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M TWELFTH FEDERAL RESERVE O N T H L Y R E V I E W DISTRICT Fe d e r a l R e s e r v e B a n k A U G U ST 195 2 of S a n Fr a n c is c o FARM FORECAST— ANOTHER GOOD YEAR indications are that United States food sup plies from the 1952 harvests will be generally plentiful in the months ahead. The combined production of all crops is expected to be the third largest on record and the output of livestock products may top all previous years. Farm income should be the same or slightly higher than in 1951, with lower average prices largely offsetting increased output. Plantings of 1952 crops were about the same as in 1951. Despite some “ headline” weather problems during the growing season, yields for most crops should be at high levels. Winter wheat and rice are expected to set new production records and above average crops of corn, cotton, soybeans, hops, grapes, cherries, and plums are forecast. Smaller production of dairy products and fewer hogs should be more than offset by increased supplies of beef cattle and poultry products. Production problems during most of the season have been no more difficult than in other recent years. Con cern over labor supplies and continued high production costs led farmers to continue the gradual shift to less intensive farming and crops requiring less labor. Drought in the Northeast and Southeast has been severe but will not affect national food supplies appreciably. Feed grain supplies for the 1952-53 season were ix¿luced somewhat by the dry weather in July and August but will still be near the average of recent years. As the season pro gressed, few problems arose which required farmers to alter their planting intentions, and shifts between crops were relatively minor. re se n t P More field crops, less fruit in the District Compared with some recent years, Twelfth District farmers have enjoyed a relatively favorable growing sea son so far this year. Heavy winter rains and good snow fall assured adequate irrigation water and good soil mois ture conditions throughout all states. Dry spells in local areas reduced some crop yields, but in most areas spring rains contributed to the favorable moisture situation. Winter freezes and spring frosts were few and had rela tively little effect on production prospects. Abandonment of dry-farmed crops was less than usual. These good growing conditions have allowed Califor nia and Arizona farmers to bring to harvest a record acreage of field crops. Arizona’s record acreage results largely from the sharp increase in cotton plantings from which Arizona growers hope to harvest their first millionbale crop. No outstanding increases have occurred for any individual field crops in California but gains are indi cated for most. Last year’s record cotton and rice acre ages were increased slightly and the output of both crops should reach all-time highs. Field crop production in Oregon, Idaho, and Nevada is turning out larger than in 1951. Yields for most crops should be higher under the stimulus of adequate moisture and favorable temperatures. The larger seedings of winter wheat in the Pacific Northwest came through the winter with relatively little winter kill. Though plantings of spring wheat were consequently reduced, total wheat production in Idaho and Oregon will set a new high, and Washington’s crop is well above that of 1951. Despite these increased acreages of wheat in the Pacific North west and the larger cotton acreages in California and Arizona, District farmers made substantial expansions in feed grain and hay acreages. District output of the four feed grains (barley, corn, oats, and sorghums) is ex pected to be 17 percent above 1951 levels. Fruit is coming off District trees this year in consider ably smaller quantities than in 1951 except for apples and cherries. In addition, most fruit crops are below the 1941-51 average production. Contrary to the last few years, adverse weather is not the principal cause of the smaller crops. Spring frosts in Oregon and central Wash ington caused some losses, but the other District states came through the winter and spring with no freeze dam- A ls o in This Issu e United States Savings Bonds— The Old and the New S u p p le m e n t Waterborne Trade of the Pacific Northwest 74 FEDERAL RESERVE B A N K OF SA N FRANCISCO age. Much of the decrease in output is merely the reac tion that often follows a year of fairly large crops. De spite the cold weather losses in Oregon and Washington, total fruit production in both states should exceed the 1951 outturn, which suffered even more seriously from freezing weather. Idaho’s orchards are also expected to yield larger crops. These increases, however, are more than offset by drops in California’s big fruit crops, with substantial reductions anticipated for apricots, grapes, peaches, plums, and prunes. At the start of the 1951-52 citrus year last November, California’s navel orange crop was expected to be up slightly and little change was forecast for lemons and grapefruit. Two freezing spells, high winds, and brown and water rot induced by heavy rains reduced yields con siderably. The Valencia crop matured slowly and turned out smaller-sized than usual. Arizona’s citrus crop has been disappointing. Many groves were short of water, and the set was lighter than was first thought. Orange produc tion was down almost 50 percent from the previous year, and the grapefruit crop is turning out 40 percent smaller. District e g g supplies to decline while milk production up More eggs were gathered from the nation’s hen houses during the first seven months of this year than during the same period last year. Fewer chickens are being raised for laying flock replacement, however, and egg produc tion nationally is expected to fall off later this year. Dis trict production, which has also been running ahead of last year, may not decrease as much as nationally. Not only has the increase in laying flocks over last year been relatively larger than for the entire United States, but potential layers on farms on August 1 have increased in the District while decreasing in the country as a whole. Milk production will continue its seasonal decline un til winter, and national output for the year will probably be slightly below that in 1951. Both milk production from January to July and mid-year numbers of milk cows were under the previous year’s levels. In the District, however, both output and numbers are slightly above 1951 figures. More meat for 7952 Although total livestock slaughter and meat production in the nation in the first half of the year was well above a year earlier, in the second half of 1952 it will be little if any larger than in the last six months of 1951. Cattle I n d ic a t e d August 1952 1 9 5 2 P r o d u c t io n of Indicated 1952 production (in thousands) Field and seed crops Barley (b u .) ................. Beans, dry (bags) ................... Corn ( b u . ) .................................... Cotton (bales) ........................... Flaxseed (b u .) ................. ......... .......... Sorghums, grain (bu.) .......... H ay, all (tons) ........................ H ops (lbs.) ........................ ......... Oats (bu .) .................................... Peas, dry (bags) ............... Potatoes ( b u . ) ............................. Rice (bags) ................. ................ Sugar beets ( t o n s ) .......... ......... . . . . W heat, all (bu .) ..................... Fruits Apples (bu .) ............................... Apricots (tons) ........................... Cherries ( t o n s ) ................. ......... Grapes (tons) ...................... Grapefruit1 (boxes) .......... Oranges1 (boxes) .............. Lem ons1 (boxes) ............... Peaches (bu.) . . . . ................... Pears (bu .) ........................ Plums (tons) ...................... Prunes, fresh (tons) ........ ____ Prunes, dried (tons) .............. N uts Alm onds (tons) ........................ Filberts (tons) ................. ......... W alnuts (tons) ............... C rops— T w e l f t h 1,312 2,422 4,012 86 56 94 137 Percent change 1952 t— compared with— N 1941-50 1951 average + 18 + 11 — 10 + 4 + 16 + 24 + 14 + 233 — 30 — 64 +47 — 22 — 2 + 9 — 3 + 25 0 + 13 — 32 — 6 + 8 + 5 + 60 + 8 — 6 + 4 + 25 + 7 + 17 — 6 +28 — 14 — 29 — 16 — 5 — 15 0 — \2 — 1 — 23 — — — + — — — — + — — — 13 24 6 5 33 21 2 6 4 29 19 26 — 19 + 57 + 5 + + + 13 57 16 1 Figures are for crop year which begins in October of the previous year. Source : United States Department of Agriculture, Bureau of Agricultural Economics, C r o p P r o d u c t i o n , A ugust 1, 1952. slaughter is rising from last year’s level, but the rise is slower than the decrease which is occurring in hog slaugh ter. Cattle numbers on farms have been expanding for several years. Unless slaughter rates are substantially increased, this trend will continue. Although commercial hog slaughter in the first six months of 1952 was 7 y2 percent larger than in the first half of 1951, the increase took place in the first four months. Hog slaughter has been falling since May and this trend is likely to continue well into 1953. Not only was there a 9 percent reduction in the 1952 spring pig crop, but farmers indicate they in tend to reduce the fall crop as well. Commercial slaughter of sheep and lambs in the United States in the first half of 1952 was about one-fourth larger than a year earlier. The substantial rise is attrib uted chiefly to increased numbers fed last winter and to a more normal pattern of marketing spring lambs. Last L IV E S T O C K S L A U G H T E R * —T W E L F T H D IS T R IC T , 1951 A N D 1952 (in millions of pounds) Source : United States Department of Agriculture, Bureau of Agricultural Economics, L e a d in g D i s t r i c t a s o f A u g u s t 1, 1 9 5 2 L iv es to c k S la u g h te r b y S ta te s. August 1952 75 M O N T H L Y REVIEW I N D E X E S O F P R IC E S R E C E I V E D B Y F A R M E R S — U N I T E D S T A T E S , 1948-52* (1910-14=100) *Mid-monthly data. . Source: United States Department of Agriculture, Bureau of Agricultural Economics, year, in contrast, an unusually large proportion of lambs were withheld from slaughter for building up flocks and breeding inventories. As the rate of retention on farms is expected to be lower this summer and fall than last and because of larger numbers on farms, sheep and lamb slaughter will show a net gain over last year. On balance, red meat production for 1952 will be slightly larger than last year. White meat supplies for the year as a whole are also expected to total more than in 1951. During the first half of the year, consumption of chickens and turkeys was apparently of record proportions. Larger supplies are in prospect for the coming months from the larger stocks of chickens now in storage, marketings of chickens at about year-ago levels, and the probable increase in turkey pro duction. Turkey growers started the year with plans to increase the number of turkeys raised because of favor able returns in 1951. Hatchings during the spring were 13 percent above last year and the total crop could esta blish a new record by year end. Agricultural prices remain high and firm Demand for farm products throughout the nation has continued at high levels for the past year. Consumer in comes have continued high and exports of farm products were at record levels. With prospects for an expanding defense program, a high level of business investment spending, and a general rise in total demand for goods and services, consumer incomes probably will continue to increase moderately and will support a high level of domestic demand for farm products in the 1952-53 mar keting year. Since total agricultural production is ex pected to increase only moderately, prices should be rela tively stable for most agricultural products. Prices received by farmers in the first half of 1952 averaged only slightly lower than during the first half of last year. They are not expected to change much in coming months if current prospects materialize. Wheat prices have been adjusting to a large new crop, and feed grain prices may weaken somewhat at harvest time if growing conditions are favorable. The effect of relatively large supplies will be modified by price supports. Recent action by Congress guarantees that prices will be sup ported at 90 percent of parity for at least two more years. A g r ic u ltu r a l P r ic e s . Relatively high prices for vegetables will continue into the second half of the year because of strong demand and decreased production. Although fruit crops are generally smaller, supplies are expected to be large enough to fill processing demands and yet provide a fairly large vol ume for the fresh market at prices generally under 1951 levels. Because production and stocks of most dairy products are below last year and demand continues high, there will be some seasonal price increases this year. The normal seasonal increase in cattle marketings this fall will push beef prices below 1951 levels. In drought-affected areas, drying ranges and pastures have already resulted in some forced marketings. If further deterioration occurs, ranch ers may reduce herds more than now appears likely, thus putting further pressure on beef prices. Sheep and lamb prices will also tend to dip slightly this fall as marketings increase seasonally. Although livestock prices as a group will probably continue below those of a year earlier, the smaller spring pig crop will be reflected in higher hog prices the rest of the year. Lower farm income likely for 1952 Farmers’ net income in 1952 is expected to be about the same as or somewhat smaller than the $14.9 billion they realized last year. Gross farm income in the United States, which was 14 percent higher in 1951 than the year before, seems to be leveling off, with lower average prices largely offsetting increased output. On the other hand, farm production expenses, which rose 12 percent last year, are still rising, though at a considerably slower rate. This combination indicates a small decline in this year’s net income. Cash receipts from farm marketings, the principal ele ment in farmers’ gross income, may be slightly higher than the 1951 total, however. Wheat, corn, cotton, and dairy products will be the main contributors to the in crease. Receipts may be lower for meat animals, eggs, flaxseed, soybeans, and some fruits. Crop receipts for the first eight months of the year ran 18 percent higher than the corresponding period a year ago. Livestock and live stock products receipts, however, dropped 4 percent, dairy products being the only member of the group to register an increase over the first eight months of 1951. FE D E R A L R ESER VE B A N K OF S A N F R A N C IS C O 7 6 A u g u s t 1952 BUSINESS INDEXES—TWELFTH DISTRICT1 (1947-49 average=100) In d u strial pro du ction (p h ysical volu m e)* Year and m o n th 1929 1931 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 Pa4rnlai ■m 1 Lum ber C ru d e R e fin e d C e m e n t Lead* Copper* W heat flour* T o ta l W a te rb o rn e nonagrl- T o ta l C a rD ep’ t foreign cu ltu ral m f’g loadings store R etail trade*«* E le c tric e m p lo y e m p lo y ( n u m sales food power m ent b er)1 m e n t4 (v a lu e )2 prices** * E x p o r t s 1m p o rts 97 51 41 44 54 70 74 58 72 79 93 93 90 90 72 85 97 104 99 112 114 87 57 52 52 62 64 71 75 67 67 69 74 85 93 97 94 100 101 99 98 106 78 55 50 50 56 61 65 64 63 63 68 71 83 93 98 91 98 100 103 103 112 54 36 27 35 33 58 56 45 56 61 81 96 79 63 65 81 96 104 100 112 128 165 100 72 76 86 96 114 92 93 108 109 114 100 90 78 70 94 105 101 109 89 105 49 17 24 37 64 88 58 80 94 107 123 125 112 90 71 106 101 93 115 115 90 86 75 81 87 81 84 81 91 87 87 88 98 101 112 108 113 98 88 86 95 29 29 26 28 30 34 38 36 40 43 49 60 76 82 78 78 90 101 108 119 136 1951 June July August September October November December 124 101 114 105 118 109 99 106 107 107 107 107 107 106 110 112 115 116 114 116 109 132 142 138 129 130 124 119 91 84 67 74 80 85 88 114 112 98 108 116 114 118 81 83 90 96 96 99 101 1952 January February March April M ay June 93 107 108 110 94 117 106 106 106 107 108 107 111 113 115 114 114 116 94 112 113 120 129 126 88 104 96 95 89 90 109 109 115 117 116 112 112 105 90 88 87 84 30 25 18 21 24 28 30 28 31 33 40 49 59 65 72 91 99 104 98 105 108 64 50 42 45 48 48 50 48 47 47 52 63 69 68 70 80 96 103 100 100 113 190 138 110 132 135 131 170 164 163 132 124 80 72 78 109 116 119 87 95 101 ioo 101 96 95 99 102 99 103 110 "4 7 54 60 51 55 63 83 121 164 158 122 104 100 102 98 105 119 102 68 52 60 66 77 81 72 77 82 95 102 99 105 100 101 106 100 94 97 100 *89 129 86 85 91 186 ’ *57 81 98 121 137 157 135 140 141 135 141 140 136 110 111 111 110 111 111 111 120 120 120 118 120 121 120 107 92 94 104 101 101 100 103 108 106 108 106 114 110 112 113 112 112 113 114 117 196 201 240 215 187 182 192 166 147 142 155 172 144 130 142 139 142 141 147 150 113 113 112 112 112 113 122 124 125 126 125 126 86 101 100 106 98 108 106 108 102 105 118 114 116 114 114 116 115 115 183 208 210 185 146 138 157 143 143 BANKING AND CREDIT STATISTICS—TWELFTH DISTRICT (amounts in millions of dollars) C o n d itio n Item s o f all m e m b e r b a n k s7 Year and m o n th 1929 1931 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 Loans U .S . D em an d and G o v 't deposits d i s c o u n t s s e c u r itie s a d ju s te d 1 T o ta l t im e deposits 2,239 1,898 1,486 1,469 1,537 1,682 1,871 1,869 1,967 2,130 2,451 2,170 2,106 2,254 2,663 4,068 5,358 6,032 5,925 7,105 7,907 495 547 720 1,064 1,275 1,334 1,270 1,323 1,450 1,482 1,738 3,630 6,235 8,263 10,450 8,426 7,247 6,366 7,016 6,392 6,533 1,234 984 951 1,201 1,389 1,791 1,740 1,781 1,983 2,390 2,893 4,356 5,998 6,950 8,203 8,821 8,922 8,655 8,536 9,244 9,940 1,790 1,727 1,609 1,875 2,064 2,101 2,187 2,221 2,267 2,360 2,425 2,609 3,226 4,144 5,211 5,797 6,006 6,087 6,255 6,256 6,720 1951 July August September October November December 7,473 7,630 7,704 7,791 7,885 7,907 6,005 6,000 5,998 6,204 6,356 6,533 9,052 9,058 9,235 9,485 9,584 9,940 6,510 6,547 6,576 6,642 6,625 6,720 1952 January February March April M ay June July 7,806 7,760 7,787 7,850 7,921 8,062 8,114 6,543 6,413 6,378 6,313 6,238 6,258 6,507 9,951 9,420 9,426 9,408 9,306 9,501 9,643 6,806 6,900 6,915 6,924 6,985 7,083 7,143 B an k rates on short-term bu sin ess loans* 3 .2 0 ’ 3.35 3.66 ............ 3.65 3.82 M e m b e r ban k reserves and related i t e m s 1* Reserve ban k c re d it11 C oin and C o m m ercia l Treasu ry cu rren cy in o p e ra tio n s12 op e ra tio n s12 c irc u la tio n 11 Reserves B ank d ebits Index 31 cities*» » (1947-49 100)2 _ 34 21 + 2 — 7 2 + 6 + 1 — 3 2 + 2 + 4 + 107 + + 214 98 + 76 9 + 302 17 + 13 + 39 + 21 0 154 110 — 198 163 227 90 240 192 148 596 - 1 ,9 8 0 - 3 ,7 5 1 - 3 ,5 3 4 - 3 ,7 4 3 - 1 ,6 0 7 510 + 472 930 - 1 ,1 4 1 - 1 ,5 8 2 + 23 + 154 + 150 + 257 + 219 + 454 + 157 + 276 + 245 + 420 + 1 ,0 0 0 + 2 ,8 2 6 + 4 ,4 8 6 + 4 ,4 8 3 + 4 ,6 8 2 + 1 ,3 2 9 + 698 482 + 378 + 1 ,1 9 8 + 1 ,9 8 3 6 48 + 18 4 + 14 + 38 + 3 20 + 31 + 96 + + 227 + 643 + 708 + 789 + 545 326 — 206 — 209 65 — 14 189 + 175 147 185 242 287 479 549 565 584 754 930 1,232 1,462 1,706 2,033 2,094 2,202 2,420 1,924 2,026 2,269 42 28 18 21 25 30 32 29 30 32 39 48 61 69 76 87 95 103 102 115 132 — + 14 159 43 — 121 + 236 276 + - 342 80 18 143 239 102 + + + + + + 298 86 42 283 118 279 + + + + + + 19 41 32 17 18 14 2,186 2,312 2,293 2,291 2,392 2,269 125 129 129 134 137 141 84 180 309 176 52 211 45 - 228 109 17 237 174 97 208 + + + + + + 194 I ll 272 102 185 190 288 — + 86 20 7 13 49 29 7 2,416 2,365 2,313 2,341 2,347 2,209 2,333 134 138 139 135 128 144 134 + + 3.94 + + 3.95 + _ + + + + 1 Adjusted for seasonal variation, except where indicated. Except for department store statistics, all indexes are based upon data from outside sources, as follows: lumber, various lumber trade associations; petroleum, cement, copper, and lead, U.S. Bureau of Mines; wheat flour, U .S. Bureau of the Census; electric power, Federal Power Commission* nonagricultural and manufacturing employment, U .S. Bureau of Labor Statistics and cooperating state agencies; retail food prices, U .S. Bureau of Labor Statistics; carloadings, various railroads and railroad associations; and foreign trade, U.S. Bureau of the Census. 2 D aily average. * N ot adjusted for seasonal variation. 4 Excludes fish, fruit, and vegetable canning. 6 Los Angeles, San Francisco, and Seattle indexes combined. • Commercial cargo only, in physical volume, for Los Angeles, San Francisco, San Diego, Oregon, and Washington customs districts; starting with July 1950, “ special category” exports are excluded because of security reasons. 7 Annual figures are as of end of year, monthly figures as of last Wednesday in month or, where applicable, as of call report date. * Demand deposits, excluding interbank and U .S. G ov’t deposits, less cash items in process of collection. Monthly data partly estimated. 9 Average rates on loans made in five major cities during the first 15 days of the month. 10 End of year and end of month figures. 11 Changes from end of previous month or year. 12 Minus sign indicates flow of funds out of the District in the case of commercial operations, and excess of receipts over disbursements in the case of Treasury operations. 18 Debits to total deposit accounts, excluding inter-bank deposits. r— revised. August 1952 M O N T H L Y REVIEW UNITED STATES S A V I N G S B O N D S — THE O L D A N D THE N E W h e causes o f inflation and the w eapons available for com b a tin g it w ere described briefly in the June and J u ly issues o f the Monthly Review. T h ese articles stressed the im portant role o f Savings B on ds in h elpin g to preven t a deterioration in the purchasing p ow er o f the dollar. T h e purchaser o f Savings B on ds plays a dual role, h ow ever. H e n ot on ly strikes a b lo w against inflation bu t, at the sam e tim e, he purchases an investm ent w hich for m any m illions o f savers is an ideal m edium fo r holdin g liquid assets. M o s t A m ericans, even those w ith m odest incom es, en deavor to lay aside savings to be used in case o f illness or other un foreseen events and as a provision against old age. T T h e p rop er ch oice as to the form in w hich to h old savings is v irtu ally as im portan t as the act o f saving itself. S a fe ty and liq u idity, com bin ed w ith a satisfa ctory return, are the prim ary considerations. T h e large in vestor is, o f course, an im portan t fa ctor in supplying eq u ity and private b o n d m arkets w ith necessary funds for capital developm en t. H e also has need, h ow ever, fo r riskless, h igh ly liquid investm ents as a con tin gen cy reserve and as a hedge against other m ore risky investm ents. C onsidering their h igh ly desirable risk and liq u id ity features, the new Savings B onds which becam e available in M a y and June o f this y ear p rov id e an attractive yield. T h e terms o f these new Savings B on ds h ave been given w ide p u b licity , bu t because o f their im portance it m ight be w ell to p o in t o u t again the significant changes w hich have been m ade in the T rea s u r y ’s present offerings o f Savings B on ds. M o re detailed in form ation is available at Federal R eserve B anks and their branches, local banks and p ost offices, other designated agencies, and the T rea su ry D epa rtm en t. A m on g the Savings B on ds n ow available, one is last season’s m odel, Series E , w ith im p orta n t changes in accessories to m ake it m ore attractive for the com in g season. A nother, Series H , is an entirely n ew m od el designed to appeal to the “ m id d le-in com e” groups. T h e rem aining tw o n ew m odels, Series J and K , are prim arily “ carriage tra d e” item s and replace the form er Series F and G bon ds. T h e m a jor difference is that the new issues carry signifi ca n tly higher yields than their predecessors. T h e n ew Series E b o n d is unchanged in that it is still a discoun t b o n d — that is, a $25 b o n d m a y be purchased fo r $18 .75 . I t is available in denom inations from $25 to $10,00 0, is sold on ly to individuals, is n on tran sferable, and m ay be redeem ed at any tim e after tw o m onths from the issue date. I t m ay n ow be purchased in quantities up to $20,00 0 m aturity value a year. A m arked increase in y ie ld in the earlier years o f its life represents the m ost significant change in the new Series E b on d com pared w ith the old . I f held for one year, the new b o n d yields 1.59 percen t, m ore than tw ice the .67 percen t p aid b y the old. A t the end o f tw o years the y ie ld is 2.10 percen t, com pared w ith .99 p ercen t for the old. T h e return on Series E bon ds in their earlier years n ow com pares m ore fa v ora b ly than h eretofore w ith that o f alternative form s o f in vestm en t for savings. T h e new issue also has a higher y ield to m a tu rity than the o ld — 3 p ercen t com p ou n d ed sem iannually com pared w ith 2.9 percent. T h is resulted from reducing the m atu rity o f the bon ds from the form er 10 years to the present 9 years and 8 m onths. A sim ilar increase in y ield also applies to bon d s held for an “ extended m a tu rity ” period. U n der the n ew provisions old Series E bon ds m aturing after M a y 1, 1952, as w ell as n ew b on d s issued after that date, w ill earn 3 percent per annum com p ou n d ed sem i annually fo r each h a lf-y e a r p eriod o f the extension period. A s previou sly, an investor desiring to h old a b o n d a fter its original m atu rity date need take no specific action and need on ly retain the b o n d for an y p eriod desired up to 10 years. T h e m ost con spicu ou s change in the T rea su ry ’s new Savings B on ds line-up is the entirely new Series H b on d . T h e Series H b o n d is similar to the Series E b o n d in that th ey b oth y ield 3 percen t if held to m atu rity (9 years and 8 m o n th s), b oth carry a sm aller rate o f interest fo r earlier years to en cou rage h oldin g until m aturity, can be purchased o n ly b y individuals, 76A August 1952 FEDERAL RESERVE B A N K OF SAN FRAN CISCO are n on tran sferable, and a m axim um o f $20,00 0 o f each can be purchased in any one year. In con trast, h ow ev er, to the Series E b o n d , w hich is a “ d iscou n t” b on d , the Series H b o n d is a “ current in co m e ” b o n d — that is, it is sold at p ar and interest is paid b y ch eck ev ery six m onths. T h e Series H b o n d is issued in larger denom inations ($ 5 0 0 , $1000, $50 0 0 and $ 1 0 ,0 0 0 ). W h ile the Series E b o n d is redeem able any tim e after tw o m onths (w ith accrued in te re st), the Series H b o n d is redeem able at par after six m onths and then o n ly after one m o n th ’s n otice. T h e Series H b o n d is designed to appeal to those w ho are dep en den t u pon current in com e from investm ents and others w h o p refer to receive interest cu rren tly rather than at som e fu tu re date. T h e n ew b o n d also has tax appeal to som e p eop le in th at the in com e is received sem i-annually. In con trast, incom e on Series E b on d s m a y b e rep orted for tax pu rposes either as accru ed each y ea r o r as a lum p sum at tim e o f redem ption. T h e oth er n ew Savings B on ds are the Series J and K w hich replace the old Series F and G . T h ese b on d s parallel Series E and H , respectively, in that Series J is a “ d iscou n t” b o n d and Series K is a “ current in co m e ” b o n d sold at par. T h e y differ from Series E and H , h ow ev er, in their lon ger m a tu rity (1 2 y e a r s ), low er yield, and the fa ct that th ey can be sold to all classes o f in vestors e x ce p t com m ercial banks. T h e new Series J and K bon d s differ from the old Series F and G in that their y ie ld in the earlier years has been increased sharply — an even greater relative increase than occu rred fo r Series E bon ds. T h eir y ield to m atu rity has also been in creased to 2.76 percen t from 2.53 percent on the old Series F and 2.50 p ercen t on the old Series G. In add ition , the m axim um am ount o f these bon ds w hich can b e purchased in an y y e a r has b e e n increased from $ 1 00,0 00 to $200,0 00 ( f o r either series or a com bin ation o f the t w o ). Series J and K bon ds are intended to appeal to institutional and corp ora tion buyers, as w ell as to in dividu al investors w hose investm ent program s are lim ited b y the ceilin g on the purchase o f Series E and H b on d s — $20,00 0 o f each. In vestors p e rfo rm a dual fu n ction b y purchasing Savings B onds. O n the one hand th ey purchase a desirable form o f investm ent w ith their current incom e. T h ese savings, on the oth er hand, represent a diversion o f spending from civilian m arkets and this helps to reduce the u pw ard pressure on prices. M o re o v e r, this flow o f funds p rovides the G overn m en t w ith a non in flation ary form o f deficit financing. COMPARISON OF SAVINGS BOND INVESTMENT YIELDS FOR LENGTH OF TIME HELD* (in p e r c e n t ) Length of time held after issue date: O ld S e r ie s E .00 */2 year ...................................... 1 year ...................................... 1^2 years ................................... 2 years ................................... 2 V-z years ................................... 3 years ................................... 3 ^ years ......................... .. 4 years ................................... 4 ^ years ................................... 5 years ................................... SYz years ................................... 6 years ................................... 6l/2 years ................................... 7 years ................................... IV 2 years ................................... 8 years ................................... 8^2 years ................................... 9 years ................................... 9 lA years ................................... 9 years and 8 m o n th s . . . 10 years ................................... 1 0 ^ years ................................... 11 years ................................... 11^4 years ................................... 12 years ................................... .6 7 .88 .9 9 1 .0 6 1 .3 1 1 .4 9 N ew S e r ie s E 1 .0 7 1 .5 9 1 .9 4 2.10 2 .1 9 2 .2 5 N ew S e r ie s H .8 0 1 .6 5 1 .9 3 O ld S e r ie s F N ew S e r ie s J N ew S e r ie s K .00 1.11 .10 1 .1 6 .2 7 1 .2 5 1 .3 8 1 .5 1 .3 0 1 .2 6 .4 4 .6 1 1 .6 4 .7 5 1 .3 7 1 .5 2 1 .6 2 .88 1 .7 5 2 .0 7 2 .1 5 .4 5 .6 1 .7 5 2.21 .8 9 1 .7 7 2 .2 8 2 .2 5 1 .0 3 1 .8 5 1 .0 4 1 .6 2 2 .3 0 2 .2 8 1 .1 9 1 .9 5 1.20 1 .9 4 1 .7 2 2 .4 3 2 .4 0 1 .3 4 2 .0 4 1 .3 5 2 .0 3 1 .7 9 2 .5 2 2 .4 9 1 .4 9 1 .8 5 1 .9 0 2 .5 9 2 .5 7 2 .6 3 1 .6 3 1 .7 6 2.12 2.20 2.12 2 .6 9 2 .7 2 2 .6 9 1 .8 7 2 .7 3 2 .4 5 2 .5 7 2 .7 4 2 .7 9 2 .7 7 2 .8 1 2 .6 7 2 .8 3 2 .8 4 2 .7 6 2 .8 4 — 2.86 2.88 2 .8 7 2 .8 9 3 .0 0 * * — ___ 3 .0 0 * * — — 2 .3 0 2 .9 0 * * ___ 2 .6 4 1 .8 4 1 .5 1 2 .1 3 1.66 2.21 2 .2 6 1 .7 9 1 .8 9 2 .2 7 2 .3 3 1 .9 6 2 .3 3 2 .3 9 1 .9 8 2 .3 9 2 .0 3 2 .4 5 2 .0 5 2 .4 4 2 .0 9 2 .1 4 2 .5 0 2 .5 4 2.12 2 .4 9 2 .1 9 2 .2 4 — 2 .5 7 2 .6 1 — 2 .1 8 2 .5 3 2 .2 3 2 .2 7 — 2 .5 7 2 .6 1 — 2 .2 9 2 .6 4 2 .3 1 2 .6 5 2 .3 4 2.68 2 .3 5 2.68 ___ ___ — ___ ___ — 2 .4 0 2 .4 6 2 .7 1 2 .7 3 2 .3 9 2 .4 4 2 .7 3 — — — 2 .5 3 * * 2 .7 6 * * 2 .5 0 * * 2 .7 6 * * *Approximate investment yield (rate per annum, compounded semiannually) on purchase price for length of time held. **Maturity date. Source: United States Treasury Department. O ld S e r ie s G 2 .7 0
@FedFRASER