View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

FEDERAL RESERVE BANK OF DALLAS
D ALLAS, TEXAS

March 16, 1961

To All Banks in the
Eleventh Federal Reserve District:

Enclosed are reproductions of the following Treasury documents
pertaining to emergency operations of the Federal Reserve banks and
the commercial banking system: “Emergency Banking Regulation
No. 1,” “Delegation to Board of Governors of Federal Reserve System
of Emergency Authority,” and “Statement of the Secretary of the
Treasury to Accompany the Issuance of the Emergency Banking
Regulation.” After reading this material, please place it in your emer­
gency binder.
Also enclosed is Annex 27 to The National Plan for Civil Defense
and Defense Mobilization, entitled “Emergency Economic Stabiliza­
tion.” This annex indicates the type of monetary and credit policy
problems that might be encountered in a postattack period, as well as
some tentative solutions, and should be kept with your other emergency
materials.
Yours very truly,
Watrous H. Irons
President
Enclosures

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

department of the

T reasury

EMERGENCY BANKING REGULATION NO. 1

CHAPTER I
Authority

This Regulation is issued pursuant to the authority vested in me as Secre­
tary of the Treasury, including the authority vested in me by section 5 (b) of
the Trading with the Enemy Act of October 6, 1917, as amended (50 U.S.C.
App. 5 (b)), and Executive Order No. 9193.
CHAPTER II
Time of Taking Effect

This Regulation shall be effective immediately after an attack upon the
United States.
CHAPTER III
Definitions

(a) As used in this Regulation, the term “banking institution” shall
include the following banking and financial institutions : every commercial bank,
trust company, private bank, savings bank, mutual savings bank, savings and
loan association, building and loan association, cooperative bank, homestead
association, credit union, and United States Postal Savings depository office
authorized under the laws of the United States or of any State to transact busi­
ness in the United States or any place subject to its jurisdiction, or any receiver
or conservator for any of the foregoing.
(b) As used in this Regulation, “operations and functions” shall include
the paying out or earmarking of any coin or currency, or permitting the with­
drawal or transfer thereof in any manner or by any device whatsoever; the
receipt or paying out of deposits; the receipt of payments into share or savings
accounts or the repurchase of or payments on withdrawals from share or sav­
ings accounts; the making of loans or discounts; transfers of credit; the per­
formance of fiduciary, custodial or agency functions; the purchase or sale of
securities, and the transaction of any banking or trust business whatsoever.
(c) As used in this Regulation, the term “Branch” shall include any duly
authorized place of business separate and apart from the head office of a Federal
Reserve Bank, Federal Home Loan Bank, or banking institution in which any
of its operations and functions are carried out.

—2—

CHAPTER IV
Continuance of Operations and Functions
Temporary Curtailment of Operations and Functions
Temporary Quarters, and Emergency Loans.

Section 1. Continuance of operations and Functions of Federal Reserve
Banks, Federal Home Loan Banks, Banking Institutions, and Branches. Except
as provided in Section 2. of this Chapter, all Federal Reserve Banks, branches
of Federal Reserve Banks, Federal Home Loan Banks, branches of Federal
Home Loan Banks, and all banking institutions and all branches thereof, with­
out regard to whether or not the head office or any other branch or branches are
functioning, shall remain open and continue their operations and functions and
permit the transaction of business during their regularly established hours.
Section 2. Temporary Curtailment of Operations and Functions. Any
Federal Reserve Bank, Federal Home Loan Bank, banking institution, or
branch may temporarily curtail, limit, suspend, or delegate any or all operations
and functions if located in an area which is unsafe because of enemy or defen­
sive action, or if essential personnel or physical facilities become unavailable.
Operations and functions of any Federal Reserve Bank, Federal Home Loan
Bank, banking institution, or branch which have been so curtailed or suspended
shall, as soon as practicable, be resumed when the cause of such curtailment or
suspension has been remedied, removed or dissipated.
Section 3. Temporary Change of Quarters. In the event that the main
office or any branch of any Federal Reserve Bank, Federal Home Loan Bank,
or banking institution becomes wholly or partially unusable, as a result of an
attack upon the United States, the Federal Reserve Bank, Federal Home Loan
Bank, banking institution, or branch so affected shall, if possible, establish
temporarily necessary substitute quarters. The use of such substitute quarters
shall be terminated as soon as practicable.
Section 4. Loans to and Borrowings From Federal Reserve Banks,
Federal Home Loan Banks, or Banking Institutions. In order to provide the
necessary liquidity to maintain operations and functions as required by Sec­
tion 1. of this Chapter, any Federal Reserve Bank, Federal Home Loan Bank,
or banking institution, or branch thereof, may make loans, discount assets, or
borrow without regard to the restrictions of Federal or State law.
Section 5. Notification of Supervisory Authorities. Any banking institu­
tion or branch thereof which curtails or suspends its operations and functions
or changes the location of its quarters pursuant to Section 2. or 3. of this
Chapter, shall as promptly as possible notify all of the authorities responsible
for its supervision, State and National, and if the banking institution is insured,
such supervisory authorities shall notify the Federal Deposit Insurance Corpo­
ration or Federal Savings and Loan Insurance Corporation, as the case may be,
of all such actions by banking institutions or branches thereof reported to them.
Section 6. Acting As Agent. Any Federal Reserve Bank, Federal Home
Loan Bank, banking institution, or branch may by agreement act as agent and
perform temporarily any or all operations and functions of any other Federal
Reserve Bank, Federal Home Loan Bank, banking institution, or branch.

—3—
CHAPTER V

Restrictions on Cash Withdrawals and Transfers of Credit.

Section 1. Cash Withdrawals, (a) Withdrawals in the form of cash,
whether by the cashing of checks or drafts, the making of loans in cash, or any
other form of cash disbursement are prohibited except for those purposes, and
not in excess of those amounts, for which cash is customarily used.
(b) Banking institutions are further authorized to restrict and ration cash
withdrawals to the extent necessary in the event a sufficient amount of cash
should not be available.
(c) Banking institutions shall prohibit withdrawals of cash in any case
where there is reason to believe that such withdrawal is sought for the purpose
of hoarding.
Section 2. Transfers of Credit, (a) No depositor or share or savings
account owner may transfer in any manner or by any device whatsoever any
balance to his credit on the date on which this Regulation becomes effective,
except for the payment of (i) expenses or reconstruction costs vital to the war
effort, (ii) essential living costs, (iii) taxes, (iv) payrolls, or (v) obligations
incurred before the date on which this Regulation becomes effective, to the end
that the best interests of the war effort and the public will be served.
(b) Banking institutions shall prohibit the transfer of credit in any case
where there is reason to believe that such transfer is sought for any unauthor­
ized purpose.
(c) After this Regulation becomes effective, banking institutions shall
retain until released by Federal authority the original or a photographic copy
(face and reverse sides) of each check and other evidence of transfer of credit
in the amount of $1,000 or more.
Section 3. Exceptions to Restrictions, (a) Balances in deposit or share
or savings accounts may be transferred from one banking institution to a
deposit or share or savings account of the same owner in another banking
institution.
(b) The restrictions of Section 2. of this Chapter shall not apply to any
check or draft negotiated for value prior to the time this Regulation becomes
effective.
(c) The limitations and restrictions of this Chapter shall not apply to the
United States, any State or any political subdivision thereof, nor to their respec­
tive agencies and authorities.
(d) The limitations and restrictions of this Chapter shall not apply to
transactions between Federal Reserve Banks, Federal Home Loan Banks,
banking institutions, and branches thereof.
(e) The provisions of Section 2. of this Chapter do not alter the right of
any banking institution to invoke restrictions on withdrawals of deposits or
repurchases of or payments on withdrawals from share or savings accounts
provided for under contract or agreement with depositors or share or savings
account owners or by reason of law or the provisions of its charter or bylaws.

—4—
CHAPTER VI

Lending and Extending Credit

Section 1. Making Loans and Extending Credit. No banking institution
may make any loan, extend any credit, or discount or purchase any obligation
or evidence of debt, unless it is established and certified in writing by the bor­
rower and a banking institution that the purpose is to pay (i) expenses or
reconstruction costs vital to the war effort, (ii) essential living costs, (iii) taxes,
or (iv) payrolls, to the end that the best interests of the war effort and the public
will be served.
Section 2. Exceptions to Restrictions, (a) The restrictions contained in
Section 1. of this Chapter do not prohibit the renewal, recasting, or extension
of any loan or credit outstanding prior to the effective date of this Regulation,
if in the judgment of the management of the banking institution such action is
in the best interest of the war effort. The cancelled original evidence of debt
shall be attached to the instrument renewing, recasting, or extending such
obligations.
(b) Section 1. of this Chapter shall not apply to loans or extensions of
credit to the United States, to any State or any political subdivision thereof, nor
to their respective agencies and authorities, nor to loans or extensions of credit
between banking institutions.
CHAPTER VII
Savings Provisions

Any action authorized or required to be taken by a Federal Reserve Bank,
Federal Home Loan Bank, banking institution, or branch or its management
pursuant to this Regulation may, in the absence of persons authorized by dele­
gation or otherwise to take such action, be taken by any director, officer or
employee of such Federal Reserve Bank, Federal Home Loan Bank, banking
institution, or branch at the time conducting that part of the affairs of the Fed­
eral Reserve Bank, Federal Home Loan Bank, banking institution, or branch
to which such action relates. Notwithstanding any other provision of law, no
Federal Reserve Bank, Federal Home Loan Bank, banking institution, or
branch or any director, officer, or employee thereof and no member or employee
of any agency of the United States shall be subject to any liability on account of
any action taken or omitted to be taken in good faith pursuant to this Regulation,
provided that this sentence shall not be deemed to apply to any liability on
account of any contractual obligation.
CHAPTER VIII
Revision or Termination

This Regulation may be revised or terminated when so ordered by the
Secretary of the Treasury.

D ated: January 10, 1961

(Signed) Robert B. Anderson
Secretary of the Treasury

department of the

T reasury

DELEGATION TO BOARD OF GOVERNORS OF FEDERAL
RESERVE SYSTEM OF EMERGENCY AUTHORITY

Pursuant to the authority vested in me as Secretary of the Treasury,
including the authority vested in me by Executive Order 9193,1 hereby delegate
to the Board of Governors of the Federal Reserve System authority and power
to take such action, consistent with regulations issued by the Secretary of the
Treasury relating to the maintenance of the operations and functions of banking
institutions, as may be necessary to maintain, regulate, limit, or suspend the
operation and functioning of any banking institution.
As used in this Order the term “banking institution” includes every Fed­
eral Reserve bank, commercial bank, trust company, private bank, savings bank,
and mutual savings bank authorized under the laws of the United States or of
any State to transact business in the United States or any place subject to its
jurisdiction, or any receiver or conservator for any of the foregoing.
The Board of Governors of the Federal Reserve System may make provi­
sion for the exercise by any person, agency, or instrumentality of any of the
authority or power delegated by this Order.
This Order shall be effective immediately after an attack upon the United
States.
(Signed) Robert B. Anderson
Secretary of the Treasury

Dated: January 10, 1961

department of the

Treasury

STATEMENT OF
THE SECRETARY OF THE TREASURY TO ACCOMPANY
THE ISSUANCE OF THE
EMERGENCY BANKING REGULATION

In keeping with the objectives of The National Plan for Civil Defense and
Defense Mobilization, I have issued an Emergency Banking Regulation that
would become effective only in the event that there should be an attack upon the
United States. Issuance of the Regulation at this time has no particular signifi­
cance except that, after months of careful study, work on it has now been com­
pleted. It is being issued so that banking institutions may develop and complete
their emergency preparedness programs as advocated by the National Plan.
Obviously the effective utilization of the financial capacity of the Nation in
the conduct of any war that might befall us must be assured. The Regulation
provides, insofar as possible, a reasonable degree of flexibility, as proper imple­
mentation would depend heavily upon the knowledge, initiative and judgment
of the managements of our financial institutions and the understanding and
cooperation of depositors and share or savings account owners. Basically the
Regulation is for the purpose of assuring the maintenance of operations and
functions of all banking institutions, including savings and loan associations and
credit unions, and to facilitate restoration of such activities should they become
temporarily disrupted because of such an emergency. This Regulation, should it
ever become effective, would be subject to such amendment, modification or
termination as might be consistent with the existing monetary needs and the
developments in the national economy.
The Regulation has been issued pursuant to the authority vested in me as
Secretary of the Treasury, including the authority vested in me by Section 5
(b) of the Trading with the Enemy Act of October 6, 1917, as amended (SO
U.S.C. App. 5 (b )), and Executive Order No. 9193. Bearing in mind that the
Regulation would become effective only in the event of an attack upon the
United States, and that the term “banking institutions” includes every com­
mercial bank, trust company, private bank, savings bank, mutual savings bank,
savings and loan association, building and loan association, cooperative bank,
homestead association, credit union, and United States postal savings depository
office authorized under the laws of the United States or of any State to transact
business in the United States or any place subject to its jurisdiction, or any
receiver or conservator for any of the foregoing, the Regulation is summarized
as follows:
(over)

All Federal Reserve Banks, Federal Home Loan Banks, their respective
branches, and all banking institutions and their branches would be required to
remain open and continue their operations and functions, and permit the trans­
action of business during their regularly established hours. The only exceptions
would be those unable to operate because they may have suffered personnel
losses or physical damage, or may be located in areas declared to be unsafe
because of defensive or enemy action. Such institutions would also be authorized
to act as agent for each other in carrying out their operations and functions.
Banking institutions and depositors and the owners of share or savings accounts
would be required to observe provisions that would guard against the misuse
of the Nation’s monetary resources so that they might be preserved primarily
for the payment of vital expenses, reconstruction and essential living costs,
taxes, or payrolls. Provisions would also guard against the misuse of credit by
directing all lending activities toward the above-named essential purposes.
To prevent misuse or hoarding of goods and material and in order to guard
against inflation, Government planning also includes a number of other emer­
gency measures. These would provide for the stabilization of rentals, prices,
salaries and wages, and rationing. During an emergency of the type toward
which our planning is directed, the cash and credit resources of our financial
institutions must likewise be utilized to the end that the best interests of the
Nation would be served.
(Signed) Robert B. Anderson
Secretary of the Treasury

Dated: January 10, 1961

THE NATIONAL PLAN
for
Civil Defense and Defense Mobilization
Annex 27
EMERGENCY ECONOMIC
STABILIZATION
This annex also includes the originally planned A nnex 2 9 ,
Em ergency Distribution and Consum ption Controls

Executive Office of the President
O FFIC E OF C IV IL AND D EFEN SE M O B ILIZ A TIO N

Preface
This annex supports and amplifies the National
Plan for Civil Defense and Defense Mobilization, par­
ticularly Part VI, Functions for Mobilization and Man­
agement of Resources and Production.
In connection with a limited war mobilization, the
annex is concerned chiefly with the emergency mone­
tary, credit, and tax measures and the “direct” controls
on prices, wages, salaries, and rents, required to combat
inflationary pressures and to stabilize the economy.
In a general war (that is, with attack on the United
States), the annex is directed to the emergency mone­
tary and credit policies and actions required to maintain
and stabilize the monetary and economic systems on a
“going concern” basis, especially in undamaged areas.
In such a situation, it is also concerned equally with
“direct” controls on prices, wages, salaries, and rents,
and with emergency rationing, all intended and trig­
gered to function in undamaged areas immediately
after attack.
Periods of international tension would be unlikely
to require the actual use of most of the emergency meas­
ures outlined in this annex but would require acceler­
ated preparedness for their possible imminent use.
In the event of massive attack, the headquarters
of the Federal Government could not administer most
of the immediately required regulatory measures.
This annex emphasizes, therefore, that the only work­
able alternative is for local, State, and Federal regional
[iii]

authorities to have immediate postattack responsibility
for the interim administration and coordination of
many of the emergency measures involved. This re­
sponsibility would continue in varying degrees and for
varying times, depending upon how rapidly the head­
quarters of the Federal Government could gradually
consolidate interim local, State, and Federal regional
actions into a cohesive national stabilization operation.
Accordingly, in addition to outlining national
economic plans and policies for emergency use, the
annex will contain operating appendixes setting forth
emergency techniques and objectives for the guidance
of local, State, and Federal regional authorities in
carrying out their interim postattack operating re­
sponsibilities.
For the purposes of clarity, limited war and general
war are treated as self-contained entities in this annex,
inasmuch as the policies, objectives, and techniques
involved must necessarily differ.
The annex is published in looseleaf form in order
that pages may be added or replaced easily whenever
revisions are made.
Director
Office of Civil and Defense Mobilization
Issued November 1960
(NOTE: This annex also includes the originally planned
Annex 29, Emergency Distribution and Consumption Controls.)
[iv]

Contents
Page

PREFACE.............................................................. iii

I. DEFINITION ................................................ 1
II. LIMITED W A R .............................................
A. Assumptions..............................................
B. General Responsibilities.............................
C. Functions...................................................
D. Execution...................................................

1
1
2
2
4

III. GENERAL WAR............................................. 9
A. Assumptions.............................................. 9
B. General Responsibilities................................11
C. Functions.......................................................13
D. Execution.......................................................21
IV. INTERNATIONAL TENSION..........................27
A. Assumption....................................................27
B. General Responsibilities................................27
C. Functions...................................................... 27
D. Execution...................................................... 28
[V ]

ANNEX 27
EMERGENCY ECONOMIC STABILIZATION
I. Definition
For the purpose of this annex, emergency economic
stabilization includes the “indirect” controls (monetary,
credit, and tax measures) required to support mobiliza­
tion for limited war and to stabilize the economy during
such a mobilization. It also includes the “indirect” or
financial policies and controls necessary to maintain
and stabilize the continued functioning of a “going con­
cern” economy following massive attack on the United
States. Finally, it includes the equally important
“direct” controls necessary to stabilize prices, wages,
salaries, and rents, and to ration essential consumer
items.
A.

II. Limited War
Assumptions1
1. In a limited-war situation, a fundamental emer­
gency economic problem would involve restrain­
ing or controlling the inflation which acceler­
ated mobilization would be likely to set in
motion. Even though immediate shortages of
goods and services might not result, the
psychological reaction to limited war would
almost certainly produce inflationary conse­
quences requiring forceful national action.

'See Annex 1, Planning Basis.

[1 ]

Annex 27

2. Comprehensive indirect and direct controls, of
the types and to the extent required by the
situation, would be initiated promptly and ad­
ministered by the Federal Government. These
measures would involve little or no direct par­
ticipation by local or State authorities and
organizations, except in the case of rationing.
Substantial local and State administrative sup­
port would be required if rationing should
become necessary during a limited-war mobili­
zation.

B. General Responsibilities

1. The Federal Government will be responsible for
the initiation and administration of indirect
controls (emergency monetary, credit, and tax
measures); of direct controls on prices, wages,
salaries, and rents; and for rationing operations
or accelerated preparation for such operations.
2. Local, State, and OCDM regional authorities
will familiarize themselves with Federal eco­
nomic stabilization operations from the outset of
any limited-war mobilization and will review and
strengthen their preparedness to carry out
emergency economic stabilization responsibili­
ties in the event of attack, especially in undam­
aged areas.
3. Private citizens and organizations will be
responsible for cooperating with all emergency
economic measures required, and for supporting
by every means the national policy of forestall­
ing inflationary pressures set in motion by the
mobilization.

C. Functions

1. Objectives
a. To initiate emergency monetary, credit, and
tax measures (indirect controls) designed to
[2]

Annex 27

finance limited-war mobilization and to re­
strain inflation.
b. To impose comprehensive direct controls, as
necessary, on prices, wages, salaries, and
rents, in order to combat the effects of infla­
tion during the mobilization period.
c. To institute or accelerate preparedness for
rationing, as it may be necessary to comple­
ment indirect and direct controls and to
ensure equitable distribution of available
essential consumer items.
2. Actions Required
a. The major Federal financial and economic
agencies will immediately recommend to the
President previously prepared emergency
monetary and tax measures and, to the extent
that it has not been enacted, will recommend
necessary enabling legislation.2 On the basis
of such enabling authority, the appropriate
Federal financial agencies will take the
actions necessary, in keeping with existing
plans, to impose and administer the indirect
controls authorized.
b. Simultaneously, if it has not been enacted,
the Director, OCDM, will recommend to the
President previously prepared enabling leg­
islation to support the imposition of compre­
hensive direct controls on prices, wages,
salaries, and rents.
By Executive order, the President will
immediately create an emergency stabiliza­
tion agency and its component direct-controls

2See Annex 4, A uthorities for Civil Defense and Defense Mobilization.
[3]

Annex 27

agencies, and the administrator of the emer­
gency stabilization agency will initiate directcontrols operations through a general freeze
of prices, wages, salaries, and rents. The
Director, OCDM, will participate in the con­
tinuing development of basic direct-controls
policy and in the coordination of that policy
among the emergency stabilization agencies
and between indirect- and direct-control
operations.
Under the general supervision of the
emergency stabilization agency, in keeping
with existing plans, the appropriate opera­
ting directors of the direct-controls agencies
will staff their agencies, create necessary
field organizations, and administer the freeze
order and consequent regulatory operations
within their respective jurisdictions.
c. The Director, OCDM, and the administrator
of the emergency stabilization agency, under
existing delegation from the President, will
also take whatever action the economic situa­
tion may require in connection with ration­
ing. This may be confined to accelerated pre­
paredness for rationing, or it may involve the
actual staffing of an emergency agency and
field organization to provide a ready basis for
selective or general rationing.

D. Execution

The most important aspects of emergency economic
stabilization action during a limited-war mobilization
will be executed as follows:
[4 ]

Annex 27

1. Federal
a. Office of Civil and Defense Mobilization:
(1) Participates in the continuing develop­
ment and coordination of emergency
stabilization policies and actions to fit
the existing situation.
(2) In connection with direct controls on
prices, wages, salaries, and rents, rec­
ommends to the President necessary
enabling legislation if it has not been
enacted.
(3) Coordinates direct-controls policy with
indirect-controls policy and with produc­
tion and materials control policy. In
the latter connection, also establishes
arrangem ents under which Federal
agencies having responsibilities for pro­
duction and distribution of resources will
provide to the direct-controls and ration­
ing agencies information and advice
needed with respect to the formulation
and effects of direct controls and ration­
ing regulations involving such resources.
b. Department of the Treasury:
(1) Participates in the continuing develop­
ment and coordination of emergency
stabilization policy and action, and de­
velops emergency monetary and tax poli­
cies and measures to fit the existing
situation.
(2) On the basis of the existing conditions,
recommends to the President necessary
enabling legislation in connection with
[5]

Annex 27

emergency tax operations and such mon­
etary operations as fall within its
jurisdiction.
(3) Imposes and administers emergency tax
measures and such monetary controls as
are its responsibility.
c. Federal Reserve Board and other Federal
financial agencies:
(1) To the extent required, participate in the
continuing development and coordina­
tion of emergency stabilization policy
and action, and develop emergency mon­
etary and credit policy to fit the existing
situation.
(2) To the extent required, recommend to
the President necessary enabling legis­
lation in connection with emergency
monetary and credit operations.
(3) Administer those aspects of emergency
stabilization operations which fall with­
in their jurisdictions (for example, the
Federal Reserve Board and the Federal
Home Loan Bank Board as to consumer
credit control and the Housing and Home
Finance Agency as to real estate credit
measures).
d. Emergency stabilization agencies:
(1) The parent stabilization agency will or­
ganize the component agencies and initi­
ate direct-controls operations, including
accelerated preparedness for rationing
or the imposition of rationing as
necessary. It will also participate in the
continuing development of stabilization
[6 ]

Annex 27

policy, and will coordinate the policies
and operations of its component directcontrols agencies.
(2) The component agencies will staff and
organize their respective operations in
keeping with existing plans, and will ad­
minister direct controls on prices, wages,
salaries, and rents.
e. Department of Labor and Housing and
Home Finance Agency:
Respectively, in keeping with existing
plans, will assist the Director, OCDM, in
creating and organizing emergency wagesalary and rent control agencies within the
parent stabilization agency.
f. Departments of Agriculture, the Interior,
and Commerce (Business and Defense
Services Administration):
(1) As to food, petroleum and solid fuels,
and other essential consumer items
respectively, participate in the general
development of accelerated rationing
preparedness; and, in the event of ra­
tioning, advise the emergency rationing
agency of available supplies, require­
ments, and allocations for rationing
purposes.
(2) With respect to their production and dis­
tribution responsibilities, provide the
stabilization agencies with information
and advice in connection with the formu­
lation and effect of direct control and
rationing regulations.
[7 ]

Annex 27

g. General Services Administration:
In keeping with existing plans, provides
physical facilities and supplies necessary for
the creation and organization of the emer­
gency stabilization agency and its compo­
nent direct-controls agencies.
h. Civil Service Commission:
(1) In keeping with existing plans, assists
the Director, OCDM, and the emergency
stabilization agency and its component
direct-controls agencies in securing
qualified personnel, particularly from
Federal Government sources; and as­
sists in the development of appropriate
personnel standards and regulations
for use in the administration of emer­
gency stabilization operations.
(2) Participates in the formulation of wage
and salary stabilization policies as they
affect Federal Government personnel,
and establishes civilian wage and salary
stabilization policies and standards for
the Executive Branch of the Federal
Government.
i. Bureau of the Budget:
In keeping with existing plans, arranges
with the Director, OCDM, and the emer­
gency stabilization agency for the availabil­
ity and budgeting of appropriations required
for stabilization operations.
j. Department of State:
The departments and agencies men­
tioned above will avail themselves of foreign
policy guidance from the Department of
[8 ]

Annex 27

State in connection with those stabilization
policies and measures which would directly
affect relations with other countries.
2. State and Local
State governors and civil defense direc­
tors, and through them, community authorities,
will familiarize themselves with emergency
Federal stabilization policy and actions in order
to improve or accelerate their preparedness to
carry out interim stabilization responsibilities
in the event of general war.

III. General War
A. Assumptions

1. Because of the interdependence and interrela­
tionships of the Nation’s monetary and credit
system, massive attack would gravely jeopar­
dize the continued operation of banks and other
financial institutions, including those in un­
damaged areas. This would be true at a time
when the maximum capacity and functioning
of our surviving monetary and economic sys­
tems would be most needed, and when it would
be least desirable to shut down or introduce
substitute systems.3

3For the purposes of this annex, “undamaged areas” are those com­
munities, cities, counties, parts of States, or States where physical
destruction and fallout would be nonexistent or where fallout would be
tolerable or short-lived. In effect, therefore, they are all those economic
entities where, with preparedness, regulated but familiar economic activity
could be triggered to continue with minimum interruption. This rejects
the alternative of shutting down our surviving economy or substituting
new and unfamiliar systems, such as barter, the introduction of scrip,
or “police” rule of a nonmoney economy. (This preparedness concept
in no way interferes with the development of “civil defense-public welfarenonmoney economy” preparedness applicable in damaged areas, nor does
it inhibit adapting both kinds of preparedness to such “gray” or moder­
ately damaged areas as may exist.)
[9 ]

Annex 27

In keeping with the preparedness and
operating concepts which this assumption pro­
duces, the immediate and urgent postattack
national objectives are to support the continued
functioning of the surviving portions of our
monetary system and to stabilize the surviving
economic system.
Emergency financial and indirect controls,
outlined later in this section, would be required
to instill confidence in and assure the continued
but regulated operation of our monetary and
credit systems in undamaged areas, while
avoiding the introduction of new or substitute
systems. Simultaneously, emergency direct
controls, particularly including rationing, would
be required to stabilize the surviving economy
in order to assure its maximum contribution to
the national security.
This annex assumes that, whether from the
present seat of the Federal Government or from
relocation sites, it would be virtually impossible
for the national headquarters of Federal agen­
cies to administer initial and interim postattack
stabilization operations.
2. The great bulk of the operating responsibility
for these emergency actions in undamaged
areas, during the critical first period following
attack, would fall upon local and State authori­
ties, OCDM Regional Offices, and the field staffs
of Federal agencies which normally administer
financial and credit programs or to which special
responsibilities have been delegated (for ex­
ample, the Department of the Treasury, the
Federal Reserve Board, the Federal Home Loan
[ 10]

Annex 27

Bank Board, the Federal Deposit Insurance Cor­
poration, the Housing and Home Finance
Agency, the Department of Labor, and the De­
partment of Agriculture).
Most of the coordinating responsibility in
this initial period will rest with State authorities
and with OCDM Regional Offices.
After the interim postattack period, as Fed­
eral agencies gradually become able to adminis­
ter and coordinate nationally, the Federal
Government (through OCDM, permanent agen­
cies, and emergency stabilization agencies) will
draw together local, State, and regional in­
terim operations in the direction of a cohesive
and stabilized national economy.
3. This annex does not envisage the possibility of
organized economic activity, nor of a function­
ing money economy, during the initial post­
attack period in the heavily damaged areas. The
policies and measures outlined in the annex are
intended primarily for immediate postattack use
in undamaged areas, as the only alternative to
shutting down our surviving monetary and eco­
nomic systems when they are most needed.
Nevertheless, the economic objectives included
in this annex, primarily for immediate and in­
terim postattack use in undamaged areas,
should also guide authorities in other areas as
the gradual restoration of restricted economic
functioning becomes possible.
B. General Responsibilities

1. The Federal Government will be responsible for
establishing the national policies and taking the
[ii]

Annex 27

Federal actions required to support the mobili­
zation of all economic forces and the maximum
utilization of surviving human, material, and
economic resources. It will be responsible for
establishing the national policies and directing
the actions required to maintain the functioning
of the monetary, credit, and financial system;
the continuance of banking operations; and the
operations of the surviving economy as a “going
concern,” including provision for the sharing of
war losses to the extent necessary to carry out
these responsibilities.4
The Federal Government will be responsible
for authorizing the general control of prices,
wages, salaries, and rents and the imposition of
rationing; and it will be responsible for creating
emergency stabilization agencies to advise and
assist, as rapidly as possible, in immediate localState postattack operations in these fields and
gradually to absorb these interim operations.
By prearrangement, the Federal Govern­
ment will also be responsible for requesting
State governors to exercise their emergency au­
thority in connection with the initial and interim
postattack administration of price and rent con­
trol and rationing. (In keeping with existing
plans, the Wage and Hour offices of the Depart­
ment of Labor will initiate interim postattack

4This aspect of loss-sharing should not be confused with the policy
expressed in par. IV.A.l.e of Annex 35, Emergency Administration of
Essential Facilities, in which it is proposed to “insure” the producers
of designated goods and services against “financial loss” with respect
to the production of such goods and services.
[ 12]

Annex 27

wage and salary control and will provide ma­
chinery for dealing with such labor disputes as
may arise.)
2. At the request of the Director, OCDM, State gov­
ernments will be responsible for supporting the
prearranged actions of the Federal agencies
(including their field staffs), having responsibil­
ity for monetary, credit, and financial controls,
to assure the continued functioning of the mon­
etary, credit, and banking system in undamaged
areas.
Also at the request of the Director, OCDM,
State governments will be responsible for the
interim postattack administration of price and
rent control and rationing and for assisting or
supporting Department of Labor Wage and
Hour offices in the interim administration of
wage and salary controls.
Local governments, acting under State
authority and coordination, will have the same
interim direct controls responsibilities.
3. Private citizens and organizations, particularly
including financial institutions, will be responsi­
ble for cooperating with and assisting local,
State, and Federal regional authorities in car­
rying out the immediate postattack objectives
of national economic policy.
C. Functions

1. Objectives
a. To assure the continued functioning of a
money and credit economy in undamaged
areas, so as to assure its maximum contribu­
tion to economic activity, reconstruction, and
the national security.
[ 13 ]

Annex 27

b. To stabilize the surviving economy by pre­
venting inflation and a flight from the nation­
al monetary and credit system, by supporting
the continuity of the system, and by avoiding
drastic substitutes for it, such as barter or
scrip.
c. To undertake immediate rationing of essen­
tial items in undamaged areas, in keeping
with prearranged plans, in order to conserve
and share available supplies and to support
and complement other financial, indirect, and
direct controls.
d. To rely upon prearranged State and local in­
terim administration of direct controls on
prices and rents, and of rationing, in un­
damaged areas, in keeping with national
economic policies, objectives, and standards
prescribed by the Federal Government pre­
attack; and to rely upon the Wage and Hour
offices of the Department of Labor to impose
and administer wage and salary controls in
undamaged areas.
e. To pursue the preceding objectives in dam­
aged areas, and those adjoining, as soon as
conditions permit.
f. To consolidate interim local, State, and re­
gional actions and responses in undamaged
areas into a coordinated national stabilization
program as soon as conditions permit. This
will be undertaken gradually by OCDM, per­
manent Federal agencies, and emergency
stabilization agencies.
[ 14]

Annex 27

2. Actions Required
a. A pre-positioned Executive proclamation will
be directed to the country by all available
communications media, stating or reiterating
the national economic objectives and policies
to be pursued and stressing the need for na­
tional support of the emergency actions to be
taken.
b. By pre-positioned Executive order, the Secre­
tary of the Treasury will assume full respon­
sibility for policy matters pertaining to finan­
cial institutions and the monetary, credit, and
financial system. The Secretary will be
vested with full power and authority to per­
mit or require such actions, in keeping with
existing plans, as may be necessary to assure
the continued functioning of the system in
undamaged areas. By pre-positioned order,
the Secretary will also redelegate to other
financial agencies such power and authority
as they will require in order to carry out their
prearranged postattack responsibilities.
At the outset of the postattack period,
these actions will be administered, on the
basis of pre-positioned orders and regula­
tions, by the field staffs of the financial agen­
cies, with such support or assistance by local,
State, and OCDM regional authorities as the
financial agencies may request.
c. Necessary orders, regulations, and adminis­
trative machinery will be pre-positioned to
support the following postattack monetary
and credit policies and actions:
[15]

Annex 27

(1) The continuance of banking operations,
including provision for liquidity' and
credit, will be maintained in undamaged
and other areas insofar as possible. The
Federal Government will offer assurance
that those dealing with financial institu­
tions may do so without risk of the insol­
vency of such institutions by reason of
war losses.
(2) The Federal Government will assure the
equitable sharing of war losses through­
out the economy to the extent possible,
not to guarantee individuals against
losses, but to ensure the maintenance of
a “going concern” economy.
(3) Bank deposits and currency will be made
available in proportion to the needs of
postattack economic activity (to avoid
inflation), with due regard to local con­
ditions in severely damaged, moderately
or lightly damaged, and undamaged
areas, and subject to controls prescribed
by national authority.
(4) New bank credit will be made available
for essential purposes such as the sup­
port of military, emergency relief, and
salvage operations and of national re­
construction.0
6
5

5As used here, liquidity means making provision for converting
enough assets into available cash or credit to meet operating needs, even
though some or many of those assets may be destroyed or inaccessible.
6 This would include the essential facilities and the essential produc­
tion and distribution contemplated in Annex 35, Emergency Adminis­
tration of Essential Facilities.
[16]

Annex 27

(5) The Federal Government will guarantee
private financing for essential purposes
to the extent that it is not otherwise
available on reasonable terms.
(6) On the basis of existing plans, provision
will be made for the clearance of checks,
including those drawn on destroyed
banks, subject to such limitations and
controls as may be necessary to assure
the maintenance of the monetary and
credit system.
(7) Supplies of currency will be pre-positioned and decentralized to the extent
possible in order to provide for local
needs and, in keeping with existing
plans, will be made available in accord­
ance with the needs of postattack eco­
nomic activity.
(8) There will be no general moratorium on
the payment of preattack debts, but lim­
ited moratoria may be authorized for
hardship cases.
(9) The issuance and use of scrip as a sub­
stitute for currency will be avoided ex­
cept as it may be necessary due to the
unavailability of currency.
(10) Actions will be taken in connection with
foreign financial transactions as are
deemed necessary to protect the value of
the dollar in international markets, pre­
serve foreign exchange resources, and
prevent transactions adverse to the con­
duct of the war and the financial inter­
ests of the United States.
[1 7 ]

Annex 27

d. To support and complement these financial,
monetary, and credit controls, the Federal
Government (through the Director, OCDM)
will immediately issue a pre-positioned gen­
eral “freeze” of prices, wages, salaries, and
rents, to be applicable particularly in undam­
aged areas during the immediate and in­
terim postattack period.
e. The Director, OCDM, will also issue a pre­
positioned order requiring the immediate
conservation and rationing of essential con­
sumer items. It will be national policy to
control immediately, under State and local
government direction, all retail and pre-retail
inventories through pre-positioned orders
and, for a period of at least 5 days, to pro­
hibit all sales of food, petroleum, and other
essential consumer items, except for the most
essential purposes and except for perish­
ables in danger of spoilage.
f. By prearrangement, the Director, OCDM,
will request governors, and through them,
community authorities, to initiate and ad­
minister these interim direct controls as to
prices, rents, and rationing.7 The Secretary
of Labor, through the Wage and Hour offices
of the Department of Labor, will initiate and
administer interim wage and salary controls
and necessary labor disputes machinery.

7For the guidance of local, State, and OCDM regional authorities,
the direct-controls objectives, standards, and techniques to be pursued
are contained in appendixes to this annex.
[ 18]

Annex 27

g. Simultaneously, by Executive order, there
will be created an emergency Federal stabili­
zation agency and component direct-con­
trols agencies, including a rationing agency.
To the extent possible, the nucleus staffs of
these agencies will advise and assist Federal
regional authorities and State authorities as
the latter initiate, administer, and coordinate
interim direct-controls operations. These
emergency Federal stabilization agencies
will be expanded as rapidly as conditions
permit in order to gradually absorb the localState administration of interim direct con­
trols.
h. In connection with emergency rationing,
local-State authorities will assess their re­
spective supply and replenishment situations
and take the prearranged administrative
steps required to impose and administer a
prescribed system of rationing at the expira­
tion of the period of prohibition of sales.
Initial rationing techniques will be based
upon the policy that tight conservation re­
ceives first priority, to be followed by austere
rationing until the supply situation is clari­
fied, notwithstanding the fact that some
areas may appear to have supplies surplus
to their own needs.
The emergency rationing techniques to
be followed will also be based upon pre-positioned ration “evidence” (cards, coupons,
certificates, etc.), supplied by the Federal
Government. Registration of consumers
and preparation and distribution of ration
[ 19]

Annex 27

evidence will be undertaken by local-State
authorities during the period of prohibition
of sales.
Also during this period and thereafter,
field representatives of the Department of
Agriculture (food), the Department of the
Interior (petroleum and solid fuels), and the
Department of Commerce (other essential
consumer items) will supervise and coordi­
nate the allocation and replenishment of in­
ventories required for effective emergency
rationing.8
Representatives of these agencies will
collaborate to the extent possible in the localState assessment of the supply and replenish­
ment situation, and will provide local-State
authorities with necessary information and
guidance as emergency rationing is initiated.
i. The Director, OCDM, will take such other
actions as may be necessary to confirm,
establish, or revise national emergency eco­
nomic policies in terms which will support in­
terim local-State administration of direct
controls until the Federal Government can
effectively coordinate and administer these
interim actions nationally.
To the extent possible, necessary interim
actions will be taken and coordinated by

“With respect to food and other consumer items, the Departments of
Agriculture and Commerce will control pre-retail inventories with retail
inventories under the control of local-State authorities. As to petroleum
and solid fuels, representatives of the Department of the Interior will
control “primary” inventories and local-State authorities will control
“secondary” inventories. The terms “primary” and “secondary” are
defined in Annex 33, National Energy and Minerals Plan.
[ 20]

Annex 27

State authorities and by OCDM regions with
the objective of supporting a cohesive rlational response to the emergency as quickly
as possible, even though the national econ­
omy may be fragmented and the only work­
able responses are temporarily local and
State in nature.
D. Execution

1. Federal
a. Office of Civil and Defense Mobilization:
(1) Participates in the continuing develop­
ment and coordination of postattack
economic stabilization policy.
(2) Acting for the President, initiates pre­
positioned direct controls on prices,
wages, salaries, and rents, and rationing.
By prearrangement, requests State gov­
ernors to exercise their emergency au­
thority in administering these controls
temporarily.
(3) On the basis of existing plans, organizes
an emergency stabilization agency and
component direct-controls agencies, to
be expanded as rapidly as possible.
Thereafter, supervises and coordinates
the development of Federal capability to
gradually absorb interim local-State
operations.
(4) Coordinates direct-controls policy with
postattack financial, monetary, and
credit policy and provides for coordi­
nation with production and resources
control policy.
[2 1 ]

Annex 27

b. Department of the Treasury:
(1) On the basis of existing arrangement,
the Secretary of the Treasury prescribes
postattack monetary, credit, and bank­
ing policies and initiates pre-positioned
emergency actions.
(2) By prearrangement, delegates appro­
priate authority to other financial agen­
cies (the Federal Reserve Board and the
Federal Home Loan Bank Board, for
example) to permit them to carry out
their postattack banking and monetary
responsibilities.
(3) Participates in the continuing develop­
ment and coordination of postattack
monetary, credit, and economic policy
and actions.
c. Federal Reserve Board and Federal Home
Loan Bank Board:
(1) Participate in the continuing develop­
ment of postattack monetary, credit, and
economic policy and actions.
(2) In keeping with existing plans, adminis­
ter all aspects of postattack banking,
monetary, and credit operations falling
within their jurisdictions (the Federal
Reserve System, the Federal Home Loan
Bank System, and the Savings and Loan
System).
d. Council ofEconomic Advisers:
Participates in the continuing develop­
ment of postattack financial, monetary, credit,
[22]

Annex 27

and economic policy and advises the Presi­
dent in connection with national economic
rehabilitation.
e. Other agencies or organizations having
financial or economic responsibilities:
(The following are representative but
not inclusive: Housing and Home Finance
Agency, Social Security Administration, Vet­
erans Administration, Federal Deposit In­
surance Corporation, Small Business Admin­
istration, Civil Service Commission, Bureau
of Federal Credit Unions.)
By prearrangement, administer those
aspects of postattack monetary, credit, or
economic operations falling within their ju­
risdictions and adapt their operations and
functions to postattack economic policy and
operating conditions.
f. Emergency stabilization agencies:
(1) As rapidly as possible, in keeping with
existing plans, expand the Federal stab­
ilization agency and component direct
controls agencies and regulatory opera­
tions; gradually absorb interim local State direct-controls operations.
(2) To the extent possible, provide advice,
guidance, direction, and policy to State
authorities and, through the Director,
OCDM, to OCDM regions during the in­
terim period prior to coordinated Federal
direct-controls administration.
g. Department of Labor:
(1) By existing delegation from the Direc­
tor, OCDM, initiates and administers,
[ 23]

Annex 27

through its Wage and Hour offices, pre­
positioned interim wage and salary con­
trol in undamaged areas. Provides
interim administration of such labor dis­
putes operations as may be necessary.
(2) Coordinates its interim administration
of wage and salary controls with interim
local-State administration of other di­
rect controls.
(3) In keeping with existing plans, advises
and assists in organization of an emer­
gency stabilization agency to control
wages and salaries, and assists that
agency as it gradually absorbs interim
wage and salary control operations.
h. Departments of Agriculture, the Interior,
and Commerce (Business and Defense
Services Administration):
Will control preretail inventories (“pri­
mary” inventories as to petroleum products)
of food, petroleum products and solid fuels,
and other essential items, and will provide
local-State rationing authorities with nec­
essary information as to available supplies,
requirements, allocations to varying uses,
and replenishment.
i. General Services Administration:
As quickly as possible, will provide pre­
arranged physical facilities and supplies nec­
essary for the creation and organization of
the emergency stabilization agency and its
component direct-controls agencies.
[2 4 ]

Annex 27

j. Civil Service Commission:
By prearrangement, will assist OCDM
and the emergency stabilization agencies in
securing and relocating qualified personnel
from other Federal sources, and will develop
necessary administrative and personnel
standards for use in such transfers and in
the continuing administration of the stabili­
zation agencies.
k. Bureau of the Budget:
By prearrangement, will provide for
the availability to OCDM and the emergency
stabilization agencies of the emergency
funds required to organize the Federal sta­
bilization functions, and will provide an
emergency financial plan to account for the
necessary expenditures.
l. OCDM Regional Offices:
(1) Will provide guidance and assistance to
local-State authorities and to representa­
tives of Federal departments and agen­
cies in the respective regions in the
initiation of postattack stabilization
operations.
(2) Will provide necessary coordination of
postattack stabilization operations with­
in and among the OCDM regions.
(3) To the extent possible, will inform,
advise, and consult with OCDM head­
quarters and the emergency stabilization
agency headquarters during the initial
postattack period.
(4) Where local-State emergency function­
ing is temporarily impossible, will initiate
[ 25]

Annex 27

and direct interim stabilization opera­
tions through a regional emergency sta­
bilization organization.
(5) In connection with financial, monetary,
and credit operations, will assist in
arranging the necessary support and
assistance of local-State authorities to
the extent requested or required by Fed­
eral financial agencies and their field
staffs.
2. State and Local
a. Through the State governors, at the pre­
arranged request of the Director, OCDM,
will initiate and administer for an interim
period price and rent control and emergency
rationing operations, and, by prearrange­
ment, will activate necessary interim organi­
zations for these purposes.
b. To the extent required, will assist Depart­
ment of Labor Wage and Hour offices in the
initiation and interim administration of post­
attack wage and salary controls.
c. At the request of OCDM Regional Offices or
Federal financial agencies, will provide localState support and assistance in connection
with postattack financial, monetary, and
credit operations.
d. State governments will coordinate interim
postattack stabilization operations within
their own jurisdictions and will assist OCDM
Regional Offices in coordinating interim State
operations within the respective OCDM
regions.
[2 6 ]

IV. International Tension

Annex 27

A. Assumption

Periods of increased international tension would
not be likely to require the actual use of many of the
emergency measures outlined in this annex, but would
require accelerated preparedness for their use in the
event of mobilization.
B. General Responsibilities

1. In periods of increasing international tension,
the Federal Government and State and local
governments will be responsible for accelerating
preparedness to take the emergency stabiliza­
tion actions which the nature and threat of more
imminent mobilization might require. The Fed­
eral Government will be responsible for taking
emergency stabilization action which might be
required during periods of increasing inter­
national tension.
2. Local and State governments will be particu­
larly responsible for reviewing and strengthen­
ing, or accelerating, their preparedness to carry
out emergency stabilization responsibilities in
the event of a general war mobilization.

G. Functions

1. Objectives
a. To review, strengthen, and accelerate pre­
paredness to take the emergency stabilization
actions required in the event of mobilization,
whether for limited war or general war.
b. To take such emergency stabilization actions
as a continuing period of increasing inter­
national tension might require.
[ 27]

Annex 27

2. Actions Required
a. The Director, OCDM, on behalf of the Federal
Government, and State governors, on behalf
of State and local authorities, will initiate or
take such accelerated stabilization prepared­
ness actions as are indicated by the nature of
the increasing tension.
b. The Director, OCDM, on behalf of the Federal
Government, will initiate and coordinate such
emergency stabilization actions as increasing
international tension might require.

D. Execution

1. The Director, OCDM, will initiate and coordinate
accelerated stabilization preparedness or such
emergency stabilization action as periods of
increasing international tension might require.
2. Federal financial and economic agencies will
initiate or participate in the development of
appropriate monetary, credit, and economic poli­
cies, or in accelerated preparedness for the use
of the policies and objectives outlined in this
annex.
3. State and local governments will review,
strengthen, or accelerate their preparedness to
carry out emergency stabilization responsibili­
ties in the event of general war.

☆

[28]

U.

s.

GOVERNMENT PRINTING OFFICE : 0 — 1 9 6 0


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102