unlikely
that the higher

level would

long

delay an

increase in rates if business expansion resulted
in credit demands pressing strongly against a
limited supply.
D e m a n d factors
There is no statistical measure of credit demand
in the sense of amounts borrowers would be
willing to take at various interest rates; however,
changes in credit outstanding are a fairly good
indicator of the strength of demand, especially
in the early part of an upswing when there is
not much of a problem of rationing a limited
supply of credit. Measured in this way, the
increase in over-all credit demand has been
similar to the two previous recoveries.
Commercial

bank

loans

outstanding

have

risen 4 per cent from the recession trough, about
the same as in 1958-1959, but well below the
11 per cent rise in 1954^1955. Response of
consumer demand for credit to the forces of
recovery has been about the same as in 1958,
but much less than in 1954-1955 when a surge
in automobile sales generated a sharp rise in
consumer installment credit.
Demand for long-term credit has been sub­
cent in 1954^1955. The rise in yield on long­

stantial in the current business expansion. Total

term Governments has also been more moderate.

mortgage debt outstanding has moved up at

Corporate AAA bond yields have risen some­

about the same rate as in 1954-1955 and

what, but the increase has been substantially

1958-1959. Corporate demand, as reflected by

less than in 1958-1959.
Another feature which should be recognized

new securities offerings, was especially large in

is that interest rates were at a considerably

issues have been well above the other two up­
swings. State and local government offerings are
also running above 1958-1959.

higher level when the latest recovery began than
in the earlier periods. The bill rate, for example,

12




the early months of the 1961 recovery; new

term

D EM A N D FACTORS
CORPORATE SECURITY ISSUES*
INDEX (TROUGH = 100)

credit,

make

it

difficult

to

compare

strengths of total credit demand in the three
recovery periods. Analysis of demand factors,
however, fails to reveal differences that account
for the markedly slower response of market
rates to forces of the current recovery.
Factors influencing su p p ly
Saving and bank credit are the two sources of
funds to meet credit demands. Personal saving,
which accounts for the largest part of total
saving, has increased at about the same rate as
in 1958, but considerably more than in 1954.
The net increase in assets of savings institutions,
a good indicator of the flow of personal saving
into credit instruments, has been about the same
as in the two earlier recoveries. Retained earn­
ings of corporations show the usual sharp rise
for periods of recovery. The increase has been
somewhat less than in 1958, but more than in
1954-1955.
The principal difference on the supply side
has been the position of commercial banks.
Their total loans and investments have increased
somewhat

more

than

in

the

two

previous

recoveries. A more significant difference, how­
ever, has been their capacity to extend credit—
their

ability

to

meet

loan

demand and to

continue to increase their investments. For an
explanation, let’s take a look at reserve positions
and monetary policy.
M o n e ta r y policy
The

Treasury

has

been

a net borrower.

Federal Reserve actions impinge directly on

Marketable Government securities outstanding

bank reserves, which in turn determine the

have increased about $5 billion since the begin­

capacity of commercial banks to make loans and

ning of the recovery period. The net increase in

purchase securities. More reserves mean more

1958-1959 was $10 billion, and it was $3 billion

capacity to extend credit; less reserves mean

in 1954-1955.

less capacity.

Fluctuations in demand, especially for short­




The Federal Reserve has pursued an easy

13

SOURCES OF SUPPLY
PERSONAL SAVING*
INDEX (TROUGH = 100)

indicator of the degree of ease in bank reserve
positions, has remained at about the recession
level,

except

for

short-term

fluctuations.

In

1958-1959, however, the reserve position had
shifted from net free to a small volume of net
borrowed

reserves;

and

in

1954^1955,

free

reserves had been reduced to about $100 million.
Member bank borrowing from the Reserve Banks
tells the same story. Daily average borrowing is
still at about the recession level, in contrast to
substantial

increases

in

the

two

previous

recoveries.
Expectations
Interest rates are sometimes influenced by what
people think is going to happen as well as by
actual events. Expectations may have a signifi­
cant influence

on

market rates temporarily,

especially near cyclical turning points, but the
effects are short-run unless confirmed by the
expected events.
The quick

turnaround in the Government

securities market in mid-1958 affords a good
illustration of the impact of expectations. Until
about midyear, many expected the recession to
be the longest and most severe of the postwar
period and, as a result, anticipated continued
strength in the Government securities market
and a further decline in interest rates.
A conjuncture of events, however, led to a
sharp turnaround in expectations. The flow of
data

began

to

indicate

emerging

business

recovery. A large deficit in prospect for fiscal
1959 meant the Treasury would be a substantial
borrower. Improved business prospects and a
large Treasury deficit pointed to a substantial
* Fourth quarter estimated; seasonally adjusted.
“ Saving and loan associations, life insurance companies, and
mutual savings banks.

increase in credit demand and higher, not lower,
rates. Also, the quick shift from pessimism to

money policy longer than in the two earlier

optimism came at a time when large speculative

recovery periods. Average free reserves, one

holdings of Governments, especially the recently

14




FREE RESERVES A N D B O R R O W IN G S OF
MEMBER BAN KS

the current recovery has probably discouraged
actions in anticipation of higher rates and, more

FREE RESERVES

important, has prevented the tightening of credit
required to reinforce and sustain increases that
might have been induced by such actions.
M A T U R IT Y STRUCTURE OF RATES
Borrowers want credit for different lengths of
time, and lenders and investors have different
preferences as to maturity. For this reason,
market rates vary for different maturities of
securities of the same quality and credit risk.
At any one time, therefore, instead of a single
rate on Government securities there is a whole
range or pattern of rates. The accompanying
charts show “ yield curves” — that is, yields on
the various maturities of Government securities

BORROWINGS

outstanding at about the end of the recession

BILLIONS OF DOLLARS

and at later dates during the ensuing recovery.
Borrower preference as to maturity is deter­
mined primarily by the length of time credit is
needed. Lender and investor preferences vary
mainly according to liquidity needs. Commercial
banks, with the bulk of their liabilities payable
on demand or short notice,
preference

for

shorter

have a strong

maturities,

whereas

savings institutions, with less need for liquidity,
prefer longer maturities.
Changes in economic conditions are unlikely
to affect supply-demand relationships equally in
offered 2 % ’s, had been built up in anticipation

all maturity sectors of the market. Both demand

of

in

and supply tend to be more volatile in the

expectations touched off a rise in market rates—

short- than in the longer-term sector of the

a rise which was accelerated by heavy liquida­

market. As a result, short-term rates fluctuate

tion of speculative holdings of Governments.

more widely during the cyclical upward and

lower,

not

higher,

rates.

The

shift

Expectations of business recovery emerged

downward swings in business than long-term

more gradually in 1961 and in 1954-1955 than

rates. There is a certain amount of mobility of

in mid-1958. Thus far there has also been less

funds among maturity sectors but it is not

fear of inflation than in the 1958-1959 expan­

sufficient

sion. Continuation of an easy money policy in

structure of interest rates.




to

prevent

shifts

in the

maturity

15

One of the more distinctive features of the
current recovery has been the stability of short­

CO M M ERC IA L BANK H O LD IN G S OF
G O VERN M ENTS BY MATURITY

term rates. This stability reflects several diverse
influences.
The principal factor tending to raise rates has
been the growing volume of business activity
accompanied

by

increased

credit

demands.

Treasury cash borrowing has put considerable
upward pressure on short-term rates. Treasury
bills outstanding increased over $6 billion during
the last three quarters of 1961. Nonfinancial
corporations, usually large purchasers of short­
term Governments as the net cash inflow rises
during recovery, have not added to their Govern­
ment

portfolios

thus

far

in

the

current

expansion.
An easy money policy has been the major
force exerting downward pressure on short-term
rates. Banks have been supplied with sufficient
reserves not only to meet loan demand but, in
addition, to increase their holdings of Govern­
ment securities. Bank purchases of Governments—
both in the recession and thus far

in the

recovery— have been concentrated in short ma­
turities,
year.

mostly
Holdings

issues
of

maturing

short-term

within

one

Governments

relative to deposits are larger than at this stage
of the 1958-1959 recovery; however, the ratio
of loans to deposits is also higher.
Another

difference

is

that

banks

began

liquidating Governments sooner, especially in the
1954-1955 recovery in older to get funds to
meet expanding loan demands. The fact that
banks have been able to continue buying Gov­
ernments, instead of having to sell in order
to get funds for loans, has been a strong force
tending to offset the upward pressure on shortand

intermediate-term

rates

generated

by

business expansion.
Techniques employed by the Federal Reserve

16




the downward pressure on

short-term rates.

Under authority granted prior to the recession,
the Board of Governors permitted banks to

count vault cash as reserve. Country banks hold

purchases outside the short-term area in the

a large part of cash in vault; hence, reserves

last ten months of 1961 exceeded $2.5 billion.

supplied in this way were not likely to flow to

The major part of these purchases was in the

the money market as quickly as if the reserves

three- to ten-year maturity range. Although it

had been supplied by purchasing securities. The

is impossible to measure their impact, it does

policy of conducting open market operations in

seem certain that purchases of this magnitude

all maturities instead of short-term issues only,

either exerted considerable downward pressure

also relieved the downward pressure on short­

on intermediate- and longer-term rates or the

term rates. A substantial part of System pur­

market for these maturities is very broad. The

chases in supplying reserves was in intermediate

latter appears not to be the case.

and longer maturities, thus diverting the direct
impact from short- to intermediate- and longer-

S U M M A R Y A N D C O N C L U S IO N S

term rates.

Causes of the tardy response of market rates to

YIELD CURVES O N G O VERN M ENT SECURITIES

the 1961 recovery cannot be quantified and
measured; however, analysis of demand and

PER CENT

supply factors does reveal differences that appar­
ently account for much of the sluggishness of
rates as compared with the 1954r-1955 and
1958-1959 recoveries.
The explanation does not appear to be on
the demand side. Total private demand for
credit has shown about the usual response to
business recovery. Consumer demand for credit,
especially for the purchase of automobiles, has
been weaker but corporate, and state and local
government demands have been somewhat larger
Diverse influences also help to explain the
sluggish response of intermediate- and long-term

than in the other two upswings.
A principal reason for the lag in market rates

of business

appears to be on the supply side— a greater

activity. Here, too, private demand appears to

availability of credit made possible by easier

have been about as strong as in the other two

bank reserve positions. The flow of saving has

recovery periods. Treasury debt management

not been out of line with other recovery periods.

operations have tended to absorb some long­

Easy reserve positions, however, have afforded

term funds. Marketable Government securities

commercial banks the capacity to expand both

of

five years’ maturity have increased

loans and investments. The fact that banks have

considerably more than in 1958-1959, and about

been able to continue as net buyers of securities,

the same as in 1954-1955.

instead of having to sell securities to get funds

rates to

over

the

Techniques
policy

expanding

in

volume

market

for loans, has been a major force cushioning

upward pressures on

upward pressures on rates, especially short- and

implementing

have cushioned

open

intermediate- and long-term rates. System net




intermediate-term rates.

17

Techniques in implementing monetary and

been designed to help meet the needs of the

debt management policies have exerted some

balance-of-payments

influence on the structure of market rates. The

economic recovery.

Federal Reserve has tried to supply reserves in

Expectations

situation

apparently

and

have

domestic

exerted

less

ways that would minimize direct downward

upward pressure on interest rates than in 1958.

pressure on short-term rates. Substantial open

The absence of widespread expectation of an

market purchases outside of intermediate and

inflationary boom,

longer

downward

speculative holdings of Government securities,

pressure from short- to intermediate- and long­

has tended to hold down transactions made in

term rates. Treasury debt operations have also

anticipation of higher rates.

maturities

diverted

direct

and presumably of large

BUSINESS AND BANKING IN 1961
The year 1961 opened on a bleak, dreary note.

prices, interest rates, and unemployment. All

Snow and ice covered much of the nation; clouds

three moved sideways during most of the year.

of recession hung low over business. Both the

Usually, the three series are more sensitive to

climate

changes in business conditions.

and

the

economy

remained

chilled

through February.
Spring finally came and it was especially
welcome. It ended the Eskimo weather and it

Third district b usin ess
Local business followed roughly the same trend
as the national economy during 1961— a slow

brought recovery in business.
The recovery was rapid at first. Industrial

start and then considerable improvement.

production rose eight points from March to June.

The longstanding gaps between the district

The inventory sector provided much of the

and the nation were narrowed in a number of

initial impetus.

statistical series. Unemployment was of particu­

By late summer the economy had begun to

lar note. Chronic unemployment continued to be

sputter a bit. There was widespread concern lest

a problem but, with very few exceptions, the

the recovery end prematurely. As things turned

rates here improved relative to the United States

out, however, it was only a pause to shift gears.

total. For example, the Philadelphia Metropolitan

The expansion resumed in the fall with con­

Area matched the national rate for the first

sumers leading the way. In the fourth quarter,

time in a decade.

automobile

sales

picked

up

sharply

and

The following table compares the first 10 or

Although the over-all economy expanded from

for a selection of district business indicators.

March, stability characterized three key areas—

The large number of minuses tends to obscure

Christmas buying hit record highs.

18




11 months of 1961 to similar periods of 1960

the momentum behind the local economy as

Philadelphia banks. They hoped the business

1961 ends. The explanation is that 1961 was a

recovery would bring a substantial increase in

year of recession and recovery, and only in the

loan demand. But new demand was slow to

latter part did it begin to compare favorably

materialize. Loans of Philadelphia (reserve city)

with the previous year.

banks were stable until the waning weeks of
1961 when they finally rose above year-earlier

LOCAL BUSINESS INDICATO RS

levels. Loans in Third District country banks,

Third Federal Reserve District—
Percent change 1960 to 1961

on

Em ploym ent (15 a re a s)* ..................................
Factory payrolls* ..............................................
Factory working tim e* .....................................
Electric power consum ed by m a n u fa c t u re r s*.......
Anthracite coal o u tp u t* ....................................
Construction contracts:
Residential * * ...............................................
N o nre side n tial* * ..........................................
Public works and u tilitie s** ...........................
C a r load ings (Philadelphia region— 51 weeks) . . .
Retail sales, total (excluding national chains) * * ..
Departm ent store sales* ....................................
A uto m o bile registrations (48 counties, eastern
Pennsylvania ) * * ............................................
Bank debits (20 citie s) * * ..................................

the

other

hand,

increased

pretty

much

— 1%
— 3
— 5
+ 2
— 4

throughout 1961.

+13
+ 7
+36
— 13
— 4
+ I

policy, and the relatively listless loan demand,

— II
+11

Net profits of district member banks were

In order to stimulate economic recovery and
growth, the Federal Reserve System pursued a
policy

of monetary ease during 1961. This

meant

that

district

banks— particularly

the

Philadelphia banks— remained liquid and had
little need to borrow at the discount window.
almost 15 per cent higher in the first half of

* First eleven months.
** First ten months.

1961

(the latest available data)

than in the

Construction was a strong feature in the

similar 1960 period. Profits on sales of securities

Third District during 1961. Contracts rose more
rapidly here than in the nation as a whole. The

were one of the principal reasons for the in­
crease.

district enjoyed particular strength in public
works and in the residential sector— a type of

R e serve B a n k o p e ratio n s

spending that has widespread effects on the

Automation took several giant steps here at 925

local economy.

Chestnut Street during 1961. In January our
Check Department installed an electronic check­

C om m e rcial b a n k in g

handling system. It was a pilot installation used

The past year was a disappointing one for

to test the reading, sorting, and listing of checks

THIRD DISTRICT B A N K IN G
(Millions $)

Dec. 31, 1959
Reserve C ity Banks
Loans
Investments
Deposits
C o u n try Banks
Loans
Investments
Deposits




Dec. 31, 1960

Change
in 1960

Dec. 27, 1961

Change
in 1961

2,128
945
3,793

2,292
929
4,007

+ 164
— 16
+214

2,430
1,085
4,139

+ 138
+ 156
+ 132

2,737
2,392
5,519

3,032
2,432
5,791

+295
+ 40
+272

3,260
2,531
6,085

+228
+ 99
+294

19

imprinted with magnetic ink. The test proved

up to two hours

a day

of

computer time

effective and, as planned, the equipment took

and has written a number of its own pro­

its place on the check collection production

grams.

line. In October we added a second system and

The Bank and Public Relations Department

the department now processes 170,000 checks a

took on several new activities in 1961. They
were:

day on its electronic equipment.

a series of pamphlets explaining our

The success of our electronic check handling

economy for the “ mass” reader; participation in

installation is due, in large measure, to the

a series of public service television programs;

cooperation of district banks, most of which
now are preprinting checks in magnetic ink.

preparation to make a movie about the Federal
Reserve System.

About 60 per cent of all the checks we receive

In other departments, discounts and advances

are now preprinted and the percentage is rising

to member banks fell to $564 million from

all the time.
The Data

$2,712 million in 1960. Issues of saving bonds

its own

Processing

electronic

Department installed

computer

in May,

1961.

At present it is doing over 60 different jobs
for

the

various

departments

of

the

Bank.

The Research Department, for example, uses

exceeded redemptions for the first time in several
years. Fewer pieces of currency but more coins
were counted in 1961.
Additional statistics on Reserve Bank opera­
tions are shown on page 26.

NEW RELEASE
Forecasts for 1962. The Department of Research has
compiled and analyzed a number of predictions made by
businessmen, economists and Government officials. This
compilation includes a summary of forecasts for the econ­
omy as a whole and particular sectors of the economy.
The more important indicators are presented in chart form.

Copies of this release are available on request from the
Bank and Public Relations Department, Federal Reserve
Bank of Philadelphia.

20




DIRECTORS AN D OFFICERS

A t the election held in the fall of 1961, Frank R. Palmer was re-elected as a
Class B director by the banks in Group I for a term of three years from
January I, 1962. Eugene T. Gramley, President of the Milton Bank and Safe
Deposit Company, Milton, Pennsylvania, was elected for a like term by banks
in G roup 3 to serve as a Class A director. He succeeds. O. Albert Johnson.
The term of Henderson Supplee, Jr. as a Class C director and his service
as Chairman of the Board of Directors expired at the end of 1961. The Board
of Governors of the Federal Reserve System appointed Willis J. W inn to
succeed him as a Class C director for a three-year term. Mr. Winn is Dean
of the W harton School of Finance and Commerce, University of Pennsylvania.
During 1962, Walter E. Hoadley, previously Deputy Chairman, will serve as
Chairman and David C. Bevan as Deputy Chairman of the Board of this Bank.
By appointment of the Board of Directors, Howard C. Petersen, President
of the Fidelity-Philadelphia Trust Company, Philadelphia, Pennsylvania, will
continue to represent the District on the Federal Advisory Council during
1962.
W ith the approval of the Board of Governors of the Federal Reserve
System, the Board of Directors reappointed Karl R. Bopp as President and
Robert N. Hilkert as First Vice President for terms of five years beginning
March I, 1961. Roy Hetherington, an Assistant Cashier, retired on M ay 31,
1961 and Philip M. Poorman, Vice President in charge of fiscal agency oper­
ations, on June 30. Norman G. Dash, previously an Assistant Vice President,
was made a Vice President, effective July I. He succeeds Mr. Poorman as
senior officer of the fiscal agency function.




21

DIRECTORS AS OF JANUARY 1962

Term expires
December 31

Group
C LASS A
1

FREDERIC A. POTTS
President, The Philadelphia National Bank,
Philadelphia, Pennsylvania

1962

2

J. M ILTON FEATHERER
Executive Vice President and Trust Officer,
The Penn’s Grove National Bank and Trust
Company, Penns Grove, New Jersey

1963

3

EUGENE T. GRAMLEY
President, Milton Bank and Safe Deposit
Company, Milton, Pennsylvania

1964

CLASS B
1

FRANK R. PALMER
Chairman, The Carpenter Steel Company,
Reading, Pennsylvania

1964

2

R. RUSSELL PIPPIN
Treasurer, E. I. du Pont de Nemours & Company,
Wilmington, Delaware

1962

3

LEONARD P. POOL
President, Air Products and Chemicals, Inc.,
Allentown, Pennsylvania

1963

C LASS C
WALTER E. HOADLEY, Chairman
Vice President and Treasurer,
Armstrong Cork Company,
Lancaster, Pennsylvania

1963

D A V ID C. BEVAN, Deputy Chairman
Vice President, Finance, Pennsylvania Railroad Company,
Philadelphia, Pennsylvania

1962

W ILLIS J. W IN N
Dean, Wharton School of Finance and Commerce,
Philadelphia, Pennsylvania

1964

22




OFFICERS AS OF JANUARY 1962

KARL R. BOPP
President

ROBERT N. HILKERT
First Vice President

RALPH E. H AAS
Assistant Vice President

JOSEPH R. CAMPBELL
Vice President

G EO RGE J. LAVIN
Assistant Vice President
and Assistant Secretary

W ALLACE M. C ATANACH
Vice President

HENRY J. NELSO N
Assistant Vice President

N O R M A N G. DASH
Vice President

HARRY W. ROEDER
Assistant Vice President

D A V ID P. EASTBURN
Vice President
M U RD O C H K. G O O D W IN
Vice President, General Counsel
and Assistant Secretary

JOSEPH M. CASE
Chief Examining Officer
HAROLD M. GRIEST
Examining Officer

JAM ES V. VERGARI
Vice President and Cashier

JACK H. JAM ES
Examining Officer

RICHARD G. W ILG U S
Vice President and Secretary

LEONARD M ARKFORD
Examining Officer

EVAN B. ALDERFER
Economic Adviser

G. W ILLIAM METZ
Examining Officer

CLAY J. A N D E R SO N
Economic Adviser

JACK P. BESSE
Assistant Cashier

JO HN R. BUNTING, JR.
Business Economist

W ILLIAM A. JAMES
Personnel Officer

EDW ARD A. AFF
Assistant Vice President

W ARREN R. M OLL
Assistant Cashier

HUGH BARRIE
Assistant Vice President

FRED A. MURRAY
Director of Plant

ZELL G. FENNER
Assistant Vice President

RUSSELL P. SUDDERS
Assistant Cashier




HERMAN B. HAFFNER
Genera! Auditor

ST A T E M E N T OF CONDITION
FEDERAL RESERVE B A N K OF PHILADELPHIA
End of y e a r
( 0 0 0 ’s omitted in d ollar figures)
A SSET S
G o ld certificate reserves:
G o ld certificate a c c o u n t ...............................................
Redemption fund— Federal Reserve n o t e s .....................
Total go ld certificate r e s e r v e s ...................................

$

90 6 ,9 5 9
7 1 ,5 1 7

$ 1 ,0 5 5 , 7 1 2
66 ,2 51

$

97 8 ,4 7 6

$ 1 ,1 2 1 , 9 6 3

Federal Reserve notes of other Federal Reserve B a n k s ........
O the r cash ......................................................................
Loans and securities:
Discounts and a d v a n c e s ...............................................
United States G overnm ent s e c u r it ie s .............................

4 3 ,6 3 5
1 2 ,8 5 2

4 2 ,5 1 9
1 0 ,7 9 3

2 ,1 8 5
1 ,6 5 8 ,9 6 3

4 ,1 9 2
1 ,5 4 5 ,0 1 2

Total loans and s e c u r it ie s .........................................

$ 1 ,6 6 1 ,1 4 8

$ 1 ,5 4 9 , 2 0 4

Uncollected cash items ....................................................
Bank p r e m is e s ..................................................................
All other a s s e t s ................................................................

4 3 9 ,4 4 3
3,521
1 3 ,5 9 0

4 1 2 ,3 2 4
3,791
1 2 ,0 4 4

$ 3 ,1 5 2 , 6 6 5

$ 3 ,1 5 2 ,6 3 8

$ 1 ,8 9 0 , 0 7 4

$ 1 ,8 6 7 ,3 2 3

8 2 9 ,2 3 7
1 0 ,6 9 6
1 5 ,3 7 0
3,211

83 1,788
2 7 ,0 3 8
1 2 ,6 2 6
5 ,7 0 0

Total assets

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

LIABILITIES
Federal Reserve notes ......................................................
Deposits:
M e m b er b ank reserve a c c o u n t s .....................................
United States G o v e r n m e n t .............................................
F o r e i g n ........................................................................
O the r deposits ............................................................
Total d e p o s i t s ..........................................................

$

85 8 ,5 1 4

$

87 7 ,1 5 2

D eferred a vailability cash i t e m s .......................................
All other liabilities ..........................................................

32 3 ,8 0 8
3,34 7

3 3 4 ,9 7 1
1 ,6 9 7

Total liabilities ........................................................

$ 3 ,0 7 5 ,7 4 3

$ 3 ,0 8 1 , 1 4 3

$

$

C A P IT A L A C C O U N T S
C ap ital paid i n ............................................................
Surplus ........................................................................
Total liabilities and capital a c c o u n t s .........................
Ratio of g o ld certificate reserves to deposit and Federal
Reserve note liabilities com bined .................................

24

1960

1961




25,641
51 ,2 81

2 3 ,8 3 2
4 7 ,6 6 3

$ 3 ,1 5 2 , 6 6 5

$ 3 ,1 5 2 , 6 3 8

3 5 .6 %

4 0 .9 %

EARNINGS AND EXPENSES
FEDERAL RESERVE BANK OF PHILADELPHIA

( 0 0 0 ’s omitted)

1961

1960

E arnin gs from:
United States G overnm ent s e c u r it ie s .............................

$

O the r s o u r c e s ..............................................................
Total current e a r n i n g s ...............................................

5 3 ,9 5 4

$

180

6 1 ,8 4 3
879

$

5 4 ,1 3 4

$

6 2 ,7 2 2

$

8 ,1 1 9

$

7 ,5 9 4

N et expenses:
O p e ra tin g e x p e n se s*

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

C ost of Federal Reserve c u r r e n c y .................................

624

691

Assessm ent for expenses of Board of G o v e r n o r s ............

364

384

Total net e x p e n s e s ..................................................

$

9 ,1 0 7

$

8 ,6 6 9

Current net e a r n i n g s ........................................................

$

4 5 ,0 2 7

$

5 4 ,0 5 3

$

200

$

Ad d itions to current net earnings:
Profit on sales of U.S. G overnm ent securities ( n e t ) ..........
Transferred from reserves for contingencies ( n e t ) ..........

—

All o t h e r ......................................................................
Total a d d i t i o n s ....................... .................................

1
$

140
824

201

—
$

964

Deductions from current net earnings:
M isce lla ne ous non-operating expenses

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

1

7

Total d e d u c t io n s ......................................................

$

1

$

7

N et additions ..................................................................

$

200

$

957

Net e a rn in g s before paym ents to U.S. T r e a s u r y ..................

$

4 5 ,2 2 7

$

5 5 ,0 1 0

D ivid end s paid ................................................................

1 ,4 7 2

1,3 9 9

Paid to U.S. T reasury (interest on Federal Reserve notes) . . . .

4 0 ,1 3 6

5 1 ,5 8 5

Transferred to or deducted from (— ) S u r p l u s ...................

$

3 ,6 1 8

$

2 ,0 2 5

* After deducting reimbursable or recoverable expenses.




25

VOLUME OF OPERATIONS
FEDERAL RESERVE B A N K OF PHILADELPHIA

1961

1960

1959

1 8 1 ,1 0 0
2 6 ,3 0 0
1 6 ,2 0 0
732

1 7 6 ,7 0 0
2 5 ,0 0 0
1 7 ,2 0 0
707

1 7 3 ,6 0 0
2 4 ,2 0 0
1 7 ,9 0 0
718

677
149
2 6 0 ,3 0 0
4 7 6 ,2 0 0
1
544
317

698
145
2 9 5 ,0 0 0
45 1 ,2 0 0
2
529
326

742
133
2 9 9 ,2 0 0
4 9 1 ,1 0 0
2
505
328

406

419

353

8 ,6 5 0
1,11 9

7 ,8 7 2
6,65 7
1,0 4 3

7,53 6
6 ,7 6 6
953

$6 4,600
5 ,8 6 6
274
166

$ 6 4,500
5,131
283
150

$6 4 ,3 0 0
4 ,9 7 4
287
157

3 6 ,3 9 5
9 0 ,6 7 6
1,78 3
55
564
2,2 4 0
851

3 4 ,7 0 7
87,251
2 ,0 7 2
54
2 ,7 1 2
2 ,1 8 2
861

3 3 ,2 6 7
6 9 ,8 2 6
2 ,0 7 4
52
6 ,2 6 2
1,981
842

1 0 ,9 9 8

1 0 ,5 5 7

12,771

405
377
156

386
405
142

382
531
128

N u m b er of pieces ( 0 0 0 ’s omitted)
Collections:
O r d in a ry c h e c k s * ....................................... . .
G overnm ent checks (paper and c a r d ) ..............
Postal m oney orders ( c a r d ) .............................
N on -cash it e m s ...............................................
C le a rin g operations in connection with direct sendings and wire and g ro u p clearing p la n s * * . . . .
Transfers of funds .............................................
C urren cy c o u n t e d ...............................................
C oins counted ...................................................
Discounts and ad va nce s to member b a n k s ............
D ep osita ry receipts fo r withheld t a x e s .................
Postal receipts (remittances) ...............................
Fiscal a g e n c y activities:
M a rk e ta b le securities delivered or redeem ed . . .
S a v in g s bond transactions—
(Federal Reserve Bank and agents)
Issues (including re-issues) .........................
Redem ptions
.............................................
C ou p on s redeem ed (G overnm ent and agencies) . . .

6 ,7 5 6

D o lla r am ounts ( 0 0 0 , 0 0 0 ’s omitted)
Collections:
O r d in a ry c h e c k s * ...........................................
G overnm ent checks (paper and c a r d ) .............
Postal m oney orders ( c a r d ) .............................
N on -cash i t e m s ...............................................
C le a rin g operations in connection with direct sendings and wire and g ro u p clearing p l a n s * * ........
Transfers of funds .............................................
C urren cy c o u n t e d ...............................................
C oin s counted ...................................................
Discounts and ad va nce s to member b a n k s ............
D ep ositary receipts fo r withheld t a x e s ...............
Postal receipts (re m itta n c e s)...............................
Fiscal a ge n cy activities:
M a rk e ta b le securities delivered or redeem ed . . .
S a v in g s bond transactions—
(Federal Reserve Bank and agents)
Issues (including re-issues) .........................
Redem ptions
.............................................
C ou p on s redeem ed (G overnm ent and agencies) . . .
* Checks handled in sealed packages counted as units.
* * Debit and credit items.

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