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O f Credit and Business Conditions



o lu m e









No. 12

The money market tightened in November, under seasonal

M e m b e r B a n k R eserve P o s it io n s

pressures, following some weeks of relative ease. Seasonal

Member bank reserve positions were relatively easy at the

factors did not exert as much pressure upon bank reserves,
however, as they have in some other recent years. Nevertheless,

beginning of the statement week ended November 4, but they

there was a convergence of demand upon the money market

month-end outflow of currency was responsible for most of

as the banks put to use the reserves which had been made

the banks’ losses, but Treasury operations and a decline in
float also absorbed reserves. Only a small part of these losses

available to them earlier in the fall. The demand for bank







loans in November continued to be modest, and the banks

was offset by foreign account disbursements and changes in

in the aggregate were able to add a sizable volume of Govern­

other factors affecting reserves. To help compensate for net

ment securities to their portfolios.

reserve losses, the System Open Market Account purchased 50

W ith the tightening of the money market, yields on Govern­

million dollars of bills outright in the market (its first such

ment securities of all maturities rose moderately. Treasury

purchases since the early part of October) and the Federal

bill rates, which in market trading in October had fallen to

Reserve Bank of N ew York took 49 million dollars of bills

as low as 0.80 per cent for the shortest-term issue outstanding
and 1.2 5 per cent for the longest issue, climbed back to a

from dealers under repurchase agreements. Member banks still

range of 1.10 -1.5 2 per cent by November 2 7 (the last day
covered by this review). The rate on Federal funds, which
was 1 1 4 per cent or less during most of October, was quoted
at 1 % per cent or above during most of November. Prices
of intermediate and long-term bonds also declined and closed
on November 2 7

several 32nds below their October 30

Aside from the seasonal money market factors, the most
important influences affecting the Government security market
during November were the Treasury’s financing operations.
On November 9, the Treasury issued for cash 2X billion dol­
lars of intermediate bonds. Considerable switching occurred
within the market as subscribers made preparation for this
payment. The market was also influenced over the first half
of the month by various expectations concerning the Treasury’s
decision on refunding of the roughly 10 billion dollars of

2 Vs

per cent notes maturing December 1. The announcement on

found it necessary to increase their borrowings and draw on
their excess reserves. For the week as a whole the daily aver­
age level of discounts rose 16 8 million dollars to 460 million
and the daily average level of excess reserves declined 1 1 9 mil­
lion to 6 15 million dollars.
In the following statement week, although the outflow of
currency continued to be fairly heavy, reserve gains and losses
were about even for the banking system in the aggregate. But
the new reserves tended to flow to banks outside the money
market centers, and the situation in N e w York continued to
be relatively tight. The Reserve System purchased another 60
million dollars of bills for the System Account, and early in
the week the Federal Reserve Bank of N ew York took a large

M oney M arket in N o v e m b e r.................................

17 7

R ecent Trends in W est G erm an y’s

November 16 of a split offering— 12 ^-m onth notes or bonds

B alance of P a y m e n ts............................................

18 1

of December 19 5 8 — was followed by further market adjust­

P riva te Pension P la n s ..............................................

18 5

D epartm ent Store T ra d e ......................................

18 9

Selected Econom ic In d icato rs...............................


ments. A ll Treasury operations were well received, and the
Government security market showed underlying strength.
Prices generally sagged through the first half of the month
and then recovered irregularly over the last half.


Table I

offsetting influence, at times, through borrowing outside N ew
York or security sales that, in effect, returned funds to N ew

W e e k ly C hanges in F a c to rs T e n d in g to In cre a se o r D ecrease
M e m b e r B a n k R eserves, N o v e m b e r 1953
( I n m illio n s o f d o lla rs ; ( + ) denotes incre a se ,

York. As a consequence, by the end of the week they had

(— ) decrease in excess reserves)

repurchased all of the bills which they had previously placed
N ov.

N ov.

N ov.

N ov.

N ov.

T reasury o perations*............................
Federal Reserve flo a t............................
C urrency in c irc u la tio n ........................
Gold and foreign a ccou n t....................
Other deposits, e tc ................................

- 18
- 40
-1 6 0
+ 17
+ 84

+ 63
-1 1 2
-1 6 5

-1 8 3
+ 53
+ 29
+ 139

-2 9 7
-2 0 4
- 59
+ 63

+ 37
-4 2 3
+ 121

T o ta l........................................

-1 1 7

+6 3 3


-5 0 6


G overnm ent securities
D ire ct m a rket purchases or sales..
H eld under repurchase agreements.
Loans, discounts, and advances.........

In the final statement week of the month (the one ended
November 2 5 ) , the banking system was generally under some

+ 50
+ 49

—440 f
+1 1 6
-4 5 8

-1 6 5
+ 230

+ 35
+ 29
+ 173

+ 29
+4 0 8

pressure. The volume of Federal Reserve float outstanding

T o ta l........................................

+5 6 2

-7 8 2

+ 65


+ 82

in response to the normal rise in demand which comes over

Total reserves...............................................
Effect of change in required reserves........

- 14

-1 4 9
-1 4 5

+ 414
- 90

-2 6 9
+ 15

-2 3 4

Excess reserves............................................

+ 431

-2 9 4

+ 324

-2 5 4


the Thanksgiving holiday and with the approach of the
Christmas shopping season. In addition, the gold stock declined

D a ily average level of discounts............
D a ily average level of excess reserves..






Statem ent weeks ended

Operating transactions

Direct Federal Reserve credit transactions

N ote: Because of rounding, figures do n o t necessarily add to tota ls.
* Includes changes in Treasury currency and cash.
f Reflects effect of the sale b y the Federal Reserve Banks to the T reasury fo r
retirem e n t of 500 m illio n dollars of Treasury notes and paym ent therefor b y
deposit of gold certificates w ith the Federal Reserve Banks.

with the Federal Reserve Bank of N ew York under repur­
chase agreements. Some banks, on the other hand, had to
increase their borrowings at the end of the week. For member
banks in the aggregate, there was virtually no change in the
average amount of borrowings or excess reserves outstanding.
The System Open Market Account did not enter the market.

declined sharply and currency in circulation again increased

49 million dollars. As a partial offset, reserves were provided
through System Account purchases of 35 million dollars of
bills, and through (net) repurchase agreements of 29 million
by the Federal Reserve Bank of N ew York. Member bank
borrowings rose, both on a Wednesday-to-Wednesday and a
daily-average basis.

amount of securities under repurchase agreements. Later, how­
ever, Government security dealers were able to obtain some
funds at a lower rate in other parts of the country and re­

T r e a s u r y Fi n a n c i n g a n d t h e M a r k e t
G o v e r n m e n t Se c u r it ie s


acquired part of their securities from the Federal Reserve Bank.

The most important influences on the Government security

As a result, the net increase in repurchase agreements at the

markets during November were the Treasury’s financing oper­

N ew York Reserve Bank was limited to 1 1 6 million dollars

ations and the usual seasonal developments in the money mar­

over the week. The volume of reserves that actually flowed
through the market during the week ended November 1 1 is
obscured because, as noted in the footnote to Table I, the
Treasury used 500 million dollars of its free gold to purchase
Treasury notes from the Reserve Banks. This transaction,
though necessarily included in the totals for Treasury opera­
tions and System sales of securities, had no direct money
market effect. Actually the market gained about 340 million
dollars during the week as the result of other Treasury oper­

ket. Prices of both long and short-term issues fluctuated over

ations; the increases in currency and in required reserves
(reflecting the increase in Government deposits on November
9 in payment for the new

2 Ya

a fairly wide range during the month, but by November 27,
prices of most issues except the longer notes closed at levels
below the quotations current at the beginning of the month.
A t the end of October the Treasury had announced a cash
offering of 2 % per cent, seven-year and ten-month bonds.
The market response was clearly favorable and the issue
was greatly oversubscribed. On November 2 the Treasury
announced that subscriptions for $10,000 and less would be
allotted in full, and that the larger subscriptions would be
allotted on a percentage basis: 24 per cent for mutual savings

per cent bonds) were the

banks, insurance companies, pension funds, and State and local

major offsets. Member banks used the reserves gained from

governments, and 16 per cent for all other investor groups,

the Reserve Banks’ net purchases of securities from the mar­

including commercial banks. The total amount allotted was

ket, plus a part of their excess reserves, to repay almost all the

2,238 million dollars. In order to stay within the statutory

money borrowed from the Reserve Banks in the preceding

debt limit, as already noted, the Treasury on November 9


( the issue date for the new bonds) purchased from the Federal

The banking system as a whole gained reserves on balance
during the week ended November 18, primarily as a result of

Reserve Banks 500 million dollars of 2 Vs per cent notes of

the usual midmonth rise in float. A return flow of currency

Reserve Banks with 500 million dollars of gold certificates

December 1, 19 5 3 .

It paid for the notes by crediting the

and further foreign account disbursements also provided some

and reducing its "free” gold by a like amount. This gold repre­

reserves, but these funds were more than absorbed by Treasury

sented part of the “profit” which the Treasury acquired when

operations. The distribution of the reserve gains among banks

the dollar was devalued in 19 3 4 ; no gold certificates had

in the various sections of the country, however, was again

previously been issued against this gold. The transaction had

uneven. Government security dealers were able to exert an

no effect on the supply of bank reserves.



Movements of prices of short-term securities during Novem ­
ber tended to parallel the fluctuations of the longer issues,

On November 16, the Treasury announced that it would
offer holders of the maturing December 1, 2 Vs per cent notes
a choice of 1 % per cent, 12 ^ -m o n th notes, or 2 Vi per cent
bonds maturing in December 19 5 8 (the latter represented a
reopening of a bond issue sold in February 1 9 5 3 ) . This offer

November, the firming of the money market in response
to the seasonal pressures pushed the prices of bills down and

was also very favorably received in the market. The "rights”

yields correspondingly moved upward. Dealers were unable

although for somewhat different reasons. In the early part of

maintained a quotation of 1 0 0 % 2 nds or better until the

to move, as rapidly as they had anticipated, the relatively large

exchange was completed. Approximately 10.0 billion dollars

inventories of bills which they had acquired in October. By

of the notes were outstanding (nearly 7 billion of them held

the middle of the month, average rates of discount on the

by the Reserve Banks). Only 12 2 million were turned in for
cash; 8,170 million (including all of the Reserve System hold­
ings) were tendered in exchange for the new 1 % per cent

regular weekly offerings of new bills, which had reached a

notes and 1,750 million for the

2 l/ 2 per cent bonds.

low of 1.220 per cent on October 29, climbed to 1.30 6 on
November 5 and to 1.482 per cent on November 12. Yields
of short-term bonds and notes and of certificates followed

In the first half of November prices of intermediate
and long-term securities eased under some selling pressure.
Although the volume of this selling was not large, it was suffi­

much the same pattern as bills.
Soon after the middle of the month prices of Treasury bills
and other short securities again reversed direction. The cus­

cient in the thin market prevailing to push prices down, in

tomary midmonth rise in float and the resulting ease in the

some cases almost a full point. This selling was reported to

money market were partly responsible. In addition, since a

2 Vs

have originated with savings banks, small insurance companies,

number of corporate holders of the maturing

and some other groups of investors who were seeking to do
one of two things— shift part of their assets into higher-

notes were interested only in securities with less than twelve
months to maturity, they had disposed of their "rights” and

yielding mortgages or corporate bonds, or make room in their

were seeking new short-term investments. There was also a

portfolios for their allotments of the new 2 % per cent bonds

corporate demand for short securities for the purpose of invest­
ing the proceeds of new security financing. The resulting

of 19 6 1, which were issued on November 9. Another influ­
ence was the announcement by General Motors Corporation
that it was planning to offer for sale in the early part of

per cent

increase in demand was sufficient to push yields on the shortest
bills back to the 1.00 per cent mark for two days, and rates

December a very large issue of long-term debentures. This

on the longest maturity eased to 1.40 per cent. But once the

announcement, following closely upon several other sizable

switching occasioned by the refunding had been completed

security offerings, tended to depress the market.

and the money market began to firm again with the approach
of the month end, rates rose. The possibility that the Com­

As a result of these various forces, long-term bonds declined
as much as 3 % 2n
<is between October 30 and November 13 ,

modity Credit Corporation would soon offer another large

dropping back to the levels of late September or early October.

amount of Certificates of Interest also tended to depress the

The intermediate issues declined by smaller amounts. Even

bill market. Average yields on the third and fourth issues of

the new 2 M ’s of September 19 6 1

Treasury bills during the month, the issues dated November 19

declined from a peak

quotation on November 2 of 10 0 3 % 2 nds (bid basis)
1001% 2nds on November 13.


and 27, were 1.4 3 3 per cent and 1.488 per cent, respectively.
By the close of the market on November 2 7 bill rates ranged
from 1.10 for the shortest issue to 1.52 per cent for the long­
est one.

After the middle of the month, and particularly after the
terms of the December 1 refunding had been announced, mar­
ket sentiment began to improve and bond prices quickly
recovered much of the two previous weeks’ losses. A growing
belief that the Treasury would not offer a marketable obliga­

The leveling-out of the demand for loans, which had been
evident earlier in the fall, continued in November, and for

tion in exchange for the maturing F and G Savings bonds also

the first time in several years investment portfolios have grown

M e m b e r B a n k C r e d it

tended to buoy prices. But in the last week of the month some

faster during the fall season of the year than loans. Total loans

moderate selling reappeared, and prices of intermediate and

and investments of the weekly reporting member banks in­

long-term issues again eased, only to make a partial recovery

creased 1,468 million dollars during the four weeks ended

again on November 25 and 27. A t the close of the market

November 18 ; loans rose 582 million, and investments 886

on November 27, prices of the long-terms were as much as

million reflecting primarily purchases of the new 2 % per cent

2 % 2 nds below the closing quotations on October 30. The

bonds. In the corresponding four weeks last year, loans in­

3 1 4 ’s of 19 78 -8 3 were quoted at 1 0 3 2 % 2 nds (b id ), or a

creased 900 million dollars (net) while Government security

3.03 per cent yield, compared with 1 0 3 3 %2*ids (bid) or

holdings declined 5 72 million and portfolios of other types

a 3.02 per cent on October 30.

of securities were off 15 6 million. There were no comparable

The 2 ^ ’s of December

19 6 7-72 were priced at 9 4 2 % 2 nds (2.8 7 per cent yield),

purchases of new Government securities last year.

compared with 9 5 1 % 2 nds or 2.8 1 per cent at the end of the

The change in the demand for loans is quite evident in

previous month. The new 2 % ’s of 19 6 1 closed at 10 0 2 % 2nds.

the accompanying chart. The lines plotted are the cumulative



Cumulated Weekly Changes in the Commercial, Industrial, and
Agricultural Loans and “All Other” Loans of the Weekly
Reporting Member Banks, 1952 and 1953*

the food, liquor, and tobacco group, and most other industries
have borrowed approximately the same amount this fall as
they did last year.
The rise in consumer loans, as the chart for “all other” loans
indicates, was considerably greater in the early part of 19 5 3
than it was in 19 52, but when summer arrived, the volume of
these loans outstanding tended to stabilize and has since
remained on a plateau. Last year there was a fairly steady
growth in the amount outstanding throughout the period
charted. The net increase in the two years for the 10Vi-month
period was not greatly different, 7 1 2 million this year against
8 33 million dollars last year, but by the end of this year, if
the present trends continue, the spread will have widened
In order to support the expansion in their loan portfolios
in the fall of 19 5 2 , the weekly reporting banks disposed of
a fairly sizable volume of short-term securities. Their hold­
ings of Treasury bills and notes declined 3 2 4 million and 2 10
million dollars, respectively, in the four weeks ended Novem ­
ber 19, 19 52. This year, in contrast, there was no net liquida­

# Cum ulated fro m the beginning o f the year through the th ir d week in
Novem ber; the last figures plotted are fo r the weeks ended Novem ber 19,
1952 and November 18, 1953.

tion of short-term securities, and this group of banks added
to their portfolios a substantial amount of the new 2 % per
cent bonds of 19 6 1, which the Treasury issued on November 9.

weekly changes, for this year and last, in the two most import­

During the week ended November 1 1 , total bond holdings

ant types of commercial bank loans— business loans and "all
other” loans (the largest part of which are consumer loans).
In the first eight months of both years changes in the commerical, industrial, and agricultural loans of the weekly report­

of the weekly reporting member banks increased 898 million
dollars. According to the figures released by the Treasury
Department, 1,299 million dollars of the issue was sold directly
to commercial banks.

ing banks followed somewhat similar patterns, although the
contraction in the first quarter was somewhat greater in 19 5 3
than in 19 5 2 and the contraction in the second quarter of
19 5 3 somewhat less. But at the beginning of September the
two lines diverge sharply. In the following two and one-half
months in 19 5 2 the amount of loans outstanding rose abruptly,
but this year the amount outstanding declined and then rose
only moderately. The only marked increase this fall since
September was in the week ended October 28 when the weekly
reporting banks added to their portfolios nearly half of

Table II
Weekly Changes in Principal Assets and Liabilities of the
Weekly Reporting Member Banks
( I n m illio n s o f d o lla rs )
S tatem ent weeks ended
Ite m


N ov.

N ov.

N ov.

fro m Dec.
31, 1952
to N ov.
18, 1953

T o ta l loans and in v e s tm e n ts ... .


-1 2 5

+ 1,081

+ 46

+ 1 ,0 5 4






-1 3 9

+ 1,407

Com m ercial, in d u s tria l, and
a g ric u ltu ra l loa n s.............
S ecurity loans........................
Real estate loans...................
Loans to b a n k s .....................
A ll other loans (largely
consum er)...........................

+ 189
+ 13
— 44

+ 14
- 11
-2 5 1



+ 37
— 160
+ 12
- 17









T o ta l investm ents.....................


— 55



+1 8 5



+1 6 6

-1 4 3
-1 5 2



+ 157
+1 5 6

- 1 ,8 5 5

Some possible explanations for the leveling-out in the de­

U. S. G overnm ent securities
Treasury b ills ....................
O ther U. S. Governm ent
Other securities.....................

+ 41
-1 0 6

+ 88



+ 28

+ 1 ,4 9 3

mand for loans were discussed in the preceding issue of this

Loans net and other securities. . . .






-1 1 1

+ 1 ,4 1 6

Review, and no new factors entered the situation in the four


-6 8 7



+ 22

- 1 ,6 7 6

+ 48
-2 0 3

+ 51
+ 23


— 102

+ 1,186

-2 1 5



+ 23


the 360 million dollars of Certificates of Interest sold by the
Commodity Credit Corporation. From the beginning of the
year through the 18th of November, commercial, industrial,
and agricultural loans of the weekly reporting member banks
showed a net reduction of 1 3 million dollars this year, com­
pared with an increase of 1,4 5 5 million in the corresponding
period last year.

weeks ended November 18. The sharp drop in demand this
fall as compared with last fall continues to reflect for the most
part the net repayments of bank loans by firms in the metals
and metal products industries and by sales finance companies,

Loans, n e t * ................................

Dem and deposits a d ju s te d . . .
Tim e deposits except
G o vernm ent...........................
U. S. G overnm ent deposits. . .
In te rb a n k demand deposits . .
D om e stic................................







and also a marked decline in the net new loan demands of
commodity dealers. Retail and wholesale trade establishments.

* Figures fo r various loan item s are shown gross (i.e., before deduction of va lu a tio n
reserves); th e y therefore m ay n o t add to the to ta l, w hich is shown net.



In the five and a half years since the German currency
reform of June 19 4 8 the Deutsche mark has become one of

improvement in Germany’s current-account position appears
to be in the order of magnitude of 1.5 billion dollars. W hile

the strongest currencies in Europe.1 The reform restored over­
night the normal functions of a currency and re-established

merchandise imports have more than doubled in value since
1949, exports have quadrupled; in terms of physical volume,

incentives to work and save; in short, it laid the foundation of
what has become known as the "miracle of the Deutsche mark”.

imports increased by 30 per cent and exports by 80 per cent
between 19 50 and the third quarter of 19 5 3 (see Chart I ) .

The reform was accompanied by a restoration of freedom to
the price system and by strong economic and financial policy

the improvement in Germany’s terms of trade— the relation

A n important factor in this striking development has been

measures designed to stimulate investment and restrain con­

between prices obtained for exports and those paid for imports.

The success of these policies is reflected in Germany’s re­
markable economic and financial recovery. Her industrial

The terms-of-trade index had risen by the third quarter of
Moreover, exports have been encouraged by tax incentives,

production has increased by more than 14 0 per cent since
19 48; the number of employed has risen to 16 million from

retention scheme

13.5 million in 1949, while the unemployed have decreased
from 1.2 million to 940,000,2 or to less than 6 per cent of the
potential labor force. The cost of living has remained virtually
unchanged since 1949, while real industrial wages have risen

19 5 3

to approximately 14 per cent above the 19 5 0 level.

the provision of long-term export credits, a dollar-exchange(which, however, was discontinued last

Jun e), export credit insurance, and export promotion on the
part of private industry. The "export-mindedness” of German
industry also may have played an important part in Germany’s
comeback in international markets.

substantially. A t the same time, Germany’s balance-of-payments
position has steadily strengthened. In line with this progress,

T h e D o l l a r Ba l a n c e

German economic and financial policy is now officially oriented
toward restoring a large measure of convertibility to the

A s regards the dollar area, Germany’s balance-of-payments
position has improved markedly in the last few years. Her

Deutsche mark.

current-account deficit with the area, which in 19 4 9 amounted

To a considerable extent, the success of the currency reform

to 926 million dollars, was reduced to 39 million in 19 5 2 ; and

and the subsequent rapid recovery of the German economy

in the current year she may even show, for the first time since

may be attributed to the provision of dollar aid in amounts

the war, a small surplus. In the early years after the currency

far in excess of what Germany has had to contribute to the
cost of the occupation. Germany has also benefited over the

reform, her large deficits with the dollar area were financed
chiefly by United States aid, but such aid declined from 9 2 3

last few years by a variety of favorable circumstances. Unlike

million dollars in 19 4 9 to 1 1 5 million in 19 5 2 , and in the

her neighbors, she has not had to devote any of her resources
to the support of an army of her own and has been free of
economic and defense commitments toward overseas areas,
which have proved a considerable drain on the economies of
several other European nations. Similarly, Germany’s central
government has not had to honor the large domestic debt that

Chart I
German Foreign Trade Volume and Terms of Trade
(A verage for 1950=100)

Per cent


had been incurred prior to the currency reform; nor has the
country had until recently to service its foreign debt, public
or private. Finally, the partial shift to war production in most
other industrial countries after the outbreak of hostilities in
Korea has given German industry a decided advantage in the
world markets for machinery and other manufactured goods.
A c h ie v e m e n t

of a

B a l a n c e -o f -P a y m e n t s Su r p l u s

From a balance-of-payments deficit on current account of
more than 1 billion dollars’ equivalent in 1949, Germany
worked up to a 560 million surplus in 19 5 2 . For 19 5 3 the
surplus may prove to be somewhat smaller; even so, if the pres­
ent surplus is compared with the deficit in 1949, the over-all
1 For a fuller account of Germany’s currency reform and subsequent
developments, see the articles published in this Review in September
1948, May 1950, April 1951, and January 1953.
2 The difference between this reduction in unemployment and the
2.5 million increase in employment reflects mainly the absorption
of workers from East Germany.

* Term s o f trade = ra tio o f export prices to im po rt prices.
Source: Statistisches Bundesamt, Der Aiissenhandel der
Deutschland, P a rt I .




current year is running at about 35 million. This decrease,
however, is being partly offset by the expenditures by United

Chart II

Germany’s Cumulative Accounting Position with the EPU
(A s of end of period)

States troops, which are running at present at an annual rate
of 200 million dollars, as against 4 3 million in 1949. If it
were not for these outlays, Germany would still show a con­
siderable deficit on current account with the dollar area.
Y et the progress that Germany has made through her own
efforts is remarkable. In 19 5 2 merchandise exports to the
dollar area were almost four times their 19 4 9 value, while
imports declined by nearly one fourth. Germany was thus able
to reduce her merchandise deficit with the dollar area from
861 million dollars in 19 4 9 to 2 1 9 million in 19 5 2 and pre­
sumably to an even lower level in the current year. On the
import side, the improvement has been largely brought about
by increased domestic output of coal and wheat, which had
been imported extensively, as well as by a shift of raw material
purchases from the dollar area to other sources of supply. On
the export side, the continued high level of business in the
United States has helped German exporters to recover markets
here and elsewhere in the dollar area. As already noted, exports
to the dollar area were also encouraged by a dollar-exchangeretention scheme established in July 1950, which, in varying
forms and with a temporary interruption, was maintained until
last June, when it was formally abandoned.

T he EP U Position
Germany’s greatest strides have been made in trade with

licenses, coupled with a raising of the discount rate and of
commercial bank reserve requirements as well as a drastic
reduction in the volume of commercial bank credits, quickly
redressed the situation. Since March 1 9 5 1 the monthly EPU

the EP U countries— Germany’s largest trading area— which

accounting has shown almost continuous surpluses. By the end
of last April, Germany, with a credit balance of 292 million

together account for over two thirds of both her exports and

dollars, had become the largest creditor in the EP U — a position

her imports of goods and services. In 19 5 2 , the value of such

that she has since retained. By the end of October 19 5 3 her

exports was 3.3 times as large as in 1949, while such imports

cumulative credit position amounted to 705 million. The net

were 2.7 times as large. The rise in imports reflected in part
the shift in German imports from the dollar area to the EPU
countries, especially the sterling area. W hile the dollar and
EPU areas provided in 19 49 about 4 7 per cent each of
Germany’s total imports, the share of the dollar area declined
to about 1 7 per cent in 19 5 2 whereas that of the EPU area
rose to 69 per cent. In 19 5 2 Germany’s current-account surplus
with the EP U area amounted to 4 58 million dollars— the out­

improvement from March 1 9 5 1 through October 19 5 3 totaled
1,16 2 million dollars: over this period Germany recovered 17 4
million dollars that she had previously paid the EPU, acquired
net dollars from the EP U to the amount of 300 million, paid

come of a surplus of 580 million dollars with the Continental

the Netherlands, and Portugal; of the continuing deficits with

off 283 million of debts to the EPU, and became a net creditor
of the EPU to the amount of 405 million. Germany’s rather
persistent surpluses since March 1 9 5 1 have reflected direct sur­
pluses with all EP U member countries except the sterling area,

E P U nations and a deficit of 12 2 million with the sterling

these three, only those with the sterling area have loomed

area. In the current year Germany’s over-all surplus with the

particularly large.

E P U area is expected to be even larger.
It may be recalled that in the early stages of the European

Under these conditions the arrangements for settling Ger­
many’s EP U surpluses have had to be gradually extended. Her

Payments Union, following its establishment in July 1950,

EP U quota, originally set at 320 million dollars, was raised in

Germany had large deficits with the organization (see Chart I I ) .

July 1 9 5 1 to 500 million. However, the upswing in Germany’s

From July 19 50 through February 1 9 5 1 she incurred a cumula­

EP U position has been so large that since the fall of 19 5 2 sev­

tive deficit of 4 5 7 million dollars, which cost her a large

eral so-called "rallonges”, totaling 200 million dollars, have had

amount of dollars, made her the E P U ’s largest debtor, and

to be added to Germany’s quota— the latest one of 50 million

threatened the very existence of that organization. The deficit

having been agreed upon with the Organization for European

was attributable chiefly to heavy German imports of raw mate­

Economic Cooperation last October. Germany’s EP U facilities

rials before the post-Korea rise in commodity prices had

have thus been raised to a total of 700 million, with recent sur­

reached its peak.

However, swift action on the part of

pluses having to be settled 50 per cent in gold or dollars and

Germany’s central bank in suspending the issue of import

50 per cent in Germany’s credits to the EPU. The settlement



for October 19 5 3 resulted in a cumulative surplus of 705
million, thus leaving 5 million uncovered by the current settle­
ment arrangements.3
Germany’s EPU surpluses averaged about 2 1 million dollars
monthly in the first quarter of 19 5 3 and about 45 million in
the second quarter. The July surplus of 44 million was still at
the second-quarter level, but in August and September it

G old and F o re ig n E x c h a n g e H o ld in g s
o f th e B a n k d e u ts c h e r L a e n d e r
( In m illio n s o f d o lla rs )

E n d of

G old

D ollars

Gold and

1950— Decem ber........
1951— Decem ber........



1 ,0 0 4.6

declined to 12.6 million and 26.9 million, respectively. The

D ecem ber........
1953— M a rc h ...............

decline appears to have been due at least partly to the first

Septem ber. . . .

payments under the London debt agreement and to the settingaside of claims in EP U currencies for future use in making

O ther

T o ta l gold
and foreign
1,2 4 5.9
1 ,4 5 6.0

n.a. N o t available.
Source: Monatsberichte of the B a n k deutscher Laender.

payments under that agreement; if these claims had been
entered into the monthly settlements, they would have resulted
in larger surpluses. In October the surplus was again 44.4 mil­
lion— about the same as during the April-July period.
T h e Su r p l u s e s

w it h

"B i l a t e r a l ” C o u n t r ie s

T h e R e c o n s t i t u t i o n o f G o l d a n d Fo r e ig n
E x c h a n g e R eserves

Germany’s balance-of-payments surpluses since 1 9 5 1 have
resulted in large additions to her gold and foreign exchange
reserves (see table). It is true that her gold and dollar reserves

W ith a number of countries that belong to neither the dol­

had increased as early as 1950, but this had been due exclusively

lar nor the EP U area, German trade and other payments are

to the fact that United States aid in that year exceeded by a

settled by bilateral clearings. Under the bilateral agreements
in force, debit balances may be incurred by either partner up

dollar area. This was also the case in 1 9 5 1 and 19 52, but at a

to the so-called "swing limit”, with the proviso that debit

progressively declining rate; at the same time, as already noted,

sizable amount Germany’s current-account deficit with the

balances exceeding this limit are to be settled in dollars. Trade

Germany’s EP U surpluses became her largest source of gold

with this rather heterogeneous group of nations, which in­

and dollars. By the end of September 19 5 3 , Germany, which
at the time of the currency reform had virtually started from

cludes such countries as Argentina, Brazil, Finland, and Y ugo ­
slavia, has greatly expanded. However, while exports of goods

scratch, had built up a total gold and foreign exchange reserve

and services to this group in 19 5 2 were 8.4 times as large in

equivalent to 1,685 million dollars; of this, more than 1 billion,

value as in 1949, imports from the group were only 3.3 times
as large.

or slightly less than 60 per cent, was in gold and dollars. The

The imbalance in trade resulted in a 19 5 2 current-account

Germany’s current imports of goods and services, the gold and
dollar portion alone being equivalent to almost three months

surplus with this group equivalent to 14 2 million dollars, and
in the piling-up of net clearing claims on the part of Germany

total is equivalent to more than four and a half months of

of such imports.

totaling 18 5 million by the year end and 2 1 7 million by

Germany’s gold and foreign exchange acquisitions, of course,

October 19 5 3. Of the latter, some 80 million dollars’ equiva­
lent, or more than one third, arose from trade with Brazil,
which exceeded its "swing limit” of 13.5 million dollars’
equivalent by some 65 million but without settling the differ­

are to a large extent the counterpart of reserve losses incurred

ence in dollars. The rise in Germany’s claims on this group
of countries primarily reflects the strong demand for German
capital goods, the export of which was made possible by
credits and the other promotion schemes noted above. It also
reflects the inability of these countries to provide raw mate­
rials and foodstuffs at competitive prices.

by her European trading partners. To an even larger extent
they also reflect the rising indebtedness to Germany of the
EP U nations as a group as well as of her bilateral-clearing
partners in other parts of the world. In fact, these nations as a
whole are experiencing Deutsche mark deficits, which in 19 5 2
reached the equivalent of 540 million dollars and during 19 5 3
have been running at the somewhat lower annual rate of
roughly 4 30 million. Under these circumstances some of
Germany’s trade partners have begun restricting their imports

Trade between W est and East Germany is based on short­

from her; this in turn may adversely affect certain German

term payments arrangements and generally takes the form of

export industries and thus impair the further expansion of the

global compensation deals. It had fallen to a very low level

German economy as a whole. Since Germany is apparently

in 19 5 1-5 2 , but has subsequently increased somewhat; in 19 5 2

unable to increase her imports, she is faced in many cases with

it represented less than 1 per cent of W est Germany’s total

the choice of either extending further credits or accepting

foreign trade. Trade with Eastern Europe and the U SSR also

a reduction in exports and the loss of a market where she
only recently has regained a foothold.

has been small.

Further OEEC decisions in October stipulated that any amounts
T r a d e L i b e r a l iz a t i o n a n d E x p o r t C redits
by which Germany’s cumulative surplus at the end of October may
exceed 700 million would be settled by additional German credits to
Germany appears to be well aware that she has a major
the EPU, with the proviso that at the time of the November settle­ interest in increasing, so far as she can, her trading partners’
ment (in mid-December) the question of the settlement of EPU
surpluses in excess of 700 million would be reviewed.
capabilities to import from her. W ith this in view, she has



liberalized her European trade to a high degree and has pro­
moted capital exports in various ways, especially to the
bilateral-clearing countries.

goods to Israel over twelve to fourteen years up to the equiva­
lent of 8 2 1 million dollars; since the bulk of these goods will
be produced in Germany and are not normally export goods,

After having found it necessary to suspend all previous

Germany will forego, as a result of the agreement, only small

liberalization measures vis-a-vis the EP U nations at the end

amounts of foreign exchange.

of February 1 9 5 1 when her payments difficulties were acute,

Finally, Germany on August 2 8 , 1 9 5 3 authorized the transfer

Germany resumed the liberalizing of her imports in January

into foreign currencies of current earnings accruing after

19 52.

January 1,

Since then she has gradually freed from quantitative

19 5 3

on the foreign investments blocked in

Germany since July 15 , 1 9 3 1 when she introduced foreign

restrictions up to about 90 per cent of her private imports from
the EP U countries. A considerable margin for further liberali­

exchange controls, provided that such investments have not

zation seems to exist only as regards imports of food and

changed their owner except through legal succession. The new

feedstuffs, which have been freed from quota restrictions only

regulations will particularly benefit foreign direct investments

to the extent of 70 per cent, as against 98 per cent for in­

made in Germany between the stabilization of the mark in

dustrial raw materials and 94 per cent for manufactured

19 24, and 1 9 3 1 when exchange controls were introduced.


Excluding the deliveries to Israel, these arrangements affect,
according to a German official estimate, foreign loans and

Furthermore, with a view to relieving the Deutsche mark
deficit, especially as regards the less developed nations, and in

investments totaling the equivalent of some 4.9 billion dollars.

order to facilitate further export expansion, export credits up

Interest and amortization payments in foreign exchange con­
sequently will be resumed on about two thirds of Germany’s
total present foreign debt, which is officially estimated at the

to five years are being extended by the Export Credit Corpo­
ration. This organization has access to rediscount facilities at
Germany’s central bank; its credits amounted at the end of

equivalent of 7.2 billion dollars. The transfers on the two

March 19 5 3 to the equivalent of some 17 0 million dollars. In
addition, private direct investment, even if on a moderate scale

thirds of Germany’s foreign indebtedness that are to be made
in the years 19 5 3 through 19 5 7 have been officially put at the

and India. Finally, the International Bank for Reconstruction

equivalent of 200 million dollars annually, of which 1 1 9 mil­
lion is to be in EP U currencies and 7 7 million in dollars. The

and Development has extended some of its credits in Deutsche

annual transfers will rise by considerable amounts beginning

only, appears to be getting under way in countries like Brazil

marks, the marks actually disbursed under such credits amount­

19 58, when Germany starts amortizing the debts covered by

ing at the end of September 19 5 3 to the equivalent of 8.6

the London agreement. A t that time the transfers will rise to

million dollars.

the equivalent of 247 million dollars, of which 1 3 1 million

T h e Fo r e ig n D e b t Se t t l e m e n t s

is to be in what are now EP U currencies and 1 1 1 million in

February 27, 19 5 3 and made effective on September 16, the
bulk of Germany’s prewar debts as well as all of her public

N o definite arrangements have thus far been made regarding
the transfer of earnings or amortization on the remaining one
third of the country’s present foreign indebtedness. This por­
tion of Germany’s foreign debt, which amounts to the equiva­
lent of 2,34 5 million dollars, includes: ( 1 ) the restitution and
compensation claims that are to be accorded, under German

postwar debts (most of which were incurred to secure food
and raw materials from the United States) were subjected to a
comprehensive settlement. The initiative for this settlement

legislation now in preparation, to individuals victimized by
Nazi persecution who had taken up residence abroad ( 1,2 8 5
million dollars’ equivalent); ( 2 ) blocked mark balances, and

The ability of a number of countries to increase their im­
ports from Germany will also be affected by her resumption of
service on a substantial portion of her large foreign indebted­
ness. Under the international agreement signed in London on

was taken largely by the creditor nations, but it met with

investments made from such balances either by their original

Germany’s cooperation, since she wished to restore her interna­

holders or by foreign residents who have acquired them for

tional credit standing. Since 1 9 3 1 Germany had made only

investment purposes (46 5 million); and ( 3 ) miscellaneous

scant transfers on her large privately held foreign debt. Under

direct investments and claims, the bulk of which are certain

the London agreement, interest payments are to be resumed

mark claims not covered by the London agreement that

this year, while amortization has been postponed until 19 58,

originated prior to 1 9 3 1 (5 9 5 million). Transfers on these

with the last interest and amortization payments to take place

claims and investments will have to wait for further German

as late as 1994.
Moreover, by a special agreement with Switzerland con­

decisions, but the German Government has already announced

cluded on August 2 6 ,1 9 5 2 , Germany settled the wartime clear­

transfer of earnings on investments owned by emigrants who

ing debt to that country. Part of the Swiss claims were funded

took up residence abroad after 19 3 1.

its intention to issue "as soon as possible” regulations on the

into two twenty-year loans, while the remainder is to be amor­
tized over some thirty years. Of a still different nature is the

I n d ic a t io n s


St r e n g t h

of the

G erm an M ark

reparations agreement concluded with Israel on September 10,

The remarkable recovery of Germany’s economy and her

19 5 3 under which Germany has committed herself to deliver

comparatively strong balance-of-payments position, as well as



the progress she has made toward resuming the service on her
foreign indebtedness, have been reflected in the rising confi­
dence in the German mark both at home and abroad. In
Germany herself, signs of confidence have appeared in the
growth of savings deposits, which have been increasing during
the current year at an annual rate of 643 million dollars’
equivalent, compared with 540 million in 19 5 2 and 207

by a remarkable expansion in output and the absorption of
several millions of workers into the productive process and,
internationally, by the emergence of a balance-of-payments
surplus and the reconstitution of gold and foreign exchange
reserves. However, with full employment nearly reached and
with industrial capacity in many branches of industry approach­
ing full utilization, the recent rate of expansion of output and

million in each of the two preceding years. There have also

exports may very well slow down. In addition, Germany’s

been reports that sizable amounts of German capital held

export potential may well be reduced somewhat if, upon the

abroad are being repatriated.

termination of the occupation regime, she has to set aside part

Internationally, the German mark has shown signs of

of her economic resources for defense purposes. It is also pos­

strength in several ways. In the multilateral exchange trading

sible that payments difficulties on the part of the less developed

among eight European currencies inaugurated under the

countries or the limitations on Germany’s own capital forma­

auspices of the O EEC last May, the mark has proved to be

tion may obstruct a further increase in capital goods exports.

consistently strong. Moreover, the premium on the so-called

Furthermore, Germany’s relatively favorable terms of trade

"dollar import rights’* under the dollar-retention scheme, which

may not be susceptible to further improvement, particularly in

amounted to about 20 per cent in April 19 5 2 when such

view of possible increased export competition in world mar­

"rights” were made negotiable, had declined to a fraction of


1 per cent prior to June 19 5 3 when the scheme was aban­

the added burden of interest and amortization payments as a

doned. The mark is currently at a premium vis-a-vis the

result of her recent commitments to resume the service on

currencies of some of the countries with which trade is being

about two thirds of her large foreign debt.

Finally, Germany’s balance-of-payments position faces

settled on a bilateral basis. In addition, the rate for the so-

The outlook, nevertheless, is not unfavorable. Germany has

called blocked marks, which are freely traded abroad, has

some prospect of increasing further her exports to the sterling

strengthened markedly; when acquired, such marks can be

area, and thus of reducing her sterling deficit, in consequence

used only for investments in Germany, which in turn are

of the announcement that Britain would free from quota

blocked. Despite their limited use, the discount on blocked

restrictions a larger part of her European imports. As regards

marks declined from about 46 per cent in March 1 9 5 1 , when

the dollar area, Germany would benefit from any increase

the transfer of blocked funds between residents abroad was

in United States offshore purchases in Germany, which so far

authorized by Germany, to about 30 per cent in November

have been rather small. Upon the termination of the occupa­

1 9 5 3 ; this fall apparently reflected, for the most part, increased
demand for foreign investment in Germany. Finally, the rate

tion regime and with the consequent gradual termination of

for Deutsche mark notes in Zurich has strengthened, the dis­

expect substantial dollar outlays for installations and other

count on such notes declining from 28 per cent at the end of

goods and services for the United States armed forces. Finally,

19 49 to about 7 per cent in October.

Germany’s vigorous efforts to restore her international credit

C o n c l u s io n

The increasing strength of the W est German economy has
been an outstanding feature of recent economic developments
in Europe. This recovery has been characterized, domestically,

German expenditures for occupation costs, the country can

offer some hope of increased access to the international money
and capital markets. Accordingly, although some slackening in
the current rate of improvement in Germany’s balance of pay­
ments is doubtless to be expected, her international financial
position appears likely to remain generally strong.

Since the prewar years there has been a marked growth in

G row th


Pe n s io n P l a n s

the number of pension plans adopted by business enterprises.

Although private pension plans are not of recent origin, the

The growth of these private pension funds has in turn created

first pension program having been adopted by the American

a large, distinct source of savings which have been generally

Express Company in 18 7 5 , it was not until the 19 3 5 passage

invested in quality securities of the larger, well-established

of the Social Security Act that the pension fund movement

corporations. These investment practices reflect the institutional

gained momentum. In 19 3 7 , when contributions under the

investor’s usual preference for debt issues and have tended

Act first began, the Federal program covered about 25 million

to strengthen the market for the securities of older corpora­

employees of business and industry. This legislation greatly

tions as compared with those of newer concerns, although

increased employer and employee interest in, and conscious­

there has been an increasing investment in equities during the

ness of, the desirability of providing through advance financ­

past few years. This article undertakes to trace the growth of

ing for the economic hazards of old age. But possibly the

the private pension movement and to analyze the significance

most important stimulus to private pension plans was the

of this development for the capital markets.

sharp increase during World W ar II in Federal corporate




income tax rates which encouraged corporations to make taxfree contributions to pension funds with relatively little effect

D E C E M B E R 1953

cannot be answered with any assurance. To the extent that
employees would otherwise fail to make adequate provision

on after-tax earnings. During and after the war, the efforts

for old age, it can be contended that employee contributions

of business enterprises to attract and retain employees, particu­

to pension funds represent money that would be spent. For

larly salaried employees, under restraints imposed by the
Federal wage and salary stabilization policy increasingly

for it is doubtful that saving for other purposes— for emergen­

the most part, these savings may be added to other savings,

took the form of favorable pension arrangements. A new

cies and for the purchase of a home (including retirement of

spurt in the growth of private pension plans after 19 4 9 reflects

home mortgage debt)— will be reduced because of the assur­

to a considerable extent a National Labor Relations Board

ance of pensions. On the other hand, to the extent that the

decision making pensions an appropriate subject for collective

assurance of a pension makes individuals less concerned with

bargaining. Finally, an increased sense of responsibility among

the problem of retirement income and thus results in reduced

corporations and other business enterprises for the future

personal saving, employee contributions would represent a

security of their employees has been an important contributory

diversion of savings. However, it is probable that without the


aid of a pension most persons individually would fail to make

Although data collected on private pension programs are
spotty and inadequate, some indication of the growth of

adequate financial preparation for old age. Employee contri­
butions may consequently be regarded as new savings.

pension plans and the number of persons covered may be seen

It is even more difficult, if not impossible, to trace the inci­

from the accompanying table. In 19 30, according to estimates
prepared by the Social Security Administration, there were in

dence on spending and consumption of the much larger em­

existence only 720 plans, covering 2.4 million persons. A
decade later, almost 2,000 plans were in force with nearly

expense of business, the costs of such contributions are passed
on to consumers in the form of higher prices, it might be

4 million persons included. The swift wartime growth of the

argued that such employer contributions represent forced sav­

ployer contributions to pension plans. To the extent that, as an

private pension movement increased the total number of plans

ings drawn from the consuming public. On the other hand,

to more than 7,400, involving more than 5.5 million persons.

pension contributions by corporations might also be regarded as

In the following six years through 19 5 1, the number of plans

a reduction of retained earnings, dividends, and income taxes.

almost doubled to reach an estimated 14,000, covering over


9.5 million persons.2 Since 1 9 5 1 , it is estimated that at least

sumably result in a shift from corporate savings to savings

reduction in corporate undistributed profits would pre­

1,500 new plans have been adopted, raising the total coverage

in the form of pension fund contributions, with the accom­

of the private retirement programs to roughly 1 0 - 1 1 million

panying effect of increasing the importance of external finan­

persons. This still falls far short of the Government’s old-age

cing through the capital markets as a source of corporate

and survivors insurance (O A S I) program which now covers

funds. Perhaps the only conclusion that can be reached is that

more than 66 million persons, while another 7.5 million or
more are covered under State, local government, and other

corporate contributions to pension funds represent in part
a source of new savings and in part a shift in the form of

public programs.

The marked growth in the number of private pension plans
and in the number of employees covered has had its financial
counterpart in a large and growing volume of funds accruing

The stability of savings through pension plans is also
somewhat uncertain. In providing retirement income for
their employees, employers have made relatively fixed, long­
term commitments. Actual contributions, however, depend
largely on the stability of employment of persons covered

to the credit of employees as future pension benefits. Whether

by pension plans, fluctuations in the rate of funding past

these funds constitute new savings or merely represent a diver­

service liabilities, the variability of benefit payments in the

Ef f e c t


O t h e r Sa v in g s


Sp e n d in g

sion of savings from one form to another is a question that
1 Among other influences tending to promote the adoption of
private pension plans, the provision of retirement income for officers,
supervisory employees, and other higher-paid employees, whose after­
tax income has suffered most from increased Federal income tax rates
and from inflation, represents a factor of unknown or unmeasurable
significance. Inasmuch as Section 165 (a) of the Internal Revenue
Code requires that in order for pension contributions to be tax exempt
the contributions or benefits may not discriminate in favor of any
individual or small group of employees, all employees within a broad
class come under private pension plans.
2 The number of plans is not identical with the number of enter­
prises having such plans, since a single company may have more than
one plan. Because the figures in the table include only those employees
meeting minimum eligibility requirements (as to age, duration of
service, etc.,) in those plans which have such requirements, the number
of persons covered is bound to grow merely with the passing of time,
other things remaining equal.

aggregate, and the financial ability of employers to meet their
pension obligations during slack times. The most important
of these influences are, of course, the volume and stability
of employment. Inasmuch as most industrial pension plans
are integrated with the O ASI program, a sizable part of
the retirement income provided by private plans goes to,
or will go to, those in the higher wage and salary brackets
(above the first $3,600 yearly covered by O A SI)


employment is generally steadier than those in the lower

Nevertheless, the widespread coverage of factory

and other workers by plans adopted during the war and par­
ticularly since the negotiation of a large number of collective
bargaining plans beginning in 19 4 9 may have made contribu­



tions to pension funds more susceptible to cyclical changes in
employment than formerly. The stability of pension fund
accumulations is also affected by variations in the rate of fund­
ing past service liabilities (the rate at which employers set
aside funds to provide for pensions for those employees at or
near retirement age who have sufficient past service to meet
eligibility requirements at the time a plan is adopted).
Fluctuations in aggregate benefit payments are likely to add
some further variability to the (net) accumulation of pension
funds. During slack times, employees at or beyond the retire­
ment age who might otherwise have remained in the labor
force may be expected to retire, and others who might other­
wise have become unemployed may take advantage of the
early retirement provisions of many plans. Benefit payments
may then take a spurt just when the volume of contributions
may be falling off or increasing only slowly.
On the other hand, to the extent that private pension fund

E s tim a te d N u m b e r o f P r iv a te P e n sio n P la n s
a nd N u m b e r o f P e rson s C o v e re d *
N um ber of persons covered
( In m illions)

Y ear
A ll
1 9 3 0 ... ,
1940. .,
1 9 4 5 .,,
1950. , ,



Insured f

1 3 ,500p

U ninsured J


A ll
2 .4
2 .6
3 .7
5 .6
8 .6
9 .6


plans f

0 .7
2 .9
3 .3
3 .5 p

U ninsured
plans J

3 .0
6 .3

* Figures include only employees w ho have m et m in im u m e lig ib ility conditionsin those plans w hich have such requirem ents fo r p a rtic ip a tio n . Insured plans in ­
clude a sm all num ber of p u b lic plans causing an understatem ent of the data fo r
uninsured plans w hich are derived as a residual,
t Plans adm inistered b y life insurance companies.
t Plans adm inistered p rin c ip a lly b y corporate fiduciaries and inve stm e n t com­
m ittees of corporations.
P re lim ina ry.
ource: A ll plans and coverage, Social Security A d m in is tra tio n as published in
Pension Funds in the United States, a stu d y prepared fo r the J o in t C om m ittee
on the Econom ic R eport b y the N a tio n a l P lanning Association, 1952, page11; insured plans and coverage, In s titu te of L ife Insurance.

liabilities are concentrated among the very large corporations
of greater financial strength, the risk of employer inability to

Aside from inflationary wage trends, two related factors are

fulfill pension fund payment obligations during periods of

pension plans adopted in recent years, particularly by large

declining economic activity is lessened. In this connection, it

industrial corporations, and the characteristic pattern of accel­

is noteworthy that employer contributions to pension funds

erated growth in the early years of each new pension fund.

currently constitute less than one half of one per cent of aggre­
gate corporate sales (but a larger percentage, of course, of
the sales of corporations with pension plans and especially
those with plans covering all their employees).
To the extent, then, that the bulk of private pension con­
tributions are made by large, well-established corporations,
that efforts to stabilize employment are successful, and to the
extent that private pensions cover the relatively stable white
collar and executive occupations, it appears that pension con­
tributions are likely to be a relatively stable form of savings,
possibly more so than the availability of private investment

largely responsible: the marked growth in the number of new

Especially rapid has been the growth of "uninsured” pension
plans, those administered principally by corporate fiduciaries or
investment committees, representing predominantly the plans
of large corporations, providing retirement income for large
numbers of employees. From the table it can be seen that the
increase in uninsured plans between 1940 and 1 9 5 1 accounted
for about 10 per cent of the growth of all private plans (by
number) and for well over half the increase in the number
of employees covered. Similarly, although this is not shown
in the table, the larger, group-annuity type of insured plans
of larger business enterprises accounted for the bulk of the
growth of employee coverage under programs handled by





G rowth

In the absence of adequate machinery to collect data on
the accumulation of funds in private pension plans, only
approximations, which admittedly may be wide of the mark,
are available. Pension fund managers estimate that more than

life insurance companies.
The pattern of growth of the individual pension fund has
also been an important influence tending to increase pension
fund accumulations in recent years. This result follows from
the nature of a pension fund. The accumulations of periodic
contributions to the credit of employees are invested, and the

1 7 billion dollars are currently lodged in pension funds and
that about 2 to 2l billion dollars flow into such funds each
year (representing net growth in pension funds, including con­

principal and interest are used to pay retirement incomes at
some future date— usually at the retirement age of 65.3 Because

tributions and investment income less benefit payments). A t

adoption of a plan, pension funds build up most rapidly in the

this rate, the annual accrual of pension funds is roughly a

early stages, and then level off at some theoretical point where

fifth of the net annual growth of savings through other major

income from investments and current contributions equal outgo

benefit payments are small in the first years following the

financial institutions— the net increase in time and savings

in the form of pension benefits. The build-up in the early

deposits of commercial and mutual savings banks, share capital

stages is usually made even more rapid by the funding of past

(deposits) of savings and loan associations, and policyholders’

service liabilities. It is the usual practice for the employer to

reserves of life insurance companies other than pension fund

Theoretically pensions can be financed on a pay-as-you-go basis
with employers making benefit payments directly to retired employees.
However, such a method of financing is not considered satisfactory
from the employees’ standpoint, since the hazards of economic life
may be such that employing concerns may become defunct or other­
wise financially unable to continue with benefit payments. For this,
and other reasons the pay-as-you-go method is little used in practice,

annuity reserves.
The annual rate of accumulation has been particularly rapid
in recent years. One estimate places the annual increase in net
pension contributions at 300-350 million dollars since 1949.



make all or most of the contributions for past service, and
this tends to swell the early growth of the fund.4
I n v e s t m e n t R e q u ir e m e n t s

Aside from questions of size, stability, and growth, the
expansion of pension funds has raised immediate and practical
questions for the capital markets as to the investment require­
ments of such funds and the investment practices of those
managing them. In general, as already indicated, pension funds
are handled principally by life insurance companies and cor­
porate fiduciaries and have been placed largely in private debt
instruments, with a large concentration in obligations of sea­
soned, well-established corporations. The investment policies
of life insurance companies as compared with those of banks
and trust companies as pension trustees have been similar with
two exceptions: the latter have by and large almost ignored
the real estate field as a source of investing pension funds, but
they have been much more active in the purchase of common
Of the two major classes of administrators or managers of
such funds, the life insurance companies handle between 40-45
per cent of the funds going into pension plans (as the table
shows, insured plans account for a much smaller proportion of
persons covered by private pension arrangements). In 1 9 5 1 ,
the net increase in reserves against insured pension plans
amounted to almost 1 billion dollars, according to the Institute
of Life Insurance. Such funds, of course, are merged with
other life insurance funds and are invested in all the various
forms of instruments in which life insurance companies regu­
larly place their funds— mainly the debt securities of business
and industry, and mortgages on residential and commercial
real estate, and almost solely in such obligations since 19 4 5.
The remaining 55-60 per cent of currently accruing pension
funds, administered principally by trust departments of banks
and by trust companies and to a lesser extent by investment
committees appointed by corporate contributors, have been
made almost entirely available to business and industry in
recent years.
Unlike the insurance companies, trustees of self-insured
pension plans have placed a sizable portion of their funds in
better-grade common stocks. The proportion of pension trust
investments in equities varies widely for individual trusts.
A typical ratio appears to be in the neighborhood of 25 per
cent, with perhaps 5 per cent or more in preferred stocks.
Government securities comprise another 1 5 per cent or less,
mainly accounted for by pension plans adopted before the end
of the war. Corporate debt securities of the better grades
account for the remaining 55 per cent. These percentages are
admittedly only approximate, and for the newer trusts should
be raised for corporate stocks and lowered for corporate bonds
and Government issues. For the most part, pension trustees
have ignored mortgages because of the greater costs of ad­
ministering investments in that field including the larger staffs

required. However, a few trustees are reported to have dis­
played some interest in large mortgage loans on incomeproducing real estate, sale-and-lease-back agreements in connec­
tion with large commercial buildings, and oil payment con­
tracts. Many trustees, furthermore, have acquired corporate debt
securities through direct purchases from the debtor, since such
private placements usually earn a somewhat higher investment
return than has been obtainable on comparable securities
offered publicly in the new issue market.
The composition of pension trust portfolios consisting
principally of long-term and equity investments reflects their
investment requirements: the absence of need for liquid in­
vestments (since liquidity is assured by the constant inflow of
new money to be invested), the emphasis on quality, and the
tendency to regard fluctuations in market prices of investments
as a secondary consideration. Although the investment require­
ments of self-insured pension trusts are similar to those of
life insurance companies, trustees as a rule are less circum­
scribed by legal restrictions. It is then possible for them, within
the limitations (if any) of the pension trust instrument, to
acquire common stocks and generally to pursue a more flexible
investment policy.5
Pr o s p e c t s


Fu t u r e G r o w t h

The most dynamic phase of the growth of pension funds
has probably been reached or will be reached in the next few
years. In view of the very substantial number of pension plans
adopted over the last dozen years by very large corporations,
it is not likely that further impetus to the pension fund move­
ment from this source will be as strong as in the past. It is
probable, too, that many enterprises are too small ever to adopt
pension plans. Furthermore, the marked growth in the num­
ber of private pension systems adopted since the beginning
of the war, particularly by the larger corporations, has brought
an even more rapid growth of pension contributions because
of heavier payments into funds for past service retirement
credits and because the number of pension beneficiaries is
usually small in the early years of pension plans, as already
indicated. Moreover, as plans mature and pension rolls build
up, benefit payments tend to increase, and contributions for
past service credits tend to fall off since such costs are amor­
tized. The rate of amortization has been especially rapid in
recent years of high corporate tax rates and prosperous busi­
ness conditions. W hile there are a number of factors that
may tend to bring about an increase in the volume of funds
going into pension plans, they are likely to be increasingly
offset by the gradual maturing of most pension plans and the
accompanying growth in pension payments. It is clear, how­
ever, that pension funds are likely to grow, even though at a
more gradual rate, as long as the economy and the labor force
continue to expand, so that, just as in the case of life insurance,
the accumulation of pension funds may continue indefinitely.

To some extent, this flexibility is inhibited by the tax laws which
discourage the setting-up of an investment loss reserve. Thus, realized
Federal tax laws allow as deductions from income employer con­ capital losses may require additional contributions to the pension fund
tributions on account of past service up to 10 per cent of the liability
and capital gains may reduce the corporate contribution. As a result,
in any one year, and so place a limit on the funding of past service
switching of investments may be hampered somewhat, except as gains
liabilities in any year.
offset losses.



Higher temperatures continued to exert a restraining influ­
ence on Second District department store sales in November.
Election Day sales, in particular, were affected adversely; dol­
lar volume for the week declined 3 per cent below the yearearlier level. However, even though the hoped-for stimulus

After eight successive months of year-to-year gains, Second
District furniture store sales in May declined 3 per cent below
the year-earlier figure. This, as shown in the table, was the first
sign in the Second District of the recent slackening of con­
sumer interest in furniture store merchandise. In the follow­

of more seasonable weather failed to materialize, sales in the

ing month dollar volume fell to the lowest level of any June

second and third full weeks exceeded that of the like period

since 1949. Although an upswing occurred in July when aggre­

last year. Aggregate dollar volume for the month is estimated

gate consumer purchases of homefurnishings rose to a fouryear peak for that month, the renewal of consumer interest

to have been about equal to November 19 5 2.

was not sustained and sales in August declined contraseasonally
below the July level to a new four-year low for the month.

F u r n it u r e St o r e Sa l e s

Although aggregate sales at Second District furniture stores

The downtrend continued in September when sales were 8 per

during the first ten months of this year have been slightly

cent below the corresponding month in 19 5 2 , and October

above the dollar volume of the corresponding months in 19 5 2 ,

sales were 1 per cent lower.

year-to-year declines in sales during recent months may reflect

It is difficult to evaluate the significance of the year-to-year

a certain slackening of consumer demand for homefurnishings.

declines in sales experienced by Second District furniture stores

Unless November and December sales reverse this slackening,

in five out of the last six months. The comparatively higher

it seems possible, therefore, that sales for 19 5 3 as a whole may

level of sales during the same six months a year ago may

not equal the record volume of 19 52.

reflect to some extent the temporary stimulus to consumer

D e p a rtm e n t and A p p a re l S to re Sales a nd S to cks, Second F e d e ra l R eserve
D is t r ic t , P e rce n ta g e C hange fro m th e P re ce d in g Y e a r

May 7, 19 52. The subsequent easing of credit terms by furni­

demand brought about by the expiration of Regulation W on
ture stores undoubtedly enabled them to attract many customers
Net sales

Department stores, Second District...........
New York—Northeastern New Jersey
Metropolitan Area..........................
New York C ity * ..'.............................
Nassau County...................................
Westchester County...........................
Northern New Jersey.........................
Fairfield County....................................
Lower Hudson River Valley..................
Upper Hudson River Valley..................
Central New York State........................
Mohawk River Valley........................
Syracuse Metropolitan Area...............
Northern New York State.....................
Southern New York State......................
Binghamton Metropolitan Area.........
Western New York State.......................
Buffalo Metropolitan Area.................
Niagara Falls..................................
Rochester Metropolitan Area.............
Apparel stores (chiefly New York C ity )...




on hand
Oct. 31,
Jan.through Feb. through
Oct. 1953
Oct. 1953





+ 5
- 4
- 5
+ 2
+ 2
- 7
4* 1
- 3
— 2
+ 6
— 3
- 5
- 3
+ 1
+ 1
+ 1

+ 1

+ 3


— 1
- 2 ( - 2)

+ 1
— 1
+ 7
+ 3
+ 1

3 (-2 )

+ 4
+ 3
+ 1
+ 4
+ 5
- 1
- 2
+ 3
+ 5
+ 3
+ 4
+ 5
+ 5

+ 4
+ 3
+ 2
+ 4
+ 5
— 1
- 2
+ 3
+ 4
+ 3
4- 4
+ 4
+ 4

+ 6

+ 5
— 3

+ 9

+ 5
+ 5
+ 9
+ 3
+ 9

- 1
+ 2

- 1
+ 1

+ 2











their demands. On the other hand, such random factors as
unusual weather conditions or the signing of the Korean truce
may have influenced sales adversely this year. In addition, it
is possible that more fundamental readjustments such as the
recent tapering-off of home-building have contributed to the
reduction of homefurnishings demand.
The year-to-year declines in sales experienced by Second
District furniture stores over the past several months coincided
with a lessened use of instalment credit. Beginning in May
19 5 3 and in each succeeding month through October, instal­
ment sales declined below year-earlier levels both in actual dol­
lar volume and as a proportion of total sales. It is difficult to
determine whether the reduction in the use of credit in Second
District furniture stores since May, in comparison with the

+ 8


who would otherwise have been unable immediately to satisfy

+ 6



* The year-to-year comparisons given in parentheses exclude the data of a Brooklyn department
store that closed early in 1952.
n.a. Not available.

previous year, merely represents a leveling off after the excepSales and S to c k s o f Second D is t r ic t F u r n it u r e S to re s *

Percentage change 1953
fro m 1952

In sta lm e n t sales as
a per cent of
Stocks-sales ra tio
to ta l sales

M o n th
T o ta l

In d e xes o f D e p a rtm e n t S to re Sales and S to c k s
Second F e d e ra l R eserve D is t r ic t
(1 9 4 7 -4 9 a v e ra g e = 1 0 0 p e r c e n t)
F e b ru a ry . . . .


Ite m




Sales (average d a ily ), u na d justed .................
Sales (average d a ily ), seasonally a d ju s te d ..





Stocks, una d justed ............................................
Stocks, seasonally adjusted.............................




In s ta l­
m ent

E nd-ofm onth



+ 7
+ 9
+ 4
- 3
- 3
+ 4
- 4
- 8
- 1

+ 8
- 4
- 7
- 2
- 9
-1 0
- 1

- 3
- 1
+ 1
+ 4
- 3
- 2
- 9
-1 1
-1 2
-1 7





4 .5
4 .9
4 .4
4 .5
4 .9
4 .9
4 .4
3 .2

6 .0
5 .3
4 .4
4 .5
5 .6
5 .3
4 .6
3 .8


J u ly ................

r Revised.

S eptem ber. . .

* D erived fro m data reported b y a constant sample of stores. T o ta l sales com pari­
sons are based on a larger num ber of stores th a n those fo r instalm e n t sales,
stocks, and stocks-sales ratios.

M O N T H L Y R E V I E W , D E C E M B E R 1953


tional rise immediately following the expiration of Regula­
tion W , or whether it reflects a substantial tightening both of

produced stocks-sales ratios that were smaller, in general, than
those of last year. W ith the weakening of sales, however, the

furniture store credit policies and of the consumer’s desire or

declines in stocks in the four months following June ranged

ability to mortgage his future purchasing power.

from 9 to 1 7 per cent below the year-earlier levels (inventories

The relaxation of consumer demand in recent months may

in both August and September dropped to the lowest levels

explain, in part, the accelerating reduction of inventories held

for these months in four years). These substantial declines

by Second District furniture stores. During the first six months

resulted in moderately smaller stocks-sales ratios than those
of the previous year.

of this year only modest changes in the dollar value of stocks

United States and Second Federal Reserve District
Percentage change
Ite m


U n it
O ctober


A ugust


Latest m onth Latest m onth
fro m previous fro m year
m onth


Production and trade

231 p
24.8 p
4 6 .3p
2 2 .4p
9 .9 p
14. Ip

1947-49= 100
1947-49= 100
1947-49= 100
billio n s of $
1939= 100

4 9 ,147p
4 0 .3p

In d u s tria l p ro d u c tio n *......................................................................
E le ctric power o u tp u t* .....................................................................
Ton-m iles of ra ilw a y fre ig h t* ..........................................................
M a nufacturers’ sales*........................................................................
M anufacturers’ in v e n to rie s *............................................................
M anufacturers’ new orders, t o t a l* .................................................
M anufacturers’ new orders, durable g oo d s*................................
R e tail sales*.........................................................................................
R esidential construction c o n tra c ts *...............................................
N onresidential construction c o n tra c ts *........................................
Prices, wages, and employment
Basic com m odity p ric e s f..................................................................
Wholesale p ric e s f...............................................................................
Consumer p ric e s f...............................................................................
Personal income (annual ra te ) * ......................................................
Composite index of wages and salaries*.......................................
N o nagricultural em ploym ent * ........................................................
M a nu facturin g e m plo ym e nt*..........................................................
Average hours worked per week, m a n u fa c tu rin g f.....................
U ne m p lo ym e n t...................................................................................

1947-49 =
billio n s of
b illions of
b illions of
b illions of
billio n s of

T o ta l investm ents of a ll commercial banks.................................
T o ta l loans of a ll commercial b anks..............................................
T o ta l demand deposits a d ju ste d .....................................................
C urrency outside the Treasury and Federal Reserve B a n ks*.
B a n k debits (U. S. outside New Y o rk C it y ) * .............................
V e lo city of demand deposits (U . S. outside New Y o rk C ity ) *
Consumer instalm ent credit o u ts ta n d in g f...................................
United States Government finance (other than borrowing)
Cash incom e........................................................................................
Cash o u tg o ..........................................................................................
N a tio n a l defense expenditures........................................................

m illion s of $
m illions of $
m illion s of $
m illion s of $
m illion s of $
1947-49= 100
m illion s of $

Banking and finance

m illion s of $
m illions of $
m illions of $

6 7 ,120p
5,752 p
4 , 113p

99 p
4 6.5
9 .9

4 6.2
9 .5
14. l r

2 4 .8r
2 4.2 r
11. 5r

- 2

+ 9
- 7
+ 7
- 7
-1 4
- 1
- 6


2 85 .8p

8 8.8
4 9 ,308r
1 7 ,137r
4 0 .4r

9 2.5



- 1
+ 1
- 7

- 7
- 1
+ 1
+ 3
+ 5
+ 1
+ 1
- 3
-1 0

9 7 ,660p

7 7 ,090p
6 6 ,040p
9 7 ,480p


+ 1
+ 3
- 2
+ 1

+ 8
+ 2
+ 3




-5 4
- 9
- 3

-1 4
-1 2
- 3

-1 4
- 7
- 1

+ 1
-2 2
+ 1
+ 1
- 1
+ 5



E le ctric power o u tp u t (N ew Y o rk and New Je rsey)*...................
Residential construction c o n tra c ts *...................................................
N onresidential construction c o n tra c ts *........................................
Consumer prices (New Y o rk C it y ) f ..................................................
N on a g ricu ltu ra l e m plo ym e nt*.............................................................
M a nu facturin g e m plo ym e nt*..............................................................
B a n k debits (New Y o rk C it y ) * ..........................................................
B a n k debits (Second D is tric t excluding N ew Y o rk C it y ) * .........
V e lo city of demand deposits (New Y o rk C it y ) * ............................

1947-49= 100
1947-49= 100
1947-49= 100
1947-49 = 100
m illions of $
m illions of $
1947-49= 100

2 ,7 3 4 .4 p

7 ,6 0 0 .3p

7 ,6 2 3 .0
2 ,7 9 5.0

7 ,5 6 4 .3r
2 ,7 3 6 .l r

N ote: Latest data available as of noon, December 1, 1953.
p P re lim ina ry.
* A djusted fo r seasonal v a ria tio n .
r Revised.
t Seasonal variations believed to be m ino r; no adju stm e n t made,
n.a. N o t available. Series in process of revision.
# Change of less than 0.5 per cent.
Source: A description of these series and th e ir sources is available fro m the Dom estic Research D ivision , Federal Reserve B ank of New Y o rk , on request.



(Summarized by the Board of Governors of the Federal Reserve System, December 1, 1953)

Industrial production, construction activity, and retail sales
in October and November continued moderately below the
highs reached earlier this year. Wholesale prices remained at

C o n s t r u c t io n

Expenditures for new construction in October, seasonally
adjusted, continued at the third-quarter level, 6 per cent below

about the level prevailing since late 19 5 2. Consumer prices

the spring peak but 4 per cent higher than in October 19 52.

rose slightly further in October. Bank loans and investments
increased sharply in the first three weeks of November, reflect­

Value of contracts awarded in October reached a peak for the
year as appreciable gains in awards for most categories of pri­

ing primarily purchases of new Treasury securities as bank

vate construction offset declines in public awards. The 88,000

loans showed little change. Yields on Government and cor­

housing units started in October were nearly all privately

porate securities rose slightly.

financed, compared with 89,000 private starts in September

I n d u s t r ia l P r o d u c t io n

The Boards preliminary index of industrial production in
October was 2 3 1 per cent of the 19 3 5 -3 9 average as compared
with 2 32 in September and 230 in October a year ago. A

and 99,000 in October 19 52.
Em p l o y m e n t

Employment in nonagricultural establishments, seasonally
adjusted, was little changed in October at 49.1 million, follow­

decline of about 3 index points— or 1 per cent— is now indi­

ing slight reductions in the preceding two months, but was

cated for November, reflecting mainly further curtailment in

moderately larger than a year ago. Some further reduction in

durable goods output from the very advanced rate reached

manufacturing employment in October was offset by increases

earlier this year to somewhat below year-ago levels.
Auto output, after rising somewhat in October from the
moderately reduced rates of September, was reduced about 30
per cent in November, primarily because of model changeovers.

Steel mills operated at about 90 per cent of rated

in other lines of activity. The average factory work week in­
creased to 40.3 hours in October but was one hour less than
a year ago. Average hourly earnings continued at $1.7 8 , 5 per
cent above the October 19 5 2 level, and weekly earnings at

capacity in November after rising moderately to 95 per cent

$ 7 1 .7 3 were about 2 per cent above a year ago. Unemploy­
ment in early October remained exceptionally low at 1.2 mil­

in October. Activity in producers’ equipment industries gen­

lion. N ew claims for unemployment compensation have in­

erally held steady in October, and there was little change in

creased further since then and in early November were sub­

farm machinery following several months of sharp declines.
Television production declined moderately from very high
levels in the latter part of October.

stantially above a year ago.
D is t r ib u t io n

Output of nondurable goods in October showed a small fur­
ther decrease to a level about 3 per cent below the peak rates

Seasonally adjusted sales at department stores rose slightly
further in the first three weeks of November, following some

of spring. There were moderate further curtailments in textile
and fuel industries. Moreover, production of industrial chemi­

recovery in October from the reduced September level. Total

cals declined, reflecting lower output rates in various consum­
ing lines. Paper and paperboard output, however, reached a
record level in October and early November, and meat pro­
duction continued sharply above a year ago.

year-ago level, reflecting mainly continued high sales of new
and used cars by automotive dealers. Seasonally adjusted stocks
at department stores which had declined in September are esti­
mated to have shown little change in October.


Federal Reserve indexes.

retail sales changed little in October and were near their high


M o n th ly figures, latest shown are fo r October.

Bureau o f L ab o r S tatistics data adjusted fo r seasonal va ria tio n by Federal
Reserve. P ro prie to rs, self-employed persons, and domestic servants are
not included. M id m o n th figures, latest shown are fo r October.


C o m m o d i t y PgjCES

The average level of wholesale prices changed little from

change. Business loans increased only slightly, compared with
a substantial rise in the same period last year.

Livestock showed further

Bank reserve positions continued generally easy during most

decreases, largely seasonal, through early November, but sub­
sequently advanced sharply. Prices of pork and some other

of November, although at times banks in major cities were
under some reserve pressure. During the four weeks ended

foods declined, but grains advanced, reflecting in part the influ­

November 25, excess reserves of member banks, on the aver­

mid-October through November.

ence of Federal support programs. Average prices of industrial

age, exceeded borrowings at the Federal Reserve by about 300

commodities continued to change little. There were reductions

million dollars. System Open Market purchases of U. S. G ov­

in cotton textiles, alcohol, petroleum products, carpets, and

ernment securities, and an increase in float supplied additional

list prices for some makes of television sets. Acetate yarn was

reserves but these were absorbed through currency outflows

raised, however, and metal scrap increased slightly further.

and increases in required reserves. Early in November the

Consumer prices again advanced in October, reflecting fur­

Treasury used part of its free gold to retire securities held by

ther increases in most groups of goods and services other than

the Federal Reserve Banks, a transaction which had no effect
on member bank reserves.

B a n k C r e d it


R eserves

Se c u r it y M a r k e t s

Total loans and investments at banks in leading cities
increased substantially during the first three weeks of Novem ­

Yields on U. S. Government and corporate securities rose
slightly over the first three weeks of November, following sub­

ber, reflecting largely bank purchases of the new Treasury

stantial declines in October. The Treasury offered 2Vz per cent

bonds issued on November 9. A n increase in bank loans
reflected mainly expansion in loans for purchasing and carrying

bonds of December 19 5 8 or 1 % per cent notes of December 15 ,
19 5 4 in exchange for the 2V$ per cent notes maturing Decem­

securities. Real estate and consumer loans showed little further

ber 1, 19 53.



Per Cent, 1947-49*100





Seasonally adjusted series except fo r prices. P rice indexes compiled by B ureau
o f Lab o r S tatistics. T o ta l re ta il sales and disposable personal income,
Federal Reserve indexes based on D epartm ent o f Commerce data. D ep a rt­
ment store trade, Federal Reserve indexes. M o n th ly figures, latest shown
are fo r October, except income (Septem ber) and departm ent store stocks
(September 30).




D ata fo r selected ind u strie s reported by over 200 o f the largest m ember banks.
M etals, etc., includes m achinery and tra n sp ortatio n equipm ent. Foods and
com m odity dealers include liq u o r and tobacco. Petroleum , etc., includes
coal, chemical, and rubber products. Wednesday figures, latest shown are
fo r November 11.