Full text of Economic Policy Review (Federal Reserve Bank of New York) : February 1957, Vol. 39, No. 2

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MONTHLY REVIEW
O f Credit and Business Conditions

FEDERAL
V o lu m e

RESERVE

39

BANK

FEBRUARY

OF

NEW

YORK

1 95 7

No. 2

MONEY MARKET IN JANUARY
M e m b e r b a n k reserve p o s itio n s w ere substantially easier

tion o n Jan u ary 2 8 . In the final a u ctio n o f the m on th , the

du ring m ost o f Jan u ary as u nu su ally h ea v y retu rn flow s o f

average issu in g rate w as 3 .2 8 3 p e r cen t as against 3 .2 6 2

cu rren cy fr o m circu la tion , a sharp d e clin e in req u ired re­

p e r cen t at the en d o f D e c e m b e r .

serves, an d an e x ce p tio n a lly lo w lev el o f T rea su ry b a la n ces

T h e p rices o f G o v e r n m e n t b o n d s and n otes rallied sh arply

at the F e d e ra l R e s e rv e B a n k s a d d e d to the fre e reserves o f

o n Jan u ary 8, after d e clin in g u p to that date, an d th en

the b a n k in g system . T h e s e u n e x p e c te d ly la rge m ov em en ts

a d v a n ce d o v e r m ost o f the rem a in d er o f the m on th . T h e

as w ell as a slow er-th a n -u su a l d eclin e in floa t resu lted in

b u o y a n t atm osp h ere reflected the ex ce lle n t r e ce p tio n a c ­

average fre e reserves in ex cess o f 2 0 0 m illio n d olla rs fo r

c o r d e d the h ea v y v o lu m e o f c o r p o r a te flotation s, w h ich

ea ch o f the th ree w eek s en d ed Ja n u a ry 2 3 . F e d e ra l R e s e rv e

h a d b e e n a s o u rce o f e x p ecta n t c o n c e r n to the m a rk et late

o p era tion s w ere d esign ed to c o u n te ra ct these sea son al in ­

in 1 9 5 6 .

flu ences, bu t it w as n o t until the final statem ent w e e k o f the

the b e lie f o n the p a rt o f s o m e m a rk et o b serv ers that the

In a d d ition , secu rity p r ic e s w ere in flu en ced b y

m on th that average m e m b e r b a n k b o r r o w in g s fr o m F ed era l

e c o n o m ic b o o m m igh t p rog ress less ra p id ly in the n ear

R e s e rv e B a n k s again e x c e e d e d average ex cess reserves.

fu tu re than h a d b e e n the ca se in the latter p a rt o f last year.

D u rin g the five w eek s e n d e d Janu ary 3 0 , F e d e ra l R e s e rv e

A s a result, p rice s o f lo n g e r term G o v e r n m e n t securities

o p e n m a rk et o p e ra tio n s resu lted in a r e c o r d sea son al d e ­

m o v e d u p sh arply, in so m e cases g ain in g as m u ch as a b o u t

c lin e o f 1.5 b illio n dolla rs in System h old in g s o f G o v e r n ­

4 p oin ts o v e r the m on th , and, a lon g w ith ou tstan d in g c o r ­

m en t secu rities, in clu d in g b o th ou trigh t an d u n d er rep u r­

p o r a te an d m u n icip a l b o n d s , rega in ed m o s t o f the g rou n d

ch a se agreem en ts; an a d d ition a l 3 2 m illio n d olla rs w as

lost sin ce O c t o b e r .

w ith draw n fr o m the m a rk et as the result o f tran sa ction s

M

in v olv in g b a n k ers’ a cce p ta n ce s. In the F e d e ra l fu n d s m a r­

em ber

B ank R

eserves

ket rates sh ow ed an u nu su al d eg ree o f d a y -to -d a y vari­

W id e sw ings in b o th m e m b e r b a n k b o r r o w in g s fr o m

ability, and the effectiv e rate rem a in ed b e lo w 3 p e r cen t

F ed era l R e s e rv e B a n k s an d in free reserves t o o k p la c e in
Janu ary.

d u ring m u ch o f the m on th .
T h e securities m arkets w ere m a rk ed b y the su ccessfu l

A t the beg in n in g o f th e statem ent w e e k en d ed

Janu ary 2 b a n k s w ere m a k in g p rep a ra tion s f o r the y ea r-en d

distribu tion o f a la rge v o lu m e o f n ew c o rp o r a te an d m u n ici­

statem ent date, w h ile at the sam e tim e the e n d -o f-th e -

pal issues an d b y a g en eral im p ro v e m e n t in the p rices o f

m on th d e clin e in floa t ten d ed to w ith d ra w reserves fr o m

U n ited States G o v e r n m e n t secu rities.

the b a n k in g system ; as a result, av erag e b o r r o w in g s fr o m

T rea su ry b ill rates

du ring m ost o f Janu ary w ere at levels som ew h a t b e lo w th ose

the R e s e rv e B a n k s r o s e sh arply an d e x c e e d e d average

preva ilin g in late D e c e m b e r .

e x cess reserves.

T h e reviv a l o f d e m a n d fo r

In the s u cce e d in g th ree w eek s, an u n ­

bills fr o m n o n b a n k in vestors after the en d o f the y ea r w as

u su ally h ea v y retu rn flo w o f c u r re n c y fr o m

the m a jo r fa c to r a cco u n tin g fo r the lo w e r lev el o f rates,

persisten t d eclin es in T rea su ry b a la n ces at F e d e ra l R e s e rv e

circu la tion ,

but the easier p o s itio n o f m e m b e r ba n k s th rou g h m o s t o f
the m on th , in flu en ced p a rtly b y a sea son al re d u c tio n in

CONTENTS

loans o f r e c o r d p r o p o rtio n s , also co n trib u te d to the d eclin e.

Money Market in January.................................... 13

H o w e v e r , a n u m b er o f fa c to r s ten d ed to c h e c k the d eclin e

International Monetary Developments............. 17

in rates, in clu d in g the gen eral r e co g n itio n that the easin g

Trends in International Reserves and
Payments in 1956 .............................................. 18
Department Store Trade...................................... 22
Selected Economic Indicators.............................. 24

o f b a n k reserve p o s itio n s w as te m p ora ry , the h ea v y System
sales an d red em p tion s o f T rea su ry bills, the T re a su ry ’ s re­
fu n din g o f 1.6 b illio n dollars o f sp ecia l bills, an d the 1 0 0
m illion d o lla r in crease in offerin g s in the regu lar bill a u c­




14

MONTHLY REVIEW, FEBRUARY 1957
Table I

the

C hanges in F actors Tending to Increase or D ecrease M em ber
B ank R eserves, January 1957
(In m illions of d o lla rs; ( + ) denotes increase,
(— ) decrease in excess reserves)

F ed era l

R e s e rv e

Banks

c o u ld

not

be

rep len ish ed

th rou g h the usual ca ll p r o ce d u r e s sufficiently to b e m a in ­
tain ed at n o rm a l lev els. A s a result, the T rea su ry b a la n c e
at F ed era l R e s e rv e B a n k s fe ll to a lo w p o in t o f 1 2 2 m illio n

Daily averages— week ended

dolla rs o n Janu ary

Factor
Jan.
2

Net
changes

18 , c o m p a r e d w ith 5 3 3 m illio n o n

S u b sequ en tly the b a la n ce rose, in p a rt as

Jan.
16

Jan.
23

Jan.
30

+ 83
+168
+281
3
+ 2

-2 3 1
-3 6 8
+220
+124
+ 11

+
173
-1 ,1 3 0
+ 1,385
+
195
+
131

in the statem ent w e e k e n d e d Janu ary 3 0 w as also attrib­

+528

-2 4 3

+

753

u table in pa rt to th e sale o f 3 0 0 m illio n d o lla rs’ w o rth o f
in ex ch a n g e fo r n on in terest-b ea rin g n otes o n Ja n u a ry 2 8 .

the result o f in crea sed receip ts fr o m p e rso n a l in c o m e ta x

Operating transactions
Treasury operations*..................................
Federal Reserve float..................................
Currency in circulation..............................
Gold and foreign account..........................
Other deposits, etc......................................

+228
-6 7 1
+163
+ 19
- 26

+ 37
+
2
+350
+ 51
+ 1 22

+ 56
-2 6 1
+371
+ 4
+ 22

Total.............................................

-2 8 7

+562

+193

p a ym en ts, an d ba n k s lo s t reserves in co n s e q u e n c e .
T h e rise in T rea su ry b a la n ces at F e d e ra l R e s e rv e B a n k s

g o ld b y the In tern a tion al M o n e ta r y F u n d to th e T rea su ry

Direct Federal Reserve credit transactions
Government securities:
Direct market purchases or sales..........
Held under repurchase agreements----Loans, discounts, and advances:
Member bank borrowings......................
Other.........................................................
Bankers’ acceptances:
Bought outright......................................
Under repurchase agreements...............

D ecem ber 26 .

Jan.
9

+ 36
+ 52

9
-2 9 7

-3 0 8
- 87

-4 8 2
—

-3 6 1
—

-1 ,1 2 4
332

+259
1

-3 9 5
+
4

-1 8 2
4

-

+180
—

-

3
—

-

1 — -

3
27

T h is tran sa ction w as d esign ed even tu a lly to rep len ish th e
I M F ’ s h o ld in g s o f d o lla r fu n d s in a n ticip a tion o f p o s sib le
fu rther draw in gs b y m e m b e r n ation s o f the I M F u n d er

+
1
- 22

-

+353

-7 1 7

-5 9 4

-4 8 6

-1 8 1

-1 ,6 2 5

Effect of change in required reserves t .............

+ 66
- 16

-1 5 5
+133

-4 0 1
+187

+ 42
8

-4 2 4
+180

+

872
476

m illion d olla r a d d ition to T rea su ry b a la n ce s w as o ffse t b y

Excess reservest ................................................

+ 50

-

-2 1 4

+ 34

-2 4 4

-

396

a lik e in crease in the g o ld stock .

22

-

139
1

1
7

+
+

1
12

1
—

sta n d -b y cred it arran gem ents.

T h e re w as, h o w e v e r, n o

im m ed ia te im p a ct u p o n b a n k reserve p o s itio n s, as the 3 0 0

A lth o u g h a substantial d rain o n b a n k reserves o v e r the
Daily average level of member bank:
Borrowings from Reserve Banks..............
Excess reservest..........................................

505
739

900
761

323
525

322
559

502
315

510J
5801

in System h old in g s o f G o v e r n m e n t secu rities. In a d d ition ,
h old in gs o f b a n k ers’ a cce p ta n ce s, b o th ou trigh t an d u n d er

B a n k s, an d a d e clin e in req u ired reserves a c c o m p a n y in g
large r e d u ctio n s in m e m b e r b a n k loa n s an d in vestm ents,
the

w ith d raw al

of

reserves

th rou g h

F ed era l

R e s e rv e o p e n m a rk et o p e ra tio n s an d a slow d eclin e in
float.

d eclin e after the w e e k e n d e d Janu ary 2 w as slow er th an
usual, an d the m a jo r losses stem m ed fr o m th e r e d u c tio n

Note: Because of rounding, figures do not necessarily add to totals.
* Includes changes in Treasury currency and cash,
t These figures are estimated,
j Average for the five weeks ended January 30.

exceed ed

m on th a rose fr o m the u su al sea son al d e clin e in floa t, the

A v e r a g e b o r r o w in g s d e c lin e d an d m e m b e r ban k s

h eld free reserves in e x cess o f 2 0 0 m illio n dolla rs, o n an
average basis, in e a ch o f the three w eek s e n d e d Janu ary 2 3 .
In the final statem ent w eek , h o w e v e r, average b o r r o w in g s
e x c e e d e d average e x cess reserves b y 1 8 7 m illio n dollars,
largely as the result o f a d eclin e in floa t an d fu rther System

rep u rch a se agreem en ts, w e re r e d u c e d b y 3 2 m illio n d olla rs
o v e r the p e r io d .

T h e n et re d u c tio n in ou tstan d in g re­

p u rch ase agreem en ts w ith G o v e r n m e n t secu rities dea lers
a m ou n ted to 33 1 m illio n b e tw e e n D e c e m b e r 2 6 an d Ja n u ­
ary 9, w h ile the re d u c tio n in ou trigh t h old in g s o f G o v e r n ­
m en t securities a m ou n ted to 1 .2 b illio n d olla rs du rin g the
five w eek s e n d e d Jan u ary 3 0 .

A substantial p a rt o f the

sales an d r ed em p tion s o f G o v e r n m e n t secu rities w as c o n ­
cen tra ted in the w e e k e n d e d Janu ary 2 3 . In the final state­
m en t w eek , System sales p r o c e e d e d at a slow er p a c e as
float d eclin ed .

sales o f T rea su ry bills.
G o v e r n m e n t S e c u r it ie s M

A n e x ce p tio n a lly large d e clin e o f c u rre n cy in circu la tion

arket

w as the m o s t im p orta n t fa c to r in in creasin g b a n k reserves

T h e p rice s o f T rea su ry n otes an d b o n d s te n d e d d o w n ­

o v e r the m on th . T h is d eclin e a m ou n ted to 1.5 b illio n d o l­

w a rd at the b eg in n in g o f Janu ary b u t su b seq u en tly r e ­

lars b etw een D e c e m b e r 2 6 an d Janu ary 3 0 , an d w as the

bounded

largest retu rn flo w o f cu rre n cy ev er r e c o r d e d .

B ank re­

o p e n e d reflected w id e sp re a d a p p reh en sion o v e r th e u n ­

serve p o s itio n s w ere also eased b y a sharp d r o p in req u ired

usually h ea v y ca len d a r o f c o r p o r a te flota tion s in Janu ary

sh arply.

T h e d eclin e in p rice s as th e m o n th

reserves, reflectin g p rim a rily the h ea v y net rep ay m en ts o f

an d F eb ru a ry , as w ell as m a rk et ex p ecta tion s that a c o n ­

b a n k loa n s.

O v e r the fu ll fiv e -w e e k p e r io d , req u ired re­

tinu ed e x p a n sio n in e c o n o m ic activity w o u ld b e a c c o m ­

serves fe ll b y 4 1 0 m illio n d olla rs, th ereby m o r e than o f f­

p a n ied b y tighter cred it c o n d itio n s an d p erh a p s b y a rise

setting the 195 m illion rise that h ad o c c u r r e d in the fo u r

in d is co u n t rates at F e d e ra l R e s e rv e B a n k s. A lth o u g h trad ­

w eek s e n d e d D e c e m b e r 2 6 , 1 9 5 6 .
D u rin g m o s t o f the m on th reserves also ten d ed to in ­

ing activity, b o th o n an ou trigh t ba sis an d o n sw itch es,
sla ck en ed as the n ew y ea r o p e n e d , p r ic e s w ere m a rk ed

crea se as a result o f the persisten t d o w n w a rd m o v e m e n t in

dow n

T rea su ry ba la n ces at F ed era l R e s e rv e B a n k s, la rg ely reflect­

T rea su ry issues to n ew lo w s o n Ja n u a ry 7 .

sh arply,

ca rry in g

m ost

in term ed ia te

an d

lo n g e r

ing u n e x p e cte d ly h ea v y d efen se ou tla ys. T h e sam e fa c to r

T h e ex ce lle n t resp on se o f in vestors to the c o r p o r a te

ten d ed to r e d u c e T a x and L o a n A c c o u n t b a la n ces at c o m ­

issues floa ted o n Janu ary 7 an d 8 ap p aren tly p r o v id e d the

m ercia l bank s, w ith the result that T rea su ry ba la n ces at

initial im petu s f o r the sharp u p w a rd trend in the p rices




FEDERAL RESERVE BANK OF NEW YORK
o f G ov ern m en t b o n d s o v e r m u ch o f the rem ain d er o f the

15

A brisk in vestor d em a n d fo r the n ew bills d e v e lo p e d su b ­

m on th . B y January 9 , virtually all o f the 3 0 0 m illion d o l­

sequ en tly and, pa rtly

lars o f c o rp o r a te issues o ffe re d du rin g the w eek h ad b e e n

F rid a y , Janu ary 18 (ra th er than o n M o n d a y b eca u se o f the

taken b y in vestors.

In au gu ral D a y h o lid a y in W a s h in g to n ), resu lted in an

In a d d ition , so m e d o u b t b eg a n to

as a result, the a u ction h eld on

d e v e lo p in the m a rk et rega rd in g the strength o f in flation ary

average issuing rate o f 3 .0 8 5 p er cen t, the lo w e st since

pressures in the e c o n o m y , a v iew that re ce iv e d so m e su p ­

m id -N o v e m b e r .

p o rt fr o m the sharp d eclin e in bu siness loa n s at w e e k ly

ou tstan din g issues ten d ed to m o v e u p, in flu en ced b y the

rep ortin g ba n k s.

T r a d in g v o lu m e co n tin u e d to b e v ery

in crease in the o ffe rin g o f bills b y 1 0 0 m illion dolla rs in

light alth ough there w as a sp o ra d ic d em a n d arising m ain ly

the regu lar b ill a u ction o n Janu ary 2 8 , b y som e ta p erin g -off

fr o m sm all in vestors w h ich m et w ith fe w offerin g s.

M ost

o f n o n b a n k d em a n d , an d b y a r e d u c e d reserve availability.

T o w a r d the en d o f the m on th , rates on

o f the p r ic e a d va n ces o c c u r r e d as dealers sou g h t to p r o b e

T h e average issuing rate ro se to 3 .2 8 3 p e r cen t in the

fo r p rice levels at w h ich so m e trad in g m igh t tak e p la ce .

final a u ction .

T h e p r ic e rise ca rried average y ield s o n T rea su ry secu ri­

o f the m on th , h o w e v e r, lo w e r e d the clo sin g b id o n the

ties d u e o r ca lla b le in ten to tw en ty years d o w n to 3 .2 2

lon gest ou tstan d in g issue o f T rea su ry bills to 3 .1 2 p er cent,

p er cen t in the w eek en d ed Janu ary 2 5 , a b o u t equ al to the

c o m p a r e d w ith 3 .2 2 p e r cen t at the en d o f D e ce m b e r .

y ield at the en d o f O c t o b e r 1 9 5 6 an d in con tra st to the
h igh o f 3 .5 3 p er cen t r e a ch e d in early January.

O ver

A

d r o p in y ield s in the last three days

O n Janu ary 31 the T rea su ry a n n o u n ce d refu n d in g p la n s
fo r the 7 .2 b illio n dolla rs o f 2 % p er cen t certificates m a tu r­

the m on th as a w h o le , m o s t issues m atu rin g after 1 9 6 2

ing F eb ru a ry 15, the 3 .0 b illio n dollars o f 2 %

sh ow ed in creases o f b etw een 3 an d 4 p oin ts; the 3 ’ s o f

n otes m atu ring M a r c h 15, an d the 531 m illion dolla rs o f

19 95 c lo s e d at 9 4 14/S2 (b id ), u p

3 1 % 2 p oin ts.

p e r cen t

In ter­

1 V2 p e r cen t n otes d u e A p r il 1. H o ld e r s o f the ob lig a tion s

m ed iate and sh orter issues sh o w e d m o r e m o d e ra te a d ­

d u e F eb ru a ry 15 an d M a r c h 15 w ill b e o ffe re d the o p tio n

v an ces, gen erally o f b e tw e e n Vi o f a p o in t and W

2

p oin ts.

o f e x ch a n g in g in to either n ew 3 ¥ s p er cen t o n e -y e a r certifi­

O n January 4 the T rea su ry a n n o u n ce d that it w o u ld

cates m atu ring F eb ru a ry 14, 1 9 5 8 o r 3 ^ p er cen t T rea su ry

refu n d the 1.6 b illio n dollars o f sp ecia l bills m atu ring o n

n otes m atu ring M a y 15, 1 9 6 0 .

January 16 th rou gh the sale at a u ction o f an equ al am ou n t

A p r il 1, p rim a rily the F ed era l R e s e rv e B a n k s, m a y e x ­

H o ld e r s o f the n otes du e

o f 1 5 9 -d a y ta x a n ticip a tion bills d a ted Janu ary 16, m a tu r­

ch a n g e o n ly in to the n ew o n e -y e a r certificates.

ing June 2 4 , and a cce p ta b le at fa c e v alu e in p a y m en t o f

certificates and n otes w ill b e d a ted F eb ru a ry 15, 1 9 5 7 , w ith

in co m e and profits taxes d u e o n Ju n e 15.

R e la tiv e ly fe w

interest adju stm ents in all cases as o f that date. T h e su b ­

o f the h old ers o f m atu ring bills a p p ea red to b e interested

scrip tion b o o k s w ill b e o p e n o n F eb ru a ry 4 an d 5 , 1 9 5 7 . In

T h e n ew

in the n ew offerin g , an d b id d in g b y oth er in vestors w as

ad d ition , the T rea su ry also a n n o u n ce d that it w ill a ccep t

also light. A s a result, the average issuing rate w as 3 .3 0 5

ten ders o n F eb ru a ry 7 fo r a b o u t 1 .7 5 b illio n dolla rs o f

per cen t. T ra d in g o n a w h en -issu ed basis o p e n e d at a b ou t

1 2 9 -d a y tax a n ticip a tion bills f o r cash o r in e x ch a n g e fo r

3 .3 2 p er cen t ( b i d ) , b u t b y the en d o f th e m on th a su b ­

the sp ecia l T rea su ry bills w h ich m a tu re F eb ru a ry 15. T h e

stantial d em a n d d e v e lo p e d

n ew bills w ill b e d a ted F e b ru a ry 15 , w ill m atu re Ju n e 2 4 ,

an d the tax bills w ere b id

d o w n to 3 .1 2 p e r cen t.
R a tes o n regu lar T rea su ry bills flu ctu a ted w ith in rela­
tively n a rrow lim its th rou g h ou t Janu ary, w ith m o d e ra te
d eclin es b o th early an d late in the m on th . T h e reviv al o f
in vestor d em a n d fo r regu lar T rea su ry bills after the y ear

1 9 5 7 , an d are a c c e p ta b le at fa c e v a lu e in p a y m en t o f in ­
c o m e and p rofits taxes d u e Ju n e 15, 1 9 5 7 . Settlem ent fo r
a c c e p te d ten ders m a y b e m a d e either in cash o r in a
lik e fa c e a m ou n t o f the sp ecia l T rea su ry bills m atu ring
F eb ru a ry 15.

en d w as substantial and, in c o n ju n c tio n w ith relatively light
O t h e r Se c u r it ie s M

offerin gs, ten d ed to m o v e rates d o w n as the m on th o p e n e d .

arkets

T h e an n ou n cem en t o f the refu n d in g o ffe rin g o f ta x bills

T h e a tm osp h ere in the c o r p o r a te an d m u n icip a l b o n d

o n January 4 , as w ell as the e x p e cta tio n that the System

m arkets im p r o v e d strik ingly in Janu ary an d y ield s d e ­

w o u ld b e selling bills to o ffset the sea son al in crease o f b a n k

clin ed , d espite an ex trem ely la rge v o lu m e o f n ew offerin gs.

reserves, ten d ed to d a m p e n d ea ler interest in the regu lar

Y ie ld s o n ou tstan d in g issues w ere steady du ring the first

bill a u ction o n Janu ary 7 , b u t in vestor b id d in g w as qu ite

c a len d a r w^eek o f the m on th , as the m a rk et aw aited som e

strong.

A s a result, the average issu in g rate d e clin e d b y

in d ica tion o f in v estor re sp o n se to the w a v e o f n ew c o r ­

ab ou t 7 b a sis-p oin ts fr o m the final a u ction in D e ce m b e r

p o r a te flotation s sch e d u le d o n January 7 an d su cceed in g

to 3 .1 9 7 p er cent.

A lth o u g h dealers again b id cau tiou sly

d ays. T h e su ccess o f th ese offerin g s im p ro v e d the ton e o f

in the January 14 au ction , pa rtly b e ca u se o f h ea v y aw ards

ou tstan din g c o r p o r a te issues, w h ich started to m o v e u p in

o f the n ew ta x bill, cu stom er interest w as u nu su ally strong,

p rice o n Janu ary 8. A v e r a g e yield s o n h igh -g ra d e c o r p o ­

in part sw elled b y bid s fr o m h o ld e rs o f the m a tu rin g sp e­

rate b o n d s , as reflected in M o o d y ’ s A a a -r a te d in d ex , d e ­

cial bill w h o h ad n ot ten d ered fo r the n ew ta x bill, an d the

clin ed o v e r the m on th as a w h o le b y 10 b a sis-p oin ts to

average issuing rate rose o n ly slightly to 3 .2 2 3 p e r cen t.

3 .7 2




p er cen t, w h ile average y ields o f

sim ilarly rated

MONTHLY REVIEW, FEBRUARY 1957

16

m u n icip a l b o n d s fe ll 18 b a sis-p oin ts to 2 .8 7 p er cen t. In
e a ch case, the average yield s o f late D e c e m b e r and early
January rep resen ted p o s tw a r p ea k s and the su bsequ en t

Table II
W e e k ly Changes in Principal A s s e ts and Liabilities of the
W e e k ly R eporting M em ber B anks
(In m illions of dollars)

declin es ca rried the in d ex es b a c k to the lev els o f a b ou t

Item

lars, th e h igh est v o lu m e o f flotation s sin ce last M a y and
e x ce e d in g the D e c e m b e r v o lu m e b y a b o u t 2 5 0 m illion .
A b o u t h a lf o f this a m ou n t w as o ffe re d in the th ree-d a y
p e r io d , Ja n u a ry 7 -9 , to w h ich the m a rk et h a d b e e n lo o k ­
in g fo r w a r d w ith a p p reh en sion .

A ll o f these issues w ere

w ell r e ce iv e d and, in several in stan ces, w ere b id at a p r e ­
m iu m sh ortly after the offerin g . M o s t c o rp o r a te issues later
in the m on th d id eq u a lly w ell.

L ib e ra l p ricin g b y u n d er­

w riters c o n trib u te d to the attractiveness o f the n ew issues.
O fferin g s o f m u n icip a l b o n d s a m ou n ted to an estim ated
6 0 0 m illio n dolla rs in Janu ary, c o m p a r e d w ith 3 6 0 m illion
in D e c e m b e r .

T h e m a jo r test o f the m u n icip a l m ark et

ca m e a b o u t a w e e k later than in the c o rp o r a te m arket, w ith
alm ost tw o fifths o f the offerin g s— 2 3 8 m illio n d olla rs—
b ein g c o n c e n tra te d in the th ree-d a y p e r io d , Janu ary 1 4 -1 6 .
T h e lo w e r lev el o f d ea ler in ven tories, alrea dy n ota b le at
the en d o f D e c e m b e r , a id ed in the retailin g o f the n ew
issues, an d the rea p p ea ra n ce o f d em a n d fr o m ba n k s and

167 - 383
+ 46
1
9+ 1—
— 78 - 392
7
- 13 — 13 - 92
+ 50 +
+181 - 402 - 874

-155
- 3
- 11
- 1
- 74
-246

-243
- 3
- 93
- 24
- 37
-400

157- 396
37 - 106
- 502
9- 60
- 562
291 —1,436
- 129
411 - 934

+601
- 50
+551
—
+551
+305
+ 32
-246

-391 - 12
- 236
-493 - 248
- 27 - 132
-520 - 380
-920 -2,121
+ 28 + 172
-427 -1,873

+783
+125
-308
- 96
- 36

-227
+ 33
- 19
-792
- 18

Dec.
26,
1956

T h e estim a ted v o lu m e o f p u b lic offerin g s o f co rp o r a te
b o n d s f o r n ew ca p ita l in Janu ary r o se to 6 2 0 m illio n d o l­

Jan.
16,
1957

Five
weeks
ended
Jan. Jan.
23,
23,
1957 1957

Statement weeksended

m id -N o v e m b e r 1 9 5 6 .

Assets
Loansandinvestments:
Loans:
Commercial andindustrial loans......
Agricultural loans.......................
Securityloans...........................
Real estateloans........................
All otherloans (largelyconsumer)....
Total loansadjusted*................
Investments:
U. S. Government securities:
Treasurybills........................

2

+102

+ 17
+ 59
+ 76
Othersecurities......................... - 36
Total investments.................... + 40
Total loansandinvestmentsadjusted*. ...
Loanstobanks.............................. +131
Loansadjusted* and“other” securities.... +145
Liabilities
Demanddepositsadjusted.................. + 66
Timedepositsexcept Government......... +130
U. S. Government deposits................. - 31
Interbankdemanddeposits:
- 42
+ 25

+221

Jan.
9,
1957

Jan.
,
1957

2

+
—
+
—
+
+
-

120
111

110

2

5S5+ 131
+ 116
199-1,230
+1,314 -1,215
+ 32- 82

+
—

- 902
— .15
- 472
- 58
- 151
-1,741

-102

+ 148
+ 40G
-1,787
- 831
- 79

oth ers resu lted in a gen erally g o o d resp on se, ev en th ou gh
m ost

issues

m oved

m ore

slow ly

than

d id

c o rp o r a te

* Exclusiveofloanstobanksandafterdeductionofvaluationreserves; figuresfortheindividual
loan classifications are showngross andmay not, therefore, add to the totals shown.

offerin g s.
N e w offerin g s b y G o v e r n m e n t ag en cies an d in tern a tion a l
o rg a n iza tion s w ere a lso e x trem ely w ell r e ce iv e d d u rin g the
p e r io d . A 1 0 0 m illio n d o lla r issue o f tw en ty -yea r 4 V i p er
cen t b o n d s b y the In tern a tion al B a n k fo r R e c o n s tr u ctio n
an d D e v e lo p m e n t w as su ccessfu lly m a rk eted

on

Janu­

ary 10, as w as a 7 2 m illio n d o lla r issue o f 4 Vs p e r cen t
b o n d s m a tu rin g in 1 9 7 2 o ffe re d b y the F ed era l L a n d B a n k s
o n Janu ary 3 0 . S h orter term offerin g s b y the F e d e r a l H o m e
L o a n B a n k s, the F e d e ra l N a tio n a l M o rtg a g e A s s o c ia tio n ,
the

F e d e ra l

In term ed ia te

C red it

B a n k s, the B a n k

fo r

C o o p e r a tiv e s , an d the F e d e ra l L a n d B a n k s w ere a lso in
stron g d em a n d .

R e p o r te d ly in o r d e r to lim it c o m p e titio n

w ith oth er lo c a l g ov ern m en t offerin g s, the P u b lic H o u sin g
A d m in istra tio n a n n o u n ce d o n January 15 that it w o u ld
o ffe r in early F e b ru a ry less than o n e third o f the 1 0 0 m il­
lio n d olla rs o f lo c a l h ou sin g b o n d s orig in a lly con te m p la te d .

a y ear earlier.

Secu rity loa n s, real estate lo a n s , an d “ all

o th e r” (la rg e ly c o n s u m e r ) loa n s also d e clin e d .
T h e d e clin e in bu siness loa n s d u rin g th e fo u r w eek s
e n d e d Jan u ary 2 3 w as la rg ely attribu table to th ose types
o f firm s that n orm a lly rep a y at this tim e o f th e yea r.
W h o le sa le and retail trade, f o o d p r o ce s s o r s , an d c o m m o d ity
d ealers a c c o u n te d fo r the b u lk o f the d eclin e in tota l b u si­
ness loa n s, b u t in ea ch ca se the d e clin e w as m o r e m a rk ed
than a y ear earlier.

L o a n s to m etals an d m etal p r o d u c ts

firm s sh ow ed , h o w e v e r, an ev en sh arper con tra st w ith y e a rearlier figures, d r o p p in g b y 4 9 m illion , c o m p a r e d w ith a
6 6 m illion d olla r in crease a y ea r a g o.
fin an ce co m p a n ie s in crea sed 2 4 8

L o a n s to sales

m illio n d olla rs in the

tw o w eek s en d ed Janu ary 2 b u t su b seq u en tly d e c lin e d ;
o v e r the entire fiv e -w e e k p e r io d , su ch lo a n s d e c lin e d b y
7 m illio n d olla rs as against a 1 0 4 m illio n d o lla r d e c lin e
last year.
T o ta l in vestm ents o f w eek ly re p ortin g m e m b e r b a n k s

M

em ber

B a n k C r e d it

d e c lin e d 3 8 0 m illion d olla rs du rin g the five w eek s e n d e d

T o ta l lo a n s ou tstan d in g at all w eek ly rep ortin g m em b er

Janu ary 2 3 , 1 9 5 7 . H o ld in g s o f n o n -G o v e r n m e n t secu rities

ba n k s d e c lin e d 1 ,9 2 2 m illio n dolla rs o v e r the fo u r w eek s

d e c lin e d b y 1 3 2 m illion , c o m p a r e d w ith an 87 m illio n d o l­

e n d e d Ja n u a ry 2 3 after rea ch in g their sea son al p e a k in

lar d eclin e a y ea r a g o , w h ile h old in g s o f G o v e r n m e n t o b li­

the w e e k e n d e d D e c e m b e r 2 6 .

g ation s fe ll 2 4 8 m illio n d olla rs as c o m p a r e d w ith a d ecrea se

L a st y ea r tota l loa n s fell

831 m illio n dolla rs in the fo u r w eek s fo llo w in g their sea­

o f 7 8 5 m illio n in sim ilar w eek s last yea r.

son al p ea k o n D e c e m b e r 2 8 , 1 9 5 5 . B u siness loa n s d r o p p e d

d e c lin e in h old in g s o f G o v e r n m e n t secu rities this y ear w as

T h e sm aller

b y 9 4 8 m illion d olla rs in the fo u r w eek s en d ed Janu ary 2 3 ,

in p a rt d u e to h ea v y b a n k su b scrip tion s fo r th e sp ecia l

o r b y m o r e than tw ice as m u ch as in the c o m p a ra b le p e r io d

issue o f tax a n ticip a tion bills in the w e e k en d e d Jan u ary 16,




FEDERAL RESERVE BANK OF NEW YORK

17

INTERNATIONAL MONETARY DEVELOPMENTS
M o netary

T rends

and

P o l ic ie s

re c o r d o f 4 .9 8 r e a ch e d at the en d o f N o v e m b e r .

Bank

In W est G erm a n y , the o fficia l d is co u n t rate w as lo w e re d

clearin gs th rou g h the L o n d o n C lea rin g H o u s e r o se 5 .4 p e r

to AVz p e r cen t fr o m 5, e ffectiv e Janu ary 1 1 ; the rate h a d

cen t in 1 9 5 6 to a n ew p e a k ; h o w e v e r, th ree fou rth s o f the

been re d u ce d V2 p e r cen t last S ep tem b er, fo llo w in g three

in crease in clearin gs o c c u r r e d in the first h a lf o f the year.

con s e cu tiv e in creases b etw een A u g u s t 1 9 5 5 an d M a y 1 9 5 6 .

T h e statem ents o f the L o n d o n clea rin g ba n k s f o r the eight

In com m e n tin g o n the presen t a ction , the p resid en t o f the

w eek s e n d e d Jan u ary 16 sh o w e d a 1 3 5 m illion p o u n d in ­

b o a rd o f d irectors o f the B a n k d eu tsch er L a n d e r r e p o rte d ly

crea se in n et d ep osits, an 18 m illion d ecrea se in ad va n ces,

stated that the p resen t G e rm a n e c o n o m ic situ ation w a r­

and a rise o f 3 0 m illio n in the b a n k s’ T rea su ry b ill h o ld ­

ranted a certain rela x a tion o f cred it cu rb s, alth ou g h the

in gs; d u rin g the sam e p e r io d a y ea r earlier, the in crease

e c o n o m y h ad n o t s lo w e d d o w n to the p o in t w h ere an

in d ep osits w as su bstantially less, th ere w as a larger d e ­

H e also n o te d

crea se in a d va n ces bu t a m u ch larger rise in the b a n k s’

the p ossib ility that a lo w e r d is co u n t rate w o u ld ten d to

T rea su ry bill h old in g s. T h e b a n k s’ liq u id ity ratio sto o d at

e x p a n sion a ry cred it p o lic y w as in d ica ted .

red u ce the h ea v y in flow o f fo r e ig n fu n d s attracted in part

3 7 .3 p e r cen t o n Janu ary 16, c o m p a r e d w ith 3 6 .3 in m id -

b y h igh G erm a n interest rates. T h e B a n k d eu tsch er L a n d er,

N o v e m b e r an d 3 7 .6 a y ear earlier.

an alyzing e c o n o m ic

c o n d itio n s in its D e c e m b e r rep ort,

C a n a d ia n interest rates co n tin u e d to rise in January.

p oin ted to the distin ct signs that the b o o m h a d lev eled o ff

T h e average T rea su ry bill ten d er rate re a ch e d 3 .7 2 p er

in the latter h a lf o f 1 9 5 6 ; in pa rticu la r, the in crea se in

cen t du ring the m id d le o f the m o n th bu t d e clin e d to 3 .7 0

industrial p r o d u c tio n in O c t o b e r an d N o v e m b e r o v e r the

at the final ten der.

c o rr e sp o n d in g m on th s o f 1 9 5 5 w as o n ly 4 p e r cen t, as

fix ed at 3 .9 5 p e r cen t o n Janu ary 31 u n der the B a n k o f

T h e d is co u n t rate w as a c c o rd in g ly

against 7 p er cen t fo r the third qu arter an d 10 p e r cen t fo r

C a n a d a ’ s p resen t p o lic y o f k eep in g it Va p e r cen t a b o v e the

the first h alf.

T rea su ry bill rate. T h e u p w a rd m o v e m e n t in g ov ern m en t

T h e slack en in g o f the p ressu re o f d em a n d

in G erm a n y is d u e a lm ost en tirely to a d eclin e in in vest­

b o n d y ields q u ick e n e d n o tic e a b ly d u rin g the m o n th ; o n

m ent, w h ich has b e e n m o r e than su fficien t to o ffset the

Janu ary 2 2 the g o v e rn m e n t raised the m a x im u m interest

c on tin u ed ra p id e x p a n sio n o f c o n s u m p tio n an d e x p orts.

rate o n in su red m ortg a g es u n d er the N a tion a l H o u sin g A c t

5 V2

T h e c on sid era b le fall in bu ild in g activity and in n ew d o m e s ­

to 6 p e r cen t fr o m

tic ord ers fo r ca p ita l g o o d s w as attribu ted b y the b a n k to

oth er lo n g -te rm rates.

the tightness o f cred it an d o f the cap ital m arket, an d also

r e d u ce their h o ld in g s o f g ov ern m en t b o n d s in Janu ary;

to a w eak en in g o f the in d u cem en t to in vest sin ce profits

business loa n s rem a in ed at a rou n d the D e c e m b e r level.

in o r d e r to b rin g it in to line w ith
T h e ch a rtered ba n k s co n tin u e d to

h ave b e e n sq u eezed b y w a g e in creases that h av e n o t b e e n
pa ssed o n in h igh er p rice s. W h ile sh ort-term interest rates
h ave eased recen tly , the strin g en cy in the ca p ita l m arket,

E xchange

R ates

w h ich w as o n ly tem p ora rily a lleviated fo llo w in g the S ep tem ­

Sterling rates r o se n o tic e a b ly d u rin g Janu ary, A m e r ic a n -

b er d iscou n t rate d ecrea se, has b e e n cite d as a m atter o f c o n ­

a c c o u n t sterling m o v in g g ra d u a lly u p w a rd to $ 2 .8 0 1/s o n

cern b y the b a n k .

Janu ary 2 2 , the h igh est q u o ta tio n sin ce Ju n e 1 9 5 6 . I m p o r ­

O n the oth er h an d , sh ort-term b a n k

len din g to the p riv a te sector actu ally d e clin e d du rin g J u ly -

tant in strengthening the rate in a m a rk et relatively sh ort

N o v e m b e r, w h ile the liq u id ity o f the b a n k in g system has

o f sp ot sterling w ere fa irly substantial offerin g s o f dollars

g row n greatly as a result o f the co n tin u e d h ea v y in flu x o f

in L o n d o n , o n o c c a s io n b y o il in terests; a fu rth er fa c to r

fo re ig n ex ch a n g e.

w as general c o m m e r cia l d e m a n d in N e w Y o r k .

R e c e n tly the T rea su ry ag reed to the

A lth o u g h

c o n v e rs io n o f a fu rther b illio n m a rk s o f the B a n k d eu tsch er

the rate w ea k en ed som ew h a t o n Sir A n th o n y E d e n ’ s resig­

L a n d e r ’ s eq u a liza tion cla im s (s p e cia l fe d e ra l g ov ern m en t

n a tion o n Janu ary 9, the q u o ta tio n w as h e ld at $ 2 .7 9 1 4

d eb t arising fr o m the 1 9 4 8 c u rre n cy r e fo r m ) in to sh ort­

r e p o rte d ly b y officia l su p p ort op e ra tio n s . W h e n the m a rk et

term securities that m a y b e so ld o n the o p e n m arket.
In the U n ited K in g d o m , interest rates co n tin u e d the

rea cted fa v o r a b ly to the a p p oin tm en t o f H a r o ld M a cm illa n ,
the n ew P rim e M in ister, th e rate resu m ed its u p w a rd trend.

Seven su c­

Q u ota tion s again d e c lin e d som ew h a t in th e c lo sin g da ys

cessive declin es totalin g 0 .4 p e r cen t b rou g h t the average

o f the m on th w h en th ere w as fa irly g o o d d em a n d fo r d o l­

declin in g tren d that h a d b eg u n in D e ce m b e r .

T reasu ry b ill ten der rate to 4 .5 5 p e r cen t o n Janu ary 2 5 ;

lars in L o n d o n ; o n Jan u ary 31 A m e r ic a n -a c c o u n t sterling

this is the low est lev el sin ce the d is co u n t rate w as raised

w as q u o te d at $ 2 .7 9 2 % 2 .

to the presen t 5 V i p e r cen t last F eb ru a ry , an d c o m p a re s
w ith the y ea r’ s p ea k

of

5 .2 7 .

The

In the fo r w a rd m a rk et, d iscou n ts n a rro w e d sh arply d u r­

co n tin u e d rise in

in g m o s t o f the m o n th as c o m m e r cia l d em a n d in N e w

C o n s o l p rice s in January w as a lm ost sufficient to w ip e o u t

Y o r k , ch iefly fr o m o il an d m etal interests, rea d ily a b so rb e d

the entire d eclin e that o c c u r r e d in the first elev en m on th s

offerin g s o f fo r w a r d sterling; su ch activity, a c c o m p a n ie d

o f 1 9 5 6 ; o n January 3 1 , C o n s o ls y ie ld e d 4 .5 0 p e r cen t,

b y substantial offerin g s o f fo r w a r d d olla rs in L o n d o n , re ­

co m p a re d w ith 4 .7 6 at the en d o f D e c e m b e r an d a 2 5 -y e a r

d u ce d the d iscou n ts o n




three an d six m o n th s’ sterling

MONTHLY REVIEW, FEBRUARY 1957

18

2 13/32

fr o m
l

31/32

an d 4 13/32 cen ts, resp ectiv ely , to 3 % 2 and

E a rly in Janu ary the C a n a d ia n d olla r d r o p p e d b e lo w

o n Janu ary 2 2 , the latter b e in g the lo w e st since

the $ 1 .0 4 lev el, o n r e d u c e d d em a n d fr o m L o n d o n an d in

Janu ary 1 9 5 6 . D isco u n ts su bsequ en tly w id en ed , h o w e v e r,

resp on se to the C a n a d ia n P a c ific R a ilw a y strike.

an d at the m o n th en d s to o d at 1 % 6 and 2 % 6 .

m id m on th , h o w e v e r, the rate b e g a n to im p r o v e as th e

A

brisk d e m a n d fo r tran sferab le sterling, p rin cip a lly

A t th e

strike w as settled an d re n e w e d d e m a n d f o r the C a n a d ia n

fr o m sugar interests, m et w ith som ew h a t sm aller offerin g s

d olla r

fr o m the C on tin en t an d S ou th A m e r ic a ; tran sferab le ster­

q u en tly, the a n n ou n cem en t o f several n ew secu rity issues,

$ 2 .5 9 %

fr o m

L ondon

an d the C on tin en t.

S u b se­

to

as w ell as d em a n d fo r C a n a d ia n d olla rs fo r th e p u rch a se

S ecu rities sterling flu ctu a ted erra tically betw een

o f o il leases, fu rth er firm ed the q u o ta tio n to $ 1 . 0 4 % 6 at

lin g a c c o r d in g ly ro se du rin g January fr o m
$ 2 .7 6 8 5 .

ca m e

$ 2 .7 5 0 5

the m o n th en d.

an d $ 2 .6 5 o n in term ittent d em a n d .

TRENDS IN INTERNATIONAL RESERVES AND PAYMENTS IN 1956
G o ld an d d olla r h old in g s o f fo r e ig n cou n tries c o n tin u e d

ties an d in tern a tion a l in stitu tions— a som ew h a t sm aller

to g ro w in 1 9 5 6 , fo r the fifth c o n s e cu tiv e y e a r .1 A t the

p r o p o r t io n th an in 1 9 5 5 .

y ear en d , th ey re a ch e d som e 2 8 .3 b illio n dolla rs, o r a b ou t

g o ld requ irem en ts in the arts an d in du stry, an d oth er

2.1 b illio n m o r e than in D e c e m b e r 1 9 5 5 . L a st y ea r’ s rise

private d em a n d .

in su ch h old in g s w o u ld h av e b een , h o w e v e r, m u ch sm aller

T h e rem a in d er w en t to m eet

A s in 1 9 5 5 , a la rge p o r tio n o f last y e a r’ s fo r e ig n g o ld

h ad n o t the U n ited K in g d o m in D e c e m b e r d raw n 561 m il­

p r o d u c tio n w as so ld o n the L o n d o n g o ld m a rk et.

lio n d olla rs fr o m the In tern a tion al M o n e ta r y F u n d . A t the

A fr ic a n and oth er sterlin g-area p r o d u c e r s s o ld m o s t o f

D ecem ber

S ou th

1 9 5 6 lev el, fo r e ig n g o ld an d d o lla r h old in g s

their ou tp u t there, w h ile a n u m b er o f n on sterlin g p r o ­

w ere n early tw ice the m id -1 9 4 8 p o s tw a r lo w , and som e

d u cers lik ew ise d is p o s e d o f s o m e o f th eir o u tp u t in that

5 0 p e r cen t a b o v e M a r c h 1 9 5 2 w h en in tern a tion a l reserves

m arket. T h e p rin cip a l b u y ers c o n tin u e d to b e the W estern

b eg a n their cu rren t rise.

E u r o p e a n cen tra l ba n k s, bu t s o m e g o ld w as also so ld to
p riv ate o p e ra to rs , p a rticu la rly in th e M id d le an d F a r E a st.

T he F l o w

of

G old

and

T h e d olla r eq u iv a len t o f the L o n d o n g o ld p r ic e rem a in ed

D ollars

O f the 2.1 b illio n d o lla r rise in g o ld an d d o lla r h old in g s
a b ro a d , g o ld a c c o u n te d fo r som e 4 0 0 m illion , as against
6 3 0 m illio n in 1 9 5 5 .

B esid es in creasin g th eir m on eta ry

g o ld stock s, h o w e v e r, fo r e ig n cou n tries p a id g o ld to the
In tern a tion al M o n e ta r y F u n d and— fo r the first tim e sin ce
1 9 5 2 — so ld g o ld o n b a la n ce to the U n ited States.

G o ld

p a ym en ts to the I M F tota led a b o u t 85 m illio n d olla rs,
an d w ere m a d e either as p a rt o f certain m e m b e rs’ su b scrip ­
tions o r in fu lfilm en t o f rep u rch a se ob lig a tion s.

F o re ig n

cou n tries as a w h o le also so ld 8 0 m illion d o lla r s’ w orth
o f g o ld to the U n ited States, pu rch ases fr o m th e U n ited
States b y V e n e z u e la , F ra n ce , and a n u m b er o f oth er c o u n ­
tries h a v in g b e e n m o r e than offset b y sales to the U n ited
States b y A rg en tin a , the U n ited K in g d o m , an d som e oth er

a lm ost en tirely w ith in the ran ge o f the U n ited States b u y ­
ing an d selling p rice s o f $ 3 4 .9 1 2 5 an d $ 3 5 .0 8 7 5 p e r fine
o u n c e ($ 3 5 p lu s o r m in u s V4 p e r c e n t ) , at w h ich this
B a n k , actin g o n b e h a lf o f the U n ited States T rea su ry , dea ls
w ith fo r e ig n m o n e ta ry au th orities.

Sellers thus r e ce iv e d a

h igh er p r ic e in L o n d o n , w h ile fo r e ig n m o n e ta ry au th orities
g en erally fo u n d it ch ea p er to b u y g o ld there, rather th an
fr o m the U n ited States T rea su ry — to th e exten t, o f co u r s e ,
that sh ip p in g co sts d o n o t en ter in .
A s a result o f th ese v a riou s tran sa ction s, the officia l g o ld
reserves o f fo r e ig n cou n tries r o se last y ear b y so m e 4 0 0
m illion d olla rs to

1 4 .8

b illio n .

A t the sam e tim e, the

m on eta ry g o ld sto ck o f the U n ited States r o s e b y 3 0 5 m il­
lio n 2 to 2 2 .1 b illio n ; if a c c o u n t is ta k en o f the 1.7 b illio n
d o lla r s’ w orth o f g o ld h eld b y the I M F , the U n ited States

cou n tries.
T h e g o ld a d d e d to the m on eta ry reserves o f fo re ig n
cou n tries thus c a m e fr o m n ew o u tp u t and oth er sou rces

at the y ear en d h eld som e 5 7 p e r cen t o f th e w o r ld ’ s m o n e ­
tary g o ld reserves (e x c lu d in g th ose o f th e U S S R ) .

F o r e ig n g o ld p r o d u c tio n ( e x ­

F o r e ig n sh ort-term d o lla r h old in g s r o s e b y 1.7 b illio n

clu d in g the U S S R ) a m ou n ted to so m e 9 3 5 m illio n d ollars

d olla rs in 1 9 5 6 to 1 3 .5 b illion . O f this a m ou n t a b o u t 8 .0

last year, o r a b o u t 5 p e r cen t m o r e than in 1 9 5 5 , an in ­

b illio n w as h eld b y fo r e ig n m on eta ry au th orities, in part

ou tsid e th e U n ited States.

crea se that a lm ost w h o lly reflected e x p a n d e d o u tp u t in the

to m eet cu rren t e x ch a n g e requ irem en ts o r to in terven e in

U n io n o f S ou th A fr ic a .

T a k in g in to a c c o u n t the tran sa c­

fo r e ig n e x ch a n g e m arkets. T h e rem a in d er w as h eld la rg ely

tion s o f fo r e ig n cou n tries w ith the U n ited States and the

b y fo r e ig n c o m m e r cia l b a n k s a n d o th e r bu sin esses f o r

I M F n o te d a b o v e , a b o u t th ree fifths o f the n ew ou tpu t

carry in g ou t in tern a tion a l tran sa ction s.

O f the 1.7 b illio n

2
In addition to the net 1956 purchases of the United States from
foreign countries, which totaled 80 million dollars, the United States
1 For definition of gold and dollar holdings, see footnote to table. during March-October acquired 200 million dollars’ worth of gold
Changes in foreign gold and dollar holdings in earlier years were sur­
from the International Monetary Fund; the IMF’s purpose in making
veyed in the Monthly Revieiv for January 1951, and for February in
the sale was to invest the proceeds in United States Treasury bills in
each of the years following.
order to obtain some income to cover its operating deficits.
a b ro a d fo u n d its w a y in to the reserves o f m on eta ry a u th ori-




19

FEDERAL RESERVE BANK OF NEW YORK
S om e tw o

a p paren t fr o m the chart an d the table. A b o u t h a lf o f the

fifths o f the total rise to o k the fo r m o f p u rch ases o f sh ort­

total in crease o f 1.8 b illio n dolla rs d u rin g the first n ine

term U n ited States G o v e r n m e n t secu rities, an d an a d d i­

m on th s o f

tional tw o fifths the fo r m o f tim e an d d em a n d d ep osits,

details w ere ava ila b le at the tim e o f w ritin g ) w as a c c o u n te d

w ith the b a la n ce g o in g in to h old in g s o f b a n k e rs’ a c c e p t­

f o r b y C on tin en ta l W estern E u r o p e a n cou n tries; a m on g

an ces an d oth er c o m m e r c ia l p a p e r.

these, the in crease w en t m ostly to W est G e rm a n y and, to

in crease a b ou t h a lf w as in o fficia l h old in g s.

In a d d ition to these sh ort-term d o lla r assets, fo r e ig n

1956

(th e latest p e r io d fo r w h ich c o m p le te

a lesser exten t, Ita ly an d S w itzerlan d. O n the oth er h an d,

cou n tries h o ld U n ited States G o v e r n m e n t b o n d s an d n otes

F r a n c e ’ s reserves d e c lin e d rather sh arp ly :

w ith origin a l m aturities o f m o r e than o n e year. S u ch h o ld ­

sh ort-term d o lla r h old in g s fell b y 3 2 7 m illio n w h ile its

ings tota led s o m e 1.2 b illio n dolla rs in S ep tem b er 1 9 5 6 ,

h old in g s o f lo n g e r-te rm U n ited States G o v e r n m e n t secu ri­

o r a b ou t 1 5 0 m illio n less th an at th e beg in n in g o f the y e a r;

ties (n o t in clu d e d in the data sh ow n in the ta b le ) d r o p p e d

du rin g 1 9 5 5 , th ey h a d risen b y 5 6 0 m illion . F o r the greater

b y 1 4 4 m illio n .

part, th ey w ere h eld b y C a n a d a an d certain W estern E u r o ­

c ou n tries either rem a in ed r o u g h ly u n ch a n g ed o r sh ow ed
N eth erlan d s,

eserve

T h e h old in g s o f m o s t oth er E u r o p e a n

fu rther, alth ou g h m o d e ra te , in crea ses; the h old in g s o f the

pea n cou n tries.

R

its g o ld and

P o s it io n s

of

h o w e v e r,

d e c lin e d

n o tic e a b ly

du rin g

the

fou rth qu arter.

F o r e ig n C o u n t r ie s

A g g re g a te g o ld and U n ited States d olla r h old in g s o f the

L ik e th ose in p re v io u s years, the 1 9 5 6 gains in fo r e ig n
g o ld an d d o lla r h old in g s w ere u n ev en ly distribu ted , as is

sterling cou n tries in crea sed b y 2 2 3 m illio n du rin g the first
n ine m on th s o f the year.

H o w e v e r , the central g o ld an d

Foreign Gold and D ollar H oldings
(In m illions o f dollars)
December 1954

December 1953

December 1955

September 1956p

Area and country
Gold

United Kingdom and other sterling-area countries. .

Dollar
holdings

Total

Gold

Netherlands (and Netherlands W est Indies).........

Total

Gold

Dollar
holdings

Total

Gold

Dollar
holdings

Total

996

1,296

2 ,2 9 2

1,080

1,536

2 ,6 1 6

1,141

1 ,032

2 ,1 7 3

1 ,112

1,437

2 ,549

2 ,9 2 9

1,104

4 ,0 3 3

3 ,2 2 3

1,000

4 ,2 2 3

2 ,7 6 0

940

3 ,7 0 0

2 ,8 1 4

1,109

3 ,9 2 3

238
1,089
1,0 4 9 *
1 ,225
812
1 ,055
335
2 ,1 3 3
2 ,1 3 7

56
896
596*
626
346
820
265
1,513
1,452

273
148
732
1,373
579
298
141
672
841

329
1,044
1 ,3 2 8 *
1 ,999
925
1 ,118
406
2 ,1 8 5
2 ,2 9 3

61
1,048
881*
920
352
889
276
1,597
1 ,540

261
153
1 ,105
1 ,454
785
211
153
757
797

322
1,201
1,9 8 6 *
2 ,3 7 4
1 ,137
1 ,100
429
2 ,3 5 4
2 ,3 3 7

61
1,097
881*
1 ,294
360
878
263
1 ,634
1,551

276
167
778
1,805
925
238
190
812
923

337
1 ,264
1 ,6 5 9 *
3 ,0 9 9
1,285
1 ,116
453
2 ,4 4 6
2 ,4 7 4

Continental Western Europe:
Belgium-Luxembourg (and Belgian C ongo)..........
France (and dependencies)............................................
W est Germ any...................................................................

Dollar
holdings

47
865
596*
326
346
761
218
1 ,459
1,293

191
224
453
899
466
294
117
674
844

T otal. ................................................................................

5,9 1 1

4 ,1 6 2

10,073

6 ,5 7 0

5 ,0 5 7

11,627

7 ,5 6 4

5 ,676

13,240

8 ,0 1 9

6 ,1 1 4

14,133

Eastern Europe X.....................................................................

290

16

306

290

19

309

289

19

308

275

12

287

371
321
158
373
696

130
J02
183
222
1,061

501
423
341
595
1,757

371
322
62
403
677

160
120
329
194
1 ,035

531
442
391
597
1,712

371
323
142
403
614

138
143
414
265
976

509
466
556
668
1 ,5 9 0

258
323
166
403
585

141
259
396
405
1,034

399
582
562
808
1 ,619

1,919

1,698

3 ,6 1 7

1 ,835

1 ,838

3 ,6 7 3

1,853

1,936

3 ,7 8 9

1,735

2 ,2 3 5

3 ,9 7 0

Japan................................................... ..................................
Philippines............................................................................

145
123
9
388

39
828
295
475

184
951
304
863

81
126
9
416

100
725
257
510

181
851
266
926

81
128
16
427

174
901
252
645

255
1 ,029
268
1,072

46
128
20
427

158
1,075
278
679

204
1 ,203
298
1 ,106

Total...................................................................................

665

1 ,637

2 ,3 0 2

632

1 ,592

2 ,2 2 4

652

1 ,972

2 ,6 2 4

621

2 ,1 9 0

2 ,8 1 1

178

106

284

178

111

289

178

147

325

178

130

308

12,888

10,019

22 ,9 0 7

1 3,808

11,153

24,961

14,437

11,722

26,159

14,754

13,227

27,9S1

Latin America :§

Venezuela..............................................................................
T o t a l . . . . . ........................................................................
Asia:§

Grand total......................................................................

Note: In this table, "gold ” covers reported and estimated gold reserves of central banks and governments (excluding the USSR) and of the Bank for International Settle­
ments and the European Payments Union (but not other international institutions). “ Dollar holdings” consist primarily of sight and time deposits, short-term
United States securities, and bankers’ acceptances, as reported by United States banks, and comprise the oflBcial and private holdings in the United States of
foreigners, including the USSR, the Bank for International Settlements, and the European Payments Union (but not other international institutions). In addition,
foreigners held longer-term United States Government bonds and notes with an original maturity of more than one year, which are not included in the table; these
are estimated to have amounted to 1,154 million in September 1956, 1,308 million in December 1955, 746 million in December 1954, and 806 million in December
1953.
p Preliminary.
* For France, only the gold reserves of the Bank of France are included; beginning with December 1955, jia ta include certain previously unreported French gold re
serves, which are included for earlier dates under “ Continental Western Europe— Other” ,

f Including principally the gold and dollar holdings of the Bank for International Settlements, of the European Payments Union, and of Denmark, Finland, Greece,
Norway, Portugal and its dependencies, Spain and its dependencies, Turkey, and Yugoslavia, and also estimates of unreported gold reserves, as well as the gold
still to be distributed by the Tripartite Gold Commission.
X Including the dollar holdings, but not the gold reserves, of the USSR.
§ Excluding sterling, French-franc, and Dutch-guilder areas.




MONTHLY REVIEW, FEBRUARY 1957

20

o fficia l d o lla r assets h eld b y the U n ited K in g d o m as the

States an d C a n a d a (th e interest itself w as p a id in to sp ecia l

sterling a rea’ s ba n k er, w h ich ro se du rin g Ja n u a ry-Ju ly b y

a ccou n ts p en d in g c o n s id e ra tio n o f the w a iv er o f interest

2 8 5 m illion , d e clin e d 4 4 0 m illion d u rin g A u g u s t-N o v e m b e r,

sou gh t b y the B ritish G o v e r n m e n t ).

to 1 ,9 6 5 m illion , desp ite the r e ce ip t o f 1 7 7 m illio n fr o m
the sale o f
firm .
w h ich

a B ritish o il c o m p a n y to

C a n a d a a d d e d sign ifican tly to its tota l g o ld an d U n ite d

States

States d o lla r h old in g s as its rising fo r e ig n trad e d eficit w as

B e h in d this la rge loss w ere pressures o n sterling

m o re than offset b y an in flow o f ca p ita l; the U n ited States-

w ere

p s y c h o lo g ic a l

rather

a U n ited

than

c o m m e r cia l

in

C a n a d ia n

d o lla r e x ch a n g e rate, w h ich h a d

stood

o n ly

ch a ra cter. A c tu a lly , B ritain ex p a n d e d its ex p o rts b y n early

slightly a b o v e p a r d u rin g the earlier pa rt o f the y ear,

10 p e r cen t in 1 9 5 6 w h ile m ain taining im p orts relatively

gra d u a lly ro se to U .S .$ 1 .0 4 at the year en d.

stable, w ith the result that it h a d a b a la n c e -o f-p a y m e n ts

h old in g s o f L a tin A m e r ic a n cou n tries r o se som ew h a t, b u t

surplus o n cu rren t a c c o u n t; the ov ersea s sterling c o u n ­

m ost o f the in crease w en t to B razil and V e n e z u e la ; A r g e n ­

tries

tine an d C o lo m b ia n h old in g s d e clin e d .

as a w h o le

also

seem ed

w ith n on sterlin g cou n tries.

in

a p p ro x im a te

b a la n ce

A g g r e g a te

T h e in crease in

T h e drain o n reserves thus

the g o ld an d d olla r h old in g s o f n on sterlin g A s ia n cou n tries

a p p ea red to b e attribu table m a in ly to th e s o -c a lle d “ leads

w as m a in ly a c c o u n te d fo r b y Ja p an an d the P h ilip p in es.

and la g s” in the tim in g o f c o m m e r cia l pa ym en ts an d to
oth er sp ecu lativ e pressures, m o r e p a rticu la rly after the o u t­
b re a k o f the M id d le E a st crisis in Ju ly ; su ch fa cto rs are,

F a c t o r s in

the

G r o w t h o f F o r e ig n R e s e r v e s

A t the b eg in n in g o f

A b o u t o n e fifth o f last y e a r’ s rise in fo r e ig n g o ld and

D e ce m b e r , the I M F , h o ld in g B rita in ’ s trad in g p o s itio n

sh ort-term d o lla r h old in g s w as a c c o u n te d fo r , as a lrea d y

to b e fu n d a m en ta lly sou n d , and also n otin g the im p o r ­

n oted , b y accru a ls o f g o ld fr o m n ew p r o d u c tio n an d fr o m

tan ce

o th er sou rces ou tsid e the U n ited States.

o f c o u rse , p oten tia lly self-rev ersin g.

of

sterling as a w o r ld -w id e

reserve

an d trading

T h e rem a in d er

cu rren cy , gra n ted su p p ort to sterling b y a llow in g B ritain

origin a ted to an im p orta n t exten t in tran sa ction s w ith the

to d raw im m ed ia tely u p to 56 1 m illio n dollars o f its 1.3

U n ited States, w h ich as in earlier years w ere th e largest

b illion d olla r I M F q u o ta an d b y arranging fo r a stan d -by

single fa c to r affectin g fo r e ig n g o ld an d d olla r reserves; in

cred it under w h ich B ritain m a y d raw w ith in the n ext tw elv e

part, last y ea r’ s o v e r-a ll in crease also reflected tran sa ction s

m on th s o n the rem ain in g 7 3 9 m illio n o f the q u ota . T o w a r d

w ith in tern a tion a l fin an cial institutions.

the year en d, the U n ited States E x p o r t-Im p o r t B a n k e x ­

D u rin g the first th ree quarters o f the year, a c c o r d in g to

ten d ed to the U n ited K in g d o m a lin e o f cred it o f 5 0 0 m il­

p relim in a ry data, fo r e ig n cou n tries re ce iv e d 1 9 .0 b illio n

lio n dolla rs f o r the p u rch a se o f U n ited States p r o d u cts ,

dollars as the result o f U n ited States p u rch a ses o f fo r e ig n

against colla tera l o f A m e r ic a n securities that h a d b een h eld

g o o d s an d services, e c o n o m ic aid an d oth er ou tla ys b y the

by the B ritish E x ch a n g e E q u a liza tio n A c c o u n t sin ce 1 9 4 0 .

U n ited States G o v e rn m e n t, a n d a n et ca p ita l o u tflo w o n

A s a result o f B rita in ’ s draw in g o n the I M F , its o fficia l g o ld

b o th U n ited States G o v e r n m e n t an d priv a te a c c o u n t; th ey

and d o lla r h o ld in g s r o se b y

m illion in D e c e m b e r

also ob ta in ed , as alrea d y n o te d , an a d d ition a l 8 0 m illio n

desp ite losses in cu rred in su p p ortin g sterling b e fo r e the

th rou g h n et g o ld sales to the U n ited States T rea su ry . O n

a n n ou n cem en t o f I M F assistance, as w ell as the y e a r-e n d

the oth er h an d, p u rch a ses b y fo r e ig n cou n tries o f U n ited

168

p a ym en ts o n B ritish p ostw a r in d ebted n ess to the U n ited

States g o o d s an d serv ices a m ou n ted to 1 6 .9 b illio n .

F or­

eig n cou n tries thus h a d a n et r e c o r d e d surplus o f so m e
2 .2 b illio n d olla rs in their relation s w ith the U n ited States,

GOLD AND DOLLAR HOLDINGS
OF SELECTED COUNTRIES AND AREAS

w h ich th ey u tilized m a in ly to b u ild u p their d o lla r h o ld ­
in gs, p u rch a se U n ited States c o r p o r a te secu rities, an d in ­
crea se their d irect in vestm ents in the U n ited States.
A s in 1 9 5 5 , U n ite d States ex p o rts r o se strikingly, h a n d
in h a n d w ith th e fu rth er e x p a n sio n o f e c o n o m ic activity
th rou g h ou t m u ch o f the w o rld . M e rc h a n d ise e x p o rts ( e x ­
clu d in g sh ipm ents u n d er m ilitary g ra n ts) in crea sed fr o m
1 0 .4 b illio n in Ja n u a ry -S ep tem b er 1 9 5 5 to a r e c o r d le v e l
o f 1 2 .4 b illio n fo r the sam e m on th s o f 1 9 5 6 , o r b y n early
2 0 p e r cen t.

U n ited States im p orts also r o se to a r e c o r d

lev el last y ear— to 9 .6 b illio n in Ja n u a ry -S ep tem b er 1 9 5 6
fr o m 8 .4 b illio n a y ear earlier— u n d er the im p a c t o f the
high lev el o f d o m e stic e c o n o m ic a ctivity.

T h e rise in im ­

ports, h o w e v e r, h av in g b e e n less th an in

1950

1951

1952

1953

1954

1955

* Excluding sterling, French-franc, and Dutch-guilder areas.




1956

e x p o rts, the

U n ited States m erch a n d ise trad e surplus r o se fr o m 2 b il­
lio n in J a n u a ry -S ep tem b er 1 9 5 5 to 2 .8 b illio n d u rin g the
co rr e sp o n d in g p e r io d o f 1 9 5 6 .

FEDERAL RESERVE BANK OF NEW YORK

21

In c o m e d eriv ed fr o m U n ited States in vestm ents a b ro a d

U n io n settlem ents, an d B elg iu m 1 5 9 m illio n ; o n th e oth er

and oth er cu rren t receip ts fr o m a b ro a d also in crea sed su b ­

han d, F r a n ce and the U n ited K in g d o m m a d e substantial

stantially last year, bu t w ere m o r e than o ffset b y r e c o r d

paym en ts to the E P U

tourist an d tran sp ort expen d itu res, b y en la rged U n ited

F u rth erm ore, d o lla r p a ym en ts are m o r e freq u en tly m a d e

States G o v e r n m e n t ou tla ys o n

than in earlier years in settlem ents a m o n g fo r e ig n cou n tries

m ilitary c o n s tr u c tio n in

foreig n cou n tries, an d b y the ex p en d itu res o f th e U n ited
States d efen se fo r c e s ov ersea s.

in resp ect o f n o n d o lla r trade.
T he Pa tter n

in

J a n u a ry -S ep tem b er

1956,

th ey

of

T rade

and

Paym ents

L i b e r a l iz a t i o n

d olla r in c o m e to a n u m b er o f fo r e ig n cou n tries; at 2 .2
d olla rs

m illio n an d 2 0 2 m i llio n ).

T h e se U n ited States G o v ­

ernm ent ou tla ys co n tin u e d to b e an im p orta n t s o u rce o f
b illion

(4 8 5

w ere

D esp ite r en ew ed o r in crea sed b a la n c e -o f-p a y m e n ts diffi­

equ iv alen t to o v e r o n e fifth o f the dolla rs p a id b y the

culties o f certain cou n tries, the freer pattern o f trad e and

U n ited States fo r all its m erch a n d ise im p orts. F o r W estern

p a ym en ts that h a d em e rg e d in recen t years w as largely

E u ro p e a n cou n tries a lon e th ey w ere eq u a l to o v e r 6 0 p e r

m a in tain ed in 1 9 5 6 .

cen t o f U n ited States im p orts fr o m these cou n tries.

in this d ire ctio n — at least p r io r to the o u tb re a k o f the

U n ited States e c o n o m ic an d oth er aid grants w ere n early
2 5 0 m illion d olla rs lo w e r in J a n u a ry -S ep tem b er 1 9 5 6 than

In fa ct, fu rth er a d va n ces w ere m a d e

M id d le E a stern crisis in m id y ea r.

In the latter pa rt o f

the year, it is true, th ere w ere scattered in stan ces o f som e

a y ear earlier, p rim a rily as a result o f the d iscon tin u in g

tightening o f d irect c o n tro ls o v e r trad e an d p a y m en ts; bu t

o f n ew a lloca tion s o f e c o n o m ic aid to W estern E u r o p e a n

m ost o f the fo r e ig n cou n tries c o n c e r n e d e n d e a v o re d to

cou n tries oth er than G re e c e , Spain, an d Y u g o sla v ia .

On

c o p e w ith the d eteriora tion in their b a la n ces o f pa ym en ts

the oth er h an d, the o u tflo w o f cap ital o n G o v e r n m e n t a c ­

b y m on eta ry and fiscal m easu res, an d d id n o t relapse in to

co u n t in crea sed b y 2 2 3 m illio n — to a la rge exten t b e ca u se

the m o r e stringent d irect c o n tro ls that h a d ch a ra cterized

o f shipm ents a b ro a d o f surplus agricu ltural c o m m o d itie s

the earlier p ostw a r years.

against lo c a l cu rre n cy pa ym en ts.

In W estern E u r o p e , m o r e pa rticu la rly , fu rth er ad va n ces

A p a rticu la rly im p orta n t fa c to r in last y e a r’ s b a la n c e -o f-

w ere m a d e last y ea r b y a n u m b er o f cou n tries in relaxin g

p a ym en ts d ev elop m en ts w as the o u tflo w o f priv ate ca p ita l

their rem ain in g d iscrim in a tory co n tro ls o v e r d o lla r im p orts.

— 1.9 b illio n dolla rs in J a n u a ry -S ep tem b er 1 9 5 6 , as against

W est G erm a n y , Italy, an d S w ed en sign ifican tly in crea sed

0 .7 b illio n a y ear earlier.

A m o n g the m o r e sizable in d i­

their earlier lib era liza tion o f d o lla r im p orts, w h ile N o r w a y

vidu al tran sa ction s w ere the p r e v io u s ly n o te d p u rch a se o f

to o k its first p o s tw a r step to w a rd freein g d o lla r trade. A s

a B ritish o il c o m p a n y b y a U n ited States firm , the p u rch a se

a result o f these an d earlier lib era liza tion m easu res, som e

of

9 0 p e r cen t o f d olla r im p orts h av e b e e n fr e e d in B elgiu m ,

o il co n c e s s io n s

C a n a d ia n p ip elin e.

in V e n e zu e la ,

and in vestm en t in

a

T h e re also w as a co n tin u e d o u tflo w

G erm a n y , N o r w a y , an d Sw itzerlan d, an d o v e r 5 0 p e r cen t

o f p o r tfo lio capital, ch iefly in the fo r m o f C a n a d ia n b o n d

in D en m a rk , S w eden , P ortu g a l, and the U n ited K in g d o m .

issues.

T h e exten t o f the d o lla r lib era liza tion a ch iev ed in W estern

T h e g o ld an d d olla r h o ld in g s o f fo r e ig n cou n tries also
in creased b e ca u se o f receip ts o f dolla rs fr o m

the I M F

E u r o p e has c o n trib u te d to the ex p a n sio n o f U n ited States
e x p orts to that area d u rin g recen t years. In L a tin A m e r ic a

an d the In tern a tion al B a n k f o r R e c o n s tr u c tio n and D e v e l­

an d in oth er fo r e ig n cou n tries, th ere has b e e n relatively

op m en t.

less d iscrim in a tion against d o lla r im p orts.

T h e B ritish d ra w in g o n the I M F has already

b een m e n tio n e d ; a m o n g oth er cou n tries that d rew o n the

W estern E u ro p e a n cou n tries d u rin g 1 9 5 6 a lso lib era liz ed

I M F last y ear w ere In d o n e s ia ( 5 5 m illion d o lla r s ), Iran

fu rth er their in tra -E u ro p e a n tra d e; in m ost o f th ese c o u n ­

T h e In tern a­

tries a b o u t 9 0 p e r cen t o f the im p orts fr o m oth er cou n tries

tional B a n k d isb u rsed 8 4 m illio n dollars ( n e t ) o n loa n s

( 1 7 .5 m illio n ), an d B u rm a ( 1 5 m illio n ).

pa rticip atin g in the O rg a n iza tio n fo r E u r o p e a n E c o n o m ic

du ring the y ea r e n d e d S ep tem b er 1 9 5 6 .

O n the oth er

C o o p e r a t io n an d their ov ersea s territories h a v e n o w b e e n

hand, fo r e ig n cou n tries m a d e p a ym en ts to the I M F , b oth

freed . D u rin g the yea r, six C on tin en ta l W estern E u ro p e a n

fo r the p a y m en t o f their su b scrip tion s, as b y A rg en tin a ,

cou n tries stu d ied the fo r m a tio n o f a “ c o m m o n m a rk et” ,

and fo r the rep u rch a se o f their cu rren cies, as b y F ra n ce

p ro v id in g

and In d ia . F o r e ig n cou n tries also m a d e pa ym en ts in d o l­

a m o n g the p a rticipan ts an d fo r the estab lish m en t o f a

lars as pa rt o f their su b scrip tion to the n ew ly establish ed

c o m m o n tariff to w a rd oth er cou n tries; the U n ited K in g d o m

In ternation al F in a n ce C o r p o r a tio n . T o ta l p a ym en ts to in ­

a n n o u n ce d that it w as co n s id e rin g lim ited a ssocia tion , in

fo r

th e p rog ressiv e

elim in a tion

of

all tariffs

tern ational institutions, h o w e v e r, w ere m u ch sm aller than

a “ fre e trade a rea ” , w ith the “ c o m m o n m a rk et” cou n tries

the receip ts o f dollars fr o m these institutions.

an d oth er cou n tries o f W estern E u r o p e . T h e U n ited States

T h e in ternation al reserves o f in d iv id u a l cou n tries are
also

sign ifican tly a ffected b y g o ld

an d d o lla r transfers

has

in d ica te d

that

it w e lc o m e s

su ch

arran gem ents

to

strengthen the E u r o p e a n e c o n o m ie s , p r o v id e d th ey lea d

a m on g th em selves. W est G erm a n y thus r e ce iv e d 7 5 0 m il­

tow a rd the ex p a n sion o f trad e n o t o n ly a m o n g the p a rtici­

lio n dollars as the result o f its m on th ly E u r o p e a n P ay m en ts

pants bu t also w ith oth er countries*




MONTHLY REVIEW, FEBRUARY 1957

22
C o n c l u d in g

cou n tries h av e b e e n raised to m o r e a d eq u a te lev els and

R emarks

T h e g o ld and d o lla r reserve p o s itio n s o f fo r e ig n cou n tries
thus h a v e b e e n ch a ra cteriz ed d u rin g the recen t past b y tw o
m a jo r d e v e lo p m e n ts .

there is less n e e d o f m ain tain in g d irect c o n tro ls o v e r im ­
ports fo r b a la n c e -o f-p a y m e n ts con sid era tion s.
M a n y cou n tries, h o w e v e r, h av e e x p e rie n c e d ren ew ed

A g g re g a te g o ld and d o lla r h old in g s

h ave c o n tin u e d to rise at a p a c e com m en su ra te w ith the

or

g en eral e x p a n sio n o f in ternation al trade as w ell as o f the

so m e cases h av e b r o u g h t a b o u t siza b le g o ld an d d o lla r

in crea sed

b a la n c e -o f-p a y m e n ts

difficu lties,

w h ich

in

fo r e ig n trade o f the U n ited States; at the sam e tim e, h o w ­

losses.

ev er, the a d d ition s to g o ld and d o lla r reserves h ave g o n e to

n o t w o r ld -w id e , and fu rth erm ore h av e greatly v a ried in

T h e v ery fa c t that th ese strains and stresses are

a rather sm all n u m b er o f cou n tries, last year p rin cip a lly to

s c o p e an d ch a ra cter as b e tw e e n cou n tries, sh ow s that th ey

W est G erm a n y , C a n a d a , and V e n e zu e la . M a n y oth er c o u n ­

are attribu table p rim a rily to d ifferen ces in th e u n d erly in g

tries, it is true, h ave also a d d ed som ew h a t to their reserves;

e c o n o m ic co n d itio n s in the cou n tries c o n c e r n e d , n o ta b ly

b u t oth ers, m o r e p a rticu la rly the U n ited K in g d o m , F ra n ce,

differen ces in the exten t o f the in flation ary rise in d em a n d ,

the N eth erlan d s, as w ell as a n u m b er o f L a tin A m e rica n

as w ell as p r ic e an d c o s t disparities.

an d n onsterlin g A s ia n cou n tries, h ave lost reserves. R e c e n t

oth er

d ev elop m en ts in in tern a tion a l reserve p o s itio n s h ave thus

bank ers an d traders m a y a llo w their w o rk in g b a la n ces in

b een at the sam e tim e en cou ra g in g an d d isa p p oin tin g.

so m e cu rre n cy to run d o w n fo r fe a r o f e x ch a n g e d e p r e cia ­

T h e y h ave b een en cou ra g in g in that the reb u ild in g in
recen t years o f g o ld and d olla r h o ld in g s o f m a n y cou n tries
is a h ealth y sign o f a gra du a l stren gth enin g o f their b a l­
a n ces o f p a ym en ts— the stren gth enin g b ein g itself the o u t­
com e

of

g ro w in g

agricu ltural,

m in eral,

and

industrial

ou tp u t an d o f a m u ch better b a la n ce in their d o m e stic
e c o n o m ie s than du rin g the earlier p ostw a r years.

The

U n ited States has c o n trib u te d to the e c o n o m ic grow th o f
oth er cou n tries, and to the r e in fo rce m e n t o f their b a la n ces
o f p a ym en ts an d in tern a tion a l reserves, b y steadily in crea s­
ing its im p orts an d oth er cu rren t expen d itu res a b ro a d as
w ell as its e x p orts o f priv ate cap ital. U n ited States G o v e r n ­
m ent ou tla ys o n a c c o u n t o f “ d efen se su p p o rt” an d oth er
aid p rog ra m s, as w ell as m ilitary exp en d itu res a b roa d ,
have also b e e n im p orta n t. A p a r t fr o m these U n ited States
G o v e r n m e n t ou tla ys, h o w e v e r,

all tran sa ction s th rou g h

w h ich fo r e ig n cou n tries are acqu irin g dolla rs rest o n the
firm fo u n d a tio n o f g row in g U n ited States trad e an d p r i­
vate in vestm ent a b ro a d .

T h e fu rth er b u ild -u p

o f g o ld

an d fo r e ig n e x ch a n g e reserves b y fo r e ig n cou n tries is an
essential prereq u isite fo r freer an d less d iscrim in a tory trade
an d pa ym en ts, w h ich is o n e o f th e m a in o b je ctiv e s o f
U n ited States in ternation al e c o n o m ic an d fin an cial p o licie s .
In fa ct, m a n y fo r e ig n cou n tries h a v e alrea dy r e d u ce d their
trade and p a ym en ts restriction s in o r d e r to secu re m ore
d o lla r g o o d s , an d this freein g o f im p orts ca n b e e x p e cte d
to c on tin u e, n o w that g o ld and d o lla r reserves in m any

n o n e c o n o m ic

fa c to r s

are

also

P s y c h o lo g ic a l and
im p orta n t,

since

tion o r o n the co n tra ry m a y in crea se th em in the e x p e cta ­
tion o f an e x ch a n g e a p p re cia tio n .

L a st y ear, sterling and

the G erm a n m a rk w ere p a rticu la rly a ffected b y su ch sh ift­
ing ex p ecta tion s.
S in ce p a ym en ts d ifficu lties h av e thus b e e n c o n fin e d to
certain in d iv id u a l cou n tries, th ey c a n b e d ea lt w ith p r i­
m a rily b y the cou n tries c o n c e r n e d , o n th eir o w n in itiative
an d resp on sib ility .

M a n y cou n tries, in d e e d , are cu rren tly

en d e a v o rin g to cu rb in flation ary pressures an d restore a
su stainable b a la n ce in their trad e an d p a ym en ts.

The

B ritish G o v e r n m e n t has m a d e cle a r that it in ten ds to k e e p
the rate o f the p o u n d sterling at its existin g p a rity an d that
it d o e s n o t p r o p o s e to re im p o s e an y o f the c o n tr o ls o f
fo r e ig n trade an d p a ym en ts that it h ad p r e v io u s ly r e m o v e d .
A t the sam e tim e, it is m a in tain in g m on eta ry , fisca l, an d
o th er p o lic ie s d esig n ed to restrain d em a n d an d m o d e ra te
the rise in co sts an d p rice s, in an e ffort to sa fegu ard ex p o rts
an d strengthen c o n fid e n c e in sterling. O th er cou n tries, t o o ,
are en d e a v o rin g to restrain ex cessiv e d em a n d , w ith p r in c i­
pa l em p h asis o n

m o n e ta ry

an d fisca l p o lic ie s .3

T h e se

efforts, tog eth er w ith the greatly in crea sed strength o f m a n y
e c o n o m ie s o v e r o n ly a fe w years a g o, g iv e g rou n d s fo r h o p e
that the cou n tries that h a v e recen tly b e e n e x p e rie n c in g
d ifficu lties w ill s u c ce e d in restorin g a b etter e c o n o m ic
b a la n ce w ith in a fr a m e w o r k o f e x p a n d in g w o rld trad e.
3 For a discussion of recent monetary conditions and policies in
foreign countries, see "A Year of Monetary Restraint Abroad” , in
the Monthly Review, November 1956.

DEPARTMENT STORE TRADE
S h op p ers spent m o r e m o n e y in the n a tio n ’ s dep a rtm en t

F ed era l R e s e rv e D istricts, w h ere in du stry, p o p u la tio n , an d

stores in 1 9 5 6 than in any p re v io u s y ear. T h e y p u rch a sed

in co m e s w ere e x p a n d in g ra p id ly .

m o re g o o d s than th ey ev er h a d b e fo r e .

T h e y also p u r­

largest relative in creases w as in th e N e w Y o r k D istrict.

ch a sed b etter qu ality an d h igh er p r ic e d m erch a n d ise, and

D ep a rtm en t store sales h ere r o se 6 p e r cen t last year, c o m ­

th ey b o u g h t m o r e o n tim e.

H o w e v e r , n o t all parts o f the

p a red w ith 4 p e r cen t f o r the co u n tr y as a w h o le . In fa c t,

c o u n try sh ared to the sam e d eg ree in th e sales in creases.

the 1 9 5 6 in crea se w as the largest sales gain in this D istrict

In m o s t p ostw a r years, the p rin cip a l in creases in d ep a rt­

sin ce the early p o s tw a r p e r io d w h en th e re m o v a l o f w artim e

m en t store sales o c c u r r e d in the sou th ern and sou th w estern

restraints o n the p r o d u c tio n o f co n s u m e r g o o d s g a v e rise

parts o f the co u n try , the A tla n ta , D a lla s, and R ic h m o n d

to a h ea v y u psu rg e in sales.




B u t in 1 9 5 6 o n e o f the

23

FEDERAL RESERVE BANK OF NEW YORK
D esp ite last y e a r’ s fa v o r a b le sh ow in g, h o w e v e r, the le v e l

o v e r, this te n d e n cy o f the p u b lic to b u y h igh er p r ic e d g o o d s

1 9 5 6 still

w as ev id en t w ith in the c o m p o n e n ts o f the m a in store itself.

sh ow ed the sm allest im p ro v e m e n t o v e r the 1 9 4 7 -4 9 av er­

T h e largest sales in crea se in 1 9 5 6 o c c u r r e d in h om e fu rn ish ­

age o f an y F e d e ra l R e s e rv e D istrict. T h e in d e x o f sales fo r

ings w h ich in clu d e a h e a v y p r o p o r t io n o f “ b ig tick e t” item s,

the co u n try as a w h o le fo r 1 9 5 6 w as 125 o n th e 1 9 4 7 -4 9

su ch as fu rn itu re, rugs, te le v is io n an d r a d io sets, refrig era ­

o f dep a rtm en t store sales in this D istrict in

b a se; in this D istrict, it w as 1 1 3 .

T h u s, w h ile S e c o n d

tors, an d w ashers.

A n a b o v e -a v e r a g e sales gain a lso w as

D istrict dep a rtm en t stores w ere able to ca tch u p som ew h a t

registered in w o m e n ’ s an d m isses’ re a d y -to -w e a r ap parel.

in 1 9 5 6 , in term s o f p o s tw a r g row th th ey still la g g ed far

T h e sm allest y ea rly in creases, o n the oth er h an d , w ere
sh ow n in d epa rtm en ts sellin g p ie c e g o o d s an d h o u s e h o ld

beh in d stores in oth er parts o f the cou n try .
W ith in th e S e c o n d D istrict, there w ere a lso w id e d iffer­
en ces in th e rate o f sales g row th in 1 9 5 6 .

A lth o u g h all

textiles an d w o m e n ’ s an d m isses’ r e a d y -to -w e a r a ccessories,
w h ich , relatively, are lo w e r p r ic e d m erch a n d ise.

areas o f the D istrict sh o w e d sales gains in 1 9 5 6 , the great­

T h e d o lla r a m ou n t o f in v en tories o n h a n d an d o f n ew

est in creases o c c u r r e d in the su bu rba n section s o f the

o rd ers r o se to n e w h igh s d u rin g 1 9 5 6 in b o th the S e c o n d

m e tro p o lita n areas o f N e w Y o rk -N o r th e a s te r n N e w Jersey

D istrict an d th e n a tion as a w h o le , bu t the in creases g en ­

an d B u ffa lo . D ep a rtm en t stores in eastern L o n g Islan d an d

erally p a ra lleled th ose o f sales, so that the ra tio o f b o th

in W estch ester C o u n ty w ere m a jo r gain ers, w ith an ag g re­

stock s an d n ew ord ers to sales sh o w e d little ch a n g e in

gate sales in crea se o f 3 6 p e r cen t, an d the stores o n the

either the D istrict o r co u n tr y fr o m 1 9 5 5 to 1 9 5 6 . W ith in

ou tskirts o f the cities o f B u ffa lo an d N ew a rk sh o w e d gains

the D istrict the ra tio o f stock s to sales a lso sh o w e d little

o f 16 p e r cen t an d 10 p e r cen t, resp ectiv ely . T h e sm allest

ch a n g e either g e o g r a p h ic a lly o r fo r the m a jo r ca teg ories

in creases w ere g en erally sh ow n b y the d o w n to w n areas o r

o f m erch a n d ise.
C r e d it S a l e s

the areas w ith in city lim its.
B in g h a m ton , an d N e w Y o r k -N o r th e a s te r n N e w Jersey,

C on su m ers’ u se o f cre d it in b u y in g dep a rtm en t store

w ith sales in creases o f 9 an d 7 p e r cen t, resp ectiv ely , w ere

m erch a n d ise co n tin u e d to rise in this D istrict in 1 9 5 6 . T h e

the o n ly m e tro p o lita n areas to sh ow a rise in 1 9 5 6 better

p r o p o r t io n o f tota l sales m a d e o n tim e has b e e n e x p a n d in g

than th e average f o r the D istrict.

steadily sin ce the en d o f th e w ar, alth ou g h the y e a r -to -y e a r

Syracu se, B u ffa lo , and

R o c h e s te r m e tro p o lita n areas, w h ere the steel strike last

ch a n g es in the share o f tota l sales m a d e fo r ca sh an d fo r

Ju ly p r o b a b ly h a d an im p orta n t im p a c t u p o n co n s u m e r

cred it g en era lly h a v e b e e n sm all. S in ce 1 9 5 2 , cred it sales

in co m e s, sh o w e d in creases o f o n ly 2 to 4 p e r cen t, as

h av e con stitu ted a la rger p r o p o r t io n o f total sales than th ey

T a b le I in dicates.

S in ce 1 9 4 7 , h o w e v e r, the m etrop olita n

d id in an y p rew a r year. In 1 9 5 6 , ca sh sales a c c o u n te d fo r

areas o f S yracuse, B u ffa lo , an d R o c h e s te r h av e sh ow n

5 4 p e r cen t o f tota l sales, c o m p a r e d w ith 55 p e r cen t in

the

largest

in creases

in

the

D istrict.

In

these

areas,

1 9 5 5 , w h ile cre d it sales rep resen ted the b a la n ce— 4 6 p er

w h ere in co m e s d e p e n d to a la rge exten t u p o n activity in

ce n t o f the total in 1 9 5 6 an d 4 5 p e r cen t in 1 9 5 5 .

d u ra b le g o o d s m a n u fa ctu rin g , th e e x p a n sio n in sales o v e r

co m p a ra b le p r o p o r tio n s in

the past n in e years has a b o u t e q u a le d th e n a tion a l average.

4 0 p e r cen t, re sp ectiv ely , w h ile the 1 9 4 4 an d 19 4 5 w artim e

T h e lev el o f sales in th ese th ree m e tro p o lita n areas in 1 9 5 6
w as 12 4 o r 125 p e r cen t o f th eir 1 9 4 7 -4 9 average. In c o n ­
trast, 1 9 5 6 sales in the N e w Y o r k -N o r th e a s te r n N e w Jersey

The

19 41 w ere 6 0 p e r cen t and

Table I
A n nual D epartm ent Store Sales for the U nited S tates
and Selected M etropolitan A rea s and Cities in the
Second Federal R eserve D istrict, 1 9 5 5 -5 6
(B ased on retail dollar am ou n ts)

m etrop olita n area, w h ich a cco u n ts f o r ro u g h ly 7 0 p e r cen t
o f the D istrict’ s sales b u t w h ich p r o d u c e s

a relatively

Percentage change

greater p r o p o r t io n o f co n s u m e rs’ n o n d u ra b le g o o d s an d

Area
1955
from
1954

services, w ere o n ly 1 1 0 p er c e n t o f th e 1 9 4 7 -4 9 average,
d esp ite the ra p id su bu rba n g row th .
O f the n in e m a jo r S e c o n d D istrict cities (as con tra sted
w ith m etrop olita n areas) f o r w h ich d ep a rtm en t store sales
data are av ailab le, the m o s t su bstantial in crea se in sales in
1 9 5 6 , 11 p e r cen t, o c c u r r e d in A lb a n y .

T h e in creases in

depa rtm en t store sales in the cities o f P ou g h k e e p sie and
N ew a rk w ere eq u a l to o r ju st b e lo w the D istrict average.
B u t all o f the oth er cities fo r w h ich separate data are av ail­
able r e p o rte d b e lo w -a v e r a g e in creases o f 1 to 4 p e r cent.
A n analysis o f the D istrict sales b y dep a rtm en tal g ro u p ­
ings sh ow s that ev ery m a jo r g ro u p sh ared in the past y e a r’ s
sales gains. N ev erth eless, the in crease in m a in store sales,




1956
from
1955

1955

1956

U n ited S t a t e s .......................................................

+

7

+

4

120r

125p

Second D is t r i c t ...........................................

+

4

+

6*

107

113*

M etro p o lita n areas:
New York-Northeastern New Jersey.. . .
Syracuse................................................................
Binghamton.........................................................
Buffalo...................................................................
Rochester..............................................................
Albany-Schenectady-Troy.......... ..................
Utica-Rom e.................................................. ..

+
+
+
+
+
+
+

4
5
3
3
2
3
3

+
+
+
+
+
+
+

7*
2
9
4
4
6
6

104
121
108
120
119
106
106

110*
124
118
124
125
113
112

+
+
+
+
+
+

0
0
8
7
7
1
5
2
3

n.a.
+ 5
+ 2
+ 6
+11
+ 1
+ 4
+ 3
+ 1

92
95
125r
120
n.a.
109
n.a.
109
131

n.a.
99r
126r
127

C ities:
New Y o rk ................................................. ..
Newark..................................................................
Bridgeport............................................................
Poughkeepsie......................................................
Schenectady........................................................
Utica.......................................................................
Buffalo...................................................................
Niagara Falls......................................................

w h ich u su ally con sist o f h igh er p r ic e d , h igh qu ality articles,
w as m ore than tw ice that o f ba sem en t store sales. M o r e ­

Indexes
(1 9 4 7 -4 9 = 100)

n.a. N ot available.

p Preliminary.

r Revised.
* Partly estimated.

110
n.a.
112
132

24

MONTHLY REVIEW, FEBRUARY 1957

p ea k s fo r ca sh sales w ere 7 2 p er cen t an d the c o rr e sp o n d in g

in g. H o w e v e r , in recen t years d ep a rtm en t stores h a v e p r o ­

w artim e lo w s fo r cre d it sales w ere 2 8 p e r cen t.

m o te d greater u se o f in stalm ent arran gem ents su ch

In the

as

U n ited States as a w h o le , the share o f total sales m a d e o n

“ re v o lv in g c re d it” an d “ b u d g e t” p la n s to stim u late c o n ­

cred it g en era lly has b e e n som ew h a t larger than in the

su m er p u rch ases. T h e s e p a y m en t arran gem ents p r o v id e f o r

S e c o n d D istrict bu t the tren d o v e r tim e o f cash versus credit

an interest o r serv ice ch a rg e o n the u n p a id b a la n c e , an d

sales has b e e n sim ilar to that o ccu rr in g lo c a lly .

are u sed to p u rch a se all ty pes o f d ep a rtm en t store m e r ­

S e c o n d D istrict c re d it sales, as sh ow n in T a b le II, are

ch a n d ise, in clu d in g “ so ft g o o d s ” an d lo w -p r ic e d articles.

segrega ted in to ch a rg e a c c o u n t an d in stalm ent sales an d it

C o n se q u e n tly , ev en w h en sales o f co n s u m e r d u ra b le g o o d s

is n o te w o rth y that v irtu a lly all th e in crea se in c re d it sales,

h a v e tem p ora rily d e c lin e d du rin g the p ostw a r p e r io d , th e

c o m p a r e d w ith p rew a r 1 9 4 1 , has o c c u r r e d in the in stalm ent

in stalm ent segm en t o f tota l sales has either rem a in ed u n ­

c a te g o r y ; ch a rg e a c c o u n t sales still con stitu te the b u lk o f

ch a n g e d o r has sh ow n a fu rth er rise.

cre d it sales, an d w h ile th ey h av e in crea sed in th e p ostw a r

T able II

p e r io d , th ey h a v e e x c e e d e d their p rew a r 19 41 im p o rta n ce

D epartm en t Store Sales by T y p e of Transaction for Selected Y e a rs
Second Federal R eserve D istrict, 1 9 4 1 -5 6
(P ercentage o f total sales)

b y o n ly a m in o r exten t.

In stalm en t sales, h o w e v e r, h ave

risen to 14 p er c e n t o f tota l sales in 1 9 5 6 fr o m 9 p er cen t

Credit sales
Year

Cash sales

194 1 ......................
194 5 .....................
1950.....................
1955.....................
195 6 .....................

60
72
61
55
54

in 1 9 4 1 , o r b y m o r e than 5 0 p e r cen t.

Charge account

T h e g row th in in stalm ent sales in the past has gen erally
b e e n lin k ed to sales o f co n s u m e r d u ra b le g o o d s “ b ig tick et”
item s, su ch as m a jo r h o u s e h o ld a p p lia n ces, telev ision and
r a d io sets, fu rn itu re and b e d d in g , an d d o m e stic flo o r c o v e r ­

31
23
28
32
32

Instalment
9
5

Total
40
28
39
45
46

11
13
14

S E L E C T E D E C O N O M IC IN D IC A T O R S
U nited S tates and Second Federal R eserve D istrict

1956
Item

1955

Percentage change

Unit
December

November

October

December

146
216
107
2 8 .3
5 0 .8
2 8 .9
1 4.6
16.1
230
260

144
207
105
2 7 .3
4 5 .9
2 9 .3
1 5.6
1 5 .8
273
319

Latest month Latest month
from previous from year
month
earlier

U N IT E D S T A T E S

Production and trade
Electric power o u tp u t*............................................................................
Ton-miles of railway freight*................................................................
Manufacturers’ inventories*..................................................................
Manufacturers’ new orders, to ta l*......................................................
Manufacturers’ new orders, durable goods*...................................
Residential construction contracts*...................................................

1947-49 =
1947 -49 =
1947 -49 =
billions of
billions of
billions of
billions of
billions of
1947 -49 =
1947-49 =

100
100
100
$
$
$
$
$
100
100

147p

220
—
2 8 .7 p

51 A p
2 8 .8 p
1 4 .4p
—
—
—

146
218
104p
2 8 .7
5 1 .3
2 9 .4
15.1
1 6 .4p
197
272

+
+
—
+
-1
+

2
6

1
1

+
+

3
#
#

#
+ 5
+ 12
- 2
- 8
+ 4

2
5

2

4
5

-2 2
_ 4

Prices , wages, and employment

Composite index of wages and salaries*...........................................
Average hours worked per week, manufacturing!.......................

1947 -49 = 100
1947 -49 = 100
1947 -49 = 100
billions of $
1947 -49 = 100
thousands
thousands
hours
thousands

9 2 .9
1 1 6 .2 p
118.0
—
—
5 1 ,988p
17,078p
4 1 .Op
2 ,4 7 9

9 2 .7
115.9
117.8
3 3 3 .6
151p
5 1 ,943p
17,057p
4 0 .6
2 ,4 6 3

9 0 .7
115.6
1 17.7
3 3 2 .5
151
51,902
17,026
4 0 .7
1,909

8 9 .7
111.3
114.7
3 1 7 .5
145
5 0,948
16,975
4 1 .3
2,4 2 7

millions of §
millions of S
millions of $
millions of S
millions of $
1947 -49 = 100
millions of §

74,450p
91,240p
1 1 0 ,650p
30,970p
76,576
1 3 8 .lp
3 1,552

74,360p
8 9 , 580p
108,210p
30,859
78,7 9 4
140.0
31,024

73,710p
8 8 ,830p
1 0 7 ,450p
30,741
7 8 ,6 5 8
138.1
30,811

7 8 ,2 8 0
82,601
109,914
30 ,4 7 3
7 2 ,7 5 5
128.1
29 ,0 2 0

6 ,3 3 2
6,5 7 6
3 ,4 5 0

3 ,4 3 4
6 ,4 0 9
3 ,8 9 2

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

- 7
+ 13
#

153
195
302

-1 2

Banking and finance
Total investments of all commercial banks.....................................
Total loans of all commercial banks...................................................
Total demand deposits adjusted..........................................................
Currency outside the Treasury and Federal Reserve Banks*.
Bank debits (337 centers)*.....................................................................
Velocity of demand deposits (337 centers)*...................................
Consumer instalment credit outstanding!............. .........................
United States Government finance (other than borrowing)
National defense expenditures..............................................................

millions of $
millions of $
millions of $

5 ,899
7 ,4 4 8
3 ,4 4 8

#
#
#
#
#
#
#
+
+

1
1

+
+
+
+
+
+
+
+

#

— 5

+
+

2
2

+

#
3

1
2

4
4
3

6
4

2
1
1
2

+10
1
2

+
+
+
+
+

5

8
9

+10
+19
+ 4

SE C O N D F E D E R A L R E S E R V E D IS T R IC T
Electric power output (New York and New Jersey)*.....................
Nonresidential construction contracts*.................................................
Consumer prices (New York C it y ) t .......................................................
Nonagricultural em p loy m e n t*!................................................................
Bank debits (New York C ity )*................................................................
Bank debits (Second District excluding New York C it y )* ..........
Velocity of demand deposits (New York C it y )* ...............................
Department store sales*...............................................................................
Department store stocks*........ ..................................................................

1 947 -49 = 100
1947-49 = 100
19 47 -49 = 100
1947 -49 = 100
thousands
thousands
millions of $
millions of $
1947 -49 = 100
1 9 47 -49 = 100
1 947 -49 = 100

155
—
—

11 5 .5
7 ,7 3 7 .4 p
2 ,6 7 0 .2p
6 5 ,6 7 4
5,0 7 0
174.8
116
132

155
141p
305p
115.6
7 ,7 3 4 .1
2 ,6 5 4 .2
72,031
5 ,1 1 5
186.3

150
160
268
115.7
7 ,7 0 8 .1
2 ,6 5 1 .6
70,0 9 3
5 ,1 2 8
177.9

120

112

131

129

112.0
7 ,7 0 0 .7
2 ,6 8 1 .0
68,667
4 ,7 7 3
1 73.3

110
121

+ 14
#
#
+ 1
- 9
- 1
- 6
- 3
+ 1

+ 1
-1 8
+ 11
+ 3
#
#
- 4
+ 6
+ 1
+ 5
+ 9

Note: Latest data available as of noon, February 4, 1957.
p Preliminary.
r Revised.
# Change of less than 0.5 per cent.
* Adjusted for seasonal variation.
If Revised series. Back data available from the Domestic Research Division, Federal Reserve
f Seasonal variations believed to be minor; no adjustment made.
Bank of New York.
Source: A description of these series and their sources is available from the[,Domestic Research Division, Federal Reserve Bank of New York, on request.