Full text of Federal Reserve Bulletin : September 1979

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SEPTEM BER

1979

FEDERAL RESERVE

BULLETIN
Operating Guides in U.S. Monetary Policy: A Historical Review
Insured Commercial Bank Income in 1978
New Measures of Commercial Bank Credit and Bank Nondeposit Funds
Survey of Standby Letters of Credit
Treasury and Federal Reserve Foreign Exchange Operations




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VOLUME 65 □ NUM BER 9 □ SEPTEMBER 1979

FEDERAL RESERVE

BULLETIN
Board of Governors of the Federal Reserve System
Washington, D.C.

P U B L IC A T IO N S C O M M ITT E E
Joseph R. Coyne, Chairman □ Stephen H. Axilrod □ John M. Denkler
Janet O. Hart □ James L. Kichline □ Neal L. Petersen □ Edwin M. Truman
Michael J. Prell, Staff Director
The F ederal R eserve B u ll e t in is issued m onthly under the direction of the statt publications com m ittee. This com m ittee
is responsible for opinions expressed except in official statements and signed articles. D irection for the art work is provided
by M ack R. R ow e. Editorial support is furnished by the E conom ic Editing Unit headed by M endelle T. Berenson.




Table of Contents
679

The R ole of O perating G uides in
U.S. M o netary P olicy : A Historical
R eview
Review of the operating techniques used
by the Federal Reserve to implement
monetary policy since the end of World
War II.

692 Insured C ommercial B a n k Income
in 1978
Net income of insured commercial banks
reached more than $10 billion during
1978.
707 N e w M easures of C ommercial B a n k
Credit and B a n k S ources of F unds
The commercial bank credit series and
estimates of assets and liabilities of all
commercial banks have been revised to
reflect both conceptual and statistical im­
provements.
716 S urvey of
S tandby L etters

of

Credit

Banks in the large size group (total assets
of more than $18 billion each) account for
about three-fourths of all standby letters
of credit issued.
720

Treasury and Federal R eserve
Foreign Exchange Operations
According to the semiannual report,
progress was being made in early 1979 in
resolving the disparities in economic per­
formance among industrial countries.

737 Industrial Production
Output fell 1.1 percent in August.




738 S tatements

to

C ongress

Chairman Paul A. Volcker testifies on the
current economic difficulties facing the
nation in light of our need to deal con­
vincingly with the problem of inflation,
before the House Committee on the Bud­
get, September 5, 1979.
742 Governor Nancy H. Teeters discusses a
recent study by the Internal Revenue
Service on unreported income and the dif­
ficulties in measuring its extent, before the
Subcommittee on Oversight of the House
Committee on Ways and Means, Sep­
tember 10, 1979.
744 A nnouncements
Increase in the discount rate.
Increase in swap arrangement with the
Bank of Mexico.
Changes in staffs of the Board and of the
Federal Open Market Committee.
Publication of four educational pamphlets.
Admission of five state banks to member­
ship in the Federal Reserve System.
Establishment of mailing list for the Staff
Studies.
747 R ecord of P olicy A ctions of the
Federal Open M arket C ommittee
At its meeting on July 11, 1979, the
Committee decided to retain the ranges for
growth of the monetary aggregates for
1979 that it had established in February.
Thus, for the period from the fourth quar­
ter of 1978 to the fourth quarter of 1979,
the Committee reaffirmed ranges of 1Vi to

4 V percent for M -l, 5 to 8 percent for
2

M-2, and 6 to 9 percent for M-3. The
associated range for commercial bank
credit remained IV2 to 10V percent. Hav­
2
ing established the range for M -l in Feb­
ruary on the assumption that expansion of
ATS and NOW accounts would dampen
growth by about 3 percentage points over
the year, the Committee also agreed that
actual growth in M -l might vary in rela­
tion to its range to the extent of any
deviation from that estimate. The Com­
mittee anticipated that for the period from
the fourth quarter of 1979 to the fourth
quarter of 1980, growth might be within
the same ranges, depending upon emerg­
ing economic conditions and appropriate
adjustments that might be required by leg­
islation or judicial developments affecting
interest-bearing transactions accounts.
With respect to policy for the period
immediately ahead, the Committee de­
cided that ranges of tolerance for the an­
nual rates of growth in M -l and M-2 over
the July-August period should be 2 x to
h
6!/2 percent and 6 V to 1 0 V percent re­
2
^
spectively. The Manager was instructed to
direct open market operations initially
toward maintaining the weekly average
federal funds rate at about the current
level, represented by a rate of IO 4 per­
V
cent. Subsequently, if the two-month
growth rates of M -l and M-2 (given ap­
proximately equal weight) appeared to be
close to or beyond the upper or lower
limits of the indicated ranges, the objec­
tive for the funds rate was to be raised
or lowered in an orderly fashion within
a range of 9% to IOV2 percent.
On July 27, with the projections sug­
gesting that growth of both M -l and M-2




over the July-August period would exceed
the upper limits of their ranges and with
the objective for the federal funds rate at
the upper limit of its range, the Committee
voted to modify the directive adopted at
the meeting on July 11. Specifically, the
Committee raised the upper limit of the
intermeeting range for the federal funds
rate to 1 0 3 percent and instructed the
A
Manager to aim for a rate within a range
of IOV2 to 1 0 % percent, depending on
subsequent behavior of the monetary ag­
gregates, on conditions in foreign ex­
change markets, and on the current Treas­
ury financing.
759 L a w D epartment
Amendment to Regulation E, various bank
holding company and bank merger orders,
and pending cases.
Al

Financial

and

B usiness S tatistics

A3 Domestic Financial Statistics
A46 Domestic Nonfinancial Statistics
A54 International Statistics
A69 G uide to Tabular Presentation
and S tatistical R eleases
A70 B oard

of

G overnors

and

S taff

A72 Federal Open M arket C ommittee
and S taff; A dvisory C ouncils
A73 Federal R eserve B a nks , B ranches ,
and Offices
A74 Federal R eserve B oard P ublications
A76 Index

to

S tatistical Tables

679

The Role of Operating Guides in
U. S. Monetary Policy: A Historical Review
This article was prepared by H enry C. W allich,
M em ber, B oard of Governors o f the Federal
R eserve System, and Peter M . K eir, A ssistant
to the B oard, Office of Staff D irector fo r M one­
tary and Financial Policy. A n earlier version
appeared in Kredit und Kapital, vol. 11 (Jan­
uary 1978). A ll notes and references cited a p­
p ea r at the end of the article.

The operating techniques employed by the Fed­
eral Reserve to implement monetary policy
since the end of World War II have undergone
substantial evolution. This process has been
guided by a number of important developments:
(1) the “ rediscovery of money,” following an
extended period in the 1930s and 1940s during
which monetary policy played a relatively minor
role; (2) the breaking away of the Federal Re­
serve from Treasury control in 1951; (3) various
new analytical insights into the workings of
monetary policy; and (4) the advent of inflation
as a persisting— though presumably not perma­
nent— fact of life. The shift away from the gold
exchange standard toward floating rates, on the
other hand, had little effect on the choice of
Federal Reserve operating techniques.
The focus of this essay is on the operating
techniques used to implement Federal Reserve
open market policy. It does not deal with sec­
ondary instruments, such as the discount mech­
anism and changes in reserve requirements. Nor
does it seek to evaluate the successes and fail­
ures of open market operations in achieving
their ultimate policy goals— for employment,
prices, economic growth, and the balance of
payments.
The Federal Reserve’s approach to open
market policy has been substantially influenced
by the organizational structure through which




that policy must be decided and carried out.
Policy decisions are made by the Federal Open
Market Committee (FOMC), which consists of
five of the twelve presidents of the regional
Federal Reserve Banks, along with the seven
members of the Board of Governors. The seven
presidents who at any one time are not members
nevertheless participate in these meetings. The
logistics of bringing this group together is one
reason meetings ordinarily are limited to ten a
year.
Between the regular Federal Open Market
Committee meetings, which are held in Wash­
ington, policy is implemented by the Manager
of the System Open Market Account at the
Federal Reserve Bank of New York. The com­
plex and decentralized nature of this policy
mechanism has made it necessary to develop
explicit and rather formal procedures, both for
expressing policy decisions reached at meetings
and for delegating their execution between
meetings to the Manager.
W o r l d W a r II: P e g g i n g
the

Y ie l d C u r v e o n

U .S . G o v e r n m e n t S e c u r i t i e s

In connection with the financing of the Second
World War, the Federal Reserve, at the request
of the Treasury, had undertaken to maintain
approximately the level and term structure of
interest rates prevailing when the war began.
While this decision was critical to the efficient
financing of the war, it hampered the central
bank in pursuing its traditional function of
managing the nation’s supply of money and
credit.
To fulfill its commitment to “ peg” interest
rates, the Federal Reserve had to buy Treasury

680

Federal Reserve Bulletin □ September 1979

securities in the secondary market when offer­
ings by other investors threatened to force yields
to rise relative to the “ pegged” structure.1 The
Federal Reserve did not buy securities directly
from the Treasury, but its support operations
in the secondary market in effect guaranteed the
Treasury a ready demand for the new securities
issued to finance the war.
During the war, investors— individuals, fi­
nancial intermediaries, nonfinancial corpora­
tions, and all the rest— had willingly acquired
Treasury securities because many alternative
uses of their funds were circumscribed by war­
time controls. After the war, however, many
investors sought to dispose of these holdings;
still adhering to a pegged rate structure the
Federal Reserve had to acquire all offerings that
threatened to push yields above these official
pegs. In the process, bank reserves, bank credit,
and the money supply were all expanded.
This abdication of Federal Reserve control
over the supplies of money and credit had its
most serious consequences during the Korean
War. Since the public could cover its warinflated needs for funds simply by dumping
excess holdings of marketable Treasury debt on
the Federal Reserve at pegged prices, the Fed­
eral Reserve became— in the words of its own
Chairman— “ an engine of inflation.” After a
difficult and prolonged confrontation between
the administration and the Federal Reserve, an
“ accord” was reached with the Treasury in
March of 1951 that finally freed the Federal
Reserve from its lingering World War II com­
mitment to pegging.

T r a n s i t i o n f r o m 6"Pe g g i n g 99

Although the 1951 accord with the Treasury
ended the Federal Reserve’s commitment to
maintain rigid interest rate pegs, official support
of the government securities market was with­
drawn gradually. In particular, support of the
issues involved in Treasury financings continued
until nearly the end of 1952.
Not surprisingly, there were differences of
judgment within the Federal Reserve System as
to how rapidly and how completely the Federal
Reserve should pull back from market support




of this type. Fears were voiced that upon with­
drawal of official buying, prices of government
bonds might drop drastically, forcing heavy
losses on financial institutions that had invested
in longer-term bonds on the assumption that
their prices would be stabilized. In addition,
there was considerable concern that, in the wake
of the pegging experience, the secondary market
for U.S. government securities might not be
sufficiently broad and active to accommodate the
substantial volume of transactions needed to
implement an effective monetary policy.
To help resolve these questions the Federal
Open Market Committee, in early 1952, ini­
tiated a broad study of the U.S. government
securities market and its relation to Federal
Reserve operations. While this study was in
progress and the support of Treasury financings
was continuing, questions concerning the selec­
tion of appropriate operating targets for the
management of monetary policy were not con­
sidered in any systematic way. To some extent
the limited focus on explicit operating targets
in this period probably reflected a presumption
among the old hands on the Committee that the
operating approach used prior to the pegging
episode would simply be reinstituted. This, in
effect, is what happened.

R esu lts o f 1952 S tu d y
The 1952 study concluded that, if the Federal
Reserve’s open market transactions were to be
carried out effectively, they would consistently
have to represent only a relatively small share
of total dealer transactions with all participants
in the government securities market.2 Only
when this condition prevails can open market
operations be transacted with little direct impact
on market prices. Because the bulk of the Fed­
eral Reserve’s transactions are of a “ defensive”
type, it was (and still is) considered important
for the FOMC to influence bank reserves with­
out significantly disturbing securities prices.
Defensive operations are designed to keep the
posture of monetary policy essentially un­
changed by offsetting fortuitous fluctuations in
bank reserves that result from other factors, such
as currency flows, adjustments in float, and

Operating Guides in U.S. Monetary Policy

changes in the Treasury’s balance at Federal
Reserve Banks.
The 1952 study concluded that the govern­
ment securities market at that time did not
adequately satisfy these conditions for effective
implementation of monetary policy. Because
market professionals did not have a clear per­
ception of the reasons why the System might
act in the market, or of the magnitude of trans­
actions that might be undertaken in given market
sectors, they were reluctant to take investment
positions in government securities or to carry
the inventories needed to promote and accom­
modate an active volume of private investor
trading.
Acting on these findings, the Federal Open
Market Committee, in March 1953, introduced
several new operating procedures. First, to re­
duce market uncertainties about Federal Reserve
intentions, the Federal Open Market Committee
announced that henceforth operations would be
initiated solely “ to effectuate the objectives of
monetary and credit policy” and “ not to impose
on the market any particular pattern of prices
or yields.” 3 To bolster the credibility of this
promise, the Federal Open Market Committee
also stated that it would confine its market
transactions to securities of very short term,
preferably bills— except for the rare situation in
which intervention over a broader maturity
range might be needed to correct disorderly
market conditions. In market circles this came
to be known as the “ bills only” doctrine.
Additional constraints were imposed on
transactions of the System Account Manager at
times of Treasury financings: he was not to
purchase (1) maturing Treasury issues for which
an exchange was being offered, (2) new issues
being offered in an exchange, and (3) out­
standing issues with maturities comparable with
those of the new issues.
When it announced these modifications of its
approach to Treasury financings, however, the
Federal Open Market Committee stated that it
was still prepared to maintain an “ even keel”
in monetary policy during financing periods. In
other words, at times of Treasury financings the
Federal Reserve would refrain from any action
that might be interpreted as a change in mone­
tary policy.




681

M o d ifica tio n s o f 1953 R e stric tio n s
The 1953 “ bills only” doctrine was viewed by
some members of the Federal Open Market
Committee as essentially a temporary measure
to ease the transition from pegging. Actually,
the constraint was maintained until early 1961.
Moreover, during the intervening period System
operations were extended to longer-term securi­
ties, to help “ correct disorderly markets,” only
twice— and then only briefly.
The 1961 decision to end this procedure was
prompted by special developments during the
1960-61 recession. System efforts to combat the
recession through an easy monetary policy had
exerted downward pressure on U.S. short-term
interest rates at a time when higher short-term
rates abroad were encouraging capital outflows
and tending to augment a large U .S. balance
of payments deficit. To help minimize the
downward pressure on U.S. short-term rates,
the Federal Reserve sold Treasury bills in vol­
ume from its portfolio and then offset the re­
sulting drain on bank reserves with market pur­
chases of longer-term government securities. In
addition, when a need arose to add to the overall
supply of bank reserves, the System often met
it through purchases of intermediate- and long­
term securities rather than bills. The U.S.
Treasury bolstered this System effort to maintain
the bill rate by concentrating the bulk of its cash
borrowing during the period in Treasury bills.
Many analysts outside the Federal Reserve
System interpreted this abrupt 1961 shift in
operating technique to an emphasis on purchases
of longer-term securities as evidence that the
Federal Open Market Committee was trying to
“ twist” the yield curve on U.S. government
securities. Actually, in the view of the Federal
Open Market Committee, avoiding a depressing
effect on bill rates was the primary consid­
eration. In any event, econometric studies sug­
gest that the power of open market operations
to twist the yield structure— raising short and
lowering long rates— is minimal. Moreover, any
temporary effect the System “ swaps” may have
exerted on long-term rates in 1961 was
swamped by the offsetting influence from the
massive Treasury advance refundings under­
taken at the same time.

682

Federal Reserve Bulletin □ September 1979

Since 1961, the Federal Reserve has engaged
in periodic transactions in longer-term U.S.
government securities. And in August 1971, its
operations were extended to the full maturity
spectrum of the market for federal agency se­
curities as well. However, these transactions in
longer-term securities have been restricted ex­
clusively to purchases; they have occurred only
when the Federal Reserve needed to supply
reserves; and they typically— though not
always— have been limited to situations in
which dealers were willing sellers of securities
at close to prevailing market prices.
Since these constraints on System operations
in longer-term securities are now well under­
stood by market participants, such transactions
no longer create the types of uncertainties that
prevailed just after the 1951 accord. Moreover,
as economists have come to understand the
overriding importance of expectations about
market interest rates in determining the maturity
structure of security yields, outside pressures on
the Federal Reserve to step up its purchases of
longer-term securities as a means of twisting the
yield curve at times of economic recession have
diminished.
6‘E v e n K e e l i n g 99 T o d a y

The importance of the System’s “ even keel”
commitment on Treasury financings— originally
an avoidance of changes in monetary policy
during roughly three weeks, four times a
year— has also diminished in recent years. In
the late 1950s and early 1960s this commitment
was particularly important because Treasury re­
funding operations were concentrated in large
quarterly financings, and the prices and coupon
rates on new issues involved were set several
days in advance of the offering dates. In those
circumstances, the refundings were vulnerable
to any updrift in market interest rates that de­
veloped between their announcement and offer­
ing dates.
During recent years, however, virtually all of
the Treasury’s new marketable debt offerings
have been auctioned. Since auctions set the rates
of new issues on the actual date of offering,
rather than on the announcement date, and allow
the market, rather than the Treasury, to deter­




mine the price once the Treasury has set the
volume to be sold, the possibility that a financ­
ing will not be fully subscribed because of
last-minute shifts in market rates has been min­
imized. Auctioning and other debt-management
innovations have thus reduced the need to con­
strain monetary policy initiatives close to
Treasury financing periods.
R e t u r n to Tr a d it io n a l
O p e r a t in g T a r g e t s

After the spring of 1953— when the major tran­
sitional questions raised by the abandonment of
pegging were fairly well resolved— the Federal
Open Market Committee began to focus on the
question of appropriate operating targets.4 It
soon became clear that the general terms like
“ neutrality,” “ active ease,” and “ restraint”
that members had been using to characterize
their policy preferences needed explicit defini­
tion to be meaningful.
To help meet this need, some Committee
members began to support their expression of
policy preferences at Federal Open Market
Committee meetings with a more complete
spelling out of the analytical reasoning behind
them. Usually, they then specified an explicit
set of near-term financial conditions that they
believed would be consistent with their desired
policy approach. The particular conditions
specified usually included desired levels or
changes in key short-term interest rates, plus
related totals for member bank borrowing and
excess reserves at Federal Reserve Banks. Over
time the relationship between excess reserves
and member bank borrowing began to be ex­
pressed as a desired range of “ net free” or “ net
borrowed” reserves.5
While the staff furnished supporting detail on
recent economic and financial events, no inte­
grated projections were provided to suggest how
alternative specifications of net reserves and
money market rates were likely to be reflected
in the behavior of money, bank credit, and bond
yields, and how, under their influence, the
economy itself might evolve. Each Committee
member was left to judge for himself the likely
results of his proposals.
In the late 1950s and early 1960s some mem­

Operating Guides in U.S. Monetary Policy

bers began to question the Committee’s empha­
sis on money market conditions and net reserves
as operating targets for open market policy.
They noted, in particular, that the same level
of net reserves could mean rather different
things about the effects of policy depending on
whether credit demands at banks were strong
or weak. An effort by the Federal Reserve to
maintain a given level of free reserves at a time
when the banks, facing strong credit demands,
were trying to use up their free reserves through
credit expansion would lead to monetary and
credit expansion. An effort to hold free reserves
constant when banks, facing weak credit de­
mands, were willing to see their free reserves
rise would lead to contraction.
This point was driven home when the money
supply and total reserves at banks contracted
appreciably during the initial phase of the
1960-61 recession. In that period the Federal
Reserve was reluctant, for balance of payments
reasons, to reduce the System discount rate in
line with declines in short-term market rates.
With the relative cost of market sources of funds
thus declining, banks elected to repay borrow­
ings from the Federal Reserve as their custom­
ers’ loan demands dropped off. The Manager
of the System Open Market Account, following
the Federal Open Market Committee’s instruc­
tions to hold net reserves in a given range, did
not permit net borrowed reserves to decline as
rapidly as banks wanted. Thus the Manager held
back on the provision of nonborrowed reserves,
and total reserves at banks contracted. This
episode contrasted sharply with some earlier
ones at times when general demands for bank
credit had been strong and the Committee’s
tendency to hold to a given net reserve target
had contributed to very rapid growth in total
reserves, money, and bank credit.
The Federal Open Market Committee’s focus
on interest rate targets, a corollary of the free
reserves approach, also came into more general
question at this time, on the grounds that it
tended to minimize the Committee’s attention
to the performance of money and credit aggre­
gates. Since interest rates are procyclical, in that
they move up and down with swings in eco­
nomic activity, they generally tend to make
monetary p olicy appear cou n tercyclical,




683

whether money and credit are behaving coun­
tercyclical^ or not. Thus there was concern that
emphasis on interest rate targets could induce
inappropriate behavior of the monetary and
credit aggregates. During the early 1960s,
operating targets actually used nevertheless
continued to be net reserves and money market
conditions.
As the 1960s progressed, Committee mem­
bers began to shift their focus to the perform­
ance of the aggregates, especially the volume
of bank credit. This heightened Committee in­
terest in the aggregates was supported by im­
provements in the available data and by contin­
uing staff reviews and analyses of their behav­
ior. In addition, the Committee began to reflect
its increased attention to the importance of the
monetary and credit aggregates through revi­
sions in the structure and wording of the policy
directives given monthly to the Manager.
E x p e r im e n t a t io n w it h
Q u a n t it a t iv e T a r g e t s

Around the mid-1960s the Federal Open Market
Committee and its staff began to study and
experiment with more precise ways of choosing
and expressing relevant targets for open market
policy. As the discussion proceeded, two types
of targets were differentiated.
First, it was recognized that the net reserve
and money market rate variables that the Com­
mittee had stressed up to that point were essen­
tially “ operating targets,” suitable for express­
ing immediate operating objectives and instruc­
tions. Data on these measures were available
almost immediately, and System open market
operations could exert an immediate impact on
their behavior.6 For this reason, the Manager
of the System Account could be held responsible
for reaching such targets during the period be­
tween Committee meetings.
The second type of target variable— repre­
sented by the money supply and bank credit—
was of an intermediate character, less closely
related to Federal Reserve operations. Data for
these variables were available with longer time
lags. Moreover, because they responded with
a lag to changes in operating targets of the first
type, they had to be influenced indirectly

684

Federal Reserve Bulletin □ September 1979

through adjustments in those targets. As a re­
sult, the Manager did not have much chance,
through adjustments in the operating variables
he could control, to correct target variables of
the intermediate type when they deviated from
the Committee’s desired ranges between meet­
ings.
Despite these limitations on the Committee’s
short-run ability to control the intermediate tar­
get variables, Committee members began to
place a higher premium on them— initially
stressing bank credit and then, as time passed,
the monetary aggregates. This change of attitude
reflected the developing view that bank credit
and money provided a more predictable link to
the ultimate policy goals of output, prices, and
employment. In particular, as inflation increas­
ingly separated real from nominal interest rates,
many analysts began to view nominal rates as
seriously flawed for target purposes and turned
to the financial aggregates as substitutes.
The Federal Open Market Committee thus
began to focus more explicitly on the linkages
in the monetary process— running from the ini­
tial impacts on the money market and marginal
reserves (borrowed, excess, and free reserves)
through growth in money and bank credit and
changes in long-term interest rates, to the ulti­
mate behavior of output, prices, and employ­
ment. For its ongoing analysis of these linkages,
the Committee needed not only studies of past
relationships but also projections of future rela­
tionships. Thus, in addition to the usual reports
on recent economic and financial developments,
the staff began providing an integrated economic
projection of future developments.
As time passed, the forecasting procedures
used and the types of documentation provided
by the staff became increasingly sophisticated.
Basically, judgmental projections made by staff
experts with long experience in forecasting were
melded with results obtained from econometric
models. Two types of models were used: the
Board’s basic model of the U.S. economy (de­
veloped initially in conjunction with consulting
economists from the University of Pennsylvania
and the Massachusetts Institute of Technology);
and smaller models that focused more explicitly
on the relationships of the money supply and
interest rates to national income.
Efforts by the Committee to incorporate in­



termediate targets— especially the monetary ag­
gregate targets— into its actual operating proce­
dures evolved gradually, starting in the spring
of 1966. The first step was to add a proviso
clause to the policy directive the Committee
used to control the Manager’s operations be­
tween meetings. Prior to 1966, the operating
clause of the policy directive had directed the
Manager simply to gear his intermeeting actions
either to the maintenance of roughly the condi­
tions then prevailing in money markets, or to
some modest tightening or easing of those con­
ditions. The record of the Committee’s discus­
sion at the meeting was relied on to guide the
Manager as to how the term “ prevailing condi­
tions” should be interpreted, or how much con­
ditions should be modified if the Committee had
decided on some policy tightening or easing.
With the introduction of the proviso clause,
the Committee’s policy directive continued to
direct the Manager to seek either prevailing, or
somewhat tighter or easier, money market con­
ditions, but with the qualification that he modify
this objective if bank credit (or some other
aggregate measure) deviated significantly from
some recent or anticipated general pattern of
behavior. The following operating directive
voted at the Federal Open Market Committee
meeting of November 22, 1966, provides an
example:
To implement this policy, System open
market operation's until the next meeting of
the Committee shall be conducted with a
view to attaining somewhat easier conditions
in the money market, unless bank credit
appears to be resuming a rapid rate of ex ­
pansion.

This experiment with proviso clauses was part
of a more general Committee effort during the
late 1960s to exert more effective control over
the management of open market policy. While
the language of the policy directive itself re­
mained broad, its general wording began to be
linked through staff documents prepared for the
Committee to an explicit set of money market
conditions and expected growth ranges for the
aggregates.
At the November 1966 meeting, for example,
supporting staff documents indicated that the
directive language quoted would be consistent
with net reserves fluctuating around zero, a

Operating Guides in U.S. Monetary Policy

three-month Treasury bill rate around 5 percent,
and bank credit expansion in a range of 2 to
4 percent at an annual rate. These specifications,
of course, were linked to the directive language
actually adopted by the Committee. Similar
specifications had been provided to support al­
ternative directives, which the Committee ma­
jority had discarded.
The Committee’s decision to provide explicit
specifications of the financial conditions thought
to be consistent with the general language of
alternative directives had essentially two pur­
poses: to improve communication among Com­
mittee members themselves as they deliberated
on policy choices; and to tighten control over
the intermeeting actions of the Committee’s
agent.
For the four years that the Federal Open
Market Committee qualified its operating direc­
tive with proviso clauses, the operations of the
Manager were actually modified in accordance
with such clauses on only a few occasions— and
then only slightly. Thus, while monetary and
credit aggregates played a role, money market
conditions continued to be the dominant operat­
ing targets for open market policy during those
years, and there was no explicit linkage of the
proviso clause to any view of a desired longerrun trend in the aggregates.
At the beginning of 1970 the Federal Open
Market Committee began to change its empha­
sis. During the succeeding two to two and
one-half years, operating directives usually
stressed bank credit and money as primary tar­
gets, subordinating money market conditions to
a proviso. Average growth ranges were speci­
fied for both the bank credit proxy and the
money supply. The time span chosen for this
specification became the two-month period en­
compassing the current and succeeding meet­
ings. These target growth ranges were to be
achieved provided that in the process key money
market rates, chiefly the federal funds rate, did
not move outside their own stated ranges. Even
with this general emphasis on money and credit
as primary targets, actual growth in these meas­
ures often continued to deviate significantly
from the Committee’s specified ranges. Since
the Committee remained reluctant to authorize
wide ranges for possible change in money mar­
ket rates, the Manager was constrained in mov­



685

ing to counter deviations in money growth rates;
moreover, as noted earlier, the aggregates re­
sponded to his actions with a lag.
A special subcommittee of the Federal Open
Market Committee charged with suggesting
means of improving control of the monetary
aggregates recommended in 1972 that the Com­
mittee experiment with total or nonborrowed
bank reserves as an operating target. The sub­
committee acknowledged that past efforts to
realize specified growth ranges for the money
supply had often been frustrated by an unwill­
ingness of the Committee to set a federal funds
constraint that permitted sufficient movement in
rates. It concluded that a shift of emphasis to
reserves might help the Federal Open Market
Committee to overcome this evident reluctance.
Responding to this suggestion, the Committee
experimented first with total reserves as an
operating target. They were quickly discarded,
however, because wide month-to-month fluctu­
ations in Treasury balances at banks (which are
not included in the money supply) would often
have resulted in negative growth rates in the
target for total reserves which risked misleading
outside observers. To avoid this problem, the
Committee adopted “ reserves against private
deposits” (RPD) as its target variable.
The RPD measure also proved difficult to
work with. Shifts within the deposit structure—
from demand to time deposits, and from demand
deposits at large banks to demand deposits at
smaller banks— created marked changes in re­
quired reserves for given totals of private de­
posits. These variations reflected the widely
differing structure of reserve requirements that
apply to deposits of different types and sizes.
As a result of these differences, the multiplier
between RPD and the money supply proved to
be highly unstable. Consequently, the Federal
Open Market Committee soon concluded that
money market conditions were preferable as its
immediate operating target.
O p e r a t in g Ta r g e t s N

ow

In U se

Pursuant to the Federal Reserve Reform Act and
the Full Employment and Balanced Growth Act
(Humphrey-Hawkins), the Federal Reserve now
reports semiannually to the banking committees
of the Congress on its prospective targets for

686

Federal Reserve Bulletin □ September 1979

the annual growth of various measures of the
money supply (M -l, M-2, and M-3) and of bank
credit.7 The initial report is due in mid-February
after the President has presented his annual
budget and economic messages to the Congress.
In this report the Federal Reserve states its
policy targets for the current calendar year and
indicates how they are related to the short-term
goals set forth in the President’s Economic
Report.
The second Federal Reserve report is made
to the Congress in July. In it, the System ex­
plains (1) the record of actual money growth
during the first half of the year, (2) any devia­
tions that appear to be developing from the
annual targets specified in February, and (3) its
current growth targets for both the present and
subsequent calendar years.
At each of its monthly meetings the Federal
Open Market Committee sets two-month ranges
of tolerance for growth in M -l and M-2. These
shorter-run ranges are intended to be broadly
consistent with the calendar-year targets re­
ported semiannually to the Congress;8 but they
are not completely constrained by those targets
and may exceed or fall short of them. Since
the Committee can change its calendar-year
ranges in light of the economic outlook, it
retains considerable discretion to adjust the
two-month ranges at its monthly meetings.9
Actions linked to these short-run ranges thus
continue to be the focus of open market policy.
When the performance of the money supply
appears to be deviating from the Committee’s
stated two-month ranges, the Manager of the
System Account is still constrained in his efforts
to offset these deviations by a federal funds rate
proviso. He can initiate countering open market
purchases or sales only so long as these opera­
tions, or other market factors, do not push the
weekly average federal funds rate outside its
specified range, generally 50 to 100 basis points
wide. If growth rates for M -l and M-2 (occa­
sionally weighted unequally to minimize the
impact of known distortions in the series) appear
to be remaining outside the Committee’s desired
ranges, and the Manager’s actions to counter
this deviation have moved the funds rate to the
upper or lower limit of its range, he must request
new instructions from the Committee.




So long as the funds rate remains within its
specified range, the Manager has leeway to
respond to evidence that weighted growth rates
for M -l and M-2 are approaching or moving
outside the limits of'their ranges. The FOMC
may instruct him to begin offsetting market
action when the aggregates move substantially
into the upper or lower halves of their ranges.
Alternatively, the Committee may instruct him
to take action only when growth rates for M -l
and M-2 are already close to or exceeding the
limits of the ranges. In either case, these
operating procedures encourage the Manager to
respond more sensitively to deviations in growth
of the aggregates from desired rates than was
the case in the late 1960s and early 1970s. Of
course, the full effect on M -l and M-2 of a
change in the funds rate occurs, not within the
one-month intermeeting period, but cumula­
tively over a period of roughly six months.

O p e r a t in g P r o b l e m s W it h
M o n e t a r y Targets

With its increased emphasis on the monetary
aggregates as policy targets, the Federal Reserve
has had to decide how to deal operationally with
difficult conceptual and statistical questions. A
committee of academic experts from which the
Federal Reserve solicited advice on the meas­
urement of money described the essential re­
quirements for an effective aggregates target:10
In conducting monetary policy, the Fed­
eral Reserve should use as an intermediate
target that monetary total (aggregate), or
those totals, through which it can most re­
liably affect the behavior of its ultimate
objectives—the price level, employment,
output, and the like. Which total or totals
best satisfy that requirement depends in turn
on (1) how accurately the total can be meas­
ured; (2) how precisely, and at what costs
including unwanted side effects, the Fed can
control the total; and (3) how closely and
reliably changes in the total are related to
the ultimate policy objectives.
The Committee identified three conceptual
bases for defining money. One takes money as
those assets that correspond to the non-interestbearing fiat issues of the ultimate monetary
authority— or the “ monetary base.” In the

Operating Guides in U.S. Monetary Policy

United States this base consists of circulating
currency plus reserves (deposits) held at Federal
Reserve Banks by commercial banks that are
members of the Federal Reserve System.
The second concept views money as assets
that are used as media of exchange. Tradition­
ally, this definition has included currency in
circulation plus demand deposits at commercial
banks (or M -l). The third concept defines
money as assets that serve as a temporary abode
of purchasing power and are, or are readily
convertible into, media of exchange; it thus
encompasses both the transactions and store-ofliquidity functions of money. The report noted
that many scholars view this third basis as more
closely and reliably related to ultimate policy
objectives than the other two. The report also
noted, however, that this basis has the most
ambiguous empirical content of the three, in the
sense that it could correspond to a wide range
of possible broader aggregates.11
Under existing arrangements for data collec­
tion, constraints imposed by the time lag with
which statistics become available have led the
Federal Reserve to express its two-month inter­
meeting policy targets exclusively in terms of
M -l and M-2, with related information provided
on the monetary base. While data on the broader
aggregates and bank credit are available only
with significantly longer lags, M-3 and bank
credit are also used when the Committee sets
its 12-month growth ranges.
A c c u r a c y o f M e a su re m e n t
The accurate measurement cited by the aca­
demic experts as necessary for a good policy
target is better satisfied by the monetary base,
which poses few measurement ambiguities, than
by M -l and M-2. Measurement of the monetary
aggregates is complicated because public hold­
ings of money cannot be identified directly; they
have to be estimated from bank records, which
are not always reported consistently and pose
problems of definition and consolidation. More­
over, deposit data for banks that are not mem­
bers of the Federal Reserve System have been
available only for limited benchmark periods
(semiannually until December 1972, quarterly
since then).12 Between benchmarks and during




687

the delay in receiving the benchmark data, they
have had to be estimated. Deposit data from
a sample of nonmember banks are now being
collected to fill this gap, but they are still being
tested and are not yet fully incorporated into
the money supply measures.
While these problems have introduced uncer­
tainty into measurement of the aggregate supply
of money, their impact on short-run changes in
that supply generally appears to have been quite
limited. Consequently, they have not hindered
the choice of a policy target.
C o n tro l o f the A g g r e g a te s
On the more critical question of effective man­
agement of the aggregates, the Federal Reserve
has found it difficult to exert close short-run
control over M -l and M-2 without risking un­
wanted side-effects on interest rates. In addition,
relationships between the monetary targets and
the ultimate objectives of policy have proved
to be substantially less predictable than desired.
Federal Reserve efforts since 1972 to control
growth in the monetary aggregates have placed
the greatest emphasis on M - l.13 These efforts
have sometimes been frustrated because the
ratio (or multiplier) between bank reserves and
M -l tends to vary, depending on the form that
growth in M -l takes.
Growth of M -l in the form of an expansion
of currency in circulation creates a dollar-fordollar drain on the supply of reserves available
to the banking system. This one-for-one drain
does not occur, however, when the increase in
M-l reflects growth in member bank demand
deposits because the banking system is subject
to fractional reserve requirements. Similarly,
since existing regulations call for a higher re­
serve requirement at the margin as the total
deposits of a given member bank expand, the
volume of reserves needed by the banking sys­
tem to support a given growth in demand de­
posits will differ depending on the sizes of the
banks at which that growth occurs. Finally, if
banks as a group change their relative desire
to hold excess reserves, the ratio between re­
serve growth and money growth will change.
Even if the Federal Reserve could accurately
forecast the currency and deposit mix the public

688

Federal Reserve Bulletin □ September 1979

is likely to demand, and hence the reserve
growth needed to accommodate some specified
expansion in M -l, it would be reluctant to force
the financial system to conform to this rigid
pattern. Demands for M -l also tend to vary
considerably in the short run, due to institutional
considerations that often are not very responsive
to short-term changes in interest rates; thus a
rigid Federal Reserve commitment simply to
supply the reserves its projections of the deposit
mix showed would be needed for a desired rate
of growth in M -1 could be expected to produce
marked short-run fluctuations in market interest
rates.
In practice, the Federal Open Market Com­
mittee has been unwilling to seek such close
short-run control over growth in the money
supply. This reluctance reflects the Committee’s
belief that the short-run volatility in market
interest rates likely to result from such a policy
would risk greater disruption to the economy
than the short-run instability in money growth
rates the policy was seeking to avoid.
When incoming data show a sudden marked
acceleration or slowing in money growth rates,
the Committee must decide whether the change
is a temporary aberration likely soon to be
reversed, or a more fundamental change in
money demands that stems from a basic adjust­
ment in the performance of the economy. If the
Committee acted immediately to counter an
observed change in money growth, and the
change then proved to be temporary, the action
could be destabilizing and require a subsequent
offsetting adjustment. Since Committee actions
affect the public’s willingness to hold money
with a lag through their influence on interest
rates, such attempts at fine tuning could produce
perverse results.
To minimize this risk, the Federal Open
Market Committee typically has adopted an
intermediate position. Confronted with an un­
expected overshoot or undershoot of its money
growth targets, the Committee has taken action
that neither fully ignores nor fully responds to
the miss, until the underlying growth tendency
can be differentiated from the “ noise” of aber­
rations in the data. This approach poses some
risk that needed countercyclical policy actions
will be less timely than desired. But the Com­




mittee believes that the accentuated volatility in
short-term interest rates likely to result from
efforts at instantaneous fine tuning of the aggre­
gates poses a greater risk. This belief has been
bolstered by Federal Reserve research that sug­
gests that temporary aberrations in money
growth rates create few difficulties for the econ­
omy so long as desired growth rates are attained
over periods of two to four quarters.

R e la tio n sh ip s to U ltim ate O b je c tiv e s
Relationships between the monetary aggregates
and measures of ultimate economic activity have
proved to be substantially looser in practice than
is typically implied by economic theory. This
discrepancy between theory and practice ap­
pears to have been particularly wide for the
monetary base. The ratios of M -l and M-2 to
the gross national product (that is, the income
velocity of money) have been somewhat more
stable, but they have shifted significantly at
critical times.
The growth of M -l relative to GNP has
changed in the 1970s as important institutional
innovations have encouraged the public to shift
transactions balances from the non-interestbearing demand deposits that are included in
M -l to the interest-bearing accounts that are
included in M-2 and M-3. In New England and
New York, savings and loan associations, sav­
ings banks, and commercial banks have all been
authorized to promote interest-bearing accounts
that permit holders to use “ negotiable orders
of withdrawal” much as they would checks.
Credit unions are offering “ share draft” ac­
counts that serve much the same function.
In the face of these developments, the Federal
Reserve and the Federal Deposit Insurance Cor­
poration have sought to maintain the balance
of competition among banks and other types of
thrift institutions by relaxing some of the re­
straints on offerings of savings deposits by
commercial banks. For example, commercial
banks have been authorized to offer savings
accounts to businesses and state and local gov­
ernments as well as to individuals and nonprofit
institutions. Holders of savings accounts have
been permitted to transfer funds from savings

Operating Guides in U.S. Monetary Policy

to demand deposits by telephone as well as by
mail or in person. Finally, depositary institu­
tions have been authorized to offer overdraft
privileges on checking accounts that involve an
automatic transfer of funds from savings ac­
counts.14
All of these innovations encourage the public
to economize on M -l by holding more of their
transactions balances in various interest-bearing
forms of M-2 and M-3. Moreover, instruments
have been developed that, although not defined
as money, fulfill its liquidity function and to
that extent help the public to economize on
holdings of M-2 and M-3 as well. Mutual funds,
for example, are now offering shares in pools
of money market assets that can be liquidated
on demand, while depositary institutions have
increased their emphasis on security repurchase
agreements with large customers. Since these
RPs are secured by Treasury and federal agency
debt, they are a relatively safe and liquid alter­
native to deposits.
The public’s resort to interest-bearing trans­
actions accounts has strengthened the case for
use of a relatively broad measure of money as
a policy target. The particular broader measures
that have been available, however, pose impor­
tant practical operating problems of their own.
For one thing, large negotiable certificates of
deposit at large banks— on which there are no
interest rate ceilings— are excluded from M-2
on the grounds that they behave more like
securities than deposits; those issued by smaller
banks and all large nonnegotiable certificates
remain in M-2 because historical data are lack­
ing. Since CDs at smaller banks are similar in
function to those at large banks, a strong case
can be made for excluding them from M-2 as
well.
Second, M-2 and M-3 also include certain
smaller CD-type accounts that are subject to
interest rate ceilings, offer higher yields in re­
turn for extended maturities (out to seven years),
and carry substantial penalties for early with­
drawal. These accounts, too, are more compa­
rable with market securities than they are with
the transactions and savings-type deposits typi­
cally viewed as money.
Relationships between changes in the broader
aggregates and GNP can be further clouded by




689

the distortions that interest rate ceilings on time
and savings accounts sometimes introduce into
deposit flows. When yields on competing mar­
ket securities rise to levels appreciably above
ceiling rates on deposit accounts, growth in M-2
and M-3 may slacken abruptly. Not only are
current savings flows diverted to the higheryielding market securities but also some thrift
accounts accumulated at lower rates may be
redirected into market securities. When rates on
liquid market securities drop through official
ceilings to levels significantly below those
available on thrift accounts, flows to depositary
institutions are typically augmented. For this
reason, observed changes in growth rates for
M-2 and M-3 have to be carefully evaluated to
judge how much of the indicated shift may be
attributable simply to changes in market yields
relative to depositary rate ceilings.
The sensitivity of the broader aggregates to
changes in relative market yields has been tem­
pered during the past year by the introduction
of money market CDs. Starting in June 1978,
commercial banks and thrift institutions were
authorized to offer nonnegotiable certificates
having a 26-week maturity, a minimum denom­
ination of $10,000, and a maximum rate of
interest linked to the average rate paid on sixmonth Treasury bills in the latest Treasury auc­
tion prior to issuance of the certificates.15 Thus
holders of deposits with fixed-rate ceilings who
wish to take advantage of rising market interest
rates now have an alternative to a shift to market
securities. And, while there were large shifts
from savings accounts to the money market CDs
at intermediaries following their inauguration,
overall growth in thrift accounts slowed sub­
stantially less than it had in earlier periods of
sharp advances in market rates.
Because the quickened pace of regulatory
change and financial innovation has fundamen­
tally altered the character of the public’s mone­
tary assets, the economic meaning of traditional
measures of money has changed. In view of
these marked changes, the Federal Reserve re­
cently published a set of staff proposals designed
to facilitate a discussion of possible revisions
in the definition of money.16 These proposed
definitions group together similar kinds of de­
posits held at different types of institutions.

690

Federal Reserve Bulletin □ September 1979

Although they are designed to make the mone­
tary aggregates more meaningful under current
institutional arrangements, they recognize that
no one aggregate or group of aggregates can
meet all current analytical needs or even serve
particular needs indefinitely.
The many practical difficulties of selecting a
monetary target with predictable links to GNP
reinforces a persisting strand of Federal Reserve
thought: that no single formula or operating
target can be relied on to work effectively in
all circumstances. For this reason the Federal
Reserve has typically hedged its commitment

to any given operating target, constantly check­
ing performance of the target and other relevant
economic variables to determine whether the
presumed linkage between them is working as
expected. The future of Federal Reserve mone­
tary policy techniques is unforeseeable, de­
pending as it does in large measure upon devel­
opments in the economy, especially the degree
to which inflation can be overcome. But the
deeply rooted practice of eclectic choice among
operating techniques and policy targets, rather
than exclusive commitment to one, is likely to
continue.
□

Footnotes

1. The characteristics of this wartime yield structure
were a three-month rate of 3/8 percent, a seven- to
twelve-month rate of 7/8 percent, and a twenty-year
rate of 2V percent. This structure was broadly believed
i
to reflect liquidity preference—the fear that long-term
rates might rise and the consequent desirability for
investors seeking to avoid capital losses of staying with
short-term assets.
It was widely recognized that pegging of such a rate
structure was internally inconsistent. If long-term se­
curities were expected to remain truly pegged until
maturity, there was no point in holding any security
with a lower yield but no lower risk. Anyone who acted
on this theory and bought the 2V percent bonds of
i
September 1972 on the presumption that pegging by
the Federal Reserve had removed the risk of investing
at the long end of the market would have seen his bonds
depreciate to a low of 7824/3 in early 1960.
2
2. Federal Open Market Committee report of ad hoc
subcommittee on the government securities market,
November 12, 1952; reprinted in The Federal Reserve
System After Fifty Years, Hearings before the Subcom­
mittee on Domestic Finance of the Committee on
Banking and Currency, House of Representatives, 88
Cong. 2 Sess., vol. 3 (Government Printing Office,
1964), pp. 2005-55.
3. See Fortieth Annual Report of the Board of Gov­
ernors of the Federal Reserve System Covering Opera­
tions for the Year 1953 (1954), p. 89.
4. The ultimate “target” of policy is a favorable
performance of the economy as reflected in output,
prices, and employment. The financial variables used
to define desired policy ranges, and referred to as targets
in this article, are merely means to achieve this broader
end and not targets in any final sense.
5. When excess reserves exceed member bank bor­
rowings, the net position of the banking system shows
free reserves; when borrowings exceed excess reserves,
there are net borrowed reserves.
6. Starting in the mid-1960s, large U.S. commercial
banks with temporary reserve deficiencies began to press
more actively to borrow excess reserves (called federal
funds) from banks with temporary reserve surpluses,
even when the interest cost was above the Federal




Reserve discount rate. Member banks often elected to
borrow such funds too, typically for one day at a time,
apparently in order to avoid the close surveillance of
their operations by Federal Reserve discount officers
that traditionally accompanies borrowing from the Sys­
tem for any extended period. As a result of this prefer­
ence, a national market for federal funds developed
rapidly. And since Federal Reserve operations to ease
or tighten the bank reserve base are reflected immedi­
ately in the federal funds quotation, this rate began to
be viewed as the bellwether of Federal Reserve policy in­
tentions, superseding the 90-day Treasury bill rate.
7. M-l includes (1) demand deposits at all commer­
cial banks other than those due domestic commercial
banks and the U.S. government, less cash items in the
process of collection and Federal Reserve float; (2)
foreign demand balances at Federal Reserve Banks; and
(3) currency outside the Treasury, Federal Reserve
Banks, and vaults of all commercial banks.
M-2 includes M-l plus time and savings deposits at
commercial banks other than negotiable certificates of
deposit of $100,000 or more issued by large weekly
reporting commercial banks.
M-3 includes M-2 plus deposits at mutual savings
banks and savings and loan associations, and shares at
credit unions.
Bank credit includes total bank loans and investments
(measured on a monthly average basis) less interbank
loans.
8. When commercial banks were authorized to make
automatic transfers from savings to demand deposits in
November 1978, the Federal Open Market Committee
for a short time also monitored two-month ranges for
an additional aggregate, known as M-1 + , which con­
sists of M-l plus savings deposits at banks. Data are
not available on a sufficiently timely basis for M-4 and
M-5 and the bank credit proxy.
9. Prior to the Full Employment and Balanced
Growth Act, the Federal Reserve made quarterly reports
to the Congress on its 12-month growth targets for
money and credit. At each reporting the base periods
for the ranges were moved ahead one quarter. This
moving-base procedure was sometimes criticized be­
cause the possibility of “base drift” tended to compli­

Operating Guides in U.S. Monetary Policy

cate comparisons of growth performance over time.
Furthermore, since new 12-month growth targets were
always related to the latest base quarter, the FOMC did
not explicitly account for deviations from targeted
growth ranges in earlier quarters. Under the HumphreyHawkins reporting procedure, there is no longer a mov­
ing base because the focus at successive congressional
reviews is to be on given calendar years. Thus the
Federal Reserve is now required to make an explicit
accounting and adjustment for deviations from its tar­
geted growth ranges as the calendar year progresses.
10. Improving the Monetary Aggregates: Report of
the Advisory Committee on Monetary Statistics (Board
of Governors of the Federal Reserve System, 1976),
p. 7.
11. The possibilities cited in the report included M-2,
M-3, M-4 (M-2 plus large CDs), and M-5 (M-3 plus
large CDs), and a number of permutations that combine
deposit-type instruments with liquid market securities.
12. Until March 1976, the benchmark period was a
single day. But starting with that month, weekly average
data for the week ending on the Wednesday that includes
the call date have been available for benchmarking.
13. While the Manager of the System Open Market
Account has most frequently been directed to weigh M-1
and M-2 equally when evaluating their actual growth
patterns in relation to the Committee’s desired ranges,
the fact that M-2 includes M-l still places the greatest
effective weight on M-l.
14. On April 20, 1979, the U.S. Court of Appeals




691

for the District of Columbia Circuit invalidated the
regulations of the Board and the FDIC that permitted
insured banks to transfer funds from a depositor’s sav­
ings account to a demand deposit account to cover
overdrafts or to maintain a specified balance. The court,
however, delayed the effective date of its decision until
January 1, 1980, to allow the Congress time to review
the matter. On August 21, 1979, the Board petitioned
the U.S. Supreme Court to review the decision of the
Court of Appeals.
15. Commercial banks may issue certificates with a
maximum rate of interest equal to the average discount
rate on six-month Treasury bills in the most recent
Treasury auction. Before March 15, 1979, thrift institu­
tions were permitted to offer 1/4 of 1 percent more on
the certificates than commercial banks, regardless of the
level of the six-month bill rate. Regulatory changes that
went into effect on March 15, 1979, prohibited com­
pounding of interest on subsequent issues of the certifi­
cates and authorized a full 1/4-point differential for thrift
institutions only when the six-month bill rate is 83
A
percent or less. When the six-month bill rate is between
83 and 9 percent, commercial banks may pay the actual
A
bill rate, while thrift institutions may pay 9 percent and,
thus, experience less than a 1/4-point differential. When
the six-month bill rate is 9 percent or greater, both banks
and thrift institutions may pay the actual bill rate.
16. See “A Proposal for Redefining the Monetary
Aggregates,” Federal Reserve Bulletin, vol. 65 (Jan­
uary 1979), pp. 13-42.

692

Insured Commercial Bank Income in 1978
This article was prepared by Barbara Negri
Opper of the B oard’s Division of Research and
Statistics.
Net income of insured commercial banks
reached $10.7 billion during 1978.1 The 20
percent profit increase over the preceding year
outpaced the 12.5 percent expansion in the
assets of insured commercial banks, and return
on assets increased substantially for the second
consecutive year, to a level higher than in any
other year since 1973. Because of this vigorous
profit growth and a modest further increase in
the leverage of assets with respect to equity,
returns on average equity capital also reached
a post-1973 high of 12.9 percent. The increase
in profits during 1978 was widespread among
insured commercial banks, although medium
and large regional-type banks, which tend to be
retail-oriented but which have flexible access to
funds, experienced the largest gains.
Insured U.S. banks with foreign offices at­
tributed more than one-fourth of their total 1978
net income to international business, according
to new reports on domestic and foreign opera­
tions at those institutions. The profitability of
these banks, based on data first reported for
1978, is discussed later.
The most important source of improvement
in return on assets at nearly all size classes of
banks was the increase in net interest margins,
which are the difference between gross interest
income adjusted for taxable equivalence and
gross interest expense. Table 1 summarizes in­
dustry return on average assets. Rising short­
term market yields during 1978 allowed banks
1.
Detailed income and expense data for all insured
and all member banks from 1970 through 1978 appear
in appendix tables A.l and A.2.
The data base was developed by Nancy Pittman, and
research assistance was provided by Mary McLaughlin.
Peter Lloyd-Davies prepared the Technical Note.




to acquire high-yielding assets, while regulatory
ceilings limited increases in the interest cost on
savings and most small-denomination time de­
posits. This disparity in the interest rate sensi­
tivity of assets and liabilities had its greatest
impact on banks with less than $1 billion in
assets, which rely most heavily on savings and
small time deposits as a source of funds; their
gross interest income and expense increased less
than the industry averages while their net inter­
est margin increased 25 basis points— double
the rise for all other banks (chart 1). By contrast,
the major money center institutions— very large
banks a substantial portion of whose assets and
liabilities carry returns that are highly sensitive
to movements in market yields— experienced
above-average increases in gross interest income
1. Income and expenses as percent of average
assets, all insured commercial banks, 1976-781
Item

1976

1977

1978

Gross interest earn ed ................................
Gross interest expense. . . . : ...................
N et interest m argin...............................
N oninterest income...................................
Loan-loss provision..................................
Other noninterest expense.......................

6.39
3.47
2.92
.71
.32
2.44

6.47
3.54
2.93
.70
.26
2.45

7.24
4.17
3.07
.74
.25
2.50

Income before tax..................................
Other 3..................................................

.88
.21
.03

.92
.23
.01

1.06
.29
- .0 2

N et incom e..............................................
Cash dividends declared..................

.70
.27

.71
.26

.76
.26

N et retained earnings................................

.43

.45

.50

3.33
1,131

3.33
1,257

3.48
1,419

M emo

Taxable equivalent net interest
Average assets, billions o f dollars i .........

1. Average assets are fully consolidated and net of loan-loss reserves;
averages are based on amounts outstanding at the beginning and end
o f each year.
1976 and 1977 interest and noninterest income have been restated
slightly to conform with a 1978 definitional change that adds dividends
on stock to interest income.
2. Includes all taxes estimated to be due on income, on extra­
ordinary gains, and on securities gains.
3. Includes securities and extraordinary gains or losses ( —) before
taxes.
4. For each bank with profits before tax o f at least $25,000, income
from state and local obligations was increased by the lesser o f that
interest income or profits before tax. F or banks with profits before
tax between zero and $25,000, one-third o f the lesser o f profits or
state and local interest income was added. This adjustment approxi­
mates the equivalent pre-tax return on state and local obligations.

693

and expense but a below-average increase in net
interest margins. At these banks, reductions in
loan-loss provisions contributed about as much
to improvement in net earnings as did the in­
crease in net interest margins.
I

n t e r e s t

I

n c o m e

The strong growth in gross interest income
during 1978 is attributable to both the general
increase in market interest rates and a portfolio
shift by banks from lower-yielding securities
into loans. As a percentage of average assets,
gross interest earned adjusted to a taxableequivalent basis increased 78 basis points, after
only a negligible rise in 1977.
The gross portfolio yield on loans at all in­
sured commercial banks increased 117 basis
points— 119 basis points net of loan-loss provi­
sions (table 2). In addition to the influence of
the general rise in market yields during the year,
loan portfolios were reallocated toward loans
with higher returns. Growth in real estate and
personal loans accounted for about two-thirds
of the addition to domestic loan portfolios at
all insured commercial banks. Even on a fully
consolidated basis, such loans accounted for
half of the aggregate increase in loan portfolios
of all insured U.S. banks. With yields on con­
sumer loans ranging between 11 and 13 percent
in 1978, returns on these loans substantially
exceeded average gross yields on the loan port­
folios at most banks, and were well above the
average business-loan prime rate prevailing
during the year.

2. Rates of return on fully consolidated
portfolios, all insured commercial banks,
1976-781
Percent
Item
Securities, to ta l..........................................
U.S. governm ent....................................
State and local governm ent.................
O ther.........................................................
Loans, gross................................................
N et o f loan-loss provisions.................
Taxable equivalent2
Total securities......................................
State and local........................................
Total securities and gross lo a n s.........

1976

1978

6.26
7.09
5.15
7.68
8.89
8.24

6.22
6.98
5.08
8.92
9.15
8.63

6.47
7.37
5.24
8.80
10.32
9.82

8.43
10.11
8.72

8.43
10.18
8.96

8.89
10.62
9.95

1. Calculated as described in the Technical Note.
2. See note 4 to table 1.




1977

Yields on securities held in bank portfolios
also increased during 1978, although the
gain— 46 basis points on a taxable-equivalent
basis— was less than half that for loans. As loan
demand accelerated during 1978, bank securi­
ties holdings as a proportion of interest-earning
assets declined by about as much as higheryielding loans increased (table 3).
The dollar value of industry holdings of U.S.
government obligations remained unchanged
over the year despite some increased need for
those instruments arising from their use as col­
lateral for bank repurchase agreements (RPs),
which increased rapidly during 1978, as well
as for government deposits. In contrast with the
pattern for federal obligations, some net new
funds were invested in state and local govern­
ment issues during 1978, although not in
amounts large enough to maintain the share of
bank assets in such obligations. Demand for
those tax-exempt instruments probably stemmed
from the rapid growth in taxable profits at banks.
At the end of 1978, all government obligations
held by banks had a longer average maturity
than was the case a year earlier. There had been
a shift out of U.S. government obligations ma­
turing within one year and an increase in long­
term state and local government obligations,
including those with maturities of ten years or
more.
The sensitivity to the credit cycle of the gross
interest income of banks is influenced strongly
by the maturity of loan and investment portfo­
lios and by the use of floating-rate loan agree­
ments. Real estate and consumer loans tend to
remain outstanding longer than business loans,
for example, and interest rates on such loans
have been less responsive than the business-loan
prime rate to cyclical shifts in market yields.
Moreover, floating or variable interest rates are
more prevalent on bank business loans than on
real estate or consumer loans. Banks with a
preponderance of the latter two types of loans
consequently have tended to experience rela­
tively low cyclical volatility in gross interest
income. To illustrate, more than one-third of
the loan portfolios of banks with assets less than
$100 million is in real estate loans and nearly
another third is in personal loans. Since 1970,
gross interest income of this class of bank has

694

Federal Reserve Bulletin □ September 1979

3. Portfolio composition as percent of total assets including loan-loss reserves, all insured commercial
banks, 1976-781
Average during year
Domestic

Fully consolidated

Item
1976
Interest-earning assets.........................................................................................
L o a n s..................................................................................................................
Securities............................................................................................................
U.S. T reasury...............................................................................................
U.S. government agencies.........................................................................
State and local governm ents.........................................................................
Other bonds and stock...............................................................................
Gross federal funds sold and reverse R P s.................................................
Interest-bearing deposits2..............................................................................

1977

1978

1976

1977

1978

80.9
52.0
23.9
9 .2
3.5
10.6
.6
4 .0
1.0

80.3
52.1
23.2
9 .2
3.3
10.2
.5
4 .2
.8

79.2
53.3
21.3
7 .7
3.2
9 .8
.6
4 .0
.6

83.4
53.1
20.8
7.9
3 .0
9.1
.8
3.4
6.1*

83.3
53.4
20.0
7.8
2.8
8.7
.8
3.6
6 .3e

82.4
54.6
18.4
6.5
2.7
8.3
.9
3.3
6. l e

958

1,056

1,198

M emo

Average gross assets (billions o f dollars)........................................................

1,116

1,244

1,406

1. Percentages are based on aggregate data and thus reflect the
heavier weighting o f large banks. D ata are based on averages for call
dates in December o f the preceding year and M arch, June, September,
and December o f the current year.
2. Interest-bearing deposits held by domestic offices first were

reported in 1976. Reporting of those balances on a fully consolidated
basis began in December 1978, and the number shown for 1978 is
an average based upon the reported December am ount and estimates
for earlier call report dates. Fully consolidated interest-bearing de­
posits are estimated for 1976 and 1977.

shown far more secular uptrend, but less cycli­
cal variability, than that of larger banks (top
panel of chart 1).
The increase in the rate of gross interest
income received by the banking industry as a
whole during 1978 primarily reflects the experi­
ence of the larger banks. These institutions on
average have a greater concentration of loans
with shorter maturities or floating rates and thus
with yields that respond quickly to changes in
money market conditions. Money center banks,
as shown in chart 1, are the extreme example.
Of their loans except loans to individuals and
those secured by single-family homes, 55 per­
cent matured within one year and 32 percent
of the longer maturities carried floating interest
rates. Since the two exceptions amount to only
about 10 percent of their loans, a minimum of
80 percent of the loan portfolios of money center
banks is structured to respond readily to changes
in open market yields. In 1978, interest income
per dollar of average assets at these banks in­
creased 99 basis points, well above the average
amount.

depending upon the nature of the bank. The
six-month money market certificate, authorized
in June 1978, allowed banks, for the first time,
to offer a relatively small-denomination deposit
with a ceiling on new accounts that varied
regularly with market yields.2 This instrument
permitted banks to compete with market instru­
ments for funds of rate-conscious consumers,
but at the same time it introduced some cyclical
responsiveness to the interest cost of consumer
deposits.
Because of the general stability in regulatory
ceilings affecting the bulk of these deposits, the
effective annual interest rate paid by banks on
savings and small time deposits increased only
slightly during the year. (See table 4.) The
relatively slight increase in effective yields on
consumer-type interest-bearing deposits is at­
tributable principally to the impact of the money
market certificates, since most banks already
offered regulatory ceiling rates on other savings
and small time deposits. Average rates paid for
large negotiable certificates of deposit (CDs),
RPs, and federal funds increased more than 200
basis points, on the other hand; deposit funds
raised in foreign offices of U.S. banks also cost
over 200 basis points more than in 1977.

I

n t e r e s t

E

x p e n s e

The stability in the interest rate ceilings on
savings and most small-denomination time de­
posits restrained increases in the overall cost of
funds to banks in 1978— to varying degrees




2.
An examination of profit and portfolio impacts of
the money market certificate on small banks appears
later.

Insured Commercial Bank Income in 1978

1. Components of interest margins
Percent of average assets

GROSS INTEREST INCOME

Below $100 million

'N o n m o n e y c e n te r
$1 billion or more

5
4
3
2

N O T IN T E R E S T M A R G IN S

5
4
3
2

1. Size categories are based on year-end consolidated assets.
Gross interest income is adjusted for taxable equivalence.
Net interest margins are gross interest income adjusted for
taxable equivalence minus gross interest expense.
Data are for domestic operations until 1976, when foreign
office operations of U .S . banks were consolidated into the
totals.

Although fixed-rate deposit interest ceilings
limited the effective interest cost of most savings
and small time deposits, they also limited the
ability of banks to compete for depositors’ funds
against small-denomination open-market instru­
ments, such as money market mutual funds and
Treasury securities. As a consequence, banks
seeking to attract loanable funds had to issue
an increased proportion of liabilities with market-determined interest rates, such as CDs and
nondeposit instruments. For example, the
proportion of average fully consolidated assets




695

outstanding in 1978 at all insured banks that
was financed by domestic demand, savings, and
small time deposits decreased 2.1 percentage
points (line 2 plus line 7 of table 5), and
measured from year-end 1977 to year-end 1978
(not shown), it fell 4 points to 59 percent.
The shift to higher-cost funds and the increase
in yields on those sources raised gross interest
expense as a percentage of average assets 63
basis points for all banks (table 1). Accentuating
the increase in interest expenses was the shift
of some consumer funds from non-interestbearing demand deposits to interest-bearing
transactions accounts— automatic transfer serv­
ice (ATS) and negotiable order of withdrawal
(NOW) balances. In addition, the U.S. Treasury
tax and loan account was instituted, whereby
banks holding Treasury balances were required
to pay interest on them; the rate paid was a
money market yield.
As would be expected, banks that relied most
heavily on liabilities sheltered by regulatory
ceilings experienced an increase in gross interest
expense far below the average (middle panel of
chart 1). For instance, banks with less than $100
million in assets, with 88 percent (down from
90 percent in 1977) of their financial liabilities
in demand, savings, and small time deposits,
paid only 22 basis points more interest per dollar
of average assets in 1978 than in 1977. Con­
versely, interest expense as a percent of average
assets rose 93 basis points at money center
banks, at which deposits with relatively stable
interest costs represented only 29 percent of
total financial claims.

4. Rates paid for fully consolidated liabilities,
all insured commercial banks, 1976-78 1.
Percent
Item

1976

1977

1978

Time and savings accounts.....................
Negotiable C D s2...................................
D eposits in foreign offices...................
O ther deposits........................................
Subordinated notes and debentures___
Gross federal funds purchased and RPs
Other liabilities for borrowed m o n e y ..

5.74
5.97
5.97
5.58
7.43
5.57
7.96
5.77

5.72
5.58
5.94
5.67
7.38
6.10
7.56
5.79

6.76
7.85
8.04
5.81
7.77
8.68
7.00
6.81

M emo
N ot covered by regulatory ceilings2. . . .

5.96

5.92

8.02

1. Calculated as described in the Technical Note.
2. Does not include nonnegotiable time deposits of $100,000 or
more.

696

Federal Reserve Bulletin □ September 1979

5. Composition of financial liabilities as percent of total assets including loan-loss reserves,
all insured commercial banks, 1976-781
Average during year
Domestic

Fully consolidated

Item
1976

1977

1978

1976

1977

1978

Financial claim s...................................................................................................
D em and deposits.............................................................................................

89.1
32.6

89.4
32.1

89.1
31.9

90.1
28.0

90.4
27.2

90.2
26.9

Interest-bearing claims....................................................................................
Time and savings acco u n ts........................................................................
Large tim e2 ...............................................................................................
In foreign offices......................................................................................
Other domestic.........................................................................................
Subordinated notes and debentures.................................................... ..

56.5
49.2
14.8

57.3
49.0
13.3

57.2
48.3
15.0

34.4
.5
.5
6.3

35.7
.5
.6
7.2

33.3
.5
1.1
7.3

62.1
55.5
13.8
13.2
28.5
.4
.8
5.4

63.2
55.6
11.4
14.1
30.1
.4
.9
6.2

63.3
55.2
12.7
14.5
28.1
.4
1.5
6.2

M anaged liabilities 3 .............................................................................................
Average gross assets (billions o f dollars)........................................................

22.1
958

21.6
1,056

23.9
1,198

33.6
1,116

33.1
1,244

35.3
1,406

1. Percentages are based on aggregate data and thus reflect the
heavier weighting of large banks. D ata are based on averages o f call
dates for December of the preceding year and M arch, June, September,
and December of the current year.

2. O f $100,000 and over issued by domestic offices.
3. Large time deposits issued by domestic offices plus gross deposits
at foreign offices, subordinated notes and debentures, RPs, gross
federal funds purchased, and other borrowings.

Gross federal funds purchased and R P s.....................................................
M emo

N

e t

I

n t e r e s t

M

a r g i n s

Net interest margins widened substantially at
most commercial banks, and on the whole, this
expansion provided by far the single most im­
portant source of growth in industry rates of
return during 1978. Small- and medium-sized
banks experienced below-average increases in
interest income but even smaller increases in
interest expense, so their net interest margins
expanded more than those at larger banks (bot­
tom panel of chart 1). That growth was by far
the largest factor contributing to the increase in
before-tax returns on average assets at these
banks. The impact of deposit-rate ceilings was
not so decisive for banks other than the money
center institutions with $1 billion or more in
assets; only about half of their consolidated
year-end financial liabilities were in demand,
savings, and small time deposits. Instead, the
increase in rates of return on their loan portfolios
outpaced the additional interest expense paid
during the year; as with the two smaller classes
of banks, this widened margin was the most
important component of growth in profitability
over the 1977 rate. At money center banks, by
contrast, the large increase in the rate of interest
expense nearly matched that of gross interest
income and the resulting small increase in net
interest income was not an overwhelming ele­
ment in their profit growth.




By 1978, net interest margins at most classes
of banks had returned from their recent cyclical
lows almost to the higher levels registered ear­
lier in the decade (chart 1). The major money
center institutions, however, had experienced a
substantial and relatively persistent narrowing
in net interest margins during the 1970s for
several reasons. First, foreign operations are
relatively important to the money center institu­
tions.3 Since net interest margins tend to be
narrower at foreign offices than at domestic
offices— in 1978 by one-third— the relatively
rapid growth of the foreign-office business of
the money center banks probably has tended to
narrow the consolidated interest margins, al­
though not necessarily the overall profitability,
of these banks. Second, between 1970 and 1976
non-interest-bearing demand deposits as a
proportion of total liabilities declined more rap­
idly at money center banks than at other banks.
Third, major multinational corporations— im­
portant loan customers of these money center
banks— have increased their reliance on such
alternative short-term sources of funds as the
domestic commercial paper market and banking
institutions abroad; this competition for loans
3.
As the note to the chart indicates, interest margins
reflect only domestic-office business until 1976, when
fully consolidated income and expenses first were re­
ported.

697

Insured Commercial Bank Income in 1978

probably has induced money center banks to
reduce their own differential between loan rates
and cost of funds. Although money center banks
have operated with a far smaller net interest
margin than have other banks, this difference
has been offset partially by lower noninterest
expenses per dollar of assets; perhaps econo­
mies of scale coupled with relatively low serv­
icing costs on the small proportion of demand
deposit liabilities at money center banks account
for the lower expense. Moreover, returns on
equity at these banks, with their higher assetto-capital leverage, have not been consistently
above or below those at other banks.
L o a n L osses a n d O th e r
N o n in t e r e s t E x p e n s e a n d In c o m e
Most insured commercial banks experienced a
continued reduction in loan portfolio credit
losses from the peak in those chargeoffs asso­
ciated with the 1973-75 recession (chart 2). By
1978 such charges net of recoveries, expressed
as a share of average assets, had fallen to
pre-recession levels. At banks with assets less
than $1 billion, most of the improvement had
occurred during 1977, and during 1978 they
experienced only a small additional decline in
net loan losses. At larger banks, however, net
loan losses abated considerably further during
1978; for the first time since 1974, those losses

1970

1972

1974

1976

1978

1.
As percent of average consolidated assets net of loanloss reserves, all insured commercial banks.

as a share of average assets were lower at money
center banks than at other banks.
The decline in loan-loss provisions associated
with lower actual net chargeoffs added nearly
as much to the improvement in profitability at
money center banks as did net interest gains.
In contrast, loan-loss provisions of small banks
actually increased during 1978 both in dollar
terms (table 6) and as a percentage of both
average assets and average loans.
Noninterest income and noninterest expenses
other than loan-loss provisions both tended to
increase only slightly faster than asset growth.
The acceleration, minimal as it was, centered
in income from nondeposit service charges,
commissions, and fees, and in expenses for

6. Loan portfolio losses and recoveries, insured commercial banks, 1977 and 1978
Millions o f dollars, except as noted
N et losses
Year and size o f b a n k 1

Losses
charged

Recoveries
D ollar
am ount

1977
All banks.............................................................................................................
Less than $100 m illion.....................................................................................
$100 million to $1 billion................................................................................
$1 billion or more
M oney cen ter.................................................................................................
1978
All ban k s.............................................................................................................
$100 million to $1 billion................................................................................
$1 billion or more
N ot money cen ter.........................................................................................
1. Size categories are based on year-end fully consolidated assets.




Percent of
loans2

Loan-loss
provision

3,549
720
674

809
210
177

2,740
510
497

.41
.33
.37

3,244
632
609

1,147
1,009

218
204

929
804

.45
.46

1,025
978

3,537
782
689

1,073
240
194

2,464
542
495

.32
.32
.32

3,499
748
667

995
1,068

335
303

660
765

.28
.36

972
1,112

2. Average o f beginning- and end-of-year loan balances.

698

Federal Reserve Bulletin □ September 1979

salaries and employee benefits. The increase in
income items approximately offset the increase
in expenses, however, so these factors had no
impact on growth in commercial bank earnings
(table 1).

3. Net income as percent of average equity1
Percent of banks

P r o f it a b il it y a n d D iv id e n d s

Given the strong gains in net interest income,
1978 was a year of robust expansion in profits
at most banks. Small, though widespread, losses
on sales of securities occurred throughout the
industry, but did not materially depress profits.
The sharp increases in market yields led to a
widespread erosion of capital values of securi­
ties held in portfolio, and banks may have
chosen to realize losses to offset in part growth
in their taxable profits and to provide funds for
reinvestment at higher current yields. For all
classes of banks except the large money center
institutions, the increase in net income relative
to average assets and average equity was siz­
able, bringing returns above those in any pre­
ceding year since 1973 (table 7). The profita­
bility of money center banks also improved, and
although their returns on assets remained below
pre-1974 levels, their 1978 return on equity—
now more highly leveraged— was commen­
surate with profitability in those earlier years.
Most banks allocated a smaller share of in­
come to cash dividends on common and pre­
ferred stock during 1978 than in 1977. Cash
dividends declared by large banks, most of

which are affiliated with holding companies, fell
from about 45 percent of after-tax income in
1977 to 40 percent in 1978. Because cash divi­
dends grew more slowly than earnings, income
retained showed an unusually large increase
during 1978 (table 8). The equity capital of
commercial banks expanded by nearly $8 billion
in 1978, with an exceptionally large portion of
that increase derived from earnings retention.
Growth in equity capital, though unusually
strong, nevertheless did not keep pace with
growth in assets during 1978, and at banks with
assets above $100 million, the average ratio of
equity capital to assets diminished slightly fur­
ther from 1977 levels.
The increase in the rate of return on equity
appears to have been widespread among banks.

7. Profit rates of insured commercial banks, 1973-78
Percent
Type o f return and size o f bank*
R eturn on assets2
All b an k s..................... ......................................................................................
Less than $100 million....................................................................................
$100 million to $1 billion...............................................................................
$1 billion or more
M oney center................................................................................................
N ot money center........................................................................................
R eturn on equity3
All b a n k s...........................................................................................................
Less than $100 m illio n ..................................................................................
$100 million to $1 billion...............................................................................
$1 billion or more
M oney center................................................................................................
N o t money center. — ................................................................................
1. Size categories are based on year-end fully consolidated assets.
2. N et income as a percent o f the average o f beginning- and end-ofyear fully consolidated assets net o f loan-loss reserves.




1973

1974

1975

1976

1977

1978

.76
1.00
.84

.72
.97
.79

.69
.89
.75

.70
.94
.78

.71
.98
.82

.76
1.04
.90

.60
.62

.56
.58

.56
.59

.54
.60

.50
.62

.53
.68

12.9
13.5
12.6

12.6
12.7
11.9

11.8
11.5
11.1

11.5
11.8
11.1

11.8
12.4
12.0

12.9
13.2
13.2

13.2
12.0

14.1
11.7

13.8
11.2

12.3
10.6

11.4
11.2

12.8
12.5

3. N et income as a percent o f the average o f beginning- and end-ofyear equity capital,

Insured Commercial Bank Income in 1978

699

8. Sources of increase in total equity capital, all insured commercial banks, 1973-781
Millions o f dollars, except as noted

N et retained income2

N et increase
in equity capital

Increase in equity capital
from retained income
(percent)

Year
Total

1973.................................................................................................
1975.................................................................................................
1976.................................................................................................
1977.................................................................................................
1978................................................................................................

Large
banks3

Total

Large
banks3

(l)/(3)

(2)1(4)

(1)
4,131
4,307
4,224
4,834
5,599
7,019

(2)
1,491
1,666
1,690
1,909
2,157
2,947

(3)
5,455
5,631
5,526
7,254
7,094
7,961

(4)
1,849
1,977
2,396
3,371
2,939
3,304

(5)
76
76
76
67
79
88

(6)
81
84
71
57
73
89

1. In 1976, equity capital was affected by one-time accounting
changes in the treatm ent o f loan-loss and valuation reserves. The data
shown for 1976 have been adjusted to correct for that definitional
change.

2. N et income less cash dividends declared on preferred and comm on stock.
3. Banks with fully consolidated assets o f $1 billion or more,

The distribution of individual rates of return on
equity has shifted noticeably from 1976 to 1978;
far more banks now record high rates of return
and far fewer experience losses (chart 3).

/ yields on market instruments open a large gap
over fixed interest rate ceilings on other smalldenomination deposits. By year-end, MMCs
outstanding at insured banks had grown to $22
billion, with small banks having issued a dis­
proportionately large two-fifths of that amount.
By the end of 1978, as indicated in table 9,
MMC balances averaged only 1.6 percent of
total financial liabilities of the biggest banks,
compared with about 2.5 percent of those claims
at small and medium-sized banks. Because these
smaller banks had limited ability to issue largedenomination money market liabilities, the
MMCs played an important part in sustaining
their asset growth during 1978 as market yields
rose above fixed deposit-rate ceilings.
To assess the effects of this new deposit on

G

o v e r n m

e n t

P

r o f i t

G

u i d e l in e s

In early 1979, the President’s Council on Wage
and Price Stability (COWPS) implemented bank
profit guidelines as a counterpart to the overall
wage and price guidelines already set for unions
and nonfinancial firms. Those profit guidelines
recognized the central role that interest rates
play in an anti-inflationary effort and, further,
acknowledged the decisive impact of policy
regarding deposit-rate ceilings on profit growth
at most banks. Instead of formulating interest
rate restrictions, as the Committee on Interest
and Dividends had done in 1973-74, COWPS
devised a profits measure and set as a guideline
the average of such returns in the three most
profitable years in the period 1973 through
1978. As many as one-third of all insured com­
mercial banks are estimated to have to reduce
profits from 1978 levels or to adopt the alterna­
tive restrictions on dividends and service fees
applicable to banking institutions that do not
meet the profit constraint.

M

o n e y

M

a r k e t

C

e r t if ic a t e s

Money market certificates (MMCs), introduced
in June 1978, provided banks a new opportunity
to compete for consumers’ funds when rising




9. Use of money market certificates, insured
commercial banks, by size of bank,
December 31, 1978
Measure o f M MCs and
size o f ban k 1

Lowest value in
quartile2
Mean M ode
Sec­
ond

Third Fourth

M M C s as percent o f to ta l
fiancial liabilities

Less than $100 million...............
$100 million to $1 billion.........
$1 billion or m ore.......................

2.5
2.7
1.6

0
0
0

0
1.6
.1

2.1
2 .6
1.4

3.9
3.5
2.1

9 .6
15.0
15.9

0
0
0

0
8.8
11.2

6.8
13.5
14.7

13.7
19.6
19.2

M M C s as percent o f
s m a ll tim e deposits

Less than $100 m illion..............
$100 million to $1 billion.........
$1 billion or m ore.......................

1. Size categories are based on year-end fully consolidated assets.
2. In all cases, zero was the lowest value in the first quartile.

700

Federal Reserve Bulletin □ September 1979

10. Comparison of operating results, second half
of 1978, small insured commercial banks with
greatest and least reliance on MMCs1
M eans in percent except as indicated
Quartile
Item
Highest

Lowest

Growth
Total domestic assets...........................................
Domestic liabilities...............................................

8 .5
9 .0

5 .7
6 .0

Income and expense scaled to
average consolidated assets2
Interest incom e.....................................................
Interest expense.....................................................
N et interest m argin..........................................
Taxable equivalent.......................................
Noninterest incom e..............................................
Loan-loss provisions............................................
Other noninterest expense..................................
Profit before tax ................................................
N et incom e.........................................................
D ividends...........................................................

7.97
3.83
4 .1 4
4.6 4
.55
.33
3.17
1.20
.90
.28

7.62
3.26
4.35
4.81
.48
.28
3.24
1.32
.97
.31

Changes in asset allocations
(percentage points)3
Short term assets *.................................................
Real estate lo an s...................................................

.12
.53

-.2 4
.53

1. Top and bottom quartiles, as determined by share M M Cs repre­
sented o f total financial claims at the end o f 1978, o f all banks with
year-end assets below $100 million.
The differences between means o f the two groups are statistically
significant below the 1 percent level except the value for noninterest
expense, which is significant below the 2 percent level, and the pro­
portion o f assets allocated to real estate loans, which is not statis­
tically significant.
2. These are annual rates calculated by doubling rate for second
half.
3. The percent o f total domestic assets represented by the indicated
item in December minus that percent in June. A value o f 3.5 per­
cent indicates a drop in the proportion of assets so invested by about
one-half o f 1 percentage point.
4. U.S. government, Treasury, and agency securities maturing
within one year plus federal funds sold and reverse RPs.

smaller banks in greater detail, a special analysis
of banks with less than $100 million in assets
was undertaken. Those banks were grouped
according to the percentage of their total finan­
cial liabilities represented by MMCs as of De­
cember 1978. Statistical tests of the differences
between certain operating characteristics were
performed on small banks in the lowest and
highest quartiles. The lowest quartile had no
MMCs outstanding, and the highest had at least
3.9 percent of total financial claims from MMCs
(table 9).
Higher use of MMCs clearly was associated
with more rapid growth rates of assets and
liabilities during the second half of 1978, after
the MMC was instituted (table 10). The mean
growth rates of assets and liabilities of the top
quartile— 8 V and 9 percent respectively— were
2
half again as fast as those of the lowest quartile,
and the differences between the means of these




two groups were significant at the 1 percent
level.
On balance, however, the profitability of the
more intensive users of MMCs was lower than
that of banks with none. Part of this difference,
also statistically significant at the 1 percent
level, can be related to MMC use. Banks in
the top MMC quartile paid 57 basis points more
per dollar of assets for funds, as would be
expected, but they only partly recovered that
difference by earning 40 basis points more in
interest. Net interest margins, consequently,
were lower for banks in the top quartile than
for those in the lowest. Although noninterest
expenses also were lower and noninterest in­
come was higher at small banks in the top MMC
quartile, those differences were too small to
offset fully the lower net interest margins.
Whereas small banks in the top quartile had
substantially higher interest expense relative to
average assets, most of which went to deposi­
tors, they paid 3 basis points less to stockholders
than did those in the lowest quartile.
A combination of factors may help to account
for the higher asset yield earned by banks in
the top quartile. For one, the increase in market
yields during the second half of 1978 probably
brought returns on new loans and investments
above average portfolio yields. With their faster
asset growth, banks in the top quartile probably
acquired, on net, more loans and investments
yielding high current returns than did their
slower-growing counterparts that did not use
MMCs. In addition, during the second half of
1978, banks in the top MMC quartile increased
their share of assets invested in short-term in­
struments including U.S. government and
agency obligations maturing within one year,
reverse RPs, and federal funds; banks in the
lowest quartile reduced that proportion. As
market yields increased, the term structure of
yields shifted so that returns on short-term in­
vestments exceeded those on long-term assets;
other things being equal, portfolios with more
short-term assets during the second half of 1978
were likely to experience the higher yields. No
difference between the two groups of banks was
shown in the share of assets allocated to real
estate loans.

Insured Commercial Bank Income in 1978

U .S . I n s u r e d C o m m e r c i a l
B a n k s w i t h F o r e i g n O f f ic e s
The rapid growth of business in foreign offices
of U.S. banks has been an important develop­
ment in commercial banking during this decade.
In 1970, 61 U.S. banks had foreign offices,
which together held less than $50 billion in
assets; by the end of 1978, 155 banks had
foreign-office assets of $260 billion. Eight of
the ten largest commercial banks held at least
one-third of their consolidated assets at their
foreign offices by year-end 1978 and one bank
held more than half. Although virtually all
banks with foreign offices are large institutions,
foreign-office business is concentrated at 13
money center banks, which at year-end held 80
percent of total foreign-office assets.
In 1978, domestic banks with foreign offices

701

began to supply income and expense data on
the operations of their domestic and foreign
offices separately. These institutions also began
to provide substantially more balance-sheet in­
formation for their domestic and foreign opera­
tions, including detail on selected balances ac­
cording to whether or not the customer was
domiciled within the United States.
The new data illustrate some dissimilarities
between the foreign and domestic business of
these multinational banks. Foreign offices relied
heavily on interest-bearing deposits, which
amounted to three-fourths of their liabilities
(table 11). They also relied on funds supplied
by their domestic affiliates, which amounted to
6 percent of their total December 1978 liabili­
ties. At the end of 1978, sources of funding
for domestic offices were primarily from nonaf­
filiates and were much more varied: nondeposit

11. Assets and liabilities of U.S. insured commercial banks with foreign offices, December 31,1978
Domestic offices

Foreign offices

Item
Billions of
dollars

Percent o f
total

Billions of
dollars

Percent of
total

Total assets................................................................................................................................
Cash and due from b a n k s................................................................................................
Federal funds sold and reverse R P s...............................................................................
Securities...............................................................................................................................

608
107
24
87
318
721

100
18
4
14
52
12

259
96
*
7
144
1

100
37
*
3
56
5

Total liabilities.........................................................................................................................
D eposits................................................................................................................................
Noninterest bearing2......................................................................................................
Interest-bearing...............................................................................................................
Savings and small tim e..............................................................................................
Time over $100,000....................................................................................................
Nondeposit financial claims..............................................................................................
Federal funds purchased and R P s ..............................................................................
Subordinated notes and debentures...........................................................................
Other liabilities for borrowed money.........................................................................

569
440
198
242
115
127
90
70
3
17
39

100
77
35
43
20
22
16
12
1
3
7

250
220
19
201
n.a.
n.a.
11
*
1
10
201

100
88
8
80
n.a.
n.a.
4
*
*
4
8

M em o : Remaining maturities
Total assets................................................................................................................................
Selected assets3 ...................................................................................................................
One year or less...............................................................................................................
One to five years.............................................................................................................
Over five years.................................................................................................................

608
418
260
90
67

100
69
43
15
11

259
241
168
54
19

100
92
64
21
7

Total liabilities.........................................................................................................................
Selected liabilities4..............................................................................................................
Subject to call................................. .................................................................................
Other three months or less...........................................................................................
Over three m onths..........................................................................................................

569
480
197
205
78

100
84
35
36
14

250
201
20
154
29

100
80
8
62
12

1. O f this am ount, $15 billion represents net funds advanced by
domestic offices to their own foreign branches.
2. Demand deposits in domestic offices, noninterest-bearing deposits
in foreign offices.
3. For foreign offices, maturity detail is provided for all loans and
interest-bearing balances due from banks. M aturity detail is not re­
ported for domestic-office holdings o f consumer loans and single­
family home mortgages, which amounted to $53 billion and $42
billion respectively and which tend to have relatively long original
maturities. M aturities represent all other loans and all securities at
domestic offices; included in the shortest category also are federal
funds sold and reverse RPs as well as $80 billion o f cash items in




process o f collection, demand deposits held at other banks, and
currency.
4.
For foreign offices, m aturity detail is provided for all interestbearing deposits. For domestic offices, deposits subject to call are
demand deposits. Other domestic-office liabilities maturing within 3
months include all savings and 4 percent o f small time deposits, large
negotiable CDs with that remaining maturity, RPs, and federal funds.
Over 3 months includes 96 percent o f small time deposits, subor­
dinated notes and debentures, and all other large negotiable CDs.

* L than $500,000 or 0.5 percent.
ess
n.a. Not available.

702

Federal Reserve Bulletin □ September 1979

12. Customers of U.S. insured commercial banks
with foreign offices, December 31, 1978
Billions o f dollars
Domestic
offices

Foreign
offices

323
75
39
19
10
9
128
119
9
53
2
26

145
4
23
3
16
5
86
3
82
5
23
4

To U.S. addressees.....................................
To non-U.S. addressees.............................
N o t specified................................................

138
21
162

6
121
18

Total deposits..................................................
Individuals, partnerships, and
corporations............................................
U.S. federal, state, and local
governm ents.............................................
Foreign governments and official
institutions................................................
Commercial banks in the United S ta te s..
Banks in foreign countries.......................
Certified and officers’ checks...................

437

220

340

68

Item

In the U nited States...............................
Outside the United States.....................
N ot specified.............. .............................
Commercial and in d u stria l......................
To U.S. addressees.................................
To non-U.S. addressees.........................
To individuals..............................................
To foreign governm ents............................
O th e r.............................................................
M emo

28
8
42
9
9

34
16
100
3

funds accounted for 16 percent of total liabilities
at year-end, and deposits themselves were an
amalgam of interest-bearing and non-interestbearing, demand and fixed-term accounts. With
demand deposits amounting to 35 percent and
deposit-rate-regulated savings and small time
deposits amounting to another 20 percent, more
than half of the liabilities of domestic offices
carried constraints on their ability to respond
to rising market yields. At both sets of offices,
about two-thirds of total liabilities matured in
less than three months.
Almost two-thirds of foreign-office assets
matured within one year, and only 7 percent
in five or more years. Although less maturity
detail is available for domestic offices of these
banks, it appears that their asset term structure
was more varied, with perhaps as much as
one-fifth maturing in five or more years.4
Customers of domestic offices of U.S. banks
with foreign offices also were more diversified

than those of foreign offices, especially with
respect to type of borrower (table 12). At the
end of 1978, about 40 percent of domestic-of­
fice loans had been extended to commercial and
industrial borrowers, about 25 percent was se­
cured by real estate, and about 10 percent each
was allocated to financial institutions and indi­
viduals. By contrast, commercial and industrial
loans accounted for about 60 percent of
foreign-office loans, and nearly all of the re­
mainder was divided equally between financial
institutions and foreign governments. As might
be expected, loans at foreign offices were ex­
tended predominantly to borrowers domiciled
outside the United States, while those at do­
mestic offices were extended to borrowers
within the United States. More than threefourths of the depositors at domestic offices were
individuals, partnerships, or corporations,
whereas less than one-third of foreign-office
deposits came from those sources. Banks in
foreign countries supplied nearly half of the
deposits at foreign offices, but at domestic of­
fices, both U .S. and foreign banks supplied only
slightly more than 10 percent of total deposits.
Differences between the effective rates of
return at foreign and domestic offices reflect the
dissimilarities in the composition of their assets
and liabilities and probably differences in lend­
ing and borrowing practices as well (table 13).
Although loan portfolios at both sets of offices
grew 16 percent during 1978, the apparently
greater concentration of short-term and variable-rate loans at foreign offices provided the
opportunity for more rapid portfolio response
to the marked escalation of yields during 1978.
Average loan portfolio yields consequently were
much higher at foreign offices than at domestic
13. Rates of return and rates paid for funds,
U.S.-insured commercial banks with foreign
offices, 19781
Item

4. Eleven percent of assets are reported to mature
in five or more years; not reported are maturities for
single-family home mortgages and consumer loans,
amounting to $42 billion and $53 billion respectively.
Home mortgages, in particular, tend to carry original
maturities of well over five years.




Domestic offices

Foreign offices

Interest-earning assets2.............
Interest-bearing deposits...........
Interest-bearing liabilities.........

9.93
9.67
6.54
6.97

10.59
9.38
7.95
8.01

1. Calculated as described in the Technical Note.
2. Converted to a taxable equivalent basis for domestic offices
according to the approxim ation m ethod described in table 1, note 4.

Insured Commercial Bank Income in 1978

14. Interest income and expense as percent of
average assets, U.S. insured commercial
banks with foreign offices, 1978
Item

D omestic offices

Foreign offices

G ross interest incom e...............
G ross interest expense...............
N et interest m argin...............
Taxable equivalent1...........

6.50
3.78
2.72
3.10

8.34
6.33
2.0 0
2 .00

1. Approximated for domestic offices as described in table 1, note 4.

offices in 1978. Rates paid for funds also
averaged substantially higher in foreign than in
domestic offices. One factor in that difference
was that deposit-rate ceilings, affecting some of
the liabilities of domestic offices but none of
those in foreign offices, were substantially
below market yields during 1978. Another, a
counterpart to loan portfolio behavior, was the
relatively greater influence of rising market
yields in 1978 on the higher proportion of
short-term rate-sensitive liabilities at foreign of­
fices. In addition, nominal market yields pre­
vailing on Eurodollar deposits were higher than
those on domestic large certificates of deposit.
Rates of gross interest income and expense
on average office assets were influenced not only
by effective interest rates but also by differences
in the proportion of assets and liabilities that
did not bear interest (table 14). The rate of gross
interest income at foreign offices was above that
in domestic offices, for example, partly because
domestic offices tend to have a larger portion
of assets that do not bear interest than do foreign
offices. At year-end, for example, 18 percent
of assets at domestic offices was allocated to
non-interest-earning reserves of member banks,
premises, and fixtures. Only 5 percent of foreign
office assets was so allocated. Similarly, non­




703

interest-bearing deposits— inconsequential at
foreign offices, but representing more than onethird of domestic office liabilities— reduced
stated interest costs of domestic offices to threefifths of that in foreign offices, despite a dif­
ferential of only 15 percent in the effective rates
paid for interest-bearing liabilities. As a result
of all these factors, the net interest margins of
domestic offices were 50 percent above those
in foreign offices.
On a fully allocated basis, reflecting all in­
come and expenses attributable to international
business whether conducted in domestic or in
foreign offices, U.S. banks with foreign offices
earned $2.4 billion before taxes from their in­
ternational business out of total pretax income
of $7.3 billion (tables A .3 and 15). International
business contributed 0.16 percent, or about
one-fourth, to the total 0.59 percent rate of
return on assets earned by these banks during
1978.
□

15. Consolidated income and expenses of insured
commercial banks with foreign offices, 1978
Item

Percent of
average assets

Gross interest incom e...................................................
Gross interest expense..................................................
N et interest m argin.......................................................
Taxable equivalent1..............................................

7.09
4.58
2.51
2.77

Noninterest income.......................................................
Loan loss provisions.....................................................
Other noninterest expense..........................................
Income before ta x .....................................................
Foreign offices2 .....................................................
Domestic offices2..................................................

.82
.25
2.14
.93
.25
.68

International business2............................................
Domestic business2........................................ ..

.59
.16
.43

1. A pproximated as described in table 1, note 4.
2. See table A.3. Reflects am ounts attributed, giving full allocation
o f income and expenses.

704

A.l

Federal Reserve Bulletin □ September 1979

Report of income for all insured commercial banks
Amounts shown in millions o f dollars
Item

Operating income—T o tal...................................................
Interest
L oans....................................................................................
Balances with b a n k s.......................................................
Federal funds sold and securities purchased under
resale agreem ent........................................................
Securities (excluding trading accounts)
Total interest incom e...................................................
U.S. Treasury securities..........................................
U.S. government agencies and corporations.. . .
States and political subdivisions.........................
Dividends on stock...................................................
Trust departm ent...................................................................
D irect lease financing...........................................................
Service charges on deposits................................................
Other charges, fees, etc .........................................................
Other operating incom e.......................................................
On trading account (n et).................................................
O ther....................................................................................
Equity in return o f unconsolidated subsidiaries . . . .
Operating expenses—T otal..................................................
Interest
Time and savings deposits..............................................
Time C D ’s o f $100,000 or more issued by
domestic offices.....................................................
Deposits in foreign offices..........................................
Other deposits...............................................................
Federal funds purchased and securities sold under
repurchase agreem ents............................................
Other borrowed m oney3 .................................................
Capital notes and debentures.........................................
Salaries, wages, and employee benefits............................
Occupancy expense...............................................................
Less rental income............................................................

1970

1971

1972

1973

34,574

36,204

40,065

52,794

22,859
n.a.

22,954
n.a.

25,498
n.a.

35,213
n.a.

1974

1975

1976

1977

1978

67,872

66,285

80,388

90,069

113,170

46.942
n.a.

43,197
n.a.

51,471
4,459

58,881
4,860

75,948
6,662

1,004

870

1,023

2,474

3,695

2,283

1,979

2,471

3,664

6,523
3,069
686
2,617
151
0)
1,132
n.a.
1,174
839
1,043
348
695
n.a.

7,660
3,384
914
3,124
238
( 1)
1,258
n.a.
1,226
981
1,256
344
912
n.a.

8,329
3,376
1,144
3,490
319
0)
1,366
n.a.
1,256
1,079
1,512
257
1,255
n.a.

9,138
3,436
1,469
3,861
372
0)
1,460
n.a.
1,320
1,247
1,942
341
1,601
n.a.

10,344
3,414
2,014
4,449
467
0)
1,506
n.a.
1,450
1,405
2,530
430
2,100
n.a.

12,201
4,415
2,343
4,911
532
0)
1,600
n.a.
1,547
1,647
3,811
508
3,303
n.a.

14,333
5,952
2,410
5,116
750
105
1,795
534
1,629
2,175
2,011
717
1,205
89

15,140
6,369)
2 ,4 6 6 I
5,338
858)
109)
1,980
699
1,797
2,404
1,903
420
1,350
133

16,432
9,335
6,003
1,094
2,138
862
2,039
2,930
2,495
n .a.2
n .a.2
n .a.2

27,465

29,511

32,836

44,113

58,645

57,313

70,466

78,484

98,104

13,781

19,747

27,777

26,147

34,894

38,701

50,054

n.a.
n.a.
n.a.

n.a.
n.a.
n.a.

n.a.
n.a.
n.a.

7,083
8,745
19,066

6,732
10,216
21,753

11,693
14,559
23,802

4,536
816
391
16,276
3,587)
551
3,036
1,923
3,244
9,561
24
9,537

7,247
1,452
445
18,654

3,499
11,194
n .a .2
n .a .2

10,444

12,168

n.a.
n.a.
n.a.

n.a.
n.a.
n.a.

n.a.
n.a.
n.a.

Furniture and equipm ent.....................................................
Provision for loan losses.....................................................
O ther operating expenses.....................................................
Minority interest in consolidated subsidiaries............
O th er....................................................................................

1,396
464
104
7,683
1,547
299
1,249
905
695
4,525

1,093
139
142
8,355
1,721
318
1,403
1,014
860
4,337

3,313
374
292
12,624
2,739
427
2,312
1,525
3,578
7,149

4,337

3,883
499
253
10,076
2,141
367
1,774
1,196
1,253
5,432
1
5,431

5,970
912
280
11,526
2,424
383
2,041
1,355
2,271
6,514

4,525

1,425
115
212
9,040
1,915
340
1,575
1,083
964
4,640
1
4,639

6,514

7,149

3,305
665
343
14,686
3,247
494
2,752
1,712
3,650
8,456
29
8,427

Income before taxes and securities gains or losses........
Applicable income taxes..................................................
Income before securities gains or losses.......................
N et securities gains or losses ( —) after taxes.............
Extraordinary charges ( —) or credits after taxes. . . .
N et incom e..............................................................................

7,109
2,173
4,936
-1 0 5
-1 3
4,818

6,693
1,688
5,005
210
-1
5,213

7,229
1,708
5,522
90
18
5,630

8,681
2,120
6,560
-2 7
22
6,555

9,227
2,084
7,143
-8 7
12
7,068

8,973
1,790
7,182
35
32
7,249

9,922
2,287
7,635
190
24
7,849

11,585
2,829
8,756
95
47
8,898

15,067
4,155
10,911
-2 2 5
45
10,731

Cash dividends declared......................................................

2,036

2,227

2,191

2,423

2,760

3,025

3,029

3,299

3,714

13,502

13,602

13,721

13,964

14,216

14,372

14,397

14,397

14,380

570

646

738

857

987

1,052

1,123

1,257

1,418

M emo
N um ber o f b a n k s..................................................................
Average fully consolidated assets (billions o f
dollars)............................................................................

1. Included in income from other bonds, notes, and debentures.
2. Because o f an abbreviation in the income report filed by small
banks, these items will not be available on an aggregated basis after
1977. Bracketed items similarly indicate combinations made for small
bank reporting.

5,559

3.
Includes interest paid on U.S. Treasury tax and loan account
balances, which were begun in November 1978.
n.a. n o t available.
N ote . For “Notes on comparability o f commercial bank income
data before 1976,” see B ul l et in , June 1978, page 446.

TECHNICAL NOTE
In order to calculate the rates of return presented in this
article, it was assumed that the value of the portfolios
under consideration always grew at a constant percentage
rate throughout the year. Mathematically, if A(t)
represents the value of the assets at time t, where t is
the fraction of the year that has elapsed, then

* > -* * [% ]■
If interest is compounded continuously at rate r, total
interest is given by




These two equations may then be solved for r in terms
of total interest and beginning-of-year and year-end
asset values.
Finally, the rate may be converted into a simple
interest rate (that is, by using annual rather than con­
tinuous compounding). The resulting formula, which is
used in the article, may be written thus:
l

[> 1 )-U (1 )-A (0 )

Insured Commercial Bank Income in 1978

705

A.2 Report of income for member commercial banks
Am ounts shown in millions o f dollars
1973

1974

1975

31,344

41,616

53,837

51,368

63,639

70,514

89,130

20,053
n.a.

28,266
n.a.

38,063
n.a.

33,749
n.a.

40,901
4,263

46,060
4,671

59,925
6,387

794

1,847

2,724

1,716

1,511

1,918

2,808

6,087
2,412
731
2,710
234

7,237
2,343
1,268
3,300
326

8,559
3,166
1,463
3,576
354

1,269
n.a.
905
864
1,372
254
1,118
n.a.

1,344
n.a.
940
998
1,789
338
1,451
n.a.

1,379
n.a.
1,023
1,152
2,261
425
1,836
n.a.

1,457
n.a.
1,086
1,359
3,442
497
2,945
n.a.

10,111
4,248
1,475
3,686
612
90
1,625
508
1,122
1,808
1,789
696
1,009
86

10,584
4,478'I
1,509 >
3,794
712'I
91;
1,776
664
1,206
1,967
1,662
407
1,124
131

11,328
£ , 170
0 I /y
4,255

1,073
n.a.
867
682
970
346
624
n.a.

5,661
2,434
578
2,467
182
0)
1,180
n.a.
895
796
1,130
340
800
n.a.

6,532
2,393
943
2,928
268

22,184

23,342

25,648

35,037

46,815

44,410

55,924

61,706

77,783

8,189

9,426

10,518

15,382

21,812

19,800

27,745

30,363

39,808

n.a.
n.a.
n.a.

n.a.
n.a.
n.a.

n.a.
n.a.
n.a.

n.a.
n.a.
n.a.

n.a.
n.a.
n.a.

n.a.
n.a.
n.a.

5,895
8,672
13,178

5,461
10,124
14,778

9,586
14,401
15,821

1,365
444
90
6,154
1,275
263
1,012
722
534
3,674

1,073
127
123
6,638
1,408
278
1,130
797
682
3,346

1,387
103
184
7,096
1,556
296
1,260
848
768
3,484

3,765
473
204
7,808
1,724
316
1,408
924
994
4,079

5,714
871
217
8,834
1,929
325
1,603
1,037
1,858
4,870

3,151
336
228
9,624
2,155
363
1,792
1,154
3,050
5,275

3,150
638
273
11,301
2,564
418
2,146
1,305
3,042
6,323
28
6,295

4,322
790
303
12,395
2,8041
459
2,345
1,456
2,633
7,100
22
7,078

6,803
1,403
334
14,116

Income before taxes and securities gains or losses........
Applicable income taxes..................................................
Income before securities gains or losses.......................
N et securities gains or losses ( —) after taxes.............
Extraordinary charges ( —) or credits after taxes----N et incom e..............................................................................

5,718
1,774
3,942
-1 0 7
-1 5
3,821

5,322
1,348
3,974
144
-3
4,116

5,696
1,356
4,340
47
14
4,401

6,679
1,653
5,025
-3 0
15
5,011

7,022
1,591
5,431
-6 9
3
5,365

6,958
1,453
5,505
17
23
5,546

7,715
1,929
5,786
111
17
5,914

8,807
2,311
6,496
40
38
6,576

11,347
3,327
8,020
-1 8 5
27
7,863

Cash dividends declared.......................................................

1,753

1,907

1,804

2,019

2,271

2,476

2,451

2,640

2,928

5,767

5,727

5,704

5,735

5,780

5,787

5,758

5,668

5,565

. 468

530

606

705

788

857

907

1,003

1,128

Item

1970

1971

Operating income—T o ta l.....................................................
Interest
L oans....................................................................................
Balances with b a n k s.........................................................
Federal funds sold and securities purchased under
resale agreem ent.......................................................
Securities (excluding trading accounts)
Total interest incom e...................................................
U.S. Treasury securities..........................................
U.S. Government agencies and corporations. . .
States and political subdivisions...........................
Other bonds, notes, and debentures.....................
Dividends on stock...................................................
Trust departm ent...................................................................
D irect lease financing...........................................................
Service charges on deposits.................................................
O ther charges, fees, etc.........................................................
O ther operating incom e.......................................................
On trading account (n e t).................................................
O ther....................................................................................
Equity in return o f unconsolidated subsidiaries........

27,902

28,665

18,698
n.a.

18,315
n.a.

781

676

Operating expenses—T otal..................................................
Interest
Time and savings deposits..............................................
Time C D ’s o f $100,000 or more issued by
domestic offices.....................................................
Deposits in foreign offices...........................................
Other deposits................................................................
Federal funds purchased and securities sold under
repurchase agreem ents.............................................
O ther borrowed money 3 .................................................
Capital notes and debentures.........................................
Salaries, wages, and employee benefits.............................
Occupancy expense...............................................................
Less rental incom e............................................................
Furniture and equipm ent.....................................................
Provisions for loan losses....................................................
Other operating expenses.....................................................
M inority interest in consolidated subsidiaries............
O th er........................................ ............................................

4,832
2,209
415
2,090
118
(!)

1972

0)

0)

M emo

N um ber o f b a n k s..................................................................
Average fully consolidated assets (billions o f
dollars).............................................................................

1. Included in income from other bonds, notes, and debentures.
2. Because o f an abbreviation in the income report filed by small
banks, these items will n o t be available on an aggregated basis after
1977. Bracketed items similarly indicate combinations made for small
bank reporting.




0)

0)

1976

1977

1978

fiQA

1,912
806
1,334
2,400
2,230
n.a. 2
n .a.2
n .a .2

A O^A

2,771
8,324
n .a .2
n .a .2

3.
Includes interest paid on U.S. Treasury tax and loan account
balances, which were begun in N ovember 1978.
n.a. not available.
N ote . F or “ Notes on comparability o f commercial bank income
data before 1976,” see B u l l et in , June 1978, page 446.

706

Federal Reserve Bulletin □ September 1979

A.3 Income attributable to international business o f U.S. commercial banks with foreign offices, 1978
Millions o f dollars
Item

A mount

Pre-tax income attributable to foreign offices1.............................................................................
Plus: Pre-tax income attributable to international business conducted in domestic offices
Less: adjustment am ount2 ................................................................................................................
Pre-tax income attributable to international business.............................................................
L ess: All income taxes attributable to international business..................................................
N et income attributable to international business...................................................................
M emo
Provision for possible loan losses attributable to international business................................
Noninterest income attributable to foreign offices1.................................................................
Noninterest income attributable to international business.........................................................
Noninterest expense attributable to foreign offices.....................................................................
Noninterest expense attributable to international business........................................................
Intra-company interest income attributable to international business....................................
Intra-company interest expense attributable to international business....................................
Interest income of domestic offices from foreign-domiciled custom ers..................................
Fully consolidated
Pre-tax income..................................................................................................................................
Total applicable taxes.....................................................................................................................
N et income3......................................................................................................................................
Average total assets.........................................................................................................................
1. Including Edge and Agreement subsidiaries.
2. Reflects the am ount necessary to reconcile the preceding two
amounts with pre-tax income attributable to international business.




1,946
567
72
2,441
1,166
1,275
419
1,126
1,299
2,467
2,828
1,764
3,140
1,973
7,333
2,511
4,690
796,151

This may reflect, as an example, net income in foreign offices derived
from business with U.S.-domiciled customers.
3.
After gains and losses from securities transactions and extra­
ordinary items.

707

New Measures of Commercial Bank
Credit and Bank Nondeposit Funds
This article was prepared by Edward R. Fry
of the B oard’s Division of Research and Statis­
tics.
The series on commercial bank credit and esti­
mates of assets and liabilities of all commercial
banks that are published each month in the
statistical section of the F ederal R eserve
B ulletin have been revised. The revised series
reflect both conceptual and statistical improve­
ments. The series have been expanded to cover
more banking institutions operating in the
United States, and lease financing receivables
have been included for the first time. With the
addition of U.S. agencies of foreign banks, New
York investment company subsidiaries of
foreign banks, and Edge Act corporations, the
U.S. banking system is defined for purposes of
these series to include all institutions located in
the 50 states and the District of Columbia that
are engaged in commercial banking activities.
The revised bank credit series measures credit
extended by such banking institutions to all U.S.
or foreign customers other than commercial
banks in the United States and other than di­
rectly related institutions.
Among the statistical changes in the revised
series are improved blowup procedures for esti­
mating data for domestically chartered banks,
more frequent benchmarking of current esti­
mates, and substitution of monthly averages for
data for the last Wednesday of the month. In
addition, the revised series provide new detail
on loan components, separate data for domesti­
cally chartered banks and foreign-related insti­
tutions, and a new measure of nondeposit funds
of commercial banks.1

The need for revision of U.S. banking statis­
tics has become increasingly apparent in view
of the exceptionally rapid growth of banking
assets of foreign-related institutions, the large
revisions in estimated components of non­
member banks, and the volatility of the single­
date observations. Over the past year, reporting
and estimating procedures have been changed
to improve monthly estimates for both domesti­
cally chartered banks and U.S. branches of
foreign banks covered by the bank credit series.
The additional coverage of foreign-related insti­
tutions in the new series provides a more com­
prehensive measure of commercial banking in
the United States, and the conversion from a
last-Wednesday-of-month to a monthly average
basis reduces the volatility of the series. The
inclusion of lease financing operations in the
bank credit series is in accordance with the
generally held view that such business is a form
of credit extension.
The revised series have been estimated for
the period from December 1972 to date. From
now on, the revised bank credit series and data
on assets and liabilities will be published
monthly in the B ulletin and respectively in
the Board’s monthly G.7 statistical release and
in the weekly H.8 statistical release, which will
resume publication on a revised basis. A new
series on nondeposit funds— which includes es­
timates of bank borrowings in domestic and

branches, agencies, and New York investment company
subsidiaries of foreign banks, and Edge Act corpora­
tions. Edge Act banking subsidiaries of commercial
banks are chartered as U.S. banking corporations, but
in the new series they are grouped with the foreignrelated component because of the international character
of their business. Among foreign-related institutions,
1.
Domestically chartered banks are those with na­ only the branches have been included in U.S. banking
tional or state charters whether incorporated or unincor­
statistics in the past. A fuller description of the institu­
porated, insured or uninsured, foreign or domestically
tional structure and activities of foreign banks in the
owned. Foreign-related banking institutions are U.S.
United States will appear in next month’s Bulletin.



708

Federal Reserve Bulletin □ September 1979

foreign markets— will be published in the B ul ­
letin and in a new statistical release, “ Major
nondeposit funds of commercial banks,” G.10.
These banking data, together with the data on
bank deposits published with the monetary ag­
gregates, will facilitate analysis of develop­
ments in commercial bank credit and the sources
of funding used by banks in maintaining their
credit operations.

1. Growth in commercial bank credit
Seasonally adjusted annual rates o f change, in percent
T otal loans and
investments
Old
series

Revised
series

Old
series

Revised
series

1976...........................
1977...........................
1978...........................
1979 H I ..................

13.8
9 .3
4.3
8.6
11.0
12.1
14.3

14.7
10.3
4 .3
7.9
10.9
13.6
12.8

18.8
11.5
-.7
8.2
14.6
15.9
15.5

19.5
13.1
-.6
7.1
14.0
18.0
14.9

Q 2...................
Q 3...................
Q 4 ..................
Q l ...................
Q 2...................

10.6
17.0
11.1
7.9
14.1
14.0

12.8
13.2
13.3
12.7
13.2
11.9

12.7
19.1
14.2
14.1
15.5
14.9

16.8
16.7
15.9
18.2
15.1
14.2

Jan ..................
Feb.................
M ar................
A pr.................
M ay ...............
J u n e ...............
July................
A ug................

25.3
10.9
5.8
13.8
12.1
15.7
13.0
11.1

18.7
13.1
7 .4
14.1
8.3
12.8
13.2
10.1

28.0
9 .6
8.2
15.4
10.6
18.2
13.5
15.6

20.6
16.1
8.2
17.3
9 .5
15.1
15.0
12.5

1974...........................

R e v is e d B a n k C r e d it S e r ie s

The principal effects of this revision of the bank
credit series have been to raise the level of total
loans and investments and to smooth somewhat
fluctuations in the series (chart 1). Estimated
total loans and investments were raised $24
billion in June 1979 as a result of the expanded
institutional coverage and another $8 billion
through the addition to the series of lease fi­
nancing receivables. While the addition of lease
receivables increased the trend rate of growth
of the revised series only slightly on average—
0.1 percent per year— the additional coverage
of agencies, New York investment companies,
and Edge Act corporations tends to accelerate
growth in expansion periods. As table 1 shows,
yearly growth rates are higher fof the new series
than the old in 1973-74 and 1978; they tend
to be slightly lower in intervening years. This
difference arises largely from variations in loan
growth at U.S. agencies of foreign banks, espe­
cially in loans to commercial and industrial
firms. Such loans account for a substantially

1. Total loans and investments1




Billions of dollars

T otal loans

Period

1979
1979

higher proportion of the loan portfolios of
agencies than of domestic banks. Agencies in­
creased their total loans in 1973-74 at an
average annual rate of about 35 percent, more
than twice the rate of expansion at domestically
chartered banks. In 1975, when business loan
demands subsided, U.S. agencies of foreign
banks as well as domestically chartered banks
experienced reductions in loan growth. The
largest reduction in loans of agencies occurred
after loan growth at domestically chartered
banks began to increase again in 1977, reflect­
ing conversion of a number of agencies to
branch status. Thus, the inclusion of agencies
in the bank credit series removes an upward bias
in growth rates for 1977 that had resulted from
including branch data that were inflated by the
agency conversions.
The revised series again shows greater ex­
pansion in loans and investments in 1978 than
the old series, with most of this difference due
to sharply higher loan growth. Faster loan ex­
pansion at agencies was a major source of the
increase in the growth rate shown by the new
series.2 Agencies expanded their loans to non-

2.
Revisions in previous estimates of loans at U.S.
branches of foreign banks also raised the growth rate
of the revised series.

New Measures of Bank Credit and Nondeposit Funds

financial businesses about 60 percent during the
year, nearly four times the relatively rapid rate
of advance at domestically chartered banks, and
they also sharply expanded their loans to unaf­
filiated banks in foreign countries.
In the first half of 1979, the revised series
indicates slightly slower bank credit expansion
than the old series— a \2 3 percent seasonally
A
adjusted annual rate of growth compared with
an estimated 141 percent on the old basis. This
A
revised growth rate is just under the rapid pace
of 1978, in contrast with the further acceleration
that had been indicated by the old series. In
the old series, growth in the first half had
exceeded the high rate of expansion in 1973,
but according to the revised series it was 2
percentage points below that in 1973.
The shift to monthly averages from monthend observations and the differences in seasonal
adjustments tended to smooth fluctuations in the
total bank credit series. Over the past year and
a half, annualized quarterly growth rates for the
new series stayed within a relatively narrow

709

range— 12% to 13lA percent compared with
fluctuations in growth rates on the old basis in
a range of 8 to 17 percent for the same period.
But the new series displays significantly slower
growth in the first half of 1979 as a result of
reduced growth of Treasury securities and, to
a lesser extent, loans. Formerly, the seasonally
adjusted Treasury security component of bank
credit was derived as a residual because of the
extreme volatility of the end-of-month data.
This procedure was changed with conversion of
the series to monthly averages. On the revised
basis, Treasury securities are seasonally ad­
justed directly, and total bank credit is derived
by summing securities and loan components.

N

e w

B

a n k

C

r e d i t

D

e t a i l

The new information on loans and investments
by type of institution and by type of lending
allows analysis of current developments in bank
credit in greater depth. Table 2 indicates major

2. Assets of all commercial banks in the United States, June 1979
M onthly averages, n o t seasonally adjusted
Loans and investm ents1

Type

Num ber
o f banks

Total
assets

Securities

Loans and leases

Total
U.S.
Treasury

Other

Total

Commercial
and
industrial

To
foreign
banks

All
other

Amounts outstanding, billions o f dollars
All commercial banks.................................
Domestically chartered2.........................
Foreign-related3........................................
U.S. branches........................................
U.S. agencies and agreement
corporations......................................
New Y ork investment company
subsidiaries........................................
Edge Act corporations.......................

14,959
14,620
339
123

1,383.0
1,274.8
108.2
60.5

1,083.2
1,024.8
58.4
34.4

150

34.9

6
60

2 .2
10.7

95.1
93.7
1.5
.6

182.7
181.3
1.4
.6

805.3
749.8
55.6
33.1

272.1
239.2
32.9
17.9

21.6
6.8
14.8
10.5

511.6
503.8
7.9
4 .7

19.6

.7

.5

18.4

12.8

3.0

2 .6

1.4
3.0

.1

.1
.2

1.2
2.8

.8
1.5

.2
1.1

.3
.2

100.0
98.5
1.5
.9

0

Share o f total outstanding, percent
All commercial banks..................................
Domestically chartered2.........................
Foreign-related3........................................
U.S. branches........................................
U.S. agencies and agreement
corporations......................................
New Y ork investment company
subsidiaries........................................
Edge Act corporations.........................

100.0
92.2
7 .8
4 .4

100.0
94.6
5.4
3.2

2 .5
.2
.8

1. Excludes loans to commercial banks in the U nited States.
2. Banks with national or state charters located in the SO states and
the D istrict o f Columbia.
3. Includes U.S. branches, agencies, and New Y ork investment




100.0
98.5
1.6
.6

100.0
99.2
.8
.3

100.0
93.1
6.9
4.1

100.0
87.9
12.1
6.6

100.0
31.5
68.5
48.6

1.8

.7

.3

2.3

4 .7

13.9

.5

.1
.3

.1

.1
.1

.1
.3

.3
.6

.9
5.1

.1

0

0

company subsidiaries o f foreign banks and Edge A ct corporations
engaged in international banking business in the 50 states and the
D istrict o f Columbia.

710

Federal Reserve Bulletin □ September 1979

3. Portfolios of domestically chartered and foreign-related institutions
M onthly averages, June 1979
Foreign-related
Type o f asset or ratio

A ll banks

Domestically
chartered
A m ount

Loans and investments (in billions o f dollars except as noted)

Total i .................................................................................................
U.S. Treasury securities.................................................................
Other securities.................................................................................
Total loans1......................................................................................
Business.........................................................................................
Acceptances...................................... .......................................
Other
U .S..........................................................................................
F oreign..................................................................................
Real esta te .....................................................................................
Individuals....................................................................................
A gricultural..................................................................................
Security lo a n s...............................................................................
N onbank financial institutions.................................................
Lease financing receivables........................................................
All o th er........................................................................................
Foreign b an k s..........................................................................
O ther..........................................................................................
Portfolio ratios (in percent)

Total loans to total loans and investments................................
Business loans to total lo an s.........................................................
Foreign business loans to total business loans.........................
Acceptances to total business lo an s............................................
Foreign bank loans to total loans................................................
1. Excludes loans to commercial banks in the United States.

asset holdings of domestically chartered banks
and foreign-related institutions and the relative
importance of each type of institution. Domes­
tically chartered banks have either national or
state charters, and most have federal deposit
insurance. Domestically chartered banks whose
majority owners are foreign banks are included
in the domestically chartered component rather
than with foreign-related institutions. These
foreign-owned banks operate in the same statu­
tory and regulatory environment as other do­
mestically chartered banks, and their portfolios
are more like those of other domestically char­
tered banks than of institutions included in the
foreign-related component.
U.S. branches of foreign banks are institu­
tions that have been licensed to do a full banking
business by the states in which they are located.
U.S. agencies of foreign banks also have
operated under state banking statutes with
unrestricted lending and investment activities,
but they are not permitted to hold deposits—
only credit balances that arise in the course of
their business. New York investment company
subsidiaries of foreign banks are corporations
chartered by New York State with lending ac­
tivities and deposit restrictions similar to those




Share o f total
(percent)

1,083.2
95.1
182.7
805.3
272.1
7.5

1,024.8
93.7
181.3
749.8
239.2
3.6

58.4
1.5
1.4
55.6
32.9
3.9

5.4
1.6
.8
6.9
12.1
52.0

248.2
16.6
225.5
176.8
29.2
23.2
28.1
8.1
42.3
21.6
20.7

229.5
6.3
225.5
176.8
29.2
21.4
27.3
8.1
22.2
6.8
15.4

18.8
10.3
( 2)
( 2)
( 2)
1.8
.8
( 2)
20.1
14.8
5.3

7.5
62.0
( 2)
( 2)
( 2)
7.8
2.8
( 2)
47.5
68.5
25.6

74.3
33.8
6.1
2.8
2.7

73.2
31.9
2 .6
1.5
.9

95.2
59.1
31.3
11.9
26.6

2.
N ot available separately. Small amounts are included in all
other loans.

of agencies. Edge Act corporations are interna­
tional banking subsidiaries of commercial banks
that are chartered in the United States under
provisions of the Federal Reserve Act. Although
New York investment companies and Edge Act
corporations are chartered in the United States,
they have been grouped with branches and
agencies of foreign banks because of the inter­
national character of their business. Among the
institutions in the foreign-related group,
branches and agencies account for the bulk of
loans and investments (93 percent), and they
have been most sensitive to changing loan de­
mands.
Foreign-related institutions as a group ac­
count for only about 8 percent of banking assets
in the United States (table 3). Their security
holdings are relatively small, and their lending
operations are more specialized than those of
domestically chartered banks. Most of their loan
portfolios are concentrated in loans to foreign
and domestic nonfinancial business and to
foreign banks. Although they account for only
7 percent of total loans of the banking system,
foreign-related institutions hold 12 percent of
outstanding total business loans, 62 percent of
loans to foreign businesses, and 69 percent of

New Measures of Bank Credit and Nondeposit Funds

loans to foreign banks. As a group they have
a high proportion of acceptances and loans to
foreign businesses in their portfolios.
Foreign-related institutions are also charac­
terized by greater dependence on nondeposit
funds. Statutory and regulatory restrictions have
been important in limiting the scope of the
lending and funding by these institutions. In
some cases, lending has been restricted to fi­
nancing of international transactions, and de­
posits and credit balances of some institutions
have been restricted to those arising in the
course of international business. In addition,
these institutions have been hampered in their
ability to attract deposit funds, especially at the
retail level, by lack of familiarity and by the
absence of federal deposit insurance. Conse­
quently, they have tended to rely more on fund­
ing from directly related institutions. However,
the International Banking Act has altered the
statutory and regulatory environment for these
institutions in the direction of greater equality
of treatment, and they may become more similar
to domestically chartered banks. As they expand
into retail banking activities such as lending to
consumers and competing for consumer depos­
its, the new series will make it possible to
measure such developments.
The expanded detail on loans, shown in table
3, provides considerably more information on
loan developments for the banking system as
a whole than had been available previously. In
the past, only total loans and commercial and
industrial loans were published for the last
Wednesday of each month in the B ulletin ;
weekly detail on loans for large banks and
quarterly data for all commercial banks also
were published. The new estimates based on
monthly averages were derived from these
sources, from weekly data that have been re­
ported by small member banks since the begin­
ning of 1979, from month-end data reported by
U.S. agencies and New York investment com­
pany subsidiaries of foreign banks, and from
a combination of month-end and quarterly re­
ports of Edge Act corporations.
Table 4 shows growth rates for the most
significant components of loans as estimated
from the revised series on monthly averages.
The degree of estimation required varies con­




711

siderably by loan component because of varia­
tions in the share of loans held by reporting
banks. Reporting banks account for the highest
percentage of total amounts outstanding in se­
curity loans, loans to nonbank financial institu­
tions, and lease financing receivables. Large
weekly reporting banks hold from three-quarters
to seven-eighths of total outstandings in these
categories. Small additional amounts of security
loans and loans to nonbank financial institutions
are reported monthly by foreign-related institu­
tions. Estimates of commercial and industrial
loans, the largest loan component, are derived
from weekly reports of large banks and from
a weekly report of a sample of small banks
covering 56 percent of total business loans;
another 12 percent of total business loans is
available from monthly reports of foreignrelated institutions. Real estate loans reported
weekly by domestically chartered banks repre­
sent 45 percent of total real estate loans at all
commercial banks. Loans to individuals at
present are derived from month-end reports
covering about 24 percent of the total for all
banks; later, weekly coverage will be increased
to about 43 percent of the total. Agricultural
loans are based on the thinnest sample, 17
percent, reflecting the relatively small amounts
of such loans at large weekly reporting banks.
Blowup factors derived from quarterly call
reports are applied to the data reported weekly
to estimate nonreporting domestically chartered
banks in the totals for each component. This
procedure requires revisions in the estimated
series when new blowup factors become avail­
able at the end of each quarter.
The growth rates shown in table 4 cover two
periods of rapid loan expansion and the inter­
vening period of slack loan demands. The larg­
est loan components— commercial and indus­
trial, real estate, and individual— are dominant
in the trend-cycle variation of the total. Follow­
ing extremely rapid expansion in 1973, growth
of real estate loans and loans to individuals
slowed abruptly, which led to a sharp reduction
in growth of total loans. Business loans contin­
ued to increase rapidly in 1974, but demand fell
off after 1974 as businesses responded to de­
clining economic activity and also as they began
to fund their short-term debt in the capital mar­

712

Federal Reserve Bulletin □ September 1979

4. Loans at all commercial banks, by type of loan1
Seasonally adjusted annual rates o f change, in percent
Commercial and industrial
Period

Real
estate

Other

Total
Total

Individ­ Agri­
uals
cultural

Accept­
ances
U.S.

N onbank
financial
institu­
tions

Security
loans

Lease
Foreign
banks financing

Foreign

1973.............................
1974.............................
1975.............................
1976.............................
1977..............................
1978.............................
1979 H I ....................

19.2
12.9
-.6
7 .3
13.9
18.3
15.0

21.5
19.4
-3 .8
1.4
10.5
16.8
19.3

6 .6
45.8
68.1
31.2
- 3 .1
- 9 .6
21.2

2 2.0
19.0
- 6 .4
-.4
11.8
17.0
17.4

17.0
2 0.0
30.3
17.4
-2 .0
32.3
55.0

20.3
10.7
3.1
10.2
17.8
20.0
14.1

15.2
3.8
2.3
10.9
18.9
19.4
15.0

20.4
6.4
9.9
15.5
11.3
9.3
5.9

31.1
21.9
- 1 6 .0
- 9 .2
-2 .1
5.4
8.6

- 1 7 .0
-2 .6
4.9
30.1
17.8
-5 .9
38.3

59.6
34.2
8.3
28.1
17.6
57.1
-4 .4

46.0
53.7
23.5
27.8
13.5
29.4
18.4

1978

Q l ....................
Q 2....................
Q 3....................
Q 4....................
Q l ....................
Q 2....................

17.1
16.9
15.9
18.7
15.4
14.1

18.7
16.7
12.7
14.9
21.4
17.1

- 6 1 .1
-1 .1
21.4
6 .4
24.3
17.0

20.6
18.1
11.5
14.1
16.2
17.3

52.3
0
32.1
33.1
97.7
9.8

18.1
18.3
20.4
17.8
14.6
13.0

17.9
20.5
17.9
15.9
16.3
12.4

1.6
9.3
15.1
10.2
8.5
4 .2

-7 .1
6 .0
8.9
12.1
- 1 .7
13.3

1.7
15.7
- 1 7 .8
- 2 2 .5
31.9
40.0

57.7
1.3
40.0
97.7
3.6
-1 2 .2

14.4
20.0
25.9
46.8
14.3
20.8

Ju n e.................
July..................
A ugust.............

15.3
15.0
12.5

16.6
2 0.0
16.8

42 .4
80.0
- 3 0 .0

15.3
20.0
18.2

14.5
43.1
4 1.6

14.0
15.4
16.3

10.3
6.1
n.a.

0
4.1
4.1

-1 2 .0
55.9
12.3

10.5
31.2
-3 5 .4

54.3
-1 1 .5
- 2 9 .1

29.6
29.6
28.9

M emo : Percent of
total loans...............

100.0

33.7

.9

30.7

2.1

28.1

22.1

3.6

3.5

2.9

2 .6

1.0

1979
1979

1. Excludes loans to commercial banks in the United States.

kets. This slack demand for business loans was
responsible for the relative weakness in growth
of total loans that continued after real estate and
individual loans began to expand again in 1976.
Growth in business loans lagged the upturn of
real estate and individual loans, which were
expanding rapidly by 1977. With all three major
loan components increasing rapidly in 1978 and
with loans to foreign banks also up sharply, total
loan growth returned nearly to the 1973 pace.
In the first half of 1979, business loan expansion
accelerated further, but total loan growth slowed
somewhat as real estate loans and loans to
individuals increased more slowly.
While other types of loans have less impact
on movements in total loans, they are of con­
siderable importance in financing particular eco­
nomic and financial activities. Agricultural
loans are loans other than those secured by real
estate that are made to finance agricultural pro­
duction, including the growing, storage, and
marketing of agricultural products, as well as
to finance family and other household expendi­
tures of farmers. Loans to nonbank financial
institutions include loans to many types of fi­
nancial intermediaries such as finance compa­
nies, factors, thrift institutions, real estate in­
vestment trusts, mortgage companies, bank
holding companies, and insurance companies.




n.a. N ot available.

Thus, for example, bank loans to these institu­
tions indirectly finance inventories, con­
struction, and consumer outlays, and they re­
flect such events as outflows of thrift deposits
and inability of nonbank financial institutions to
obtain funds in the commercial paper or longerterm capital markets. Security loans are made
primarily by large banks to brokers and dealers
to finance trading positions in securities, often
the portion that the dealers have not been able
to finance elsewhere. Security loans at banks
fluctuate widely with the dates of major Treas­
ury financings, according to the relative cost or
availability of dealers’ nonbank funds.
Loans to foreign banks have shown large
shifts over the period covered by the new series.
As noted previously, about two-thirds of such
loans are held by the foreign-related banking
institutions. Foreign banks often perform an
intermediary function in channeling funds ad­
vanced by banking offices in the United States
to foreign nonbank borrowers.
Lease financing receivables, a new and still
minor component of the bank credit series, have
been expanding rapidly for many years. These
receivables reflect the residual value of property
acquired by banks for the purpose of leasing
to customers who otherwise might borrow to
purchase the property directly.

New Measures of Bank Credit and Nondeposit Funds

N

S

e w

e r ie s

o n

N

o n d e p o s i t

F

713

related foreign institutions (net Eurodollar bor­
rowing).
The series on nondeposit funds has the same
institutional coverage as the revised bank credit
series discussed earlier. For domestically char­
tered banks, borrowings from nonbank custom­
ers and loans sold to affiliates are monthly
averages of Wednesday data, and net Eurodollar
borrowings are monthly averages of daily fig­
ures.3 For foreign-related institutions, the
monthly estimates reflect averages of current
and previous month-end observations.
Federal funds, RPs, and other borrowings
from nonbank customers together constitute the
largest component of the nondeposit funds series
(Table 5). Federal funds purchases most often
are unsecured, are for one day only, and are
settled in immediately available funds. In some
instances, federal funds purchases are secured,
and they may be arranged for more than one
day or renewed on a “ continuing contract”
basis until terminated by either party. An RP
is an agreement by means of which a borrower
sells securities but contracts with the purchaser
to repurchase them at a stated price at some

u n d s

Measures of bank sources of funds are of inter­
est because they indicate how banks finance
their credit operations in terms of suppliers of
funds, cost of funds, and maturity structure.
They also help to track responses of banks to
monetary policy and to other factors affecting
deposit growth. Deposits remain the most im­
portant sources of funds for banks; but when
market interest rates rise above regulatory de­
posit ceiling rates, deposits so constrained flow
out of the banks. The cost of reserve require­
ments further affects the cost of deposits relative
to alternative sources of funds. In recent years,
banks have turned more to nonreservable bor­
rowings (mainly federal funds and security RPs)
supplementing deposit flows with these nonre­
servable and other borrowings.
As a supplement to current measures of bank
deposits, such as deposit components of the
monetary aggregates and negotiable certificates
of deposit, a new measure of estimated
nondeposit funds has been developed from sev­
eral data sources. This measure includes federal
funds purchased, sales of securities under
agreements to repurchase (RPs), and other bor­
rowings from nonbanks, as well as loans sold
to affiliates and net balances due to directly

3.
A small and relatively stable amount of nonmember bank net balances due to own foreign branches
is derived from quarterly call reports.

5. Commercial bank nondeposit fu n d s1
M o n th ly a v erag e s, b illio n s o f d o llars

Period

D ecem ber

Total
nondeposit
funds

Federal funds,
RPs, and
borrowings from
nonbanks, SA2*
3

Net balances due to directly related
foreign institutions, NSA

Loans sold
to affiliates,
NSA2
Total

Domestically
chartered banks4

Foreign-related
institutions3

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

28.0
45.5
49.1
43.0
55.4
62.7
84.9

16.5
34.0
35.4
33.2
47.1
58.4
74.8

2.6
4.4
4.8
4.5
3.8
4.8
3.8

8.9
7.2
8.9
5.4
4.5
-.5
6.3

1.9
1.3
.9
-2.1
-5 .2
-11.6
-10.2

7.0
5.9
8.0
7.5
9.7
11.1
17.0

Jan.................................
Feb.................................
M ar................................
Apr................................
May .............................
June .............................
July .............................
Aug . e ..........................

83.1
95.8
100.7
104.8
111.2
115.8
119.4
127.7

73.2
80.2
80.9
82.3
84.3
84.5
86.5
91.2

3.6
3.6
3.5
3.6
3.7
3.8
3.7
3.7

6.3
12.0
16.3
18.9
23.2
27.5
29.1
32.7

-10.1
-6 .3
-4 .5
-1 .9
2.5
5.8
6.3
8.9

16.4
18.3
20.8
20.8
20.6
21.7
22.8
23.8

1972
1973
1974
1975
1976
1977
1978
1979

1. Includes national and state-chartered banks plus foreign-related banking institutions in the United States (branches, agencies, and New York
investment company subsidiaries of foreign banks) and Edge Act corporations.
2. Wednesday data for domestically chartered banks.
3. Current and preceding month-end data for foreign-related institutions.
4. Daily data,
e Estimated.
SA Seasonally adjusted.
NSA Not seasonally adjusted.




714

Federal Reserve Bulletin □ September 1979

specified future date. RPs typically have short
maturities, often one day; however, they may
be continuing contracts that can remain in effect
until canceled. Federal funds borrowing and
lending transactions are exempt from explicit
interest rate ceilings and reserve requirements,
but the market participants are restricted by
regulation to banks in the United States, savings
and loan associations, savings banks, U.S.
government agencies, and a few other institu­
tions. RP borrowings that are secured by U.S.
Treasury and federal agency securities also are
exempt from interest rate ceilings and reserve
requirements. Federal funds and RP transactions
may result in the transfer of balances at Federal
Reserve Banks from one member bank to an­
other, or they may simply reflect the conversion
of deposit balances at a commercial bank to a
nonreservable borrowing.
Other borrowings are funds raised on prom­
issory notes, bills and notes rediscounted, due
bills, and other instruments given for the pur­
pose of borrowing money for use in the bank’s
business. These include term federal funds and
borrowings from Federal Reserve Banks, over­
drawn “ due from” bank balances, loans sold
under RPs, sales of participations in pooled
loans, and direct borrowings from unrelated
foreign banks. Such borrowings from nonbanks
are a relatively small part of total borrowings.
Net balances due to directly related foreign
institutions consist of the net liabilities of do­
mestically chartered banks due to their own
foreign branches plus the net liabilities of
foreign-related U.S. banking institutions due
both to their parent banks or holding companies
and to other directly related institutions in
foreign countries. These net due-to balances are
a measure of the extent to which the U.S.
banking system uses the Eurodollar market in
funding credit activities in the United States.4

2. Commercial bank deposits and
nondeposit funds
Billions of dollars

Loans sold to affiliates are a measure of the
utilization by domestically chartered banks of
funds raised by affiliates— for example, in the
commercial paper and Eurodollar markets. This
component specifically measures the funds ob­
tained through bank holding company affiliates
or foreign branches only by means of the sale
of loans to these institutions. It does not include
proceeds of commercial paper sales by bank
affiliates that are channeled to the banks through
direct deposits.
As shown in chart 2, nondeposit funds have
become increasingly important to banks, sup­
plementing— and at times replacing— deposit
funds. In the 1973-74 period, when credit de­
mands were high and flows into deposits subject
to interest rate ceilings were disrupted, U.S.
banks obtained additional funds through bor­
rowings that were exempt from interest ceilings.
Eurodollar borrowings, which were subject to
reserve requirements at the time, changed little;
but other borrowings from nonbank sources
increased sharply (chart 3).
The use of nondeposit funds decreased in late
1974, as credit demands eased and market in­
terest rates generally remained lower than the
4.
Changes in net due-to balances reflect changes in fixed-deposit ceiling rates. Net utilization of
either balances due from or liabilities due to related
funds from the Eurodollar market declined as
foreign institutions. Foreign-related institutions gener­
large domestically chartered banks advanced
ally maintain net due-to positions with directly related
foreign institutions, while U.S. member banks moved
funds to their foreign branches for use abroad.
into large net due-from positions during the period from
These banks continued to advance funds net to
1975 to 1978, which reduced the level of net Eurodollar
branches until 1978. In the same period,
borrowings and total nondeposit funds measured by this
series.
foreign-related institutions behaved differently,




New Measures of Bank Credit and Nondeposit Funds

3. Nondeposit funds at commercial banks

Billions of dollars

increasing their net balances due to related
foreign institutions moderately through 1977 to
fund their U.S. operations. U .S. banks resumed
the expansion of their domestic borrowings in
late 1975, and these borrowings have remained
an important source of funds. In 1978, with loan
demands in the United States strengthening,
both domestically chartered banks and foreignrelated institutions began to raise more funds
abroad. Since early 1978, foreign-related insti­
tutions have sharply increased their net balances




715

due to foreign-related institutions to finance
rapid expansion in business and foreign bank
loans. Domestically chartered banks increased
their net balances due to foreign branches mod­
erately in 1978 while depending primarily on
other borrowings and deposit flows to fund
strong credit expansion. However, their net
due-to balances have spurted at an unprece­
dented rate in the first half of 1979 in response
to continued strong bank credit demands in the
United States, to relatively small deposit inflows
early this year, and to changes in reserve re­
quirements that affected the relative costs of
alternative sources of funds in late 1978.5
Back data for the series on bank credit and
nondeposit funds are available from December
1972 to date. Requests for these data or for the
statistical releases for these series may be sent
to Publications Services, Division of Support
Services, Board of Governors of the Federal
Reserve System, Washington, D.C. 20551.
5.
Reserve requirements on member banks’ net lia­
bilities to their own foreign branches were reduced to
zero from 4 percent in August 1978, and a supplemental
reserve requirement of 2 percentage points was added
to the existing requirements on large time deposits in
November 1978.

716

Survey of Standby Letters of Credit
Peter R. Lloyd-Davies of the B oard’s Division
of Research and Statistics prepared this ar­
ticle .1
Standby letters of credit issued by U.S. banks
have increased rapidly during the last six years.
The amount of such letters of credit issued by
U.S. insured commercial banks (consolidated
with their domestic and foreign branches and
subsidiaries) was about $5 billion in December
1973, when these data were first collected. By
December 1978, the amount had risen above
$25 billion.
A standby letter of credit is issued by a bank
to assure the beneficiary of the credit that he
will not suffer loss should the bank’s customer
fail to fulfill a contractual obligation to him. If
such a loss should occur, the beneficiary is
entitled to obtain reimbursement from the bank;
the bank’s customer is then liable to the bank
for amounts disbursed. The underlying contrac­
tual obligation of the bank’s customer to the
beneficiary may be either financial or nonfinan­
cial; examples include construction contracts,
contracts to ship merchandise, borrowing in the
commercial paper market, and commodity fu­
tures contracts.
In December 1978, Senators William Prox­
mire and Edward W. Brooke expressed their
concern that these instruments might constitute
undue risk for banks and the banking system
and asked the Federal Reserve to prepare a
report on them. In response to this request, a
questionnaire was sent to a sample of 28 banks
to gather information about the types of under­

lying contracts, the use of collateral, and the
bank’s takedown and loss experience.2 The re­
sults indicate that, although standby letters of
credit have the same risk potential as a direct
loan of funds, in practice they result in much
lower losses. Takedowns are fairly rare, but,
more important, the amounts disbursed are al­
most always recovered promptly by the bank
from its customer. The bank may facilitate this
recovery by requiring its customers to post col­
lateral. The smaller banks in the survey tended
to have more takedowns than the larger banks
and at the same time to have higher collateral
requirements. The survey found no obviously
imprudent uses of the instrument, and conse­
quently no additional regulations or legislation
was recommended.
Th e S a m ple

The 28 commercial banks surveyed, which were
all members of the Federal Reserve System,
included the 11 largest issuers of standby letters
of credit. These large banks (each with total
assets over $18 billion) each had more than $200
million outstanding as of September 30, 1978;
as a group they accounted for about three-quar­
ters of all standby letters of credit issued by
insured commercial banks. The remaining 17
banks in the sample were smaller banks that
issued large amounts of this instrument relative
to their size; they accounted for 4 percent of
the total outstanding. The smaller banks fulfilled
two conditions: (1) they had at least $20 million
of standby letters of credit outstanding as of
September 30, 1978; and (2) their total out­
1.
Valuable assistance in preparing the survey was standing was at least 2 percent of their fully
provided by Messrs. John J. Mingo, Michael G. Mar­
consolidated assets.
tinson, Benjamin Wolkowitz, Stanley J. Sigel, Oscar
B. Barnhardt, and Ms. Arlene E. Lustig. Thanks are
2.
The survey was conducted jointly by the Division
also due to the staff of the Reserve Banks who adminis­
of Research and Statistics and the Division of Supervi­
tered the survey and to the staff of the participating
sion and Regulation.
banks.



717

The bulk of the total amount outstanding was
in the New York Federal Reserve District. The
eight respondents located in that district reported
$15 billion in standby letters of credit out of
the survey total of $21 billion. Three banks,
with a total of $3.5 billion outstanding, were
from the San Francisco District; four, with $2
billion outstanding, were from the Chicago
District; and the other thirteen, all smaller banks
and accounting for only a small proportion of
the total outstanding, were located in the Rich­
mond, Minneapolis, Kansas City, and Dallas
Districts.

ately from their customers, whereas the large
banks reported that on average 1.83 percent of
amounts disbursed were not immediately recov­
ered. Performances differed, too, among the
large banks. One bank reported that immediate
recoveries were as low as 62 percent of take­
downs, while others reported recoveries of up
to 100 percent. The percentage of takedowns
showed surprisingly little correlation with
amounts not immediately recovered; for the
sample as a whole, this correlation was nega­
tive, reflecting the higher takedown and lower
loss experience of the smaller banks.4

T

C

o l l a t e r a l

T

y p e s

a k e d o w

n

a n d

L

o s s

E

x p e r i e n c e

Banks were asked to provide data on total drafts
paid under standby letters of credit during 1978
and also on amounts that were not recovered
immediately from the bank’s customer follow­
ing such disbursements. The responses revealed
that losses resulting from takedowns of standby
letters of credit were extremely small compared
with losses from ordinary loans. For the 28
banks, about 0.41 percent of average loans
outstanding were charged off against reserves
during 1978.3 This contrasts sharply with their
experience with standby letters of credit. Al­
though takedowns represented 2.03 percent of
standby letters of credit outstanding, more than
98 percent of the amounts paid out were recov­
ered immediately by the banks from their cus­
tomers, leaving only about 0.03 percent of
standby letters of credit as potential losses to
the bank. Even this percentage may exaggerate
the loss: amounts not immediately recovered are
typically booked as loans to the bank’s cus­
tomer, a part of which is probably recovered
as the loan is repaid.
Banks had different experiences, depending
on their size. The 11 large banks had signifi­
cantly lower takedown rates than the smaller
banks: 1.86 percent compared with 4.65 per­
cent. But all of the smaller banks reported that
all amounts disbursed were recovered immedi-

o f

C

a n d

o n t r a c t

The table shows total standby letters of credit
classified by the type of underlying contract.5
It also gives the amount of collateral or other
indemnification against loss for each type iden­
tified.6 Collateral was used in connection with
almost all types of underlying contracts, al­
though the size of collateral requirements
depended on the size of the bank. The 11 large
banks reported collateral amounting on average
to 18 percent of the value of standby letters of
credit outstanding; the comparable figure for the

4. Although the coefficient of correlation between
takedowns and losses among the 11 large banks was
positive, it was only 0.08, implying that a relatively
high takedown experience was not strongly associated
with large losses.
5. Because the detailed information on collateral and
on the nature of the underlying contract normally is not
readily available in machine-readable form, banks were
given the option of responding to these questions on
the basis of a sample of standby letters of credit covering
at least 80 percent of their total outstanding. Most of
the large banks took advantage of this opportunity and
selected a sample either by dropping certain overseas
branches or by eliminating all credits under a certain
dollar limit. The numbers reported on a sample basis
were then grossed up so as to correspond with the total
outstanding for the bank. This procedure probably in­
troduced certain minor biases into the results. Standby
letters of credit to foreign beneficiaries were somewhat
understated, as were those issued for small dollar
amounts, which are perhaps more likely to be collat­
eralized.
3.
This figure is obtained by dividing 1978 gross loan
6. Collateral and other idemnification include cash;
chargeoffs (before deducting recoveries) by the average
marketable securities; readily marketable commodities;
of total loans outstanding at the beginning and end of
and guarantees or standby letters of credit issued by
the government, insurance companies, and other banks.
1978.




718

Federal Reserve Bulletin □ December 1979

Standby letters of credit: uses and collateral1
Millions o f dollars
U.S. beneficiary

Non-U .S. beneficiary

Type o f underlying contract and purpose o f letter o f credit
Am ount
outstanding

Collateral or
indemnification

A m ount
outstanding

Collateral or
indemnification

Full sample

Financial...................................................................................................
To back commercial paper..............................................................
To back other loans..........................................................................
To ensure performance on options or futures contracts...........
O ther financial....................................................................................

2,344

208

8,304

1,643

759
456
1,129

57
41
110

5,676
1,621
1,007

1,268
257
119

7,362
1,102
1,873
1,077
3,310

1,766
286
289
120
1,072

3,376
98
1,904
174
1,200

458
7
249
28
174

9,706

To ensure contract performance associated with
construction projects....................................................................
To ensure merchandise delivery.....................................................
Other nonfinancial.............................................................................

1,974

11,680

2,101

11 large banks
Nonfinancial............................................................................................
To ensure contract performance associated with
construction p ro jects...................................................................
To ensure merchandise delivery....................................................
Other nonfinancial.............................................................................

2,033

91

8,198

1,620

653
397
983

23
20
49

5,630
1,592
975

1,259
253
108

Financial...................................................................................................
To back commercial paper...............................................................
To back other loans..........................................................................
To ensure performance on options or futures contracts...........
Other financial....................................................................................

6,657
960
1,696
1,001
3,001

1,482
206
204
108
964

3,306
98
1,869
174
1,165

427
7
247
28
144

8,691

1,573

11,504

2,046

17 smaller banks

Financial..................................................................................................
To back commercial p a p er..............................................................
To back other loans..........................................................................
To ensure performance on options or futures contracts...........
O ther financial....................................................................................

310

116

106

24

106
59
146

34
21
61

46
29
32

9
4
10

705
142
177
77
310

284
81
84
12
108

70
0
35
0
35

31
0
2
0
29

1,015

To ensure contract performance associated with
construction projects.....................................................................
To ensure merchandise delivery.....................................................
Other nonfinancial.............................................................................

401

176

55

1. Details may not sum to totals because o f rounding.

smaller banks was 38 percent. The smaller
banks required more than 40 percent collateral
for financial contracts and 34 percent for non­
financial contracts. Small banks may anticipate
their somewhat higher incidence of takedowns
and protect themselves by requiring additional
collateral.
Standby letters of credit issued in support of
commercial paper had a relatively high level of
collateral. The 11 large banks reported that on
average 21 percent of the value of letters of
credit in favor of holders of U.S. commercial
paper was supported by collateral; for the




smaller banks this percentage was 57 percent.
These collateral requirements significantly alter
the character of the overall transaction from the
point of view of the borrower, since borrowing
in the commercial paper market is normally on
an unsecured basis.
The largest single category of standby letters
of credit, accounting for more than a quarter
of the total, served to ensure performance of
construction projects abroad. These were issued
almost exclusively by the largest banks, gen­
erally for the account of large multinational
corporate customers that expose the bank to

Standby Letters of Credit

relatively little risk despite the low level of
collateral. In som e cases, the issuance of a letter
of credit m ay be little more than a pro form a
step to satisfy the requirements of the govern­
m ent of the country in w hich the project is
located.
Data w ere also collected on the extent to
w hich standby letters of credit are used in co n ­
nection with transactions with the U .S . and local
governm ents and to support the activities of




719

subsidiaries and affiliates of the issuing bank.
Credits totaling alm ost $1 b illion w ere issued
in favor of governm ental units, m ostly to guar­
antee paym ent o f financial ob ligations. About
$ 725 m illion in credits w ere issued for the
account of subsidiaries and affiliates, alm ost all
of this amount for the account of consolidated
subsidiaries overseas to enable them to use the
credit standing of the parent bank to borrow in
their local market areas.
□

720

Treasury and Federal Reserve
Foreign Exchange Operations
This 35th joint report reflects the TreasuryFederal Reserve policy of making available ad­
ditional information on foreign exchange
operations from time to time. The Federal R e­
serve Bank of New York acts as agent for both
the Tresury and the Federal Open Market
Committee of the Federal Reserve System in the
conduct of foreign exchange operations.
This report was prepared by Scott E. Pardee,
Manager of Foreign Operations of the System
Open Market Account and Senior Vice Presi­
dent in the Foreign Function of the Federal
Reserve Bank of New York. It covers the period
February through July 1979. Previous reports
have been published in the March and Sep­
tember B ulletins of each year beginning with
September 1962.
By early 1979, progress was clearly under way
in resolving the disparities in economic per­
formance among industrial countries that had
been of concern to policymakers and exchangemarket participants alike for several years. The
U.S. economy was beginning to cool down
under policies of restraint, while the economies
of several other industrial countries were pick­
ing up steam under policies of stimulus. These
shifts in relative demand conditions, coming on
top of the long-awaited adjustments in trade
volumes as a result of previous exchange-rate
changes, were reducing the serious trade and
current-account imbalances of recent years. The
sharp drop in Japan’s trade surplus and the
further narrowing of the U.S. trade deficit were
especially encouraging. Nevertheless, those
processes were far from complete, and inflation
in the United States remained uncomfortably
high.
In the early months of 1979, the exchange
markets were responding favorably to the No­



vember 1 measures by the U.S. and foreign
authorities to correct what had become an ex­
cessive decline of dollar rates. The followthrough on those measures included heavy in­
tervention in the exchange market by the U.S.
authorities in coordination with the central
banks of Germany, Switzerland, and Japan, the
maintenance of a firm monetary policy by the
Federal Reserve, and the sale of foreign cur­
rency notes by the U.S. Treasury in the German
and Swiss capital markets. These actions helped
to restore a sense of two-way risk in the market,
and with interest rate differentials strongly fa­
voring the United States, funds began to flow
back into dollars. This reflux took the form of
unwinding previously adverse leads and lags,
covering of speculative positions, and the re­
versal of portfolio shifts out of the dollar, which
had built up last year.
1. Federal Reserve
reciprocal currency arrangements
Millions of dollars
Institution

Amount of facility,
July 31, 1979

Austrian
National
Bank of
National
Bank of

National Bank.......................
Bank of B elgium ..................
Canada.....................................
Bank of Denm ark................
England....................................

250
1,000
2,000
250
3,000

Bank of
German
Bank of
Bank of
Bank of

F ran ce.....................................
Federal Bank .........................
Italy...........................................
Japan .......................................
Mexico ....................................

2,000
6,000
3,000
5,000
3601

Netherlands B a n k ..................................
Bank of N orw ay....................................
Bank of S w ed en ....................................
Swiss National Bank............................

500
250
300
4,000

Bank for International Settlements
Swiss francs/dollars.........................
Other authorized European
currencies/dollars .......................

1,250

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

29,760

600

1. Increased to $700 million effective August 17, 1979.

Treasury and Federal Reserve Foreign Exchange Operations

While progress was being made on past
problems, market participants and policymakers
had to contend with new shocks to the interna­
tional economy. A shortfall in world oil supplies
emerged abruptly in early 1979, following the
political upheavals in Iran, which temporarily
cut off crude oil exports from that country. The
ensuing scramble for spot crude pushed spot
market prices to astronomical highs and
prompted individual members of the Organi­
zation of Petroleum Exporting Countries to jack
up their posted prices.
These events favored the dollar in two ways.
The bidding up of the spot oil price had the direct
effect of generating additional demand for dol­
lars in the exchange market to pay for the oil.
In addition, markets for individual currencies
were influenced by assessments by traders of
the relative impact of the oil supply and price
strains on different countries. Currencies of
countries that were most heavily dependent on
oil imports for their energy needs, such as Japan
and several continental European countries,
came under selling pressure. By contrast, the
currencies of countries with near self-sufficiency in oil, such as the United Kingdom
and Canada, came into demand. The United
States was viewed as better able than most
others to cope with short-term oil supply prob­
lems, and so long as the scramble for oil per­
sisted the dollar was also in demand.
The surge in world oil prices aggravated
inflation pressures generally, since it came at
a time when a number of important international
commodity prices were also advancing. The
economies of Japan and continental Western
Europe were no longer shielded from these price
increases as they had been earlier when their
currencies were appreciating against the dollar.
Consequently, wholesale and consumer prices
abroad jumped sharply. Since inflation had also
accelerated in the United States, this jump raised
concern over the possibility of a renewed
worldwide price spiral such as that in the early
1970s.
For their part, foreign central banks moved
to tighten monetary conditions to avoid further
exacerbation of inflationary pressures as a result
of domestic credit demand or international in­
fluences, and short- and long-term interest rates




721

advanced fairly sharply in most countries. In
addition, to avoid the inflationary effects of a
depreciation, the authorities intervened force2. Foreign exchange operations:
Summary, January 1-July 31, 1979
Millions of dollars equivalent
Type of transaction

Transactions with
German Federal Bank

Reciprocal currency arrangement1
Commitments outstanding,
January 1, 1979 ................................
Drawings, or repayments (-)
1979 Q l ..............................................
1979 Q 2 ................................................
July 1979 ............................................
Commitments outstanding,
July 31, 1979 .....................................

4,434.2
/
334.2
1 - 1 ,7 6 2 .8 2
/
790.8
I -3 ,0 2 0 .8 2
/ 1,377.1
I -1 1 4 .6
2,053.3

U.S. Treasury swap arrangement1
Commitments outstanding,
January 1, 1979 ................................
Drawings, or repayments (-)
1979 Q l ................................................
1979 Q 2 ................................................
July 1979 ............................................
Commitments outstanding,
July 31, 1979 .....................................

889.4
- 8 7 8 .2 3
0
0
0
Transactions with
Swiss National Bank

Reciprocal currency arrangement1
Commitments outstanding,
January 1, 1979 ................................
Drawings, or repayments (-),
1979 Q l ..............................................
1979 Q 2 ................................................
July 1979 ............................................
Commitments outstanding,
July 31, 1979 .....................................

786.3
/
74.1
1 -8 6 0 .5
36.2
/
31.7
\ -3 6 .2
31.7

Special swap arrangement1
Commitments outstanding,
January 1, 1979..................................
Repayments
1979 Q l ................................................
1979 Q 2 ................................................
July 1979 ............................................
Commitments outstanding,
July 31, 1979 .....................................

157.3
-1 5 6 .5
- .9
0
0
Transactions with
Bank of Japan

Reciprocal currency arrangement1
Commitments outstanding,
January 1, 1979 ................................
Drawings, or repayments (-)
1979 Q l ..............................................
1979 Q 2 ................................................
July 1979 ............................................
Commitments outstanding,
July 31, 1979 .....................................

106.5
-1 0 6 .5
0
0
0

1. Data are on a value-date basis.
2. Repayments include revaluation adjustments from swap
renewals, which amounted to $15.2 million for drawings on
the German Federal Bank renewed during the period.
3. Repayments include revaluation adjustments from swap
renewals, which amounted to $11.3 million for drawings on
the German Federal Bank during the period.

722

Federal Reserve Bulletin □ September 1979

fully in the exchange markets whenever their
currencies came on offer.
In an effort to attain greater stability of ex­
change rates within the European Community
(EC), the member countries launched the Euro­
pean Monetary System (EMS), which included
new intervention arrangements and a partial
pooling of reserves. As some strains developed
among the EMS currencies, the arrangements
provided the context in which some countries
stepped up their intervention or tightened mon­
etary policy when their currencies came under
selling pressure. The U.K. authorities had de­
cided not to join the intervention arrangements
of the EMS for the time being, and when
sterling came into heavy demand in the spring,
rather than create substantial new domestic li­
quidity through intervention, they allowed the
rate to rise.
With the dollar in generalized demand
through much of the spring, the U.S. authorities
had acquired sufficient currencies to repay by
the end of April all of their previous foreign
currency indebtedness to other central banks.
Subsequently, considerable progress was made
in rebuilding balances drawn out of the re­
sources acquired under the various parts of the
November 1 program. Most of the currencies
purchased during the period came out of direct
transactions with correspondents, but the Trad­
ing Desk also bought currencies in the market
on occasion when the bidding for dollars was
particularly strong.
In sum, by mid-June the U.S. authorities had
purchased a total of $8,123.5 million of curren­
cies and had repaid $6,126.5 million of out­
standing debt, holding the rest in balances. In
addition, $1,351.5 million equivalent of marks
was acquired by a further medium-term issue
in the German capital market. Aside from
$628.1 million of foreign currency sales during
some days of market nervousness in early Feb­
ruary, the Desk did not intervene as a seller
of foreign exchange from late February to midJune.
By late spring, however, the balance of mar­
ket sentiment began to swing against the dollar.
Traders saw that the reflux of last year’s outflow
was coming to an end, leaving the dollar vul­
nerable on the downside. Moreover, the U.S.




3. Drawings and repayments by foreign central
banks and the Bank for International Settle­
ments under reciprocal currency arrangements 1
M illions of d o lla rs; d ra w in g s, or rep ay m en ts ( - )

B ank d ra w in g on
O u t­
Federal R eserve stan d in g ,
System
Jan . 1,
1979
B ank for In te rn a ­
tional S e ttle ­
m ents (against
G e rm a n m a rk s )2 ..

0

1979
Ql

1979
Q2

1979
July

O u t­
stan d in g ,
July 31,
1979

0

3 1 .0 \
{■- 3 1 . 0 /

0

0

1. D ata are on a v alu e-d ate basis.
2. B IS d ra w in g s and re p a y m e n ts of d ollars a gainst E u ro p ean
cu rren cies o th er than S w iss fran c s to m eet tem p o rary cash
req u irem en ts.

trade deficit was widening again somewhat, and
in view of the prospective sharp increase in our
oil import bill, private forecasts were being
revised to show larger deficits than had been
predicted earlier.
Indeed, just when the bidding for dollars by
other major countries to pay for spot oil began
to slacken, the United States was encountering
serious gasoline shortages and an uncertain out­
look for heating oil supplies. These develop­
ments, plus the continuing debate over energy
policy generally in this country, led many mar­
ket participants to question whether the United
States was better able to cope with oil price and
supply problems after all. In addition, interest
rate trends internationally had become a matter
of concern. Even though inflation had acceler­
ated in the United States and the Federal Re­
serve had firmed interest rates somewhat further
in April, widespread talk of recession led market
participants to expect that interest rates might
not be raised in line with those abroad and might
even decline somewhat.
By mid-June, following further interest rate
hikes in several major foreign countries, these
various concerns came to a head. The dollar
suddenly came on offer in the exchanges, and
many market participants hastened to shift out
of dollars on the expectation of an even greater
decline. In these highly unstable market condi­
tions, the U.S. authorities intervened forcefully
to check the decline, particularly on days sur­
rounding the OPEC meeting and the Tokyo
summit in late June. The intervention operations
by the United States were mainly in marks, but

Treasury and Federal Reserve Foreign Exchange Operations

inflationary pressures in the United States.
Those operations, conducted both in New York
and in the overnight markets in the Far East,
were coordinated with those of the German
Federal Bank in Frankfurt and helped to blunt
the immediate pressures on the dollar. In addi­
tion, on July 20 the Federal Reserve raised the
discount rate 1/2 percent to a record 10 percent
and moved to firm money market rates as well.
Once the new appointments were made, with
G. William Miller moving to the Treasury as
Secretary and Paul A. Volcker becoming
Chairman of the Federal Reserve Board, the
market quieted down and dollar rates firmed
somewhat at the end of July.
From the end of January to the end of July,
the U.S. dollar declined a net 2 lA percent
against the continental Western European cur­
rencies, 2 V percent against the Canadian dollar,
2
and 13 percent against the pound sterling. It rose
a net IV2 percent against the Japanese yen.
Intervention sales of foreign currencies by
the U.S. authorities in June and July totaled
$5,414.4 million equivalent. The bulk of this
total was in marks, of which $2,758.9 million
was sold by the Treasury out of balances and
$2,537.6 million was sold by the Federal Re­
serve out of balances and through drawings on
the swap line with the German Federal Bank.
Drawings of marks by the Federal Reserve dur­
ing June and July amounted to $2,167.9 million,
of which $2,053.3 million was outstanding on
July 31. In addition, the System sold $117.9
million of Swiss francs in June and July, and
at the end of July $31.7 million of swap draw-

4. U .S . Treasury securities, foreign currency
denominated, January 1-July 31, 1 9 7 9 1
M illio n s o f d o llars e q u iv a len t; issu e s, or red em p tio n s ( - )

Q2

6 0 0 .4

- 5 9 7 .2
1 ,2 0 3 .0
1 ,3 5 1 .5

0
0

O u t­
stan d in g ,
Ju ly 31

0
0

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

-3 .2

0
1 ,5 9 5 .2

Issues

Ql

Ju ly

0

O u t­
stan d in g ,
Jan . 1

G o v e r n m e n t s e r ie s

S w iss N atio n al
B an k ..............
P u b lic s e r ie s

S w itz e r la n d ___
G erm an y ..........
T o t a l ...................

723

1. D a ta are o n a valu e-d ate b a s is .

also in Swiss francs. The German and Swiss
central banks intervened in their own markets.
The outcome of the OPEC meeting, which
resulted in an agreement that set the average
OPEC price some 60 percent over last year’s
levels, gave rise to expectations of a strong
policy response by the United States and other
countries, and the communique from the Tokyo
summit reinforced those expectations. But the
tide of market sentiment was running so strongly
against the dollar that political and economic
events in the United States over the next few
weeks were interpreted bearishly. The dollar
came under repeated bouts of selling pressure,
especially following the President’s energy
speech on July 15 and over subsequent days
during which the President made several
changes in the Cabinet.
The U.S. authorities intervened vigorously in
German marks to head off a possible generalized
decline of the dollar, which might exacerbate

5. U .S . Treasury and Federal Reserve foreign exchange operations1
Millions of dollars; net profits, or losses (-)

O n liq u id a tio n s of fo reig n c urrency
d ebts o u tsta n d in g as of
A u g . 1 5 ,1 9 7 1

R elated to current operatio n s
U .S . T reasury

P erio d
F ederal
R eserve

Exchange
S tabilization
F und

G eneral
A cco u n t

1979 Q l ............................................................
1 9 7 9 Q 2 ............................................................
Ju ly 1 9 7 9 ..........................................................

.7
30 .8
-.2

5 .7
4 .6
22.5

17.3
2 1 .7
2 0 .7

V alu atio n profits an d lo sses o n o u t­
stan d in g assets an d liab ilities as of
Ju ly 3 1 , 1979 .......................................

5 .6

-2 0 9 .1

- 6 2 .0

1. Data are on a value-date basis.




F ederal
R eserve

E x change
Stab ilizatio n
F und

-139.1
- .7
0

-5 3 1 .0
-2 .8
0

724

Federal Reserve Bulletin □ September 1979

ings on the Swiss National Bank was still out­
standing from that series of operations. From
mid-June through the end of July, the U.S.
authorities purchased $670.6 million equivalent
of marks and Swiss francs, mainly from corre­
spondents.
During the first half of 1979 both the Federal
Reserve and the Treasury realized net profits
on liquidations of current swap debt and sales
of currencies out of balances held by the Sys­
tem, the Exchange Stabilization Fund (ESF),
and the Treasury General Account. The figures
appear in table 5. During July the System real­
ized a small net loss on its operations, but the
ESF and the General Account earned profits.
The valuation profits and losses for all three
accounts reflect revaluation of System and
Treasury assets and liabilities as of July 31.
Table 5 also shows losses on the final liquidation
of pre-August 1971 Swiss franc debts.
G

e r m

a n

M

a r k

For some time the German authorities had
sought to generate a more rapid rate of domestic
growth without undercutting the clear progress
they had made in slowing inflation in recent
years. Much of the stimulus had come from
fiscal policy, with a substantial increase in the
budget deficit by the public sector. Although
Germany’s growth rate had advanced in 1978
to 3.4 percent, the solidity of the expansion was
still in question late in the year when huge
amounts of hot money flowed into the mark
from the dollar and from other EC currencies.
The rise in the mark rate in the exchange mar­
ket, particularly against the dollar, had threat­
ened to impede real growth as German busi­
nessmen became apprehensive of their ability to
compete in their own or in foreign markets. At
the same time, intervention by the German
Federal Bank and foreign authorities to counter
the mark’s rise was swelling liquidity in Ger­
many, thereby threatening to unleash serious
inflationary pressures from the monetary side.
The German authorities joined with those of
the United States, Switzerland, and Japan in the
coordinated effort starting last November 1 to
correct what had been an excessive decline of
the dollar and to avoid the recurrence of such




a decline. The resolve of the authorities had
been put to a severe test in November and
December, and intervention— particularly by
the U.S. authorities— had been very heavy. But
pressures eased off on the dollar in early 1979.
Already in January a reflux of funds had begun,
and the U.S. authorities were able to begin
acquiring marks from correspondents and in the
market to reduce their swap debt to the German
Federal Bank. At the end of January, the Federal
Reserve’s swap debt in marks amounted to
$4,168.2 million equivalent, and the U.S.
Treasury’s swap debt in marks was $613.0
million equivalent. With the exchange markets
in better balance, the German Federal Bank
moved cautiously to absorb the excess liquidity
generated by the late-1978 intervention.
The fragility of this balance was underscored
when the dollar came under a brief bout of
selling pressure in early February, as the market
responded nervously to political developments
in Iran. The spot mark was quickly bid up from
around DM 1.86 to DM 1.83 to the dollar, but
heavy intervention again helped to contain the
immediate pressures. In New York, the Desk
sold $507.1 million equivalent of marks over
three trading days through February 8. Of this
total, $317.3 million equivalent was from U.S.
Treasury balances and $189.8 million equiva­
lent was for the Federal Reserve, of which
$145.5 million was drawn under the swap line
with the German Federal Bank and the rest was
from balances.
Meanwhile, as a further follow-up to the
November 1 program, the U.S. Treasury an­
nounced that it would issue a second markdenominated note, equivalent to $1,351.5 mil­
lion in the German capital market, with the
payment date on March 1. Following these
actions, the exchange market came into better
balance again, and the process of unwinding
resumed.
As the exchanges became more settled, mar­
ket participants attempted to assess the implica­
tions for monetary policy and interest rates of
the changing conditions in Germany’s domestic
economy. A harsh winter and a metal workers’
strike had temporarily depressed production, but
most analysts expected fairly strong growth to
continue through 1979. At the same time, how­

Treasury and Federal Reserve Foreign Exchange Operations

ever, with the exchange rate no longer appreci­
ating and thereby not shielding the domestic
economy from rising prices of international oil
and raw materials, Germany was hit by the same
burst of inflation as other industrial countries.
With the mark on offer in the exchanges, the
German Federal Bank took advantage of the
opportunity to intensify its efforts to absorb
liquidity, to signal its intention that funds would
no longer be so readily available, and otherwise
to bring down the growth of central bank money
to its target range of 6 to 9 percent. In the
market, concerns that interest rates would rise
sharply in Germany prompted investors to shift
funds from marks into higher-yielding assets in
dollars, sterling, and currencies linked to the
mark in the EMS.
These outflows occurred at a time when the
dollar was in demand in the exchanges for other
reasons. It was benefiting from evidence of a
slowdown in the U.S. economy, news of a sharp
improvement in the U.S. trade deficit in Febru­
ary, and some expectation of a moderation of
inflationary pressures. Moreover, because of its
role as a transaction currency, the dollar was
being increasingly well bid as the scramble for
oil and other dollar-based commodities intensi­
fied. As a result, the selling of marks at times
put considerable pressure on the mark rate. By
early April the mark dropped to trade as low
as DM 1.9050. In addition, the mark was on
offer against other European currencies.
As the mark came on offer, the German
Federal Bank sold increasingly large amounts
of dollars to maintain orderly trading conditions
and to absorb some of the excess liquidity in
the domestic money market. For their part, the
U.S. authorities continued to take advantage of
the opportunity to cover outstanding swap com­
mitments and to replenish foreign currency re­
sources, largely on the basis of direct transac­
tions with official correspondents. But as pres­
sure against the mark intensified in early April,
the Trading Desk also intervened by buying
marks in the market to maintain orderly trading
conditions. Before long, these combined opera­
tions had drained so much liquidity in Germany
as to exert strains on the banks’ reserve posi­
tions. Accordingly, the German monetary au­
thorities acted to provide liquidity in a short­




725

term and easily reversible manner so as not to
signal any change in their efforts to resist infla­
tionary pressures. In particular, they raised
banks’ rediscount quotas with the central bank
by DM 5 billion on April 1, and subsequently
engaged in foreign exchange swaps with com­
mercial banks, mostly for three-month maturi­
ties. But in response to continuing expansion
in bank lending, the Federal Bank also acted
to raise the cost of credit, increasing both its
discount and its Lombard rates 1 percentage
point to 4 percent and 5 percent respectively.
By the spring months, it was becoming clear
that the adjustment of Germany’s external posi­
tion was under way, as the trade and currentaccount surpluses were sharply reduced from
last year’s levels. Imports were being boosted
both by a sharp rebound in domestic demand
and by the higher prices of oil and other inter­
national commodities. Uncertainties over en­
ergy continued to weigh on the mark. Since
Germany is almost wholly dependent on im­
ported oil for its petroleum needs, the further
escalation of oil prices threatened to inflate the
oil import bill even more. Moreover, the nuclear
accident in the United States raised concern that
Germany’s efforts to shift toward greater reli­
ance on nuclear power might be undercut and
that large contracts to export nuclear plants
might be delayed or canceled.
By contrast, the United States was seen as
being better able to cope with oil price and
supply problems than most other countries.
Thus, the offering of marks was increasingly
being reinforced by commercial selling and ad­
verse reactions to each news report suggesting
yet another price hike for oil. In addition,
through April and early May, the exchange
markets were reacting favorably to the further
firming of interest rates by the Federal Reserve
in response to the rapid rise in the monetary
aggregates and to evidence of a further narrow­
ing of the U.S. trade deficit.
Selling pressure on the mark continued and
pushed the mark to a low of DM 1.9220 at one
point late in May, some 3Vi percent below levels
in early February. In the four and one-half
months to mid-June, the German Federal Bank
was a substantial seller of dollars. The U.S.
authorities also purchased a total of $5,963.2

726

Federal Reserve Bulletin □ September 1979

million equivalent of marks. These purchases
permitted the System and the Treasury to liqui­
date, respectively, their remaining $4,355.2
million equivalent and $613.3 million equiva­
lent of swap debt to the German Federal Bank
by the end of April. In addition, they provided
the U.S. Treasury the opportunity to make sub­
stantial progress in restoring its resources under
the November 1 package so as to be available
to finance future operations.
By early June, however, the balance of mar­
ket forces was beginning to shift. After nearly
six months, the process of unwinding commer­
cial leads and lags and other types of foreign
exchange positions was virtually completed.
The scramble for oil was tapering down, as
many of the important importers abroad had by
now made alternative arrangements to secure
their supplies. Meanwhile, the political scrap
over energy policy in the United States cast
doubts in the market over this country’s ability
to deal effectively with the oil supply and price
situation. Moreover, interest rate differentials
were narrowing. U.S. interest rates had leveled
off since April or eased somewhat, and talk of
a possible recession gave rise to expectations
that rates might begin to decline significantly.
In Germany by that time most of the earlier
strains that had generated such large capital
outflows had disappeared, but interest rates were
some 1 to 2 percentage points higher than be­
fore. And the market was concerned that, to
prevent rising oil and other commodity prices
from further exacerbating inflation in Germany,
the authorities in that country would tighten
monetary policy sharply. Indeed, German banks
were facing seasonal liquidity pressures during
June and, in any case, the German Federal Bank
raised the Lombard rate a further 1/2 percentage
point, tempering these immediate pressures by
offering a new repurchase-agreement type of
facility for the banks based on interest rates
close to those prevailing in the market.
As money market rates in Germany rose, the
German mark advanced to the upper interven­
tion point against other currencies in the EMS.
Already the participating central banks had sold
a sizable amount of marks, and some had in­
creased their own official lending rates. The
market was therefore uncertain about the impli­




cations for the relatively new intervention ar­
rangements in the EC should monetary policy
be tightened further in Germany. At the same
time, many market participants felt there was
little downside risk for the mark in view of
continuing sales of dollars by the German Fed­
eral Bank and purchases of marks by the U.S.
authorities.
Under these circumstances, the mark imme­
diately became the focus of heavy demand when
the dollar suddenly came on offer on June 15;
in one day it jumped 1 percent through DM
1.90, even as the Trading Desk stepped in to
contain the rise. By comparison with the rela­
tively limited rate fluctuations of previous
months, market participants were impressed by
the magnitude of the mark’s rise, and the bid­
ding for marks quickly cumulated even in the
face of stiff resistance by the authorities who
continued to intervene in sizable volume.
Moreover, as the OPEC meeting in late June
approached, the feeling in the market strength­
ened that the German authorities might welcome
an appreciation of the mark to cushion the
inflationary impact of rising oil prices. Also,
news of a worsening in both the U.S. trade
deficit for April and our consumer price index
for May had heightened concerns in the market
about the performance of the U.S. economy.
In these market conditions, the Trading Desk
at the Federal Reserve Bank of New York
intervened almost daily for the rest of the
month, operating not only in New York but also
in the overnight markets in the Far East during
the week of the OPEC meeting and the Tokyo
summit, June 25-29. In all, the Desk sold
$2,429.9 million equivalent of marks by the end
of the month, of which $842.1 million equiva­
lent was financed by new drawings by the Sys­
tem on its swap line with the German Federal
Bank and the rest was drawn out of System and
Treasury balances. On several days, the German
Federal Bank also intervened forcefully. By the
end of the month the spot rate had advanced
above DM 1.84.
Early in July, the results of the OPEC pricing
meeting and the Tokyo summit set up expecta­
tions in the market that there would be strong
official reactions to the higher-than-expected in­
creases in new oil prices. In fact, participants

Treasury and Federal Reserve Foreign Exchange Operations

at the Tokyo summit committed themselves to
limit oil imports. The market responded nerv­
ously to the postponement of President Carter’s
energy speech. Meanwhile the German Federal
Bank, following up on the rise in domestic
interest rates in Germany, raised its discount and
Lombard rates on July 12 to 5 percent and 6
percent respectively. This action had been an­
ticipated, but it nonetheless reinforced concerns
in the market over the further narrowing interest
differentials between Germany and the United
States.
Even before the President had completed his
energy address on Sunday evening, July 15, the
mark advanced sharply in the overnight markets
in Singapore and Hong Kong, and the Desk
intervened vigorously in those markets through
banks in the United States with offices in those
countries. Subsequently, the announcement that
the entire U.S. Cabinet and senior White House
staff had offered their resignations to President
Carter distressed the market. The dollar came
under a renewed burst of selling pressure and
the Desk stiffened its resistance. On July 20,
the Federal Reserve raised its discount rate 1/2
percentage point to 10 percent and short-term
money market rates were moved up as well.
The mark nevertheless remained in heavy
demand, as commercial and professional market
participants undertook a hard reassessment of
the dollar’s prospects. Over subsequent days,
U.S. corporate interests that had previously
been hesitant to turn their positions began to
unwind their forward mark sales and to cover
future mark needs in the spot market. In this
unsettled environment, reports that central
banks were diversifying out of dollar-denominated assets spread throughout the market.
In response to such pressures, U.S. authori­
ties provided heavy and sustained support in
both the U.S. and the Far Eastern markets, and
the German Federal Bank also bought dollars
in Frankfurt. This intervention blunted the im­
mediate selling pressures, and the mark rate,
which briefly reached DM 1.80, dropped back
on some covering of short dollar positions.
Moreover, the appointments of G. William
Miller as Secretary of the Treasury and of Paul
A. Volcker to replace him as Chairman of the
Federal Reserve helped to reassure the market




727

that lower inflation and a stable dollar would
continue to be of the highest priority for eco­
nomic policy in the United States. In addition,
in late July statistics were released showing a
widening in the German current-account deficit
and a narrowing in the U.S. trade deficit during
June. The mark eased back to DM 1.8335 on
July 31. At this level the mark was up a net
2 percent over the six-month period.
In July the Desk’s intervention sales of marks
amounted to $2,866.6 million equivalent, of
which $1,225.6 million was out of Treasury
balances and $1,641.0 million was for the Fed­
eral Reserve. The System’s operations were
mainly financed by an additional $1,325.8 mil­
lion equivalent of drawings on the swap line
with the German Federal Bank, with the re­
mainder coming out of balances. Toward the
end of the month the Desk was able to acquire
some marks from correspondents and to liqui­
date some $114.6 million equivalent of swap
drawings. At the month-end, System swap debt
with the German Federal Bank totaled $2,053.3
million equivalent.
During the period, German reserves were
influenced by a revaluation of some of Ger­
many’s gold holdings when, during March, 20
percent of all gold and foreign exchange was
transferred into the European Monetary Fund
against the receipt of claims denominated in the
European currency unit (ECU). Germany’s re­
serves were also affected when the German
Federal Bank executed foreign exchange swaps
during April and May to provide temporary
liquidity to the domestic market. Excluding the
impact of these transactions, Germany’s foreign
exchange reserves declined $6.6 billion from the
end of January through May, reflecting almost
equally the German Federal Bank’s intervention
in dollars and in EMS currencies. By contrast,
foreign exchange reserves rose $5 billion during
June and July.
S w is s Fr a n c
Coming into 1979, the persistent rise in the
Swiss franc was finally blunted. Concerned that
excessive appreciation might drive the economy
into recession, the Swiss National Bank had
intervened massively in the exchanges and had

728

Federal Reserve Bulletin □ September 1979

accepted the huge injection of liquidity that
resulted from the heavy intervention. As part
of the November 1 dollar-support package, the
Federal Reserve also sold large amounts of
Swiss francs in its efforts to correct an excessive
decline in the dollar, and the U.S. Treasury had
arranged a $1,203.0 million equivalent place­
ment of Treasury notes in the Swiss capital
market. The market had been impressed by
these initiatives and by the priority that the
Swiss government was giving to stabilizing the
franc. As a result, the franc had started coming
on offer in January, enabling the Federal Re­
serve to reduce its outstanding swap debt in­
curred last year with the Swiss National Bank
to $446.7 million equivalent by the time the
period began.
In early February the franc was again bid up
when the dollar came briefly on offer following
the cancellation of large military contracts with
Iran. The rate jumped 3% percent above its SF
1.70 opening, prompting the Swiss National
Bank and the U.S. authorities to intervene. The
System sold $45.8 million equivalent of francs
financed by drawings of $40.4 million on the
swap line with the Swiss National Bank and
from balances while the Treasury sold $24.8
million equivalent of francs out of the proceeds
of its recent borrowing. These operations
quickly brought the market into better balance
and reaffirmed to the market the authorities’
determination to contain any further rise in the
Swiss franc. Thus, the franc settled back to SF
1.67 by midmonth while trading around SF
0.9000 against the German mark.
Meanwhile, the turnaround in the Swiss franc
was generating fears that the sharp rise in oil
and other international commodity prices would
be transmitted more rapidly to the Swiss econ­
omy. Also, an improved business outlook had
set in as new orders recovered somewhat from
the depressed condition of earlier months.
Against this background, market participants,
looking for parallels between developments in
Germany and Switzerland, were sensitive to the
possibility that the Swiss authorities would
tighten liquidity, just as the German Federal
Bank had done, should the recovery in activity
threaten domestic price stability. But, in fact,
the Swiss expansion was not nearly so well




established as that in Germany, and the Swiss
authorities repeatedly reaffirmed that economic
policy was still focused on the need to stabilize
exchange relationships.
By early March the relatively comfortable
conditions in Switzerland’s money and capital
markets were in clear contrast to the tightening
taking place in Germany. As a result, Switzer­
land emerged as one of the most favorable
markets for placing new loans. Indeed, bor­
rowers from Asia, Europe, and North America
flocked to Zurich to take advantage of the at­
tractively low interest rates for as long as they
might last. Thus, the buildup of a heavy calen­
dar of new foreign issues weighed on the Swiss
franc for some time. As the near-term outlook
for the franc faded, nonresidents also shifted
some of their funds out of francs into higheryielding assets in other currencies, and the leads
and lags built up last year continued to be
unwound.
These various developments kept the franc on
offer against both the dollar and the mark during
most of the spring months. Between mid-February and early May, the franc declined 3 per­
cent to SF 1.7228 against the dollar and had
slipped to trade around SF 0.9060 against the
German mark. As the franc eased, Swiss au­
thorities became more concerned that a sharp
decline in the franc would magnify the effect
of rising oil prices and otherwise exacerbate
inflationary pressures. The Swiss National
Bank, therefore, came into the market to support
the franc and to absorb domestic liquidity by
selling large amounts of dollars in the market
while also continuing with its dollar sales under
its capital export conversion program.
For its part the Federal Reserve bought francs
in the market and directly from the Swiss
National Bank to repay the remaining $487.1
million equivalent of market-related swap debt
incurred with that bank last year and during
February. The Treasury also purchased francs
to restore its Swiss franc balances. In addition,
the U.S. authorities accelerated the program for
orderly payment of the pre-August 1971 Swiss
franc debt, so that the System and the Treasury
were able to repay $139.3 million equivalent
of special swap debt and $531.2 million equiv­
alent of Treasury securities respectively. Con­

Treasury and Federal Reserve Foreign Exchange Operations

sequently, by early April the United States had
no outstanding obligations to the Swiss National
Bank for the first time since August 1970. Once
the debt was repaid the Federal Reserve ac­
quired modest balances in Swiss francs.
During May the unwinding of commercial
leads and lags and the heavy volume of capital
outflows gradually tapered off. But the heavy
intervention to moderate the franc’s decline had
generated severe strains in the Swiss money
market. To some extent, the authorities had
offset these strains by lending francs against
dollars through foreign exchange swaps with
maturities of up to six months. By this time,
they had also allowed Swiss interest rates to rise
to contain monetary growth and to reduce infla­
tionary pressures. In addition, during May the
Swiss National Bank liberalized its exchange
controls by removing requirements that non­
residents convert franc borrowings with the
Swiss central bank, that commercial banks bal­
ance foreign currency claims and liabilities at
the end of each day, and that nonbank residents
receive official approval for placing loans
abroad. These regulatory changes were well re­
ceived in the market and contributed to a bottoming-out of the franc around the end of May.
As a result of the relaxation of the exchange
controls and some narrowing in interest dif­
ferentials between the United States and Swit­
zerland, the Swiss franc was poised for a recov­
ery at the time the dollar started its decline in
mid-June. Bidding for francs put the rate under
strong upward pressure. Leading the rise in
foreign currencies against the dollar, the franc
soared almost 414 percent to as high as SF
1.6475 on June 22. To avoid an excessive
appreciation of the franc, the Swiss National
Bank reacted by intervening massively both in
Zurich and through the Trading Desk in New
York. In addition, during June the Federal Re­
serve sold $86.2 million equivalent of francs
with $36.2 million equivalent drawn on the
swap line with the Swiss National Bank and the
remainder financed from balances.
This forceful and concerted operation by the
Swiss and U.S. authorities impressed the mar­
ket, and the franc eased back to SF 1.6565
around the month-end. Thereafter, the franc
moved up again with the other European cur­




129

rencies in response first to the postponement and
then to the disappointment in the market over
President Carter’s energy speech and the subse­
quent resignation of the U.S. Cabinet. But the
franc did not lead this rise, and its advance was
contained with only modest intervention by the
Swiss authorities and by the System, which sold
$31.7 million equivalent of francs in the market
financed by swap line drawings.
Once the President had completed the reor­
ganization of his economic team, the franc fell
back more rapidly than the mark. The Swiss
National Bank sold dollars in the market, and
the Federal Reserve was able to buy directly
from the Swiss National Bank a sufficient
amount of the proceeds of this intervention to
repay $36.2 million equivalent of swap debt
with the Swiss National Bank. At month-end,
System swap debt with the Swiss National Bank
was $31.7 million equivalent. By the close of
the six-month period under review, the franc
had eased back to SF 1.6610 for a net gain of
2lA percent on balance. Meanwhile, during the
first four months of this period, Switzerland’s
foreign exchange reserves declined $3.6 billion.
In June and July foreign exchange reserves
declined a further $500 million as the effect of
money market operations more than offset spot
foreign exchange market intervention for a net
decline of $4.1 billion over the six-month pe­
riod.
J

a p a n e s e

Y

e n

By early 1979 the Japanese economy had en­
tered a period of strong recovery, spurred first
by public investment, then by private invest­
ment and personal consumption. Progress was
being made in reducing Japan’s massive trade
and current-account surpluses as export growth
had slackened for several months while imports
expanded briskly in response to rising domestic
demand, to last year’s sharp appreciation of the
yen, and to government programs to encourage
imports.
The yen had fallen back more sharply than
most other major currencies after the an­
nouncement of the November 1 measures and
concerted intervention by U.S. and Japanese
authorities and was trading at ¥ 2 0 2 on February

730

Federal Reserve Bulletin □ September 1979

1. Even so, economic policy under the new
Ohira government continued to focus on the
need to cut the current-account surplus further.
The government’s budget for the fiscal year
beginning April 1979 contained another sub­
stantial increase in spending to maintain real
growth at 6.3 percent even if production for
foreign markets slowed further. On this basis,
the government forecast an impressive 50 per­
cent fallback in the current-account surplus to
$7.5 billion for the fiscal year. Meanwhile,
monetary policy remained accommodative, so
as to provide support to the economic recovery
and to an outflow of capital that would offset
the continuing current-account surplus. But ex­
pansion of bank credit had become a matter of
concern.
As a followup to the November 1 actions,
the U.S. authorities remained prepared to inter­
vene in yen. And so, on one occasion when
the dollar came under selling pressure in early
February, the Desk sold $50.4 million equiva­
lent of yen in the New York market, of which
$33.8 million equivalent was from Federal Re­
serve balances and $16.6 million equivalent
from Treasury balances. But for the most part
the yen was under selling pressure over the late
winter and early spring. The U.S. authorities
thus took advantage of the opportunity to ac­
quire yen to add to balances of the System and
the Treasury.
Much of the flow out of yen continued to
reflect the reversal of commercial leads and lags
that had built up in 1978 when the yen had been
appreciating rapidly. In addition, with interest
rates in Japan well below those in the U.S. and
Eurodollar markets, capital moved out of yen
once the spot rate began to decline. Japanese
residents shifted funds abroad and nonresidents
ran down their free-yen deposits in Japan.
Moreover, a number of foreign borrowers took
advantage of both favorable rates and ample
liquidity in the Tokyo market to issue bonds
and to place syndicated loans denominated in
yen. The continued conversion of the proceeds
of sizable issues over a short period of time also
weighed on the exchange market.
In addition, the decline in the rate reflected
a deterioration in market sentiment toward the
yen during the early spring. Now that the sharp




rise in the spot rate had been broken, the ad­
justment in Japan’s trade position was no longer
masked in the monthly figures by a continuous
improvement in the terms of trade. At the same
time, the oil shortage triggered by the protracted
shutdown of Iranian production was high­
lighted, even more in Japan than elsewhere,
when multinational oil companies phased out
shipments to their nonaffiliates, thereby sharply
reducing deliveries of crude oil to Japan’s re­
fineries. Fears over the availability of supplies,
as well as concern over rapidly rising interna­
tional prices, led to an increase in imports of
oil and other commodities. This increase was
reflected in a scramble for dollars in the ex­
change market, which added to the pressure
against the yen. While other major currencies
were weakening only slightly against the dollar,
the spot yen dropped a full 4 l/z percent below
levels in early February to ¥ 2 1 1 .6 0 by early
April.
With the yen on offer and declining almost
daily, the Japanese authorities acted to moderate
the selling pressures, in part, through the con­
tinued liberalization of exchange controls on
capital inflows. Limitations on nonresident pur­
chases of yen bonds were progressively elimi­
nated, a marginal reserve requirement on in­
creases in nonresident free-yen accounts was
phased out, and the period for converting the
proceeds of nonresident issues of yen-denominated bonds was extended. The Bank of Japan
also intervened massively in the exchange mar­
ket, selling dollars and thereby absorbing yen.
As the pressures continued to build, the au­
thorities became concerned that the decline in
the yen would undercut the progress already
achieved in reducing the large trade and cur­
rent-account surpluses of recent years. At the
same time, the sharp depreciation of the yen
magnified the effect of rapidly rising commodity
prices, thereby aggravating domestic inflation­
ary pressures. With these concerns in mind, on
April 17 the Bank of Japan raised its discount
rate 3/4 percentage point to 4 lA percent. Selling
pressure on the yen nevertheless continued into
early May at which point the rate had fallen
to ¥ 2 2 5 .2 5 , some IIV 2 percent below the level
in early February and fully 27% percent below
its peak just before the November 1 program.

Treasury and Federal Reserve Foreign Exchange Operations

By May, expressions of concern by senior
Japanese and U.S. officials that the yen may
have reached excessively low levels sparked a
sudden scramble for yen. In a surge of profit
taking and short covering, the spot rate shot up
more than 6 percent to ¥ 2 1 1 .5 0 toward mid­
month. Once these immediate demands passed,
however, the yen came on offer again and the
rate eased to around ¥ 2 1 8 to ¥ 2 2 0 by early
June. The Japanese authorities did not intervene
as heavily as before in the market, but reflecting
the sustained heavy intervention over the early
months of the year, Japan’s foreign exchange
reserves declined $8.7 billion from January
through May.
In early June, selling pressure on the yen
gradually tapered off, but the yen did not par­
ticipate in the generalized rise against the dollar
that set in at midmonth. The market remained
cautious about the outlook for Japanese trade
and current-account positions, with the further
rise in the oil prices adding to Japan’s oil-import
bill and a possible slowdown in the United
States cutting into Japanese exports. Not until
selling pressure on the U.S. dollar intensified
in July, amid concern over the management of
U.S. energy policy and of economic policy
more generally, did the yen begin to advance.
By that time, the pickup of inflationary pressures
in Japan and the rapid growth in the money
supply prompted the Bank of Japan to raise its
discount rate 1 percentage point to 5 lA percent.
The market responded favorably to this action,
and the yen edged higher to close around ¥ 2 1 7 .
At this level, the yen showed a net IV2 percent
decline over the six-month period under review.
Japan’s foreign exchange reserves posted little
further change in June and July, closing the
period at $21 billion, compared with $28.8
billion at the end of January.
S t e r l in g

Coming into 1979, sterling was firm in the
exchange markets. Underpinning the pound
were the relatively high yields available on
British gilt-edged securities and other instru­
ments denominated in sterling. Also, the U.K.
government had indicated that, even though it
would not initially join the exchange interven­




731

tion arrangement in the EMS, it would seek to
keep sterling relatively stable vis-a-vis the cur­
rencies of its major trading partners. The com­
fortable level of foreign exchange reserves,
which were at $15.6 billion at the end of Jan­
uary, gave credibility in the market to this
pledge. Moreover, Britain’s near self-suffi­
ciency in oil was seen as insulating the U.K.
economy from the disruption in Iranian oil sup­
plies and its balance of payments from the
effects of skyrocketing oil prices. Thus, the
pound traded comfortably around the $2.00
level in early February, and on the effective
trade-weighted basis used by the U.K. authori­
ties, it remained around 63 percent of its
Smithsonian parity.
Meanwhile, Britain’s economic performance
was falling short of market expectations. The
recovery of the domestic economy had run out
of steam, inflationary pressures were acceler­
ating, and the current account was showing little
improvement despite the increasing contribution
of North Sea oil to the balance of payments.
Looking ahead, a public-sector borrowing re­
quirement that was larger than expected, labor
union demands for large pay increases to make
up for four years of wage restraint, and spiraling
commodity prices all aggravated the outlook for
inflation. Interest rates continued to move up
in London’s financial markets, and on February
8 the Bank of England raised its minimum
lending rate from HV 2 percent to 14 percent.
During February a massive reflow of German
marks, Swiss francs, and Japanese yen was
getting under way. Much of this reflux was into
dollars. But with so much money on the move
at a time when interest rates in the United
Kingdom were higher than in other major coun­
tries, including the United States, there was a
tendency for some of these funds to gravitate
into sterling. In addition, sterling was buoyed
by Britain’s near self-sufficiency in oil. In re­
sponse to a continuing inflow of funds, the Bank
of England cut its minimum lending rate 1
percentage point to 13 percent on March 1. The
sterling rate was allowed to rise gradually, and
it advanced to nearly $2.06 by late March. The
Bank of England moderated the rise in the rate
by intervening fairly heavily, and this interven­
tion was reflected in the $1.3 billion increase

732

Federal Reserve Bulletin □ September 1979

in U.K. foreign exchange reserves in February
and March.
On March 28 the Labour government lost a
no-confidence vote in Parliament, thereby
opening the way for a general election in early
May. Coming into the campaign, the two major
parties offered clearly different approaches for
bolstering the British economy. The Labour
Party pointed to its record in gaining trade union
acceptance of wage restraint and its plans to use
North Sea oil earnings to strengthen British
industry. The Conservative Party put emphasis
on restoring incentives for long-term recovery
by stimulating the private sector, reducing the
government’s role in the economy, and lowering
inflation by setting firm limits on the growth of
the money supply. Public opinion polls, show­
ing the Conservative Party to be heavily fa­
vored, were viewed by many market partici­
pants as a bullish factor for sterling. Thus, the
injection of election uncertainties at first gave
little pause to the bidding for sterling.
The persistent inflows of funds into sterling
raised a serious policy dilemma for the U.K.
authorities. Exchange-market intervention to
keep spot sterling from rising sharply risked
generating a substantial burst in the monetary
aggregates beyond the targeted levels. Cuts in
interest rates aimed at reducing the attrac­
tiveness of sterling investments could instead
spark additional demand from investors on ex­
pectations of capital gains and undermine efforts
to rein in monetary expansion.
Complicating matters further was the lack of
reliable data on current economic developments
in the United Kingdom as a result of a civil
servants’ strike affecting data collection and of
a series of strikes elsewhere in the economy,
which were having imponderable effects on
overall employment and production levels. On
April 5 the Bank of England once again cut its
minimum lending rate 1 percentage point to 12
percent. At the same time, concerned that con­
tinued heavy intervention to restrain the rise of
sterling was generating excessive growth of the
money supply, the U.K. authorities decided to
scale back the magnitude of their intervention.
The initial response in the market to these
steps was a further rush into sterling. By midApril, the spot rate had been bid up above $2.10




against the dollar and to nearly 68 percent in
effective terms. The demand for sterling then
ran out of steam and the rate eased back as
traders sensed that interest rates would not be
allowed to fall further in the United Kingdom,
particularly following evidence that domestic
inflation was accelerating. Moreover, the market
turned cautious ahead of the general election,
as the public opinion polls indicated a narrowing
of the margin in favor of the Conservatives.
Spot sterling fluctuated rather widely over the
last weeks before the election. The immediate
reaction to the May 3 election results, a clear
majority for a new Conservative government led
by Prime Minister Margaret Thatcher, was some
further bidding for pounds, and the spot rate
advanced to as high as $2.0843. Although the
Bank of England remained prepared to intervene
to counter excessively disorderly conditions in
the market, it continued to allow sterling to
move rather widely in response to market
forces. Sterling soon settled back somewhat as
the market assessed the prospects for the Con­
servative Party program, to be laid out in some
detail in a budget message on June 12.
By this time, available evidence suggested
that output had fallen during the first quarter
and that both the trade and the current accounts
had been in uncomfortably large deficit. Wage
increases had been much higher than antici­
pated, which, together with the upsurge of raw
material and oil prices, contributed to the accel­
eration of inflation. The pace of monetary ex­
pansion had quickened substantially, largely
because of strong demands for bank credit.
Some tightening measures were therefore ex­
pected.
The market was nonetheless caught by sur­
prise by the boldness of the initiatives an­
nounced by Chancellor Howe in the budget
address, which adhered closely to the principles
set forth in the campaign. The projected publicsector borrowing requirement for the current
fiscal year was to be cut nearly £1 billion below
its current level to £ 8X billion. Substantial re­
A
ductions in income taxes were to be financed
by large cuts in public spending, increases in
the value-added tax, and the sale of some gov­
ernment holdings to the private sector.
In the meantime, to keep inflation in check,

Treasury and Federal Reserve Foreign Exchange Operations

the authorities imposed stricter monetary re­
straints. They reduced the money growth target
to a range of 7 percent to 11 percent. To bring
the actual growth of sterling M-3 down into the
middle of this range, the minimum lending rate
was raised 2 percentage points to 14 percent;
and the supplementary special deposit scheme,
which had been imposed last summer to restrict
the growth of commercial bank interest-bearing
eligible liabilities, was extended for a further
three-month period. With the intention of al­
lowing U.K. residents much freer use of sterling
resources, certain capital controls were also
liberalized. These changes included freer avail­
ability of official exchange for outward direct
investment, abolition of the requirement that
two-thirds of overseas profits be repatriated, the
end to controls on dividends, and the relaxation
of controls on travel and emigration allowances.
The exchange market’s response was exceed­
ingly bullish, with the pound coming into heavy
commercial and professional demand from fi­
nancial centers the world over. The jump in
interest rates had particularly marked effects as
foreign investors joined in the scramble to buy
government securities, and several issues of
government tap stocks were sold out quickly.
Rumors of a large new oil find in the North
Sea reinforced favorable market sentiment
toward sterling at a time when the world oil
price and policies were under active debate
within OPEC and among the major industrial
countries. With the increased volume of funds
flowing into sterling, the British authorities
continued to intervene to avoid excessively dis­
orderly markets but allowed the exchange rate
to take the brunt of the demand pressures. As
a result, the pound shot up to $2.21 by early
July, some 6 percent above levels in early May.
Sterling rose against other major currencies as
well, advancing to 70.8 percent in effective
terms.
The relatively high level of U.K. interest
rates, the security of British oil supplies, and
the depth and diversity of the U.K. money
market all benefited sterling when the dollar
came on offer during July. In response to the
uncertainties surrounding U.S. energy policy
and the general outlook for energy policy in the
United States, funds from multinational cor­




733

porations, OPEC members, and market profes­
sionals continued to flow heavily into London.
The perception that the Bank of England, reluc­
tant to compromise its control of the money
supply, would restrain its intervention in the
exchanges also propelled sterling higher. In
these circumstances, the authorities accelerated
their policy of relaxing exchange controls by
lifting totally all restrictions on overseas direct
investment and easing those on outward portfo­
lio investment.
But these measures had little immediate im­
pact and the pound rocketed up to a four-year
high of $2.3324 on July 26. By that time,
British manufacturers were expressing open
alarm over a possible loss of competitive posi­
tions that could result with sterling at such a
high level. Once the immediate concern over
U.S. economic policy eased in late July, the
flow into sterling suddenly dried up. Spot ster­
ling dropped away as sharply as it had risen,
receding to $2.2480 by the month-end. Never­
theless, compared with six months earlier, ster­
ling had risen on balance 13 percent against the
dollar and 14% percentage points to 72.7 per­
cent on the trade-weighted index.
During the period, the government took ad­
vantage of sterling’s strength in the exchanges
to repay previously incurred external debt while
also extending the maturities of remaining ex­
ternal public debt. These repayments included
the prepayment of $1 billion to the International
Monetary Fund (IMF), liquidating Britain’s re­
maining credit tranche drawings with the Fund,
as well as the repayment of a large portion of
public-sector debt that was coming up for early
maturity. Even so, reserves rose another $2.3
billion above levels at the end of March to $19.2
billion at the end of July, reflecting the accu­
mulation of dollar intervention by the Bank of
England.
E u r o pe an M o n e t a r y S ystem

On March 13 the EMS was formally inaugu­
rated. Aimed at achieving greater exchange-rate
stability in Europe, the new system supplanted
the EC snake, which had been in existence since
1972 but by this time had lost more than half
its membership. Within the EMS the new joint

734

Federal Reserve Bulletin □ September 1979

floating arrangement included the currencies still
remaining in the EC snake, together with the
French franc, the Italian lira, and the Irish
pound. As in the EC snake, the member nations
agreed to maintain their currencies in a 2 lA
percent band against each other, except for
Italy, which was allowed a wider 6 percent
margin for the lira. The United Kingdom de­
cided not to bring the pound sterling into the
exchange-rate arrangement at this stage, though
participating in other aspects of the EMS.
The launching of the EMS was the culmina­
tion of nearly a year’s intensive efforts by offi­
cials of the nine participating nations. The new
system was designed to promote monetary sta­
bility by appropriate and timely policy measures
and by a strengthening of existing financing
arrangements, including the creation of ECUs
(European currency units) against central bank
deposits of gold and dollars. In addition, the
participating governments agreed to limit fluc­
tuations in their currencies against the ECU, a
weighted basket of all currencies. A nation
whose currency deviates beyond an agreed limit
from the ECU is expected either to intervene,
to apply domestic monetary measures, to adjust
other economic policies, or to explain to the
other members why none of these actions would
be sufficient or adequate to bring its currency
back into line.
Initially, the exchange market had been
skeptical about the practicality of a joint floating
arrangement, given the persistently wide
disparities in the inflation and trade perform­
ances of the respective economies. Expectations
of a realignment prior to or just after the EMS
got under way had generated large movements
of funds between member currencies. But once
the monetary authorities of the EC snake coun­
tries let it be known that the bilateral central
rates then in force between the “ snake” cur­
rencies would be maintained in the new system,
tensions eased and most speculative positions
were unwound before the EMS was finally
launched.
In this context, interest differentials increas­
ingly dominated exchange-rate movements
within the EMS as elsewhere. Funds flowed
heavily out of the German mark, where interest
rates were low, into assets of other currencies




where interest rates were much higher. Among
the beneficiaries of these flows was the French
franc, which settled into the middle of the new
band. It benefited also from an improved exter­
nal position and favorable market reaction to
the sustained commitment of the French gov­
ernment to fight inflation and to increase the
competitiveness of French industry. The Italian
lira also was well bid, moving quickly to its
6 percent upper limit, as higher interest rates,
restrictions on domestic credit expansion, and
the market’s awareness of the sizable foreign
exchange reserves that the Bank of Italy had
amassed over the previous two years encouraged
Italian companies to satisfy their financing needs
through external borrowings.
The lira was buoyed, too, by Italy’s currentaccount position, which remained in sizable
surplus even after a rebound in economic activ­
ity over the winter and early spring. In addition,
the Danish krone, as well as the Irish pound,
which remained tied to sterling, moved to the
top of the 2 lA percent band as capital inflows
were attracted by the exceptionally high interest
rates in Denmark and the United Kingdom. In
fact, when interest-sensitive funds continued to
pour into sterling, the Central Bank of Ireland
was forced on March 30 to suspend its cur­
rency’s longstanding link with sterling in order
to keep the Irish pound from bursting through
the top of the joint float.
By contrast, the commercial Belgian franc,
after having already reached its lower interven­
tion limit against the Danish krone during April,
weakened against the mark. In part, this weak­
ening reflected the deterioration in Belgium’s
current-account deficit from an upsurge in im­
ports associated with the expansion in Belgian
economic activity. But in addition, with German
interest rates rising, the mark moved up to the
top of the 2 lA percent band in the second half
of May. Once the mark hit its upper intervention
limit against the Belgian franc, rumors circu­
lated of a possible realignment within the joint
float. As a result, the Netherlands guilder moved
down close to the Belgian franc amid signs of
a widening in the Dutch trade deficit. At the
same time, the Danish krone dropped to the
bottom of the band as earlier capital inflows
dried up and were even reversed.

Treasury and Federal Reserve Foreign Exchange Operations

As German interest rates rose higher, pres­
sures within the EMS intensified. However, in
this first test of the durability of the new ar­
rangement, the participating central banks pro­
vided strong support for their currencies through
sales of dollars and marks both at the interven­
tion limits against the mark and within the
margins. Moreover, the authorities were quick
to raise domestic interest rates to maintain in­
terest differentials against the mark. In midJune, when the mark started to rise against the
dollar, other EMS currencies had difficulty
keeping pace. But once the mark’s advance was
checked, pressures within the joint float were
alleviated. As a result, the weaker EMS curren­
cies moved above their lower intervention
points, and tensions eased within the EMS dur­
ing July.
C a n a d ia n D o lla r

By early 1979, Canada’s current account re­
mained in substantial deficit despite the sharp
depreciation of the Canadian dollar over the
previous two years. The growth of export earn­
ings was insufficient to offset rising imports and
the increasing burden of Canada’s interest pay­
ments on external debt. Long-term capital in­
flows from abroad were not large enough to
close the payments gap left by the current-account deficit. Moreover, the persistent decline
in the Canadian dollar was complicating the task
of winding down inflation, since the foreign
sector had become a principal source of upward
pressure on Canadian prices and costs. There­
fore, the authorities had intensified their efforts
to check the decline of the exchange rate.
The Bank of Canada had intervened substan­
tially at times. It had also increased its discount
rate in several stages to 11 lA percent by early
January and acted to firm up yields in the bond
market, thereby maintaining favorable interest
rate differentials vis-a-vis the United States. To
replenish Canada’s reserves and to supplement
long-term capital inflows, the government had
previously borrowed large sums in the U.S. and
German capital markets and had drawn $2.7
billion under two revolving standby credit facil­
ities with foreign commercial banks. In addi­
tion, early this year the government raised about




735

$500 million and $900 million equivalent in the
Japanese and Swiss capital markets respec­
tively.
Exchange-market pessimism toward the Ca­
nadian dollar was deeply entrenched, however,
following the extended slide of the exchange
rate, and this mood was reinforced by uncer­
tainties in advance of the national election to
be held in 1979. The Canadian currency there­
fore remained on offer in the early weeks of
the year and reached Can.$1.2019, a 46-year
low, on February 1. Against the U.S. dollar,
this low represented a cumulative decline of
20!/2 percent since November 1976 and an even
greater fall against currencies of many of its
other trading partners.
In early February, the Canadian dollar began
to rally, partly in response to the worldwide
scramble for oil and other commodities. Canada
with its rich supplies of natural gas, oil, and
other minerals was considered less vulnerable
than other industrial countries to energy short­
ages. Moreover, in March, Canada’s role as an
energy producer was highlighted when the Na­
tional Energy Board determined that Canada’s
natural gas reserves were sufficient to warrant
an increase in exports. Once it was clear that
the spot exchange rate had bottomed out, the
adverse leads and lags and short trading posi­
tions that had been built up began to be un­
wound, and favorable short-term interest rates
also helped to draw liquid funds into Canadian
dollars.
The higher yields on government bonds also
attracted investment funds from abroad, includ­
ing substantial amounts from Europe, Japan,
and the OPEC countries. By late April, the
Canadian dollar had been bid up to as high as
Can.$1.1401, some 5 percent above lows in
early February. During the advance the Bank
of Canada bought substantial amounts of U.S.
dollars on days when the Canadian dollar was
in demand, in accordance with the approach of
the Canadian authorities of intervening to mod­
erate exchange-rate movements in either direc­
tion.
Meanwhile, Canada’s external position had
failed to improve. Export growth turned slug­
gish, and the possibility of a slowdown in the
United States worsened prospects for the near

736

Federal Reserve Bulletin □ September 1979

term, while imports continued to grow more
than expected. With respect to capital flows,
the expansion of the domestic economy was
generating sufficient liquidity in the corporate
sector to provide for the financing of new in­
vestment out of internal sources rather than
depending so heavily on foreign borrowing. At
the same time, there were prospective outflows
in connection with takeovers by Canadian com­
panies of U.S.-owned operations. Moreover, in
assessing the prospects for the Canadian dollar,
many market participants viewed the sizable
intervention purchases of U.S. dollars as an
indication that the Canadian authorities were
resisting an appreciation of the rate in order to
maintain the competitiveness of Canadian ex­
ports and to build up reserves.
These uncertainties reinforced existing
bearish sentiment in the exchange market, and
the Canadian dollar came increasingly on offer.
Also, with the approach of the May 22 general
election, market participants became concerned
over the possibility that a weak minority gov­
ernment might emerge, which many thought
would be unable to deal effectively with Can­
ada’s economic problems. The spot rate fell
back to as low as Can.$1.1626 in mid-May,
with the Bank of Canada intervening to moder­
ate the decline.
The election provided a near majority to the

Progressive Conservative Party under Joseph
Clark and helped to clear the air somewhat. But




the release of recent trade figures confirmed
Canada’s disappointing trade performance.
Also, the $1.1 billion decline in Canada’s
foreign exchange reserves during May sug­
gested that there had been more support for the
Canadian dollar than the market had realized.
The Canadian dollar dropped off to Can.
$1.1780, almost 3 l/z percent below the high in
mid-April.
As attention again shifted to world energy
problems in advance of the OPEC meeting and
Tokyo summit in late June, market sentiment
toward the Canadian dollar improved some­
what, and reports of several large natural gas
discoveries in Canada prompted some bidding
up of the Canadian dollar. Therefore the ex­
change market came into better balance over the
rest of June and through July. Following the
further advance of interest rates in the United
States and in European centers, the Bank of
Canada raised its discount rate 1/2 percentage
point to 11% percent on July 23. At the end
of July the Canadian dollar was trading at
Can.$1.1700, up a net 2Vi percent against the
U.S. dollar over the six-month period. After the
large reserve swings earlier in the period, there
was little change in June and July. At the close
of the period Canada’s reserves totaled $2.1
billion, down a net $60 million from the level
of January 31, after official borrowings of $1.4
billion and repayments of $2.2 billion under the
standby facilities with commercial banks.
□

737

Industrial Production
R eleased for publication Septem ber 14

Industrial production declined an estimated 1.1
percent in August after an increase of 0.1 per­
cent in July and no change in June. Output of
durable consumer goods was reduced sharply
in August for the third successive month, as the
production of autos and personal-use trucks and
vans was cut further. Business equipment and
materials declined 0.8 percent and 1.0 percent
respectively. Reductions in output apparently
occurred in most other components of the index
as well. At 150.9 percent of the 1967 average,
the total index was 1.4 percent below the peak
level of March 1979 and 2.0 percent above that
of a year earlier.
Output of consumer durable goods fell 5.4
percent in August, as auto assemblies were
reduced about 15 percent and the production of
home goods, such as carpeting, furniture, and
appliances, was cut back. Auto assemblies, at
a 7.5-million-unit annual rate in August, are
tentatively scheduled to increase in September,
but are expected1 to remain well below the an­
nual rate of 8.9 million units in the first half
of 1979. Output of consumer nondurable goods
also declined. Production of business equipment
was lower in August than in July because of
declines in business vehicles and a strike-related
cut in power equipment. Output of construction
supplies was about unchanged.

1967 = 100

Production of durable goods materials in Au­
gust was reduced 1.8 percent, as widespread
declines occurred in all components, particu­
larly in parts for consumer durable goods and
in basic metals, such as raw steel. Output of
nondurable goods materials declined moder­
ately. Energy materials increased 0.7 percent as
coal production rose.

Seasonally adjusted, ratio scale, 1967=100

Federal R eserve ind exes, seasonally adjusted. Latest figures:
A ugust. A uto sales and stocks include imports.

J u ly p

A ug. e

Mar.

Apr.

M ay

June

July

A ug.

Percentage
change
8/78
to
8/7 9

1 5 2 .6
149.8
1 47.2
150.9
155.8
1 48.9
17 1 .6
15 9 .4
156.8
156.9

1 5 0 .9
148.0
145.1
147.7
147.4
147.9
170.3
159.1
156.9
155.3

.7
.6
1.0
.9
1.6
.6
1.1
-.6
-1 .4
.7

-1 .4
-1 .6
-1 .9
- 2 .5
- 7 .3
-.4
-1 .2
-.4
-.7
-1 .2

1.1
1.3
1.7
1.9
5 .9
.5
1.6
- .1
.3
.8

.0
-.1
-.1
-.2
-1 .2
.2
.1
-.2
- .1
.2

.1
- .2
-.3
-.5
-1 .7
-.1
.0
.1
.4
.6

- 1 .1
-1 .2
-1 .4
- 2 .1
-5 .4
-.7
-.8
-.2
.1
-1 .0

2 .0
1.0
.6
-1 .9
-8 .7
1.1
4 .2
2 .2
2 .0
3 .4

1979

Industrial production

T o ta l .............................................
Products, total ..........................
Final products ......................
C onsumer g oods ............
Durable ........................
N ondurable ..................
B usiness equipm en t . . .
Intermediate products ___
Construction s u p p lie s ...
M aterials ......................................
p Preliminary.




Percentage change from preceding month to
1979

e Estimated.

N o t e . Indexes are seasonally adjusted.

738

Statements to Congress
Statem ent by Paul A . V olcker , Chairman,
B oard of G overnors of the Federal R eserve
System , before the Committee on the B udget ,
U.S. House of R epresentatives , Septem ber 5,

1979.
I am pleased to be able to participate in these
hearings on the Second Concurrent Budget
Resolution for fiscal 1980. I might say that on
receiving your invitation, I felt it a bit incon­
gruous that my first appearance before a com­
mittee of the House as Chairman of the Federal
Reserve Board would occur in the context of
consideration of fiscal, rather than monetary,
policy. But the plain fact is that our nation faces
serious problems that require interrelated gov­
ernmental action, involving all of the main
instruments of economic policy. In no place are
the interrelationships more important than in the
area of fiscal and monetary policy. I hope that
our dialogue this afternoon will help throw light
on the proper role for those policy instruments
in today’s setting.
Surveys and other evidence indicate that the
most pressing economic concern of the Ameri­
can people today is the persistent and rapid rise
of prices. In my judgment, that concern is not
misplaced.
As you know, the acceleration of inflation
this year can be traced in considerable part to
so-called exogenous forces— the rise in food
prices, and much more importantly the decision
of the Organization of Petroleum Exporting
Countries to raise oil prices in an amount that,
in absolute terms, approaches the increase in
1973 and 1974. But even in appraising these
sources of inflationary pressure, I believe it
would be wrong to consider them independent
of more general inflationary pressures in the
United States and elsewhere. For instance, the
desire of oil suppliers to recover losses in real
income implied by rising prices of other goods



and the weakness of the dollar appeared to be
one factor contributing to the OPEC pricing
decision. Moreover, part of the challenge to
economic policy today is to avoid to the extent
possible a kind of “ leap-frogging” process
whereby rising prices and costs in one sector—
energy is the notable case— set off a whole
sequence of adjustments in wages and prices in
other sectors, as workers and businesses engage
in a vain attempt to achieve and maintain levels
of real purchasing power that s imply cannot be
sustained in an economy experiencing higher
real energy costs and virtually no growth in
productivity.
To be sure, the impact of inflation is uneven.
Those on fixed incomes suffer, while some
people who are well positioned— either by
clever design or by good luck— do manage to
increase their wealth. Even for the fortunate,
however, such a result is at best precarious,
frequently built on heavy indebtedness or highly
speculative investments. In an environment of
virulent inflation, such as we find ourselves in
today, there are no reliable haivens, and so the
discomfort of our citizens is hardly surprising.
Even these capricious effects on individuals
and the related concern reflected in the surveys
do not capture the insidious and debilitating
effects of inflation and inflationary expectations
on our economic performance and growth pros­
pects. It is not entirely a coiincidence that we
can observe in these recent inflationary years
a declining tendency in the profitability of in­
vestment. Calculations differ because of the
accounting problems associated with changing
prices. However, one estimate indicates that the
annual after-tax return on corporate net worth,
measured, as it reasonably should be, against
the replacement cost of inventories and fixed
assets, has averaged 3.8 percent during the
1970s, a period characterized by rapid inflation,
as compared with 6.6 percent in the 1960s. At

Statements to Congress

the same time, the uncertainty about future
prospects associated with high and varying
levels of inflation tends to concentrate the new
investment that does take place in relatively
short, quick payout projects. Or firms may sim­
ply delay investment commitments until the
pressures of demand on capacity are unambig­
uously compelling— with the result that capac­
ity pressures can become strong even before the
labor force is fully utilized.
In other areas, inflationary expectations are
reflected in a diversion of energies into essen­
tially speculative activities— ranging from the
“ froth” of investing in art objects to the con­
sidered purchase, at the expense of heavy in­
debtedness, of larger or second homes as an
inflation hedge. When returns from these activi­
ties are often judged greater than those from
usual patterns of work and saving, normal in­
centives are plainly distorted in a manner in­
consistent with orderly growth.
Another obvious result of our distressingly
poor price performance has been the recurrent
weakness of the dollar in foreign exchange
markets. During much of 1978, the cumulating
decline in the value of the dollar abroad added
an important further element of uncertainty and
instability to the economies of the United States
and other countries. Following the vigorous
program introduced in November of last year,
the dollar rose somewhat against other major
currencies, helped by an improvement in our
current account and by indications of a relative
strengthening of economic expansion abroad.
But the value of the dollar internationally began
to be questioned again as the trend of U.S.
inflation worsened noticeably and as many of
our trading partners acted forcefully to retard
inflationary tendencies in their own economies.
Although the situation in exchange markets ap­
pears to have stabilized recently, that stability
ultimately rests on our ability to cope with
inflation.
We need to deal with inflation and a vulnera­
ble dollar in the context of the slowing in do­
mestic economic activity that has developed in
recent months. A moderation in the growth of
aggregate demand was welcome this year— even
essential— if the economy was to avoid the
kind of pressures on capacity that could only




739

aggravate inflationary forces. Policies of mone­
tary and fiscal restraint were directed toward that
aim. Now it is apparent that the drain of pur­
chasing power implicit in the sudden runup in
our oil import bill and in energy prices gener­
ally— combined with the actual and feared
shortages of gasoline— has led to a contraction
of real incomes and final demands. During the
second quarter, real gross national product fell,
primarily reflecting a drop in consumer spend­
ing, and further declines in some areas of busi­
ness activity continued into the summer. With
sales falling, businesses have experienced some
involuntary accumulation of inventories— most
strikingly in the auto industry, but to a lesser
degree in other sectors as well.
Our reading of the most recent economic
indicators suggests that a correction of these
inventory imbalances is well under way. Orders
have been reduced, production schedules have
been cut back, and hiring has slowed. These
adjustments need not by themselves set in mo­
tion a deep or prolonged contraction in activity.
Indeed, while the inflationary process itself has
introduced important new uncertainties, some of
the economic and financial dislocations and im­
balances that usually have presaged severe cy­
clical declines have been avoided. To be sure,
the transfer of income to foreign oil producers
will continue to exert a depressing effect on
aggregate demand over the near term. But the
position taken in the Board’s midyear report to
the Congress— that the economy should grow
moderately in 1980— still seems reasonable.
In the present circumstance, we need to be
especially cautious in interpreting any business
forecast; there are vulnerabilities in the present
situation on the downside, and there is also the
possibility that the downturn will prove shorter
and shallower than many now expect. The
shaping of policy must appreciate and take ac­
count of the risks on both sides. For instance,
the traditional response throughout the postwar
period to any prospect of declining production
and rising unemployment has been a sharp shift
in monetary and fiscal policy toward expansion
and the enhancement of aggregate demand—
even at the risk of adding to inflation. A decade
or two ago, with prices historically fairly stable,
that risk was discounted. But now we have to

740

Federal Reserve Bulletin □ September 1979

face squarely the adverse consequences of pre­
mature or unduly large moves to stimulate the
economy. In exacerbating the already serious
problems of inflation and the dollar, such moves
would also feed back on the underlying prob­
lems of investment, productivity, and growth.
Some observers have suggested that this situ­
ation presents an intractable dilemma for poli­
cymakers: the need to sacrifice one set of eco­
nomic goals in the pursuit of another. But this
dilemma seems to me more apparent than real.
Even in the relatively short run, premature
stimulative actions could well prove ineffective
rather quickly, and even counterproductive, as
their force is dissipated in higher prices rather
than real growth— in more uncertainty, rather
than less. Ultimately the perceived “ trade off”
between unemployment and inflation would
only be worsened— the lesson of the 1970s, not
just in the United States but elsewhere.
I think we would all agree that, over the
years, labor and product markets have devel­
oped an increasing sensitivity to inflation. Ex­
pectations about inflation are an important factor
in wage bargaining, in price setting for many
goods and services, and certainly in interest
rates. The plain danger is that actions rightly
interpreted as doing little or nothing toward
dealing with our underlying persistent problems
of productivity and investment, but all too likely
to produce more inflation, will in fact have only
a small and short-lived expansionary effect,
regardless of their intent. Our ability to avoid
future instability in employment, or to deal with
chronic unemployment in urban areas and
among our young, would be damaged, not en­
hanced.
Similar behavior dominates the foreign ex­
change markets: exchange rates usually respond
quickly— and sometimes excessively— when
incoming economic data or news about policy
actions alter the outlook for inflation. Adverse
repercussions on the dollar generate in turn new
uncertainty and inflationary pressures, partly
because of the direct effects on costs of imports
and partly through the reduced competitive re­
straints on prices of domestically produced
goods. We have tasted too much of the vicious
circle of domestic inflation and external depre­
ciation to want to see that pattern repeated. The




dangers would extend beyond the domestic
economy. Because of the dollar’s role as an
international store of value and medium of ex­
change— a role we cannot simply shrug off or
dismiss consistent with our own interests and
those of our trading partners— its instability
could pose a major threat to the world system
of finance and commerce and even to our politi­
cal leadership.
Obviously, then, our current economic diffi­
culties are tightly interwoven. They will not be
resolved unless we deal convincingly with in­
flation. Progress won’t come easily or suddenly;
among other things the adjustment in prices of
energy and petroleum-based products is far from
complete. But what we can do— what we must
do— is begin the process and prevent the inevi­
table rise in real energy prices from fanning out
into an acceleration of general inflation.
Monetary and fiscal policies are not the only
tools we should bring to bear. But both mone­
tary discipline and fiscal discipline— policies
that are seen to be disciplined— are absolutely
basic to restoring and maintaining a greater
sense of stability.
For its part, the Federal Reserve intends to
continue its efforts to restrain the growth of
money and credit, a growth that in recent
months has been excessive in terms of our own
1979 objectives— objectives that have only re­
cently been reviewed by our congressional
oversight committees. Those efforts, combined
with heavy credit demands, have had the visible
consequence of some increases in short-term
interest rates as the availability of reserves has
been limited through open market operations.
But I would also note that the impact on
longer-term securities markets, generally con­
sidered more important for business decisions,
has been small. We seem to have here an
illustration of the more general proposition that
actions to deal with the sources of inflationary
pressure should over time have a constructive
influence in restoring more stable and healthier
financial and economic conditions.
I frankly do not know whether needed re­
straint on monetary growth will be reflected in
further increases in short-term rates; that will
depend on the course of economic activity,
credit demand, and other factors. But I do know

Statements to Congress

that credit flows at present are generally well
maintained, and no sustained decline in nominal
interest rates can reasonably be expected in the
absence of a discernible slowing in the underly­
ing trend of inflation.
Meanwhile, the moves in the direction of
fiscal restraint by the Congress and the adminis­
tration have been a key ingredient in setting the
stage for a successful anti-inflationary effort.
Substantial progress has been made in the past
year toward reduction of the federal budget
deficit. Potentially more significant, in terms of
the longer-range outlook, is the sense of greater
control on spending that has been achieved by
the efforts of this committee and others.
Of course, the deficit has remained high, even
after years of business expansion, and reduc­
tions in spending relative to GNP have been
modest so far. Moreover, with the economy
likely to be sluggish in the months ahead, the
operation of automatic stabilizers could lead to
a temporary widening of the gap between ex­
penditures and receipts. That in itself need not
be disturbing— if budgetary decisions do not
seem to throw us off the track of restoring
budgetary balance and restraining expenditures
as the economy picks up. However, legitimate
doubts would be raised by sizable new spending
programs not matched by savings elsewhere;
indeed, such an approach would directly chal­
lenge our ability to eliminate future deficits and
could only add to skepticism over the commit­
ment to contain inflation. Similar doubts would
be aroused by a premature commitment to tax
reduction— welcome as such reductions would
be over a period of time. I believe that we
should be particularly wary of tax reductions
that might have a transitory effect in adding to
the purchasing power of consumers but that
would accomplish little or nothing toward stim­
ulating investment, cutting costs, or improv­
ing work incentives. For these reasons, the
members of the Federal Reserve Board believe
that both the administration’s budget proposals
and the Second Concurrent Budget Resolution
recommended by the Senate Budget Committee
represent a broadly appropriate and desirable
commitment to hold the line on spending, to
avoid premature tax cuts, and to contain the size
of the deficit.




741

As I noted earlier, a broad range of uncer­
tainty must be assigned to any forecast of eco­
nomic events, particularly in view of the obvi­
ous vulnerability of the economy to a variety
of exogenous forces. In that connection, we
cannot entirely exclude the possibility of reces­
sionary tendencies cumulating and intensifying,
even if it would be wrong to have current policy
decisions dominated by that single possibility.
There is much more danger— in terms of aggra­
vating the inflationary momentum— in prema­
turely anticipating the most unfavorable
hypothesis than in dealing in the most orderly
and effective way we can with the clear and
present fact of inflation.
Should economic trends develop in a clearly
unfavorable direction and action come to be
needed to deal with sharp declines in output and
employment, it would be crucially important
that those actions be integrated with the longerterm needs of the economy. Specifically, any
fiscal actions should be designed to minimize
any inflationary impact in the short run while
helping to deal positively with some of the
sources of inflationary pressures in the long run.
Cost-cutting and incentive-building tax reduc­
tions broadly meet this criterion; few spending
programs do. We need to give much more
weight than in the past to the need for both
tangible capital formation and research and de­
velopment, for these activities underlie produc­
tivity growth.
I need not emphasize that even well-designed
tax reduction— reduction that could have im­
portant payoffs over time in improved produc­
tivity and reduced cost pressures— has a cost
in terms of transitional deficits and increased
competition in the credit markets. Tax reduc­
tion, however desirable over time, needs to be
earned by a sustained commitment to spending
restraint. Prematurely timed or poorly struc­
tured, the potential gains could be swamped by
adverse effects in an inflation-prone economy.
The monetary and budgetary policies that I
have discussed seem to us in the Federal Re­
serve to be essential if our commitment to
controlling inflation and stabilizing the dollar is
to have meaning. They would lay the ground­
work for changing expectations about inflation
in the short run and for renewed growth and

742

Federal Reserve Bulletin □ September 1979

stability over a longer period of time. I would
emphasize that other efforts, in the areas of
wage-price policy, regulatory reform, and the
encouragement of market competition, are im­
portant as well. We also must deal with our
energy situation, one that today leaves us vul­
nerable to foreign sources of supply. But none
of these policies, important as they are, can
substitute for commitments to fiscal prudence
and restraint on the money supply.

Public concern is high— but out of that concern
grows awareness of the pressing need to solve
our inflationary problem. Therein lies our op­
portunity. I would suggest that the American
people are coming to understand that there are
no easy answers, but that failure to act consist­
ently and forcefully can only lead to worse
results, both for the vitality of our economy and
for our world leadership. Your budget making
is quite clearly a key element in the process.

Statement by Nancy H. Teeters , Member,
Board of Governors of the Federal Reserve
System, before the Subcommittee on Oversight
of the Committee on Ways and Means, U.S.
House of Representatives, September 10, 1979.

to demand deposits to extract estimates of the
size of underground economic activity. Accord­
ing to this approach, movements in this ratio
from its value in the years 1937-41 have been
interpreted as reflecting changes in the under­
ground economy exclusively. However, there
are significant analytical and measurement
problems in drawing inferences about under­
ground activity on the basis of movements in
the ratio of currency to demand deposits.
First of all, even though the Federal Reserve’s
data on currency and demand deposits are highly
accurate and measured on a consistent basis over
time, there are no reliable estimates on what por­
tion of the U.S. currency in circulation is held
in the United States and what portion is held
abroad. U.S. currency balances may be held
abroad as a store of wealth, and in a few
countries, such balances evidently serve even
as a major medium of exchange. Therefore,
fluctuations in the currency ratio may reflect
changes in economic and political conditions
abroad.
Apart from variations resulting from currency
held abroad, movements in the currency-deposit
ratio also reflect domestic aboveground eco­
nomic activity. In fact, as the IRS study noted,
research by the Federal Reserve staff indicates
that both the trend and cyclical movements in
the currency-deposit ratio over most of the
1960s and 1970s can be explained adequately
by movements in real income and consumption
expenditures, prices, and interest rates— vari­
ables that are recognized as important deter­
minants of currency and deposit holdings.
Since mid-1974, however, the currency-

I appreciate the opportunity to appear before this
subcommittee to discuss the recent study by the
Internal Revenue Service (IRS) on unreported
income. In view of the technical issues involved
in this study, I have asked some staff members
from the Federal Reserve System to be present
today. Mr. Chairman, I would like to introduce
to you and the other members of the subcom­
mittee, Mr. Jared Enzler, Mr. Richard Porter,
Mr. James Stull, and Mr. William Wallace from
the Board staff, and Mr. Robert Laurent from
the Federal Reserve Bank of Chicago, who will
answer any of your technical questions.
Activities giving rise to unreported income,
whether earned from legal or illegal sources,
have been called the underground economy. The
scope and nature of the underground economy
have an important bearing on U.S. tax policy
and also may be relevant to the understanding
of developments in the economy and financial
markets. For these reasons, the Board welcomes
any efforts that may be made to measure the
extent of the underground economy.
Underground activity by its very nature is
difficult to measure directly. As a result, econo­
mists have resorted to various indirect methods
of estimation. One much-discussed method that
is evaluated in the IRS study— and one that I
understand you would like us to comment
upon— uses the ratio of currency in circulation




Statements to Congress

deposit ratio has moved up more sharply than
can be accounted for by movements in those de­
terminants. The increase in the ratio appears to
be a result of a downward shift in the demand
for demand deposits and not an upward shift
in the demand for currency. Currency holdings
continue to be predicted accurately by move­
ments in real consumption expenditures, prices,
and interest rates. The weakness in growth of
demand deposits, on the other hand, appears to
be associated with a variety of new develop­
ments in the money market. For households,
innovations such as negotiable order of with­
drawal accounts, automatic transfer service ac­
counts, and money market mutual funds have
become increasingly important substitutes for
demand deposits. For business firms, sluggish
deposit growth has reflected the growing use of
cash management techniques and deposit sub­
stitutes such as security repurchase agreements.
Thus, there are plausible explanations of the
rise since World War II in the ratio of currency
to deposits, which do not rely on the growth
of an underground economy. I do not mean to
imply that the underground economy does not




743

exist or that currency is not used more exten­
sively as a medium of exchange for underground
transactions. The point is that other factors
affect the currency-deposit ratio, and they must
be taken into account when separating above­
ground currency holdings from underground
currency holdings.
Moreover, even if this separation could be
accomplished with precision, it is by no means
clear what magnitude of underground GNP is
associated with underground currency holdings.
Presumably, underground currency holders are
somewhat restricted from exchanging currency
for demand deposits or for interest-bearing
assets. Therefore, it is quite possible that the
income velocity of underground currency is less
than that of aboveground currency, when there
are no restrictions on such exchanges.
Finally, whatever the advantages and prob­
lems with the currency-based approach to esti­
mating the underground activity, it is obviously
useful to try to estimate underground activity
directly, as the IRS has done in its study. The
approach taken by the IRS appears to be helpful
and merits careful consideration.
□

744

Announcements
C h a n g e in D is c o u n t R a t e

The Board of Governors announced an increase
in the discount rate from 10 percent to 10 V
2
percent, effective August 17, 1979.
Action was taken against the background of
the continuing strong inflationary forces that are
evident in the economy and in recognition of
the relatively rapid rate of expansion in the
monetary aggregates.
In making the change, the Board acted on
requests from the directors of the Federal Re­
serve Banks of New York, Philadelphia, Cleve­
land, Richmond, St. Louis, Minneapolis, and
Kansas City. The discount rate is the interest
rate that member banks are charged when they
borrow from their district Federal Reserve
Banks.
The Federal Reserve Board subsequently ap­
proved actions by the directors of the Federal
Reserve Banks of Boston, Atlanta, Chicago,
Dallas, and San Francisco to increase the dis­
count rate at those banks from 10 to IOV2
percent, effective August 20.

rangements, the Federal Reserve Bank of New
York acts on behalf of the Federal Reserve
System under the direction of the Federal Open
Market Committee.
The Federal Reserve’s reciprocal currency
arrangements are now as follows (in millions
of dollars):
Austrian National Bank ..........................250
National Bank of Belgium .................1,000
Bank of Canada ..................................... 2,000
National Bank of Denmark .................. 250
Bank of England ................................... 3,000
Bank of France .......................................2,000
German Federal Bank ..........................6,000
Bank of Italy .......................................... 3,000
Bank of Japan .........................................5 ,000
Bank of M exico .........................................700
Netherlands Bank ..................................... 500
Bank of Norway .......................................250
Bank of Sweden .........................................300
Swiss National Bank ............................4,0 0 0
Bank for International Settlements
Swiss francs/dollars ..............................600
Other European currencies/dollars 1,250

Total ...............................................30,100
In c r e a s e i n R e c ip r o c a l
C urrency A rrangem ents

The Federal Reserve announced on August 17,
1979, that its reciprocal currency (swap) ar­
rangement with the Bank of Mexico had been
increased from $360 million to $700 million.
The increase enlarges the System’s swap net­
work with 14 central banks and the Bank for
International Settlements to $30.1 billion.
A swap arrangement is a renewable, short­
term facility under which a central bank agrees
to exchange on request its own currency for the
currency of the other party up to a specified
amount over a limited period of time.
The Federal Reserve swap network was ini­
tiated in 1962. In all reciprocal currency ar­




C h a n g e s in Fe d eral
O p e n M a r k e t C o m m it t e e S t a f f

The Federal Open Market Committee has an­
nounced the following promotions, effective
August 17, 1979.
Alan R. Holmes, who has been Manager of
the System Open Market Account, has been
named Adviser for Market Operations to the
Committee.
Peter D. Sternlight, who has been Deputy
Manager for Domestic Operations, has been
named Manager for Domestic Operations, Sys­
tem Open Market Account.
Scott E. Pardee, who has been Deputy Man­
ager for Foreign Operations, has been named

745

Manager for Foreign Operations, System Open
Market Account.
The Committee is the System’s chief policy­
making body for monetary policy. It is com­
prised of the seven members of the Board of
Governors and five of the twelve presidents of
the Federal Reserve Banks. The Committee’s
directives are put into effect through operations
in the System Open Market Account, carried
out on behalf of the System as a whole by the
Federal Reserve Bank of New York.
Ch a n g e s in B o ard S taff

The Board of Governors has announced the
following official staff promotions and appoint­
ment.
Robert E. Mannion, Associate General
Counsel, Legal Division, has been promoted to
Deputy General Counsel, effective September
3, 1979.
Edward T. Mulrenin, Assistant Controller,
Office of the Controller, has been promoted to
Assistant Staff Director, Office of Staff Director
for Management, also effective September 3.
William N. McDonough has been appointed
temporary Assistant Secretary, Office of the
Secretary, effective October 1. Mr. McDonough
is Assistant General Counsel and Assistant Sec­
retary of the Federal Reserve Bank of Boston.
Mr. McDonough, who joined the staff of the
Federal Reserve Bank of Boston in 1969, holds
an LL.B. and an LL.M. from Boston Univer­
sity.
The Board has also announced the resignation
of Albert R. Hamilton, Director, Division of
Federal Reserve Bank Examinations and Bud­
gets, effective September 1, 1979.
N e w E d u c a t io n a l P a m p h l e t s

A series of educational pamphlets on the struc­
ture of the Federal Reserve System are now
available for public distribution.




The four pamphlets, which describe the or­
ganization and functions of the major policy­
making units of the nation’s central banking
system, are: “ The Board of Governors of the
Federal Reserve System,” “ The Federal Open
Market C om m ittee,” “ Federal R eserve
Banks,” and “ Federal Reserve Bank Board of
Directors.”
Copies of the pamphlets may be obtained
singly or in limited quantity free of charge from
Publications Services, Board of Governors of
the Federal Reserve System, Washington, D.C.
20551.

S y s t e m M e m b e r s h ip :
A d m is s io n o f S t a t e B a n k s

The following banks were admitted to member­
ship in the Federal Reserve System during the
period August 11 through September 10, 1979:
Kansas

Lenexa ................... Country Hill State Bank
Oklahoma

Mustang ............ Mustang Community Bank
Oregon

Springfield ............ Emerald Empire Banking
Company
Virginia

Fisherville ................... Jefferson Bank of the
Valley
Mechanicsville .. Peoples Bank of Hanover
County

M a il in g L is t f o r S t a f f S t u d ie s

The Board of Governors has established a mail­
ing list for all papers in the Staff Studies series.
Requests to be added to the mailing list may
be sent to Publications Services, Division of
Support Services, Board of Governors of the
Federal Reserve System, Washington, D.C.
20551.

747

Record of Policy Actions of the
Federal Open Market Committee




MEETING HELD ON JULY 11, 1979

Domestic Policy Directive
The information reviewed at this meeting suggested that real output
of goods and services had declined somewhat in the second quarter
when a slackening in demands was intensified by reduced supplies
of motor fuels and higher energy prices; in the first quarter the
expansion in economic activity had slowed sharply, to an annual rate
of 0.8 percent. The rise in average prices, as measured by the
fixed-weight price index for gross domestic business product, appeared
to have accelerated somewhat further in the second quarter, from an
annual rate of about 10 percent in the first quarter and around 8 %
percent during 1978.
Staff projections suggested a further contraction in economic activity
over the next few quarters and an upturn beginning in 1980. Over
the year ahead the increase in average prices was projected to be
moderately below its pace in the first half of 1979. The rate of
unemployment was expected to rise substantially.
In June the dollar value of retail sales fell for the third consecutive
month, and in real terms such sales were estimated to be about 6 V
2
percent below their December 1978 peak. Unit sales of new automo­
biles declined further in June despite continued strength in sales of
small domestic and foreign models.
In April and May total private housing starts were at an average
annual rate of about 1 % million units, up somewhat from the first
quarter, when starts were depressed by unusually adverse weather
conditions, but well below total starts in both 1977 and 1978. Com­
bined sales of new and existing single-family homes in April and May
were also above their first-quarter pace, but substantially below the
peak rate in the fourth quarter of 1978.
The expansion in total nonfarm payroll employment slowed consid­
erably during the second quarter to a pace well below that in the
previous six months. Payroll employment in manufacturing declined
in each month of the quarter, and the length of the average workweek

748

Federal Reserve Bulletin □ September 1979

fell appreciably from its relatively high first-quarter level. Never­
theless, the unemployment rate edged down in June to 5.6 percent,
its lowest level since August 1974.
The index of industrial production rose 1.3 percent in May. The
increase about offset a drop in April that was induced largely by a
work stoppage in the trucking industry. The expansion in industrial
production over the first five months of the year was less than 1 percent,
compared with an increase of about 4 percent in the second half of

1978.
The latest survey of business plans taken by the Department of
Commerce in late April and May suggested that spending for plant
and equipment would expand 12.7 percent in 1979 as a whole; the
survey taken three months earlier had suggested an increase of 11.3
percent. The new survey, like the earlier one, implied considerably
more growth in the second half of the year than in the first half.
Manufacturers’ new orders for nondefense capital goods picked up
somewhat in May after having declined substantially in April. The
machinery component of such orders— generally a good indicator of
underlying trends in demand for business equipment— was up only
slightly in May following a very large drop in April. Contract awards
for commercial and industrial buildings— measured in terms of floor
space— declined in May for the third consecutive month to a level
well below the February peak.
Producer prices of finished goods and of materials rose much more
rapidly in the first half of 1979 than during 1978. The increase in
these indexes moderated in the second quarter, however, when prices
of food products declined after having advanced at exceptional rates
earlier in the year. Increases in prices of energy items were very rapid,
especially in the second quarter.
The rise in the consumer price index accelerated to an annual rate
of 13!2 percent over the first five months of 1979 compared with a
/
rise of 9 percent in 1978. Price increases were widespread but were
especially pronounced among energy-related items. Homeownership
costs and food prices also increased sharply, although the rise in foods
moderated in May.
The index of average hourly earnings of private nonfarm production
workers rose at an annual rate of about 5 V percent during the second
2
quarter, down from increases averaging about SV 2 percent during the
prior two quarters. The moderation was concentrated in the trade and




Record of Policy Actions of FOMC

service sectors. Recent collective bargaining agreements in two major
industries provided for large increases in worker compensation.
In foreign exchange markets the dollar came under downward
pressure in mid-June following several months of relative strength;
since then its value against major foreign currencies had fallen about
3 percent and central banks had made large purchases of dollars. The
dollar’s weakness appeared to have been related to expectations of
easier monetary conditions in the United States at a time when money
market conditions were being tightened in key foreign countries and
to concerns about the effects of sharply rising oil prices. The U.S.
trade deficit for April and May had widened somewhat from the
first-quarter rate, reflecting a sizable increase in the value of oil and
other imports and little change in the value of exports.
Total credit outstanding at U.S. commercial banks continued to
expand rapidly in May and June, but the rate of growth for the two
months combined was down somewhat from the average pace in earlier
months of the year. Increases in bank loans during May and June
were concentrated in the business and real estate categories. Commer­
cial paper issued by nonfinancial firms rose considerably further over
the two months.
The narrowly defined money supply, M-l, increased sharply in June
and the broader measures of money, M-2 and M-3, also grew rapidly;
expansion in all three measures, especially M- l, had slowed markedly
in May following a surge in April. In June, inflows to commercial
banks of interest-bearing deposits included in M-2 were large, as
money market certificates expanded rapidly for the third consecutive
month and savings deposits increased for the first time since September
1978. At nonbank thrift institutions, net inflows of funds were esti­
mated to have picked up somewhat in June from a sharply reduced
pace in May, even though net issuance of money market certificates
by these institutions weakened further.
On a quarterly average basis, M -l grew at an annual rate of about
IVi percent in the second quarter after a decline at a rate of about
2 percent in the first quarter; M-2 and M-3 grew at rates of about
8 V percent and 1 3 percent respectively in the second quarter, com­
2
A
pared with rates of about 1% percent and 4% percent in the previous
quarter. In the second quarter, banks increased considerably further
their reliance on nondeposit sources such as repurchase agreements
and Eurodollars to supplement their loanable funds. At the same time,




749

750

Federal Reserve Bulletin □ September 1979




they reduced the outstanding volume of large-denomination time
deposits by more than the increase in funds from nondeposit sources.
At its meeting on May 22 the Committee had decided on ranges
of tolerance for the annual rates of growth in M -l and M-2 during
the May-June period of 0 to 5 percent and 4 to 8 V percent respectively.
2
The Committee had agreed that early in the coming intermeeting
period, the Manager of the System Open Market Account should
continue to direct operations toward maintaining the weekly average
federal funds rate at around 10 lA percent. Subsequently, if the twomonth growth rates of M -l and M-2, given approximately equal
weight, appeared to be close to or beyond the upper or lower limits
of the indicated ranges, the objective for the funds rate was to be
raised or lowered in an orderly fashion within a range of 9 3 to IOV2
A
percent.
Subsequent to the meeting, incoming data on the monetary aggre­
gates led to progressively higher projections of growth in M -l and
M-2 over the May-June period. By mid-June the projections suggested
growth rates that were above the ranges specified by the Committee.
The behavior of the aggregates would have called for an increase in
the objective for the federal funds rate toward the IOV2 percent upper
limit of its specified range. However, on June 15 the Committee
modified the domestic policy directive adopted on May 22 and called
for open market operations directed at maintaining the weekly average
federal funds rate at about 10 lA percent. Federal funds traded somewhat
above the Committee’s objective in late June and early July, in
response to pressures associated with unusual churning in the money
market around the midyear bank statement date and the July 4 holiday.
Most interest rates other than the federal funds rate fell substantially
on balance during the intermeeting period. The declines appeared to
be in response to the growing evidence that economic activity had
been weakening. Declines in Treasury bill rates were accentuated by
large cash redemptions of maturing bills and by the resumption of
sizable net purchases by foreign central banks as the dollar came under
pressure in foreign exchange markets. During June most banks reduced
their loan rate to prime business borrowers from 11% to IIV 2 percent.
Despite relatively sizable declines in most interest rates, including bond
yields, rates on conventional home mortgages in the primary market
rose further during the intermeeting period. Thrift and other institutions
continued to tighten their lending terms on residential mortgages in




Record of Policy Actions of FOMC

apparent response to relatively strong demands for credit and to
uncertainty about prospective inflows of savings.
At this meeting, in conjunction with its discussion of the economic
situation and outlook, the Committee reviewed its longer-run ranges
for growth of the monetary aggregates. The Full Employment and
Balanced Growth Act of 1978 (the Humphrey-Hawkins Act) requires
the Board of Governors to transmit to the Congress by February 20
and July 20 of each year written reports concerning the objectives
and plans of the Board and the Committee with respect to the ranges
of growth or diminution of the monetary and credit aggregates for
the calendar year during which the report is transmitted and, in the
case of the July report, the objectives and plans with respect to ranges
for the following calendar year as well. Accordingly, the Committee
reviewed the ranges for the period from the fourth quarter of 1978
to the fourth quarter of 1979 that it had established at its meeting
on February 6 , 1979, and for the first time considered preliminary
ranges for the period from the fourth quarter of 1979 to the fourth
quarter of 1980.1
At its meeting on February 6 the Committee had specified ranges
of IV2 to 4 V percent for M-l, 5 to 8 percent for M-2, and 6 to
2
9 percent for M-3. The associated range for commercial bank credit
was IV2 to IOV2 percent. The range for M -l had been established
on the assumption that shifts in funds from demand deposits to savings
accounts with automatic transfer facilities and to NOW accounts would
dampen growth of measured M -l by about 3 percentage points.
With respect to the economic situation and outlook, no member
of the Committee expressed disagreement with the staff appraisal that
real gross national product had declined somewhat in the second
quarter and that further declines were likely for the remaining two
quarters of the year. The suggestion was made that the recession was
most likely to be mild and short-lived. However, it could prove to
be more severe than currently expected because the recent increases
in prices of energy items and inflation generally were reducing dispos­
able income and eroding the financial position of the household sector.
1.
The act also requires that the written reports set forth a review and analysis
of recent developments affecting economic trends in the nation and the relationship
of the plans and objectives for the aggregates to the short-term goals set forth
in the most recent E conom ic R ep o rt o f the P resident and to any short-term goals
approved by the Congress. The Board’s second report under the act was transmitted
to the Congress on July 17, 1979.

751

752

Federal Reserve Bulletin □ September 1979




Another reason advanced for thinking that the recession could be more
severe was the possibility that the downturn in economic activity would
become widespread among industrial countries.
Members continued to express great concern about inflation. It was
suggested that the unexpectedly large increases in OPEC oil prices
in late June had seriously harmed the government’s anti-inflation
efforts. Thus, winding down the rate of increase in prices might well
take considerably longer than had been thought earlier and would be
more costly in terms of its impact on output, employment, and real
income. In that connection it was noted that time would be required
to implement the new policies with respect to energy that the President
was expected to announce within a few days. On the other hand,
the public’s perception of the urgency of the problem had increased,
leading to a growing awareness that in the short run some loss of
real income would have to be accepted for the sake of reestablishing
growth in real income over the longer term.
In reviewing ranges for the monetary aggregates for the current
year and contemplating ranges for 1980, the Committee continued
to face unusual uncertainties concerning the forces affecting monetary
growth. A staff analysis had suggested that shifts in funds from demand
deposits to savings accounts with automatic transfer services and to
NOW accounts had retarded the annual rate of growth of M -l by
the assumed amount of about 3 percentage points in the first quarter
of 1979 but by only about iVi percentage points in the second quarter;
thus, from the fourth quarter of 1978 to the second quarter of 1979,
the dampening effects of ATS and NOW accounts on growth of M -l
averaged about 2 lA percentage points. The outlook for the effects of
these accounts on growth of M -l was clouded, moreover, by a federal
court decision handed down in April barring ATS and certain other
payments services as of January 1, 1980, and by the possibility of
further judicial review and of legislation concerning such services.
The demand for M -l was unusually weak in the first quarter of
1979, even after allowance for the effects of the growth of ATS and
NOW accounts, but money demand appeared to strengthen in the
second quarter. Still, at an annual rate of about 2 3 percent from the
A
fourth quarter of 1978 to the second quarter of 1979, growth of M -l
was just below the midpoint of the longer-run range established by
the Committee in February, as the high level of interest rates reached
in late 1978 and the continued tautness of markets in 1979 prompted




Record of Policy Actions of FOMC

the public to economize on non-interest-earning holdings of cash. The
high level of market interest rates also induced the public to divert
funds from deposits subject to fixed ceiling rates into market instru­
ments, thereby further retarding growth of M-2 and M-3 over the
first two quarters of 1979; their annual rates of growth, at 5% percent
and 6 V percent respectively, were just above the lower limits of their
4
ranges. As a result of these developments, growth of all three monetary
aggregates, which had moderated over the four quarters of 1978 from
the pace of the preceding four quarters, slowed appreciably further
in the first half of 1979. However, growth of commercial bank credit
in the first half of 1979, at a rate of IIV 2 percent, was slightly above
its range and little different from the year before.
In the Committee’s discussion, most members favored ranges for
both 1979 and 1980 that would represent essentially a continuation
of the policy posture adopted in early February. One member advo­
cated a more restrictive policy for the balance of the current year.
Some sentiment was expressed for narrowing the ranges for the period
from the fourth quarter of 1978 to the fourth quarter of 1979, because
passage of half of the year had reduced uncertainty about rates of
growth over the whole period.
It was suggested that the ranges for 1980 might well be slightly
lower than those for 1979, in recognition of the Committee’s long­
standing objective to move gradually toward rates of monetary expan­
sion consistent with general price stability. The suggestion also was
made to adopt slightly higher ranges for 1980 than for 1979, in view
of the decline in activity that had just begun. It was observed, however,
that any increase in the ranges for 1980 would not now be timely
and that the Committee would reconsider the 1980 ranges next Febru­
ary in the light of the information then available about economic
conditions. In any event, it was recognized that the current reexami­
nation of the definitions of the monetary aggregates, which was being
undertaken in light of the major institutional changes in the payments
system, might in the near future lead to a new and improved set of
money stock measures.
At the conclusion of the discussion, the Committee decided to retain
the ranges for 1979 that it had established in February. Thus, for
the period from the fourth quarter of 1978 to the fourth quarter of
1979, the Committee reaffirmed ranges of IV2 to 4Vi percent for M- l,
5 to 8 percent for M-2, and 6 to 9 percent for M-3. The associated

753

754

Federal Reserve Bulletin □ September 1979




range for commercial bank credit remained IV 2 to IOV2 percent. Having
established the range for M -l in February on the assumption that
expansion of ATS and NOW accounts would dampen growth by about
3 percentage points over the year, the Committee also agreed that
actual growth in M -l might vary in relation to its range to the extent
of any deviation from that estimate. The Committee anticipated that
for the period from the fourth quarter of 1979 to the fourth quarter
of 1980, growth might be within the same ranges, depending upon
emerging economic conditions and appropriate adjustments that might
be required by legislation or judicial developments affecting interestbearing transactions accounts.
It was understood that the longer-run ranges, as well as the particular
aggregates for which ranges were specified, would be reconsidered
at any time that conditions might warrant. It was also understood that
short-run factors might cause growth rates from one month to the
next to fall outside the ranges anticipated for the year.
The Committee adopted the follow ing ranges for rates of growth in
monetary aggregates for the period from the fourth quarter of 1978 to
the fourth quarter of 1979: M -l, IV2 to 4V2 percent; M -2, 5 to 8 percent;
and M -3, 6 to 9 percent. Actual growth in M -l might vary in relation
to its range to the extent that the dampening effect of expansion in ATS
and NOW accounts deviates from an estimate of about 3 percentage points.
The associated range for bank credit is 7 V to 10y2 percent.
2
Votes for this action: Messrs. Miller, Volcker, Balles,
Black, C oldwell, Kimbrel, M ayo, Partee, Rice, and Mrs.
Teeters. Vote against this action: Mr. W allich.

Mr. Wallich dissented from this action because, with the Commit­
tee’s objective of slowing the rate of inflation in mind, he believed
that the range adopted for M- l, after allowance for the effects of ATS
and NOW accounts, was too high. In his opinion, growth of the money
stock, after allowance for the expansion in repurchase agreements and
Eurodollars as well as for the effects of ATS and NOW accounts,
had been considerably more rapid than indicated by the behavior of
M-l.
The Committee agreed that for the period from the fourth quarter of
1979 to the fourth quarter of 1980, growth of M -l, M -2, and M -3, and
of commercial bank credit, might be within the ranges adopted for 1979,
depending upon emerging econom ic conditions and appropriate adjust­
ments that may be required by legislation or judicial developments
affecting interest-bearing transactions accounts.




Record of Policy Actions of FOMC

Votes for this action: Messrs. Miller, Volcker, Balles,
Black, C oldwell, Kimbrel, M ayo, Partee, Rice, Mrs. Teeters,
and Mr. W allich. Votes against this action: None.

In the discussion of policy for the period immediately ahead,
members of the Committee in general favored directing open market
operations initially toward maintaining the money market conditions
currently prevailing, as indicated by a federal funds rate of about IOV4
percent, on the expectation that over the July-August period growth
of M -l and M-2 would be both moderate and consistent with their
longer-run ranges. Some sentiment was expressed for a near-term
reduction in the federal funds rate because of the downturn in economic
activity, but it was agreed that current conditions in foreign exchange
markets militated against a prompt reduction.
With respect to operations later in the period before the next regular
meeting, most members thought that the objective for the federal funds
rate should be moved up or down within its specified range only if
growth of M -l and M-2 appeared to be close to or beyond the upper
or lower limits of their ranges. Most members favored specification
of an intermeeting range of 9 3 to IOV2 percent for the federal funds
A
rate, the same range that had been specified at the three preceding
meetings. A range of 10 to 103 percent was also suggested, coupled
A
with an instruction to the Manager to move the objective for the funds
rate up within that range should the dollar come under severe down­
ward pressure in foreign exchange markets. It was recognized, how­
ever, that the Committee could consult during the intermeeting period
to consider giving additional instructions to the Desk in response to
any new developments, including reactions to the President’s forth­
coming address on energy policy as well as to the behavior of the
foreign exchange markets.
The suggestion was made that, in assessing the implications of the
behavior of the aggregates for the Desk’s objective for the federal
funds rate, the Manager be instructed to give more weight to M-2,
rather than approximately equal weight to M -l and M-2, because of
uncertainties about the interpretation of M-l. It was noted, however,
that the course of M-2 was subject to considerable uncertainty because
the six-month Treasury bill rate was hovering around the 9 percent
trigger point that affects the relationship between the maximum rates
that commercial banks and savings and loan associations may pay
on money market certificates.

755

756

Federal Reserve Bulletin □ September 1979

At the conclusion of the discussion the Committee decided that
ranges of tolerance for the annual rates of growth in M-l and M-2
over the July-August period should be 2V to &h percent and 6 V
fe
2
to IOV2 percent respectively. The Manager was instructed to direct
open market operations initially toward maintaining the weekly average
federal funds rate at about the current level, represented by a rate
of IO V 4 percent. Subsequently, if the two-month growth rates of M-l
and M-2 appeared to be close to or beyond the upper or lower limits
of the indicated ranges, the objective for the funds rate was to be
raised or lowered in an orderly fashion within a range of 9 3 to IOV2
A
percent. It was also agreed that in assessing the behavior of the
aggregates, the Manager should give approximately equal weight to
M-l and M-2.
As is customary, it was understood that the Chairman might call
upon the Committee to consider the need for supplementary instruc­
tions before the next scheduled meeting if significant inconsistencies
appeared to be developing among the Committee’s various objectives.
The following domestic policy directive was issued to the Federal
Reserve Bank of New York:
The information reviewed at this meeting suggests that real output of
goods and services declined somewhat in the second quarter, as slackening
in demands was intensified by reduced supplies and sharply higher prices
of motor fuels. During the quarter, the dollar value of retail sales declined,
and in real terms, sales in June were substantially below those of last
December. Growth in nonfarm payroll employment slowed during the
quarter to a pace considerably below that in the preceding six months,
but the unemployment rate in June, at 5.6 percent, was somewhat lower
than earlier in the year. Industrial production recovered in May, after
having declined in April in large part because of a work stoppage. Over
the first half of this year, broad measures of prices increased at a much
faster pace than during 1978, although producer prices of foods declined
in the second quarter. The rise in the index of average hourly earnings
has slowed in recent months.
Downward pressure on the dollar in foreign exchange markets emerged
in mid-June after several months of strength, and since then the tradeweighted value of the dollar against major foreign currencies has declined
about 3 percent. The U.S. trade deficit for April and May combined
widened somewhat from the first-quarter rate.
M-l expanded sharply in June, after having increased little in May,
and M-2 and M-3 also grew rapidly. Inflows of interest-bearing deposits
included in M-2 grew rapidly in June, as net flows into money market
certificates at commercial banks expanded further and savings deposits







Record of Policy Actions of FOMC

increased for the first time since last September. At nonbank thrift
institutions, inflows of deposits picked up from the sharply reduced pace
in May. On a quarterly average basis, M-l grew at an annual rate of
about IVi percent in the second quarter, compared with a decline at a
rate of about 2 percent in the first quarter; M-2 and M-3 grew at rates
of about 8 V percent and 1 3 percent respectively in the second quarter,
2
A
compared with rates of about 13 percent and 4 3 percent in the first
A
A
quarter. Market interest rates in general have declined substantially over
the past several weeks, but mortgage interest rates have risen further.
Taking account of past and prospective developments in employment,
unemployment, production, investment, real income, productivity, inter­
national trade and payments, and prices, it is the policy of the Federal
Open Market Committee to foster monetary and financial conditions that
will resist inflationary pressures while encouraging moderate economic
expansion and contributing to a sustainable pattern of international trans­
actions. The Committee agreed that these objectives would be furthered
by growth of M-l, M-2, and M-3 from the fourth quarter of 1978 to
the fourth quarter of 1979 within ranges of W2 to 4Vi percent, 5 to 8
percent, and 6 to 9 percent respectively, the same ranges that had been
established in February. Having established the range for M-l in February
on the assumption that expansion of ATS and NOW accounts would
dampen growth by about 3 percentage points over the year, the Committee
also agreed that actual growth in M-l might vary in relation to its range
to the extent of any deviation from that estimate. The associated range
for bank credit is IV2 to IOV2 percent. The Committee anticipates that
for the period from the fourth quarter of 1979 to the fourth quarter of
1980, growth may be within the same ranges, depending upon emerging
economic conditions and appropriate adjustments that may be required
by legislation or judicial developments affecting interest-bearing transac­
tions accounts. These ranges will be reconsidered at any time as conditions
warrant.
In the short run, the Committee seeks to achieve bank reserve and
money market conditions that are broadly consistent with the longer-run
ranges for monetary aggregates cited above, while giving due regard to
the program for supporting the foreign exchange value of the dollar and
to developing conditions in domestic financial markets. Early in the period
before the next regular meeting, System open market operations are to
be directed at maintaining the weekly average federal funds rate at about
the current level. Subsequently, operations shall be directed at maintaining
the weekly average federal funds rate within the range of 9 3 to 10y2
A
percent. In deciding on the specific objective for the federal funds rate
the Manager shall be guided mainly by the relationship between the latest
estimates of annual rates of growth in the July-August period of M-l
and M-2 and the following ranges of tolerance: 2 V to 6 V percent for
2
2
M-l and 6 V to \ 0 V percent for M-2. If, with approximately equal weight
2
2
given to M-l and M-2, their rates of growth appear to be close to or
beyond the upper or lower limits of the indicated ranges, the objective

757

758

Federal Reserve Bulletin □ September 1979




for the funds rate is to be raised or lowered in an orderly fashion within
its range.
If the rates of growth in the aggregates appear to be above the upper
limit or below the lower limit of the indicated ranges at a time when
the objective for the funds rate has already been m oved to the corre­
sponding limit of its range, the Manager will promptly notify the Chair­
man, who will then decide whether the situation calls for supplementary
instructions from the Committee.
Votes for this action: Messrs. M iller, Volcker, Balles,
Black, C oldwell, Kimbrel, M ayo, Partee, R ice, Mrs. Teeters,
and Mr. W allich. Votes against this action: None.

About a week after the meeting, on July 19, projections suggested
that over the July-August period M -l would grow at an annual rate
moderately above the upper limit of the range of 2 lA to 6 !/2 percent
that had been specified by the Committee and that M-2 would grow
at a rate about equal to the upper limit of its range of 6 !/2 to 10!/2
percent; in those circumstances, the Manager began to aim for a weekly
average federal funds rate at about the lO1 percent upper limit of
^
its range. On July 27, with the projections suggesting that growth
of both M -1 and M-2 over the July-August period would exceed the
upper limits of their ranges and with the objective for the federal
funds rate at the upper limit of its range, the Committee voted to
modify the directive adopted at the meeting on July 11. Specifically,
the Committee raised the upper limit of the intermeeting range for
the federal funds rate to 10% percent and instructed the Manager to
aim for a rate within a range of IOV2 to 10% percent, depending on
subsequent behavior of the monetary aggregates, on conditions in
foreign exchange markets, and on the current Treasury financing.
On July 27, the Committee modified the domestic policy directive
adopted at its meeting on July 11, 1979, by raising the upper limit of
the intermeeting range for the federal funds rate to 10 3 percent and by
A
instructing the Manager to aim for a weekly average rate within a range
of IOV2 to 10% percent, depending on subsequent projections of growth
of M -l and M -2 over the July-August period, on conditions in foreign
exchange markets, and on the current Treasury financing.
Votes for this action: Messrs. Miller, Volcker, Black,
C oldwell, Partee, Rice, W allich, Guffey, R oos, and Winn.
Vote against this action: Mrs. Teeters. Absent: Messrs. Balles,
Kimbrel, and Mayo. (Messrs. Guffey, R oos, and Winn voted
as alternates for Messrs. Balles, Kimbrel, and Mayo respec­
tively.)
*

*

*

*

*

Records of policy actions taken by the Federal Open Market Committee at each
meeting, in the form in which they will appear in the Board’s A nnual R e p o rt ,
are made available a few days after the next regularly scheduled meeting and
are subsequently published in the B u l l e t i n .

759

Law Department
S ta tu te s ,

A

re g u la tio n s ,

m e n d m e n t to

in te rp re ta tio n s ,

R e g u l a tio n E

The Board of Governors has adopted an
amendment to section 205.5(c) of Regulation
E, which implements the Electronic Fund
Transfer Act, to provide that written notice of
loss or theft of an access device or possible
unauthorized electronic fund transfers is effec­
tive at the time the consumer mails or otherwise
sends the notice to the financial institution.
Effective September 10, 1979, paragraph (c) of
section 205.5 of Regulation E is amended by
deleting the third sentence and substituting the
following sentence, to read as follows:
Section 205.5—Liability of
Consumer for Unauthorized Transfers.
jfc

*

*

*

(c) ***Notice in writing is considered given
at the time the consumer deposits the notice in
the mail or delivers the notice for transmission by
any other usual means to the financial institu­
tion.***
sc
|

sc
f

se
f

%

j|c

B a n k H o ld in g C o m p a n y
and

Bank M

Is s u e d

by

erger

the

B

O rders

o ard of

G overnors

Orders Under Sectio n 3
of

B a n k H o ld in g C o m p a n y A

ct

Caneyville Bancshares, Inc.,
Caneyville, Kentucky
Order Denying
Formation of a Bank Holding Company
Caney ville Bancshares, Inc., Caneyville, Ken­
tucky, has applied for the Board’s approval under
section 3(a)(1) of the Bank Holding Company Act
(12 U.S.C. § 1842(a)(1)) of formation of a bank




an d

d e c is io n s

holding company by acquiring 99.1 percent of the
voting shares of the Bank of Caney ville, Caneyville, Kentucky (“ Bank” ).
Notice of the application, affording opportunity
for interested persons to submit comments and
views, has been given in accordance with section
3(b) of the Act. The time for filing comments and
views has expired, and the Board has considered
the application and all comments received in light
of the factors set forth in section 3(c) of the Act.
Applicant, a nonoperating corporation with no
subsidiaries, was organized for the purpose of
becoming a bank holding company by acquiring
Bank. Upon acquisition of Bank, Applicant would
control the 289th largest commercial bank in Ken­
tucky, with .06 percent of the total commercial
bank deposits in the state.1
Bank holds deposits of $7.1 million, repre­
senting approximately 10.1 percent of total market
deposits in commercial banks and is the smallest
of four banks in the relevant banking market.2 The
subject proposal involves a restructuring of Bank’s
ownership from individuals to a corporation owned
by those same individuals. The facts of record
indicate that one of Applicant’s principals also
holds significant voting interests in Leitchfield De­
posit Bank and Trust Company, Leitchfield, Ken­
tucky (“ Leitchfield Bank” ), one of three other
banking organizations located in the relevant
banking market. In addition, one of Applicant’s
principals serves as chairman of the board of
directors of Leitchfield Bank. Leitchfield Bank
(deposits of $20.1 million) controls 28.5 percent
of total market deposits and is the third largest
bank in the relevant banking market.
Applicant contends that Bank and Leitchfield
Bank operate in distinct banking markets. In sup­
port of this contention, Applicant has submitted
data concerning the respective service areas for
loans and deposits of each of the banks. Applicant
1. All banking data are as of June 30, 1978.
2. The relevant banking m arket is approxim ated by Grayson
County, Kentucky.

760

Federal Reserve Bulletin □ September 1979

also alleges that there is little commercial interac­
tion between Caneyville and Leitchfield.3
Applicant’s contention that Bank and Leitch­
field Bank operate in distinct banking markets is
not supported by the facts. In addition to A ppli­
cant’s subm issions, the Board has reviewed the
results of a telephone survey of the area, as well
as com m u tin g data and a d v e r tisin g , c o m ­
munications and other service patterns. In particu­
lar, it appears that a significant percentage of the
work force in Leitchfield is from C aneyville. Fur­
thermore, one newspaper and hospital and two
radio stations serve the entire county.4 Based on
its careful review of the entire record of this
application, the Board is of the view that the
relevant banking market for purposes of analyzing
the competitive effects of the transaction is an area
that includes both Leitchfield and Caneyville.
Thus, it appears that Bank and Leitchfield Bank
are located in the relevant banking market as
described above.
Under section 3(c) of the Bank Holding Com ­
pany Act, the Board is precluded from approving
any proposed acquisition of a bank that, in any
part of the country, (1) would result in a monop­
oly, or would be in furtherance of any combination
or conspiracy to m onopolize or attempt to monop­
olize the business of banking; or that (2) may
substantially lessen competition or tend to create
a m onopoly or be in restraint of trade in any
banking market, unless the Board finds that such
anti-competitive effects are clearly outweighed by
the convenience and needs of the community to
be served.
As part of its analysis of the competitive effects
of a proposal involving the restructuring of a
bank’s ownership into corporate form, the Board
takes into consideration the competitive effects of
the transaction whereby common share ownership
and/or an interlocking director/officer relationship
were established between the subject bank and one

3. The Board notes that the Suprem e Court has indicated
that the com petitive effects o f a proposed merger or acquisition
should be judged in a localized market. H ow ever, the Court
has stated that “ the proper question is not where the parties
to the merger do business or even where they com pete, but
w here, w ithin the area o f com petitive overlap, the effect of
the merger on com petition w ill be direct and im m ed iate.”
U nited S ta tes v. P h iladelphia N a tio n a l B ank, 374 U .S . 321
(1 9 6 3 ). In determ ining the extent o f this area, the Supreme
Court sought to delineate the area in w hich bank customers
that are neither very large nor very sm all find it practical to
do their banking business. U nited S ta tes v. P h iladelphia N a ­
tional B ank, supra. See also, F irst S ta te B a n co rp o ra tio n , 65
F e d e r a l R e s e r v e B u l l e t i n 25 6 (1 9 7 9 ).
4 . The Board notes that B ank’s advertising is not directed
toward any specific area in Grayson County.




or more of the other banks in the same market.5
When Applicant’s principals acquired control of
Bank in 1977, one of Applicant’s principals also
held the above described interest in Leitchfield
Bank, and served as an officer and/or a director
of Leitchfield Bank. Together, Bank and Leitch­
field Bank controlled, as of December 1977, total
deposits of $2 5 .6 m illion, representing approxi­
mately 38.2 percent of total deposits in the market.
The Board finds that the effect of Bank’s acquisi­
tion by Applicant’s principals was to eliminate
significant competition that existed at that time
between Bank and Leitchfield Bank, increase the
concentration of banking resources within the
Grayson County banking market, and eliminate an
independent banking competitor in the market.
In the Board’s view , the subject proposal in­
volves the use of the holding company form to
further an anticompetitive arrangement. On the
basis of all the facts of record, including the sizes
of the organizations involved, and their collective
position in the relevant market,6 the Board con­
cludes that this proposal should be denied since
approval of this application would serve to perpet­
uate a substantially adverse competitive situation.
As part of the subject proposal, Applicant would
assume the debt incurred by Applicant’s principals
in acquiring shares of Bank and would issue pre­
ferred stock with debt-like characteristics. A ppli­
cant proposes to service this debt over a 12-year
period. In the Board’s view , Applicant’s financial
projections over the debt-retirement period appear
to be somewhat optimistic and, in light of all the
facts of record, it does not appear that the financial
factors provide any weight for approval of the
application.
N o significant changes in Bank’s operations or
in the services offered to its customers are antici­
pated to follow from consummation of the pro­
posed acquisition. Consequently, convenience and
needs factors lend no weight toward approval of
this application.
On the basis of the facts of record, and in light
of the factors set forth in section 3(c) of the Act,
it is the Board’s judgment that consummation of
the proposal to form a bank holding company
would not be in the public interest and that the

5. See the B oard’s Order denying the application to becom e
a bank holding com pany of M ahaska Investm ent C om pany,
63 F ederal R eserve B u l l e t in 579 (1977) and the B oard’s
Order denying the application to becom e a bank holding
com pany by C itizens Bancorp, In c., 63 F ederal R eserve
B u l l e t in 1083 (1977).
6. A s of June 1978, the tw o banks together held 3 8 .6
percent of the m arket’s total com m ercial bank deposits.

Law Department

application should be and is hereby denied for the
reasons summarized above.
By order of the Board of Governors, effective
August 13, 1979.
Voting for this action: Vice Chairman Schultz and
Governors Wallich, Coldwell, Partee, Teeters, and
Rice. Absent and not voting: Chairman Volcker.

(Signed)
[s e a l ]

G r if f it h

L.

G arw ood,

Deputy Secretary of the Board.

Central W isconsin Bankshares, Inc.,
Wausau, W isconsin

Order Approving Acquisition of Bank
Central W isconsin Bankshares, Inc., Wausau,
W isconsin, a bank holding company within the
meaning of the Bank Holding Company Act, has
applied for the Board’s approval under section
3(a)(3) of the Act (12 U .S .C . § 1842(a)(3)) to
acquire 98 .6 percent or more of the voting shares
of Northern Security National Bank of Rhine­
lander, Pelican, W isconsin ( “ Bank” ), a proposed
new bank.
N otice of the application, affording opportunity
for interested persons to submit comments and
view s, has been given in accordance with section
3(b) of the Act. The time for filing comments and
views has expired, and the Board has considered
the application and all comments received, in­
cluding those of First National Bank of Rhine­
lander, Rhinelander, W isconsin ( “ Protestant” ), in
light of the factors set forth in section 3(c) of the
Act (12 U .S .C . § 1842(c)).
A pplicant, the tw elfth largest com m ercial bank­
ing organization in W isconsin, controls four banks
with aggregate deposits of approximately $222.7
m illion, representing 1.2 percent of the deposits
in commercial banks in the state.1 Since this ap­
plication involves the acquisition of a proposed
de novo bank, consummation of the proposal
would not immediately increase Applicant’s share
of deposits in commercial banks in W isconsin, nor
would it increase the concentration of banking
resources in the state.
Bank is to be located in the Vilas-Oneida bank­
ing market,2 in which a subsidiary bank of Appli­

1. A ll banking data are as o f June 3 0 , 1978, and reflect
bank holding com pany form ations and acquisitions approved
as o f June 3 0 , 1979.
2. The V ilas-O neida banking market is approximated by all
of V ilas and O neida C ounties, W isconsin.




761

cant, Eagle River State Bank, Eagle River, W is­
consin ( “ Eagle River Bank” ), ranks as the fifth
largest of eight banks, controlling 10.5 percent of
total market deposits. The proposed site of Bank
is approximately 21 m iles south of Eagle River
Bank, Applicant’s closest subsidiary bank. With
respect to the com petitive aspects of this proposal,
Protestant asserts that consummation would sub­
stantially lessen competition in the relevant bank­
ing market and foreclose the likelihood of addi­
tional entrants into the market. Since Bank would
be a de novo bank, Applicant’s acquisition of Bank
would not have any immediate effect on A ppli­
cant’s market share, or eliminate any existing
competition. Moreover, based upon all the facts
of record, it is the Board’s opinion that the pro­
jected econom ic and population growth within the
market will support additional entrants, thereby
assuring that consummation of the proposal would
not foreclose future competition, preempt a bank­
ing site, or have any other adverse competitive
consequences. Accordingly, com petitive consid­
erations are consistent with approval of the appli­
cation.
Protestant also contends that Applicant lacks
sufficient financial resources to consummate the
subject proposal. The Board, however, regards the
financial and managerial resources and future
prospects of Applicant and its subsidiary banks as
generally satisfactory.3 Bank, as a proposed de
novo bank, has no financial or operating history;
however, its prospects as a subsidiary of Applicant
appear favorable. Accordingly, considerations re­
lating to banking factors are consistent with ap­
proval of this application.
Protestant claims that approval of this applica­
tion would not be consistent with the convenience
and needs of the community to be served. Under
the proposal, however, Bank would be the only
commercial banking facility located in a develop­
ing suburban shopping area, thereby providing a
new and convenient full-service banking alterna­
tive for the residents of the community. Accord­
ingly, it is the Board’s judgment that consumma­
tion of the proposal would be in the public interest
and that the application should be approved.
On the basis of the record, the application is
approved for the reasons summarized above. The
transaction shall not be made (a) before the thir­
tieth calendar day follow ing the effective date of
this Order or (b) later than three months after that
3.
The Board notes that on July 16, 1979, Applicant fulfilled
a capital com m itm ent made in connection with its application
to acquire C om m unity State Bank.

762

Federal Reserve Bulletin □ September 1979

date, and (c) Bank shall be opened for business
not later than six months after the effective date
of this Order. Each of the periods described in
(b) and (c) may be extended for good cause by
the Board, or by the Federal Reserve Bank of
Chicago, pursuant to delegated authority.
By order of the Board of Governors, effective
August 6, 1979.
Voting for this action: Vice Chairman Schultz and
Governors Wallich, Partee, Teeters, and Rice. Absent
and not voting: Chairman Miller and Governor Coldwell.

(Signed)
[s e a l ]

G r if f it h

L.

G arw ood,

Deputy Secretary of the Board.

Citizens Ban-Corporation,
Rock Port, Missouri

Order Approving Acquisition of Bank
Citizens Ban-Corporation, Rock Port, Missouri,
a bank holding company within the meaning of
the Bank Holding Company Act, has applied for
the Board’s approval under section 3(a)(3) of the
Act (12 U .S .C . § 1842(a)(3)) to acquire 95.3
percent of the voting shares of Farmers and Mer­
chants Bank of Elmo ( “ Bank” ), Elmo, Missouri.
Notice of the application, affording opportunity
for interested persons to submit comments and
view s, has been given in accordance with section
3(b) of the Act. The time for filing comments and
view s has expired, and the Board has considered
the application and all comments received in light
of the factors set forth in section 3(c) of the Act
(12 U .S .C . § 1842(c)).
Applicant, a one-bank holding company, con­
trols The Citizens Bank of Atchison County
( “ Rock Port Bank” ), Rock Port, Missouri. The
acquisition of Bank would increase Applicant’s
share of total deposits in commercial banks in
Missouri from 0.08 percent to 0.11 percent,1 and
would not have an appreciable effect on the con­
centration of banking resources in the state.
Bank, with deposits of $7.2 m illion, is the
fourth largest of six commercial banks in its bank­
ing market and controls 5.5 percent of deposits
in commercial banks in that market.2 The proposed
transaction is primarily a reorganization of existing

1. A ll banking data are as o f June 3 0 , 1978.
2. The relevant banking market is approxim ated by N o d ­
aw ay C ounty, M issouri, and the southern one-third o f Page
C ounty, Iow a.




ownership interests since Applicant is controlled
by three individuals who also own 95.3 percent
of the outstanding voting shares of Bank. More­
over, Bank and Rock Port Bank are located in
separate banking markets, and consummation of
this proposal would not eliminate any significant
competition. Accordingly, competitive consid­
erations are consistent with approval.
The financial and managerial resources and fu­
ture prospects of Applicant, Rock Port Bank, and
Bank are regarded as generally satisfactory, par­
ticularly in view of Applicant’s commitment to
raise additional equity capital of $337,500 prior
to consummation of the proposal.3 Accordingly,
considerations relating to banking factors are con­
sistent with approval of the application.
Although the proposed acquisition is essentially
a restructuring of Bank’s existing ownership inter­
ests, and consummation of the proposal would not
result in an immediate change in the service pro­
vided by Bank, considerations relating to the con­
venience and needs of the community to be served
are consistent with approval. Accordingly, it is the
Board’s judgment that the proposed acquisition is
consistent with the public interest and that the
application should be approved.
On the basis of the record, the application is
approved for the reasons summarized above and
subject to the condition that the transaction shall
not be consummated until Applicant has satisfied
its capital commitment. In addition, the transaction
shall not be made before the thirtieth calendar day
follow ing the effective date of this Order or later
than three months after the effective date of this
Order, unless such period is extended for good
cause by the Board or by the Federal Reserve Bank
of Kansas City pursuant to delegated authority.
By order of the Board of Governors, effective
August 24, 1979.
Voting for this action: Vice Chairman Schultz and
Governors Wallich, Coldwell, Partee, Teeters, and
Rice. Absent and not voting: Chairman Volcker.

(Signed)
[s e a l ]

G r if f it h

L.

G arw ood,

Deputy Secretary of the Board.

3.
On January 19, 1979, the Board denied an earlier appli­
cation by A pplicant to acquire Bank, based on financial con ­
siderations. C itizen s B an -C o rp o ra tio n , 65 F e d e r a l R e s e r v e
B u l l e t i n 162 (1 9 7 9 ). A pplicant’s com m itm ent to raise addi­
tional equity capital has sufficiently strengthened A pplicant’s
financial resources and future prospects to permit approval of
this application.

Law Department

County National Bancorporation,
Clayton, Missouri
T .G .B . C o.,
St. Louis, Missouri

Order Denying Acquisition and
Formation of Bank Holding Companies
County National Bancorporation ( “ County N a­
tional” ), Clayton, M issouri, a bank holding com ­
pany, has applied for the Board’s approval to
acquire control of TG Bancshares, Co. ( “ T G ” ),
St. Louis, Missouri, an unaffiliated bank holding
company. This would be accomplished by the
merger of TG into County National’s subsidiary,
T .G .B . C o., Clayton, M issouri, a nonoperating
company formed to facilitate the proposed acqui­
sition. T .G .B . Co. has applied to become a bank
holding company as a result of this transaction.
Both applications were filed pursuant to section
3(a) of the Bank Holding Company Act (12
U .S .C . § 1842(a)).
N otice of the applications, affording opportunity
for interested persons to submit comments and
view s, has been given in accordance with section
3(b) of the Act. The time for filing comments and
view s has expired, and the Board has considered
the applications and all comments received in light
of the factors set forth in section 3(c) of the Act
(12 U .S .C . § 1842(c)).
County National, the tenth largest banking or­
ganization in Missouri, controls five banks with
aggregate deposits of approximately $333.7 m il­
lion, representing 1.6 percent of the total deposits
in commercial banks in the state.1 TG, the thir­
teenth largest banking organization in Missouri,
controls three subsidiary banks with aggregate
deposits of approximately $225.6 m illion, repre­
senting 1.1 percent of the total commercial depos­
its in the state. Upon consummation of the pro­
posed acquisition, County National will become
the seventh largest banking organization in the
state with 2.7 percent of total statewide commer­
cial bank deposits. By combining the tenth and
thirteenth largest banking organizations, the pro­
posal would have an effect on the concentration
of banking resources in the state that is not insig­
nificant.
Four of County N ational’s five subsidiary banks
and all three subsidiary banks of TG operate in

1.
U nless otherw ise noted, banking data are as o f June 30,
1978, and reflect holding com pany acquisitions approved
through April 2 5 , 1979.




763

the St. Louis banking market.2 County N ational’s
four subsidiaries, with total deposits of $3 1 5 .6
million or 3.2 percent of the market total, and
TG ’s subsidiaries, with total deposits of $ 225.6
million or 2.3 percent of the market total, are,
respectively, the sixth and tenth largest banking
organizations in the St. Louis banking market. The
proposed merger would increase County N a­
tional’s share of total market deposits to 5 .6 per­
cent, and County National would becom e the
fourth largest banking organization in the market.
Because the effects on competition of elim i­
nating a direct viable competitor from a market
are more immediately felt and less subject to future
uncertainties, the Board believes proposals in­
volving the elimination of existing competition
require particular scrutiny and care. In the past
the Board has authorized combinations of rela­
tively substantial competitors in various markets
when it was persuaded that the effects of the
combinations would be minimal, that offsetting
benefits of value were likely to be achieved, or
that less anticompetitive means of expansion were
not reasonably available to the organizations. It
is the Board’s view that a proposed combination
of two banking organizations that are direct com ­
petitors of similar orientation within a metropolitan
market and are both of a size to have achieved
econom ies of scale and have management, or
sufficient resources to attract capable management,
that will permit each to continue independently as
an aggressive competitor in that market, normally
would have serious anticompetitive effects and
should not be approved except in com pelling cir­
cumstances.
The increase in concentration of banking re­
sources in the St. Louis banking market resulting
from consummation of this proposal is of some
concern to the Board. However, of even more
concern is the degree to which County National
and TG are direct and immediate competitors in
the market. Both are relatively large banking or­
ganizations in the competitive context of that mar­
ket, fairly matched in strength and each is well
represented by a sizable lead bank subsidiary. In
addition, both County National and TG are largely
oriented to the provision of a similar range of
commercial banking services, and have both dem­
onstrated the inclination and ability to compete
2.
The St. Louis banking market is approximated by the
St. Louis R anally M etropolitan Area ( “ R M A ” ), w hich in­
cludes the city of St. L ouis and St. L ouis C ounty, portions
of Franklin, Jefferson, L incoln, and St. Charles C ounties in
M issouri, and portions o f Jersey, M acoupin, M adison,
M onroe, and St. Clair Counties in Illinois.

764

Federal Reserve Bulletin □ September 1979

effectively for a similar range of customers for
those services.3 Under the circumstances the Board
believes that a significant beneficial competitive
influence within the St. Louis market would be
lost by the combination of these two com petitors.4
Furthermore, the proposed merger would result in
the elimination of a lead bank and its independent
holding company organization from the market,
foreclosing the possibility of increased competition
between County National and TG in the future that
could result in greater benefits to the public and
the customers served by each organization. In view
of the nature of the competitors involved, their
respective positions in the market, and other facts
of record, the Board concludes that the competitive
effects of the proposed merger are so seriously
adverse as to warrant denial of these applications.
Considerations of the financial and managerial
resources and future prospects of Applicants, TG,
3. The com bined organization, with $ 5 4 1 .2 m illion in d e­
posits, w ould displace C om m erce Bancshares, Inc. ( “ C om ­
m erce” ), Kansas C ity, M issouri, w hich holds market deposits
of $4 5 9 .1 m illion, as the fourth largest banking organization
in the St. L ouis banking market. C om m erce assum ed that
position upon its merger with M anchester Financial Corpora­
tion ( “ M anchester” ), St. L ouis, M issouri, w hich the Board
approved in 1978. 64 F ederal R eserve B u l l e t in 576
(1 9 7 8 ). The Board concluded that merger w ould not have
elim inated significant com petition. The C om m erce m erger,
h ow ever, did not in v o lv e, as does the present proposal, banking
organizations comparably balanced and poised as natural c o m ­
petitors for the same range o f business within the market. Both
organizations in this case are active, su ccessfu l, and aggressive
competitors in the market, and the com bined organization that
w ould result from the present proposal w ould not only be
som ew hat larger than C om m erce in the St. L ouis market, even
allow in g for the divestiture o f Continental Bank & Trust
C om pany, but it w ould com bine tw o banks in the market
significantly larger than any bank involved in the C om m erce
merger. St. L ouis County Bank (A pp licant’s lead bank) is the
m arket’s fourth largest bank, with $ 2 5 8 .5 m illion in deposits,
and T ow er Grove Bank and Trust C o. (T G ’s lead bank) has
$ 1 7 1 .3 m illion in deposits and is the sixth largest bank in the
market. In contrast, the largest o f C om m erce’s banks in the
St. Louis market before the merger, C om m erce Bank of
University C ity, now has deposits o f only $ 5 5 .9 m illion, and
M anchester Bank, w hich w as M anchester’s lead bank, has
deposits of $ 1 2 7 .6 m illion. F inally, C om m erce from its market
base o f eight relatively sm all retail bank subsidiaries, had
attempted for som e years without su ccess to establish de novo
an effective presence in the m idtow n com m ercial area and in
the w holesale banking business in w hich M anchester Bank was
principally engaged. But for the B oard’s perception that co m ­
plem entary w eaknesses inhibited C om m erce and M anchester,
as independent organizations, from realizing their potential as
effective com petitive forces in the market, the Board m ight
have view ed the com petitive im plications o f that merger d if­
ferently.
4 . A pplicants have agreed, if required by the Board, to
divest w ithin one year after the merger Continental Bank &
Trust C om pany, T G ’s subsidiary m ost clearly and im m ediately
positioned to attract sm all custom ers from County N ation al’s
lead bank. H ow ever, this bank accounted for only 7 .5 percent
of the com bined organization’s assets at year-end 1978, and
its divestiture w ould not materially alter the B oard’s assessm ent
of the com petitive effects o f this proposal.




and their subsidiaries are regarded as generally
satisfactory and consistent with approval. H ow ­
ever, the Board believes the proposed merger
would not result in any significant or necessary
enhancement of the resources or prospects of the
organizations.
Moreover, the Board finds in this proposal no
sufficiently important benefits to the convenience
and needs of the communities to be served to
warrant approval. With a few exceptions the Board
considers of minor significance, the justification
advanced for this merger is essentially premised
on the proposition that as a larger organization
County National may provide services larger or­
ganizations in the market typically provide. This
is an argument that can be advanced in defense
of all mergers and acquisitions that do not involve
a market’s largest organization, and the Board
does not consider it a com pelling consideration in
this case where the banking organizations to be
combined are already among the market’s largest
and most capable competitors. Accordingly, the
Board finds considerations relating to the conven­
ience and needs of the community to be served
are insufficient to outweigh the anticompetitive
effects that would result from consummation of
this proposal. Based upon the foregoing and other
considerations reflected in the record, it is the
Board’s judgment that consummation of the pro­
posed transaction would not be in the public inter­
est and the applications are hereby denied.
By order of the Board of Governors, effective
A ugust 2 7 , 1979.
Voting for this action: Governors Wallich, Coldwell,
Teeters, and Rice. Voting against this action: Vice
Chairman Schultz and Governor Partee. Absent and not
voting: Chairman Volcker.

(Signed)
[s e a l ]

G r if f it h

L.

G arw ood,

Deputy Secretary of the Board.

FirstBancorp, Inc.,
New Haven, Connecticut

Order Approving Acquisition of Banks
FirstBancorp, Inc., N ew Haven, Connecticut,
a bank holding company within the meaning of
the Bank Holding Company Act, has applied for
the Board’s approval under section 3(a)(3) of the
Act (12 U .S .C . § 1842(a)(3)) to acquire 100 per­
cent of the voting shares (less directors’ qualifying
shares) of N ew Britain Bank and Trust Company,
N ew Britain, Connecticut ( “ N ew Britain Bank” ),

Law Department

and The Terry ville Trust Company, Plymouth
(P.O.
Terry ville),
Connecticut
( “ Terry ville
Bank” ), both of which are presently whollyowned subsidiaries of The Connecticut BancFederation, Inc., Hartford, Connecticut ( “ BancFederation” ) . 1
N otice of the application, affording opportunity
for interested persons to submit view s and recom­
mendations, has been given in accordance with
section 3(b) of the Act. The time for filing views
and recommendations has expired, and the appli­
cation and all comments received have been con­
sidered in light of the factors set forth in section
3(c) of the Act (12 U .S .C . § 1842(c)).
Applicant, a one-bank holding company by vir­
tue of its control of First Bank ($407.5 million
in deposits), is the eighth largest banking organi­
zation in Connecticut and controls approximately
4.5 percent of total commercial bank deposits in
the state.2 BancFederation, the eleventh largest
commercial banking organization in Connecticut,
with three subsidiary banks (aggregate deposits of
$111.6 m illion), controls approximately 1.4 per­
cent of total commercial bank deposits in the state.
Consummation of the overall proposal will in­
crease Applicant’s share of commercial bank de­
posits in Connecticut to approximately 6 .0 percent
and will make Applicant the seventh largest bank­
ing organization in the state, without having any
significant adverse effect upon the concentration
of banking resources in Connecticut.
BancFederation’s subsidiaries are all located in
the Hartford banking m arket3 and it currently
ranks as the fourth largest commercial banking
organization in the market, controlling 4.1 percent
of market deposits.4 The Hartford banking market
is highly concentrated since the two largest bank­

1. In addition to the subject acquisitions, A pplicant proposes
to m erge its subsidiary bank, First Bank, N ew H aven, C on­
necticut ( “ First B ank” ), with BancFederation’s other subsidi­
ary bank, The Guaranty Bank and Trust C om pany, Hartford,
C onnecticut ( “ Guaranty B ank” ). U pon consum m ation o f that
merger, w hich is subject to FDIC approval, First Bank w ill
acquire the assets and assum e the deposits and certain other
liabilities of Guaranty. In light o f the total proposal and since
Applicant considers the merger o f First Bank with Guaranty
Bank and its acquisition o f N ew Britain Bank and Terryville
Bank integrated and contractually inseparable, the analyses of
com petitive and banking factors take into account the overall
transaction.
2. A ll state banking data are as of Septem ber 3 0 , 1978,
and reflect bank holding com pany form ations and acquisitions
approved as o f June 3 0 , 1979.
3. The Hartford banking market includes the Hartford
S M S A , the N ew Britain S M S A , and the tow ns o f Som ers,
A shford, L ebanon, and Barkhamsted.
4 . A ll market data are as o f June 3 0 , 1977, unless otherw ise
indicated. BancFederation’s subsidiaries are N ew Britain Bank




765

ing organizations, Hartford National Corporation
and CBT Corporation, control 73 .4 percent of total
commercial bank deposits and operate 69 offices
in the market. The third largest banking organi­
zation in the market, (First Connecticut Bancorp,
Inc.), controls 9 .4 percent of market deposits and
operates 27 offices in the market. N ew Britain
Bank, operating seven offices in the market, and
Terryville Bank, operating five offices in the mar­
ket, respectively, the fifth and eighteenth largest
of 27 banks located in the relevant market, hold
respectively only 2 .4 and 0 .6 percent of the mar­
ket’s commercial bank deposits. Although the
nearest branch office of Applicant’s banking sub­
sidiary is located 11.5 m iles from a BancFedera­
tion subsidiary’s branch office, Applicant’s sub­
sidiary operates in the N ew Haven banking mar­
ket,5 and has no branch office within the Hartford
market. Therefore, since Applicant’s subsidiary
and BancFederation’s subsidiaries operate in sep­
arate markets, no significant existing competition
will be eliminated upon consummation. With re­
spect to potential competition, it appears that Ap­
plicant has the capability of entering the Hartford
banking market through de novo branching into
any of the open towns in the market.6 Therefore,
Applicant’s entry into the Hartford market through
acquisition instead of de novo branching would
have a slightly adverse effect on probable future
competition. However, the slightly adverse effects
of the proposal are mitigated by the fact that the
proposed acquisition could have a procompetitive
effect by strengthening a m edium-sized competitor
in the highly concentrated Hartford banking mar­
ket, and since after consummation of the proposal
there would still remain other points of entry into
the Hartford market. Thus, on the basis of the
foregoing and all the facts of record, it is the
Board’s judgment that the overall competitive e f­
fects of the proposal are consistent with approval.
The financial and managerial resources and fu­
ture prospects of Applicant, its subsidiary bank,
New Britain Bank, and Terryville Bank are re­
garded as generally satisfactory, particularly in

($ 6 8 .6 m illion in deposits), T erryville Bank ($ 1 7 .3 m illion in
deposits), and Guaranty Bank ($ 3 1 .8 m illion in deposits), as
of March 31 , 1979.
5. The N ew Haven banking market is contiguous with the
Hartford m arket’s southern boundary.
6. C onnecticut law permits statew ide branching by c o m ­
mercial banks except in “ c lo se d ” tow ns, w hich are tow ns
where another com m ercial bank has its hom e office. A lthough
Hartford itself is c losed , 33 o f the 48 tow ns and cities in the
Hartford market are open, including nine open tow ns in the
imm ediate vicinity of Hartford.

766

Federal Reserve Bulletin □ September 1979

light of certain commitments made by Applicant.
Moreover, Applicant appears to have the ability
to offer assistance to Guaranty Bank to enable
Guaranty Bank to becom e a more meaningful
banking alternative in the market. To insure that
bank holding companies serve as sources of
strength to subsidiary banks, the Board generally
expects an applicant proposing to acquire a bank
to be able to retire its acquisition debt within 12
years. Although Applicant’s debt-retirement
schedule extends beyond 12 years, based upon
financial projections and historical performance, it
appears that Applicant would have sufficient fi­
nancial flexibility to retire its acquisition debt
within 12 years while maintaining adequate capital
ratios in its subsidiary banks. Thus, banking fac­
tors lend weight toward approval. Follow ing con­
summation of the proposal, Applicant proposes to
assist N ew Britain Bank and Terryville Bank in
offering a variety of new services and expanding
the scope of existing ones, so as to make such
services uniformly available among all its subsidi­
aries. In addition, Applicant proposes to extend
banking hours and increase the interest paid on
time and savings deposits at N ew Britain Bank
and Terryville Bank. Therefore, considerations
relating to the convenience and needs of the com ­
munities to be served lend weight toward approval
and, together with the financial considerations
present in the subject proposal, are sufficient to
outweigh whatever slightly adverse competitive
effects are associated with the proposal. Accord­
ingly, it is the Board’s judgment that the proposed
transaction would be consistent with the public
interest and that the application should be ap­
proved.
On the basis of the record, the application is
approved for the reasons summarized above. The
transaction shall not be made before the thirtieth
calendar day follow ing the effective date of this
Order or later than three months after the effective
date of this Order, unless such period is extended
for good cause by the Board, or by the Federal
Reserve Bank of Boston pursuant to delegated
authority.
By order of the Board of Governors, effective
August 10, 1979.
Voting for this action: Vice Chairman Schultz and
Governors Coldwell, Partee, Teeters, and Rice. Present
and abstaining: Governor Wallich. Absent and not vot­
ing: Chairman Volcker.

(Signed) G riffith L. G arw ood ,
[s e a l]




Deputy Secretary of the Board.

Otto Bremer Company,
St. Paul, Minnesota

Order Approving Acquisition of Banks
Otto Bremer Company, St. Paul, Minnesota, a
bank holding company within the meaning of the
Bank Holding Company Act, has applied for the
Board’s approval under section 3(a)(3) of the Act
(12 U .S .C . § 1842(a)(3)) to acquire from an af­
filiate the follow ing stock interests in four W is­
consin banks ( “ Banks” ): 6 0.9 percent of the vot­
ing shares of Union State Bank ( “ Amery Bank” ),
Amery, W isconsin; 77.5 percent of the voting
shares of Peoples State Bank ( “ Colfax Bank” ),
Colfax, W isconsin; 91.1 percent of the voting
shares of Farmers State Bank ( “ Frederic Bank” ),
Frederic, W isconsin; and 9 2.7 percent of the vot­
ing shares of Washburn State Bank ( “ Washburn
Bank” ), Washburn, W isconsin.
Notice of the applications, affording opportunity
for interested persons to submit comments and
view s, has been given in accordance with section
3(b) of the Act. The time for filing comments and
view s has expired, and the Board has considered
the applications and all comments received in light
of the factors set forth in section 3(c) of the Act
(12 U .S .C . § 1842(c)).
Applicant is a w holly-owned subsidiary of Otto
Bremer Foundation ( “ Foundation” ), St. Paul,
Minnesota, a private foundation that now owns
the shares Applicant proposes to acquire. The Otto
Bremer organization controls 29 subsidiary banks
located in Minnesota, North Dakota, and W iscon­
sin .1 Foundation is the 32nd largest banking orga­
nization in W isconsin, controlling the four banks
that are the subject of this application. These banks
have total deposits of approximately $72 million,
1.
Section 3(d) of the Bank H olding Com pany act prohibits
the approval of an application w hich w ill permit any bank
holding com pany to acquire voting shares of an additional bank
located outside of the state where the holding com pan y’s
banking operations are principally conducted. The Board b e­
lieves that approval of these applications is not barred by
section 3(d ), although A pplicant’s banking operations are
principally conducted in M innesota. Applicant and Foundation
were organized by Otto Bremer 35 years ago and have func­
tioned together as a sin gle, integrated banking system . Mr.
Bremer acquired dom inant interests in Banks or their prede­
cessor banks betw een 1917 and 1933, and Foundation held
its interests in Banks in 1966, w hen it becam e a bank holding
com pany by operation of law . A ccordin gly, no application is
necessary for the retention by Foundation of those interests.
It is the B oard’s opinion that Applicant and Foundation should
be view ed as a single bank holding com pany system and that
the proposed transactions, being an internal reorganization of
that system , w ould have the effect of maintaining rather than
expanding an existing interstate bank holding com pany, and
w ould not represent the acquisition of any additional bank for
purposes of section 3(d).

Law Department

representing 0 .4 percent of the total deposits in
commercial banks in the state.2 The proposal rep­
resents a reorganization of the Otto Bremer group,
designed to facilitate Foundation’s compliance
with provisions of the Internal Revenue Code
applicable to private foundations. It does not ap­
pear that consummation of the transactions would
increase the concentration of banking resources in
any relevant area.
Banks are all located in separate banking mar­
kets in W isconsin.3 They hold the follow ing posi­
tions in their respective markets:

Deposits

Amery Bank $21 m illion
11 m illion
Colfax Bank
Frederic Bank 19 m illion
Washburn
20 m illion
Bank

Percentage
of
commercial
bank
deposits

Rank
among
banking
organi­
zations

12.8
1.7
15.7

2nd of 14
18th of 21
3rd of 5

18.7

3rd of 4

Neither Applicant nor Foundation controls any
other bank in any of the four markets relevant to
this application, and section 3(d) of the Act pre­
vents Applicant from acquiring any additional
banks in the state. The Board concludes that the
proposed acquisitions would have no adverse ef­
fects on competition.
The financial and managerial resources of Ap­
plicant, Foundation, their subsidiaries, and Banks
are regarded as generally satisfactory. Restrictions
of the Internal Revenue Code applicable to it
inhibit Foundation from supporting Banks fully
and actively, and this reorganization is part of a
plan designed to resolve some of the difficulties
those restrictions have caused. To that extent the
future prospects of Banks are likely to be enhanced
by consummation of this proposal. Accordingly,
the Board considers that banking factors lend some
weight toward approval of the applications.
Although Applicant does not propose that Banks
will introduce any new services in connection with
the proposed reorganization, considerations relat­
ing to the convenience and needs of the com m uni­

2. A ll banking data are as o f Septem ber 3 0 , 1978.
3. The relevant markets are approxim ated by St. Croix
County and the southern third o f Polk County for Am ery Bank;
Eau C laire, C hippew a, and Dunn C ounties for C olfax Bank;
the northern two-thirds o f Polk County and the western tw othirds o f Burnett County for Frederic Bank; and, Ashland
County and the eastern half o f Bayfield County for Washburn
Bank.




767

ties to be served are consistent with approval of
the applications. Accordingly, the Board con­
cludes that these acquisitions would be in the
public interest and that the applications should be
approved.
On the basis of the record, the applications are
approved for the reasons summarized above. The
transactions shall not be made before the thirtieth
calendar day follow ing the effective date of this
Order or later than three months after the effective
date of this Order, unless such period is extended
for good cause by the Board, or by the Federal
Reserve Bank of Minneapolis pursuant to dele­
gated authority.
By order of the Board of Governors, effective
August 31, 1979.
Voting for this action: Chairman Volcker and Gover­
nors Schultz, Wallich, Coldwell, Partee, and Teeters.
Absent and not voting: Governor Rice.

(Signed)
[s e a l ]

G r if f it h

L.

G arw ood,

Deputy Secretary of the Board.

Savings Banks Shares, Inc.,
Franklin, N ew Hampshire

Order Approving
Formation of Bank Holding Company
Savings Banks Shares, Inc., Franklin, N ew
Hampshire, has applied for the Board’s approval
under section 3(a)(1) of the Bank Holding Com ­
pany Act (12 U .S .C . § 1842(a)(1)) of formation
of a bank holding company by acquiring 93.8
percent or more of the voting shares of The
Franklin National Bank ( “ Bank” ), Franklin, N ew
Hampshire.
Notice of the application, affording opportunity
for interested persons to submit comments and
view s, has been given in accordance with section
3(b) of the Act. The time for filing comments and
views has expired, and the Board has considered
the application and all comments received, in­
cluding those of protestants,1 in light of the factors
set forth in section 3(c) of the Act (12 U .S .C .
§ 1842(c)).
Twenty N ew Hampshire mutual savings banks

1.
The protestants to the application are the N ew Hampshire
Bankers A ssociation ( “ N H B A ” ) and the follow in g N ew
Hampshire banking organizations: Indian Head B anks, Inc.
( “ Indian H ead” ), Nashua; The Souhegan N ational Bank,
M ilford; P em igew asset N ational Bank, Plym outh; and National
Bank of L ebanon, Lebanon. N o protestant to this application
has requested a hearing.

768

Federal Reserve Bulletin □ September 1979

and one guaranty savings bank recently organized
Applicant, each acquiring 4.7 6 percent of Appli­
cant’s shares, for the purpose of becom ing a bank
holding company by acquiring Bank. Bank holds
total deposits of approximately $6.4 m illion, rep­
resenting 6.2 percent of total deposits in commer­
cial banks in the relevant banking market, and is
the sixth largest of eight commercial banks in the
market.2
In the past the Board has expressed concern that
where a bank holding company is formed by
shareholders, each of whom owns less than 5
percent of the bank holding com pany’s shares, the
shareholders’ participation in the management or
business of the bank holding company or its sub­
sidiary bank might be so extensive as to support
the conclusion that each shareholder is engaging
as an entrepreneur in the business of the other
company or bank. In this instance there is no
evidence that any savings bank-shareholder would
exercise control or a controlling influence over
Applicant, and the Board finds that no individual
savings bank-shareholder of Applicant would be
engaging as an entrepreneur in the business of
Applicant or Bank.3 Furthermore, the Board finds
that the savings bank-shareholders would not be
engaged collectively as an entrepreneur in the
business of Applicant or Bank, since there is no
evidence indicating the existence of a “ formalized
structure” for control that might cause them co l­
lectively to be considered a “ com pany” within
the meaning of section 2(b) of the Act and conse­
quently, because together the savings bank-shareholders own more than 25 percent of Applicant’s
shares, a bank holding com pany.4 In this regard,
Applicant has submitted its application subject to
the follow ing conditions, the first three of which

2. The relevant banking market is approximated by the
L aconia banking market, w hich is com prised o f Belknap
C ounty, except for the tow n o f Barnstead and part o f A lton,
plus the city o f Franklin and the tow ns o f N orthfield, A ndover,
and Hill in M errimack C ounty, and the tow ns o f B ristol,
A shland, and H olderness in Grafton County. A ll banking data
are as o f Septem ber 3 0 , 1978.
3. Under section 2(a) o f the A ct, a com pany ow nin g or
controlling, directly or indirectly, less than 5 percent o f the
voting securities of a bank or com pany m ay not be held to
have control over that bank or com pany unless that it is found,
after notice and opportunity for hearing, to exercise a control­
ling influence over the bank or com pany.
4 . For a discussion o f considerations involved in determ in­
ing whether a group o f unaffiliated noncontrolling shareholders
of a proposed bank holding com pany constitutes a “ com pan y”
w ithin the m eaning o f section 2(b ), see the B oard’s Order of
A ugust 2 1 , 1979, approving an application by W ISC U B , In c.,
M ilw aukee, W iscon sin , to becom e a bank holding com pany,
65 F ederal R eserve B u l l e t in 773 (1 9 7 9 ).




are similar to those the Board has previously
imposed in approving similar applications:5
1. That no savings bank will hold more than
5 percent of Applicant’s voting shares;
2. That Applicant’s shareholders will not par­
ticipate in the business of Applicant or Bank
except to the extent of voting as shareholders of
Applicant;
3. That Applicant’s shareholders will not enter
into any formal or informal agreements or under­
standings among them selves, or between or among
any two or more of them, concerning the manner
in which they may vote their shares of Applicant;
and
4. That no management official of any savings
bank-shareholder located within the Laconia
banking market will serve as a management offi­
cial of Applicant or Bank.
On the basis of these conditions and other facts
of record, the Board concludes that no savings
bank-shareholder of Applicant would becom e a
bank holding company upon consummation of the
proposed transaction, and it appears that no com ­
bination of them would constitute a company as
defined in section 2(b) of the A ct.6
As noted, the Board has received comments
opposing this proposal, on com petitive, manage­
rial, and legal grounds. N H BA and several of the
protesting banking organizations chiefly contend
that consummation of the proposal would lead to
a decrease in the w illingness of Bank to compete
with other commercial banks in the provision of
commercial banking services similar to those
services provided by savings banks, and would
lessen competition between Bank and other com ­
mercial banks in the provision of commercial
banking services, such as correspondent services,
to savings banks. N H BA also contends that be­
cause bank holding companies may not acquire
shares of a savings and loan association, savings
banks should not be permitted to acquire shares
of banks or bank holding companies.
NH BA has also challenged several aspects of
Applicant’s managerial resources. N H BA prin­
cipally argues that the savings bank-shareholders
are so decentralized they cannot provide Applicant

5. S ee, e .g ., S Y B C orp o ra tio n , 63 F e d e r a l R e s e r v e
B u l l e t i n 587 (1977).
6. Should the Board have reason to b elieve at any future
time that A pplicant’s savings bank-shareholders, or any of
them , are not acting independently of each other, or that its
conclusions should be reexam ined for som e other reason, or
that additional conditions should be im posed, it w ill take
appropriate steps to ensure that the regulatory purposes of the
A ct are not evaded.

Law Department

with appropriate managerial guidance; that A ppli­
cant’s principals violated federal securities laws
in making their initial offering for Bank’s shares
and this reflects so adversely on Applicant’s man­
agerial resources as to require denial of the appli­
cation; and that Applicant’s managerial resources
are deficient in that Applicant has not named
Bank’s new chief executive officer.7
While the Board is concerned about the com ­
petitive issue raised by the protests,8 on balance
the Board finds that this acquisition would not
result in a significantly adverse effect on com peti­
tion between Bank and the savings bank-shareholders of Applicant in any relevant market.9 Bank
and four of Applicant’s savings bank-shareholders
operate in the Laconia banking market.10 Each of
these four shareholders owns 4.7 6 percent of Ap­
plicant’s voting shares and none of them will share
any management officials with Bank.

7. In addition, Indian Head has challenged the legality of
the proposal under N ew Hampshire la w , contending that the
acquisition o f more than 25 percent o f the capital stock of
a national bank or a N ew Hampshire bank holding com pany
by a com bination o f savings banks w ould violate state law
w hich provides that “ the amount o f capital stock held by any
state chartered bank . . . shall not ex ceed one-fourth o f the
total capital stock o f such N e w Hampshire bank holding
co m p a n y .” N .H . R ev . Stat. A nn. § 3 8 7 .1 3 . That section also
contains a parallel lim itation on ow nership o f a national bank’s
stock by any savings bank. Indian Head has not disputed
A pplicant’s assertions that com petent state authorities have
adopted a contrary interpretation o f the law and that A pplicant’s
organizers were advised by the N ew Hampshire B anking
Department that this transaction w as perm issible under state
law . The Board considers the State Banking D epartm ent’s
interpretation o f that law to be reasonable and b eliev es this
transaction w ill not violate N ew Hampshire law .
8. The Board also has serious concerns about the public
po licy im plications o f any com bination o f com m ercial banks
and thrift institutions. T hese concerns were addressed in D .H .
B a ld w in C om pany, 63 F e d e r a l R e s e r v e B u l l e t i n 280
(1 9 7 7 ). H ow ever, as the Board has previously stated, that
decision has only lim ited relevance to a transaction in w hich
each shareholder acquires less than 5 percent o f the voting
shares o f a bank holding com pany. W IS C U B , In c., 64 F e d ­
e r a l R e s e r v e B u l l e t i n 4 0 (1 9 7 8 ). In addition, the public
po licy o f N ew Hampshire permits any savings bank, within
specified prudential lim its, to acquire a noncontrolling interest
in a N ew Hampshire bank holding com pany. N .H . R ev . Stat.
A nn. § 3 8 7 .1 3 . On balance, the Board concludes that the
concerns it expressed in D .H . B a ld w in C om pany do not require
denial o f this specific application.
9. A pplicant has no operations or subsidiaries, so that apart
from considerations relating to A pplicant’s shareholders, co n ­
sum m ation o f the proposed transaction w ould not have any
adverse effect on existin g or potential com petition, nor w ould
it increase the concentration o f banking resources in any
relevant area.
10. The four are Franklin Savings B ank, Franklin; L aconia
Savings Bank, Laconia; M eredith V illage Savings B ank,
M eredith; and N ew H ampshire Savings Bank, Concord, w hich
has a branch in L aconia. The rem aining shareholders do not
com pete in the L aconia market, and com petition am ong them
is significantly lim ited by N ew Hampshire branching law s.
N .H . R ev. Stat. A nn. § 3 8 4 -B .




769

Since the individual savings banks located in
the market would not control or be capable of
controlling Bank, Bank would continue to operate
as an independent competitor in the Laconia
banking market. Consummation of the proposal
would not eliminate an existing competitor within
that market.11 To the extent commercial banks and
savings banks com pete, the transaction may, in
fact, enhance competition between Bank and one
of the savings bank-shareholders in the Laconia
market, Franklin Savings Bank. Until July 1,
1973, Bank was w holly owned by Franklin Sav­
ings Bank and the two did not compete. Since
that time there has been some increased com peti­
tion between them, but Franklin Savings Bank
continues to be Bank’s largest shareholder, hold­
ing 24.76 percent of Bank’s voting shares. Upon
consummation of this proposal, Franklin Savings
Bank would surrender its interest in Bank in ex ­
change for less than 5 percent of Applicant’s
shares.
N H BA has also contended that consummation
of the proposal would lessen competition between
Bank and other commercial banks in the provision
of commercial banking services to savings banks.
This might in fact be the result if Bank were to
operate as a captive source of correspondent serv­
ices for Applicant’s shareholders or engage in
unfair pricing. However, Applicant has stated, and
the Board requires as a condition of this Order,
that each savings bank-shareholder will remain
entirely free to contract for correspondent services
from any available source, and no shareholder will
be required or expected to take any service or any
combination of services from Bank. The Board
further requires Applicant to ensure that Bank will
not limit the availability of its services or the terms
on which they are offered on any basis or in any
manner that might tend to discriminate between
institutions that are shareholders of Applicant and
those that are not. Subject to those conditions, it
appears more likely that Applicant’s acquisition
of Bank may have a positive com petitive effect
as a result of Bank’s introduction as an aggressive
competitor for services performed by commercial

11.
If greater w eight is attached to the possible restraining
influence of A pplicant’s association with savings banks in the
Laconia banking market, the elim ination o f com petition b e­
com es a matter o f greater concern. H ow ever, in evaluating
com petitive aspects of this proposal and in declining to deny
this application, the Board has noted that Bank is a very small
institution both in absolute terms and relative to other institu­
tions in its market, and that A pplicant has undertaken that its
chief priorities w ill be the maintenance o f B ank’s capital
adequacy and the reinvigoration of Bank as a com petitor for
retail banking services in the market.

770

Federal Reserve Bulletin □ September 1979

banks for savings banks. Accordingly, the Board
concludes that the proposal involves no com peti­
tive effects that require denial of this application.
In acting upon applications, the Board must
consider the managerial resources of the acquiring
bank holding company, including all the factors
that bear upon the com petence, quality, and integ­
rity of an applicant’s management. N H B A ’s pro­
test contends that the managerial resources of
Applicant do not support approval of this applica­
tion. NH BA argues that the initial offering letter
by Applicant’s principals contained material
om issions constituting a violation of the federal
securities laws, reflecting adversely on Applicant’s
managerial resources; that there is no identifiable
chief executive officer for Bank; and that by lim it­
ing their active participation in Applicant’s affairs,
the shareholders are precluded from giving Appli­
cant sufficient managerial guidance.
N H BA contends that the initial offering letter
omits material facts without which the letter was
misleading to holders of Bank’s shares. Such
om issions, according to N H B A , constituted a vio­
lation of federal securities law s, which violation,
in turn, reflects so adversely on Applicant’s man­
agement that the Board must deny this applica­
tion.12 However, on the basis of memoranda sub­
mitted by Applicant and N H BA , the offering letter
itself, and appropriate consultation with staff of
the Securities and Exchange Comm ission, the
Board has concluded that the record contains no
evidence establishing conduct on the part of A p­
plicant’s proposed management that could support
an adverse finding with respect to this application.
NH BA also contends that Applicant’s failure to
name a new chief executive officer for Bank raises
serious questions as to Applicant’s managerial
soundness, and that by assuming limited interests
and limited roles, Applicant’s shareholders will
not give Applicant sufficient managerial direction.
As stated, in recognition of the Board’s concerns
regarding their status under the Act, Applicant’s
shareholders will not participate in the business
affairs of Applicant and Bank except to elect
Applicant’s directors and vote on other matters
properly before the shareholders, without coordin­
ation among themselves.
The Board does not believe that either of these
aspects of this proposal reflects adversely on Ap­
plicant’s managerial resources. The management
of a national bank’s affairs and that of a N ew

12.
The A ssociation also argues that this alleged securities
law violation renders this proposal clearly contrary to the public
convenience and needs o f the com m unity to be served.




Hampshire corporation’s business are committed
by law to their respective directors, not to their
shareholders. 12 U .S .C . § 7 1 ; N.H. Rev. Stat.
Ann. § 294.89. Applicant’s initial directors have
been identified, as has the process for filling va­
cancies in Applicant’s board of directors as they
occur. The initial directors are experienced indi­
viduals with a background in financial manage­
ment, and there is no basis in the record for
concluding that these directors or future directors
so chosen may not competently and honestly
manage Applicant’s business, or that they may not
select experienced and capable officers.13 On the
basis of the record the Board finds that the mana­
gerial resources of Applicant and Bank are satis­
factory.
Applicant would incur no debt incident to this
proposal, and the Board regards the financial re­
sources and future prospects of Applicant and
Bank as satisfactory. The Board concludes that
banking factors are consistent with approval of the
application.
Applicant has indicated that upon consumma­
tion of its proposal it would make changes in the
customer services provided by Bank. Among the
new services Applicant intends to cause Bank to
offer to the public are NOW accounts, IRA and
Keogh accounts, money market certificates of de­
posit, payroll checking accounts, overdraft privi­
leges and business and commercial loans secured
by accounts receivable and inventories. In addi­
tion, Applicant expects to improve Bank’s physi­
cal facilities. Bank would also function as a corre­
spondent for thrift institutions, although this serv­
ice would be phased-in on a gradual basis. Appli­
cant has given assurances that such services will
not be provided at the expense of Bank’s capital
adequacy, and that its implementation of these
correspondent services will be slowed as necessary
to maintain Bank as a sound financial institution
at all times. Accordingly, considerations relating
to the convenience and needs of the communities
to be served lend weight toward approval of this
application. Based upon the foregoing and other
considerations reflected in the record, it is the

13. The advance identification of proposed principal officers
of an institution m ay, o f course, be of critical importance in
applications involving institutions having doubtful or deficient
financial or managerial resources or future prospects. It may
be impractical, how ever, for a com pany to em ploy a suitable
chief executive for a bank, or to announce that individual’s
em ploym ent pu blicly, before it is know n whether the com pany
w ill be permitted to acquire the bank. In this case, Applicant
has prescribed satisfactory intentions regarding its search for
a qualified and experienced officer.

Law Department

Board’s judgment that this application should be
approved.
On the basis of the record and subject to the
conditions recited in this Order, the application
is approved for the reasons summarized above.
The transaction shall not be made before the thir­
tieth calendar day follow ing the effective date of
this Order, or later than three months after the
effective date of this Order unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of Boston pursuant to dele­
gated authority.
By order of the Board of Governors, effective
August 21, 1979.
Voting for this action: Chairman Volcker and Gover­
nors Schultz, Wallich, Partee, Teeters, and Rice. Voting
against this action: Governor Coldwell.

(Signed)
[s e a l ]

T heodore

E.

A l l is o n ,

Secretary of the Board.

Dissenting Statement of Governor Coldwell
The Board has the flexibility under the Bank
Holding Company Act to deny applications to
form bank holding companies on the basis of the
public interest as the Board perceives it. It is my
opinion that the public interest requires that this
application be denied.
First, I am concerned not only that this proposal
violates principles the Board has established re­
garding affiliations between commercial banks and
thrift organizations, but that approval may en­
courage other organizations to combine in order
to accomplish an expansion of activities that would
be impermissible to any one of them. In connec­
tion with an application by D. H. Baldwin Com ­
pany to retain Empire Savings, Building and Loan
A ssociation,1 the Board determined that the po­
tentially adverse effects of generally allowing af­
filiations of banks and savings and loan associa­
tions are sufficiently strong to outweigh benefits
that might result in individual cases. That decision
should govern the disposition of this case, which
would affiliate a bank holding company not only
with one thrift institution but with two-thirds of
all mutual savings banks in N ew Hampshire.
The sole purpose of this proposed affiliation is
to permit the participating savings banks to obtain
correspondent banking services that they cannot
perform themselves directly. The proposal is not

1. 63 F ederal R eserve B u l l e t in 280 (1977).




111

justified by the banking needs of the local custom ­
ers Bank was chartered to serve. For reasons stated
in the Board’s D. H. Baldwin Company Order,
I believe it is contrary to the public interest to
permit commercial banks and separately regulated
thrift institutions, by affiliation with one another
through a bank holding company, to acquire and
exercise wider powers than the law would other­
wise allow them, and to blur distinctions estab­
lished by law among those institutions. This prin­
ciple precludes a savings bank from acquiring 25
percent of a bank holding com pany’s voting
shares, and there is no basis on which I can
conclude that it is more in the public interest for
94 percent of those shares to be acquired by a
combination of savings banks.
Second, I have earlier expressed my fundamen­
tal objections to domestic joint ventures by finan­
cial institutions,2 and this case is a concrete illus­
tration of the problem these joint ventures entail.
The savings bank-shareholders in this case have
agreed not to participate actively in the manage­
ment of Applicant or to coordinate the exercise
of their ownership rights among them selves. This
agreement is not designed in any way to help Bank;
its sole purpose is to attempt to position the share­
holders artificially beyond the reach of the nonbank
prohibitions of the Act and to frustrate the Board’s
legitimate scrutiny of their nonbank activities.
The Board has long insisted that bank holding
companies be sources of strength to their subsidi­
ary banks. But in this case the Board will permit
the formation of a bank holding company that is
likely not to be a source of strength, because of
conditions limiting shareholder involvement.
These conditions do not in any way serve the
public interest but only weaken the organization’s
resources and prospects by fragmenting necessary
responsibility and accountability for the enterprise.
I see no reason to be sympathetic to the dilemma
Applicant’s shareholders faced in devising this
proposal. If they assumed active or joint manage­
ment roles, the proposal would more clearly rep­
resent an impermissible combination of commer­
cial banking with the operation of savings banks.
By instead refraining from full participation in
management, they handicap the resources and fu­
ture prospects of Applicant and Bank to an extent
that in my opinion would warrant denial of this
application, without effectively curing the funda­
mental objection I have to control of commercial
banks by thrift institutions.
2.
S Y B C o rp o ra tio n , 63 F e d e r a l R e s e r v e B u l l e t i n 5 8 7 ,
589 (1977).

772

Federal Reserve Bulletin □ September 1979

Finally, I believe the effect of this proposal on
competition in the Laconia banking market is
incompatible with approval. If this proposal is
consummated, Bank will be controlled by a group
that includes four savings banks in the Laconia
banking market, which together hold approxi­
mately 65 percent of time and savings deposits
held by depository institutions in that market. To
the extent that commercial banks and savings
banks com pete, consummation of this proposal
would not only eliminate Bank as an independent
competitor with three larger savings banks in the
market, but would also effectively preclude the
likelihood that Bank’s existing savings bank affil­
iation may be broken in the future.
Empirical studies have established to my satis­
faction that N ew Hampshire commercial banks
affiliated with mutual savings banks in that state
have not operated as independent competitors, but
have significantly restricted their participation in
the residential real estate and time and savings
deposits market.3 In the face of that evidence,
which includes surveys of commercial banks as­
sociated with mutual savings banks by very small
shareholdings and relatively few common officers
and directors, I believe this proposal to form a
bank holding company wholly controlled by sav­
ings banks and drawing its officers and directors
almost exclusively from the management of sav­
ings banks will necessarily have at least an adverse
effect on competition in the Laconia banking mar­
ket.
In this connection, I draw little comfort from
Applicant’s representations that it will not obtain
management officials from savings banks operating
in the local market, and I do not attach importance
to Applicant’s argument that the savings bankshareholders operating outside that market would
have no motive to restrain Bank from offering
services similar to those offered by savings banks
in the market. The first representation is little more
than Applicant’s affirmation that it will comply
with laws prohibiting management interlocks
among unaffiliated local depository institutions,
without which this application could not be prop­
erly considered. With respect to the savings bankshareholders operating outside the market, to me
the crucial fact is that, so long as they are able
to secure a captive source of correspondent serv3.
E isenbeis and M cC all, “ The Impact o f L egislation Pro­
hibiting Director-Interlocks A m ong D epository Financial Insti­
tu tio n s,” 2 Journal o f B anking an d Finance 323 (1978);
E isenbeis and M cC all, “ Som e E ffects o f Affiliations A m ong
M utual Savings and C om m ercial B a n k ,” 27 Journal o f F inance
865 (1 9 7 7 ).




ices for them selves, there is little incentive for
them to encourage Bank to be a vigorous com pet­
itor in the local market for other banking services.
For the foregoing reasons, I would deny this
application.
August 21, 1979

Thomson Investment Company, Inc.,
Savanna, Illinois

Order Approving Retention of Bank Shares
Thomson Investment Company, Inc., Savanna,
Illinois, a bank holding company within the
meaning of the Bank Holding Company Act, has
applied for the Board’s approval under section
3(a)(3) of the Act (12 U .S .C . § 1842(a)(3)) to
retain 56 voting shares of Thomson State Bank
( “ Bank” ), Thomson, Illinois.
N otice of the application, affording opportunity
for interested persons to submit views and recom­
mendations, has been given in accordance with
section 3(b) of the Bank Holding Company Act
(12 U .S .C . § 1842(b)). The time for filing view s
and recommendations has expired, and the Board
has considered the application and all comments
received in light of the factors set forth in section
3(c) of the Act (12 U .S .C . § 1842(c)).
Applicant, a one-bank holding com pany,1 owns
54.8 percent of the outstanding voting shares of
Bank. From 1973 through June 1977, Applicant
acquired 56 shares of Bank, representing 11.2
percent of the outstanding voting shares of Bank,
without the prior approval of the Board in violation
of the Act and the Board’s Regulation Y. Appli­
cant now seeks the Board’s approval to retain these
shares.2
Bank (approximately $4 .2 m illion in deposits)
is one of the smaller commercial banks in Illinois,
holding approximately 0.01 percent of total com ­
mercial bank deposits in the state.3 Bank is the
smallest of eleven banking organizations in the
relevant banking market,4 holding approximately
1. A pplicant is engaged in certain nonbanking activities that
are subject to 10-year grandfather privileges.
2. A dditionally, in June 1977, Applicant redeem ed 4 0 of
its shares, representing more than 10 percent of A pplicant’s
net w orth, without givin g prior notice to the Federal R eserve
Bank of C hicago as required by section 2 2 5 .6 (a ) of R egulation
Y (12 C .F .R . § 2 2 5 .6 (a )). A pplicant has requested approval
to retain these shares.
3. A ll banking data are as o f June 30 , 1978.
4 . The relevant banking market is the Clinton Area banking
market, w hich is approxim ated by Clinton C ounty, Iow a,
excludin g the northern portion o f the county lyin g w ithin an

Law Department

1.7 percent of total commercial bank deposits in
the market. Since Applicant has no other banking
subsidiaries and since the proposal involves only
the retention of shares of Bank, which at all times
pertinent hereto was controlled by Applicant, ap­
proval of the application will not result in any
adverse effects on existing or potential com peti­
tion, nor increase the concentration of banking
resources in any relevant area.5 Thus, competitive
considerations are regarded as consistent with ap­
proval of the application.
Where principals of an applicant are engaged
in operating a chain of banking organizations, the
Board, in addition to analyzing the one-bank
holding company proposal before it, also considers
the total chain and analyzes the financial and
managerial resources and future prospects of the
chain within the context of the Board’s multi-bank
holding company standards. Based upon such an­
alysis in this case, the financial resources and
future prospects of Applicant and Bank appear to
be satisfactory.
Under section 3 of the Bank Holding Company
A ct, the Board must consider the managerial re­
sources of an applicant and a bank to be acquired.
As indicated above, the subject application is an
after-the-fact request for the Board’s approval to
retain shares of Bank that were purchased without
the prior approval of the Board; Applicant has also
requested approval to retain shares of Applicant
that were redeemed in violation of Regulation Y.
Upon examination of all the facts surrounding the
violations, the Board concludes that the violations
do not warrant denial of the application. In acting
upon the application, the Board has taken into
consideration the fact that Applicant promptly filed
this application after the violations were brought
to its attention and that Applicant’s management
has taken action to prevent violations from occur­
ring in the future, including the initiation of an
affirmative program under the direction of one of
its officers to ensure compliance with the Act and
Regulation Y. The Board expects that these actions
will assist Applicant in avoiding future violations.
In consideration of the above and other informa­
tion in the record evidencing Applicant’s intent
to com ply with the requirements of the Bank
Holding Company Act and Regulation Y , the

eight-m ile radius o f M aquoketa, Iow a, and including the area
in Illinois im m ediately across the M ississip pi River from C lin­
ton County.
5.
Principals o f A pplicant are also principals o f other banks
located in Illin o is, Iow a, and Indiana. Each o f these banks
com petes in a separate market from Bank.




773

Board has determined that the circumstances of
the violations do not reflect so adversely on the
managerial factors as to warrant denial of this
application.
Thus, banking factors are regarded as consistent
with approval of the application. Although there
will be no immediate increase in the services
offered by Bank, convenience and needs consid­
erations are regarded as consistent with approval.
It is the Board’s judgment that retention of the
subject shares is consistent with the public interest
and that the application should be approved.
On the basis of the record, the application to
retain shares of Bank, as w ell as the request to
retain the redeemed shares of Applicant, is ap­
proved for the reasons summarized above.
By order of the Board of Governors, effective
August 17, 1979.
Voting for this action: Chairman Volcker and Gover­
nors Schultz, Wallich, Coldwell, Partee, Teeters, and
Rice.

(Signed)
[s e a l ]

T heodore

E.

A l l is o n ,

Secretary of the Board.

W ISCUB, Inc.,
M ilwaukee, W isconsin

Order Approving Formation of
WISCUB , Inc . , a Bank Holding Company
On December 30, 1977, the Board approved the
application of W ISCUB, Inc. ( “ W ISC U B” ),
Milwaukee, W isconsin, to becom e a bank holding
company by acquiring approximately 86 percent
of the voting shares of Cleveland State Bank
( “ Bank” ), Cleveland, W isconsin.1 W ISC U B’s
application had been protested by the W isconsin
Bankers Association ( “ W B A ” ), which subse­
quently petitioned for judicial review of the
Board’s Order.
On October 27, 1978, the United States Court
of Appeals for the District of Columbia Circuit
remanded the matter of W ISC U B’s application to
the Board for further development of evidence
regarding the managerial resources of W ISCUB
and a possible control relationship between the
W isconsin Credit Union League ( “ W C U L” ) and
W ISC U B .2 In response to the Court of Appeals’

1. 64 F ede ral R eserve B u l l e t in 4 0 (1978).
2. W isconsin B an kers A sso c ia tio n v. B o a rd o f G overn ors
o f the F ederal R ese rv e S ystem , N o . 78-1 0 8 3 (D .C . Cir. O ct.
2 7 , 1978), unreported.

11A

Federal Reserve Bulletin □ September 1979

remand, the Board directed WISCUB to supple­
ment the record with information on these issues
and afforded W BA the opportunity to comment
on these issues and on W ISC U B’s submissions.
The Board has reexamined the record on the ap­
plication, including the submissions of W ISCUB
and W BA follow ing the remand and, based upon
that review, makes the follow ing findings as to
the facts, and the conclusions drawn therefrom.
1. Background
WISCUB was originally organized by WCUL
to acquire Bank (deposits of $7.9 m illion as of
March 31, 1979) for the stated purpose of provid­
ing better and more efficient service to the financial
and banking needs of W isconsin credit unions.
W ISCUB is wholly owned by 173 of W C U L’s
credit union members, no one of which owns or
controls 5 percent or more of W ISCU B’s out­
standing voting shares.
Under the proposal originally presented to the
Board, the credit union-shareholders agreed to
enter into a voting trust agreement with W CUL,
designating WCUL as voting trustee for the shares
of W ISCUB. W ISC U B’s board of directors was
to be made up of the members of the executive
committee of the WCUL board of directors, and
the chief executive officer of WCUL was to serve
as president of W ISCUB. Each credit unionshareholder, however, was to retain the right to
direct the voting of its shares of W ISC U B’s stock.
W BA vigorously protested the application on
the grounds that (1) consummation of the proposal
would be anti-competitive; (2) approval of the
application would be inconsistent with the Board’s
finding in D. H. Baldwin Company , 63 F e d e r a l
R e s e r v e B u l l e t i n 280 (1977), that a bank hold­
ing company may not acquire a savings and loan
association or similar thrift institution; and (3) the
credit unions and WCUL would constitute an
illegal bank holding company. W BA also re­
quested a formal hearing on the application.
On December 30, 1977, the Board denied
W B A ’s request for a hearing and approved W IS­
C U B ’s application. The Board conditioned its
approval upon the selection of a bona fide inde­
pendent trustee for the voting trust and upon
W C U L’s refraining from any role by any means
in the management of Bank or W ISCUB. These
conditions were imposed because the Board was
of the view that the trade association might exer­
cise control over W ISC U B’s and Bank’s manage­
ment and that the shareholders of WISCUB (united
through both a voting trust agreement and common
membership in the trade association that would




serve as trustee for the voting trust) might consti­
tute a bank holding company under the Bank
Holding Company Act of 1956, as amended (the
“ A ct” ). The Board also felt that, since the voting
trustee was to be a trade association of credit
unions, the trade association’s responsibilities to
its 650 credit union members might conflict with
its trustee responsibilities to the 173 credit union
beneficiaries of the voting trust.
In response to the Board’s conditions for ap­
proval, W ISCUB notified the Board, by letter
dated January 5, 1978, that the entire voting trust
arrangement had been eliminated from the pro­
posal and that each credit union-shareholder of
W ISCUB would vote its own shares. W ISCUB
also advised the Board that W ISCUB had amended
its by-laws to prohibit any director or em ployee
of W CUL from serving as a director or officer
of W ISCUB, and that its directors would instead
be selected from among the officers, directors or
members of its credit union-shareholders.
On January 27, 1978, W BA requested that the
Board stay and reconsider its Order. W BA also
filed a petition for judicial review of the Board’s
Order in the Court of Appeals. On February 1,
1978, the Board denied W B A ’s request for a stay;
and, on March 2, 1978, the Board denied peti­
tioner’s request for reconsideration.
On October 27, 1978, the Court remanded the
case to the Board, after finding W B A ’s arguments
meritorious with respect to two aspects of the
Board’s December 30, 1977 Order. Because W IS­
CUB had eliminated the trust altogether, rather
than comply with the Board’s condition to select
a bona fide independent voting trustee, the Court
found the administrative record inadequate to
demonstrate whether the Board had given consid­
eration to the implications of W ISCUB being
operated without a voting trust agreement. The
Court found it was possible that, in the absence
of an independent voting trustee, W ISCUB would
be controlled in fact by WCUL as the only cen­
tralized policy-m aking body of the credit unionshareholders, thus frustrating the Board’s condi­
tion that W CUL not participate in any way in
W ISCU B’s management. The Court further in­
structed the Board to consider whether, if WCUL
did not exercise de facto control over W ISCUB,
W ISCUB would be operated without centralized
direction and would therefore function less effi­
ciently than contemplated by the Board when it
conditioned approval upon selection of an inde­
pendent voting trustee. The Court also concluded
that, by excluding W CUL officers and directors
from serving W ISCUB in any capacity, the Board

Law Department

had approved W ISC U B’s application without evi­
dentiary support in the record with respect to
W ISC U B’s managerial resources.
In response to the Court’s remand, the Board
requested W ISCUB to submit information regard­
ing W ISC U B’s current officers and directors, in­
cluding all the information on managerial re­
sources requested by the Board’s bank holding
company application form, to describe how these
officers and directors had been selected and would
be selected in the future, and to comment upon
the legal and practical effects of the elimination
of W ISC U B’s voting trust arrangement and the
substitution of an arrangement under which each
W ISCUB credit union-shareholder votes its own
shares. The Board also asked W ISCUB to respond
to a series of specific questions, posed by W BA ,
regarding W C U L’s continued involvem ent, if any,
in W ISC U B’s affairs, the operation of WISCUB
in the absence of the voting trust, the procedures
for handling W ISC U B’s shareholder matters, and
the process for selecting officers and directors for
W ISCUB and Bank. The Board afforded W BA op­
portunity to comment upon these issues and upon
W ISC U B’s submissions. W BA fully availed itself
of this opportunity. As indicated, the Board also
directed W ISCUB to answer specific questions
raised by W BA concerning the remand issues.
2. W ISCUB’s managerial resources
In response to the Board’s request, WISCUB
submitted the information requested in the Board’s
bank holding company form regarding the mana­
gerial resources of an applicant, including bio­
graphical data on each of W ISC U B’s officers and
directors. W ISCUB stated that each of its current
five directors was elected to a one-year term of
office by direct election by its credit union-shareholders. These directors also serve as W ISC U B’s
officers. W ISCUB has assured the Board that at
each future annual meeting of W ISCUB, each of
its directors and officers will be subject to election
by the same procedure and will be drawn from
the officers, directors, and em ployees of W IS­
C U B ’s credit union-shareholders. The record
shows that each current director and officer of
W ISCUB is an officer of one of W ISCU B’s credit
union-shareholders and has held long-term full­
time em ployment as an officer of a credit union;
that each has substantial financial experience and
is responsible, knowledgeable, and capable of pro­
viding direction and leadership to WISCUB; and
that none of these individuals is affiliated with
WCUL. The Board is also of the view that the
pool of managerial talent available to WISCUB




775

from its credit union-shareholders is a positive
factor in the Board’s evaluation of the managerial
resources of W ISCUB. Indeed, in its post-remand
submissions to the Board, W BA did not claim any
inadequacy in W ISC U B’s managerial resources.
On the basis of the record as amplified by submis­
sions of W ISCUB, W BA , WCUL and the credit
union-shareholders, the Board finds that W IS­
C U B ’s managerial resources are satisfactory and
consistent with approval of this application.3
3. The relationship of WCUL to WISCUB
As indicated, the Board’s December 30, 1977
Order conditioned approval of the application upon
a complete separation of W CUL from any role
in the management of W ISCUB. The Board be­
lieved such a separation could be accomplished
by substituting an independent trustee for W CUL
as the voting trustee. Because W ISCUB eliminated
the voting trust arrangement altogether, the Court
of Appeals questioned whether, in the absence of
an independent voting trustee, W ISCUB would
controlled in fact by W CUL as the only centralized
policy-making body of the credit union share­
holders.
In its review of the application on remand, the
Board has solicited information from W ISCUB
and W BA with respect to the management and
control of W ISCUB and Bank and the role, if any,
of W CUL therein. W ISCUB has furnished infor­
mation to demonstrate that it is in com plete com ­
pliance with the purpose and intent of the Board’s
December 30, 1977 Order; that no officer or

3.
In its remand order, the Court expressed concern that
the elim ination of the voting trust m ight have so decentralized
control of W ISC U B that W ISC U B m ight operate less effi­
ciently than contem plated by the Board in its D ecem ber 30,
1977 Order. W IS C U B ’s com m itm ents have satisfied the Board
that W IS C U B ’s day-to-day m anagem ent and overall policy
direction w ill be derived from its officers and board of directors
and that the substitution o f direct voting by the credit unionshareholders for W IS C U B ’s directors w ill have no adverse
effect on the efficiency with w hich W ISC U B is operated.
Control of W ISC U B w ill be centralized in, and exercised by,
W IS C U B ’s five directors and officers.
The B oard’s direction for selection of an independent voting
trustee in its D ecem ber 30 , 1977 Order w as designed to
elim inate the control problem s raised by W C U L ’s proposed
service as voting trustee. The Board concluded that, if a voting
trust were used by W IS C U B ’s shareholders, the trustee should
be independent. The Board did not require that a voting trust
be used to hold W IS C U B ’s shares. E lim ination of the voting
trust and trustee and the prohibition against W C U L ’s partici­
pation in any manner in W IS C U B ’s affairs fu lly accom plishes
the B oard’s goal of separating W C U L from W ISC U B . In its
March 2, 1978 Order denying W B A ’s request for recon­
sideration, the Board, at least im p liedly, view ed W IS C U B ’s
revision of its proposal ( i.e ., its elim ination of the voting trust)
as acceptable com pliance with the B oard’s D ecem ber 30, 1977
Order and consistent with the B oard’s goal o f separating
W C U L from W ISC U B and Bank.

776

Federal Reserve Bulletin □ September 1979

director of W ISCUB is an officer or director of
W CUL, or has any affiliation with W CUL other
than as an officer of a credit union that is a member
of WCUL; that no director or officer of Bank is
affiliated with W CUL;4 that WCUL is providing
to WISCUB and Bank only limited administrative
services (such as typing and mailing) that are
reimbursed by W ISCUB; that WCUL has worked
with Bank only to the extent that W CUL has
assisted other W isconsin banks developing sharedraft clearing programs; that, at the annual m eet­
ing of W CUL’s delegates, there have not been,
nor will there be, any committee m eetings, other
actions or documents relating to the management
or policy decisions of W ISCUB or Bank; that
proxies for shareholder meetings of W ISCUB will
not indicate the view s of WCUL or its directors
and officers; that the WCUL district system plays
no role in the selection of W ISC U B’s officers or
directors; that W CUL will have no role in the
solicitation of additional subscribers to W ISC U B’s
stock; and that W CUL plays no role in the selec­
tion of officers or directors for either WISCUB
or Bank. WISCUB has further assured the Board
that W ISC U B’s shareholders will elect its board
of directors which, in turn, on behalf of the
principal shareholder of Bank, will determine the
composition of Bank’s management. W BA has
disputed none of these submissions of fact.
WCUL has submitted assurances to the Board
that WCUL will not exercise, or attempt to exer­
cise, control or any controlling influence over the
management or policies of WISCUB or Bank, or
attempt to influence the credit union-shareholders
in the voting of their shares of W ISCUB. The
Board has received from the credit union-share­
holders of WISCUB written assurances that they
have no agreements with W CUL concerning either
the manner in which their shares of W ISCUB will
be voted or the management, operation or control
of WISCUB or Bank.5

4 . Only one of the seven directors of Bank serves as an
officer o f a credit union m em ber o f W C U L.
5. W B A ’s claim that W C U L exercises a controlling influ­
ence over the m anagem ent o f Bank and W ISC U B is based
on inform ation provided by W ISC U B that the original directors
of W ISC U B (w ho were also m em bers o f W C U L ’s executive
com m ittee) selected the present group o f W ISC U B directors,
w ho in turn appointed them selves as W IS C U B ’s officers.
H ow ever, the record show s that, shortly after the selection
of the replacem ent directors, the annual m eeting o f W ISC U B
was held, and at that m eeting each o f the W ISC U B share­
holders was afforded the opportunity to participate in the
election o f directors. The W ISC U B shareholders reelected the
replacem ent directors. The Board b eliev es the evidence proferred by W B A is inadequate to show that W C U L exercises




Both W BA and W ISCUB have had ample op­
portunity to make inquiries, subm issions, counter­
submissions and responses regarding the relation­
ship between W CUL and W ISCUB. W ISCUB has
responded fully and fairly to every question that
W BA has raised. W BA has not in any way
disputed the facts presented by W ISCUB. The
Board finds that the record adequately establishes
that W ISCUB is com plying with, and is committed
to com plying with, the condition in the Board’s
December 30, 1977 Order requiring W CUL to
refrain from any role in the management of Bank
or W ISCUB, and that W ISCUB is not controlled
in fact by W CUL.

4. The “ company9 issue
9
W BA contends that, on the present record and
in the absence of an independent trustee, the credit
union-shareholders might, as a group, constitute
a bank holding company. W BA claims that, be­
cause the credit union-shareholders have a com ­
mon purpose and objective in their acquisition of
W ISCUB, they are not acting separately or inde­
pendently of one another but are engaged in an
alleged entrepreneurial activity to control a com ­
mercial bank. Accordingly, W BA argues, the
credit union-shareholders constitute a “ com pany”
within the meaning of section 2(b) of the Act and,
because the credit union-shareholders together
own more than 25 percent of W ISCU B’s shares,
a bank holding company.
On several occasions, the Board has addressed
the legal issues involved in ownership of a bank
holding company by a number of individual, non­
controlling shareholders. The Board has approved
the formation of three bank holding companies
each owned by credit unions and of a bank holding
company owned by sixteen one-bank holding
companies. In each of these instances, the share­
holders purchased less than 5 percent of the shares
of the new bank holding com pany.6 The Board
found these acquisitions to be consistent with the
purposes of the Act, particularly since, under
section 2(a)(4) of the Act, a company owning or

control or a controlling influence over W ISC U B , or that the
current directors of W ISC U B are representatives of W C U L
or subject to its control.
6.
See C U ban c C orp o ra tio n , 62 F e d e r a l R e s e r v e B u l l e ­
t i n 792 (1976)(bank holding com pany ow ned by 24 Ohio
credit unions); C U B ank S h ares, In c ., 62 F e d e r a l R e s e r v e
B u l l e t i n 364 (1976)(bank holding com pany ow ned by 150
T exas credit unions); B u sin ess A d m in istra tive N e ed s o f
K a n sa s, 39 F e d e r a l R e g is t e r 2 6 ,0 6 8 (1974)(bank holding
com pany ow ned by 27 K ansas credit unions); S Y B C o rp o ra ­
tion, 63 F e d e r a l R e s e r v e B u l l e t i n 587 (1977)(bank holding
com pany ow ned by 16 one-bank holding com panies).

Law Department

controlling, directly or indirectly, 5 percent or less
of the voting securities of a bank or company may
not be held to have control over that bank or
company (unless the company is found, after no­
tice and opportunity for hearing, to exercise a
controlling influence over the bank or company—
an exception not relevant here).7
The Board has taken the position that there must
be a “ formalized structure” for control among the
shareholders of a bank or bank holding company
in order for the shareholders collectively to con­
stitute a bank holding company within the meaning
of the Act. The U .S . Court of Appeals for the
D .C . Circuit has endorsed the Board’s position.8
There is, in W ISC U B’s case, no evidence of any
formalized structure or unifying force for control
that would cause the credit union-shareholders of
WISCUB to be considered a bank holding com ­
pany. The ownership and control of WISCUB is
widely dispersed among 173 separate and inde­
pendent credit unions. The evidence of record
shows that there are no agreements between or
among the, formal or informal, as to how WISC U B ’s shares would be voted or with respect
to control of W ISCUB or Bank in any manner.
The individual credit union-shareholders have
submitted assurances to the Board that they have
not entered, and will not enter, into any agree­
ments, formal or informal, with any or all of the
other shareholders of W ISCUB or with WCUL
concerning either the voting of W ISCU B’s shares
or the management, operations or policies of W IS­
CUB or Bank.

7. The Board b eliev es its position is supported by the
legislative history o f the A ct. The original H ouse version of
the 1970 A m endm ents to the A ct contained a provision bring­
ing within the coverage o f the A ct a com pany “ acting in
concert w ith one or more p erso n s.” H .R . 6 7 7 8 , 91st C o n g .,
1st S ess. (1 9 6 9 ). The Senate rejected the “ acting in concert”
language and substituted the phrase now contained in section
2 (a )(2 )(A ) o f the A ct, “ acting through one or more other
perso n s.” H .R . 6 7 7 8 , 91st C o n g ., 2d S ess. (1 9 7 0 ).
8. C en tral B ank v. B o a rd o f G o vern o rs o f the F ederal
R ese rv e S ystem , N o . 7 7 -1 9 3 7 (D .C . Cir. Feb. 1, 1979),
unreported. There has been only one instance in w hich the
Board has concluded that a proposed acquisition o f a bank
holding com pan y, where each o f the acquiring com panies
w ould acquire less than 5 percent o f the shares o f the com pany,
w ould result in those shareholders being c o llectiv ely a bank
holding com pany. In that situation, the Board found that the
six com panies in v o lv ed , each o f w hich was ow ned by an
individual and mem bers o f his im m ediate fam ily, w ould be
acting “ with a single purpose and at the direction and under
the control o f [the in d iv id u a l]/4 and that “ because o f their
com m on ow nership and the control exercised over them by
[this individual], are incapable o f independent a ctio n .” Letter
of N ovem ber 17, 1978, from the Secretary of the Board to
W illiam C . B eam an, regarding a proposed acquisition o f 24
percent o f the voting shares o f W yom ing Bancorporation,
C heyenne, W yom in g.




111

In its 1977 evaluation of W ISC U B’s applica­
tion, the Board considered W B A ’s comments and
concluded that approval of W ISC U B’s application
should be conditioned upon an absence of control
by the trade association, W CUL, over W ISC U B .9
By eliminating the voting trust entirely and deter­
mining instead that the 173 credit union-share­
holders should each vote directly and inde­
pendently for the directors of W ISC U B , W ISCUB
eliminated the trust and trustee as a possible basis
for “ com pany” status. As indicated earlier, the
Board finds that elimination of the voting trust
from the proposal is consistent with the Board’s
requirement that W CUL shall not control W I­
SCUB or Bank and that W CUL shall no longer
be associated in any way with the management
or operation of W ISCUB or Bank.
The Board believes that the record in this case
does not warrant a finding that W ISC U B’s credit
union-shareholders, each of which owns or con­
trols less than 5 percent of the shares of W ISCUB,
individually or collectively constitute a company
or a bank holding company under the Act.
5. W B A ’s hearing request
In remanding this case to the Board for further
development of evidence, the Court stated, “ [i]f
necessary to supplement the existing administra­
tive record, the Board should in its discretion hold
a hearing in this matter.” W BA had requested a
hearing before the Board on W ISC U B’s original
application, and renewed its request for a hearing
in submissions to the Board dated November 20,
1978, December 26, 1978, and April 4, 1979.
W BA contends that the issues raised before the
Court, and for which the Court requested the
development of further evidence, turn on questions
of “ intent, purpose and understanding,” and that
these issues cannot be determined from corre­
spondence between the parties.
W B A ’s submissions are directed only to
whether W ISCUB is or will be controlled by
W CUL and whether the credit union-shareholders
of W ISCUB constitute a “ com pany” . However,
W BA has not disputed any of W ISC U B’s detailed
statements of fact regarding the disaffiliation of
W CUL from W ISCUB or the relationships among

9.
In C U ban c C o rporation , C U B ank S h ares, In c., and
B usiness A d m in istra tiv e N e ed s o f K a n sa s, where the Board
had found acceptable a voting trust arrangement with the credit
union trade association as the voting trustee, the bank holding
com panies were required by the Board to m od ify their opera­
tions to conform to the standards set for W ISC U B .

778

Federal Reserve Bulletin □ September 1979

the credit union-shareholders.10 In the absence of
any disputed facts and any reason to disbelieve
the commitments made in this matter, the Board
finds that a hearing is neither necessary nor appro­
priate in this ca se.11 There is no statutory12 or due
process13 requirement for a hearing in this situa­
tion.
6. Conclusion
The Board has thoroughly considered the issues
that formed the basis of the Court’s remand,
W B A ’s claims and subm issions, and all the ev i­
dence of record. Based upon this review, the
Board concludes that the steps taken by WISCUB
in eliminating the independent voting trustee were
consistent with the Board’s December 30, 1977
Order; that the evidence of record shows that
W ISCUBs managerial resources are adequate; that
W ISCUB has satisfactorily demonstrated its inde­
pendence from WCUL; that the evidence of record
fails to show that W CUL has control of, or exer­
cises a controlling influence over, WISCUB or
Bank; that the evidence of record fails to show
any “ formalized structure” or agreement or un­
derstanding among the credit union-shareholders
for control of W ISCUB or Bank; and that there
are no disputed operative facts for which a hearing
would be appropriate or useful in this matter.
Accordingly, on the basis of the entire record,
including the record and findings made with re­
spect to the Board’s December 30, 1977 Order,
it is the Board’s judgment that the application of

10. On the basis that the original W ISC U B board o f directors
(com posed o f W C U L officers and directors) selected its suc­
cessor, W B A contends that W C U L m ight continue to control
W ISC U B . The Board b elie v e s, as discussed above, that this
process o f selectin g W IS C U B ’s board o f directors is not
sufficient evidence o f control by W C U L , particularly since (a)
these directors were reelected at W IS C U B ’s annual shareholder
m eeting by the individual independent credit unions and (b)
W C U L and the shareholders o f W ISC U B , respectively, have
assured the Board that W C U L does not and w ill not control
W ISC U B and that the shareholders vote their shares as they
please and w ithout any agreem ents or understandings or influ­
ence from W C U L or am ong th em selves.
11. The Board regards these com m itm ents and assurances
as conditions o f the Order o f approval. A ny departure from
these com m itm ents and assurances m ay result in invalidation
of the Order or the initiation o f other rem edies.
12. Section 3(b) o f the A ct requires the Board to hold a
form al hearing w hen the primary supervisor o f the bank to
be acquired recom m ends disapproval o f the application (12
U .S .C . § 184 2 (b )). In W IS C U B ’s ca se, no such disapproval
was recom m ended.
13. See F arm ers an d M erch a n ts B ank o f L a s C ru ces v.
B o a rd o f G o vern o rs o f the F ed era l R ese rv e S ystem , 567 F.
2d 1082 (D .C . Cir. 1977); G ra n d view B ank and T rust C o.
v. B o a rd o f G o vern o rs o f the F ed era l R ese rv e S ystem , 550
F. 2d 4 1 5 (8th C ir.), cert, d enied, 4 3 4 U .S . 821 (1 9 7 7 ).




W ISCUB warrants approval. The application of
W ISCUB is again approved.
By order of the Board of Governors, effective
August 21, 1979.
Voting for this action: Chairman Volcker and Gover­
nors Schultz, Wallich, Coldwell, Partee, Teeters, and
Rice.

(Signed)
[s e a l ]

T heodore

E.

A l l is o n ,

Secretary of the Board.

O rder Under Se c tio n 4
of

B

ank

H o ld in g C o m p a n y A

ct

Charles Stewart Mott Foundation,
Flint, Michigan

Order Approving
Exemption of Nonbanking
Activities of Bank Holding Company
Charles Stewart Mott Foundation ( “ A ppli­
cant” ), Flint, Michigan, a bank holding company
within the meaning of the Bank Holding Company
Act with respect to The W ayne Oakland Bank
( “ Bank” ), Royal Oak, M ichigan, has applied to
the Board of Governors, pursuant to section 4(d)
of the Act (12 U .S .C . § 1843(d)), for an exem p­
tion from the prohibitions of section 4 of the Act
(relating to nonbanking activities of, and acquisi­
tions by, a bank holding company).
N otice of receipt of the application, affording
opportunity for interested persons to submit com ­
ments regarding this application, has been pub­
lished in the Federal Register (44 Federal Register
25,692 (1979)). The time for filing comments has
expired and the Board has considered the applica­
tion and all comments received in light of the
factors set forth in section 4(d) of the Act.
Section 4(d) of the Act provides that, to the
extent such action would not be substantially at
variance with the purposes of the Act and subject
to such conditions as the Board considers neces­
sary to protect the public interest, the Board may
grant an exemption from the prohibitions in section
4 of the Act to a bank holding company that
controlled one bank prior to July 1, 1968, and
has not thereafter acquired the control of any other
bank, in order (1) to avoid disrupting business
relationships that have existed over a long period
of years without adversely affecting the banks or
communities involved, (2) to avoid forced sales
of small locally owned banks to purchasers not
similarly representative of community interests, or

Law Department

(3) to allow retention of banks that are so small
in relation to the holding com pany’s total interests
and so small in relation to the banking market to
be served as to m inimize the likelihood that the
bank’s powers to grant or deny credit may be
influenced by a desire to further the holding com ­
pany’s other interests.
Applicant is a charitable foundation established
in 1926 by Charles Stewart Mott, to fund educa­
tional and religious programs and to promote the
public welfare. Applicant has investment interests
in several banking and nonbanking companies, but
it holds more than five percent of the voting shares
of only two organizations: a 24.9 percent interest
in United States Sugar Corporation ( “ U S S ” ),
Clewiston, Florida, which is engaged primarily in
growing sugar cane and raising cattle, and a 55
percent interest in Bank.
Bank’s predecessors survived the bank failures
of the 1930’s, partially as a result of the efforts
of Mr. Mott. These predecessor institutions were
merged in the early 1940’s, and Applicant has
owned a majority of Bank’s shares since 1944,
a period of affiliation comprehended by section
4(d)(1) of the Act. With deposits of approximately
$374 m illion as of June 30, 1978, Bank is the
ninth largest bank located in the Detroit banking
m arket1 and holds about two percent of the aggre­
gate deposits in commercial banks in that market.
Bank appears to be in satisfactory condition, its
management capable, and its prospects good.
The Board has found no evidence that the ow n­
ership and control of Bank by Applicant has had
an adverse effect on Bank or the communities
involved. Rather it appears that Applicant has
undertaken substantial charitable endeavors in the
areas of education, religion, and public welfare
for the benefit of those communities and the United
States generally. For exam ple, between 1967 and
1977, Applicant made charitable grants totaling
approximately $165 m illion. Moreover, to assist
in Bank’s growth and to strengthen its capital
position, Applicant approved Bank’s policy of not
paying cash dividends, a policy that continued for
approximately 30 years. At the time Applicant
acquired it, Bank’s total assets were $17 m illion,
and its capital and reserves approximated $750,000. By 1978, Bank’s total assets had grown to
$425 m illion and its capital and reserves exceeded
$30 m illion. Applicant has maintained substantial

1.
This market is approxim ated by all o f M acom b, Oakland,
and W ayne C ounties and portions o f the five surrounding
counties o f St. Clair, Lapeer, L ivingston, W ashtenaw , and
M onroe.




779

demand deposits with Bank, but neither Applicant
nor USS has ever borrowed from Bank. There is
no evidence of any misuse of Bank by Applicant,
nor any evidence to suggest that the continued
ownership of Bank by Applicant will jeopardize
the financial soundness of Bank.
As stated, Bank controls about two percent of
the aggregate deposits in the Detroit banking mar­
ket. Applicant’s total assets of approximately $396
million are smaller than those of Bank, and by
this standard, Bank cannot be said to be small in
relation to Applicant. However, the Board notes
that Applicant’s investment in Bank constitutes 3.3
percent of its total investments, and its income
from Bank in 1977 approximated 2.5 percent of
its total incom e.2
On the basis of the entire record, the Board
concludes that the business relationships between
Applicant and Bank have existed over a long
period of years without adversely affecting the
banks or communities involved, and it appears
unlikely that Bank’s powers to grant or deny credit
would be influenced by a desire to further Appli­
cant’s other interests. Granting an exemption to
Applicant would not be substantially at variance
with the purposes of the Act nor adverse to the
public interest; and an exemption is warranted
under the provisions of section 4(d) of the Act.
Accordingly, an exemption pursuant to section
4(d) of the Act is hereby granted subject to the
condition that this determination may be revoked
if the facts upon which it is based change in any
material respect. Further, the provision of any
credit, property, or service by Applicant or any
subsidiary thereof shall not be subject to any
condition which, if imposed by a bank, would
constitute an unlawful tie-in arrangement under
section 106 of the Bank Holding Company Act
Amendments of 1970. This determination is sub­
ject to the Board’s authority to require modifi­
cation or termination of the activities of Applicant
or any of its nonbanking subsidiaries as the Board
finds necessary to assure compliance with the
provisions and purposes of the Act and the Board’s
regulations and orders issued thereunder, or to
prevent evasions thereof.

2.
A lthough as a general rule it may not be appropriate to
grant a section 4(d) exem ption to a bank holding com pany
that controls a bank as large as Bank in absolute terms,
A pplicant’s charitable nature and its exem plary record vis a
vis Bank persuade the Board that B ank’s size should not bar
the granting of an exem ption in this case. M oreover, the Board
notes that as a private foundation, A pplicant’s activities and
investm ents are substantially lim ited by provisions of the
Internal R evenue C ode.

780

Federal Reserve Bulletin □ September 1979

GATX Corporation (formerly General Ameri­
can Transportation Corporation), Chicago, Illinois
( “ G A T X ” ) has requested a prior certification pur­
suant to section 6158(a) of the Internal Revenue
Code ( “ C ode” ), as amended by section 3(a) of
the Bank Holding Company Tax Act of 1976
( “ Tax A ct” ), that its proposed sale of 582,591
shares of common stock ( “ Bank Shares” ) of La­
Salle National Bank, Chicago, Illinois (“ Bank” ),
to A .B .N .-Stichting, a w holly-owned subsidiary
of Algamene Bank Nederland, both of Amster­
dam, The Netherlands (together referred to as
“ A B N ” ) for cash, is necessary or appropriate to
effectuate the policies of the Bank Holding Com ­
pany Act (12 U .S .C . § 1842 et seq.) ( “ BHC
A ct” ).
In connection with this request, the follow ing
information is deemed relevant for purposes of
issuing the requested certification:1
1. GATX is a corporation organized on July
5, 1916, under the laws of the State of N ew York.
2. On November 20, 1968, GATX completed
an exchange offer whereby it acquired ownership
and control of 614,243 shares, representing 91 per­
cent of the outstanding voting shares, of Bank.
On July 1, 1969, GATX completed a second
exchange offer whereby it acquired ownership and
control of an additional 68,838 shares of Bank,
thereby increasing its percentage of ownership in

Bank to 99 percent of the outstanding voting shares
of Bank.
3. GATX became a bank holding company on
December 31, 1970, as a result of the 1970
Amendments to the BHC Act, by virtue of its
ownership and control at that time of more than
25 percent of the outstanding voting shares of
Bank, and it registered as such with the Board
on November 8, 1971. GATX would have been
a bank holding company on July 7, 1970, if the
BHC Act Amendments of 1970 had been in effect
on such date, by virtue of its ownership and control
on that date of more than 25 percent of the out­
standing voting shares of Bank. GATX presently
owns and controls 582,591 shares, representing 84
percent of the outstanding voting shares, of Bank.2
4. GATX holds property acquired by it on or
before July 7, 1940, the disposition of which
would be necessary or appropriate under section
4 of the BHC Act if GATX were to remain a bank
holding company beyond December 31, 1980, and
which property is “ prohibited property” within
the meaning of section 1103(c) of the Code.
5. On March 31, 1971, GATX filed with the
Board an irrevocable declaration pursuant to sec­
tion 225.4(d) of the Board’s Regulation Y that it
would cease to be a bank holding company prior
to January 1, 1981, by divesting itself of all of
its interest in Bank. In accordance with that portion
of the regulation and G A T X ’s commitment,
GATX has been permitted to expand its nonbank­
ing activities without seeking the Board’s prior
approval.
6. GATX has committed to the Board that no
person holding an office or position (including an
advisory or honorary position) with GATX or any
of its subsidiaries as a director, policy-making
em ployee or consultant, or who performs (directly,
or through an agent, representative or nominee)
functions comparable to those normally associated
with such office or position, will hold any such
office or position or perform any such function
with Bank or A BN . GATX has further committed
that the officers of GATX presently serving as
directors of Bank will terminate their positions
with Bank.
On the basis of the foregoing information, it
is hereby certified that:
(A)
GATX is a qualified bank holding corpora­
tion within the meaning of section 1103(b) of the

1.
This inform ation derives from G A T X ’s correspondence
with the Board concerning its request for this certification,
G A T X ’s R egistration Statem ent filed with the Board pursuant
to the B H C A ct, and other records o f the Board.

2.
On February 2 1 , 1978, the Board issued a prior certifi­
cation pursuant to the Tax A ct relating to the sale by G A T X
of 100 ,0 0 0 shares of the stock of Bank on N ovem ber 30 , 1973.
The instant certification relates to the divestiture by G A T X
of all o f its rem aining interest in Bank.

By order of the Board of Governors, effective
August 6, 1979.
Voting for this action: Vice Chairman Schultz and
Governors Wallich, Partee, Teeters, and Rice. Absent
and not voting: Chairman Miller and Governor Coldwell.

(Signed)
[s e a l ]

C ertificatio n

G r if f it h

L.

G arw ood,

Deputy Secretary of the Board.

P

ursuant

H o ld in g C o m p a n y Ta x A

to
c t of

the

B

ank

1976

GATX Corporation,
Chicago, Illinois

Prior Certification Pursuant to the Bank Holding
Company Tax A ct of 1976
[Docket No. TCR 76-102]




Law Department

Code, and satisfies the requirements of that sec­
tion;
(B) Bank Shares covered by the instant request
are part of the property by reason of which GATX
controls (within the meaning of section 2(a) of the
BHC Act) a bank; and
(C) the sale of such shares is necessary or
appropriate to effectuate the policies of the BHC
Act.
This certification is based upon the repre­
sentations and commitments made to the Board
by GATX and upon the facts set forth above. In
the event the Board should determine that facts

Orders A

pproved

781

material to this certification are otherwise than as
represented by G ATX, or that GATX has failed
to disclose to the Board other material facts or
to fulfill any commitments made to the Board in
connection herewith, it may revoke the certifi­
cation.
By order of the Board of Governors, acting
through its Acting General Counsel, pursuant to
delegated authority (12 C .F .R . 265.2(b )(3)), ef­
fective August 13, 1979.
(Signed)
[s e a l ]

Un d e r B a n k H o ld in g C o m p a n y A

G r if f it h

L.

G arw ood,

Deputy Secretary of the Board.

ct

B y the B oard of Governors
During August 1979 the Board of Governors approved the applications listed below . Copies are
available upon request to Publications Services, D ivision of Support Services, Board of Governors
of the Federal Reserve System , W ashington, D .C . 20551.
Section 3

Applicant

Bank(s)

Akron Financial, Inc.,
Akron, Indiana
Apple wood Bankcorp, Inc.,
Wheat Ridge, Colorado
First Alabama Bancshares, Inc.,
M ontgomery, Alabama
First Security Corporation,
Salt Lake City, Utah
Frankfort Bancorporation, Inc.,
West Frankfort, Illinois
Gibson Investment Company,
Gibson, Iowa
Goodenow Bancorporation,
Wall Lake, Iowa
Kupka’s, Inc.,
Traer, Iowa
Southern Bancorporation of Alabama,
Birmingham, Alabama
Stanley Bancorporation, Inc.,
Stanley, W isconsin
TALEN, IN C .,
Edgerton, W isconsin
Texas American Bancshares, Inc.,
Fort Worth, Texas
Tuscumbia Bancshares, Inc.,
Kansas City, Missouri

Akron Exchange State Bank,
Akron, Indiana
Bank of Apple wood,
Wheat Ridge, Colorado
The Conecuh County Bank,
Evergreen, Alabama
First Security Bank of Richfield, N .A .,
Richfield, Utah
The Bank of W est Frankfort
West Frankfort, Illinois
Gibson Savings Bank,
Gibson, Iowa
Wall Lake Savings Bank,
Wall Lake, Iowa
The First Community Bank and Trust,
Traer, Iowa
First National Bank of Etowah County,
Attalla, Alabama
Farmers and Merchants State Bank,
Stanley, W isconsin
First State Bank of Edgerton,
Edgerton, W isconsin
Fredericksburg National Bank,
Fredericksburg, Texas
Bank of Tuscumbia,
Tuscumbia, Missouri




Board action
(effective
date)
August 20, 1979
August 3, 1979
August 20, 1979
August 27, 1979
August 24, 1979
August 9, 1979
August 28, 1979
August 20, 1979
August 31, 1979
August 3, 1979
August 8, 1979
August 10, 1979
August 6, 1979

782

Federal Reserve Bulletin □ September 1979

Section 4
Nonbanking
company
(or activity)

Applicant
Rainier Bancorporation,
Seattle, Washington
Swift County Financial Corporation,
Benson, Minnesota
W esbanco, Inc.,
W heeling, West Virginia

Effective
date

Insurance agency activities

August 31, 1979

Swift County Agricultural Credit
Association, Benson, Minnesota
Ohio Valley Finance Company,
W heeling, West Virginia

August 13, 1979
August 31, 1979

B y Federal R eserve Banks
Recent applications have been approved by the Federal Reserve Banks as listed below . Copies of
the orders are available upon request to the Reserve Banks.
Section 3

Applicant

Bank(s)

First International Bancshares,
Inc., Dallas, Texas
National City Corporation,
Cleveland, Ohio
Valley Bancorporation,
Appleton, W isconsin

San Jacinto State Bank,
Pasadena, Texas
The Fairfield National Bank,
Lancaster, Ohio
The W isconsin National Bank
in Watertown, Watertown,
W isconsin

Orders A

erger

pproved

Under B a n k M

Applicant

A

Reserve
Bank
Dallas

August 15, 1979

Cleveland

August 23, 1979

Chicago

August 16, 1979

ct

Bank(s)

Reserve
Bank

Western Reserve Bank of Portage Cleveland
Cortland Savings & Banking
County, Windham, Ohio
Company, Cortland, Ohio
The Union Savings Bank and Trust Scio Bank Company,
Cleveland
Scio, Ohio
Company, Steubenville, Ohio




Effective
date

Effective
date
August 14, 1979
August 27, 1979

Law Department

P e n d i n g C a s e s In v o l v i n g

the

B oard

of

G overnors

Does not include suits against the Federal Reserve
Banks in which the Board of Governors is not
named a party.
Donald W. R iegel , Ir. v. Federal Open Market
Committee, filed July 1979, U .S .D .C . for the
District of Columbia.

Connecticut Bankers Association, e ta l., v. Board
of Governors, filed May 1979, U .S .C .A . for
the District of Columbia.

Ella lackson et al., v. Board of Governors, filed
May 1979, U .S .C .A . for the Fifth Circuit.

Memphis Trust Company v. Board of Governors,
filed May 1979, U .S .C . A. for the Sixth Circuit.

U.S. Labor Party v. Board of Governors, filed
April 1979, U .S .C .A . for the Second Circuit.

U.S. Labor Party v. Board of Governors, filed
April 1979, U .S .C .A . for the Second Circuit.

Independent Insurance Agents of America, et a l.,
v. Board of Governors, filed May 1979,
U .S .C .A . for the District of Columbia.

Independent Insurance Agents of Am erica, et a l.,
v. Board of Governors, filed April 1979,
U .S .C .A . for the District of Columbia.

Independent Insurance Agents of America, et a l . ,
v. Board of Governors, filed March 1979,
U .S .C .A . for the District of Columbia.

Credit and Commerce American Investment, et
al., v. Board of Governors, filed March 1979,
U .S .C .A . for the District of Columbia.

Consumers Union of the United States, v. G.
William Miller, et al., filed December 1978,
U .S .D .C . for the District of Columbia.

Manchester-Tower Grove Community Organi­
zation/ACORN v. Board of Governors, filed




783

September 1978, U .S .C .A . for the District of
Columbia.
Beckley v. Board of Governors, filed July 1978,
U .S .C .A . for the Northern District of Illinois.
Independent Bankers Association of Texas v. First
National Bank in Dallas, et a l., filed July 1978,
U .S .C .A . for the Northern District of Texas.
Mid-Nebraska Bancshares, Inc. v. Board of Gov­
ernors, filed July 1978, U .S .C .A . for the D is­
trict of Columbia.
United States League of Savings Associations v.
Board of Governors, filed May 1978, U .S .D .C .
for the District of Columbia.
Security Bancorp and Security National Bank v.
Board of Governors, filed March 1978,
U .S .C .A . for the Ninth Circuit.
Wisconsin Bankers Association v. Board of Gov­
ernors, filed January 1978, U .S .C .A . for the
District of Columbia.
Vickars-Henry Corp. v. Board of Governors, filed
December 1977, U .S .C .A . for the Ninth Cir­
cuit.
Investment Company Institute v. Board of Gover­
nors, filed September 1977, U .S .D .C . for the
District of Columbia.
Roberts Farms, Inc. v. Comptroller of the Cur­
rency, et al., filed November 1975, U .S .D .C .
for the Southern District of California.
David R. Merrill, et al., v. Federal Open Market
Committee of the Federal Reserve System, filed
May 1975, U .S .D .C . for the District of Colum ­
bia.

Al

Financial and Business Statistics
Contents

D o m estic F in an cial S ta tistic s

W e e k l y R e po r tin g C om m ercial B a n k s

A3 Monetary aggregates and interest rates
A4 Factors affecting member bank reserves
A5 Reserves and borrowings of member
banks
A6 Federal funds transactions of money
market banks
P o l i c y In s t r u m e n t s

A8 Federal Reserve Bank interest rates
A9 Member bank reserve requirements
A 10 Maximum interest rates payable on
time and savings deposits at federally
insured institutions
A ll Federal Reserve open market
transactions
Fe d e r a l R e se r v e B a n k s

Assets and liabilities
A20
All reporting banks
A21
Banks in New York City
A22
Banks outside New York City
A23 Balance sheet memoranda
A24 Commercial and industrial loans
A25 Gross demand deposits of individuals,
partnerships, and corporations
Fi n a n c i a l M

arkets

A25 Commercial paper and bankers dollar
acceptances outstanding
A26 Prime rate charged by banks on
short-term business loans
A26 Terms of lending at commercial banks
A27 Interest rates in money and capital
markets
A28 Stock market— Selected statistics

A 12 Condition and Federal Reserve note
statements
A 13 Maturity distribution of loan and
security holdings

A29 Savings institutions— Selected assets
and liabilities

M

Fe d e r a l Fin a n c e

onetary and

C re d it A

ggregates

A 13 Bank debits and deposit turnover
A 14 Money stock measures and components
A 15 Aggregate reserves and deposits of
member banks
A 15 Loans and investments of all
commercial banks
C o m m ercial B a n k A

ssets a n d

L iabilitie s

A 16 Last-Wednesday-of-month series
A17 Call-date series
A 18 Detailed balance sheet, September 30, 1978




A30 Federal fiscal and financing operations
A31 U.S. budget receipts and outlays
A32 Federal debt subject to statutory
limitation
A32 Gross public debt of U.S. Treasury—
Types and ownership
A33 U.S. government marketable
securities— Ownership, by maturity
A34 U.S. government securities dealers—
Transactions, positions, and financing
A35 Federal and federally sponsored credit
agencies— Debt outstanding

A2

Federal Reserve Bulletin □ September 1979

S e c u r itie s M

arkets a n d

C o r p o r a t e Fi n a n c e

A36 New security issues— State and local
governments and corporations
A37 Open-end investment companies— Net
sales and asset position
A37 Corporate profits and their distribution
A38 Nonfinancial corporations— Assets and
liabilities
A38 Business expenditures on new plant
and equipment
A39 Domestic finance companies— Assets
and liabilities; business credit
R eal Estate

A40 Mortgage markets
A41 Mortgage debt outstanding
C o n s u m e r In s t a l l m e n t C r e d it

A42 Total outstanding and net change
A43 Extensions and liquidations

I n te r n a tio n a l S ta tis tic s
A54 U.S. international transactions—
Summary
A55 U.S. foreign trade
A55 U.S. reserve assets
A56 Foreign branches of U.S. banks—
Balance sheet data
A58 Selected U.S. liabilities to foreign
official institutions
R eported

by

Banks

in

the

U n it e d S tates

A58
A59
A61
A62

Liabilities to and claims on foreigners
Liabilities to foreigners
Banks’ own claims on foreigners
Banks’ own and domestic customers’
claims on foreigners
A62 Banks’ own claims on unaffiliated foreigners
A63 Claims on foreign countries—
Combined domestic offices and
foreign branches

S e c u r itie s H o l d in g s

and

Tra n sa c t io n s

A44 Funds raised in U.S. credit markets
A45 Direct and indirect sources of funds to
credit markets

A64 Marketable U.S. Treasury bonds and
notes— Foreign holdings and transactions
A64 Foreign official assets held at Federal
Reserve Banks
A65 Foreign transactions in securities

D o m e stic N o n fin an cial S ta tistic s

R eported

A46 Nonfinancial business activity—
Selected measures
A46 Output, capacity, and capacity
utilization
A47 Labor force, employment, and
unemployment
A48 Industrial production— Indexes and
gross value
A50 Housing and construction
A51 Consumer and wholesale prices
A52 Gross national product and income
A53 Personal income and saving

E n terprises

Fl o w

of

F unds




N

by

in

o n b a n k in g
the

B

usiness

Un it e d S tates

A66 Liabilities to unaffiliated foreigners
A67 Claims on unaffiliated foreigners
In t e r e s t

and

E xc h a n g e R ates

A68 Discount rates of foreign central banks
A68 Foreign short-term interest rates
A69 Guide to Tabular Presentation and
Statistical Releases

Domestic Financial Statistics

A3

1.10 MONETARY AGGREGATES AND INTEREST RATES
1979

1979

1978
Item
Q3

Q4

Ql

Q2

Mar.

Apr.

May

June

July

Monetary and credit aggregates
(annual rates o f change, seasonally adjusted in percent)13
1
2
3
4

Member bank reserves
Total................................................................................................
Required.........................................................................................
Nonborrowed................................................................................
Monetary base1............................................................................

8 .6
8 .6
6 .6
9 .3

2 .3
2.1
4 .6
8.4

- 2 .9
-2 .8
-3 .3
5.7

-4 .9
-4 .8
-8 .8
4 .0

1.8
3.3
1.3
4 .6

-4 .9
-5 .5
-2 .9
4.9

-4 .9
- 3 .9
-3 0 .6
3.1

-1 .8
-4 .1
8.9
6.1

12.0
12.3
20.0
10.9

5
6
7
8

Concepts o f money 2
M -l..................................................................................................
M-1 + ......................................................................... .....................
M -2..................................................................................................
M-3...................................................................................................

7.9
6.1
9 .8
10.3

4.1
2 .7
7 .6
9 .3

- 2 .1
- 5 .0
1.8
4 .7

7.6
3.6
8.6
7.9

1.3
-1 .0
3.8
6.2

17.7
11.4
14.1
10.5

.7
-2 .3
5.4
4.9

14.8
12.1
14.2
11.9

10.1
10.0
12.7
11.3

Time and savings deposits
Commercial banks
9
Total............................................................................................
10
Savings........................................................................................
11
Other time..................................................................................
12 Thrift institutions 3.............................................. .........................

11.3
2.9
17.9
11.1

12.3
0 .2
18.2
11.6

8.4
-9 .6
15.6
8.8

1.2
-3 .1
18.5
6.8

- 1 .4
-4 .9
13.6
9 .5

2.1
0
19.8
5.6

- 1 .4
-7 .2
19.9
4.1

.8
7.8
17.6
8.8

12.2
9 .4
18.1
9 .3

13 Total loans and investments at commercial banks4.............

r13.3

*■12.7

*■13.2

rl l . 9

r7.3

*■14.1

*■8.3

*•13.0

13.2

1979

1978
Q4

Ql

1979
Q2

Mar.

Apr.

May

June

July

Aug.

Interest rates (levels, percent per annum)
Short-term rates
15 Federal Reserve discount6 .........................................................
16 Treasury bills (3-month market yield)7 ...................................
17 Commercial paper (90- to 119-day)7.8....................................

9.58
9.09
8.57
9.83

10.07
9.50
9.38
10.04

10.18
9.50
9.38
9.85

10.09
9 .50
9.48
9.90

10.01
9 .50
9.46
9.85

10.24
9.50
9.61
9.95

10.29
9.50
9.06
9.76

10.47
9.69
9.24
9.87

10.94
10.24
9 .52
10.43

Long-term rates
Bonds
U.S. government9.....................................................................
State and local government10..............................................
Aaa utility (new issue)11........................................................

8.78
6.28
9.23

9.03
6.37
9.58

9.08
6.22
9.66

9.08
6.33
9.62

9.12
6.29
9.70

9.21
6.25
9.83

8.91
6.13
9.50

8.92
6.13
9.58

8.97
6.20
9.48

21 Conventional mortgages12.........................................................

10.12

10.33

10.35

10.35

10.55

10.80

10.90

10.95

11.10

18
19
20

1. Includes total reserves (member bank reserve balances in the current
week plus vault cash held two weeks earlier); currency outside the U.S.
Treasury, Federal Reserve Banks and the vaults o f commercial banks;
and vault cash o f nonmember banks.
2. M -l equals currency plus private demand deposits adjusted.
M -l-f equals M -l plus savings deposits at commercial banks, NOW
accounts at banks and thrift institutions, credit union share draft ac­
counts, and demand deposits at mutual savings banks.
M-2 equals M -l plus bank time and savings deposits other than large
negotiable certificates o f deposit (CDs).
M-3 equals M-2 plus deposits at mutual savings banks, savings and
loan associations, and credit union shares.
3. Savings and loan associations, mutual savings banks, and credit
unions.
4. Quarterly changes calculated from figures shown in table 1.23.
5. Seven-day averages o f daily effective rates (average o f the rates on
a given date weighted by the volume o f transactions at those rates).




6. Rate for the Federal Reserve Bank o f New York.
7. Quoted on a bank-discount basis.
8. Beginning Nov. 1977, unweighted average o f offering rates quoted
by at least five dealers. Previously, most representative rate quoted by
these dealers.
9. Market yields adjusted to a 20-year maturity by the U.S. Treasury.
10. Bond Buyer series for 20 issues o f mixed quality.
11. Weighted averages o f new publicly offered bonds rated Aaa, Aa,
and A by M oody’s Investors Service and adjusted to an Aaa basis.
Federal Reserve compilations.
12. Average rates on new commitments for conventional first mortgages
on new homes in primary markets, unweighted and rounded to nearest
5 basis points, from Dept, o f Housing and Urban Development.
13. Unless otherwise noted, rates o f change are calculated from average
amounts outstanding in preceding month or quarter. Growth rates for
member bank reserves are adjusted for discontinuities in series that result
from changes in Regulations D and M.

A4

D om estic Financial Statistics □ Septem ber 1979

1.11

FACTORS AFFECTING MEMBER BANK RESERVES
Millions o f dollars
Monthly averages o f daily
figures

Weekly averages o f daily figures for weeks ending—

1979

1979

Factors

June

July

Aug.p

July 18

July 25

Aug.l

Aug. 8

Aug. 15

Aug. 22? Aug. 29 ?

1 Reserve Bank credit outstanding.........

129,035

131,585

131,497

132,930

131,745

131,272

129,831

131,144

132,470

131,894

2 U.S. government securities i ...............
3
Bought outright.................................
4
Held under repurchase agree­
ments ...............................................
5 Federal agency securities.....................
6
Bought outright.................................
7
Held under repurchase agree­
ments ...............................................

106,865
105,825

109,921
108,673

111,639
111,044

110,986
109,382

110,338
108,848

111,103
110,321

110,105
110,008

110,829
110,362

112,394
111,446

112,887
111,967

1,040
7,788
7,537

1,248
8,377
7,854

595
8,519
8,243

1,604
8,572
7,761

1,490
8,512
7,761

782
8,553
8,243

97
8,267
8,243

467
8,366
8,243

948
8,729
8,243

920
8,757
8,243

S upplying R eserve F unds

251

523

276

811

751

310

24

123

486

514

Acceptances............................................
Loans.......................................................
Float.........................................................
Other Federal Reserve assets.............

310
1,396
6,383
6,293

717
1,179
5,758
5,633

388
1,097
4,940
4,915

711
1,182
5,575
5,904

940
1,292
5,154
5,509

834
946
4,575
5,261

73
762
5,214
5,410

411
1,023
5,241
5,274

572
1,386
4,861
4,527

429
1,116
4,228
4,475

12 Gold stock..............................................
13 Special drawing rights certificate

11,328

11,299

11,266

11,291

11,291

11,291

11,286

11,259

11,259

11,259

14 Treasury currency outstanding...........

1,800
12,357

1,800
12,446

1,800
12,529

1,800
12,448

1,800
12,456

1,800
12,486

1,800
12,488

1,800
12,501

1,800
12,551

1,800
12,564

115,819
369

117,701
335

118,244
265

118,082
353

117,480
320

117,371
282

117,962
265

118,512
267

118,362
266

118,051
265

3,271
284
661

3,303
288
761

3,021
294
634

3,307
279
857

3,182
248
826

3,095
282
716

2,719
306
677

2,957
294
608

3,183
293
562

2,986
277
607

8
9
10
11

A bsorbing R eserve F unds
15 Currency in circulation........................
16 Treasury cash holdings.........................
Deposits, other than member bank
reserves, with Federal Reserve
Banks
17 Treasury...................................................
18 Foreign.....................................................
19 Other........................................................
20 Other Federal Reserve liabilities and
capital...................................................
21 Member bank reserves with Federal
Reserve Banks....................................

4,294

4,551

4,572

4,510

4,618

4,917

4,189

4,387

4,718

4,856

29,822

30,191

30,062

31,082

30,616

30,185

29,286

29,680

30,696

30,476

End-of-month figures

Wednesday figures

1979

1979

June

July

Aug.?

July 18

July 25

Aug. 1

Aug. 8

Aug. 15

Aug. 22^ Aug. 29*

130,972

131,474

132,213

135,755

129,946

131,822

127,243

131,667

131,097

135,828

109,737
106,432

111,445
109,366

113,027
112,635

111,387
109,265

108,104
107,383

110,290
110,015

105,579
105,579

109,801
109,801

111,222
111,222

115,135
113,028

3,305
8,587
7,761

2,079
8,881
8,243

392
8,395
8,242

2,122
8,599
7,761

721
8,482
7,761

275
8,409
8,243

0
8,243
8,243

0
8,243
8,243

0
8,243
8,243

2,107
8,999
8,242

Supplying R eserve Funds

23 U.S. government securities 1...............
24
Bought outright.................................
25
Held under repurchase agree­
ments. ............................................
26 Federal agency securities.....................
27
Bought outright.................................
28
Held under repurchase agree­
ments ...............................................

826

638

153

838

721

166

0

0

0

757

Acceptances............................................
Loans.......................................................
Float.........................................................
Other Federal Reserve assets.............

1,400
1,558
3,924
5,766

1,159
852
3,896
5,241

475
1,572
4,123
4,621

1,064
1,501
7,434
5,770

824
1,168
6,086
5,282

588
1,348
5,719
5,468

0
887
7,082
5,452

0
2,707
6,456
4,460

0
1,509
5,649
4,474

699
917
5,498
4,580

33 Gold stock..............................................
34 Special drawing rights certificate
account................................................
35 Treasury currency outstanding...........

11,323

11,290

11,259

11,291

11,291

11,290

11,260

11,259

11,259

11,259

1,800
12,525

1,800
12,599

1,800
12,600

1,800
12,456

1,800
12,456

1,800
12,475

1,800
12,493

1,800
12,521

1,800
12,560

1,800
12,589

116,575
370

117,896
262

118,786
272

118,089
343

117,587
311

117,864
257

118,607
265

118,834
268

118,427
264

118,708
272

3,290
326
813

2,765
373
636

3,542
325
663

3,668
269
656

2,336
239
675

4,012
226
1,161

2,498
258
644

3,805
312
674

2,851
262
534

3,176
308
541

29
30
31
32

A bsorbing R eserve F unds
36 Currency in circulation........................
37 Treasury cash holdings.........................
Deposits, other than member bank
reserves, with Federal Reserve
Banks
38 Treasury...................................................
39 Foreign.....................................................
40 Other.........................................................
41 Other Federal Reserve liabilities and
capital...................................................
42 Member bank reserves with Federal
Reserve Banks....................................

4,836

4,951

4,876

4,491

4,741

4,938

4,272

4,510

4,717

4,993

30,407

30,279

29,407

33,785

29,604

28,929

26,252

28,844

29,661

33,479

1.
Includes securities loaned—fully guaranteed by U.S. government
N ote. For amounts o f currency and coin held as reserves, see table
securities pledged with Federal Reserve Banks—and excludes (if any)
1.12.
securities sold and scheduled to be bought back under matched salepurchase transactions.




Member Banks
1.12 RESERVES AND BORROWINGS

A5

Member Banks

Millions o f dollars
Monthly averages o f daily figures
1979

1978

Reserve classification
Nov.

1
2
3
5

All member banks
Reserves
At Federal Reserve Banks...............
Currency and co in ............................
Total held i ..........................................
Excess1............................................

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.®

29,853
9,794
39,728
39,423
305

31,158
10,330
41,572
41,447
125

31,935
11,093
43,167
42,865
302

30,485
10,074
40,703
40,494
209

30,399
9,776
40,316
40,059
257

30,675
9,737
40,546
40,548
-2

30,208
10,044
40,382
40,095
287

29,822
10,154
40,105
39,884
221

30,191
10,552
40,900
40,710
190

30,062
10,521
40,738
40,502
236

722
185

874
134

994
112

973
114

999
121

897
134

1,777
173

1,396
188

1,179
168

1,097
176

6,682
6,658
24
48

7,120
7,243
-1 2 3
99

7,808
7,690
118
117

6,995
6,976
19
0

6,892
6,845
47
45

6,804
6,837
-3 3
61

6,658
6,544
114
150

6,346
6,415
-6 9
78

6,605
6,586
19
97

6,358
6,427
-6 9
79

1,791
1,765
26
4

1,907
1,900
7
10

2,011
2,010
1
23

1,824
1,823
1
10

1,822
1,809
13
26

1,801
1,824
-2 3
18

1,730
1,712
18
60

1,726
1,697
29
64

1,709
1,713
-4
45

1,731
1,706
25
7

15,547
15,447
100
194

16,446
16,342
104
276

16,942
16,923
19
269

16,055
16,018
37
275

15,844
15,802
42
215

15,948
16,014
-6 6
271

15,926
15,893
33
721

15,989
15,877
112
586

16,374
16,339
35
517

16,216
16,327
-1 1 1
481

15,708
15,553
155
476

16,099
15,962
137
489

16,406
16,242
164
585

15,829
15,677
152
688

15,758
15,603
155
713

15,993
15,873
120
547

16,068
15,946
122
846

16,044
15,895
149
668

16,212
16,072
140
520

16,108
16,042
66
530

Borrowings at Federal Reserve
Banks2
7

Seasonal..............................................
Large banks in New York City

Large banks in Chicago

Other large banks

A ll other banks
20 Reserves held..........................................
22

Excess...................................................

Weekly averages o f daily figures for weeks ending
1979
June 27

29

Borrowings at Federal Reserve
Banks 2
Total.....................................................
Large banks in New York City

July 18

July 25

Aug. 1

Aug. 8

Aug. 15

29.942
10,110
40,181
40,030
151

30,885
10,439
41,448
40,802
646

28,614
10,736
39,476
39,513
-3 7

31,082
10,334
41,572
41,205
367

30,616
10,427
41,200
41,214
-1 4

30,185
10,804
41,146
40,856
290

29,286
10,813
40,256
40,115
141

29,680
10,888
40,727
40,428
299

30,696
9,848
40,695
40,670
25

30,476
10,473
41,102
40,750
352

1,586
194

1,677
186

941
162

1,182
160

1,292
167

946
173

762
176

1,023
169

1,386
175

1,116
185

6,334
6,301
33
59

6,717
6,657
60
416

6,201
6,264
-6 3
39

6,931
6,868
63
54

6,573
6,624
-5 1
7

6,608
6,544
64
0

6,349
6,323
26
24

6,482
6,489
-7
209

6,386
6,448
-6 2
14

6,461
6,418
43
50

1,755
1,737
18
185

1,656
1,645
11
0

1,789
1,782
7
0

1,735
1,743
-8
7

1,691
1,663
28
64

1,694
1,691
3
0

1,761
1,749
12
0

1,891
1,696
195
0

1,690
1,687
3
29

16,008
16,003
5
676

All member banks
Reserves
At Federal Reserve Banks...............
Currency and co in ............................
Total held i ..........................................
Required..........................................
Excess1............................................

July 11

1,615
1,600
15
105

24
25
26
27
28

July 4

16,535
16,274
261
476

15,788
15,864
—76
485

16,700
16,561
139
642

16,479
16,524
-4 5
694

16,478
16,438
40
308

16,170
16,181
-1 1
256

16,388
16,297
91
360

16,089
16,395
-3 0 6
848

16,352
16,447
-9 5
430

16,224
16,126
98
746

16,441
16,134
307
600

15,831
15,740
91
417

16,152
15,994
158
486

16,413
16,323
90
584

16,369
16,211
158
574

16,043
15,920
123
482

16,096
15,893
203
454

16,062
16,131
-6 9
524

16,295
16,198
97
607

Large banks in Chicago

Other large banks

All other banks
43 Reserves held..........................................
45

Excess...................................................

1. Adjusted to include waivers o f penalties for reserve deficiencies in
accordance with Board policy, effective Nov. 19, 1975, o f permitting
transitional relief on a graduated basis over a 24-month period when a
nonmember bank merges into an existing member bank, or when a




Aug. 22p Aug. 29*

nonmember bank joins the Federal Reserve System. For weeks for which
figures are preliminary, figures by class o f bank do not add to total
because adjusted data by class are not available,
2. Based on closing figures.

A6

D om estic Financial Statistics □ Septem ber 1979

1.13 FEDERAL FUNDS TRANSACTIONS Money Market Banks
Millions o f dollars, except as noted
1979, week ending Wednesday
Type
July 4

July 11

July 18

July 25

Aug. 1

Aug. 8

Aug. 15

Aug. 22

Aug. 29

Total, 46 banks
Basic reserve position
1 Excess reserves1....................................
Less:
2 Borrowings at Federal Reserve
Banks...................................................
3 N et interbank federal funds
transactions........................................
Equals : Net surplus, or deficit ( —)
4 Amount..................................................
5 Percent o f average required
reserves...............................................

6
7
8
9
10

Interbank federal funds transactions
Gross transactions
Purchases...........................................
Sales....................................................
Two-way transactions2 .......................
Net transactions
Purchases o f net buying banks...,
Sales o f net selling banks..............

Related transactions with U.S.
government securities dealers
11 Loans to dealers 3.........................
12 Borrowings from dealers4 .........
13 Net loans........................................

297

-3 1

101

-4 1

58

69

82

39

173

828

285

137

342

173

64

238

318

174

19,195

23,670

20,926

20,175

18,066

22,235

21,508

20,972

17,549

-1 9 ,7 2 6

-2 3 ,9 8 6

-2 0 ,9 6 2

-2 0 ,5 5 8

-1 8 ,1 8 1

-2 2 ,2 3 1

-2 1 ,6 6 3

-2 1 ,2 5 1

-1 7 ,5 4 9

115.5

145.5

118.4

118.7

106.2

132.3

126.4

124.6

102.8

29,014
9,819
6,716

31,723
8,053
6,786

29,583
8,657
6,378

27,484
7,308
6,372

26,167
8,101
6,312

29,858
7,623
6,386

30,034
8,527
6,075

28,941
7,969
5,846

26,823
9,275
6,460

22,298
3,102

24,937
1,267

23,205
2,280

21,112
937

19,854
1,789

23,473
1,237

23,959
2,452

23,095
2,123

20,346
2,815

3,628
1,868
1,760

4,919
1,344
3,575

2,738
1,843
895

2,492
2,088
404

2,529
2,146
383

3,959
1,814
2,144

2,730
1,883
847

3,246
2,240
1,007

2,646
1,980
666

17

39

85

8 banks in New York City
Basic reserve position
14 Excess reserves1....................................
L ess:
15 Borrowings at Federal Reserve
Banks...................................................
16 Net interbank federal funds
transactions........................................
E q u a l s : Net surplus, or deficit ( —)
17 Am ount...................................................
18 Percent o f average required
reserves...............................................
Interbank federal funds transactions
Gross transactions
19
Purchases............................................
20
Sales....................................................
21 Two-way transactions2 .......................

63

-6

35

-4 2

7

47

413

29

54

7

0

0

205

14

0

5,833

7,082

4,159

5,383

5,412

6,539

5,505

5,378

3,675

-6 ,1 8 3

- 7 ,1 1 6

- 4 ,1 7 8

-5 ,4 3 2

-5 ,4 0 5

- 6 ,4 9 2

- 5 ,6 9 3

- 5 ,3 5 3

-3 ,5 9 1

103.5

126.5

67.9

91.6

92.0

114.0

97.5

92.0

62.0

6,999
1,166
1,057

7,905
823
823

6,252
2,093
1,052

6,497
1.114
1.114

6,359
946
947

7,453
914
914

6,509
1.004
1.005

6,225
847
847

5,174
1,499
1,336

5,942
109

7,082
0

5,200
1,041

5,383
0

5,412
0

6,539
0

5,505
0

5,377
0

3,838
163

2,165
628
1,537

3,478
633
2,844

1,652
686
966

1,630
632
999

1,613
727
886

2,735
783
1,952

1,732
823
909

2,199
667
1,532

1,615
789
826

66

0

89

N e t tra n s a c tio n s

22
23

Purchases o f net buying banks.. ..
Sales o f net selling banks...............

Related transactions with U.S.
government securities dealers
24 Loans to dealers 3...........................
25 Borrowings from dealers4 ...........
26 Net loans..........................................

38 banks outside New York City
Basic reserve position

234

-2 5

66

1

50

22

L ess:

28 Borrowings at Federal Reserve
29 Net interbank federal funds
transactions..........................................
E q u a l s : Net surplus, or deficit ( —)
30 Amount.....................................................
31 Percent o f average required
Interbank federal funds transactions
Gross transactions
34 Two-way transactions2 .........................
N et transactions
35
Purchases o f net buying banks........
36
Sales o f net selling banks.................
Related transactions with U.S.
government securities dealers
37 Loans to dealers 3....................................

For notes see end o f table.




416

256

84

335

173

64

33

304

174

13,362

16,588

16,767

14,792

12,654

15,696

16,003

15,595

13,874

-1 3 ,5 4 3

-1 6 ,8 6 9

-1 6 ,7 8 4

-1 5 ,1 2 6

-1 2 ,7 7 7

-1 5 ,7 3 9

-1 5 ,9 7 0

-1 5 ,8 9 8

-1 3 ,9 5 8

121.9

155.3

145.4

132.7

113.7

141.6

141.4

141.4

123.7

22,015
8,653
5,659

23,819
7,231
5,964

23,331
6,564
5,326

20,986
6,194
5,258

19,808
7,154
5,366

22,405
6,709
5,472

23,525
7,522
5,070

22,716
7,121
4,998

21,649
7,776
5,124

16,356
2,993

17,855
1,267

18,005
1,238

15,729
937

14,442
1,789

16,934
1,237

18,455
2,452

17,718
2,123

16,525
2,652

1,463
1,240
224

1,441
711
731

1,087
1,158
-7 1

861
1,456
-5 9 5

916
1,419
-5 0 2

1,224
1,031
192

998
1,060
-6 3

1,048
1,572
-5 2 5

1,031
1,190
-1 6 0

Federal Funds

A7

1.13 Continued
1979, week ending Wednesday
Type
July 4

July 11

July 18

July 25

Aug. 1

Aug. 8

Aug. 15

Aug. 22

Aug. 29

5 banks in City o f Chicago
Basic reserve position

40 Excess reserves1....................................
Less:
41 Borrowings at Federal Reserve
Banks...................................................
42 Net interbank federal funds
transactions........................................
Equals : Net surplus, or deficit ( —)
43 Amount...................................................
44 Percent o f average required
reserves...............................................

71

21

19

2

34

17

17

0

18

181

0

0

7

62

0

0

0

29

6,541

7,965

8,063

6,944

5,968

6,729

8,076

8,130

7,961

- 6 ,6 5 2

- 7 ,9 4 4

-8 ,0 4 5

- 6 ,9 4 9

- 5 ,9 9 6

- 6 ,7 1 3

-8 ,0 5 9

- 8 ,1 3 0

- 7 ,9 7 2

423.0

519.2

483.5

427.5

388.0

426.0

493.7

514.4

507.9

8,033
1,491
1,491

9,327
1,363
1,355

9,280
1,216
1,216

8,252
1,309
1,309

7,377
1,409
1,409

8,308
1,579
1,579

9,314
1,238
1,238

9,535
1,405
1,405

9,073
1,112
1,112

6,541
0

7,972
7

8,063
0

6,944
0

5,968
0

6,729
0

8,076
0

8,130
0

7,961
0

291
89
202

387
28
359

162
55
107

120
8
112

127
54
73

144
6
138

120
6
115

184
42
142

230
81
149

5

49

0

71

Interbank federal funds transactions

Gross transactions
45
Purchases............................................
46
Sales.....................................................
47 Two-way transactions2 .......................
Net transactions
48
Purchases o f net buying banks___
49
Sales o f net selling banks...............
R elated transactions with U.S.
government securities dealers

50 Loans to dealers 3..................................
51 Borrowings from dealers4 .................
52 Net loans................................................

33 other banks
Basic reserve position
53 Excess reserves1......................................

163

-4 6

48

-1

16

L ess:

54 Borrowings at Federal Reserve
Banks.....................................................
55 Net interbank federal funds
transactions..........................................
E q u a l s : Net surplus, or deficit ( —)
56 Amount.....................................................
57 Percent o f average required
reserves.................................................

58
59
60
61
62

Interbank federal funds transactions
Gross transactions
Purchases..............................................
Sales.......................................................
Two-way transactions2 .........................
Net transactions
Purchases o f net buying banks........
Sales o f net selling banks.................

234

256

84

328

111

64

33

304

145

6,821

8,623

8,703

7,848

6,686

8,967

7,927

7,465

5,913

- 6 ,8 9 2

- 8 ,9 2 6

- 8 ,7 3 9

-8 ,1 7 8

-6 ,7 8 1

- 9 ,0 2 7

- 7 ,9 1 2

- 7 ,7 6 8

-5 ,9 8 7

72.3

95.7

88.4

83.7

69.6

94.6

81.9

80.4

61.6

13,982
7,161
4,168

14,491
5,868
4,608

14,051
5,348
4,109

12,734
4,886
3,949

12,431
5,746
3,957

14,097
5,130
3,893

14,211
6,284
3,832

13,182
5,717
3,594

12,576
6,664
4,012

9,814
2,993

9,883
1,260

9,942
1,238

8,785
937

8,474
1,789

10,204
1,237

10,379
2,452

9,588
2,123

8,564
2,652

1,172
1,150
22

1,055
683
372

925
1,103
-1 7 8

742
1,448
-7 0 7

789
1,365
-5 7 6

1,080
1,025
55

878
1,055
-1 7 7

864
1,531
-6 6 7

800
1,109
-3 0 9

Related transactions with U.S.
government securities dealers

63 Loans to dealers 3....................................
64 Borrowings from dealers4 ....................
65 Net loans..................................................

1. Based on reserve balances, including adjustments to include waivers
o f penalities for reserve deficiencies in accordance with changes in policy
o f the Board o f Governors effective Nov. 19, 1975.
2. Derived from averages for individual banks for entire week. Figure
for each bank indicates extent to which the bank’s average purchases
and sales are offsetting.
3. Federal funds loaned, net funds supplied to each dealer by clearing
banks, repurchase agreements (purchases from dealers subject to resale),
or other lending arrangements.




4.
Federal funds borrowed, net funds acquired from each dealer by
clearing banks, reverse repurchase agreements (sales o f securities to
dealers subject to repurchase), resale agreements, and borrowings secured
by U.S. government or other securities.
N o t e . Weekly averages o f daily figures. For description o f series, see
August 1964 B u l l e t i n , pp. 944— Back data for 46 banks appear in
53.
the Board’s Annual Statistical Digest, 1971-1975, table 3.

A8

D om estic Financial Statistics □ Septem ber 1979

1.14 FEDERAL RESERVE BANK INTEREST RATES
Percent per annum
Current and previous levels
Loans to member banks
Loans to all others
under sec. 13, last par.4

Under s€sc. 10(b)2
Under secs. 13 and 13a1

Federal Reserve
Bank

Regular rate
Rate on
8/31/79

Effective
date

B oston....................
New Y ork.............
Philadelphia..........
Cleveland...............
Richmond.............
Atlanta...................

10*4
10*4
10*4
10*4
10*4
10*4

8/20/79
8/17/79
8/17/79
8/17/79
8/17/79
8/20/79

10
10
10
10
10
10

Chicago.................
St. Louis................
Minneapolis..........
Kansas City...........
D allas.....................
San Francisco. . . .

10*4
10*4
10*4
10*4
10*4
10*4

8/20/79
8/17/79
8/17/79
8/17/79
8/20/79
8/20/79

10
10
10
10
10
10

Previous
rate

Rate on
8/31/79

Special rate 3

Effective
date

Previous
rate

Rate on
8/31/79

Effective
date

11
11
11
11
11
11

8/20/79
8/17/79
8/17/79
8/17/79
8/17/79
8/20/79

10*4
10*4
10*4
10*4
10*4
10*4

11*4
11*4
11*4
11*4
11*4
11*4

8/20/79
8/17/79
8/17/79
8/17/79
8/17/79
8/20/79

11
11
11
11
11
11

8/20/79
8/17/79
8/17/79
8/17/79
8/20/79
8/20/79

11*4
10*4
10*4
10*4
10*4
10*4

10*4
11*4
11*4
11*4
11*4
11*4

8/20/79
8/17/79
8/17/79
8/17/79
8/20/79
8/20/79

Previous
rate

Rate on
8/31/79

Effective
date

11
11
11
11
11
11

13*4
13*4
13*4
13*4
13*4
13*4

8/20/79
8/17/79
8/17/79
8/17/79
8/17/79
8/20/79

13
13
13
13
13
13

11
11
11
11
11
11

13*4
13*4
13*4
13*4
13*4
13*4

8/20/79
8/17/79
8/17/79
8/17/79
8/20/79
8/20/79

13
13
13
13
13
13

Effective date

Range
(or level)—
All F.R.
Banks

F.R.
Bank
of
N .Y .

1977—Aug. 30...................
31...................
Sept. 2 ...................
Oct. 26.................

5 %-5 %
5%-5%
5%

5%

1978—Jan.

6-6*4
6 *4
6*4-7
7
7-7%
7%
7%

6*4
6*4
7
7
7%
7%
7%

8-8*4
8*4
8*4-9*4
9*4

8*4
8*4

Previous
rate

Range o f rates in recent years5

Effective date

In effect Dec. 31, 1970.,
1971—Jan.

8.
15
19.
22.
29,
Feb. 13
19
July 16,
Nov. 11.
19.
Dec. 13.
17
24.

1973—Jan.
Feb. 26.
Mar. 2
Apr. 23.
May 4.
11.
18.
June 11.
15.

Range
(or level)—
All F.R.
Banks

F.R.
Bank
of
N .Y.

5*4

5%

5%-5*4
5%
5-5%

5%
5%
5%
5
5
5

5-5%

5
4% -5

4%

4% -5
5
4%-5
4%
4*4-4%
4*4-4%

4%
5
5-5 *4
5 *4
5*4-5%

5%

5% -6

6
6-6 Vi
6%

4%

5
5
5
4%
4%
4*4
4*4

5
5*4
5*4
5*4

I*
6

Effective date

1973—July 2.
Aug. 14.
23.

7
7-7*4
7*4

F.R.
Bank
of
N .Y.

1974—Apr. 25.
30.
Dec. 9.
16.

7*4-8

7%

May

1975—Jan.

7%-7%
7*4-7%
7%
6%-7%

July

6.

10.

24.
Feb. 5.
7.
Mar. 10.
14.
May 16.

8

7% -8

23.

6%
6%-6%
6%
6-6%
6

19.
23,
Nov. 22,
26,

5*4-6
5*4
5%-5*4
5%

1976—Jan.

Aug.
Sept.
Oct.
Nov.

9 ...................
20...................
11...................
12...................
3 ...................
10...................
2 1 ...................
2 2 ...................
16...................
20...................
1...................
3...................

6

8

6

8

38

1979—July 20...................
Aug. 17...................
2 0 ...................

10

10

10-10*4
10*4

10*4
10*4

In effect Aug. 31, 1979...

10*4

10*4

6*4
6*4

1. Discounts o f eligible paper and advances secured by such paper or by
U.S. government obligations or any other obligations eligible for Federal
Reserve Bank purchase.
2. Advances secured to the satisfaction o f the Federal Reserve Bank.
Advances secured by mortgages on 1- to 4-family residential property
are made at the section 13 rate.
3. Applicable to special advances described in section 201.2(e)(2) of
Regulation A.




Range
(or level)—
All F.R.
Banks

4. Advances to individuals, partnerships, or corporations other than
member banks secured by direct obligations of, or obligations fully
guaranteed as to principal and interest by, the U.S. government or any
agency thereof.
5. Rates under secs. 13 and 13a (as described above). For description
and earlier data, see the following publications of the Board o f Governors:
Banking and Monetary Statistics. 1914-1941 and 1941-1970; Annual
Statistical Digest, 1971-1975, 1972-1976, and 1973-1977.

Policy Instruments

A9

1.15 MEMBER BANK RESERVE REQUIREMENTS1

Percent of deposits
Requirements in effect
August 31, 1979
Type o f deposit, and deposit interval
in millions o f dollars

Previous requirements

Percent

Effective date

Percent

Effective date

7
m
ny4
123/4
16V4

12/30/76
12/30/76
12/30/76
12/30/76
12/30/76

1 ft
10
12
13
16%

2/13/75
2/13/75
2/13/75
2/13/75
2/13/75

3

3/16/67

3 ft

3/2/67

3
2 ft
1

3/16/67
1/8/76
10/30/75

3 ft
3
3

3/2/67
3/16/67
3/16/67

6
2 ft
1

12/12/74
1/8/76
10/30/75

5
3
3

Net demand2
0 - 2 ................................................................................................................
2 -1 0 ..............................................................................................................
10-100..........................................................................................................
100-400........................................................................................................
Over 4 0 0 ......................................................................................................
Time and savings2-3-4
Times
0-5, by maturity
30-179 days........................................................................................
180 days to 4 years...........................................................................
4 years or m ore.................................................................................
Over 5, by maturity
30-179 days........................................................................................
180 days to 4 years...........................................................................
4 years or m ore.................................................................................

10/1/70
12/12/74
12/12/74

Legal limits
Minimum
N et demand
Reserve city banks....................................................................................
Other banks................................................................................................
Borrowings from foreign banks.............................................................
1. For changes in reserve requirements beginning 1963, see Board’s
Annual Statistical Digest, 1971-1975 and for prior changes, see Board’s
Annual Report for 1976, table 13.
2. (a) Requirement schedules are graduated, and each deposit interval
applies to that part o f the deposits o f each bank. Demand deposits
subject to reserve requirements are gross demand deposits minus cash
items in process o f collection and demand balances due from domestic
banks.
(b) The Federal Reserve Act specifies different ranges o f requirements
for reserve city banks and for other banks. Reserve cities are designated
under a criterion adopted effective Nov. 9, 1972, by which a bank having
net demand deposits o f more than $400 million is considered to have the
character o f business o f a reserve city bank. The presence o f the head
office o f such a bank constitutes designation o f that place as a reserve
city. Cities in which there are Federal Reserve Banks or branches are also
reserve cities. Any banks having net demand deposits o f $400 million or
less are considered to have the character o f business o f banks outside o f
reserve cities and are permitted to maintain reserves at ratios set for banks
not in reserve cities. For details, see the Board’s Regulation D.
(c) Effective Aug. 24, 1978, the Regulation M reserve requirements




Maximum

10
7
3
0

22
14
10
22

on net balances due from domestic banks to their foreign branches and
on deposits that foreign branches lend to U.S. residents were reduced to
zero from 4 percent and 1 percent, respectively. The Regulation D reserve
requirement on borrowings from unrelated banks abroad was also reduced
to zero from 4 percent.
(d) Effective with the reserve computation period beginning Nov. 16,
1978, domestic deposits o f Edge corporations are subject to the same
reserve requirements as deposits o f member banks.
3. Negotiable order o f withdrawal (NOW) accounts and time deposits
such as Christmas and vacation club accounts are subject to the same
requirements as savings deposits.
4. The average reserve requirement on savings and other time deposits
must be at least 3 percent, the minimum specified by law.
5. Effective Nov. 2, 1978, a supplementary reserve requirement of 2
percent was imposed on time deposits o f $100,000 or more, obligations
o f affiliates, and ineligible acceptances.
N o t e . Required reserves must be held in the form o f deposits with
Federal Reserve Banks or vault cash.

A10 Domestic Financial Statistics □ September 1979
.16 MAXIMUM INTEREST RATES PAYABLE on Time and Savings Deposits at Federally Insured Institutions
Percent per annum
Commercial banks

Type and maturity of deposit

In effect August 31,1979
Percent

1 Savings.........................................
2 Negotiable order of withdrawal
accounts 1 .................................

5%
5

Effective
date

Savings and loan associations and
mutual savings banks

Previous maximum
Percent

7/ 1/79
1/ 1/74

5

9/ 1/79
7/ 1/73
7/ 1/73
7/ 1/73
11/ 1/73

5
5

Effective
date

7/ 1/73

In effect August 31,1979
Percent

Effective
date

5Vi

7/1/79

5

(8)

1/1/74

Previous maximum
Percent

Effective
date

51/4
(8)

(7)

Time accounts2

Fixed ceiling rates by maturity
30-89 days.........................................
90 days to 1 year...............................
1 to 2 years3......................................
2 to 2 Vi years3..................................
2Vi to 4 years3..................................
4 to 6 years4 ......................................
6 to 8 years4 ......................................
8 years or more4 ...............................
Issued to governmental units (all
maturities)......................................
Individual retirement accounts and
Keogh (H.R. 10) plans
(3 years or more) 5.........................
Special variable ceiling rates by maturity
13 6 months (money market time
deposits)6 .........................................
14 4 years or m ore...................................

51/4
5%

6/1/78

O1
)
(l2)

1V4

6/1/78

7/6/77

12/23/74
6/1/78

O1)
(12)

O1
)
( l2)

11/1/73

(u )
( 12)

62
1/
6V
4

m

7/
34

(n )
( 12)

(8)
5K
5V
4
6
6
(10)
7V
i
(8)
7%

12/23/74

6/1/78

(8)
35%

12/23/74

6/1/78

6Vi
71/4
m

1. For authorized states only. Federally insured commercial banks,
savings and loan associations, cooperative banks, and mutual savings
banks in Massachusetts and New Hampshire were first permitted to offer
negotiable order of withdrawal (NOW) accounts on Jan. 1, 1974.
Authorization to issue NOW accounts was extended to similar institutions
throughout New England on Feb. 27, 1976, and in New York State on
Nov. 10, 1978.
2. For exceptions with respect to certain foreign time deposits see the
F e d e r a l R eserve B u lle t in for October 1962 (p. 1279), August 1965 (p.
1094), and February 1968 (p. 167).
3. No minimum denomination. Until July 1, 1979, a minimum of
$ 1,000 was required for savings and loan associations, except in areas
where mutual savings banks permitted lower minimum denominations.
This restriction was removed for deposits maturing in less than 1 year,
effective Nov. 1, 1973.
4. No minimum denomination. Until July 1, 1979, minimum denomina­
tion was $ 1,000 except for deposits representing funds contributed to an
Individual Retirement Account (IRA) or a Keogh (H.R. 10) Plan es­
tablished pursuant to the Internal Revenue Code. The $1,000 minimum
requirement was removed for such accounts in December 1975 and No­
vember 1976, respectively.
5. Accounts maturing in less than 3 years subject to regular ceilings.
6 . Must have a maturity of exactly 26 weeks and a minimum denomina­
tion of $ 10,000 , and must be nonnegotiable.
7. July 1, 1973, for mutual savings bank; July 6 , 1973 for savings and
loan associations.
8. No separate account category.
9. Multiple maturity: July 20, 1966; single maturity: September 26,
1966.
10. Between July 1, 1973, and Oct. 31, 1973, there was no ceiling for
certificates maturing in 4 years or more with minimum denominations
of $ 1,000 ; however, the amount of such certificates that an institution
could issue was limited to 5 percent of its total time and savings deposits.
Sales in excess of that amount, as well as certificates of less than $1,000,
were limited to the 6 Vi percent ceiling on time deposits maturing in 2 Vi
years or more.
Effective Nov. 1, 1973, ceilings were reimposed on certificates maturing




7/ 1/73
(9>
1/21/70
1/21/70
1/21/70

5Vi
5V
4
5Y
4
( 10)
71/4
(8
)
m

73/4

7/6/77

(7)
(7)
(7)

11/1/73
12/23/74
6/1/78

C
11)
( 12)

(n )
( 12)

1/21/70
1/21/70

1111no
1111110
11/1/73

(n )
(i2)

in 4 years or more with minimum denominations of $1,000. There is no
limitation on the amount of these certificates that banks can issue.
11. Commercial banks, savings and loan associations, and mutual
savings banks were authorized to offer money market time deposits effec­
tive June 1,1978. The ceiling rate for commercial banks is the discount rate
on most recently issued 6-month U.S. Treasury bills. Until Mar. 15,
1979, the ceiling rate for savings and loan associations and mutual savings
banks was V percentage point higher than the rate for commercial banks.
4
Beginning Mar. 15, 1979, the V percentage point interest differential
4
is removed when the 6-month Treasury bill rate is 9 percent or more.
The full differential is in effect when the 6-month bill rate is 8 % percent
or less. Thrift institutions may pay a maximum 9 percent when the 6-month
bill rate is between 8 % and 9 percent. Also effective March 15, 1979,
interest compounding was prohibited on money market time depositat all offering institutions. For both commercial banks and thrift institu­
tions, the maximum allowable rates in July were as follows: Aug. 2,9.301;
Aug. 9,9.320; Aug. 16,9.481; Aug. 23,9.504; Aug. 30,9.645.
12. Effective July 1, 1979, commercial banks, savings and loan associa­
tions, and mutual savings banks are authorized to offer variable ceiling
accounts with no required minimum denomination and with maturities of
4 years or more. The maximum rate for commercial banks is 1 percent­
age points below the yield on 4-year U.S. Treasury securities; the ceiling
rate for thrift institutions is lA percentage point higher than that for com­
mercial banks. In August, the ceiling was 7.95 percent at commercial banks
and 8.20 percent at thrift institutions.
N o te . Maximum rates that can be paid by federally insured commer­
cial banks, mutual savings banks, and savings and loan associations are
established by the Board of Governors of the Federal Reserve System,
the Board of Directors of the Federal Deposit Insurance Corporation,
and the Federal Home Loan Bank Board under the provisions of 12
CFR 217, 329, and 526, respectively. The maximum rates on time de­
posits in denominations of $100,000 or more with maturities of 30-89
days were suspended in June 1970; such deposits maturing in 90 days or
more were suspended in May 1973. For information regarding previous
interest rate ceilings on all types of accounts, see earlier issues of the
F ederal Reserve B u lletin , the Federal Home Loan Bank Board Journal,
and the Annual Report of the Federal Deposit Insurance Corporation.

Policy Instruments

A ll

1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS
M
illions of dollars
1976

1977

1979

1978

Type o f transaction
Feb.

Jan.

Mar.

Apr.

May

June

July

U.S. G overn m en t S ecu rities
Outright transactions (excluding matched sa lepurchase transactions)

Treasury bills

1 G ross purchases...........................................................
2 Gross sales......................................................................
3 R edem ptions..................................................................
Others within 1 year1

4 Gross p urchases...........................................................
5 Gross sales......................................................................
6 Exchange, or maturity shift......................................

7 R ed em p tion s..................................................................
1 to 5 years
8 G ross purchases...........................................................

9 Gross sales......................................................................
10 Exchange, or maturity sh ift......................................
5 to 10 years

11 G ross purchases...........................................................
12 G ross sales......................................................................
13 Exchange, or maturity shift......................................
Over 10 years

14 G ross purchases...........................................................
15 G ross sales......................................................................
16 Exchange, or maturity shift......................................

14,343
8,462
2 5,017
472
0

792
0

13,738
7,241
2,136

16,628
13,725
2,033

3,017

1,184

0

0

4,499 -5 ,1 7 0
0
2,500

2 3,202
2,833
177
0
-2 ,5 8 8 -6,6 4 9
1,048
0

1,572

642

758
0

584
553

4,188
0

-178

1,526
0

2,803

1,063

0

3,758
500
0
0

0

0

0
0

0
0

439
2 3,240

2 640
0

0

518
623

200

0

0
0

42

218

251

0
0

0

4,660

1,152

0

0

0
0

0
0

2,252

0

33
0

237
0

-439

-5 ,2 0 9

-1 ,1 5 2

-3 3

134
0
0
0
0 -2 ,9 7 5

0
0
0

0
0
0

0
0

0
0
0

96

350

93
0

0
0
0

0
0
0

0
0
200

0
0
0

142

800
700
228
400

4,612
475
400

23,000

251

0

561
623

2,945

200

0

0
0

64,691 56,291
60,750 58,426

61,669
63,707

62,362
61,968

54,343
53,692

52,640
52,949

40,310
40,300

11,817
10,137

5,784
6,163

2,188
3,488

15,531
12,226

18,464
19,690

7,454 -2 ,3 5 2

-2 ,4 0 3

3,552

1,708

482

17 G ross purchases........................................................... 219,707
8,639
18 G ross sales......................................................................
19 R ed em p tion s.................................................................. 25,017

20,898
7,241
4,636

24,591
13,725
2,033

3,758
500

0

20
21

M atched sale-purchase transactions
G ross sales.................................................................
Gross purchases.......................................................

196,078 425,214 511,126
196,579 423,841 510,854

22
23

Repurchase agreements
G ross purchases.......................................................
Gross sales.................................................................

232,891 178,683 151,618
230,355 180,535 152,436

3,117
4,201

6,931
6,931

24 N et change in U.S. government securities.........

0

100

-724

0
0
0

All maturities1

426

0

724

22,361
21,240

2,205

673

2,545

0

2,600

0

0

1,565

0

48
-3 0

0
0

2,012

475
400

-673

225

0

0

228
400

9,087

5,798

7,743

-9 ,2 8 3

2,207

891

1,433

0
20

223

301
173
235

0

0

379

169

10

*

23

100

24,480

0
0

0
0

F ederal A gency O bligations

25
26
27

O utright transactions
Gross purchases.......................................................
Gross sales.................................................................
R ed em p tion s.............................................................

28
29

Repurchase agreements
Gross purchases.......................................................
G ross sales.................................................................

10,520
10,360

13,811
13,638

40,567
40,885

713
846

1,152
1,152

30 N et change in federal agency obligations...........

882

1,383

-4 2 6

-522

31 Outright transactions, n e t .........................................
32 Repurchase agreements, n e t.....................................

-545
410

-1 9 6
159

-3 6 6

33 N et change in bankers acceptances.......................

-135

-3 7

34 Total net change in System Open Market
Account.............................................................

9,833

7,143

0

0
0

371

*

0

40

33

0
0

2,851
2,482

1,173
1,392

1,149
1,298

4,443
3,617

7,247
7,434

-2 0

345

-219

-189

1,163

295

-587

0

0
0

204

48

-2 5 2

1,400

-241

-366

-587

0

204

48

-2 5 2

1,400

-241

6,951

-10,392

2,187

8,003 -2 ,5 2 4

-2 ,8 4 4

6,115

1,761

0
0

0
0

B ankers A cceptances

1. Both gross purchases and redemptions include special certificates
created when the Treasury borrows directly from the Federal Reserve,
as follows (millions of dollars): Sept. 1977, 2,500; Mar. 1979, 2,600.
2. In 1976, the System acquired $189 million of 2-year Treasury notes
in exchange for maturing bills. In April 1979, the System acquired $640
million of 2-day cash management bills in exchange for maturing 2-year
notes. New 2-year notes were later obtained in exchange for the maturing




0

0

0

0

0

0

bills. Each of these transactions is treated in the table as both a purchase
and a redemption.
N o te . Sales, redemptions, and negative figures reduce holdings of
the System Open Market Account; all other figures increase such holdings.
Details may not add to totals because of rounding.

A 12

Domestic Financial Statistics □ September 1979

1.18 FEDERAL RESERVE BANKS

Condition and Federal Reserve Note Statements

Millions of dollars
Wednesday
1979

Account
Aug. 1

Aug. 8

End of month
1979

Aug. 15

Aug. 22p

Aug. 29 p

June

July

Aug.p

Consolidated condition statement
A ssets

11,290
1,800
398

11,260
1,800
400

11,259
1,800
425

11,259
1,800
429

11,259
1,800
437

11,323
1,800
371

11,290
1,800
397

11,259
1,800
441

1,348

887

2,707

1,509

917

1,558

852

1,572

0

0

0

0

0

0

0

0

0

588

0
0

0
0

0
0

0

699

0

1,400

0

1,159

475

8,243
166

8,243

8,243

8,243

0

0

0

8,242
757

7,761
826

8,243
638

8,242
153

Bought outright
Bills......................................................................

41,261

36,825

40,071

41,492

43,298

0
0

0
0

40,612

55,645
14,085

0

0

111,222
0

54,505
13,557
106,432
3,305

0
0

Total i ..................................................................

55,645
14,085
113,028
2,107

0
0

42,905

55,645
14,085
109,801

0
0

38,370

55,055
13,699
105,579

0
0

55,055
13,699
110,015
275

0
0

17

110,290

105,579

109,801

111,222

115,135

18 Total loans and securities.......................................

120,635

114,709

120,751

120,974

125,750

12,513
399

13,291
399

13,924
400

11,918
400

2,189
2,880

2,201

2,852

2,188
1,872

152,104

146,912

1
2 Special drawing rights certificate account...........

3
Loans

4 Member bank borrowings....................................
5
Acceptances

6

7 Held under repurchase agreements.......................
Federal agency obligations
8

9

0

U.S. government securities
10
11
12

13
14
15
16

19
20

Other assets

21
22

23

0
0

55,055
13,699
109,366
2,079

55,645
14,085
112,635
392

109,737

111,445

113,027

121,282

122,337

123,469

11,627
400

10,488
397

11,712
399

9,852
400

2,209
1,865

2,229
1,951

2,942
2,427

2,182
2,660

2,213
2,008

152,619

150,854

155,453

151,030

152,777

151,442

L iabilities

24

106,044

106,779

107,006

106,560

106,827

104,794

105,957

106,900

25
26
27
28

28,929
4,012
226
1,161

26,252
2,498
258
644

28,844
3,805
312
674

29,661
2,851
262
534

33,479
3,176
308
541

30,407
3,290
326
813

30,279
2,765
373
636

29,407
3,542
325
663

29

34,328

29,652

33,635

33,308

37,504

34,836

34,053

33,937

30
31

6,794
1,845

6,209
1,811

7,468
1,868

6,269
1,887

6,129
1,979

6,564
1,846

7,816
1,884

5,729
1,813

149,011

144,451

149,977

148,024

152,439

148,040

149,710

148,379

1,130
1,078
885

1,130
1,078
253

1,130
1,078
434

1,130
1,078
622

1,131
1,078
805

1,126
1,078
786

1,129
1,078
860

1,131
1,078
854

152,104

146,912

152,619

150,854

155,453

151,030

152,777

151,442

82,259

81,709

83,010

83,960

81,902

78,140

82,405

82,133

Deposits

32
Capital A ccounts
33
34
35
36 Total liabilities and capital accounts.....................
37

Memo: M arketable U.S. governm ent securities

held in custody for foreign and international

Federal Reserve note statement
38

Federal Reserve notes outstanding (issued to
Bank)...............................................................

120,150

120,479

120,697

121,022

121,377

118,148

120,035

121,408

39
40
41
42 U.S. government and agency securities..............

11,290
1,800
921
106,139

11,260
1,800
689
106,730

11,259
1,800
1,644
105,994

11,259
1,800
1,215
106,748

11,259
1,800
669
107,649

11,323
1,800
1,116
103,909

11,290
1,800
652
106,293

11,259
1,800
1,090
107,259

43

120,150

120,479

120,697

121,022

121,377

118,148

120,035

121,408

Collateral held against notes outstanding

1.
Includes securities loaned—fully guaranteed by U.S. government
2. Beginning December 29, 1978, such assets are revalued monthly
securities pledged with Federal Reserve Banks—and excludes (if any)
at market exchange rates.
securities sold and scheduled to be bought back under matched sale3. Includes exchange-translation account reflecting, beginning December
purchase transactions.
29, 1978, the monthly revaluation at market exchange rates of foreignexchange commitments.




Reserve Banks

A 13

1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings
M
illions of dollars
Wednesday
1979

Type and maturity
Aug. 1

End of month
1979

Aug. 15

Aug. 8

Aug. 29

Aug. 22

June 30

917
873
44

1,558
1,469
89

1,572
1,441
131

0

19 91 days to 1 year......................................................
21 Over 5 years to 10 years..........................................

0

0

0

0

0

0

0

0
0
0
0

0
0
0
0

0
0
0
0

699
699

400
400

1,159
1,159

475
475

0
0

17 Within 15 days 1 .......................................................

2,707
2,575
132

588
588

14 Over 5 years to 10 years..........................................

887
742
145

0
0

0
0

0
0

110,290
5,223
19,116
34,035
27,685
12,321
11,910

105,579
4,466
15,624
33,573
27,685
12,321
11,910

109,801
3,509
19,520
35,464
26,791

111,222

3,449
21,553
34,912
26,791

115,135
6,187
22,632
35,008
26,791

12,221

12,221

12,296

12,296

12,296

111,445
5,851
19,553
34,125
27,685
12,321
11,910

113,027
2,821
23,419
35,477
26,793

12,221

109,737
5,748
19,434
31,928
28,634
12,225
11,768

8,409
166
377
1,225
4,340
1,505
796

8,243

8,243
150
279
1,173
4,340
1,505
796

8,243

8,999
885
185
1,242
4,452
1,439
796

8,587
922
401
915
4,064
1,510
775

8,881
678
377
1,185
4,340
1,505
796

8,395
281
185
1,242
4,452
1,439
796

0

429
1,174
4,340
1,505
795

0
0

210

219
1,173
4,340
1,505
796

851
786
65

Aug. 31

1,348
1,219
129

9 U.S. government securities......................................
10 Within 15 days*.......................................................

1,509
1,449
60

July 31

12,221

12,296

1. Holdings under repurchase agreements are classified as maturing
within 15 days in accordance with maximum maturity of the agreements.

1.20 BANK DEBITS AND DEPOSIT TURNOVER
Debits are shown in billions of dollars, turnover as ratio of debits to deposit. Monthly data are at annual rates.

Bank group, or type
of customer

1976

1977

1979
1978
Mar.

June

May

Apr.

July

Debits to demand deposits2 (seasonally adjusted)
1 All commercial banks...............
2 Major New York City banks..
* Other banks...............................

29,180.4
11.467.2
17.713.2

34,322.8
13,860.6
20,462.2

40,300.3
15,008.7
25,291.6

44.920.4
15,644.9
29.275.5

46,612.2
16,898.7
29,713.5

47,545.4
16,960.3
30,585.2

50,388.3
19,747.4
30,641.0

52,102.7
20,480.5
31,622.2

658.8
72.6
586.2

732.8
74.1
658.8

167.3
685.4
112.5

171.9
717.7
115.2

3.1
7.2
2.9

3.4
7.2
3.2

Debits to savings deposits 3 (not seasonally adjusted)
174.0
21.7
152.3

4 All customers.............................
5 Business1....................................
6 Others.........................................

418.1
56.7
361.4

598.3
76.1
522.2

698.0
71.7
626.4

764.4
69.4
695.0

Demand deposit turnover2 (seasonally adjusted)
7 All commercial banks...............
8 Major New York City banks. .
9 Other banks...............................

116.8
411.6
79.8

129.2
503.0
85.9

139.4
541.9
96.7

154.4
571.8
111.1

156.8
618.4
110.1

160.3
619.1
113.6

Savings deposit turnover 3 (not seasonally adjusted)
10 All customers.............................
11 Business1 ...................................
12 Others.........................................

1.6

4.1
1.5

1. Represents corporations and other profit-seeking organizations (ex­
cluding commercial banks but including savings and loan associations,
mutual savings banks, credit unions, the Export-Import Bank, and
federally sponsored lending agencies).
2. Represents accounts of individuals, partnerships, and corporations,
and of states and political subdivisions.
3. Excludes negotiable order of withdrawal (NOW) accounts and
special club accounts, such as Christmas and vacation clubs.




1.9
5.1
1.7

2.8

7.4
2.5

3.2
7.0
3.0

3.6
6.8

3.4

N o te . Historical data—estimated for the period 1970 through June
1977, partly on the basis of the debits series for 233 SMSAs, which were
available through June 1977—are available from Publications Services,
Division of Support Services, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551. Debits and turnover data for savings
deposits are not available prior to July 1977.

A14

Domestic Financial Statistics □ September 1979

1.21 MONEY STOCK MEASURES AND COMPONENTS
B
illions of dollars, averages of daily figures

Item

1975
Dec.

1976
Dec.

1977
Dec.

1978
Dec.

1979
Feb.

Mar.

Apr.

May

June

July

Seasonally adjusted
M easures1
2 9 5 .4
4 5 6 .8
6 6 4 .8
1 ,0 9 2 .4
7 4 5 .8
1 ,1 7 3 .5

31 3 .8
5 1 7 .2
7 4 0 .6
1 ,2 3 5 .6
8 0 3 .0
1 ,2 9 8 .0

338.7
5 6 0 .6
8 0 9 .4
1 ,3 7 4 .3
883.1
1 ,4 4 8 .0

3 6 1 .2
5 8 7 .2
8 7 5 .8
1 ,5 0 0 .1
9 7 2 .4
1 ,5 9 6 .7

3 5 8 .6
580.1
8 7 6 .7
1 ,5 0 9 .7
9 7 8 .8
1 ,6 1 1 .8

3 5 9 .0
5 7 9 .6
8 7 9 .5
1 ,5 1 7 .5
9 7 8 .5
1 ,6 1 6 .5

3 6 4 .3
585.1
8 8 9 .8
1 ,5 3 0 .8
9 8 4 .8
1 ,6 2 5 .9

364 .5
5 8 4 .0
8 9 3 .8
1 ,5 3 7 .0
9 8 4 .4
1 ,6 2 7 .6

3 6 9 .0
5 8 9 .9
9 0 4 .4
1 ,5 5 2 .3
9 8 9 .3
1 ,6 3 7 .2

372 .1
5 9 4 .8
9 1 4 .0
1 ,5 6 6 .9
9 9 8 .7
1 ,6 5 1 .6

7 Currency......................................................

7 3 .8

8 0 .8

8 8 .6

9 7 .5

9 8 .9

9 9 .4

1 0 0 .2

1 00.7

1 01.5

1 02.3

C om m ercial bank deposits
D em a n d ......................................................
Tim e and savin gs.....................................
S avin gs....................................................
N egotiable C D s2.................................
Other tim e .............................................

221.7
4 5 0 .3
160.7
8 1 .0
2 0 8 .6

2 3 3 .0
4 8 9 .2
202.1
6 2 .4
224.7

250.1
5 4 4 .4
219.7
7 3 .7
2 5 1 .0

2 6 3 .7
6 1 1 .2
2 2 3 .0
9 6 .6
2 9 1 .5

2 5 9 .7
6 2 0 .2
2 1 8 .6
102.1
2 9 9 .5

25 9 .5
61 9 .5
2 1 7 .7
9 9 .0
3 02.9

2 6 4 .1
6 2 0 .6
2 1 7 .7
9 5 .0
3 0 7 .9

2 6 3 .8
61 9 .9
2 1 6 .4
9 0 .6
3 1 3 .0

2 6 7 .5
6 2 0 .3
2 1 7 .8
8 4 .9
3 1 7 .6

2 6 9 .8
6 2 6 .6
2 1 9 .5
8 4 .7
3 2 2 .4

13 N onbank thrift institutions 3 ................

4 2 7.7

4 9 5 .0

5 6 4 .9

6 2 4 .4

6 3 3 .0

6 3 8 .0

6 4 1 .0

6 4 3 .2

64 7 .9

6 5 2 .9

1
2
3
4
5
6

M - l ...............................................................
M -l 4 - ...........................................................
M -2 ...............................................................
M -4 ...............................................................
C omponents

8
9
10
11
12

N o t seasonally adjusted
M easures1
303.9
4 6 3 .6
6 7 0 .0
1 ,0 9 5 .0
7 5 3 .5
1 ,1 7 8 .4

3 2 2 .6
5 2 4 .2
7 4 5 .8
1 ,2 3 8 .3
8 1 0 .0
1 ,3 0 2 .6

3 4 8 .2
5 6 8 .0
8 1 4 .9
1 ,3 7 7 .2
8 9 0 .8
1 ,4 5 3 .2

3 7 1 .3
5 9 5 .2
8 8 1 .5
1 ,5 0 2 .8
9 8 1 .0
1 ,6 0 2 .4

351 .9
5 7 2 .8
8 7 1 .0
1 ,5 0 2 .1
9 7 0 .6
1 ,6 0 1 .7

3 5 3 .7
5 7 5 .6
8 7 8 .2
1 ,5 1 7 .4
9 7 5 .7
1 ,6 1 4 .9

3 6 7 .4
5 9 0 .7
8 9 6 .8
1 ,5 4 0 .8
9 8 9 .5
1 ,6 3 3 .5

359.1
5 8 0 .5
892.1
1 ,5 3 6 .4
981 .1
1 ,6 2 5 .4

3 6 8 .2
5 9 0 .8
9 0 6 .0
1 ,5 5 6 .3
9 9 0 .4
1 ,6 4 0 .7

3 7 4 .0
5 9 8 .5
9 1 7 .0
1 ,5 7 2 .9
1 ,0 0 1 .0
1 ,6 5 6 .9

20 Currency......................................................

75 .1

82.1

90 .1

9 9 .1

9 7 .6

9 8 .6

9 9 .9

10 0 .6

101.8

10 3 .2

Com m ercial bank deposits
21 D em a n d ......................................................
M em ber..................................................
22
23
D om estic nonm em ber.......................
24 Tim e and savin gs.....................................
Savin gs....................................................
25
N egotiable C D s 2.................................
26
Other tim e.............................................
27

2 2 8 .8
162.8
6 2 .6
4 4 9 .6
159.1
8 3 .5
207.1

2 4 0 .5
169.4
6 7 .5
4 8 7 .4
2 0 0 .2
6 4 .3
2 2 2 .9

258.1
177.5
7 6 .2
5 4 2 .6
2 1 7 .7
7 5 .9
2 4 9 .0

2 7 2 .2
183.0
8 5 .2
6 0 9.7
2 2 0.9
9 9 .5
2 8 9 .2

2 5 4 .2
169.6
8 0 .7
61 8 .7
2 1 8 .0
9 9 .6
301.1

255.1
170.4
8 0 .6
6 2 2 .0
218.9
9 7 .5
305 .5

2 6 7 .5
178.5
8 5 .1
622.1
2 2 0 .1
9 2 .6
3 0 9 .3

25 8 .5
171.8
8 2 .6
6 2 2 .0
2 1 8 .2
8 8 .9
3 1 4 .9

2 6 6 .4
177.1
8 4 .8
6 2 2 .2
2 1 9 .4
8 4 .4
3 1 8 .3

2 7 0 .8
180.5
86.1
6 2 7 .0
2 2 1 .4
8 4 .0
3 2 1 .6

.7
4 2 4 .9

1 .4
4 9 2.5

2 .1
5 6 2 .3

3 .0
6 2 1 .4

2 .9
631.1

3 .0
6 3 9 .2

3 .2
6 4 4 .0

3 .2
6 4 4 .3

3.1
6 5 0 .3

3.1
6 5 5 .9

4.1

4 .4

5 .1

1 0 .2

8 .3

6 .5

5 .3

8 .4

1 0.8

1 3 .2

14
15
16
17
18
19

M - l ...............................................................
M -l + ...........................................................
M -2 ...............................................................
M -3 ...............................................................
M -4 ...............................................................
M -5 ...............................................................
C omponents

28 Other checkable deposits4.....................
29 N onbank thrift institutions 3 ................
30 U .S. government deposits (all

1. Composition of the money stock measures is as follows:
M -l: Averages of daily figures for (1) demand deposits at commercial
banks other than domestic interbank and U.S. government, less cash items
in process of collection and Federal Reserve float; (2) foreign demand
balances at Federal Reserve Banks; and (3) currency outside the Treasury,
Federal Reserve Banks, and vaults of commercial banks.
M-l + : M-l plus savings deposits at commercial banks, NOW accounts
at banks and thrift institutions, credit union share draft accounts, and
demand deposits at mutual savings banks.
M-2: M-l plus savings deposits, time deposits open account, and time
certificates of deposit (CDs) other than negotiable CDs of $100,000 or
more at large weekly reporting banks.
M-3: M-2 plus the average of the beginning- and end-of-month deposits
of mutual savings banks, savings and loan shares, and credit union shares
(nonbank thrift).

M-4: M-2 plus large negotiable CDs.
M-5: M-3 plus large negotiable CDs.
2. Negotiable time CDs issued in denominations of $100,000 or more
by large weekly reporting commercial banks.
3. Average of the beginning- and end-of-month figures for deposits of
mutual savings banks, for savings capital at savings and loan associations,
and for credit union shares.
4. Includes NOW accounts at thrift institutions, credit union share
draft accounts, and demand deposits at mutual savings banks.
N o te . Latest monthly and weekly figures are available from the Board’s
H .6 (508) release. Back data are available from the Banking Section,
Division of Research and Statistics.

NOTES TO TABLE 1.23:
1. Includes domestic chartered banks, U.S. branches, agencies, and
New York investment company subsidiaries of foreign banks; and Edge
Act corporations.
2. Excludes loans to commercial banks in the United States.
3. Loans sold are those sold outright to a bank’s own foreign branches,
nonconsolidated nonbank affiliates of the bank, the bank’s holding
company (if not a bank), and nonconsolidated nonbank subsidiaries of
the holding company.
4. United States includes the 50 states and the District of Columbia.
5. As of Dec. 31, 1977, as the result of loan reclassifications, business
loans were reduced by $0.2 billion and nonbank financial loans by $0.1
billion; real estate loans were increased by $0.3 billion.
6 . As of Dec. 31, 1978, total loans and investments were reduced by
$0.1 billion. “Other securities” were increased by $1.5 billion and total
loans were reduced by $ 1.6 billion largely as the result of reclassifications
of certain tax-exempt obligations. Most of the loan reduction was in
“all other loans.”




7. As of Dec. 31, 1978, commercial and industrial loans were reduced
$0.1 billion as a result of reclassification.
8 . As of Dec. 31, 1978, commercial and industrial loans sold outright
were increased $0.7 billion as the result of reclassifications, but $0.1
billion of this amount was offset by a balance sheet reduction of $0.1
billion as noted above.
9. As of Dec. 31, 1978, nonbank financial loans were reduced $0.1
billion as the result of reclassifications.
10.
As of Jan. 3, 1979, as the result of reclassifications, total loans and
investments and total loans were increased by $0.6 billion. Business loans
were increased by $0.4 billion and real estate loans by $0.5 billion. Non­
bank financial loans were reduced by $0.3 billion.
N o te . Data are prorated averages of Wednesday data for domestic
chartered banks, and averages of current and previous month-end data for
foreign-related institutions.

Monetary Aggregates

A15

1.22 AGGREGATE RESERVES AND DEPOSITS Member Banks
Billions of dollars, averages of daily figures
1975
Dec.

Item

1976
Dec.

1979

1978

1977
Dec.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

July

Seasonally adjusted
34.67
2 Nonborrowed.............................................................. 34.54
3 Required..................................................................... 34.40
4 Monetary base2 .................................................. ....... 106.7

34.89
34.84
34.61
118.4

36.10
35.53
35.91
127.8

41.27
40.40
41.04
142.3

41.48
40.48
41.26
143.4

40.75
39.78
40.54
143.3

40.81
39.82
40.66
143.9

40.65
39.73
40.47
144.5

40.48 M0.42
38.72 39.00
40.34 40.20
144.9 r 145.6

40.82
39.65
40.61
146.9

6 Time and savings........................................................

5 Deposits subject to reserve requirements 3.................

504.2
336.8

528.6
354.1

568.6
386.7

616.7
429.4

621.1
433.5

619.7
436.1

616.4
434.1

618.6
432.0

613.9
428.7

613.1
425.9

618.7
429.4

Demand
Private.....................................................................
U.S. government....................................................

164.5
2.9

171.5
3.0

178.5
3.5

185.1
2.3

185.6
1.9

181.9

180.5

184.7

183.5 r 184.8
1.7
2.4

187.5

7
8

1.8

1.8

1.8

1.8

Not seasonally adjusted
9 Monetary base2. ............................... .......................

108.3

120.3

129.8

144.6

144.4

141.9

142.3

144.2

144.4 '145.6

147.9

10 Deposits subject to reserve requirements 3.................
11 Time and savings........................................................

510.9
337.2

534.8
353.6

575.3
386.4

624.0
429.6

627.1
433.8

614.3
434.2

614.3
434.9

621.1
432.3

610.9
429.8

'613.9
427.2

619.2
429.8

Demand
Private.....................................................................
U.S. government....................................................

170.7
3.1

177.9
3.3

185.1
3.8

191.9
2.5

191.5
1.9

178.2

177.5
1.9

186.8

179.2 '183.9

187.8

12
13

1. Series reflects actual reserve requirement percentages with no adjustment to eliminate the effect of changes in Regulations D and M. There
are breaks in series because of changes in reserve requirements effective
Jan. 8 and Dec. 30, 1976; and Nov. 2, 1978. In addition, effective Jan. 1,
1976, statewide branching in New York was instituted. The subsequent
merger of a number of banks raised required reserves because of higher
reserve requirements on aggregate deposits at these banks.
2. Includes total reserves (member bank reserve balances in the current
week plus vault cash held two weeks earlier); currency outside the U.S.
Treasury, Federal Reserve Banks, and the vaults of commercial banks;
and vault cash of nonmember banks.

1.8

2 .0

1.8

2 .8

1.6

3. Includes total time and savings deposits and net demand deposits as
defined by Reguation D. Private demand deposits include all demand
deposits except those due to the U.S. government, less cash items in
process of collection and demand balances due from domestic commercial
banks.
N o te . Back data and estimates of the impact on required reserves
and changes in reserve requirements are shown in table 14 of the Board's
Annual Statistical Digest, 1971-1975.

1.23 LOANS AND INVESTMENTS All Commercial Banks1
Billions of dollars; averages of Wednesday figures

Category

1977
Dec.

1978
Dec.

1979
June?

July?

Aug.?

1977
Dec.

Seasonally adjusted
1
2
3
4
5
6

7
8

9

10
11
12

Total loans and securities2....................

U.S. Treasury securities.....................
Other securities...................................
Total loans and leases2......................
Commercial and industrial loans..
Real estate loans.............................
Loans to individuals.......................
Security loans..................................
Loans to nonbank financial
institutions...................................
Agricultural loans...........................
Lease financing receivables............
All other loans................................

891.1 61,014.3
99.5
93.4
159.6
6173.1
632.1
6747.8
5211.2
7246.5
5175.2
210.5
138.2
164.9
2 0.6
19.4

1,091.8
95.3
183.4
813.1
275.8
228.7
177.8
23.7

1 , 101.0

1027.9
29.1
8.1

41.4

29.2
29.1
8.3
40.5

29.5
29.2
8.5
41.1

895.9 61,018.1 « 1,083.6
>
636.9
6751.6 10806.7
4.8
3.8
3.8

1,095.5
816.8
3.7

1,104.7
825.3
3.7

927.1
28.2
7.4
643.6

1979
June?

July?

Aug.?

Not seasonally adjusted

101,079.8
94.8
182.1
10802.9
10270.6
10225.8
176.9
23.1

525.8
25.8
5.8
29.5

1978
Dec.

94.1
185.3
821.6
279.8
231.8
178.7
23.0

20.1

1,100.4
92.2
184.9
823.3
279.8
232.5
180.3
23.0

8.1

42.8

29.5
29.5
8.3
44.7

29.8
29.8
8.5
40.2

w»l,087.0
10809.2
3.8

1,097.0
820.2
.
3.7

1,104.1
827.0
3.7

899.1 61,023.8 wi,083.2
100.7
94.6
95.1
182.7
160.2
6173.9
638.3
6755.4 10805.4
5212.6
7248.2 10272.1
5175.5
210.9 10225.5
165.9
176.4
139.0
2 2 .0
20.7
23.2
526.3
25.7
5.8
31.5

927.6
28.1
7.4
646.6

1028.1
29.2

903.9 61,027.6
643.0
6759.2
4.8
3.8

1,093.3
93.6
183.3
816.5
277.2
228.9
178.2

M emo

13 Total loans and investments plus loans
sold2*3..............................................
14 Total loans plus loans sold 2*3...........
15 Total loans sold to affiliates 3.............
16 Commercial and industrial loans plus
loans sold 3 ...................................
17 Commercial and industrial loans
sold 3 ............................................
18 Acceptances held.............................
19 Other commercial and industrial
loans.........................................
20
To U.S. addressees4 ...................
21
To non-U.S. addressees..............
22 Loans to foreign banks......................
23 Loans to commercial banks in the
United States...................................

For notes see bottomof opposite page.




5213.9

8248.5

10273.4

278.6

282.5

5215.3

8250.1

10275.0

280.0

282.5

2.7
7.5

81.9

2 .8

2.7

2 .8

2 .8

7.8

8 .6

81.9
7.5

2 .8

7.5

2 .8

6.8

2 .8
8 .0

7.5

7.8

7.3

5203.7
5193.8
59.9
13.5

239.7
226.6
13.1

263.0
246.3
16.7

272.2
254.2
17.9

20.8

20.6

20.1

5203.9
5193.7
510.3
14.6

240.9
226.5
14.4
23.0

264.6
248.0
16.6

21.2

267.7
250.4
17.3

21.6

269.4
252.2
17.3
21.5

272.5
254.7
17.8
19.8

54.1

57.3

67.0

68.9

71.2

56.9

60.3

66.1

65.6

66.7

A16

Domestic Financial Statistics □ September 1979

1.24 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series
Billions o f dollars except for number of banks
1978

1979

A ccount
Oct.

N ov.

D ec.

Jan.?

Feb.p

Mar.p

Apr.?

M ay2
*

JuneP

July2
’

A ug.?

1 Loans and investm ents.............................
2 Loans, gross.................................................
3
Interbank...................................................
4
Commercial and industrial..................
5
O th er..........................................................
6 U .S . Treasury secu rities...........................

9 9 0 .4
7 2 7 .0
3 9 .2
2 1 5 .5
4 7 2 .2
9 4 .0
169.4

1 ,0 0 5 .5
7 4 1 .2
4 1 .5
2 1 8 .0
4 8 1 .6
9 3 .3
171.0

1 ,0 3 0 .4
7 6 1 .6
4 5 .3
2 2 1 .6
4 9 4 .7
9 3 .1
175.7

1 ,0 1 8 .9
7 5 0 .4
4 1 .3
2 2 1 .9
4 8 7 .2
9 2 .1
176.4

1 ,0 2 5 .2
7 5 5 .6
4 2 .1
2 2 5 .3
4 8 8 .2
9 3 .1
176.5

1 ,0 3 1 .4
7 5 9 .8
4 2 .3
2 2 7 .8
4 8 9 .6
9 3 .6
178.0

1 ,0 4 8 .3
7 7 3 .9
4 4 .4
2 3 3 .2
4 9 6 .3
9 4 .2
180 .2

1 ,0 5 9 .4
7 8 5 .3
4 5 .9
2 3 6 .8
5 0 2 .6
9 3 .2
1 8 1 .0

1 ,0 7 1 .3
7 9 7 .9
4 6 .3
2 4 1 .1
5 1 0 .6
9 1 .6
181.7

1 ,0 8 1 .8
8 0 7 .6
4 8 .1
2 4 2 .6
5 1 6 .8
9 2 .1
182.1

1 ,0 8 5 .8
8 1 0 .8
5 0 .3
2 4 4 .7
5 1 5 .8
9 0 .7
1 8 4 .3

8 Cash assets, to ta l.........................................
9
Currency and co in ..................................
10
Reserves with Federal Reserve Banks
11
Balances with depositary institutions
12
Cash items in process o f collection . . .

137.7
15.1
3 4 .6
3 6 .3
5 1 .8
5 8 .7

140.9
16.6
3 2 .6
3 8 .3
5 3 .5
6 2 .5

177.3
15.5
3 4 .4
5 2 .3
75.1
6 0 .9

139.8
15.2
2 9 .8
4 0 .2
5 4 .6
6 4 .0

147.1
1 5 .0
2 9 .7
4 2 .5
5 9 .9
6 2 .4

135.8
1 5 .2
3 0 .0
3 6 .8
5 3 .7
5 8 .9

1 39.9
1 5 .6
3 3 .9
3 9 .0
5 1 .4
5 5 .8

158.8
1 6 .0
3 2 .8
4 4 .6
6 5 .4
5 2 .7

1 46.3
16.3
3 2 .6
4 0 .8
5 6 .5
5 5 .1

1 4 0 .2
16.1
2 9 .6
4 1 .2
5 3 .4
5 3 .9

1 4 5 .7
1 6 .8
3 3 .7
4 1 .1
5 4 .1
6 2 .4

14 Total assets/total liabilities and capital. 1 ,1 8 6 .9
9 3 9 .8
3 4 5 .2
5 9 4.5
n.a.
n.a.

1 ,2 0 8 .8

1 ,2 6 8 .6

1 ,2 2 2 .7

1 ,2 3 4 .8

1 ,2 2 6 .1

1 ,2 4 4 .0

1 ,2 7 0 .9

1 ,2 7 2 .7

1 ,2 7 5 .9

1 ,2 9 3 .9

9 4 8 .5
3 4 5 .7
6 0 2 .8
n.a.
n.a.

1 ,0 1 1 .3
3 9 9 .2
6 12.1
2 1 9 .7
3 9 2 .4

9 6 1 .3
3 4 7 .5
6 1 3 .8
2 1 5 .2
3 9 8 .6

9 6 9 .2
3 52.1
617 .1
2 1 5 .2
4 0 1 .9

9 5 4 .9
3 3 5 .0
6 1 9 .8
2 1 6 .8
4 0 3 .0

9 6 4 .4
3 4 8 .0
6 1 6 .4
2 1 5 .9
4 0 0 .5

9 7 5 .5
3 5 7 .8
6 1 7 .8
2 1 5 .5
4 0 2 .3

9 7 1 .3
3 5 2 .4
6 1 8 .9
2 1 6 .4
4 0 2 .5

9 7 5 .2
3 5 2 .6
6 2 2 .6
2 1 8 .3
4 0 4 .2

9 8 2 .9
3 5 2 .4
6 3 0 .5
2 1 6 .7
4 1 3 .8

109.8
4 9 .9
8 7 .5

117.4
5 4 .7
8 8 .2

1 14.6
4 9 .1
9 3 .6

110.8
5 6 .6
9 4 .0

111.9
5 9 .0
9 4 .7

1 15.2
6 0 .9
9 5 .1

1 23.5
6 0 .8
9 5 .3

1 3 2 .0
6 5 .4
9 8 .1

137.1
6 5 .5
9 8 .9

1 3 7 .2
6 4 .9
9 8 .7

140.1
6 9 .7
101.1

n.a.
14,606

7 .5
14,618

12 .4
1 4,602

1 2 .0
14,586

4 .0
14,593

4 .8
1 4 ,597

5 .9
1 4 ,610

4 .9
14,6 1 6

1 2.9
14,620

11.9
14,5 8 4

8 .6
1 4 ,6 0 7

25 Loans and investm ents............................. 1 ,0 4 6 .4
7 8 0 .5
5 1 .5
2 4 1 .9
4 8 7 .0
29
O th er..........................................................
9 5 .2
170.7

1 ,0 6 7 .2
8 0 0 .2
5 5 .2
2 4 6 .5
4 9 8 .5
9 4 .6
172.3

1 ,0 9 7 .0
8 2 5 .5
5 7 .6
2 5 1 .2
5 1 6 .8
9 4 .5
1 7 7 .0

1 ,0 8 0 .6
8 0 9 .7
52.1
2 5 1 .8
5 0 5 .9
9 3 .3
177 .6

1 ,0 8 7 .7
8 1 5 .6
5 3 .5
2 5 5 .6
5 0 6 .5
9 4 .3
1 77.8

1 ,1 0 1 .4
8 2 7 .2
56.1
2 5 9 .8
5 1 1 .3
9 4 .9
1 7 9 .4

1 ,1 1 4 .8
8 3 7 .7
5 7 .3
2 6 4 .9
5 1 5 .4
9 5 .6
181.5

1 ,1 3 1 .0
8 5 4 .0
6 1 .8
2 6 9 .2
5 2 3 .0
9 4 .6
182 .3

1 ,1 4 6 .7
8 7 0 .5
6 0 .4
2 7 5 .2
5 3 4 .9
9 3 .1
183.1

1 ,1 5 2 .8
8 7 5 .9
6 0 .7
2 7 7 .5
5 3 7 .7
9 3 .5
1 83.5

153.9
15.1
35.1
5 0 .5
5 3 .2

157.1
16.6
3 3 .0
5 2 .5
5 5 .0

196.8
15.5
3 5 .0
6 9 .9
7 6 .4

158.2
15.2
3 0 .2
5 6 .8
5 6 .0

166.8
15.1
3 0 .3
6 0 .3
6 1 .3

1 5 7 .0
1 5.2
3 0 .7
5 6 .0
5 5 .1

156.4
1 5 .6
3 4 .5
5 3 .7
5 2 .5

1 7 6 .4
16.1
3 3 .4
6 0 .1
6 6 .8

1 6 8 .0
16.3
3 3 .4
6 0 .5
5 7 .7

160.8
16.1
3 0 .4
5 9 .7
5 4 .6

D omestically C hartered
C ommercial B a n k s 1

20 B orrow ings....................................................
22 R esidual (assets less liabilities)..............
M emo
23 U .S . Treasury note balances included

A ll C ommercial B anking
I nstitutions 2

32 Cash assets, to ta l........................................
33
Currency and co in ..................................
34
Reserves with Federal Reserve Banks
35
Balances with depositary institutions
36
Cash items in process o f c o lle c tio n ...

7 1 .6

7 6 .3

7 5 .9

7 8 .3

7 6 .8

7 4 .0

7 0 .5

6 7 .3

7 1 .3

6 9 .4

38 Total assets/total liabilities and capital 1 ,2 7 1 .9

1 ,3 0 0 .6

1 ,3 6 9 .7

1 ,3 1 7 .1

1 ,3 3 1 .4

1 ,3 3 2 .4

1 ,3 4 1 .6

1 ,3 7 4 .6

1 ,3 8 6 .0

1 ,3 8 3 .0

9 6 8 .6
3 5 9 .0
6 0 9 .6
n.a.
n.a.

9 7 9 .9
35 9 .5
6 2 0 .4
n.a.
n.a.

1 ,0 4 9 .0
4 1 8 .9
6 3 0 .0
2 2 0 .3
4 0 9 .7

9 9 4 .3
3 6 3 .2
6 3 1 .2
2 1 5 .9
4 1 5 .2

1 ,0 0 2 .5
3 68.1
6 3 4 .4
2 1 5 .9
4 1 8 .4

9 9 4 .0
3 5 5 .7
6 3 8 .3
2 1 8 .0
4 2 0 .3

9 9 7 .0
3 6 1 .7
6 3 5 .3
2 1 6 .9
4 1 8 .5

1 ,0 1 2 .5
375.1
6 3 7 .4
2 1 6 .7
4 2 0 .6

1 ,0 1 5 .6
3 7 6 .4
6 3 9 .2
2 1 7 .2
4 2 2 .0

1 ,0 1 2 .1
3 6 9 .6
6 4 2 .5
2 1 9 .1
4 2 3 .5

131.9
82.1
8 9 .3

142.6
8 8 .0
9 0 .0

14 4 .0
8 1 .2
9 5 .5

138 .0
8 8 .8
9 6 .0

138 .0
9 4 .4
9 6 .6

1 4 1 .7
9 9 .7
9 7 .1

1 50.4
9 7 .0
9 7 .1

1 59.4
102.8
1 0 0 .0

165.4
1 0 4 .0
100.9

165.8
104 .3
100 .8

n.a.
14,919

7 .5
14,932

1 2 .4
14,923

1 2 .0
14,913

4 .0
1 4,926

4 .8
1 4 ,930

5 .9
1 4,946

4 .9
1 4,954

1 2.9
14,968

11.9
14,933

44 Borrow ings...................................... .............
46 R esidual (assets less liabilities)...............
M emo
47 U .S. Treasury note balances included
in borrow ing.............................................

1. Domestically chartered commercial banks include all commercial
banks in the United States except branches of foreign banks; included are
member and nonmember banks, stock savings banks, and nondeposit
trust companies.
2. Commercial banking institutions include domestically chartered
commercial banks, branches and agencies of foreign banks, Edge Act




and Agreement corporations, and New York state foreign investment
corporations.
N ote.—F igures are partly estimated except on call dates. They include
all bank-premises subsidiaries and other significant majority-owned
domestic subsidiaries.

Commercial Banks

A ll

1.25 COMMERCIAL BANK ASSETS AND LIABILITIES Call-Date Series
M
illions of dollars, except for num of banks
ber
Account

1977

1976
June 30

Dec. 31

1978

Dec. 31

1976

June 30

Dec. 31

Total insured
1 Loans and investments, gross...............................
Loans
2

3

Gross.......................................................................

June 30

1978

Dec. 31

June 30

National (all insured)

827,696

854,733

914,779

956,431

476,610

488,240

523,000

542,218

578,734
560,077

601,122
581,143

657,509
636,318

695,443
672,207

340,691
329,971

351,311
339,955

384,722
372,702

403,812
390,630

101,461
147,500
129,562

100,568
153,042
130,726

99,333
157,936
159,264

97,001
163,986
157,393

55,727
80,191
76,072

53,345
83,583
74,641

52,244
86,033
92,050

50,519
87,886
90,728

1,003,970 1,040,945 1,129,712 1,172,772

Investments

4 U.S. Treasury securities.........................................
5 Other........................................................................
6 Cash assets..............................................................

1977

583,304

599,743

651,360

671,166

825,003

847,372

922,657

945,874

469,377

476,381

520,167

526,932

3,022
44,064
285,200

2,817
44,965
284,544

7,310
49,843
319,873

7,956
47,203
312,707

1,676
23,149
163,346

1,632
22,876
161,358

4,172
25,646
181,821

4,483
22,416
176,025

12 Interbank................................................................
13 Other........................................................................

8,248
484,467

7,721
507,324

8,731
536,899

8,987
569,020

4,907
276,296

4,599
285,915

5,730
302,795

5,791
318,215

14 Borrowings..............................................................
15 Total capital accounts............................................

75,291
75,061

81,137
75,502

89,339
79,082

98,351
83,074

54,421
41,319

57,283
43,142

63,218
44,994

68,948
47,019

16 M emo: Number of banks.....................................

14,397

14,425

14,397

14,381

4,735

4,701

4,654

4,616

7 Total assets/total liabilities1...................................
8

9

Deposits..................................................................
Demand

U.S. government....................................................
10 Interbank................................................................
11 Other........................................................................
Time and savings

State member (all insured)

Insured nonmember

144,000

144,597

152,514

157,464

207,085

221,896

239,265

256,749

102,277
99,474

102,117
99,173

110,243
107,205

115,736
112,470

135,766
130,630

147,694
142,015

162,543
156,411

175,894
169,106

18,849
22,874
32,859

19,296
23,183
35,918

18,179
24,091
42,305

16,886
24,841
43,057

26,884
44,434
20,631

27,926
46,275
20,166

28,909
47,812
24,908

29,595
51,259
23,606

23

189,579

195,452

210,442

217,384

231,086

245,748

267,910

284,221

24 Deposits..................................................................

149,491

152,472

163,436

167,403

206,134

218,519

239,053

251,539

429
19,295
52,204

371
20,568
52,570

1,241
22,346
57,605

1,158
23,117
55,550

917
1,619
69,648

813
1,520
70,615

1,896
1,849
80,445

2,315
1,669
81,131

28 Interbank................................................................
29

2,384
75,178

2,134
76,827

2,026
80,216

2,275
85,301

956
132,993

988
144,581

973
153,887

920
165,502

30
31 Total capital accounts............................................

17,310
13,199

19,697
13,441

21,736
14,182

23,167
14,670

3,559
17,542

4,155
18,919

4,384
19,905

6,235
21,384

1,023

1,019

1,014

1,005

8,639

8,705

8,729

8,760

17 Loans and investments, gross...............................
Loans

18 Gross........................................................................
19
20
21
22

Investments

U.S. Treasury securities.........................................
Other........................................................................
Cash assets..............................................................

Demand

25
26 Interbank.................................................................
27
Time and savings

32

Noninsured nonmember

Total nonmember

18,819

22,940

24,415

28,699

225,904

244,837

263,681

285,448

16,336
16,209

20,865
20,679

22,686

22,484

26,747
26,548

152,103
146,840

168,559
162,694

185,230
178,896

202,641
195,655

1,054
1,428
6,496

993
1,081
8,330

879
849
9,458

869
1,082
9,360

27,938
45,863
27,127

28,919
47,357
28,497

29,788
48,662
34,367

30,465
52,341
32,967

39

26,790

33,390

36,433

42,279

257,877

279,139

304,343

326,501

40 Deposits..................................................................

13,325

14,658

16,844

19,924

219,460

233,177

255,898

271,463

4
1,277
3,236

8

1,504
3,588

10
1,868

8

4,073

2,067
4,814

921
2,896
72,884

822
3,025
74,203

1,907
3,718
84,518

2,323
3,736
85,946

1,041
7,766

1,164
8,392

1,089
9,802

1,203
11,831

1,997
140,760

2,152
152,974

2,063
163,690

2,123
177,334

4,842
818

7,056
893

6,908
917

8,413
962

8,401
18,360

19,812

11,212

11,293
20,823

14,649
22,346

275

293

310

317

8,914

8,998

9,039

9,077

33 Loans and investments, gross...............................
34
35

Loans
Investments

36 U.S. Treasury securities.........................................
37 Other........................................................................
38

41
42
43
44
45

Demand

Time and savings

46
47 Total capital accounts............................................
48

1 Includes item not show separately.
.
s
n




For Note see table 1.24.

A18

Domestic Financial Statistics □ September 1979

1.26 COMMERCIAL BANK ASSETS AND LIABILITIES Detailed Balance Sheet, September 30,1978
Millions of dollars, except for number of banks
M[ember bank s 1
Asset account

Insured
commercial
banks

Large banks
Total
New York
City

City of
Chicago

1 Cash bank balances, items in process.........................................
Currency and coin....................................................................
Reserves with Federal Reserve Banks.....................................
Demand balances with banks in United States.....................
Other balances with banks in United States..........................
Balances with banks in foreign countries...............................
6
7 Cash items in process of collection.........................................

158,380
12,135
28,043
41,104
4,648
3,295
69,156

134,955
28,041
25,982
2,582
2,832
66,652

43,758
867
3,621
12,821
601
331
25,516

5,298
180
1,152
543
15
288
3,119

8 Total securities held—Book value..............................................

262,199
95,068
40,078
121,260
5,698
94

179,877
65,764
25,457
85,125
3,465

20,808
9,524
1,828
9,166
291

6,833
4,125
825
1,395
394
94

6,681
4,103
816
1,381
316

255,366
90,943
39,253
119,865
5,305

173,196
61,661
24,641
83,745
3,149

2

3
4
5

9

10
11
12

n

14
15
16
17
18
19
20
21
22

23
24

States and political subdivisions..............................................
All other securities....................................................................

All other trading account securities....................................
Bank investment portfolios......................................................
U.S. Treasury........................................................................
Other U.S. government agencies........................................
States and political subdivisions..........................................
All other portfolio securities................................................

8,866

Other
large
47,914
2,918

All other

Non­
member
banks 1

3,672
648
1,507
26,969

37,986
4,901
11,067
8,945
1,319
705
11,049

23,482
3,268
3
15,177
2,066
463
2,504

7,918
2,690
1,284
3,705
240

58,271
22,051
7,730
27,423
1,048
19

92,881
31,499
14,616
44,831
1,887
47

82,336
29,315
14,622
36,136
2,234
28

3,238
2,407
401
363
67

708
408
82
117

2,446
278
794
145
19

290
78
55
107
3
47

151
23
9
14
78
28

17,570
7,117
1,426
8,803
224

7,210
2,282

55,825
20,840
7,452
26,629
903

92,591
31,422
14,561
44,724
1,884

82,185
29,293
14,613
36,123
2,156

66

66

101

1,201

3,588
138

12,200

1,210

25 Federal Reserve stock and corporate stock...............................

1,656

1,403

311

111

507

475

253

26 Federal funds sold and securities resale agreement...................
27 Commercial banks..................................................................
28 Brokers and dealers..................................................................
29

41,258
34,256
4,259
2,743

31,999
25,272
4,119
2,608

3,290
1,987
821
482

1,784
1,294
396
94

16,498
12,274
2,361
1,863

10,427
9,717
541
169

9,365
9,090
140
135

30 Other loans, gross.........................................................................
31
32
Reserves for loan loss........................................................
33 Other loans, n et............................................................................

675,915
17,019
7,431
651,465

500,802
11,355
5,894
483,553

79,996
675
1,347
77,974

26,172
107
341
25,724

190,565
3,765
2,256
184,544

204,069
6,809
1,949
195,311

175,113
5,664
1,537
167,912

203,386
25,621
8,418
117,176
111,674
7,503
104,171
5,502
399
5,103
52,171

138,730
19,100
3,655
81,370
77,422
6,500
70,922
3,948
340
3,609
34,605

10,241
2,598
23
5,362
4,617
508
4,109
746
132
613
2,258

2,938
685
34
1,559
1,460
44
1,417
99
27
72
660

52,687
9,236
453
31,212
29,774
3,446
26,328
1,438
1,350
11,786

72,863
6,581
3,146
43,236
41,570
2,502
39,068
1,665
92
1,573
19,901

64,656
6,521
4,763
35,806
34,252
1,003
33,249
1,554
59
1,495
17,566

37,072
8,574
3,362
7,359
1,579
16,198
11,042
4,280
28,054
213,123

34,843
8,162
2,618
7,187
1,411
15,465
10,834
3,532
15,296
171,815

12,434
2,066
966
3,464
290
5,649
6,465
410
168
39,633

4,342
801
165
268
76
3,033
1,324
276
150
13,290

15,137
4,616
1,206
2,820
785
5,710
2,846
1,860
3,781
67,833

2,930
680
281
635
261
1,073
199
985
11,196
51,059

2,228
412
744
171
167
733
207
747
12,758
41,309

161,599
131,571
58,908
8,526
21,938
17,900
4,038
19,689
9,642
10,047
22,510
30,027
17,360

110,974
90,568
37,494
5,543
19,333
16,037
3,296
13,296
6,667
6,629
14,902
20,406
14,778

7,100
5,405
1,077
331
2,268
1,573
695
427
179
249
1,302
1,694
3,545

2,562
1,711
209
60
1,267
1,219
47
57
19
38
119
851
1,290

40,320
33,640
11,626
2,088
9,736
8,192
1,545
5,242
2,563
2,678
4,948
6,680
6,100

60,993
49,811
24,582
3,064
6,062
5,053
1,009
7,570
3,905
3,664
8,533
11,182
3,844

50,624
41,003
21,414
2,983
2,605
1,863
742
6,393
2,976
3,417
7,608
9,621
2,582

956,579

696,833

102,383

35,536

259,820

299,094

259,867

6,717
22,448
3,255
16,557
34,559

6,212

16,529
3,209
16,036
30,408

1,145
2,332
1,642
8,315
11,323

96
795
188
1,258
1,000

3,931
6,268
1,282
6,054
12,810

1,041
7,133
96
409
5,275

505
5,926
46
521
4,249

1,198,495

904,182

170,899

44,170

338,079

351,034

294,595

Other loans, gross , by category

35
36
37
38
39
40
41
42
43
44

Construction and land development.......................................
Secured by residential properties............................................
1- to 4-family residences......................................................
FHA-insured or VA-guaranteed.....................................
Multifamily residences..........................................................
FHA-insured.....................................................................

45 Loans to financial institutions....................................................
46 REITs and mortgage companies............................................
47 Domestic commercial banks....................................................
48 Banks in foreign countries.......................................................
49
50 Other financial institutions......................................................
51 Loans to security brokers and dealers........................................

56
57
58
59
60
61
62
63
64
65

Residential repair and modernization.................................
Check and revolving credit plans....................................

Other installment loans........................................................

66

70 Fixed assets—Buildings, furniture, real estate...........................
71 Investment in unconsolidated subsidiaries.................................

For notes see opposite page.



88

Commercial Banks

A19

1.26 Continued
[ember bank is1
Liability or capital account

Insured
commercial
banks

Large bankss
Total

New York
City

City of
Chicago

All other

Other
large

75 Demand deposits........................................................................
76
77 Other individuals, partnerships, and corporations.............
78 U.S. government....................................................................
79
80 Foreign governments, central banks, etc..............................
81 Commercial banks in United States.....................................
82 Banks in foreign countries.....................................................
83 Certified and officers’ checks, etc..........................................

369,030
1,282
279,651
7,942
17,122
1,805
39,596
7,379
14,253

282,450
1,089
205,591
5,720
11,577
1,728
38,213
7,217
11,315

66,035
527
31,422
569
764
1,436
21,414
5,461
4,443

10,690

84 Time deposits.............................................................................
85 Accumulated for personal loan payments............................
86
Mutual savings banks............................................................
87 Other individuals, partnerships, and corporations..............

266,496

38,086

15,954

98,525

66

392
210,439
689
40,010
6,450
7,289
1,161

0

177
29,209
61
1,952
3,780
2,077
829

0

40
12,074
40
1,554
1,145
999
103

1

States and political subdivisions............................................
Foreign governments, central banks, etc..............................
Commercial banks in United States.....................................
Banks in foreign countries.....................................................

368,562
79
399
292,120
864
59,087
6,672
7,961
1,381

148
76,333
356
16,483
1,401
3,585
219

93 Savings deposits.........................................................................
94 Individuals and nonprofit organizations...............................
95 Corporations and other profit organizations.......................
96
97 States and political subdivisions............................................
98

223,326
207,701
11,216
82
4,298
30

152,249
141,803
7,672
65
2,682
27

10,632
9,878
519
215
18

2,604
2,448
148
3
4
*

54,825
51,161
3,195
24
437

960,918

701,195

114,753

29,248

100 Federal funds purchased and securities sold under agreements
to repurchase.......................................................................
101
Commercial banks.................................................................
102
Brokers and dealers................................................................
103 Others......................................................................................

91,981
42,174
12,787
37,020

85,582
39,607
11,849
34,126

21,149
6,991
2,130
12,028

105 Mortgage indebtedness..............................................................
106 Bank acceptances outstanding..................................................
107 Other liabilities...........................................................................

8,738
1,767
16,661
27,124

8,352
1,455
16,140
23,883

108 Total liabilities............................................................................ 1,107,188
5,767
Equity capital.............................................................................

85,540

Common stock...........................................................................
Surplus.........................................................................................
Undivided profits.......................................................................
Other capital reserves.................................................................

88

89
90
91
92

1

7,864
188
252
19
1,807
207
352

100,737
256
79,429
1,987
3,446
211

10,803
1,251
3,354

Non­
member
banks 1

104,988
305
86,876
2,977
7,116
62
4,189
298
3,166

86,591
194
74,061

113,931
65
27
92,824
232

102,066
13
7
81,680
175
19,077

20,020

124
629
9

2,222

5,545
77
1,393
162
2,937

222

672

220

84,188
78,316
3,809
35
2,025

8

2

71,077
65,897
3,544
17
1,616
3

254,087

303,107

259,733

8,777
5,235
1,616
1,926

41,799
21,609
6,381
13,809

13,857
5,773
1,722
6,362

6,398
2,566
939
2,894

3,631
234
8,398
8,860

306
27
1,260
1,525

3,191
701
6,070
9,020

1,225
491
412
4,477

386
316
521
3,494

836,607

157,026

41,144

314,868

323,569

270,849

4,401

1,001

79

2,033

1,287

1,366

12,871

2,947

17,875
32,341
33,517
1,719

63,174
36
12,816
23,127
26,013
1,182

2,645
4,541
5,554
132

570
1,404
921
52

21,177
5
4,007
8,148
8,680
337

26,178
31
5,594
9,034
10,858
661

22,380
52
5,064
9,217
7,509
538

116 Total liabilities and equity capital............................................. 1,198,495

904,182

170,899

44,170

338,079

351,034

294,595

110
Ill
112
113
114
115

M emo :

117 Demand deposits adjusted 2 .......................................................
Average for last 15 or 30 days

119 Federal funds sold and securities purchased under agree121 Time deposits of $100,000 or more..........................................
123 Federal funds purchased and securities sold under agree124 Other liabilities for borrowed money.......................................

127
128
129 Number of banks.......................................................................

88

0

0

252,337

171,864

18,537

5,576

60,978

86,774

80,472

146,283

124,916

36,862

6,030

45,731

36,293

21,379

43,873
651,874
183,614
944,593

33,682
483,316
150,160
687,543

4,272
76,750
32,196
107,028

1,887
25,722
13,216
28,922

16,007
184,790
65,776
250,804

11,517
196,054
38,972
300,789

10,307
168,558
33,454
257,062

92,685
8,716

86,635
8,326

22,896
3,679

9,473
370

40,541
3,211

13,725
1,067

6,053
390

18,820
186,837
160,227
26,610

17,658
152,553
129,667
22,886

10,063
32,654
27,950
4,704

1,477
13,486
11,590
1,896

4,820
66,684
56,383
10,301

1,297
39,728
33,743
5,985

1,162
34,284
30,560
3,724

14,390

5,593

12

9

153

5,419

8,810

1. Member banks exclude and nonmember banks include 13 noninsured
trust companies that are members of the Federal Reserve System.
2. Demand deposits adjusted are demand deposits other than domestic
commercial interbank and U.S. government, less cash items reported
as in process of collection.




2

N o te . Data include consolidated reports, including figures for all
bank-premises subsidiaries and other significant majority-owned do­
mestic subsidiaries. Securities are reported on a gross basis before deduc­
tions of valuation reserves. Back data in lesser detail were shown in
previous issues of the B u lle t in .

A20

Domestic Financial Statistics □ September 1979

1.27 ALL LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of £750 Million or More on
December 31, 1977, Assets and Liabilities
Millions of dollars, Wednesday figures
1979
Account
July 4

July 11

July 18

July 25

Aug. 1?

Aug. 8 p

58,575

45,982

47,325

43,256

50,633

41,630

47,118

43,733

16,009

16,592

14,902

15,079

15,718

13,492

14,111

13,487

14,560

27,224
488,564

25,601
486,177

34,056
481,242

29,987
482,765

29,358
486,520

26,241
489,030

28,868
490,377

30,248
489,230

34,654
489,704

36,399
4,853
31.546
8,621
18,676
4,250
67,222
3,751
63,471
13,420
47,230
6,344
40,886
2,821

36,693
5,142
31,551
8,561
18,753
4,237
67,930
4,074
63,856
13,842
47,199
6,177
41,022
2,814

35,744
4,755
30,989
8,559
18,222
4,208
67,749
3,806
63,942
13,846
47,313
6,187
41,126
2,782

35,636
5,010
30,625
8,504
17,869
4,252
67,971
3,781
64,190
13,997
47,412

35,206

34,651
4,291
30,360
8,505
17,685
4,170
68,962
4,287
64,675
14,006
47,940
6,279
41,662
2,728

35,064
4,449
30,615
8,337
17,878
4,400
69,079
4,155
64,924
14,234
47,962
6,294
41,668
2,729

35,037
4,570
30,467
8,282
17,814
4,372
69,200
4,109
65,091
14,274
48,122
6,366
41,756
2,695

34,655
4,668
29,988
8,045
17,571
4,371
69,775
4,214
65,562
14,620
48,232
6,350
41,883
2,709

29,843
20,355
7,398
2,089
366,210
145,715

28,091
18,709
7,214
2,168
364,688
146,256

24,687
17,932
5,117
1,638
364,365
146,205

368,540
147,436

27,522
19,694
5,897
1,931
370,218
147,240

25,922
18,070
5,851

365,414
146,162

28,291
18,136
7,171
2,984
368,590
147,431

370,650
147,676

25,684
17,713
5,899
2,072
371,204
147,602

4,098
141,616
135,218
6,398
88,703
65,293

4,184
142,072
135,696
6,376
89,198
65,281

3,968
142,236
135,901
6,336
89,796
65,462

3,832
142,330
136,018
6,312
90,151
65,711

4,236
143,199
136,895
6,304
90,447
66,053

3,876
143,555
137,243
6,312
90,796
66,455

3,497
143,744
137,396
6,347
91,260
66,738

3,654
144,022
137,672
6,350
91,581
67,082

3,627
143,976
137,494
6,481
92,017
67,498

3,496
6,811

3,061
7,132

2,907
6,343

3,136
6,509

3,273
6,658

2,853
6,453

3,048
6,411

3,164
6,412

3,174
6,776

9,641
15,579
10,394

9,678
15,468
8,780

9,656
15,438
8,835

9,359
15,217
9,595

10,026
15,488
9,504

10,130
15,668
9,324

9,862
15,747
10,128

9,770
15,711
9,873

9,725
15,932
9,066

2,532
4,867
13,177
6,340
40
Loan loss reserve.........................................
4,771
41 Other loans, net..................................................... 355,100
6,774
43
56,425
653,572

2,511
4,891
12,431
6,424
4,801
353,462
6,843
58,231
639,426

2,516
4,913
12,294
6,465
4,838
353,063
6,846
55,858
640,229

2,507
4,913
12,152
6,490
4,845
354,079
6,864
56,578
634,530

2,512
4,950
12,193
6,453
4,891
357,196
6,940
57,078
646,247

2,540
4,989
11,949
6,515
4,949
357,125
7,023
56,662
634,078

2,560
4,947
12,277
6,566
4,941
358,712
7,042
58,174
645,690

2,570
4,931
11,879
6,629
4,950
359,071
7,050
56,143
639,891

2,582
4,923
11,908
6,647
4,967
359,589
7,080
56,255
646,580

185,002
747
129,930
4,413
1,622
30.721
7,475
1,748
8,346
246,321
78,257
73,122

183,154
726
128,149
4,646
2,297
31,016
6,805
1,324
8,192
246,862
78,100
73,012

177,218
587
124,718
4,510
29,889
7,470
1,198
7,181
248,228
77,915
72,830

187,520
783
130,620
5,438
773
32,275
7,432
1,365
8,834
249,111
77,632
72,607

174,430
680
124,471
4,246
559
28,215
7,456
1,273
7,529
249,833
77,770
72,694

184,066
770
131,249
4,888
1,236
29,023
7,336
1,606
7,957
250,118
77,615
72,533

174,395
602
124,909
4,485
565
28,129
6,932
1,376
7,397
251,541
77,450
72,387

177,489
662
124,276
4,315
590
30,750
7,192
1,664
8,039
252,105
77,140
72,018

4,210
901
24
168,064
136,572
20,757
453
4,694

4,199
23
168,762
137,345
20,828
438
4,664

4,259
802
24
170,313
138,625
21,103
444
4,678

4,227
774
24
171,479
139,819
21,172
441
4,570

4,279
775
172,063
140,388
21,279
481
4,608

4,257
801
23
172,503
140,853
21,187
481
4,592

4,291
747
25
174,090
142,372
21,422
476
4,514

4,334
756
30
174,965
143,058
21,685
505
4,419

5,587
93,865

5,486
94,055

5,463
90,779

5,477
90,142

5,307
94,892

5,390
93,490

5,306
92,342

5,298
95,042

829
5,002
13,112

965
5,972
13,377

575
7,350
14,905

810
5,961
15,876

380
3,080
15,202

15,911

2,100
2,220

877
5,262
16,901

256
4,911
16,077

51,666
595,798

52,416
596,800

51,954
591,010

53,029
602,450

52,367
590,186

53,916
601,821

54,734
596,051

56,628
602,508

43,628

43,429

43,520

43,797

43,892

43,869

43,840

44,072

1 Cash items in process of collection.....................
2 Demand deposits due from banks in the United
States.......................................... .......................
3 All other cash and due from depositary

Securities
6

7
8

9
10
11
12

13
14
15
16
17
18

Trading account................................................
Investment account, by maturity.....................
One year or less............................................
Over one through five years.........................

Investment account...........................................
U.S. government agencies.............................
States and political subdivision, by maturity.
One year or less.........................................
Over one year............................................
Other bonds, corporate stocks and securities
Loans

19 Federal funds sold 1 ..............................................
To commercial banks.......................................
To nonbank brokers and dealers in securities.
To others............................................................

20
21
22

24
25
26
27
28
29
30
31
32
33
34
35
36
37
38

Bankers’ acceptances and commercial
paper.......................................................
All other.........................................................
Non-U.S. addressees..................................
Real estate.........................................................
To individuals for personal expenditures........
To financial institutions
Commercial banks in the United States---Banks in foreign countries...........................
Sales finance, personal finance companies,
etc................................................................
Other financial institutions..................... ..
To nonbank brokers and dealers in securities.
To others for purchasing and carrying
securities2 ......................................................
To finance agricultural production.................

Deposits

45 Demand deDOsits.................................................. 193,342
945
46 Mutual savings banks.......................................
47 Individuals, partnerships, and corporations.. 135,638
4,848
States and political subdivisions.....................
48
937
49
50 Commercial banks in the United States.......... 31,995
8,143
Banks in foreign countries...............................
51
1,475
52 Foreign governments and official institutions.
9,360
53
54 Time and savings deoosits................................... 248,598
77,916
55
72,805
Individuals and nonprofit organizations---56
Partnerships and corporations operated for
57
4,183
911
Domestic governmental units.......................
58
16
59
60 Time................................................................... 170,682
Individuals, partnerships, and corporations 138,466
61
21,000
States and political subdivisions.................
62
455
U.S. government...........................................
63
4,966
Commercial banks in the United States---64
Foreign governments, official institutions,
65
5,796
91,559
66 Federal funds purchased 3.....................................
Other liabilities for borrowed money
1,753
67 Borrowings from Federal Reserve Banks.. . .
7,118
Treasury tax-and-loan notes.............................
68
14,310
69 All other liabilities for borrowed money........
70 Other liabilities and subordinated note and
53,320
71 Total liabilities...................................................... 610,001
72 Residual (total assets minus total liabilities)4. ..

43,571

1. Includes securities purchased under agreements to resell.
2. Other than financial institutions and brokers and dealers.
3. Includes securities sold under agreements to repurchase.




866

4,199

41,212
2,780

30,408
8,380
17,861
4,166
68,383
4,020
64,363
14,024
47,589
6,150
41,439
2,750

25,080
17,150
5,718

25,734
18,135
5,912

6,201

2,212

1,666

1,688

22

Aug. 15p Aug. 22 p Aug. 29 p

2,000

44,327

4. This is not a measure of equity capital for use in capital adequacy
analysis or for other analytic uses.

Weekly Reporting Banks

A21

1.28 LARGE WEEKLY REPORTING COMMERCIAL BANKS with Domestic Assets of 51 Billion or More on
December 31, 1977 Assets and Liabilities
M
illions of dollars, W
ednesday figures
1979

Account
July 4

July 11

July 18

July 25

Aug. I p

Aug. 8*

55,682

43,755

44,947

41,201

48,321

39,707

44,766

41,637

42,373

15,172

15,891

14,197

14,344

14,966

12,800

13,351

12,799

13,796

25,522
457,582

24,055
454,844

32,088
450,299

28,393
451,658

27,800
455,300

24,708
457,669

27,309
459,109

28,552
457,779

32,817
458,328

34,028
4,812
29,217
8,064
17,224
3,929
62,065
3,669
58,396
12,435
43,339
5,811
37,528
2,622

34,320
5,100
29,220
8,006
17,298
3,916
62,755
3,993
58,763
12,856
43,290
5,615
37,674
2,616

33,361
4,703
28,658
8,005
16,766
3,887
62,562
3,739
58,823
12,830
43,382
5,623
37,759
2,611

33,254
4,974
28,280
7,942
16,395
3,943
62,705
3,702
59,002
12,965
43,428
5,620
37,808
2,609

32,846
4,754
28,092
7,828
16,402
3,861
63,120
3,938
59,182
13,005
43,603
5,574
38,029
2,573

32,295
4,256
28,039
7,950
16,222
3,866
63,679
4,205
59,474
12,988
43,935
5,699
38,236
2,551

32,694
4,400
28,294
7,803
16,396
4,095
63,817
4,080
59,737
13,203
43,982
5,730
38,252
2,552

32,690
4,528
28,162
7,758
16,336
4,068
63,942
4,030
59,912
13,246
44,148
5,791
38,356
2,518

32,300
4,621
27,679
7,518
16,093
4,068
64,486
4,107
60,379
13,591
44,255
5,772
38,483
2,532

27,779
19 Federal funds sold 1 ..............................................
18,627
20 To commercial banks.......................................
7,102
21 To nonbank brokers and dealers in securities.
2,049
22 To others............................................................
23 Other loans, gross................................................. 344,017
24 Commercial and industrial............................... 138,370
25
Bankers’ acceptances and commercial
4,043
paper.......................................................
26
All other........................................................ 134,327
27
U.S. addresses............................................ 127,978
6,349
28
Non-U.S. addressees..................................
29 Real estate.......................................................... 83,294
57,923
30 To individuals for personal expenditures........
To financial institutions
3,418
31
Commercial banks in the United States.. . .
6,754
32
Banks in foreign countries...........................
33
Sales finance, personal finance companies,
9,456
15,102
34
Other financial institutions...........................
10,265
35 To nonbank brokers and dealers in securities.
36 To others for purchasing and carrying
2,298
4,699
37 To finance agricultural production.................
12,438
38 All other............................................................
5.804
4; 503
333,710
42 Lease financing receivables...................................
6,588
54,888
43 All other assets......................................................
615,435

25,779
16,760
6,907

23,093
15,468
5,446
2,180
343,127
138,742

23,730
16,471
5,608
1,652
346,134
140,021

26,179
16,437
6,819
2,923
346,162
139,986

25,587
18,162
5,562
1,863
347,694
139,784

23,851
16,362
5,553
1,936
348,048
140,198

23,768
16,230
5,537

342,406
138,851

22,800
16,372
4,826
1,602
342,067
138,788

348,561
140,135

4,130
134,721
128,392
6,329
83,780
57,889

3,916
134,872
128,584
6,288
84,334
57,998

3,777
134,965
128,703
6,262
84,660
58,182

4,171
135,850
129,596
6,254
84,946
58,459

3,806
136,180
129,918
6,262
85,296
58,824

3,421
136,363
130,069
6,293
85,731
59,055

3,567
136,631
130,330
6,302
86,053
59,356

3,536
136,598
130,165
6,433
86,476
59,735

2,985
7,058

2,826
6,281

3,064
6,447

3,204
6,601

2,782
6,408

2,981
6,366

3,083
6,366

3,102
6,723

9,487
14,989
8,658

9,475
14,976
8,711

9,178
14,769
9,477

9,847
15,026
9,377

9,938
15,216
9,197

9,669
15,304
9,998

9,579
15,264
9,736

9,540
15,479
8,939

2,287
4,723
11,698
5,883
4,533
331,990
6,658
56,746
601,950

2,290
4,752
11,636
5,921
4,569
331,577
6,660
54,354
602,546

2,286
4,743
11,577
5,944
4,576
332,606
6,678
55,000
597,274

2,294
4,778
11,583
5,909
4,620
335,605
6,751
55,529
608,667

2,320
4,817
11,377
5,967
4,679
335,516
6,835
55,165
596,884

2,338
4,772
11,696
6,014
4,669
337,011
6,854
56,702
608,092

2,347
4,755
11,312
6,074
4,679
337,295
6,862
54,653
602,283

2,356
4,747
11,328
6,092
4,695
337,774
6,892
54,662
608,869

173,871
713
121,268
3,859
1,495
29,316
7,419
1,747
8,053
229,167
72,623
67,901

172,031
702
119,554
3,956
2,114
29,737
6,742
1,323
7,902
229,729
72,458
67,790

166,507
562
116,406
3,873
1,537
28,600
7,410
1,191
6,926
231,146
72,313
67,628

176,304
742

163,830
650
116,131
3,710
503
26,946
7,389
1,248
7,252
232,774
72,176
67,514

172,974
742
122,544
4,344
1,137
27,677
7,269
1,574
7,688
232,972
72,030
67,370

163,842
574
116,503
3,926
507
26,918
6,878
1,375
7,162
234,323
71,892
67,227

166,836
627
115,911
3,749
538
29,472
7,116
1,662
7,761
234,758
71,609
66,889

3,882
818
23
156,544
127,254
18,830
447
4,449

3,878
768

3,935
727

3,958
684

157,271
128,018
18,912
432
4,430

22

3,936
701

4,006

21

29
163,149
133,497
19,657
498
4,207

5,564
89,311

1 Cash items in process of collection.....................
2 Demand deposits due from banks in the United
States.................................................................
3 All other cash and due from depositary
institutions.........................................................
Securities

5 U.S. Treasury securities.......................................
Trading account................................................
7 Investment account, by maturity.....................
8
One year or less............................................
9
Over one through five years.........................
10
Over five years..............................................
6

12
13
14
15
16
17
18

Trading account................................................
Investment account...........................................
U.S. government agencies.............................
States and political subdivision, by maturity.
One year or less........................................
Over one year............................................
Other bonds, corporate stocks and securities
Loans

Deposits

181,582
906
47 Individuals, partnerships, and corporations.. 126,673
4,258
48 States and political subdivisions.....................
850
49 U.S. government...............................................
50 Commercial banks in the United States.......... 30,320
8,082
51
Banks in foreign countries..................... ........
1,474
52 Foreign governments and official institutions.
9,018
53 Certified and officers’ checks...........................
231,364
54 Time and savings deposits...................................
72,311
67,596
56
Individuals and nonprofit organizations---57
Partnerships and corporations operated for
3,866
833
58
Domestic governmental units.......................
15
59
A llo th er........................................................
159,053
61
Individuals, partnerships, and corporations 129,082
19,021
62
States and political subdivisions.................
448
63
U.S. government...........................................
4,724
64
Commercial banks in the United States---65
Foreign governments, official institutions,
5,778
and banks..................................................
66 Federal funds purchased 3.....................................
87,148
Other liabilities for borrowed money
1,718
67 Borrowings from Federal Reserve Banks. . . .
6,568
68
Treasury tax-and-loan notes............................
14,006
69 All other liabilities for borrowed money........
70 Other liabilities and subordinated note and
52,148
574,535
45 Demand deposits..................................................

72 Residual (total assets minus total liabilities)4. . .|

40,900

1. Includes securities purchased under agreements to resell.
2. Other than financial institutions and brokers and dealers.
3. Includes securities sold under agreements to repurchases.




2,112

122,000

4,831
702
30,872
7,351
1,359
8,447
232,133
72,057
67,425

Aug. 15p Aug. 22p Aug. 29*

2,002

158,833
129,291
19,191
438
4,458

3,906
704
23
160,076
130,563
19,257
435
4,355

21

22

160,598
131,102
19,330
474
4,395

160,942
131,507
19,204
474
4,377

3,965
676
24
162,431
132,943
19,420
469
4,303

5,478
89,541

5,455
86,150

5,466
85,644

5,296
89,956

5,379
88,693

5,296
87,282

5,289
90,114

804
4,631
12,744

856
5,513
12,895

553
6,795
14,553

778
5,509
15,393

358
2,863
14,786

2,023
2,058
15,501

790
4,898
16,527

208
4,595
15,590

50,493
561,021

51,249
561,814

50,786
556,490

51,864
567,625

51,180
555,747

52,751
566,972

53,542
561,205

55,474
567,575

40,929

40,731

40,783

41,042

41,136

41,120

41,078

41,294

686

4. This is not a measure of equity capital for use in capital adequacy
analysis or for other analytic uses.

A22

Domestic Financial Statistics □ September 1979

1.29 LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY Assets and Liabilities
M
illions of dollars, W
ednesday figures
1979
July 4

July 11

July 18

July 25

20,411

16,424

16,931

15,785

18,407

14,769

15,759

14,821

16,424

9,326

11,197

9,878

10,506

10,691

8,978

9,167

8,837

9,685

4,811
107,673

4,381
105,056

6,701
104,089

5,931
103,718

6,242
105,142

6,257
104,959

6,262
105,683

7,081
104,973

8,917
105,198

Investment account, by maturity.....................
One year or less............................................
Over one through five years.........................
Over five years...............................................

6,952
1,163
5,145
643

6,903
1,167
5,092
644

6,542
1,188
4,717
637

6,321
1,175
4,470
676

6,265
1,154
4,498
613

6,170
1,237
4,340
594

6,149
4,334
594

1,221

6,087
1,209
4,285
593

5,818
1,128
4,115
574

Investment account...........................................
U.S. government agencies.............................
States and political subdivision, by maturity.
One year or less.........................................
Over one year.............................................
Other bonds, corporate stocks and securities

10,978
1,590
8,776
1,342
7,434
612

11,089
1,715
8,758
1,355
7,403
616

11,112

11,100

11,033
1,746
8,683
1,242
7,441
604

11,073
1,727
8,762
1,334
7,428
584

11,164
1,834
8,745
1,339
7,406
585

11,156
1,814
8,785
1,334
7,450
557

11,269
1,892
8,819
1,348
7,471
558

8,658
4,881
3,070
706
83,418
41,889

6,846
3,927
2,225
694
82,568
42,192

7,019
4,924
1,626
470
81,776
42,143

6,266
3,338
1,835
1,093
82,390
42,210

6,915
4,439

7,140
3,696
2,434
82,984
42,540

1,010

6,676
3,958
2,095
622
84,105
42,533

6,342
3,757
1,963
622
83,814
42,714

7,292
4,606
2,053
632
83,265
42,712

1,394
40,495
38,220
2,275
11,115
7,734

1,379
40,813
38,557
2,255
11,155
7,746

1,249
40,893
38,651
2,243
11,268
7,761

1,123
41,087
38,878
2,209
11,390
7,769

1,113
41,388
39,187
11,415
7,828

1,007
41,533
39,350
2,184
11,510
7,859

862
41,671
39,456
2,214
11,556
7,917

942
41,772
39,555
2,216
11,583
7,971

41,712
39,485
2,227
11,613

1,220

3,346

1,006
3,618

927
2,937

1,114
2,960

1,026
3,069

861
3,041

1,053
2,990

1,067
2,911

968
3,248

3,450
4,575
6,544

3,572
4,459
5,483

3,534
4,458
5,543

3,283
4,407
5,977

3,764
4,450
5,916

3,919
4,493
5,588

3,683
4,618
6,244

3,531
4,756
6,028

3,506
4,775
4,901

451

1 Cash items in process of collection.....................
2 Demand deposits due from banks in the United
States..................................................................
3 All other cash and due from depositary
4 Total loans and securities1 ...................................

Aug. \ p

Aug. 8 » Aug. 15? Aug. 22p Aug. 29p

Securities
6

7
8

9
10
11
12

13
14
15
16
17
18

Loans

19 Federal funds sold 3..............................................
To commercial banks.......................................
To nonbank brokers and dealers in securities.
To others........................................ ..................
23 Other loans, cross.................................................
24 Commercial and industrial...............................
Bankers’ acceptances and commercial
25
paper.......................................................
All other........................................................
26
27
U.S. addressees..........................................
Non-U.S. addressees.................................
28
29 Real estate..........................................................
30 To individuals for personal expenditures___
To financial institutions
31
Commercial banks in the United States.. . .
Banks in foreign countries...........................
32
Sales finance, personal finance companies,
33
etc................................................................
Other financial institutions...........................
34
35 To nonbank brokers and dealers in securities.
36 To others for purchasing and carrying
20
21
22

37
38
39
40
41
42
43
44

55
56
57
58
59
60
61
62
63
64
65

67
68

69
70

1,719
8,755
1,313
7,442
626

2,002

473
83,301
42,501

2,202

1,000

8,012

439

441

2,884
849
Less: Unearned income........................................
1,483
Loan loss reserve........................................
81,086
Other loans, n et....................................................
1,280
Lease financing receivables...................................
27,439
All other assets5....................................................
Total assets............................................................ 170,941

2,675
856
1,494
80,219
1,303
29,809
168,171

2,530
864
1,496
79,416
1,299
26,871
165,770

453
215
2,611
862
1,497
80,031
1,306
27,915
165,161

455
205
2,673
858
1,514
80,929
1,308
27,791
169,581

452
203
2,518
867
1,542
80,575
1,348
27,818
164,130

450
203
2,857
870
1,541
81,694
1,354
28,714
166,941

456
203
2,595
879
1,547
81,388
1,354
26,936
164,002

890
1,555
80,819
1,364
26,424
168,013

59,200
508
30,041
481
92
16,343
6,195
1,126
4,415
40,776
10,104
9,481

59,292
395
29,664
504
326
17,651
5,654
1,397
3,702
40,083
10,123
9,509

57,592
391
28,986
464
574
17,580
4,802
1,036
3,758
40,298
10,077
9,480

56,317
276
28,408
412
364
17,215
5,579
826
3,237
40,215
10,044
9,450

60,276
410
30,441
586
18,139
5,310
987
4,290
40,829
9,998
9,414

54,499
345
27,826
398
58
15,900
5,605
874
3,492
40,939
9,984
9,412

58,027
410
30,669
538
208
15,750
5,451
1,242
3,758
40,959
9,962
9,393

53,661
297
27,984
424
74
15,267
5,118
1,018
3,479
41,132
9,936
9,361

56,736
275
27,462
386
65
17,706
5,328
1,353
4,161
41,066
9,891
9,306

403
213
7
30,671
24,682
1,262
44
1,412

401
199
14
29,960
24,177
1,281
45
1,304

403
181
13
30,221
24,402
1,317
44
1,362

410
169
14
30,171
24,502
1,353
50
1,262

400
169
14
30,831
25,037
1,383
56
1,301

406
155

399
157

10

30,955
25,164
1,430
60
1,314

12

30,997
25,172
1,472
65
1,309

406
153
15
31,196
25,451
1,515
69
1,290

401
165
19
31,175
25,521
1,511
83
1,189

3,271
28,154

3,153
27,598

3,095
25,298

3,003
27,236

3,054
25,986

2,988
27,931

2,979
24,776

2,871
25,746

2,870
26,480

995
1,255
7,081

275
970
7,183

375
1,154
7,234

49
1,398
7,432

1,132
7,661

616
7,183

100

1,435
433
7,184

1,083
7,922

1,043
7,777

20,116
157,576

19,352
154,754

20,400
152,350

19,121
151,768

20,188
156,072

19,349
150,616

20,575
153,391

20,854
150,499

21,412
154,515

13,364

13,417

13,420

13,392

13,509

13,513

13,550

13,503

13,498

To finance agricultural production.................

Deposits

46
47
48
49
50
51
52
53

1,719
8,764
1,318
7,446
628

Mutual savings banks.......................................
Individuals, partnerships, and corporations...
States and political subdivisions.....................
U.S. government...............................................
Commercial banks in the United States..........
Banks in foreign countries...............................
Foreign governments and official institutions.
Certified and officers’ checks...........................
Individuals and nonprofit organizations....
Partnerships and corporations operated for
profit...........................................................
Domestic governmental units.......................
Individuals, partnerships, and corporations.
States and political subdivisions..................
U.S. government...........................................
Commercial banks in the United States---Foreign governments, official institutions.
Other liabilities for borrowed money
Borrowings from Federal Reserve Banks........
Treasury tax-and-loan notes...........................
All other liabilities for borrowed money........
Other liabilities and subordinated note and

71
72 Residual (total assets minus total liabilities)7..

222

1. Excludes trading account securities.
2. Not available due to confidentiality.
3. Includes securities purchased under agreements to resell.
4. Other than financial institutions and brokers and dealers.




222

222

112

456
206
2,866

100

5. Includes trading account securities.
6 . Includes securities sold under agreements to repurchase.
7. This is not a measure of equity capital for use in capital adequacy
analysis or for other analytic uses.

Weekly Reporting Banks

A23

1.30 LARGE WEEKLY REPORTING COMMERCIAL BANKS Balance Sheet Memoranda
M
illions of dollars, W
ednesday figures
1979
Category
July 4

July 11

July 18

July 25

A ug. 1?

A ug. 8?

A ug. 15?

A ug. 22?

A ug. 29?

1 Total loans (gross) and investments adjusted1. . .
2 Total loans (gross) adjusted 1....................................
3 Demand deposits adjusted2 .......................................

47 5 ,8 2 4
3 72,202
101,836

475,63 3
371,009
106,678

4 7 1 ,7 0 6
368,213
102,516

47 3 ,8 1 3
370,207
102,407

4 7 6 ,4 5 5
372,866
103,840

4 7 9 ,5 0 5
375,892
104,026

4 79,141
374,998
106,689

4 7 9 ,5 7 5
375,338
101,968

4 8 0 ,4 3 2
376,001
101,821

4 Time deposits in accounts o f $100,000 or m ore.
5
N egotiable C D s ........................................................
6
Other time d ep o sits.................................................

115,474
81,533
33,942

113,176
7 9 ,4 0 4
3 3,772

113,469
7 9 ,5 2 2
33,947

114,945
8 0 ,854
34,091

115,596
8 1 ,436
34,159

116,209
81,995
3 4 ,2 1 4

116,390
82 ,2 9 7
34,093

117,576
83,525
34,051

118,377
8 4 ,2 3 4
34,1 4 2

7 Loans sold outright to affiliates3 ............................
8
Commercial and industrial....................................
9
O ther.............................................................................

3,6 8 2
2 ,7 3 8
944

3 ,7 3 7
2 ,7 9 2
945

3,675
2 ,7 3 4
940

3 ,7 3 4
2 ,7 9 4
940

3 ,7 8 3
2 ,8 6 6
916

3,753
2 ,8 1 3
940

3 ,6 2 6
2 ,7 0 6
920

3,6 8 0
2 ,7 2 3
957

3 ,7 1 6
2 ,7 6 9
946

10 Total loans (gross) and investments adjusted1. ..
11 Total loans (gross) adjusted1....................................
12 D em and deposits adjusted2 .......................................

445 ,8 4 4
349,751
9 4 ,7 3 0

4 4 5 ,5 1 6
348,441
9 9 ,3 0 4

441,591
345,668
95,233

44 3 ,6 4 6
347,688
95,1 6 8

4 4 6,155
350,190
9 6 ,4 1 0

4 4 9 ,0 9 5
353,122
9 6 ,6 7 4

4 4 8 ,6 5 0
352,139
9 9 ,3 9 4

4 4 9 ,0 8 8
352,455
9 4 ,7 8 0

4 4 9 ,7 8 4
352,998
9 4 ,4 5 4

13 Tim e deposits in accounts o f $100,000 or m ore.
14
N egotiable C D s ........................................................
15
Other time d ep o sits..................................................

107,991
76 ,496
31,494

105,821
7 4 ,4 8 6
31,335

106,152
7 4 ,622
31,530

107,548
75,873
31,674

108,302
76,5 0 3
31,799

108,820
76,881
31,939

108,932
76,928
3 2 ,0 0 4

110,044
7 7 ,9 2 6
32,118

110,706
7 8 ,4 9 6
3 2 ,2 1 0

16 Loans sold outright to affiliates3.............................
17
Com mercial and industrial....................................
18
O th er.............................................................................

3,638
2 ,7 1 8
919

3,691
2,77 1
920

3 ,629
2 ,7 1 3
916

3,691
2 ,7 7 6
915

3 ,7 4 0
2 ,8 4 7
892

3 ,7 0 9
2 ,7 9 3
916

3,581
2 ,6 8 6
894

3 ,6 2 6
2 ,7 0 2
924

3 ,6 6 9
2 ,7 5 0
919

19 Total loans (gross) and investments adjusted1*4.
20 Total loans (gross) adjusted1....................................
21 D em and deposits adjusted2 .......................................

103,904
85,974
22,355

102,473
84,481
2 4 ,8 9 2

100,599
8 2 ,9 4 4
2 2 ,5 0 6

101,625
8 4 ,2 0 4
2 2 ,9 5 2

102,048
8 4 ,7 5 0
2 3 ,6 1 7

102,810
8 5 ,5 6 6
23,7 7 1

103,083
8 5 ,7 7 0
2 6 ,3 0 9

102,575
8 5 ,3 3 2
2 3 ,4 9 9

102,069
8 4 ,9 8 2
2 2 ,5 4 1

22 Tim e deposits in accounts o f $100,000 or m ore.
23
N egotiable C D s ........................................................
24
Other time d ep o sits..................................................

24,741
17,484
7 ,2 5 7

2 4 ,0 3 5
16,752
7 ,2 8 3

2 4 ,2 4 4
16,937
7 ,3 0 8

2 4 ,1 8 6
16,853
7,3 3 3

2 4 ,6 6 0
17,304
7 ,3 5 6

2 4 ,9 3 4
17,416
7 ,5 1 8

2 4 ,9 1 2
17,304
7 ,6 0 8

2 5 ,0 1 9
17,466
7,5 5 3

2 5 ,0 2 3
1 7,650
7 ,3 7 2

B anks

with

B anks

A ssets

with

of

A ssets

B anks

in

$750 M illion

of

$1 B illion

or

or

M ore

M ore

N ew Y ork C ity

1. Exclusive of loans and federal funds transactions with domestic com­
mercial banks.
2. All demand deposits except U.S. government and domestic banks
less cash items in process of collection.




3. Loans sold are those sold outright to a bank’s own foreign branches,
nonconsolidated nonbank affiliates of the bank, the bank’s holding com­
pany (if not a bank) and nonconsolidated nonbank subsidiaries of the
holding company.
4. Excludes trading account securities.

A24

Domestic Financial Statistics □ September 1979
LARGE WEEKLY REPORTING COMMERCIAL BANKS Domestic Classified Commercial and Industrial
Loans

1.31

M
illions of dollars
Outstanding

Net change during

1979

Industry classification

1979

Apr. 25

May 30

June 27

July 25

Aug. 29 p

1 Durable goods manufacturing........ .

20,699

20,648

20,905

21,450

2 Nondurable goods manufacturing..,
3 Food, liquor, and tobacco.............
4 Textiles, apparel, and leather........
5 Petroleum refining..........................
6
Chemicals and rubber....................
7 Other nondurable goods.............. .

17,589
4,753
4,339
2,113
3,605
2,779

17,303
4,365
4,547
2,067
3,496
2,827

17,403
4,371
4,701
1,967
3,448
2,916

17,423
4,252
4,859
1,929
3,437
2,946

8 Mining (including crude petroleum

1979
June

July

Ql

Q2

21,594

1,677

1,324

257

545

144

18,253
4,482
5,092
1,831
3,644
3,203

311

-86

100
6
154
-100

20

830
231
233
-9 8
207
257

11

396
-380
45
236

-4 4 0
495
-3 1 0
-6 2
230

Aug.*

-119
158
-3 8

-11

-4 8
89

30

and natural gas).............................

10,383

10,888

11,008

11,221

11,445

11

858

120

213

224

9 Trade................................................. .
10 Commodity dealers........................
11 Other wholesale..............................
12 Retail...............................................

22,957
1,815
11,262
9,880

23,574
1,957
11,401
10,216

23,976
1,917
11,741
10,318

24,596
2,099

12,001
10,495

23,999
1,665
11,946
10,388

1,327
-7 8
760
645

1,496
25
778
693

402
-4 0
340
103

619
182
260
177

-597
-4 3 4
-5 5
-108

13 Transportation, communication, and
other public utilities...................
14 Transportation................................
15 Communication..............................
16 Other public utilities......................

14,474
6,319

14,610
6,405

6,269

1,886

6,319

15,324
6,451
2,050
6,823

15,387
6,487
2,106
6,794

15,751
6,642
2,148
6,961

437
443
138
-146

1,262.
185
199
877

714
46
164
504

62
35
55
-2 8

365
155
42
167

17 Construction..................................... .
18 Services...............................................
19 All other i ..........................................

5,478
16,490
14,614

5,744
16,868
14,847

5,583
17,250
15,444

5,723
17,589
15,314

5,701
17,821
15,602

168
721
-1,921

1,180
1,481

210

-161
382
597

140
339
-130

-22

20 Total domestic loan s ..........................

122,685

124,483

126,894

128,703

130,165

2,731

7,724

2,412

21 Memo: Term loans (original maturity
more than 1 year) included in
domestic loans.............................

61,941

63,328

64,474

64,312

65,986

3,740

3,960

1,146

1,886

232
287

1,462
-162

1,673

1. Includes commercial and industrial loans at a few banks with assets with domestic assets of $1 billion or more as of December 31, 1977 are
included in this series. The revised series is on a last-Wednesday-of-theof $1 billion or more that do not classify their loans.
month basis.
N ote. New series. The 134 large weekly reporting commercial banks

1.311

MAJOR NONDEPOSIT SOURCES OF FUNDS OF COMMERCIAL BANKS1
Monthly averages, billions of dollars
Source

December outstanding

Outstanding in 1979

1976

1
2
3
4
5
6

Total nondeposit funds
Seasonally adjusted 2 ..............................................
Not seasonally adjusted.........................................
Federal funds, RPs, and other borrowings from
nonbanks
Seasonally adjusted 3..............................................
Not seasonally adjusted.........................................
Net Eurodollar borrowings, not seasonally adjusted.
Loans sold to affiliates, not seasonally adjusted4. . . .
M emo

7 Security RP borrowings, seasonally adjusted 5........
8
Not seasonally adjusted.........................................
9 U.S. Treasury demand balances, not seasonally
adjusted6.................................................................
10 Domestic chartered banks net positions with own
foreign branches, not seasonally adjusted7 ---11 Gross due from balances.......................................
12 Gross due to balances............................................
13 Foreign-related institutions net positions with
directly related institutions, not seasonally
adjusted 8..............................................................
14 Gross due from balances........................................
15 Gross due to balances............................................

1977

1978

Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

55.4
54.2

62.7
61.3

84.9
83.9

83.1
82.2

95.8
93.7

100.7
98.4

104.8
102.5

111.2

113.3

115.7
115.5

119.4
118.2

127.7
129.7

47.1
45.8
4.5
3.8

58.4
57.0
- 0 .5
4.8

74.8
73.8
6.3
3.8

73.2
72.3
6.3
3.6

80.2
78.1
12.0

82.3
80.0
18.9
3.6

84.3
86.4
23.2
3.7

84.4
84.2
27.5
3.8

86.5
85.4
29.1
3.7

91.2
93.3

3.6

80.9
78.6
16.3
3.5

27.9
27.0

36.3
35.1

43.8
42.4

43.8
40.8

42.9
41.4

42.7
42.2

43.0
42.5

42.0
44.8

45.0
44.5

42.8
42.5

40.9
42.5

10.2

4.4

-1 2 .5

11.9

8.3

6.5

5.3

8.4

10.8

13.2

9.9

- 1 0 .7 - 10.1
25.5
24.6
14.8
14.5

- 6 .3
23.3
17.0

- 4 .5
22.5
18.0

- 1 .9

2 .6

6.3

19.7

19.7
22.3

5.8

8.9
19.2
28.1

16.4
15.4
31.7

18.3
15.0
33.3

20.8

20.8

20.6

5.1

- 6.0
12.8
6.8

21.1
8 .6

9.7
8.3
18.1

10.3
21.4

11.1

1. Commercial banks are those in the 50 states and the District of
Columbia with national or state charters plus U.S. branches, agencies,
and New York investment company subsidiaries of foreign banks and
Edge Act corporations.
2. Includes seasonally adjusted Federal funds, RPs, and other borrow­
ings from nonbanks and not seasonally adjusted net Eurodollars and
loans to affiliates. Includes averages of Wednesday data for domestic
chartered banks and averages of current and previous month-end data for
foreign-related institutions.
3. Other borrowings are borrowings on any instrument, such as a
promissory note or due bill, given for the purpose of borrowing money
for the banking business. This includes borrowings from Federal Reserve




3.7

17.0
14.2
31.2

15.3
36.0

2 1.6

15.7
36.5

15.9
36.5

20.0

20.1

25.8

26.4

21.7
17.6
39.3

17.6
40.4

22.8

23.8
17.6
41.4

Banks and from foreign banks, term federal funds, overdrawn due from
bank balances, loan RPs, and participations in pooled loans. Includes
averages of daily figures for member banks and averages of current and
previous month-end data for foreign-related institutions.
4. Loans initially booked by the bank and later sold to affiliates that
are still held by affiliates. Averages of Wednesday data.
5. Based on daily average data reported by 46 large banks.
6 . Includes U.S. Treasury demand deposits and Treasury tax and loan
notes at commercial banks. Averages of daily data.
7. Includes averages of daily figures for member banks and quarterly
call report figures for nonmember banks.
8 . Includes averages of current and previous month-end data.

Deposits and Commercial Paper

A25

1.32 GROSS DEMAND DEPOSITS of Individuals, Partnerships, and Corporations1
Billions of dollars, estimated daily-average balances
Commercial banks
Type of holder

1 All holders, individuals,

partnerships,

1974
Dec.

and

2 Financial business..................................................

1975
Dec.

225.0

236.9

19.0
118.8
73.3
2.3
11.7

20.1

1977

1976
Dec.

125.1
78.0
2.4
11.3

I 9792

1978

Dec.

Mar.

June

Sept.

Dec.

Mar.

June

250.1

274.4

262.5

271.2

278.8

294.6

270.4

285.6

22.3
130.2
82.6
2.7
12.4

25.0
142.9
91.0
2.5
12.9

24.5
131.5
91.8
2.4
12.3

25.7
137.7
92.9
2.4
12.4

25.9
142.5
95.0
2.5
13.1

27.8
152.7
97.4
2.7
14.1

24.4
135.9
93.9
2.7
13.5

25.4
145.1
98.6
2.8

13.7

Weekly reporting banks

1975
Dec.

7 All holdere, individuals,

partnerships,

and

8 Financial business..................................................

12 Other.......................................................................

1976
Dec.

1977
Dec.

124.4

128.5

15.6
69.9
29.9
2.3

17.5
69.7
31.7

6.6

2 .6

7.1

1. Figures include cash items in process of collection. Estimates of gross
deposits are based on reports supplied by a sample of commercial banks.
Types of depositors in each category are described in the June 1971
B u lle t in , p. 466.
2. Beginning with the March 1979 survey, the demand deposit ownership
survey sample was reduced to 232 banks from 349 banks, and the estima­
tion procedure was modified slightly. To aid in comparing estimates
based on the old and new reporting sample, the following estimates in
billions of dollars for December 1978 have been constructed using the new
smaller sample: financial business, 27.0; nonfinancial business, 146.9;
consumer, 98.3; foreign, 2.8; and other, 15.1.

19793

1978
Aug.

Sept.

Oct.

Nov.

Dec.

Mar.

June

139.1

137.7

139.7

141.3

142.7

147.0

121.9

128.8

18.5
76.3
34.6
2.4
7.4

19.4
72.0
36.8
2.4
7.1

18.9
74.1
37.1
2.4
7.3

19.1
75.0
37.5
2.5
7.2

19.3
75.7
37.7
2.5
7.5

19.8
79.0
38.2
2.5
7.5

16.9
64.6
31.1

68.1

18.4

2 .6

33.0
2.7

6.7

6.6

3.
After the end of 1978 the large weekly reporting bank panel was
changed to 170 large commercial banks, each of which had total assets in
domestic offices exceeding $750 million as of Dec. 31, 1977. See “An­
nouncements,” p. 408 in the May 1978 B u lle t in . Beginning in March
1979, demand deposit ownership estimates for these large banks
are constructed quarterly on the basis of 97 sample banks and are not
comparable with earlier data. The following estimates in billions of dollars
for December 1978 have been constructed for the new large-bank panel:
financial business, 18.2; nonfinancial business, 67.2; consumer, 32.8;
foreign, 2.5; other, 6 .8.

1.33 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period

Instrument

1976
Dec.

1977
Dec.

1979

1978
Dec.

Jan.

Feb.

Mar.

Apr.

May

June

July

Commercial paper (seasonally adjusted)
52,971

65,101

83,665

85,226

87,358

90,796

92,725

96,106 101,516 102,447

Total....................................................................
Bank-related........................................................

7,261
1,900

8,884
2,132

12,296
3,521

12,915
4,413

13,419
3,969

14,247
3,793

14,961
4,251

15,551
4,141

16,537
3,826

17,042
3,951

Total....................................................................
Bank-related........................................................

32,511
5,959

40,484
7,102

51,630
12,314

52,880
12,191

54,586
12,166

55,653
12,642

55,313
12,788

57,886
13,799

61,256
15,130

60,532
14,722

6 Nonfinancial companies4 .......................................

13,199

15,733

19,739

19,431

19,353

20,896

22,451

22,669

23,723

24,873

1 All issuers................................................................
Financial companies 1
2
3
4
5

Dealer-placed paper 2

Directly placed paper 3

Bankers dollar acceptances (not seasonally adjusted)
7 Total........................................................................ 22,523
Holder

8 Accepting banks....................................................

9
10

Own bills.............................................................
Bills bought........................................................
Federal Reserve Banks

13 Others......................................................................

25,450

33,700

33,749

34,337

34,617

34,391

35,286

36,989

39,040

10,442
8,769
1,673

10,434
8,915
1,519

8,579
7,653
927

7,339
6,214
1,125

7,715
6,708
1,007

7,645
6,535
1,110

7,535
6,685
849

7,844
6,895
950

8,180
6,956
1,224

9,275
7,499
1,777

991
375
10,715

954
362
13,904

0

0

765
750
25,646 '25,872

204
793
25,975

252
861
25,744

0

664
24,456

940
26,501

1,400
971
27,837

1,159
952
27,654

4,992
4,818
12,713

6,378
5,863
13,209

8,574
7,586
17,540

8,869
7,762
17,118

9,281
8,104
17,232

8,679
8,087
17,625

9,007
8,367
17,912

9,202
8,599
19,189

9,499
8,784
20,756

1

Basis

16 All other..................................................................

1. Institutions engaged primarily in activities such as, but not limited to,
commercial, savings, and mortgage banking; sales, personal, and mortgage
financing; factoring, finance leasing, and other business lending; insurance
underwriting; and other investment activities.
2. Includes all financial company paper sold by dealers in the open

market.



9,114
7,858
17,365

3. As reported by financial companies that place their paper directly
with investors.
4. Includes public utilities and firms engaged primarily in activities such
as communications, construction, manufacturing, mining, wholesale and
retail trade, transportation, and services.

A26

Domestic Financial Statistics □ September 1979

1.34 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans
Percent per annum

Effective date
1978—June 16.............
30.............

9

9%

Aug. 31............
Sept. 15.............
28.............

Dec. 26...........

uy4

1979—June 19...........
July 27...........

HV4
11%

9Va

Oct. 13...........
27...........

10

io*4

Average
rate

Month

Average
rate

1977—Nov......................
Dec.......................

ioy 4
11

9%

1...........
6 ...........
17...........
24...........

8%

1978—Nov.

Month

7.75
7.75

1978—Oct.......................
Nov......................
Dec.......................

9.94
10.94
11.55

8.00
8.00
8.00

1979—Jan.......................
Feb.......................

8.27
8.63
9.00
9.01
9.41

Apr.......................
May.....................
June.....................
July......................
Aug......................

11.75
11.75
11.75
11.75
11.75
11.65
11.54
11.91

Rate

Effective date

Rate

Aug. 16............
28............

lOVi

1978—ja n ........................
Feb.......................
Mar......................
A pr......................
M ay.....................
June.....................
July......................
Aug......................
Sept......................

HV4

12

121/4

1.35 TERMS OF LENDING AT COMMERCIAL BANKS

7.93

Survey of Loans Made, May 7-12, 1979
Size o f loan (in thousands o f dollars)

A ll
sizes

Item

1-24
S hort-T erm C ommercial
I ndustrial L oans

50-99

100-499

1,000
and over

500-999

and

1
2
3
4

A m ount o f loans (thousands o f dollars)...........
N um ber o f loan s........................................................
W eighted average maturity (m on th s).................
W eighted average interest rate (percent per
annum ).................................................................
5
Interquartile range i .............................................

8 ,5 7 6 ,0 7 0
162,509
2 .9

9 4 9,806
122,951
3 .4

637,101
1 9 ,944
3 .3

5 88,718
9 ,1 1 2
3 .2

1 ,4 2 7 ,8 8 9
8,161
3 .1

673 ,7 7 0
1,061
3 .2

4 ,2 9 8 ,7 8 5
1,281
2 .5

1 2.34
1 1 .5 0 -1 3 .0 2

1 2.30
1 0 .6 7 -1 3 .4 2

12.69
1 1 .1 9 -1 3 .8 3

13 .0 2
1 2 .3 6 -1 3 .7 5

12.61
1 2 .0 0 -1 3 .3 7

12.68
1 2 .1 6 -1 3 .1 7

12.07
1 1 .5 0 -1 2 .4 0

4 7 .6
4 7 .2

2 0 .8
2 4 .0

2 5 .4
3 0 .0

2 9 .2
4 4 .2

4 8 .7
4 7 .6

6 5 .4
6 0 .0

5 6 .2
5 3 .2

Percentage o f amount o f loans
6 W ith floating rate......................................................
7 M ade under com m itm ent.......................................
L ong -T erm C ommercial
I ndustrial L oans

2 5-49

an d

8
9
10
11

A m ount o f loans (thousands o f dollars)...........
N um ber o f loan s........................................................
W eighted average maturity (m o n th s).................
W eighted average interest rate (percent per
annum ).................................................................
12
Interquartile range * .............................................

1 ,485,131
25,164
4 8 .2

423,381
2 2,615
4 0 .2

3 7 6,270
2,161
5 8 .5

127,185
181
4 7 .3

558,2 9 6
208
4 7 .6

12.08
1 1 .3 0 -1 3 .1 6

11.57
1 0 .0 0 -1 3 .2 4

11 .8 0
1 0 .7 5 -1 3 .0 0

12.9 0
1 1 .7 5 -1 3 .5 2

1 2 .4 8
1 1 .7 5 -1 3 .0 0

4 7 .4
5 0 .0

1 3 .2
3 8 .6

2 9 .2
2 3 .4

8 2 .2
5 9 .5

7 7 .6
7 4 .5

Percentage o f amount o f loans
13 W ith floating rate......................................................
14 M ade under com m itm ent.......................................
C onstruction and
L a n d D evelopment L oans
15 A m ount o f loans (thousands o f dollars)...........
16 N um ber o f loan s........................................................

1 ,0 1 9 ,8 4 2
18,490
7 .6

96,803
11,506
8 .9

108,609
3 ,2 0 9
6 .3

131,421
1,826
7 .7

307,713
1,6 8 0
8 .4

375,295
268
6 .9

18 W eighted average interest rate (percent per
annum ).................................................................
19
Interquartile range 1 .............................................

12.23
1 1 .2 5 -1 3 .4 5

12.39
1 1 .3 0 -1 3 .3 5

11.94
1 0 .7 6 -1 2 .6 2

11.89
1 0 .0 0 -1 2 .7 3

12.3 6
1 0 .6 4 -1 3 .7 2

12.28
11.25--13.75

4 9 .3
7 9 .5
5 0 .3

2 8 .5
8 7 .7
4 5 .9

19.6
9 6 .4
2 3 .4

4 4 .5
9 5 .1
2 7 .0

4 0 .3
7 0 .3
4 1 .2

7 2 .4
7 4 .7
7 4 .9

4 3 .0
11.6
4 5 .4

81 .5
2 .3
16.1

7 5 .2
2 .0
2 2 .8

7 6 .8
2 .5
2 0 .7

4 1 .9
8 .5
4 9 .7

12.7
2 2 .7
6 4 .6

Percentage o f amount o f loans
20 W ith floating rate......................................................
21 Secured by real estate..............................................
22 M ade under com m itm ent.......................................

Type o f construction
23 1- to 4-fam ily..............................................................
24 M ultifam ily.................................................................
24 N onresidential............................................................
A ll
sizes
L oans

to

1-9

10-24

25-49

50-99

100-249

250
and over

F armers

26
27
28
29

A m ount o f loans (thousands o f dollars)...........
N um ber o f loan s........................................................
W eighted average m aturity (m onths)..................
W eighted average interest rate (percent per
an nu m ).................................................................
30
Interquartile range i .............................................

1 ,0 57,427
7 4 ,330
7 .5

200,607
53,495
8.1

181,082
12,330
8 .5

145,374
4 ,3 0 9
6 .5

178,938
2 ,7 1 7
11 .4

157,441
1,1 0 4
5 .4

193,955
375
5 .0

11.20
1 0 .2 1 -1 2 .2 4

10.56
9 .8 8 -1 1 .1 9

10.69
1 0 .0 0 -1 1 .2 4

10.73
1 0 .0 0 -1 1 .4 6

10.89
1 0 .1 2 -1 1 .3 0

11.97
1 1 .0 0 -1 3 .1 6

12.35
1 1 .4 1 -1 3 .5 2

11.21
11.74
11.20
10.61
11.15

10.57
10.46
1 0 .5 2
1 0 .7 0
10.7 0

10.68
10.08
10.95
1 0.27
1 0 .8 2

10.83
10.11
10.87
1 0 .4 0
10.95

10.80
11.96

11.00

11.52
12.83
12.41
( 2)
11.79

By purpose o f loan
31
32
33
34
35

Feeder livestock .........................................................
Other livestock ...........................................................
Other current operating expenses........................
Farm machinery and eq u ip m en t..........................
O ther..............................................................................

1. Interest rate range that covers the middle 50 percent of the total
dollar amount of loans made.




2. Fewer than 10 sample loans,

1 1 .5 2
10.03

12.31
( 2)
( 2)

1 2 .5 0
1 2 .7 0

N o te . For more detail, see the Board’s G. 14 (416) statistical release.

Securities Markets

A27

1.36 INTEREST RATES Money and Capital Markets
A
verages, percent per annum
1976

Instrument

1977

1979

1978
May

June

1979,, week ending

July

Aug.

Aug. 4 Aug. 11 Aug. 18 Aug. 25 Sept. 1

Money market rates

4 Finance company paper, directly placed,
3- to 6-month 2-3...................................
5 Prime bankers acceptances, 90-day3*4.......
6 Large negotiable certificates of deposit,
3-month, secondary market5...............
7 Eurodollar deposits, 3-month 6 ..................
U.S. Treasury bills3*7
Market yields

Rates on new issue 8

5.54

7.94

10.24

10.29

10.47

10.94

10.75

10.67

10.80

11.04

11.16

5.24
5.35

5.54
5.60

7.94
7.99

9.95
9.98

9.76
9.71

9.87
9.82

10.43
10.39

9.99
9.98

10.10

10.07

10.37
10.32

10.61
10.56

10.87

5.22
5.19

5.49
5.59

7.78

9.75
9.98

9.44
9.79

9.39
9.99

9.82
10.62

9.62
10.11

9.63
10.27

9.79
10.60

9.91
10.82

10.07

5.26
5.57

5.58
6.05

8.20

8.74

10.15
10.73

9.95
10.52

10.11

10.87

10.69
11.53

10.23
11.13

10.25

11.00

10.53
11.25

10.81
11.63

12.10

5.27
5.53
5.71

7.19
7.58
7.74

9.61
9.54
9.27

9.06
9.06
8.81

9.24
9.24
8.87

9.52
9.49
9.16

9.23
9.31
8.93

9.40
9.39
8.95

9.52
9.47
9.15

9.55
9.53
9.28

9.74
9.70
9.41

4.989
5.266

Prime commercial paper 2-3
2 9 0 -to 119-day...........................................

5.05

4.98
5.26
5.52

1 Federal funds 1..............................................

5.265
5.510

7.221
7.572

9.592
9.562

9.045
9.062

9.262
9.190

9.450
9.450

9.154
9.301

9.320
9.320

9.495
9.481

9.599
9.504

9.680
9.645

8.11

10.88

11.11

11.08

Capital market rates
U.S. T re a su ry N o te s an d B on d s
Constant maturities9
1-yea r
2-yea r
3-yea r
5-year..................................................
7-year.........................................
10-year.............................................. .
20 -year...............................................
30-year................................................

6.09
6.45
6.69
6.99
7.23
7.42
7.67

8.34
8.34
8.29
8.32
8.36
8.41
8.48
8.49

10.12

6.77
7.18
7.42
7.61
7.86

6.94
6.78

6.85
7.06

8.30
7.89

5.66
7.49
6.64

6.12

5.20
5.68

9.01
8.43
8.75
9.09
9.75

Aaa utility bonds 14
31 New issue.....................
32 Recently offered issues.
Memo : Dividend /price ratio15
33 Preferred stocks.........................
34 Common stocks........................

21
22

Remaining maturities 10
3 to 5 years........................
Over 10 years (long-term).
State

an d

L ocal N otes

and

9.57
9.22
8.95
8.85

8.86

9.64
9.14
8.94
8.90
8.92
8.95
8.92
8.93

9.98
9.46
9.14
9.06
9.05
9.03
8.97
8.98

9.72
9.27
9.01
8.96
8.99
8.97
8.96
8.97

9.72
9.27
8.98
8.93
8.95
8.94
8.92
8.93

9.95
9.38
9.06
9.01
9.00
9.00
8.95
8.96

10.14
9.57
9.20
9.11
9.09
9.06
8.97
9.00

10.28
9.75
9.40
9.27
9.23
9.17
9.04
9.05

9.30
8.55

8.89
8.32

8.88
8.35

9.08
8.42

8.98
8.41

8.95
8.36

9.02
8.39

9.12
8.43

9.30
8.51

5.52
6.27
6.03

5.81
6.38
6.25

5.54
6.19
6.13

6.11

5.58

5.72
6.36

5.60
6.30
6.14

5.70

6.20

6.20
6.13

5.70
6.40
6.16

5.75
6.40
6.23

5.85
6.50
6.36

8.43

9.07

9.96

9.81

9.69

9.74

9.74

9.73

9.72

9.74

9.79

8.02
8.24
8.49
8.97

8.73
8.92
9.12
9.45

9.50
9.86

10.00
10.47

9.29
9.66
9.89
10.38

9.20
9.49
9.75
10.29

9.23
9.53
9.85
10.35

9.24
9.55
9.82
10.34

9.20
9.52
9.84
10.35

9.20
9.51
9.83
10.34

9.23
9.53
9.86
10.35

9.30
9.57
9.91
10.37

8.48
8.49

8.19
8.19

8.96
8.97

9.83
9.84

9.50
9.50

9.58
9.53

9.48
9.49

9.52
9.57

9.40
9.44

9.42
9.45

9.47
9.47

9.62
9.54

7.97
3.77

7.60
4.56

8.25
5.28

8.82
5.58

8.87
5.53

8.93
5.50

9.02
5.30

9.00
5.45

8.97
5.36

8.94
5.25

9.10
5.22

9.09
5.22

9.78
9.42
9.24
9.23
9.25
9.21
9.19

8.91
8.91
8.92

B onds

Moody’s series11
23 A aa......................................................
24 Baa.......................................................
25 Bond Buyer series12...............................

6.13

C orporate B onds

26 Seasoned issues, all industries13.
27
28
29
30

By rating groups

A aa................................................
A a..................................................
A ....................................................
Baa................................................

1. Weekly figures are 7-day averages of daily effective rates for the week
ending Wednesday; the daily effective rate is an average of the rates on
a given day weighted by the volume of transactions at these rates.
2. Beginning November 1977, unweighted average of offering rates
quoted by at least five dealers (in the case of commercial paper), or
finance companies (in the case of finance paper). Previously, most repre­
sentative rate quoted by those dealers and finance companies.
3. Yields are quoted on a bank-discount basis.
4. Average of the midpoint of the range of daily dealer closing rates
offered for domestic issues.
5. Weekly figures (week ending Wednesday) are 7-day averages of the
daily midpoints as determined from the range of offering rates; monthly
figures are averages of total days in the month. Beginning Apr. 5, 1978,
weekly figures are simple averages of offering rates.
6 . Averages of daily quotations for the week ending Wednesday.
7. Except for new bill issues, yields are computed from daily closing
bid prices.
8 .Rates are recorded in the week in which bills are issued.




9. Yield on the more actively traded issues adjusted to constant
maturities by the U.S. Treasury, based on daily closing bid prices.
10. Unweighted averages for all outstanding notes and bonds in maturity
ranges shown, based on daily closing bid prices. “Long-term” includes
all bonds neither due nor callable in less than 10 years, including a num­
ber of very low yielding “flower” bonds.
11. General obligations only, based on figures for Thursday, from
Moody’s Investors Service.
12. Twenty issues of mixed quality.
13. Averages of daily figures from Moody’s Investors Service.
14. Compilation of the Board of Governors of the Federal Reserve
System.
Issues included are long-term (20 years or more). New-issue yields
are based on quotations on date of offering; those on recently offered
issues (included only for first 4 weeks after termination of underwriter
price restrictions), on Friday close-of-business quotations.
15. Provided by Standard and Poor’s Corporation.

A28

Domestic Financial Statistics o September 1979

1.37 STOCK MARKET Selected Statistics
1979
1976

Indicator

1978

1977

Feb.

Mar.

Apr.

June

May

July

Aug.

58.38
64.24
48.85
38.88
64.43

61.19
67.71
52.48
39.26
68.40

Prices and trading (averages of daily figures)
Common stock prices

New York Stock Exchange (Dec. 31,1965 = 50).
Industrial...............................................................
Transportation.......................................................
Utility.....................................................................
Finance...................................................................

54.45
60.44
39.57
36.97
52.94

6 Standard & Poor’s Corporation (1941-43 = 10)1..

102.01

98.18

96.11

98.23

100.11

102.10

99.73

101.73

102.71

107.36

7 American Stock Exchange (Aug. 31,1973 = 100). 101.63

116.18

144.56

160.92

171.51

181.14

180.81

196.08

197.63

208.29

20,936 28,591 25,037 29,536 31,033 28,352
2,944
3,922
4,262
3,888
4,105
2,514 9 American Stock Exchange..............................

34,662
5,236

32,416
3,890

35,870
4,503

1
2
3
4
5

Volume o f trading (thousands o f shares)
8 New York Stock Exchange...................................

.

21,189
2,565

53.67
57.84
41.07
40.91
55.23

53.76
58.30
43.25
39.23
56.74

55.06
60.42
42.27
39.22
56.09

56.18
61.89
43.22
38.94
57.65

57.50
63.64
45.92
38.63
59.50

56.21
62.21
45.60
37.48
58.80

57.61
63.57
47.53
38.44
61.87

Customer financing (end-of-period balances, in millions of dollars)
10
11
12
13

Regulated margin credit at brokers/dealers2
Margin stock 3...............................................
Convertible bonds........................................
Subscription issues.......................................
Free credit balances at brokers4

14 Margin-account............................................
15 Cash-account................................................

11,035
10,830
205

2

9,993
9,740
250
3

585
1,855

640
2,060

8,166
7,960
204

1

10,989
10,790
195
4

11,056
10,870
185

1

2

835
2,510

775
2,430

830
2,490

835
2,550

11,416
11,220

194

11,314
11,130
183

11,763
11,590
172

1

1

840
2,590

897
2,880

T
n.a.

Margin-account debt at brokers (percentage distribution, end of period)
16 Total.....................................
17
18
19
20
21

100.0

100.0

100.0

100.0

100.0

100.0

100.0

12.0

18.0
36.0
23.0

33.0
28.0
18.0

29.0
31.0
18.0

21.0

30.0
23.0

28.0
26.0

12.0

12.0

12.0

5.0

5.0

11.0
6.0

23.0
29.0
23.0

22.0

10.0
6 .0

29.0
25.0

6 .0

6.0

6.0

By equity class (in percent)5

Under 40..............................
40-49....................................
50-59....................................
60-69....................................
70-79....................................
22 80 or more...........................

23.0
35.0
15.0
8.7
6 .0

11.0
6 .0

12.0

7.0

5.0

6 .0

7.0

7.0

100.0
21.0

n.a.

7.0

Special miscellaneous-account balances at brokers (end of period)
23 Total balances (millions of dollars)6. .
Distribution by equity status (percent)

24 Net credit status.................................
Debit status, equity of
25 60 percent or m ore....................
26 Less than 60 percent.....................

9,910

13,092

13,006

13,147

13,218

13,099

41.3

43.4

41.3

40.5

43.2

42.1

41.3

42.6

47.8
10.9

44.9
11.7

45.1
13.6

47.7

46.8

48.6

47.3

11.8

10.0

47.6
10.3

10.1

10.1

8,776

13,634

Margin requirements (percent of market value and effective date)7
Mar. 11, 1968
27 Margin stocks........................................................
28 Convertible bonds..................................................
29 Short sales..............................................................

June 8, 1968

May 6 , 1970

Dec. 6 , 1971

Nov. 24, 1972

Jan. 3, 1974

70
50
70

80
60
80

65
50
65

55
50
55

65
50
65

50
50
50

1. Effective July 1976, includes a new financial group, banks and in­
surance companies. With this change the index includes 400 industrial
stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public
utility (formerly 60), and 40 financial.
2. Margin credit includes all credit extended to purchase or carry
stocks or related equity instruments and secured at least in part by stock.
Credit extended is end-of-month data for member firms of the New York
Stock Exchange.
In addition to assigning a current loan value to margin stock generally,
Regulations T and U permit special loan values for convertible bonds
and stock acquired through exercise of subscription rights.
3. A distribution of this total by equity class is shown on lines 17-22.
4. Free credit balances are in accounts with no unfulfilled commitments
to the brokers and are subject to withdrawal by customers on demand.




5. Each customer’s equity in his collateral (market value of collateral
less net debit balance) is expressed as a percentage of current collateral
values.
6 . Balances that may be used by customers as the margin deposit re­
quired for additional purchases. Balances may arise as transfers based
on loan values of other collateral in the customer’s margin account or
deposits of cash (usually sales proceeds) occur.
7. Regulations G, T, and U of the Federal Reserve Board of Governors,
prescribed in accordance with the Securities Exchange Act or 1934,
limit the amount of credit to purchase and carry margin stocks that may
be extended on securities as collateral by prescribing a maximum loan
value, which is a specified percentage of the market value of the collateral
at the time the credit is extended. Margin requirements are the difference
between the market value (100 percent) and the maximum loan value. The
term “margin stocks” is defined in the corresponding regulation.

Thrift Institutions

A29

1.38 SAVINGS INSTITUTIONS Selected Assets and Liabilities
M
illions of dollars, end of period
Account

1975

1976

1979

1978

1977
Nov.

Dec.

Jan.

Mar.

Feb.

Apr.

May

June

July?

Savings and loan associations
1 Assets..................................... 338,233 391,907 459,241 520,677 523,649 529,820 534,168 539,715 543,459 549, 181 555,571 561,213
2 Mortgages.............................. 278,590 323,005 381,163 429,420 432,858 435,460 437,905 441,420 445,705 451,054 456,629 460,707
3 Cash and investment
30,853 35,724 39,150 45,869 44,855 47,653 49,018 50,130 48, 674 48,257 48,231 49,504
28,790 33,178 38,928 45,388 45,936 46,707 47,245 48,165 49,080 49,870 50,711 51,002
5 Liabilities and net worth....... 338,233 391,907 459,241 520,677 523,649 529,820 534,168 539,715 543,459 549, 181 555, 571 561,213
285,743 335,912 386,800 425,207 431,009 435,752 438,633 446,981 445,831 447,872 454,738 456,757
20,634 19,083 27,840 40,981 42,960 42,468 41,368 41,592 43,765 44,380 47,051 48,500
17,524 15,708 19,945 30,322 31,990 31,758 31,004 31,123 32,389 33,003 34,266 35,306
7,895 10,659 10,970 10,610 10,364 10,469 11,376 11,377 12,785 13,194
3,110
3,375
11,015 10,737 10,445 10,287 10,346 10,706 11,136 11,278 11,320
9,911
6,840
10 Loans in process.................... 5,128
9,918 11,971 14,250 10,919 12,971 15,283 11,703 13,542
6,949
8,074
9,506 14,666
11 Other......................................
7 Borrowed money...................
8
FHLBB..............................

19,779
13 M emo: Mortgage loan com­
mitments outstanding3..

21,998

25,184

28,808

29,025

29,284

29,630

29,877

30,186

30,510

30,801

31,094

10,673

14,826

19,875

20,738

18,911

18,053

19,038

21,085

22,923

23,569

22,777

22,367

n.a.

n.a.

n.a.

Mutual savings banks9
14 Assets..................................... 121,056 134,812 147,287 157,436 158,174 158,892 160,078 161,866
Loans
Mortgage...........................

77,221
4,023
Securities
17 U.S. government.............. 4,740
18 State and local government. 1,545
19 Corporate and other 4 ....... 27,992
2,330
3,205
21 Other assets...........................
15

81,630
5,183

88,195
6,210

94,497
7,921

95,157
7,195

95,552
7,744

95,821
8,455

96,136
9,421

5,840
2,417
33,793
2,355
3,593

5,895
2,828
37,918
2,401
3,839

5,035
3,307
39,679
3,033
3,962

4,959
3,333
39,732
3,665
4,131

4,838
3,328
40,007
3,274
4,149

4,801
3,167
40,307
3,306
4,222

4,814
3,126
40,658
3,410
4,300

121,056 134,812 147,287 157,436 158,174 158,892 160,078 161,866

n,.a.

23 Deposits................................. 109,873 122,877 134,017 141,155 142,701 142,879 143,539 145,650 145,096 145,056 146,057
109,291 121,961 132,744 139,697 141,170 141,388 142,071 144,042 143,210 143,271 144, 161
25
Ordinary savings............ 69,653 74,535 78,005 72,398 71,816 69,244 68,817 68,829 67,758 67,577 68 , 104
26
Time and other.............. 39,639 47,426 54,739 67,299 69,354 72,145 73,254 75,213 c75,452 75,694 76,057
582
916
1,272
1,458
1,531
1,491
1,784
1,468
C
1,886
1,608
1,896
27 Other..................................
5,411
4,565
5,032
2,755
2,884
3,292
5,485
5,048
c5, 050
5,172
4,545
28 Other liabilities.....................
9,052
9,978 10,870 10,907 10,980 11,054 11,167 C
8,428
11,085 11,153 11,212
29 General reserve accounts.. . .
30 M emo: Mortgage loan com­
4,843
4,400
4,366
1,803
2,439
4,066
4,453
4,449
mitments outstanding 6..
4,482
4, 352
n.a.
Life insurance companies
289,304 321,552 351,722 385,562 389,021 393,402 395,553 399,530 402,426 405,627

31

Securities
32 Government....................... 13,758 17,942 19,553 19,711 19,579 19,829 19,922 20,119 19,958 20,381
4,934
4,736
5,368
5,149
5,315
4,795
5,049
5,209
5,324
5,147
33
5,594
4,508
6,235
6,250
6,272
6,051
6,236
6,132
6,106
5,979
34
4,514
8,542
6,980
8,187
8,534
8,544
8,581
8,689
8,832
8,960
35
36 Business............................. 135,317 157,246 175,654 197,615 197,342 201,061 201,869 203,971 205,247 207,775
107,256 122,984 141,891 162,347 161,923 165,552 166,693 167,625 168,862 171,762
37
28,061 34,262 33,763 34,780 35,419 35,509 35,176 36,346 36,385 36,013
38
89,167 91,552 96,848 104,106 105,932 106,397 107,137 108,189 109,009 109,614
9,621 10,476 11,060 11,707 11,776 11,841 11,919 11,959 12,071 12,101
24,467 25,834 27,556 29,818 30,202 30,506 30,835 31,224 31,586 31,832
42 Other assets........................... 16,971 18,502 21,051 22,605 24,190 23,768 23,871 24,068 24,555 23,924

n.a.

n.a.

Credit unions
43 Total assets/liabilities and

38,037

45,225

54,084

61,614

62,595

61,756

62,319

63,883

63,247

64,372

65,603

66,563

20,209
17,828
46 Loans outstanding................ 28,169
47 Federal............................... 14,869
48 State................................... 13,300
49 Savings................................... 33,013
17,530
51 State (shares and deposits). 15,483

24,396
20,829
34,384
18,311
16,073
39,173
21,130
18,043

29,574
24,510
42,055
22,717
19,338
46,832
25,849
20,983

34,215
27,399
51,103
28,031
23,072
52,418
28,992
23,426

34,681
27,914
51,807
28,583
23,224
53,048
29,326
23,722

34,165
27,591
51,526
28,340
23,186
51,916
28,427
23,489

34,419
27,900
51,716
28,427
23,289
52,484
28,743
23,741

35,289
28,594
52,480
28,918
23,562
54,243
29,741
24,502

34,653
28,594
52,542
28,849
23,693
53,745
29,339
24,406

35,268 35,986
29,104 29,617
53,100 53,831
29,109 29,525
23,991 24,306
54,638 r55,948
29,755 30,563
24,883 r25,386

36,733
29,830
54,160
29,674
24,486
56,512
30,857
25,655

44 Federal...................................

For notes see bottomof page A
30.




A30

Domestic Financial Statistics □ September 1979

1.39 FEDERAL FISCAL AND FINANCING OPERATIONS
M
illions of dollars

Type of account or operation

U.S. budget

Transition
quarter
(JulySept.
1976)

Calendar year
Fiscal
year
1977

Fiscal
year
1978

1978

1979

HI

H2

HI

1979
May

June

July

'81,773
94,729
-12,956
-1 ,9 5 2
-11,004

357,762
402,725
-44,963
*•9,497
-5 4,460

401,997
450,836
-48,839
12,693
-61,532

210,650
'222,561
p—11,912
4,334
p—16,246

206,275
'238,186
-31,912
'11,754
-43,666

246,574
245,616
958
4,041
-4 ,9 9 9

38,287
41,618
- 3,331
6,274
-9 ,6 0 5

53,910
40,687
13,223
1,981
11,241

33,268
40,482
-7 ,2 1 4
3,805
-3 ,4 0 8

7 Other 3..................................................

'-2 ,5 7 5
r790

*•-8,415
r—
264

-10,661
*•355

'- 5 ,1 0 5
-7 9 0

-5,082
1,843

-7,712
-4 4 7

-1,560
69

-1 ,7 2 3
-2 6 4

-8 0 9
-1 4 3

U.S. budget plus off-budget, including
Federal Financing Bank
8 Surplus, or deficit ( — .........................
)

-14,741

-53,642

-59,145

-17,806

-35,151

-7,2 0 1

-4 ,8 2 2

11,236

-8 ,1 6 6

18,027

53,516

'59,115

'23,378

'30,314

6,039

1,806

-1 ,4 5 8

4,831

-2 ,8 9 9
-3 8 7

r —2,247
*•2,373

*•-3,021
'3,051

-5 ,0 9 8
'- 4 7 4

3,381
'1,456

-8 ,8 7 8
10,040

-1 6
3,032

-13,044
3,266

4,711
-1 ,3 7 6

17,418
13,299
4,119

19,104
15,740
3,364

22,444
16,647
5,797

17,526
11,614
5,912

16,291
4,196
12,095

17,485
3,290
14,195

4,657
1,974
2,683

17,485
3,290
14,195

13,530
2,765
10,765

1 Receipts1 ..............................................
2 Outlays1................................................
3 Surplus, or deficit ( — .........................
)
4 Trust funds.......................................
5 Federal funds2 .................................
Off-budget entities surplus , or
deficit ( —
)
6 Federal Financing Bank outlays........

Financed by
Borrowing from the public.............
Cash and monetary assets (de­
crease, or increase ( —))4 ..........
11
Other 5..............................................
9
10

M emo:

12 Treasury operating balance (level,
end of period)..............................
13 Federal Reserve Banks....................
14 Tax and loan accounts..................

1. Effective June 1978, earned income credit payments in excess of
an individual’s tax liability, formerly treated as income tax refunds, are
classified as outlays retroactive to January 1976.
2. Half-year figures calculated as a residual (total surplus/deficit less
trust fund surplus/deficit).
3. Includes Pension Benefit Guaranty Corp.; Postal Service Fund; Rural
Electrification and Telephone Revolving Fund; and Rural Telephone
Bank.
4. Includes U.S. Treasury operating cash accounts; special drawing
rights; gold tranche drawing rights; loans to International Monetary
Fund; and other cash and monetary assets.

5. Includes accured interest payable to the public; deposit funds; mis­
cellaneous liability (including checks outstanding) and asset accounts;
seignorage; increment on gold; net gain/loss for U.S. currency valuation
adjustment; net gain/loss for IM F valuation adjustment; and profit on
the sale of gold.
S o u r c e . “Monthly Treasury Statement of Receipts and Outlays of
the U.S. Government,” Treasury Bulletin , and the Budget o f the United
States Government, Fiscal Year 1980.

NOTES TO TABLE 1.38
1. Holdings of stock of the Federal Home Loan Banks are included in
“other assets.”
2. Includes net undistributed income, which is accrued by most, but not
all, associations.
3. Excludes figures for loans in process, which are shown as a liability.
4. Includes securities of foreign governments and international organiza­
tions and nonguaranteed issues of U.S. government agencies.
5. Excludes checking, club, and school accounts.
6 . Commitments outstanding (including loans in process) of banks in
New York State as reported to the Savings Banks Association of the
State of New York.
7. Direct and guaranteed obligations. Excludes federal agency issues
not guaranteed, which are shown in this table under “business” securities.
8 . Issues of foreign governments and their subdivisions and bonds of the
International Bank for Reconstruction and Development.
9. The NAMSB reports that, effective April 1979, balance sheet data
are not strictly comparable with previous months. This largely reflects:
(1) changes in FDIC reporting proceedures; and (2) reclassification of
certain items.




N o t e . Savings and loan associations: Estimates by the FHLBB for
all associations in the United States. Data are based on monthly reports
of federally insured associations and annual reports of other associations.
Even when revised, data for current and preceding year are subject to
further revision.
Mutual savings banks: Estimates of National Association of Mutual
Savings Banks for all savings banks in the United States. Data are re­
ported on a gross-of-valuation-reserves basis.
Life insurance companies: Estimates of the American Council of Life
Insurance for all life insurance companies in the United States. Annual
figures are annual-statement asset values, with bonds carried on an
amortized basis and stocks at year-end market value. Adjustments for
interest due and accrued and for differences between market and book
values are not made on each item separately but are included, in total, in
“other assets.”
Credit unions: Estimates by the National Credit Union Administration
for a group of federal and state-chartered credit unions that account for
about 30 percent of credit union assets. Figures are preliminary and
revised annually to incorporate recent benchmark data.

Federal Finance

A31

1.40 U.S. BUDGET RECEIPTS AND OUTLAYS
M
illions of dollars

Source or type

Transition
quarter
(JulySept.
1976)

Calendlar year
Fiscal
year
1977

Fiscal
year
1978

1978

1979

HI

H2

HI

1979
May

June

July

R eceipts

1 All sources1 ..........................................

81,773

357,762

401,997

210,650

206,275

246,574

38,287

53,910

33,268

2 Individual income taxes, net...............
3 Withheld...........................................
4 Presidential Election Campaign
F und..........................................
5 Nonwithheld.....................................
6
Refunds1...........................................
Corporation income taxes
7 Gross receipts...................................
8
Refunds.............................................
9 Social insurance taxes and contribu­
tions, n et.......................................
10 Payroll employment taxes and
contributions 2 ..........................
11 Self-employment taxes and
contributions 3 .........................
12 Unemployment insurance................
13 Other net receipts 4 .........................

38,801
32,949

157,626
144,820

180,988
165,215

90,336
82,784

98,854
90,148

111,603
98,683

14,575
16,736

25,568
18,080

17,086
16,714

6,809
958

1

37
42,062
29,293

39
47,804
32,070

36
37,584
30,068

3
10,777
2,075

32
44,116
31,228

7
5,696
7,864

4
8,424
940

1,241
869

9,808
1,348

60,057
5,164

65,380
5,428

38,496
2,782

28,536
2,757

42,427
2,889

1,870
467

16,016
376

2,518
499

14
IS
16
17

Excise taxes..........................................
Customs deposits.................................
Estate and gift taxes...........................
Miscellaneous receipts 5 ......................

0

25,760

108,683

123,410

66,191

61,064

75,609

18,652

9,375

10,566

21,534

88,196

99,626

51,668

51,052

59,298

12,932

8,374

8,857

269
2,698
1,259

4,014
11,312
5,162

4,267
13,850
5,668

3,892
7,800
2,831

369
6,727
2,917

4,616
8,623
3,072

318
4,864
538

322
188
491

1,204
504

4,473
1,455
1,612

1,212

17,548
5,150
7,327
6,536

18,376
6,573
5,285
7,413

8,835
3,320
2,587
3,667

9,879
3,748
2,691
4,260

8,984
3,682
2,657
4,501

1,601
645
559
852

1,464
637
414
811

1,659
647
463
828

94,729

402,725

450,836

222,518

238,150

245,616

41,618

40,687

40,482

52,979
2,904

55,129
2,221

57,643
3,538

9,965
743

9,973
482

10,397
-4 2 7

0

O utlays

18 All types1 .............................................
19 National defense..................................
20 International affairs.............................
21 General science, space, and
technology.....................................
22 Energy..................................................
23 Natural resources and environment..
24 Agriculture...........................................

22,307
2,197

97,501
4,813

105,186
5,922

1,161
794
2,532
581

4,677
4,172
10,000

5,532

4,742
5,861
10,925
7,731

2,395
2,487
4,959
2,353

2,362
4,461
6,119
4,854

2,461
4,417
5,672
3,020

442
737
969
69

461
789
900
-5 2 5

433
713
1,154
-3 6 9

25 Commerce and housing credit............
26 Transportation.....................................
27 Community and regional
development.................................
28 Education, training, employment,
and social services........................
29 Health...................................................
30 Income security 1 ..................................

1,392
3,304

-4 4
14,636

3,325
15,444

-9 4 6
7,723

3,291
8,758

60
7,688

16
1,326

95
1,340

173
1,552

31
32
33
34
35
36

Veterans benefits and services............
Administration of justice....................
General government............................
General-purpose fiscal assistance........
Interest« ..............................................
Undistributed offsetting receipts 6*7..

1,340

6,286

11,000

5,928

6,108

4,499

787

912

702

5,162
8,721
32,797

20,985
38,785
137,915

26,463
43,676
146,212

12,792
21,391
75,201

13,676
23,942
73,305

14,467
24,860
81,173

2,559
4,258
13,588

2,193
4,268
13,595

2,472
4,108
13,669

3,962
859
883
2,092
7,216
-2 ,5 6 7

18,038
3,600
3,374
9,499
38,009
-15,053

18,974
3,802
3,777
9,601
43,966
-15,772

9,603
1,946
1,803
4,665
22,280
-7 ,9 4 5

9,545
1,973

10,127
2,096
2,291
3,890
26,934
-8 ,9 9 9

1,694
364
454
160
4,241
-7 5 5

2,497
323
405
76
7,834
-4 ,9 3 1

667
336
365
1,800
3,491
-7 5 3

1. Effective June 1978, earned income credit payments in excess oif an
individual's tax liability, formerly treated as income tax refunds, are
classified as outlays retroactive to January 1976.
2. Old-age, disability, and hospital insurance, and railroad retirement
accounts.
3. Old-age, disability, and hospital insurance.
4. Supplementary medical insurance premiums, federal employee re­
tirement contributions, and Civil Service retirement and disability fund.
5. Deposits of earnings by Federal Reserve Banks and other miscel­
laneous receipts.
6 . Effective September 1976, “Interest" and “ Undistributed Offsetting




2,111

4,385
24,110
- 8,200

Receipts" reflect the accounting conversion for the interest on special
issues for U.S. government accounts from an accrual basis to a cash basis.
7. Consists of interest received by trust funds, rents and royalties on
the Outer Continental Shelf, and U.S. government contributions for
employee retirement.
Source. “ Monthly Treasury Statement of Receipts and Outlays of the
U.S. Government” and the Budget o f the U.S. Government, Fiscal Year

1980.

A32
1.41

Domestic Financial Statistics □ September 1979
FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions o f dollars

1977

1976

1978

Item
Dec. 31

June 30

1 Federal debt outstanding.....................

665.5

685.2

709.1

2 Public debt securities...........................

653.5
506.4
147.1

674.4
523.2
151.2

698.8
543.4
155.5

12.0
10.0

10.8

10.3
8.5

1.8

1.8

4

Held by agencies..............................

5 Agency securities.................................

Sept. 30

9.0

Dec. 31

1979

June 30

Sept. 30

Dec. 31

Mar. 31

June 30

729.2

758.8

780.4

797.7

804.6

812.2

718.9
564.1
154.8

749.0
587.9
161.1

771.5
603.6
168.0

789.2
619.2
170.0

796.8
630.5
166.3

804.9
626.4
178.5

10.2

9.8

1.8

8.0
1.8

8.9
7.4
1.5

8.5
7.0
1.5

7.8
6.3
1.5

7.3
5.9
1.5

8.4

Held by agencies..............................

1.9

8 Debt subject to statutory limit.............

654.7

675.6

700.0

720.1

750.2

772.7

790.3

797.9

806.0

652.9
1.7

673.8
1.7

698.2
1.7

718.3
1.7

748.4

770.9

1.8

1.8

788.6
1.7

796.2
1.7

804.3
1.7

682.0

700.0

700.0

752.0

752.0

798.0

798.0

798.0

830.0

7

11 Memo: Statutory debt limit...............

1. Includes guaranteed debt of government agencies, specified participation certificates, notes to international lending organizations, and District
of Columbia stadium bonds.

1.42 GROSS PUBLIC DEBT OF U.S. TREASURY

N o te . Data from Treasury Bulletin (U.S. Treasury Department),

Types and Ownership

Billions of dollars, end of period

Type and holder

1975

1977

1976

1979

1978
Apr.

May

June

July

Aug.

576.6

653.5

718.9

789.2

796.4

804.8

804.9

807.5

813.1

2 Interest-bearing debt......................... ...................
3 Marketable............................................................
4 Bills....................................................................
5 N otes..................................................................
6
Bonds..................................................................
7 Nonmarketable1....................................................
8
Convertible bonds 2 ...........................................
9 State and local government series...................
10 Foreign issues 3..................................................
11
Government...................................................
12
Public..............................................................
13 Savings bonds and notes..................................
14 Government account series4 ............................

575.7
363.2
157.5
167.1
38.6
212.5
2.3

652.5
421.3
164.0
216.7
40.6
231.2
2.3
4.5
22.3
22.3

715.2
459.9
161.1
251.8
47.0
255.3

782.4
487.5
161.7
265.8
60.0
294.8

803.8
506.9
163.1
276.1
67.7
296.9

2.2

2 .2

2 .2

799.9
499.3
159.9
272.1
67.4
300.5

806.5
507.0
159.9
278.3

2.2

795.4
504.6
163.7
275.3
65.5
290.8

299.5

812.1
509.2
160.5
277.6
71.1
302.9

21 .0

1.6

67.9
119.4

72.3
129.7

77.0
139.8

80.9
157.5

24.0
25.4
21.3
4.2
80.8
158.2

24.0
25.2

0

22.2
22.2
0

4.2
80.8
164.6

24.1
26.8
22.7
4.2
80.8
166.3

24.2
28.0
23.9
4.2
80.9
163.9

24.6
27.7
23.5
4.2
80.9
167.3

15 Non-interest-bearing debt.....................................

1.0

1.1

3.7

6.8

.9

1.0

5.1

1.0

1.0

139.1
89.8
349.4
85.1
4.5
9.5

154.8
102.5
461.3
101.4
5.9
15.1
22.7
55.2

170.0
109.6
508.6
93.4
5.2
15.0

34.2

147.1
97.0
409.5
103.8
5.9
12.7
27.7
41.6

20.6
68.6

170.7
108.6
517.1
97.0
5.2
14.8
23.6
69.1

177.1
106.2
521.5
98.5
5.2
14.7
26.2
69.2

178.6
109.2
516.6
95.0
5.0
14.5
24.0

67.3
24.0
66.5
38.0

72.0
28.8
78.1
38.9

76.7
28.6
109.6
46.1

80.7
30.0
137.8
57.4

80.6
31.5
124.8
70.6

80.6
31.8
118.0
77.5

80.6
31.8
119.5
78.3

1 Total gross public debt..........................................
By type

By holder5

16 U.S. government agencies and trust funds........
18 Private investors....................................................
19 Commercial banks................................................

1.2
21.6
21.6
0

20.2

Individuals
25 Other securities..................................................
26 Foreign and international«...................................

1. Includes (not shown separately): Securities issued to the Rural
Electrification Administration, depositary bonds, retirement plan bonds,
and individual retirement bonds.
2. These nonmarketable bonds, also known as Investment Series B
Bonds, may be exchanged (or converted) at the owner’s option for 1Vi
ercent, 5-year marketable Treasury notes. Convertible bonds that have
een so exchanged are removed from this category and recorded in the
notes category above.
3. Nonmarketable dollar-denominated and foreign currency denomin­
ated series held by foreigners.
4. Held almost entirely by U.S. government agencies and trust funds.
5. Data for Federal Reserve Banks and U.S. government agencies and
trust funds are actual holdings; data for other groups are Treasury
estimates.




13.9

24.3
29.6
28.0

2.2

68.0

68.8
2.2

n.a.

2 .2

n.a.

6 . Consists of the investments of foreign balances and international
accounts in the United States. Beginning with July 1974, the figures exclude
non-interest-bearing notes issued to the International Monetary Fund.
7. Includes savings and loan associations, nonprofit institutions, cor­
porate pension trust funds, dealers and brokers, certain government
deposit accounts, and government sponsored agencies.
8 . Includes a nonmarketable Federal Reserve special certificate for $2.6
billion.
N o te . Gross public debt excludes guaranteed agency securities and,
beginning in July 1974, includes Federal Financing Bank security issues.
Data by type of security from Monthly Statement o f the Public Debt o f
the United States (U.S. Treasury Department); data by holder from

Treasury Bulletin.

Federal Finance

A33

1.43 U.S. GOVERNMENT MARKETABLE SECURITIES Ownership, by maturity
Par value; m
illions of dollars, end of period
Type of holder

1977

1979

1978
May

1977

1979

1978

June

May

All maturities

June

1 to 5 years

1 All holders................................................................................

459,927

487,546

506,867

499,343

151,264

162,886

161,719

155,150

2 U.S. government agencies and trust funds...........................
3 Federal Reserve Banks...........................................................

14,420
101,191

12,695
109,616

12,682
106,185

12,452
109,241

4,788
27,012

3,310
31,283

2,509
28,634

2,503
28,204

4 Private investors......................................................................
5

344,315
75,363
4,379
12,378
9,474
4,817
15,495
222,409

365,235
68,890
3,499
11,635
8,272
3,835
18,815
250,288

388,001
70,704
3,379
11,792
9,925
3,555
18,544
270,101

377,650
67,790
3,287
11,612
8,826
3,669
18,023
264,442

119,464
38,691

128,293
38,390
1,918
4,664
3,635
2,255
3,997
73,433

130,576
38,157
1,811
4,822
3,299
1,989
4,385
76,112

124,443
36,028
1,765
4,657
3,068
2,013
4,016
72,896

6

7

8

9

10
11

Nonfinan cial corporations..................................................
Savings and loan associations............................................
State and local governments..............................................

2,112

4,729
3,183
2,368
3,875
64,505

Total, within 1 year

5 to 10 years

12 All holders................................................................................

230,691

228,516

243,856

243,171

45,328

50,400

47,786

47,561

13 U.S. govern)ment agencies and trust funds...........................
14 Federal Reserve Banks...........................................................

1,906
56,702

1,488
52,801

2,280
53,558

2,280
56,778

2,129
10,404

1,989
14,809

1,989
12,225

1,765
12,436

15 Private inves tors......................................................................
16
17
18 Insurance 'Companies...........................................................
19 Nonfinanc ial corporations..................................................

172,084
29,477
1,400
2,398
5,770
2,236
7,917
122,885

174,227
20,608
817
1,838
4,048
1,414
8,194
137,309

188,018
22,347
847
1,870
5,759
1,407
6,811
148,978

184,114
21,906
804
1,860
5,069
1,499
6,682
146,293

32,795
6,162
584
3,204
307
143
1,283

33,601
7,490
496
2,899
369
89
1,588
20,671

33,572
7,542
457
2,768
470
82
1,669
20,584

33,359
7,363
461
2,750
354
82
1,693
20,656

20
21
22

State and local governments..............................................

21,112

Bills, within 1 year

10 to 20 years

159,890
*
40,309

12,906

19,800

24,968

24,922

42,397

163,076
*
38,165

3,102
1,510

3,876
2,088

4,524
3,118

4,524
3,127

119,348
5,707
150
753
1,792
262
5,524
105,161

124,910
6,373
151
506
2,916
223
4,177
110,564

119,580
6,036
130
412
2,602
248
3,770
106,382

8,295
456
137
1,245
133
54
890
5,380

13,836
956
143
1,460

17,326
1,135
142
1,488
247
61
1,749
12,505

17,271
1,093
139
1,489
219
60
1,762
12,508

23 All holders................................................................................

161,081

161,747

24 U.S. government agencies and trust funds...........................
25 Federal Reserve Banks............................................................

32
42,004

2

26 Private investors......................................................................
27
28 Mutual savings banks..........................................................
29 Insurance companies...........................................................
30 Nonfinancial corporations..................................................
31 Savings and loan associations............................................
32 State and local governments..............................................
33

119,035
11,996
484
1,187
4,329
806
6,092
94,152

86

60
1,420
9,711

Over 20 years

Other, within 1 year
34 All holders................................................................................

69,610

66,769

80,780

83,282

19,738

25,944

28,538

28,538

35 U.S. government agencies and trust funds...........................
36 Federal Reserve Banks...........................................................

1,874
14,698

1,487
10,404

2,280
15,393

2,280
16,469

2,495
5,564

2,031
8,635

1,380
8,650

1,380
8,696

37 Private investors......................................................................
38 Commercial banks..............................................................
39 Mutual savings banks..........................................................
40 Insurance coi npanies............. ..............................................
41
Nonfinancial corporations..................................................
42 Savings and loan associations............................................
43 State and local governments..............................................
44 All others..............................................................................

53,039
15,482
916

54,879
14,901
667
1,084
2,256
1,152
2,670
32,149

63,108
15,973
696
1,364
2,843
1,184
2,634
38,414

64,534
15,870
674
1,447
2,467
1,251
2,912
39,911

11,679
578
146
802
81
16
1,530
8,526

15,278
1,446
126
774
135
17
3,616
9,164

18,508
1,523

18,461
1,400
117
856
117
15
3,869
12,088

1,211

1,441
1,430
1,825
28,733

N o te . Direct public issues only. Based on Treasury Survey of Owner­
ship from Treasury Bulletin (U.S. Treasury Department).
Data complete 1'or U.S. government agencies and trust funds and
Federal Reserve Bamks, but data for other groups include only holdings
of those institutions that report. The following figures show, for each
category, the number and proportion reporting as of June 30, 1979:




121

844
150
17
3,930
11,922

(1) 5,449 commercial banks, 461 mutual savings banks, and 723 insurance
companies, each about 80 percent; (2) 431 nonfinancial corporations and
485 savings and loan associations, each about 50 percent; and (3) 490
state and local governments, about 40 percent.
“All others,” a residual, includes holdings of all those not reporting
in the Treasury Survey, including investor groups not listed separately.

A34

Domestic Financial Statistics □ September 1979

1.44 U.S. GOVERNMENT SECURITIES DEALERS Transactions
Par value; averages of daily figures, in m
illions of dollars
Item

1976

1977

1979

1978

1979, w ending W
eek
ednesdaiy

M
ay
1 U.S. government securities...
By maturity

2
3
4
5

Bills........................................
Other within 1 year..............
1-5 years................................
5-10 years..............................
6 Over 10 years.........................

June

July

M 23 M 30 June 6 June 1 June 20 June 27
ay
ay
3

10,449

10,838

10,285

13,354

15,284

11,145

15,140

16,942

15,929

16,755

14,476

14,453

6,676

6,746
237
2,320
1,148
388

6,173
392
1,889
965

7,555
347
2,257
1,560
1,635

9,286
*•448
2,562
1,472
*"1,516

6,770
308
1,979
906
1,092

7,946
361
3,096
1,970
1,766

9,556
437
3,559
1,636
1,754

10,391
375
2,147
1,537
1,479

9,744
408
2,623
2,064
1,826

9,546
415
21,310
1 ,106
1 ,099

8,365
479
2,968
1,319
1,321

210

2,317
1,019
229

866

By type o f customer

7 U.S. government securities
dealers................................
8 U.S. government securities
brokers...............................
9 Commercial banks................
10 All others 1.............................

1,360

1,267

1,135

1,205

1,335

1,060

1,312

1,421

1,860

1,200

1,298

1,063

3,407
2,426
3,257

3,709
2,295
3,568

3,838
1,804
3,508

5,262
2,009
4,878

r6,112

r2,447
r5,390

4,432
1,767
3,644

6,495
2,294
5,040

7,013
2,507

7,517
2,823
5,214

Si, 645

6,001

5,619
2,524
5,926

2,121
ii, 412

5,892
2,338
5,160

11 Federal agency securities. . . .

1,548

1,729

1,894

2,621

*•3,232

2,509

3,536

3,635

3,295

3,801

31,477

3,061

1. Includes, among others, all other dealers and brokers in commodities
Transactions are market purchases and sales of U.S. government
and securities, foreign banking agencies, and the Federal Reserve System.
securities dealers reporting to the Federal Reserve Bank of New York.
The figures exclude allotments of, and exchanges for, new U.S. government
N ote. Averages for transactions are based on number o f trading days
securities, redemptions of called or matured securities, or purchases or
sales of securities under repurchase, reverse repurchase (resale), or similar
in the period.
contracts.

1.45 U.S. GOVERNMENT SECURITIES DEALERS Positions and Sources of Financing
Par value; averages of daily figures, in millions of dollars

Item

1976

1977

1979

1979, week ending Wednesday

1978
May

June

July

May 2

May 9

May 16 May 23 May 30

June 6

Positions*
1 U.S. government securities...

7,592

5,172

2,656

r5,266

7,166

2,980

2,856

4,522

4,708

5,552

8,115

7,919

2
3
4
5

Bills........................................
Other within 1 year..............
1-5 years................................
5-10 years..............................

6,290
188
515
402
198

4,772
99
60
92
149

2,452
260
-9 2
40
-4

r5 ,100
-3 4
-7 4 4
377
567

7,445

3,384
-3 3
-3 9 3
-1 3 9
37

4,084
9
-851
458
823

4,669
-1 7 5
-9 0 7
422
700

5,376

-4 3 7
223
-1 6 7

3,634
52
-5 1 3
46
-2 4 0

-8 1 8
390
596

7,677
46
-3 6 7
354
405

7,925
-1 3 9
-4 1 9
376
177

7 Federal agency securities. . . .

729

693

606

1,660

2,168

1,984

1,165

1,237

1,338

2,056

2,284

2,424

101

8

Financing 3
8 All sources.............................

8,715

9,877

10,204

14,849

17,111

16,217

13,045

13,151

13,824

15,549

17,211

17,389

Commercial banks
New York City.................
Outside New York C ity...
Corporations 1.......................
All others...............................

1,896
1,660
1,479
3,681

1,313
1,987
2,423
4,155

599
2,174
2,370
5,052

733
2,839
2,901
8,377

1,638
2,883
3,410
9,180

1,266
2,324
3,434
9,193

850
1,879
2,373
7,943

522
2,417
2,363
7,830

51
2,633
2,489
8,651

1,193
2,763
3,223
8,370

1,279
3,615
3,603
8,714

1,252
3,728
3,761
8,649

9
10
11
12

1. All business corporations except commercial banks and insurance
companies.
2. New amounts (in terms of par values) of securities owned by nonbank
dealer firms and dealer departments of commercial banks on a commit­
ment, that is, trade-date basis, including any such securities that have
been sold under agreements to repurchase. The maturities of some re­
purchase agreements are sufficiently long, however, to suggest that the
securities involved are not available for trading purposes. Securities
owned, and hence dealer positions, do not include securities purchased
under agreements to resell.
3. Total amounts outstanding of funds borrowed by nonbank dealer




firms and dealer departments of commercial banks against U.S. govern­
ment and federal agency securities (through both collat eral loans and sales
under agreements to repurchase), plus internal funds vised by bank dealer
departments to finance positions in such securities. 'Borrowings against
securities held under agreement to resell are excluded where the borrowing
contract and the agreement to resell are equal in am ount and maturity,
that is, a matched agreement.
N o t e . Averages for positions are based on numt>er of trading days
in the period; those for financing, on the number of calendar days in the
period.

Federal Finance

A35

1.46 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding
M
illions of dollars, end of period
Agency

1976

1977

1978

1978

1979

Dec.

Jan.

Feb.

Mar.

Apr.

May

1 Federal and federally sponsored agencies1 ..........

103,848

112,472

137,063

137,063

138,726

140,999

143,265

145,556

146,429

2 Federal agencies....................................................
3 Defense Department 2 .......................................
4 Export-Import Bank 3•4....................................
5 Federal Housing Administration 5...................
6
Government National Mortgage Association
participation certificates6.........................
7 Postal Service7 ..................................................
8
Tennessee Valley Authority.............................
9 United States Railway Association7................

22,419
1,113
8,574
575

22,760
983
8,671
581

23,488

23,488

8,711
588

8,711
588

868

23,431
864
8,515
582

23,485
859
8,499
586

23,507
839
8,326
580

23,568
822
8,322
576

23,366
807
8,107
568

4,120
2,998
4,935
104

3,743
2,431
6,015
336

3,141
2,364
7,460
356

3,141
2,364
7,460
356

3,141
2,364
7,620
345

3,141
2,364
7,690
346

3,141
2,364
7,900
357

3,099
2,364
7,985
400

2,202

10 Federally sponsored agencies1.............................
11 Federal Home Loan Banks.............................
12 Federal Home Loan Mortgage C orporation..
13 Federal National Mortgage Association........
14 Federal Land Banks.........................................
15 Federal Intermediate Credit Banks..................
16 Banks for Cooperatives...................................
17 Farm Credit Banks1 .........................................
18 Student Loan Marketing Association8............
19 Other..................................................................

81.429
16,811
1,690
30,565
17,127
10,494
4,330

89,712
18,345

113,575
27,563
2,262
41,080
20,360
11,469
4,843
5,081
915

113,575
27,563
2,262
41,080
20,360
11,469
4,843
5,081
915

115,295
27,677
2,262
41,917
19,275
9,978
4,392
8,877
915

117,514
28,447
2,461
42,405
19,275
8,958
3,852
11,134
980

119,758
28,265
2,333
43,625
19,275
7,890
3,351
13,987
1,030

121,988
28,121
2,330
44,792
18,389
6,994
2,473
17,838
1,050

123,063
28,577
2,323
44,639
18,389
5,958
1,483
20,597
1,095

M emo:

20 Federal Financing Bank debt7>9 ...........................
Lending to federal and federally sponsored
agencies
21 Export-Import Bank 4 ...........................................
22 Postal Service7 ......................................................
23 Student Loan Marketing Association8................

24 Tennessee Valley Authority.................................
25 United States Railway Association7 ...................

410

31,890
19,118
11,174
4,434
2,548
515
2

28,711

38,580

51,298

51,298

52,154

53,221

55,310

56,610

58,186

5,208
2,748
410
3,110
104

5,834
2,181
515
4,190
336

6,898
2,114
915
5,635
356

6,898
2,114
915
5,635
356

6,898
2,114
915
5,795
345

6,898
2,114
980
5,865
346

7,131
2,114
1,030
6,075
357

7,131
2,114
1,050
6,260
400

7,131
1,952
1,095
6,430
428

10,750
1,415
4,966

16,095
2,647
6,782

23,825
4,604
6,951

23,825
4,604
6,951

24,445
4,680
6,962

25,160
4,735
7,123

25,985
4,962
7,656

26,890
5,122
7,643

28,050
5,253
7,847

1. In September 1977 the Farm Credit Banks issued their first consoli­
dated bonds, and in January 1979 they began issuing these bonds on a
regular basis to replace the financing activities of the Federal Land Banks,
the Federal Intermediate Credit Banks, and the Banks for Cooperatives.
Line 17 represents those consolidated bonds outstanding, as well as any
discount notes that have been issued. Lines 1 and 10 reflect the addition
of this item.
2. Consists of mortages assumed by the Defense Department between
1957 and 1963 under family housing and homeowners assistance programs.
3. Includes participation certificates reclassified as debt beginning
Oct. 1, 1976.
4. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget
thereafter.
5. Consists of debentures issued in payment of Federal Housing Ad­
ministration insurance claims. Once issued, these securities may be sold
privately on the securities market.
6 . Certificates of participation issued prior to fiscal 1969 by the Govern­
ment National Mortgage Association acting as trustee for the Farmers
Home Administration; Department of Health, Education, and Welfare;




3,099
8,155
428

2

Other lending10

26 Farmers Home Administration...........................
27 Rural Electrification Administration..................
28 Other......................................................................

1,686

868

2

2

2

2

2

1

2

Department of Housing and Urban Development; Small Business Ad­
ministration; and the Veterans Administration.
7. Off-budget.
8. Unlike other federally sponsored agencies, the Student Loan
Marketing Association may borrow from the Federal Financing Bank
(FFB) since its obligations are guaranteed by the Department of Health,
Education, and Welfare.
9. The FFB, which began operations in 1974, is authorized to purchase
or sell obligations issued, sold, or guaranteed by other federal agencies.
Since FFB incurs debt solely for the purpose of lending to other agencies,
its debt is not included in the main portion of the table in order to avoid
double counting.
10. Includes FFB purchases of agency assets and guaranteed loans;
the latter contain loans guaranteed by numerous agencies with the
guarantees of any particular agency being generally small. The Farmers
Home Administration item consists exclusively of agency assets, while the
Rural Electrification Administration entry contains both agency assets
and guaranteed loans.

A36

Domestic Financial Statistics □ September 1979

1.47 NEW SECURITY ISSUES of State and Local Governments
Millions of dollars
1976

Type of issue or issuer,
or use

1979

1978

1977

Ja n .'

F eb.'

M ar.'

A pr.'

M ay'

June

35,313

12
13
14
15

Utilities and conservation......................................................
Social welfare.........................................................................
Industrial aid.........................................................................
Other purposes.......................................................................

4,637

3,360

3,078

4,205

18,042
28,655

17,854
30,658

1,310
1,523

955
1,638

1,059
3,570

1,232
2,117

1,131
1,945

1,511
2,675

72

95

21

5

8

11

2

19

6,354
21,717
18,623

6,632
24,156
17,718

467
971
1,396

580
1,177
836

436
2,930
1,263

298
1,581
1,468

204
1,528
1,344

642
1,562
1,982

36,189

37,629

2,825

2,570

4,624

3,332

3,069

3,882

4,900
2,586
9,594
6,566
483
7,979

Use o f proceeds

2,598

32,108

7 Special district and statutory authority...............................
8 Municipalities, counties, townships, school districts..........

2,854

7,054
15,304
12,845

6 State........................................................................................

48,607

133
Type o f issuer

46,769

18,040
17,140

Type o f issue

5,076
2,951
8,119
8,274
4,676
7,093

5,003
3,460
9,026
10,494
3,526

492
248
543
766
277
499

420
224
734
731
195
266

281
204
1,133
2,036
315
655

447
134
498
1,489
170
594

665

512
274
989
1,037
282
788

1. Par amounts of long-term issues based on date of sale.
2. Only bonds sold pursuant to the 1949 Housing Act, which are secured
by contract requiring the Housing Assistance Administration to make
annual contributions to the local authority.

6,120

120

545
681
386
672

S o u r ce. Public Securities Association.

1.48 NEW SECURITY ISSUES of Corporations
Millions of dollars

Type of issue or issuer,
or use

1976

1977

1978

1978

1979

Dec.

Ja n .'

F eb.'

Mar.

Apr.

May

1 All issues 1..................................

53,488

53,792

47,230

4,367

3,770

3,170

4,401

4,311

3,963

2 Bonds..........................................

42,380

42,015

36,872

3,247

3,106

2,257

3,729

3,732

3,372

26,453
15,927

24,072
17,943

19,815
17,057

1,227
2,020

1,282
1,824

1,336
921

1,904
1,825

2,984
748

2,023
1,349

7 Transportation...........................
8 Public utility...............................
9 Communication.........................
10 Real estate and financial............

, 13,264
4,372
4,387
8,297
2,787
, 9,274

12,204
6,234
1,996
8,262
3,063
10,258

9,572
5,246
2,007
7,092
3,373
9,586

1,031
690
123
364
285
755

893
494
142
460
259
858

278
279
266
517
558
359

739
362
245
721
517
1,145

534
26
264
261
1,779

866

1,089
238
177
618
97
1,153

11 Stocks.........................................

11,108

11,777

10,358

1,120

664

913

672

579

591

2,803
8,305

3,916
7,861

2,832
7,526

424
696

171
493

712

201

231
441

155
424

184
407

2,237
1,183
24

1,189
1,834
456
5,865
1,379
1,049

1,241
1,816
263
5,140
264
1,631

42
303
113
271
175
216

41
169

121

36

357

669

84
203
39
237
7

96

29

24
114
55
335
65
79

Type o f offering

3 Public..........................................
4 Private placement.......................
Industry group

5 Manufacturing...........................

6 Commercial and miscellaneous.

Type

12 Preferred.....................................
13 Common.....................................
Industry group

14
15
16
17
18
19

Manufacturing...........................
Commercial and miscellaneous.
Transportation...........................
Public utility...............................
Communication.........................
Real estate and financial............

6,121

776
771

93

210

257
78

21

1.
Figures, which represent gross proceeds of issues maturing in more companies other than closed-end, intracorporate transactions, and sales to
than one year, sold for cash in the United States, are principal amount or
foreigners.
number of units multiplied by offering price. Excludes offerings of less
than $ 100,000 , secondary offerings, undefined or exempted issues as
Source. Securities and Exchange C m
om ission.
defined in the Securities Act of 1933, employee stock plans, investment




Corporate Finance

A37

1.49 OPEN-END INVESTMENT COMPANIES Net Sales and Asset Position
M
illions of dollars
1979
1977

1978

1 Sales of own shares2 .............................................
2 Redemptions of own shares 3 ...............................

6,401
6,027
357

6,645
7,231
-5 8 6

648
607
41

451
548
-9 7

523
646
-123

594
761
-1 7 5

549
715
-1 6 6

676
667
9

744
706
38

4 Assets4 ...................................................................
5 Cash position 5 ......................................................

45,049
3,274
41,775

44,980
4,507
40,473

46,591
4,624
41,967

45,016
4,851
40,165

47,051
4,746
42,305

47,142
4,862
42,280

46,431
4,869
41,562

48,064
5,012
43,052

48,771
5,052
43,719

Item

Jan.

Feb.

Mar.

Apr.

May

June

July

In v estm en t C om panies1

1. Excluding money market funds.
2. Includes reinvestment of investment income dividends. Excludes
reinvestment of capital gains distributions and share issue of conversions
from one fund to another in the same group.
3. Excludes share redemption resulting from conversions from one fund
to another in the same group.
4. Market value at end of period, less current liabilities.

5. Also includes all U.S. government securities and other short-term
debt securities.
N o te . Investment Company Institute data based on reports of mem­
bers, which comprise substantially all open-end investment companies
registered with the Securities and Exchange Commission. Data reflect
newly formed companies after their initial offering of securities.

1.50 CORPORATE PROFITS AND THEIR DISTRIBUTION
Billions of dollars; quarterly data are at seasonally adjusted annual rates.

Account

1976

1977

1978

1978

1977

1979

Q4

Ql

Q2

Q3

Q4

Ql

Q2*>

156.0
3 Profits after tax........................................................
4 Dividends..............................................................
5 Undistributed profits...........................................
6 Capital consumption allowances.............................
7 Net cash flow............................................................

177.1

206.0

183.0

177.5

207.2

212.0

227.4

233.3

226.9

63.8
92.2
37.5
54.7
97.1
151.8

72.6
104.5
42.1
62.4
109.3
171.7

84.5
121.5
47.2
74.3
119.8
194.1

75.1
107.9
43.4
64.5
113.1
177.6

70.8
106.7
45.1
61.6
116.5
178.1

84.7
122.4
46.0
76.4
119.1
195.5

87.5
124.5
47.8
76.8

95.1
132.3
49.7
82.6
123.1
205.7

91.3
142.0
51.5
90.5
125.5
216.0

138.6
52.3
86.3
130.4
216.7

S o u r ce. Survey o f Current Business (U.S. Department of Commerce.)




120.6

197.3

88.2

A38
1.51

Domestic Financial Statistics □ September 1979
NONFINANCIAL CORPORATIONS

Current Assets and Liabilities

Billions of dollars, except for ratio

Account

1975

1977

1976

1978

Q2

Q3

Q4

Ql

Q2

1979
Q4

Q3

Ql

1 Current assets.........................................................

759.0

826.3

858.5

881.8

900.9

925.0

954.2

992.6 1,028.1 1,078.2

2
3
4
5

Cash........................................................................
U.S. government securities..................................
Notes and accounts receivable.............................
Inventories.............................................................
6 Other.......................................................................

82.1
19.0
272.1
315.9
69.9

87.3
23.6
293.3
342.9
79.2

83.3
19.9
313.0
359.9
82.5

83.5
19.3
326.9
368.3
83.8

94.3
18.7
325.0
375.6
87.3

88.8

18.6
337.4
390.5
89.6

91.3
17.3
356.0
399.3
90.3

91.6
16.1
376.4
415.5
92.9

103.5
17.8
381.9
428.3
96.5

19.1
405.0
452.6
99.3

451.6

492.7

514.1

533.2

546.8

574.2

593.5

626.3

662.2

701.8

8 Notes and accounts payable.................................

9 Other.......................................................................

264.2
187.4

282.0
210.6

295.9
218.1

306.1
227.1

313.7
233.1

325.2
249.0

337.9
255.6

356.2
270.0

375.1
287.1

392.6
309.2

10 Net working capital................................................

307.4

333.6

344.5

348.6

354.1

350.7

360.7

366.3

365.9

376.4

11 Memo: Current ratio 1 ...........................................

1.681

1.677

1.670

1.654

1.648

1.611

1.608

1.585

1.552

1.536

1. Ratio of total current assets to total current liabilities.
N o te . For a description of this series, see “Working Capital of Nonfinancial Corporations” in the July 1978 B u lle t in , pp. 533-37.

102.2

All data in this table have been revised to reflect the most current
benchmarks. Complete data are available upon request from the Flow
of Funds Section, Division of Research and Statistics,
S o u r ce. Federal Trade Commission.

1.52 BUSINESS EXPENDITURES on New Plant and Equipment
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1978
Industry

1977

1978

1979

Ql
1 All industries..........................................................

Q2

Q3

Q4

Ql

Q2

Q3

Q42

135.72

153.60

144.25

150.76

155.41

163.96

165.94

170.30

174.74

180.98

27.75
32.33

31.59
35.86

28.72
32.86

31.40
35.80

32.25
35.50

33.99
39.26

34.00
37.56

36.60
39.75

38.09
41.80

39.10
42.88

4.49

4.81

4.45

4.81

4.99

4.98

5.46

5.40

5.11

5.26

2.82
1.63
2.55

3.33
2.34
2.42

3.35
2.67
2.44

3.09
2.08
2.23

3.38
2 .20

4.02
3.35
2.71

2.76
2.92
2.93

3.89
2.60
3.01

4.62

2.47

3.49
2.39
2.55

21.57
4.21
15.43
22.95

24.71
4.72
18.15
25.67

23.15
4.78
17.07
24.76

23.83
4.62
18.18
24.71

24.92
4.70
18.90
26.09

26.95
4.78
18.46
27.12

27.70
27.63
4.79
4.66
18.75 j 47.51
27.73

27.96
4.83
47.45

27.62
5.83
49.71

Manufacturing

2 Durable goods industries.......................................

3 Nondurable goods industries................................
Nonmanufacturing

4 Mining....................................................................
Transportation
5 Railroad..............................................................
6
Air.......................................................................
7 Other...................................................................
Public utilities
8
Electric................................................................
9 Gas and other....................................................
10 Communication......................................................
11 Commercial and other 1.........................................

1. Includes trade, service, construction, finance, and insurance.
2. Anticipated by business.

Note. Estim for corporate and noncorporate business, excluding
ates




2.66

3.30

agriculture; real estate operators; medical, legal, educational, and cultural
service; and nonprofit organizations.

Source. Survey of C
urrent Business (U D of C m
.S. ept,
om erce).

Corporate Finance

A39

1.53 DOMESTIC FINANCE COMPANIES Assets and Liabilities
Billions o f dollars, end o f period
1978
A ccount

1973

1974

1975

1976

1979

1977
Q2

Q3

Q4

Ql

Q2

5 4 .9
6 6 .7
1 2 1 .6
1 6.5
105.1

5 8 .7
7 0 .1
128.8
1 7 .7
111.1

1
f 1 2 3 .8

2 4 .6

A ssets
A ccount receivable, gross
1
C onsum er......................................................................
T o ta l..........................................................................
L ess : Reserves for unearned incom e and losses.
A ccounts receivable, n e t ..............................................
Cash and bank d ep osits...............................................
Securities...........................................................................
A ll other............................................................................

3 5 .4
3 2 .3
6 7 .7
8 .4
5 9 .3
2 .6
.8
10 .6

36.1
3 7 .2
7 3 .3
9 .0
6 4 .2
3 .0
.4
1 2 .0

3 6 .0
3 9 .3
7 5 .3
9 .4
6 5 .9
2 .9
1 .0
11.8

3 8 .6
4 4 .7
8 3 .4
10.5
7 2 .9
2 .6
1.1
12.6

4 4 .0
5 5 .2
9 9 .2
1 2.7
8 6 .5
2 .6
.9
14.3

4 7 .1
5 9 .5
106 .6
14.1
9 2 .6
2 .9
1.3
16.2

4 9 .7
5 8 .3
108 .0
1 4 .3
9 3 .7
2 .7
1 .8
17.1

5 2 .6
6 3 .3
116 .0
1 5 .6
100.4
3 .5
1 .3
1 7.3

7 3 .2

3
4
5
6
7
8

7 9 .6

8 1 .6

8 9 .2

1 0 4 .3

11 2 .9

1 1 5 .3

1 2 2 .4

1 2 8 .9

1 3 5 .8

7 .2
19.7

9 .7
2 0 .7

8 .0
2 2 .2

6 .3
2 3 .7

5 .9
2 9 .6

5 .4
3 1 .3

5 .4
2 9 .3

6 .5
3 4 .5

6 .5
38.1

7 .3
4 1 .0

4 .6
2 4 .6
5 .6

4 .9
2 6 .5
5 .5

4 .5
2 7 .6
6 .8

5 .4
32 .3
8 .1

6 .2
3 6 .0
11.5

6 .6
4 0 .1
1 3 .6

6 .8
4 1 .3
15.2

8 .1
4 3 .6
1 2 .6

6 .7
4 4 .5
15.1

8 .8
4 6 .0
1 4 .4

L iabilities
10 Bank lo a n s........................................................................
D eb t
13
14

Long-term, n .e.c.........................................................
O ther..............................................................................

15 Capital, surplus, and undivided profits..................

11.5

12 .4

1 2 .5

13 .4

15.1

1 6 .0

1 7.3

1 7 .2

1 8 .0

1 8 .2

16 Total liabilities and capital..........................................

7 3 .2

7 9 .6

8 1 .6

8 9 .2

1 0 4 .3

1 1 2 .9

1 1 5 .3

1 2 2 .4

1 2 8 .9

1 3 5 .8

1. Beginning Ql 1979, asset items on lines 6 , 7, and 8 are combined.
N ote. Com ponents may not add to totals due to rounding.

1.54 DOMESTIC FINANCE COMPANIES

Business Credit

Millions of dollars, seasonally adjusted except as noted

Type

Accounts
receivable
outstanding
June 30,

Changes in accounts
receivable

Extensions

Repayments

1979

1979

1979

19791

Apr.

May

June

Apr.

May

June

Apr.

May

June

1 Total..................................................................

7 0 ,0 5 7

937

892

1 ,3 6 1

1 7 ,7 2 2

17 ,432

1 6 ,7 8 8

16 ,7 8 5

16,5 4 0

1 5 ,4 2 7

2 Retail automotive (commercial vehicles).......
3 Wholesale automotive.....................................
4 Retail paper on business, industrial and

15,478
16,766

60
705

17
757

-3 2
655

1 ,2 1 0
6,731

1,167
6 ,7 9 0

1,1 1 6
5 ,9 1 9

1 ,1 5 0
6 ,0 2 6

1,1 5 0
6 ,0 3 3

1 ,148
5 ,2 6 4

5 Loans on commercial accounts receivable2. .
6 Factored commercial accounts receivable2. .. }
7 All other business credit..................................

16,696
6,6 8 5
14,432

-1 7
78
111

-9 5
4
209

449
-1 3 5
424

1,071
6 ,2 2 8
2 ,4 8 2

1 ,084
6,191
2 ,2 0 0

1,075
6 ,0 9 7
2,581

1,088
6 ,1 5 0
2,371

1,179
6 ,1 8 7
1,991

626
6,2 3 2
2 ,1 5 7

farm equipment............................................

1 Not seasonally adjusted.
.




2. Beginning January 1979 the categories “Loans on commercial ac­
counts receivable” and “ Factored commercial accounts receivable” are
combined.

A40

Domestic Financial Statistics □ September 1979

1.55 MORTGAGE MARKETS
M
illions of dollars; exceptions noted.
1979
1976

1977

1978

Feb.

Mar.

Apr.

May

June

July

Terms and yields in primary and secondary markets
P rimary M arkets
Conventional mortgages on new homes

1
2
3
4
5

Terms1

Purchase price (thous. dollars)..................................
A m ount o f loan (thous. d o lla rs)..............................
Loan/price ratio (percent).........................................
Maturity (years).............................................................
Fees and charges (percent o f loan am ou nt)2.........
6 Contract rate (percent per an n u m ).......................

48.4
35.9
74.2
27.2
1.44
8.76

54.3
40.5
76.3
27.9
1.33
8.80

62.6
45.9
75.3
28.0
1.39
9.30

68.3
49.5
74.5
28.6
1.56
9.94

8.99
8.99

9.01
8.95

9.54
9.68

10.20

8.82
8.17

8.04

8.68

8.99
9.11

8.73
8.98

10.01

Yield (percent per annum)

7 FH LBB series3...............................................................

8 HUD series4....................................................................

10.02

75.4
54.9
75.1
29.0
1.75
10.06

10.20

10.35

10.30
10.35

10.36
10.55

9.70
8.98

10.17
9.67

10.19
9.70

9.77

10.54
11.04

10.42
10.94

68.1

49.9
75.4
28.5
1.65

73.7
52.5
73.5
28.4
1.53
10.39

74.3
52.7
73.0
28.1
1.63
10.49

10.47
10.80

10.66

10.90

10.78
10.95

9.79

n.a.

10.61
9.89

10.49
9.78

10.46
9.77

10.59
11.03

10.84
11.35

10.77
11.57

11.52

72.3
51.4
73.2
28.2
1.59

S e c o n d a r y M a r k e ts

Yield (percent per annum)

10 G N M A securities6........................................................
F N M A auctions7

10.66

Activity in secondary markets
F e d e r a l N a t io n a l M o r tg a g e A sso c ia tio n

Mortgage holdings (end o f period )

13 T o ta l...................................................................................
V A-guaranteed...........................................................

Mortgage transactions (during period )

Mortgage commitments *

32,904
18,916
9,212
4,776

34,370
18,457
9,315
6,597

43,311
21,243
10,544
11,524

45,155
21,967
10,606
12,582

46,410
22,601
10,616
13,193

47,028
22,773
10,591
13,664

47,757
23,008
10,543
14,206

48,206
23,204
10,502
14,500

n.a.
n.a.
n.a.
n.a.

3,606

4,780
67

12,303
5

1,173

1,291

*•1,023

739

0

0

r883

86

15

0

0

0

n.a.
n.a.

6,247
3,398

9,729
4,698

18,960
9,201

388
7,381

565
6,573

1,075
6,656

1,400
6,862

634
6,476

n.a.
n.a.

4,929.8
2,787.2

7,974.1
4,846.2

12,978
6,747.2

210.6

161.2

508.4
284.4

1,322.7
638.5

426.3
185.0

219.9
99.9

133.2
69.6

2,595.7
1,879.2

5,675.2
3,917.8

9,933.0
5,110.9

63.0
45.4

144.9
113.5

661.9
363.6

458.6
214.3

357.5
195.3

93.5
69.9

4,269
1,618
2,651

3,276
1,395
1,881

3,064
1,243
1,822

3,207
1,989

1,220

3,510
1,260
2,250

3,377
1,198
2,180

3.310
1,186
2,124

3,334
1,171
2,163

3,487
1,156
2,331

1,175
1,396

3,900
4,131

6,524
6,211

300
r494

350
116

358
364

560
572

447
382

518
321

1,477
333

5,546
1,063

7,451
1,410

357
1,177

547
1,342

540
1,487

652
1,541

528
1,590

528
1,572

Auction o f 4-month commitments to buy

21

Government-underwritten loans
Offered9........................................................................

C onventional loans
23 Offered s>
........................................................................
F e d e r a l Home L o a n M o r tg a g e C o r p o r a tio n

Mortgage holdings (end o f period) 10

25 T o ta l..................................................................................
26 F H A /V A ......................................................................
Mortgage transactions (during period )

29 Sales...................................................................................
Mortgage commitments11

1. Weighted averages based on sample surveys of mortgages originated
by major institutional lender groups. Compiled by the Federal Home
Loan Bank Board in cooperation with the Federal Deposit Insurance
Corporation.
2. Includes all fees, commissions, discounts, and “points” paid (by the
borrower or the seller) in order to obtain a loan.
3. Average effective interest rates on loans closed, assuming prepay­
ment at the end of 10 years.
4. Average contract rates on new commitments for conventional first
mortgages, rounded to the nearest 5 basis points; from Department of
Housing and Urban Development.
5. Average gross yields on 30-year, minimum-downpayment, Federal
Housing Administration insured first mortgages for immediate delivery
in the private secondary market. Any gaps in data are due to periods of
adjustment to changes in maximum permissible contract rates.
6 . Average net yields to investors on Government National Mortgage
Association guaranteed, mortgage-backed, fully modified pass-through




securities, assuming prepayment in 12 years on pools of 30-year FHA/VA
mortgages carrying the prevailing ceiling rate. Monthly figures are
unweighted averages of Monday quotations for the month.
7. Average gross yields (before deduction of 38 basis points for mort­
gage servicing) on accepted bids in Federal National Mortgage Associa­
tion’s auctions of 4-month commitments to purchase home mortgages,
assuming prepayment in 12 years for 30-year mortgages. No adjustments
are made for FNMA commitment fees or stock related requirements.
Monthly figures are unweighted averages for auctions conducted within
the month.
8 . Includes some multifamily and nonprofit hospital loan commit­
ments in addition to 1- to 4-family loan commitments accepted in FNMA’s
free market auction system, and through the FNMA-GNMA tandem
plans.
9. Mortgage amounts offered by bidders are total bids received.
10. Includes participation as well as whole loans.
11. Includes conventional and government-underwritten loans.

Real Estate Debt

A41

1.56 MORTGAGE DEBT OUTSTANDING
M
illions of dollars, end of period
Type of holder, and type of property

1975

1977

1976

1978

1978

1979

Q2

Q3

Q4

Ql

1 All holders..................................................
2 1- to 4-family.............................................

801,537
490,761
100,601
159,298
50,877

889,327
556,557
104,516
171,223
57,031

1,023,505
656,566
111,841
189,274
65,824

1,172,502
761,905
122,004
212,597
75,996

1,092,451
706,230
116,419
198,926
70,876

1,133,699
734,740
119,442
205,744
73,773

1,172,502
761,905
122,004
212,597
75,996

1,204,762
783,500
124,125
218,042
79,095

6 Major financial institutions.....................
Commercial banks 1..............................

1- to 4-family.....................................
Multifamily........................................
Commercial.......................................
Farm ..................................................

581,193
136,186
77,018
5,915
46,882
6,371

647,650
151,326
86,234
8,082
50,289
6,721

745,011
178,979
105,115
9,215
56,898
7,751

847,910
213,963
126,966
10,912
67,056
9,029

794,009
194,469
115,389
9,925
60,950
8,205

822,184
205,445
121,911
10,478
64,386
8,670

847,910
213,963
126,966
10,912
67,056
9,029

865,808
220,063
130,585
11,223
68,968
9,287

13
14
15
16

Mutual savings banks...........................
1- to 4-family.....................................
Multifamily........................................
Commercial.......................................
Farm ..................................................

77,249
50,025
13,792
13,373
59

81,639
53,089
14,177
14,313
60

88,104
57,637
15,304
15,110
53

95,157
62,252
16,529
16,319
57

91,535
59,882
15,900'
15,698
55

93,403
61,104
16,224
16,019
56

95,157
62,252
16,529
16,319
57

96,136
62,892
16,699
16,488
57

17
18
19

Savings and loan associations.............
1- to 4-family.....................................
Multifamily........................................
Commercial.......................................

278,590
223,903
25,547
29,140

323,130
260,895
28,436
33,799

381,163
310,686
32,513
37,964

432,858
356,156
36,057
40,645

407,965
334,164
34,351
39,450

420,971
345,617
35,362
39,992

432,858
356,156
36,057
40,645

441,420
363,200
36,770
41,450

Life insurance companies.....................
1- to 4-family.....................................
Multifamily........................................
Commercial.......................................
Farm ..................................................

89,168
17,590
19,629
45,196
6,753

91,555
16,088
19,178
48,864
7,425

96,765
14,727
18,807
54,388
8,843

105,932
14,449
19,026
62,086
10,371

100,040
14,129
18,745
57,463
9,703

102,365
14,189
18,803
59,268
10,105

105,932
14,449
19,026
62,086
10,371

108,189
14,757
19,431
63,409
10,592

26 Federal and related agencies...................
27 Government National Mortgage Assn.
28
1- to 4-family.....................................
29
Multifamily........................................

66,891
7,438
4,728
2,710

66,753
4,241
1,970
2,271

70,006
3,660
1,548

81,853
3,509
877
2,632

73,991
3,283
922
2,361

78,672
3,560
897
2,663

81,853
3,509
877
2,632

86,689
3,448
821
2,627

618
124

926
288
320
217

956
302
180
283
191

3 Multifamily................................................
4 Commercial...............................................
5 F arm ..........................................................
7
8

9

10
11
12

20
21
22

23
24
25

2,112

30
31
32
33
34

Farmers Home Administration............
1- to 4-family.....................................
Multifamily........................................
Commercial.......................................
F arm ...................................................

1,109
208
215
190
496

1,064
454
218
72
320

1,353
626
275
149
303

926
288
320
217

101

104
288

1,384
460
240
251
433

35
36
37

Federal Housing and Veterans Admin.
1- to 4-family.....................................
Multifamily........................................

4,970
1,990
2,980

5,150
1,676
3,474

5,212
1,627
3,585

5,419
1,641
3,778

5,225
1,543
3,682

5,295
1,565
3,730

5,419
1,641
3,778

5,522
1,693
3,829

38
39
40

Federal National Mortgage Association
1- to 4-family.....................................
Multifamily........................................

31,824
25,813
6,011

32,904
26,934
5,970

34,369
28,504
5,865

43,311
37,579
5,732

38,753
32,974
5,779

41,189
35,437
5,752

43,311
37,579
5,732

46,410
40,702
5,708

41
42
43

Federal Land Banks.............................
1- to 4-family.....................................
F arm ...................................................

16,563
549
16,014

19,125
601
18,524

22,136
670
21,466

25,624
927
24,697

23,857
727
23,130

24,758
819
23,939

25,624
927
24,697

26,893
1,042
25,851

44
45
46

Federal Home Loan Mortgage C orp...
1- to 4-family.....................................
Multifamily........................................

4,987
4,588
399

4,269
3,889
380

3,276
2,738
538

3,064
2,407
657

2,255
1,856
399

2,486
1,994
492

3,064
2,407
657

3,460
2,685
775

47 Mortgage pools or trusts 2 .......................
Government National Mortgage Assn.
48
49
1- to 4-family.....................................
50
Multifamily........................................

34,138
18,257
17,538
719

49,801
30,572
29,583
989

70,289
44,896
43,555
1,341

88,633
24,347
52,732
1,615

78,602
48,032
46,515
1,517

82,730
50,844
49,276
1,568

88,633
54,347
52,732
1,615

94,551
57,955
56,269

51
52
53

Federal Home Loan Mortgage C orp...
1- to 4-family.....................................
Multifamily........................................

1,598
1,349
249

2,671
2,282
389

6,610
5,621
989

11,892
9,657
2,235

9,423
7,797
1,626

10,511
8,616
1,895

11,892
9,657
2,235

12,467
10,088
2,379

54
55
56
57
58

Farmers Home Administration............
1- to 4-family.....................................
Multifamily........................................
Commercial.......................................
Farm ..................................................

14,283
9,194
295
1,948
2,846

16,558
10,219
532
2,440
3,367

18,783
11,379
759
2,945
3,682

22,394
13,400
1,116
3,560
4,318

21,147
12,742
1,128
3,301
3,976

21,375
12,851
1,116
3,369
4,039

22,394
13,400
1,116
3,560
4,318

24,129
13,883
1,465
3,660
5,121

59 Individuals and others 3 ...........................
60
1- to 4-family.........................................
61
Multifamily............................................
62 Commercial...........................................
63
Farm ......................................................

119,315
56,268
22,140
22,569
18,338

125,123
62,643
20,420
21,446
20,614

138,199
72,115
20,538
21,820
23,726

154,106
82,574
21,395
212,830
27,307

145,849
77,466
20,904
21,960
25,519

150,113
80,004
21,119
22,459
26,531

154,106
82,574
21,395
22,830
27,307

157,714
84,806
21,645
23,267
27,996

1. Includes loans held by nondeposit trust companies but not bank trust
departments.
2. Outstanding principal balances of mortgages backing securities in­
sured or guaranteed by the agency indicated.
3. Other holders include mortgage companies, real estate investment
trusts, state and local credit agencies, state and local retirement funds,
noninsured pension funds, credit unions, and U.S. agencies for which
amounts are small or separate data are not readily available.




102

101

1,686

N o te . Based on data from various institutional and government
sources, with some quarters estimated in part by the Federal Reserve in
conjunction with the Federal Home Loan Bank Board and the Depart­
ment of Commerce. Separation of nonfarm mortgage debt by type of
property, if not reported directly, and interpolations and extrapolations
when required, are estimated mainly by the Federal Reserve. Multi­
family debt refers to loans on structures of five or more units.

A42

Domestic Financial Statistics □ September 1979

1.57 CONSUMER INSTALLMENT CREDIT1 Total Outstanding, and Net Change
M
illions of dollars
Holder, and type of credit

1976

1977

1979

1978r
Jan.

Feb.r

Mar.r

Apr.r

M r
ay

June r

July

Am
ounts outstanding (end of period)
193,977

230,829

275,629

275,337

276,019

278,453

282,575

287,315

291,856

295,052

93,728
38,919
31,169
19,260
6,246
2,830
1,825

112,373
44,868
37,605
23,490
7,354
2,963
2,176

136,189
54,298
45,939
24,876
8,394
3,240
2,693

136,452
54,995
45,526
23,962
8,427
3.338
2.637

136,671
55,929
45,661
23,246
8,488
3,274
2,750

137,445
56,991
46,301
22,929
8,671
3,292
2,824

139,843
58,334
46,322
23,097
8,833
3,383
2,763

142,102
59,635
46,832
23,421
9,066
3,537
2,722

144,035
60,996
47,478
23,672
9,290
3,704
2,681

145,169
62,463
47,772
23,713
9,425
3,872
2,638

67,707
39,621
22,072
17,549
15,238
12,848

82,911
49,577
27,379
22,198
18,099
15,235

102,468
60,564
33,850
26,714
21,967
19,937

102,890
60,682
33,928
26,754
21,769
20,439

103,780
61,053
34,261
26,792
21,834
20,893

105,426
61,742
34,592
27,150
22,140
21,544

107,186
62,866
35,322
27,544
22,150
22,170

109,211
63,891
35,917
27,974
22,394
22,926

110,930
64,480
36,251
28,229
22,703
23,747

111,952
64,826
36,475
28,351
22,844
24,282

15 Revolving.....................
16 Commercial banks..
17 Retailers...................
18 Gasoline companies.

17,189
14,359
2,830

39,274
18,374
17,937
2,963

47,051
24,434
19,377
3,240

46,516
24,677
18,501
3.338

45,586
24,502
17,810
3,274

45,240
24,442
17,506
3,292

45,781
24,767
17,631
3,383

46,489
25,054
17,898
3,537

47,458
25,652
18,102
3,704

47,894
25,927
18,095
3,872

19 Mobile home..............
20 Commercial banks.
21
Finance companies.
22 Savings and loans..
23 Credit unions..........

14.573
8,737
3,263
2,241
332

15,141
9,124
3,077
2,538
402

16,042
9,553
3,152
2,848
489

16,004
9,511
3,149
2,859
485

16,008
9,495
3,147
2,880
486

16,092
9,509
3,148
2,942
493

16,198
9,549
3,159
2,997
493

16,453
9,702
3,177
3,076
498

16,607
9,759
3,191
3,152
505

16,719
9,801
3,212
3,198
508

24 Other................................
25 Commercial banks
26 Finance companies
27 Credit unions............. .
28 Retailers..................... .
29 Savings and loans........
30 Mutual savings banks.

94,508
31,011
22,808
15,599
19,260
4,005
1,825

93.503
35,298
26,556
19,104
5,553
4,816
2,176

110,068
41,638
31,209
23,483
5,499
5,546
2,693

109,927
41,582
31,416
23,272
5,461
5,568
2.637

110,645
41,621
31,889
23,341
5,436
5,608
2,750

111,695
41,752
32,299
23,668
5,423
5,729
2,824

113,410
42,661
33,005
23,679
5,466
5,836
2,763

115,162
43,455
33,532
23,940
5,523
5,990
2,722

116,861
44,144
34,058
24,270
5,570
6,138
2,681

118,487
44,615
34,969
24,420
5,618
6,227
2,638

1 Total.
2
3
4
5

By major holder

Commercial banks
Finance companies
Credit unions...............
Retailers 2..................... .
6 Savings and loans.........
7 Gasoline companies
8 Mutual savings banks..
By major type o f credit
9 Automobile...................

10
11
12
13
14

Commercial banks. . ,
Indirect paper
Direct loans...........
Credit unions............
Finance companies..

Net change (during period3)
31 Total....................................................

21,647

35,278

44,810

3,067

3,563

3,625

4,105

3,306

2,558

2,443

10,792
2,946
5,503
1,059
1,085
124
138

18,645
5,948
6,436
2,654

1,330
1,347
360
-9 0
67

1,630
1,460
402

1,465
1,228
528
143
173

-4 7

138

20
68

2,117
1,378
139
306
158
73
-6 6

1,665
893
124
283
280
96
-3 5

984
913
144
288
240
39
-5 0

662
1,185
342
180

132
352

23,813
9,430
8,334
1,386
1,041
276
530

39 Automobile.........................................
40 Commercial banks..........................
41
Indirect paper.............................
42
Direct loans.................................
43 Credit unions...................................
44 Finance companies.........................

10,465
6,334
2,742
3,592
2,497
1,634

15,204
9,956
5,307
4,649
2,861
2,387

19,557
10,987
6,471
4,516
3,868
4,702

1,680
633
387
246
187
860

1,565
739
530
209
190
636

1,486
617
290
327
245
624

1,387
740
482
258
64
583

1,225
633
389
244
60
532

690
123
87
36
45
522

616

45 Revolving............................................
46 Commercial banks..........................
47 Retailers..........................................
48 Gasoline companies.......................

2,170
2,046

6,248
4,015

433
375
-4 2

317
492
-243

742
588
134

124

100

68

20

918
605
240
73

749
418
235
96

796
494
263
39

429
303
124

132

7,776
6,060
1,440
276

49 Mobile home.......................................
50 Commercial banks..........................
51
Finance companies.........................
52 Savings and loans...........................
53 Credit unions...................................

140
70
-1 8 2
192
60

565
387
-189
297
70

897
426
74
310
87

40

56
15
9
28
4

108
31

82

234
125
13
94

102
12

72
17

2

2

41
3

54 Other....................................................
55 Commercial banks..........................
56 Finance companies.........................
57 Credit unions...................................
58 Retailers..........................................
59 Savings and loans...........................
60 Mutual savings banks.....................

8,872
2,342
1,494
2,946
1,059
893
138

13,261
4,287
3,750
3,505
553
814
352

16,580
6,340
4,654
4,379
-5 4
731
530

908
310
474
171
-4 8
48
-4 7

1,625
384
815
208

1,289
229
593
276
9
114

1,098
489
348
62
48
186
-3 5

970
355
377
97
25
166
-5 0

1,326
270
813
156
56
79
-4 8

32
33
34
35
36
37
38

By major holder

Commercial banks.............................
Finance companies.............................
Credit unions......................................
Retailers1.............................................
Savings and loans..............................
Gasoline companies...........................
Mutual savings banks.........................
By major type o f credit

1,111

2,101

1. The Board’s series cover most short- and intermediate-term credit
extended to individuals through regular business channels, usually to
finance the purchase of consumer goods and services or to refinance
debts incurred for such purposes, and scheduled to be repaid (or with
the option of repayment) in two or more installments.
2. Includes auto dealers and excludes 30-day charge credit held by
travel and entertainment companies.
3. Net change equals extensions minus liquidations (repayments, chargeoffs, and other credits); figures for all months are seasonally adjusted.




100

12

7
19
2

-2 2 1
86
68

22

58
138

11

59
7

68

21
6

56

-1

1,718
751
789
76
66
102
-6 6

14
74

120
2

-4 8

72
51
21

183
361

2

11

N o t e . Total consumer noninstallment credit outstanding—credit
scheduled to be repaid in a lump sum, including single-payment loans,
charge accounts, and service credit—amounted to $64.3 billion at the end
of 1978, $58.6 billion at the end of 1977, $54.8 billion at the end of 1976,
and $50.9 billion at the end of 1975. Comparable data for Dec. 31, 1979,
will be published in the February 1980 B u lle t in .

Consumer Debt

A43

1.58 CONSUMER INSTALLMENT CREDIT Extensions and Liquidations
M
illions of dollars
Holder, and type of credit

1976

1977

1979

1978'
Jan.

Feb.

Mar.r

Apr.

Mayr

Juner

July

Extensions2
211,028

254,071

298,351

25,544

26,452

26,533

27,009

27,901

26,139

26,848

97,397
36,129
29,259
29,447
3,898
13,387
1,511

117,896
41,989
34,028
39,133
4,485
14,617
1,923

142,720
50,505
40,023
41,619
5,050
16,125
2,309

12,153
4,547
3,241
3,565
481
1,440
117

12,430
5,072
3,238
3,460
468
1,486
298

12,412
4,958
3,250
3,611
583
1,493
226

13,111
5,239
2,753
3,742
559
1,505

12,278
4,641
2,986
3,853
682
1,589

100

13,400
5,186
3,124
3,721
723
1,613
134

110

12,292
5,353
3,282
3,687
592
1,525
117

9 Automobile....................
10 Commercial banks. . .
11
Indirect paper........
12
Direct loans............
13 Credit unions.............
14 Finance companies. . .

63,743
37,886
20,576
17,310
14,688
11,169

75,641
46,363
25,149
21,214
16,616
12,662

88,987
53,028
29,336
23,692
19,486
16,473

7,545
4,286
2,318
1,968
1,635
1,624

7,756
4,430
2,472
1,958
1,624
1,702

7,794
4,424
2,449
1,975
1,587
1,783

7,999
4,707
2,635
2,072
1,415
1,877

8,260
4,680
2,684
1,996
1,566
2,014

7,178
3,952
2,146
1,806
1,485
1,741

7,447
3,936
2,151
1,785
1,611
1,900

15 Revolving.....................
16 Commercial banks. .
17 Retailers....................
18 Gasoline companies.

43,934
30,547

86,756
38,256
33,883
14,617

104,587
51,531
36,931
16,125

9,417
4,799
3,178
1,440

9,357
4,860
3,011
1,486

9,714
5,024
3,197
1,493

9,722
4,923
3,294
1,505

10,039
5,154
3,272
1,613

10,136
5,166
3,381
1,589

9,856
5,078
3,253
1,525

19 Mobile home..............
20 Commercial banks.
21
Finance companies.
22 Savings and loans..
23 Credit unions..........

4,859
3,064
702
929
164

5,425
3,466
643

6,067
3,704

1,120

196

13

454
295
60
81
18

518
296
63
139

510
304
59
134
13

668

1,239
238

369
235
33

411
58
182
17

547
304
59
167
17

519
297
71
133
18

98,492
25,900
24,258
14,407
29,447
2,969
1,511

86,249
29,811
28,684
17,216
5,250
3,365
1,923

98,710
34,457
33,146
20,299
4,688
3,811
2,309

8,213
2,833
2,890
1,593
387
393
117

8,885
2,845
3,310
1,596
449
387
298

8,507

8,778
3,177
3,303
1,325
448
425

8,278
2,856
2,841
1,484
472
515

100

8,934
3,155
3,114
1,541
449
541
134

110

9,026
2,981
3,382
1,653
434
459
117

1 Total...............................
By major holder

2
3
4
5

Commercial banks........
Finance companies........
Credit unions.................
Retailers1 .......................
6 Savings and loans..........
7 Gasoline companies
8 Mutual savings banks..,
By major type o f credit

24 Other................................
25 Commercial banks
26 Finance companies
27 Credit unions...............
28 Retailers.......................
29 Savings and loans........
30 Mutual savings banks.

13,387

886

88

20
2,668

3,112
1,643
414
444
226

Liquidations 2
31 Total....................................................

189,381

218,793

253,541

22,483

22,889

22,908

22,904

24,595

23,581

24,405

86,605
33,183
23,756
28,388
2,813
13,263
1,373

99,251
36,041
27,592
36,479
3,374
14,485
1,571

118,907
41,075
31,689
40,233
4,009
15,849
1,779

10,823
3,206
2,881
3,655
414
1,340
164

10,800
3,612
2,836
3,681
382
1,418
160

10,947
3,730
2,722
3,468
410
1,473
158

10,994
3,861
2,614
3,436
401
1,432
166

11,735
4,293
3,000
3,438
443
1,517
169

11,294
3,728
2,842
3,565
442
1,550
160

11,630
4,168
2,940
3,507
472
1,523
165

39 Automobile.........................................
40 Commercial banks.........................
41
Indirect paper.............................
42
Direct loans.................................
43 Credit unions..................................
44 Finance companies.........................

53,278
31,552
17,834
13,718
12,191
9,535

60,437
36,407
19,842
16,565
13,755
10,275

69,430
42,041
22,865
19,176
15,618
11,771

5,865
3,653
1,931
1,722
1.448
764

6,191
3,691
1,942
1,749
1,434
1,066

6,308
3,807
2,159
1,648
1,342
1,159

6,612
3,967
2,153
1,814
1,351
1,294

7,035
4,047
2,295
1,752
1,506
1,482

6,488
3,829
2,059
1,770
1,440
1,219

2,100

45 Revolving............................................
46 Commercial banks..........................
47 Retailers...........................................
48 Gasoline companies........................

41,764
28,501
13,263

80,508
34,241
31,782
14,485

96,811
45,471
35,491
15,849

8,984
4,424
3,220
1,340

9,040
4,368
3,254
1,418

8,972
4,436
3,063
1,473

8,804
4,318
3,054
1,432

9,290
4,736
3,037
1,517

9,340
4,672
3,118
1,550

9,427
4,775
3,129
1,523

49 Mobile home.......................................
50 Commercial banks.........................
51
Finance companies.........................
52 Savings and loans...........................
53 Credit unions..................................

4,719
2,994
884
737
104

4,860
3,079
832
823
126

5,170
3,278
812
929
151

329
223
26
69

410
265
52
80
13

428
283
53
78
14

434
286
45

11

398
280
51
53
14

445
292
45
93
15

447
280
60
92
15

54 Other....................................................
55 Commercial banks..........................
56 Finance companies.........................
57 Credit unions...................................
58 Retailers...........................................
59 Savings and loans...........................
60 Mutual savings banks.....................

89,620
23,558
22,764
11,461
28,388
2,076
1,373

72,988
25,524
24,934
13,711
4,697
2,551
1,571

82,130
28,117
28,492
15,920
4,742
3,080
1,779

7,305
2,523
2,416
1,422
435
345
164

7,260
2,461
2,495
1,388
427
329
160

7,218
2,439
2,519
1,367
405
330
158

7,060
2,426
2,514
1,249
382
323
166

7,308
2,501
2,464
1,387
447
349
160

7,700
2,711
2,569
1,497
378
380
165

32
33
34
35
36
37
38

By major holder

Commercial banks.............................
Finance companies...........................
Credit unions.....................................
Retailers1 ............................................
Savings and loans...............................
Gasoline companies...........................
Mutual savings banks........................
By major type o f credit

1 Includes auto dealers and excludes 30-day charge credit held by
travel and entertainment companies.




88

15
7,836
2,666

2,766
1,479
401
355
169

2M
onthly figures are seasonally adjusted.

6,831
3,864
1,764
1,428
1,539

A44

Domestic Financial Statistics □ September 1979

1.59 FUNDS RAISED IN U.S. CREDIT MARKETS
Billions of dollars; quarterly data are at seasonally adjusted annual rates.

Transaction category, or sector

1973

1974

1975

1976

1977

1976

1978
HI

1977

1978

H2

HI

H2

HI

H2

Nonfinancial sectors
203.1
195.4

191.3
187.4

200.7

210.8

271.9
261.1

338.5
335.4

400.3
398.2

270.6
257.0

273.2
265.2

298.4
297.2

378.7
373.6

383.9
386.5

416.8
410.0

8.3
7.9
.4
194.9
7.7
Corporate equities.......................................
187.2
Private domestic nonfinancial sectors. . • • 188.8
7.9
Debt instruments..................................... 180.9
Debt capital instruments..................... 105.1
14.7
State and local obligations..............
9.2

11.8
12.0
-.2

85.4
85.8
- .4
125.4

69.0
69.1

56.8
57.6
- .9
281.8
3.1
278.6
267.9
2.7
265.1
175.6
23.7

53.7
55.1
- 1 .4
346.6

79.4
79.3

58.7
59.0
- .3
214.6

46.3
46.9

21.0

20.1

22.3

61.4
62.4
- .9
322.5
- 2 .6
325.1
301.7
- 1.8
303.5
187.8
27.8
20.5

46.0
47.9
- 1 .9
370.8

22.8

67.2
68.4
- 1.2
311.5
5.1
306.4
294.4
4.9
289.5
192.0
25.3
25.4

63.7

104.5

57.7

99.8
9.3

109.2

13.4

96.4
7.4
18.4

6.1

8.8

10.2

48.0
25.6
4.0
4.0
14.4

89.5
40.6
27.0
2.9
19.0

115.2
50.6
37.3
5.2

9.3
115.7
50.1
42.5
5.3
17.8

11.1

182.0
15.2
90.7
10.9
5.4
59.8

267.9
20.4
139.9
14.7
12.5
80.3

314.4
23.6
162.6
18.1
15.7
94.5

170.6
18.4
82.9
3.4
55.8

98.5
11.7
7.5
63.7

20.8

13.9
.4
13.5
5.1
3.1
2.4
3.0

32.3
- .5
32.8
4.0
18.3

20.7
.3
20.4
7.4
8.5
1.5
2.9

.3
20.7
9.7
5.0
2.4
3.6

1 Total funds raised........................................
By sector and instrument

4 Treasury securities.......................................
5 Agency issues and mortgages.....................
7
8

9

10
11
12

13
14
15
16
17
18
19
20
21
22

23

Mortgages

Commercial.......................................
Farm..................................................

Open market paper..........................

24
25
26
27
28
29

By borrowing sector.................................
State and local governments................

30
31
32
33
34
35
36

Foreign......................................................
Corporate equities...................................

46.4
10.4
18.9
5.5
75.8
26.0
37.1
2.5
10.3

179.5
3.8
175.6
164.1
4.1
160.0
98.0
16.5
19.7

10.1

115.3
112.1

9.9

102.1

98.4
16.1
27.2

34.8
39.5
*
6.9
15.1
11.0
4.6
5.0
3.8
62.0
9.9
9.7
31.7 - 1 2 .3
- 2 .6
6.6
9.0
13.7

188.8
13.2
80.1
9.6
13.0
73.0

164.1
15.5
51.2
7.7
81.7

38.1

6.1
-.2

15.4

13.3

8 .0

-.2

112.1

13.7
49.5
8.8
2 .0

.2

6.3

15.7

13.2

1.0

2.1

6 .2

1.6

2 .8

2.7
.9
1.7

4.7
7.3

3.9
.3

-.1

202.9
10.8

192.0
182.0
10.5
171.5
123.5
15.7

1.8

.3
20.5
8.6
6.8

1.9
3.3

2.1

344.5
314.4
2 .6

311.8
196.6
28.3

10.2

23.3

22.2

6 .6

3.9

.1

191.2
13.6
177.6
170.6
13.3
157.2
119.9
20.1

.6

14.3
5.0
37.3
23.6
- 3 .7
5.7
11.7

10.1

8.1

-.6

252.0
1.2

206.5
193.5
7.7
185.8
127.2
11.3
23.4

250.9
241.3
.5
240.8
159.3

69.7
3.1
12.5
7.3
58.6
27.6

90.5
6.4
14.8
9.0
81.5
36.6
26.2
3.4
15.3

102.3
8.4
21.9
8.7
97.5
44.5
27.8
2.4

241.3
15.4
130.0
16.3

301.7

67.0

294.4
25.3
149.9
13.2
12.5
93.5

10.7

17.1

20.8
-.8
21.6

11.6

2.3
17.1

193.5
12.1

21.0

22.0

16.6

12.6

.6
10.1

4.4

-.1

2.7
3.1

22.8

.2

16.9
5.7
6.3

21.2

21.0

156.2
15.2
16.8
92.4

6.8

364.0
327.0
7.0
320.0
205.3
28.7
19.8
11.2

25.4

114.7
51.0
32.0
5.1
26.6
327.0
26.1
169.0
20.9
14.5
96.6
43.8
-.2

2.9

2 .2

5.0
9.4
3.6
3.6

44.0
3.0
27.1
9.6
4.2

Financial sectors
37 Total funds raised ....................... .............

44.8

39.2

12.7

24.1

54.0

81.4

18.2

29.9

45.9

62.1

80.7

82.1

19.9
16.3
3.6

23.1
16.6
5.8
.7
16.2
.3
15.9

13.5
2.3
10.3
.9

18.6
3.3
15.7
- .4
5.5

26.3
7.0
20.5
- 1.2
27.7
.9
26.9

41.4
23.1
18.3

16.5
2.4
14.2
*
1.7

20.7
4.3
17.2
- .7
9.3
2.3
7.0
5.7

22.6

29.9
23.1

38.5
21.9
16.6

44.3
24.3

32.2

42.2

37.8

By instrument

38 U.S. government related......................
39 Sponsored credit agency securities.. . .
40 Mortgage pool securities.....................
41
Loans from U.S. government............
42 Private financial sectors...........................
43 Corporate equities................................
44 Debt instruments.................................
45
Corporate bonds...............................
46
Mortgages.........................................
47
Bank loans n.e.c................................
48
Open market paper and RPs..........
49
Loans from FHLBs.........................

0

24.9
1.5
23.4
3.5
- 1.2
9.0
4.9
7.2

- 1 .3
4.6
3.8
6.7

16.3
3.6
24.9

17.3
5.8
16.2

1.2
2 .2
6 .0

1.2

-.8
1.2

3.5
4.8
.9

.3
- 2 .3

2.1

- .8
.6

- 1 .4
2.9
2.3
- 3 .7
1.1

- 4 .0

1.0

4.4
5.8
2.1

- 3 .7

2 .2
- 2 .0

10.1

3.1
- .3
9.6
4.3

0

40.0
1.7
38.3
7.5
.9
2 .8

14.6
12.5

- .2

1.9
6 .0

1.4
- 2 .5
- 1.0
- 1 .9

- 4 .9
5.4
- 2 .0

7.1
17.9
- 2 .3
23.2
.9
22.3
9.5
3.1
- 2 .3
9.2
2.9

3.5
17.2
9.3

4.7
17.9
23.2

2.1

.8

- .3
.4
.9
8.5
-2 .7
.4

1.3

2 .8

6.8

0

.8

0

2.2

31.4
10.7
3.0

40.0
8.5

5.8

13.5
13.2

1.8
10.1

2.1
2 .6

20.1
0
1.1

36.7
6.4
- .3
3.1
15.7
11.8

By sector

50 Sponsored credit agencies.......................
51 Mortgage pools........................................
52 Private financial sectors...........................
53 Commercial banks..............................
54 Bank affiliates.......................................
55 Savings and loan associations.............
56 Other insurance companies..................
57
Finance companies...............................
58 REITs....................................................
59 Open-end investment companies........

.5
9.5
6.5
—1.2

6 .0
.6

- .7

3.2
10.3

1.0

.5
-1 .4
-.1

2.9
15.7
5.5
2.3
-.8
.1

.9
6.4
- 2 .4
- 1.0

5.8
20.5
27.7
1.1

1.3
9.9
.9
17.6

- 2.2
- .9

23.1
18.3
40.0
1.3
6.7
14.3
1.1

18.6
- 1.0
- 1.0

2.3
14.2
1.7
2.4
- 1 .3
- .3
.9
4.4
- 2.1
-2 .4

6.8

23.1
32.2
1.5
1.2

8.2

11.7

-.6

- 2 .0
- 1 .3

.9
15.0
- 2 .4

1.0
20.2

21.9
16.6
42.2
1.5
5.8
16.4
1.0

24.3
20.1

37.8
1.1

7.6
12.2
1.1

18.9
- 1.0
- .5

18.2
- 1.0
- 1 .5

464.6
- .5

498.9
- 1 .5
9.4
491.0
90.4
28.7
29.2
156.4
51.0
62.2
30.4
42.6

All sectors
60
61
62
63
64
65
66

67
68

69
70
71

Total funds raised, by instrument.
Investment company shares.........
Other corporate equities..............
Debt instruments..........................
U.S. government securities.. . ,
State and local obligations. . . .
Corporate and foreign bonds..
Mortgages.................................
Consumer credit.......................
Bank loans n.e.c........................
Open market paper and R P s..
Other loans...............................




248.0
10.4
238.8
28.3
14.7
13.6
79.9
26.0
48.8
8.3
19.1

230.5 223.5
-.1
- .7
10.8
4.8
226.4 212.8
98.2
34.3
16.5
16.1
23.9
36.4
60.5
57.2
9.9
9.7
41.0 - 12.2
17.7 - 1.2
22.7
8.7

296.0
- 1.0
12.9
284.1
88.1

15.7
37.2
87.1
25.6
7.0
8.1

15.3

392.5
- .9
4.9
388.5
84.3
23.7
36.1
134.0
40.6
29.8
15.0
25.2

481.7
- 1.0
4.7
478.0
95.2
28.3
31.6
149.0
50.6
58.4
26.4
38.6

288.8
-2 .4
15.8
275.4
96.0
20.1

35.7
78.8
23.6
2.3
6.2
12.6

303.2
.4
9.9
292.8
80.2
11.3
38.7
95.3
27.6
11.7
10.1

18.0

344.3
-.6
2 .6

342.2
71.4
22.0

30.6
123.7
36.6
23.7
15.3
18.9

440.8
- 1 .3
7.2
434.9
97.2
25.3
41.7
144.2
44.5
35.8
14.6
31.4

.1

465.0
100.0

27.8
34.0
141.6
50.1
54.5
22.4
34.6

Flow o f Funds

A45

1.60 DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS
B
illions of dollars, except as noted; quarterly data are at seasonally adjusted annual rates.
Transaction category, or sector

1973

1974

1975

1976

1977

1976

1978

1977

1978

HI
1 Total funds advanced in credit markets to
nonfinancial sectors...............................

H2

HI

H2

HI

H2

195.4

187.4

200.7

261.1

335.4

398.2

257.0

265.2

297.2

373.6

386.5

410.0

31.8
9.5

53.7
11.9
14.7
6.7
20.5

44.6
22.5
16.2
-4 .0
9.8

54.3
26.8

85.1
40.2
20.4
4.3

109.7
43.9
26.5
12.5
26.9

46.0
21.4
10.7
- 1 .9
15.8

62.5
32.2
14.9

108.4
56.5
22.5
5.8
23.7

102.4
43.6

- 2 .0
17.5

61.8
23.9
18.4
2.9
16.7

116.9
44.1
30.7

2.8

9.8
26.5

15.1
14.8
8.5

12.0
22.2

5.4

18.3
32.0

.6

20.4
44.6
7.0
37.7
41.4

5.8
18.5

6 .2
11.2

52.1
29.9

19.4
39.4
13.3
30.4
38.5

295.1
40.7
25.3
27.0

322.5
56.4
27.8
23.9

By public agencies and foreign

2 Total net advances.......................................
3 U.S. government securities....................
4 Residential mortgages..............................
5 FHLB advances to S&Ls.................
6
Other loans and securities.......................

8 .2

7.2
6.9

Totals advanced, by sector

7 U.S. government.........................................
8 Sponsored credit agencies...........................
9 Monetary authorities...................................
10 Foreign..........................................................
11 Agency borrowing not included in line 1..

12.8
- 2 .0

16.6

20.2

26.8
7.1
39.4
26.3

19.9

23.1

13.5

8.9
20.3
9.8
15.2
18.6

183.6
18.8
14.7

156.8
22.4
16.5
20.9
26.9
76.8
6.7

169.7
75.7
16.1
32.8
23.2
17.9
- 4 .0

225.4
61.3
15.7
30.5
52.7
63.3
- 2 .0

276.5
44.1
23.7
22.5
83.3
107.3
4.3

330.0
51.3
28.3
22.5
152.2
12.5

28.8
47.5
54.6
- 1 .9

122.5
29.4
53.5
40.6
- 1.0

190.3
59.6
70.8
49.9

255.9
87.6
82.0
67.9
18.4

296.9
128.7
75.9
73.5
18.7

190.3
124.6
4.4
61.3
- 4 .6

255.9
141.2
26.9
87.8

- .1

1.2

296.9
142.5
38.3
116.0
6.3

4.3
49.4
32.9

39.5
16.1
3.8
5.8
1.9

19.1
9.2

6.1

11.8

12.0

9.8
16.5

7.7
20.6

21.6
8.2

26.6

20.7

22.6

223.3
48.0
11.3
32.3
57.8
72.0
- 2 .0

258.0
47.6

176.9
47.8
72.8
51.8
4.6

203.8
71.5

62.7
40.3

176.9
118.2
1.9
56.8
- 6 .3
4.1
35.8
23.2

71.4
33.2
4.5
-1 .4
16.3
18.7
151.8
7.5
6.9
115.2

6.1

2 2.2

13.2
23.4

11.8

30.3
21.5
49.8
.6

45.1
44.3

Private domestic funds advanced

12 Total net advances.......................................
13 U.S. government securities....................
14 State and local obligations......................
15 Corporate and foreign bonds..................
16 Residential mortgages..............................
17 Other mortgages and loans.....................
18 Less: FHLB advances.............................

10.0

48.4
98.8
7.2

88.2

227.5
74.6
20.1

22.0

18.0
78.4
94.9
2.9

88.1

86.8

337.4
46.3
28.7
21.1

89.6
163.5

119.7
5.8

140.8
13.2

242.4
79.1
82.5
65.2
15.7

269.3
96.1
81.5
70.6

301.0
131.8
75.8
76.9
16.6

292.8
125.7
75.9
70.2
20.9

203.8
131.0
7.0
65.8
- 2.8
- 4 .3
33.2
39.7

242.4
141.4
22.3
78.7

269.3
141.1
31.4
96.9

301.0
138.6
40.0
122.5
5.7

292.8
146.4
36.7
109.6
6.9

52.5
26.7
8.7
4.5
1.9
10.7

26.6
5.6
- 1.0
7.1
1.9
13.0

37.9
18.3
- .9
- .7

- 5 .9

8.0

13.2

11.0

18.2

124.3
1.5
- .5
105.3
- 1 9 .3
57.3
67.4
18.0

139.5
3.2
.5

151.8

121.6

12.0
6.1

147.2
4.3
- .5
117.6
- 4 .5
51.4
70.8
25.8

8.6

11.8

Private financial intermediation

19 Credit market funds advanced by private

financial institutions.............................
Commercial banking................................
Savings institutions...................................
Insurance and pension funds..................
Other finance............................................

161.3
84.6
35.1
23.7
17.9

125.5

24 Sources of funds...........................................
25 Private domestic deposits........................
26 Credit market borrowing.........................
27 Other sources............................................
28
Foreign funds.......................................
29
Treasury balances.................................
30
Insurance and pension reserves..........
31
Other, net..............................................

161.3
97.3
23.4
40.6
3.0
- 1.0
18.4

125.5
67.5
15.9
42.1
10.3
- 5 .1
26.2

20.2

10.6

122.5
92.0
-1 .4
32.0
- 8 .7
-1 .7
29.7
12.7

32 Direct lending in credit markets.................
33 U.S. government securities....................
34 State and local obligations......................
35 Corporate and foreign bonds..................
36 Commercial paper....................................
37 Other..........................................................

45.7
18.8
5.4

47.2
18.9
9.3
5.1
5.8

45.8
24.1
8.4
8.4
- 1 .3

38 Deposits and currency.................................
39 Security RPs..............................................

101.2
11.0

20
21
22
23

Private domestic nonfinancial investors

41
42
43
44
45
46
47

Time and savings accounts.....................
Large negotiable CDs.........................
Other at commercial banks.................
At savings institutions.........................
M oney.......................................................
Demand deposits..................................
Currency................................................

48 Total of credit market instruments, de­
posits and currency...................................
49
50

Public support rate (in percent)............
Private financial intermediation (in per­
cent) .......................................................
Total foreign funds...................................

Memo: Corporate equities not included
above
52 Total net issues.............................................
53 Mutual fund shares..................................
54 Other equities...........................................
55 Acquisitions by financial institutions.........
56 Other net purchases.....................................

51

N otes

1.
2.
6.
11.
12.

17.
25.
26.
28.

by line number .

2 .0

9.8
9.7

75.7
17.8
29.5
28.5
14.5
10.6

3.9

66.6

24.2
29.8
4.8

8.0

6 .2

34.5
31.4

11.8

98.1
131.9
73.8
.2
- 2.2
2.3
*
2.4
1.3
65.4
84.0 113.5
18.4 - 1 4 .3 - 1 3 .6
57.9
38.8
25.3
59.4
69.1
21.8
16.1
8 .2
12.6
6.4
1.9
8.8
6.2
6.3
7.3

47.5
23.0
2.6

- 3 .3
9.5
15.7
149.5
2.2
.2
121.0

9.0
43.0
69.0
26.1
17.8
8.3

6.8

10.8

43.3
61.1
22.2

12.9
9.3

47.9
15.5

- 7 .8
58.6
70.8
14.2
5.7

1.6
1.2

45.3
30.7

21.1

.8

7.4
53.4
35.2
57.1
27.8
6 .0

.2

.9
124.4
22.6

2 .0
66.2

48.6
61.5
32.4
7.1
- 3 .9
8.5
17.5
149.0
9.8

6.1
110.8
10.1

5.8

34.6
67.2
26.4
15.7
10.7

22.2
11.8

2 0.0

42.3
58.5
10.5

11.6

59.2
32.0
81.3
34.1
2 .0
1.2

24.1

20.0

154.6
5.1
7.7
119.6
11.4
44.4
63.8
22.1

14.0
8.1

146.9

121.0

143.9

171.4

197.0

223.2

176.8

166.1

185.2

208.9

210.5

235.9

16.3

28.7

2 2.2

20.8

25.4

27.5

17.9

23.6

20.8

29.0

26.5

28.5

87.9
3.6

80.0
21.5

72.2
- 2 .6

84.4
10.6

92.5
40.5

90.0
44.0

77.8
3.5

91.2
17.8

94.0
28.2

91.3
52.9

93.3
36.1

52.0

9.2
- 1.2
10.4
13.1
- 3 .9

4.1
- .7
4.8
5.8
- 1 .7

10.7

11.9
- 1.0
12.9
12.3
- .4

4.0
- .9
4.9
7.4
- 3 .4

3.7
- 1.0
4.7
7.6
- 3 .8

13.4
- 2 .4
15.8
12.7
.7

10.3
.4
9.9

5.9
- 1 .3
7.2

- .4
- .5

11.8

2 .1
-.6
2 .6
6.8

- 1 .5

- 4 .7

-.1
10.8

9.6
1.1

Line 2 of p. A-44.
Sum of lines 3-6 or 7-10.
Includes farm and commercial mortgages.
Credit market funds raised by federally sponsored credit agencies,
and net issues of federally related mortgage pool securities. Included
below in lines 3, 13, and 33.
Line 1 less line 2 plus line 11. Also line 19 less line 26 plus line 32.
Also sum of lines 27, 32, 39, and 44.
Includes farm and commercial mortgages.
Sum of lines 39 and 44.
Excludes equity issues and investment company shares. Includes
line 18.
Foreign deposits at commercial banks, bank borrowings from foreign
branches, and liabilities of foreign banking agencies to foreign af­
filiates.




10.0

68.8

8.1

- 2 .2

.1

.4
- .8

86.8

7.9
- 1 .5
9.4
14.7
- 6.8

29. Demand deposits at commercial banks.
30. Excludes net investment of these reserves in corporate equities.
31. Mainly retained earnings and net miscellaneous liabilities.
32. Line 12 less line 19 plus line 26.
33-37. Lines 13-17 less amounts acquired by private finance. Line 37
includes mortgages.
45. Mainly an offset to line 9.
46. Lines 32 plus 38, or line 12 less line 27 plus line 45.
47. Line 2/line 1.
48. Line 19/line 12.
49. Sum of lines 10 and 28.
50. 52. Includes issues by financial institutions.
N o te . Full statements for sectors and transaction types quarterly,
and annually for flows and for amounts outstanding, may be obtained
from Flow of Funds Section, Division of Research and Statistics, Board
of Governors of the Federal Reserve System, Washington, D.C. 20551.

A46

Domestic Nonfinancial Statistics □ September 1979

2.10 NONFINANCIAL BUSINESS ACTIVITY

Selected Measures

1967 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted.

Measure

1976

1977

1979

1978
Jan.

Feb.

Mar.

Apr.

M ay'

June'

July'

Aug.

130.5

138.2

146.1

151.5

152.0

153.0

150.8

152.4

152.4

152.6

150.9

2 Products, to tal............................................................
3 Final, to tal..............................................................
4
Consumer goods.................................................
5
Equipment..........................................................
6
Intermediate............................................................
7 Materials.....................................................................

129.7
127.6
137.1
114.6
137.2
131.7

137.9
135.9
145.3
123.0
145.1
138.6

144.8
142.2
149.1
132.8
154.1
148.3

149.2
146.1
150.6
139.9
160.8
155.0

149.9
146.8
151.5
140.4
161.4
155.2

150.8
148.2
152.9
141.7
160.4
156.3

148.4
145.4
149.1
140.4
159.7
154.5

150.3
147.8
152.0
141.9
159.5
155.7

150.1
147.6
151.7
142.0
159.2
156.0

149.8
147.2
150.9
142.1
159.4
156.9

148.0
145.1
147.7
141.4
159.1
155.3

Industry groupings
8 Manufacturing............................................................

130.3

138.4

146.8

152.5

153.3

154.5

151.6

153.8

153.8

153.8

151.9

79.5
81.1

81.9
82.7

84.4
85.6

86.4
87.9

86.7
87.8

87.1
88.3

85.3
86.9

86.3
87.4

87.2

86.1

85.9
87.5

84.6
86.4

1 Industrial production1................................................
M arket groupings

Capacity utilization ( percent) 1*2

9 Manufacturing............................................................
10 Industrial materials industries...................................
11 Construction contracts 3 ............................................

190.2

160.5

174.3

181.0

231.0

186.0

202.0

178.0

177.0

165.0

n.a.

120.7

125.0

130.3

133.0

133.5

134.1

134.1

134.6

134.9

135.0

135.0

13 Goods-producing, total..............................................
14 Manufacturing, total..............................................
15 Manufacturing, production-worker......................
16 Service-producing.......................................................

100.2

104.2
101.0

108.9
104.5

112.0

97.7
95.3
131.9

112.4
107.4
105.2
145.0

113.3
107.8
105.4
145.5

113.1
107.6
105.1
145.7

113.4
107.5
104.9
146.2

113.4
107.4
104.6
146.7

113.4
107.3
104.3
146.8

106.6
103.3
147.1

17 Personal income, total*..............................................

220.5

18 Wages and salary disbursements............................... 208.2
19 Manufacturing........................................................ 177.0

142.1

107.1
104.8
144.5

244.4

274.1

292.7

295.5

298.8

300.1

302.0

304.1

308.4

n.a.

230.2
198.3

258.1
222.4

275.3
239.7

278.0
242.3

281.2
244.7

282.1
244.1

283.2
244.8

285.3
245.9

287.4
247.1

n.a.
n.a.

275.3

272.7

274.8

274.4

276.2

278.1

207.1 209.1
'207.7 '209.1

211.5
'211.4

214.1
212.4

216.6
213.4

218.9
215.8

n.a.
217.3

234.7

176.8

194.8

217.7

21 Retail sales6 ................................................................ 203.5

224.4

248.0

181.5
180.6

195.4 204.7
194.6 '205.4

20 Disposable personal income......................................

Prices7

22 Consumer....................................................................
23 Producer finished goods............................................

170.5
170.3

270.7

271.8

'239.2

n.a.

6 . Based on Bureau of Census data published in Survey o f Current
Business (U.S. Department of Commerce).
7. Data without seasonal adjustment, as published in Monthly Labor
Review (U.S. Department of Labor). Seasonally adjusted data for changes

1. The industrial production and capacity utilization series have been
revised. For a description of the changes see the August 1979 B u lle t in ,
pp. 603-07.
2. Ratios of indexes of production to indexes of capacity. Based on data
from Federal Reserve, McGraw-Hill Economics Department, and De­
partment of Commerce.
3. Index of dollar value of total construction contracts, including
residential, nonresidential, and heavy engineering, from McGraw-Hill
Informations Systems Company, F. W. Dodge Division.
4. Based on data in Employment and Earnings (U.S. Department of
Labor). Series covers employees only, excluding personnel in the Armed
Forces.
5. Based on data in Survey o f Current Business (U.S. Department of
Commerce). Series for disposable income is quarterly.

2.11

112.8

102.1

98.6
136.4

in the price indexes may be obtained from the Bureau of Labor Statistics,
U.S. Department of Labor.

N ote. Basic data (not index numbers) for series mentioned in notes
4, 5, and 6 , and indexes for series mentioned in notes 3 and 7 may also be
found in the Survey o f Current Business (U.S. Department of Commerce).
Figures for industrial production for the last two months are preliminary
and estimated, respectively.

OUTPUT, CAPACITY, AND CAPACITY UTILIZATION A
Seasonally adjusted
1978

1979

1978

1979

1978

Series
Q4

Q3

Q 2'

Ql

Output (1967= 100)

Q3

Q4

Ql

Q2

Capacity (percent of 1967 output)

Q3

1979
Q4

Ql

Q 2'

Utilization rate (percent)

1 Manufacturing..............................................

148.6

151.7

153.4

153.1

174.5

175.6

176.9

178.2

85.2

86.4

86.7

85.9

2 Primary processing.......................................

158.2
143.6

162.2
146.1

162.1
148.7

161.8
148.4

179.9
171.6

181.2
172.7

182.7
173.8

184,2
175.0

87.9
83.7

89.5
84.6

88.7
85.6

'87.8
84.8

150.2

154.6

155.5

155.4

173.9

175.4

176.8

178.1

86.4

88.2

88.0

87.2

5 Durable goods.............................................. 151.9
6
Metal materials......................................... 126.6
7 Nondurable goods....................................... 165.9
8
Textile, paper, and chemical................... 172.2
9
Textile................................................... 116.0
10
Paper..................................................... 134.1
11
Chemical............................................... 212.3
12 Energy.......................................................... 126.9

157.3
132.2
170.3
177.1
119.5
138.1
218.0
128.9

158.4
124.7
172.2
179.1
118.2
136.9
222.7
127.9

157.7
124.3
173.1
180.9
118.3
140.7
224.5
127.7

178.5
139.3
188.5
196.2
136.3
146.9
242.2
144.7

180.1
139.6
190.2
197.9
136.6
147.8
244.6
145.7

181.5
139.8
191.9
199.6
136.9
148.7
247.4
146.7

183.0
140.3
193.7
201.5
137.3
149.9
250.6
147.5

85.1
90.9

87.4
94.7
89.6
89.5
87.5
93.4
89.1
88.5

87.3
'89.1
89.7
89.7
86.3
92.0
90.0
87.2

' 86.2
88.5
89.4
'8 9 .7
' 86.2
'93.9
'89.6

A The capacity utilization series has been revised. For a description of
the changes, see the August 1979 Bulletin, pp. 606-07.




88.0

87.8
85.1
91.3
87.6
87.7

86.6

Labor Market

A47

2.12 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
Thousands of persons; monthly data are seasonally adjusted. Exceptions noted.
Category

1976

1977

1979

1978
Feb.

Mar.

Apr.

May

June

July

Aug.

H ousehold S urvey D ata

1 Noninstitutional population1 ..............

156,048

158,559

161,058

162,633

162,909

163,008

163,260

163,469

163,685

163,891

96,917
94,773

99,534
97,401

102,537
100,420

104,621
102,527

104,804
102,714

104,193

102,111

104,325
102,247

104,604
102,528

105,141
103,059

105,139
103,049

84,188
3,297

87,302
3,244

91,031
3,342

93,335
3,311

93,499
3,343

92,987
3,186

93,134
3,184

93,494
3,260

93,949
3,262

93,578
3,322

7,288

6,855

6,047

5,881

5,871

5,937

5,929

5,774

5,848

6,149

7.7
59,130

7.0
59,025

6.0

5.7
48,012

5.7
58,105

5.8
58,815

5.8
58,935

5.6
59,865

5.7
58,545

58,752

9 Nonagricultural payroll employment3

79,382

82,256

85,760

87,818

88,263

88,248

88,539

r88,764

'88,813

88,815

10 M anufacturing...........................................

18,997
779
3,576
4,582
17,755
4,271
14,551
14,871

19,647
809
3,833
4,696
18,492
4,452
15,249
15,079

20,331
837
4,213
4,858
19,392
4,676
15,976
15,478

20,895
919
4,385
5,001
19,883
4,829
16,438
15,468

20,964
922
4,526
5,025
19,945
4,839
16,535
15,507

20,922
922
4,507
4,935
19,959
4,853
16.575
15.575

20,906
923
4,594
5,031
19,985
4,867
16,622
15,611

r20,893
r930
r4,610
r5,085
r 19,980
*-4,892
r 16,706
*■15,668

*•20,863
*•933
*•4,645
*•5,075
*■19,959
r4 ,907
*■16,730
*•15,701

20,740
952
4,594
5,066
19,996
4,939
16,804
15,724

2 Labor force (including A rm ed
F orces)1 ....................................
3 Civilian labor force.............................
Em ploym ent
4
N onagricultural industries2. . .
5
Agriculture....................................
U nem ploym ent
6
N u m b er..........................................
7
Rate (percent o f civilian labor
force)...........................................
8 N o t in labor force....................................

58,521

6.0

E stablishment S urvey D ata

11 M in in g .........................................................
12 Contract construction.............................
13 Transportation and public u tilities. . .
14 Trade............................................................
15 Finance........................................................
16 Service..........................................................
17 G overnm ent...............................................

1. Persons 16 years of age and over. Monthly figures, which are based
on sample data, relate to the calendar week that contains the 12th day;
annual data are averages of monthly figures. By definition, seasonality
does not exist in population figures. Based on data from Employment
and Earnings (U.S. Dept, of Labor).
2. Includes self-employed, unpaid family, and domestic service workers.




3. Data include all full- and part-time employees who worked during,
or received pay for, the pay period that includes the 12th day of the
month, and exclude proprietors, self-employed persons, domestic servants,
unpaid family workers, and members of the Armed Forces. Data are
adjusted to the February 1977 benchmark. Based on data from Employ­
ment and Earnings (U.S. Dept, of Labor).

A48

Domestic Nonfinancial Statistics □ September 1979

2.13 INDUSTRIAL PRODUCTION

Indexes and Gross Value A

Monthly data are seasonally adjusted.

Grouping

1967
pro­
por­
tion

1978
aver­
age

1978
June

July

1979

Aug.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

July2 Aug . e
3

Index (1967 = 100)
Major M arket
100.00 146.1 146.1 147.1 148.0 151.8 151.5 152.0 153.0 150.8 152.4 152.4 152.6 150.9

1

60.71
47.82
27.68
20.14
12.89
39.29

144.8
142.2
149.1
132.8
154.1
148.3

144.6
142.1
149.3
132.3
154.0
148.3

145.6
143.2
149.8
134.0
154.7
149.3

146.6
144.2
150.6
135.3
155.6
150.2

149.0
146.1
151.5
138.6
159.9
156.2

149.2
146.1
150.6
139.9
160.8
155.0

149.9
146.8
151.5
140.4
161.4
155.2

7.89
2.83
2.03
1.90
80

159.2
179.9
172.5
148.6
198.5

161.1
181.6
174.5
150.1
199.4

162.1
183.8
176.7
152.7
201.9

161.5
183.5
174.9
150.2
205.5

Miscellaneous home goods...............

5.06
1.40
1.33
1.07
2.59

147.7
133.3
135.4
164.2
148.6

149.6
140.1
142.4
166.8
147.7

150.0
138.8
141.3
168.2
148.6

18 Nondurable consumer goods...................
19
20
Consumer staples...................................
Consumer foods and tobacco...........
?1

19.79
4.29
15.50
8.33

145.1
131.1
148.9
140.6

144.5
131.1
148.3
140.0

Nonfood staples.................................
Consumer chemical products........
Consumer paper products.............
Consumer energy products............
Residential utilities.....................

7.17
2,63
1.92
2.62
1.45

158.5
192.7
118.4
153.6
162.1

157.9
191.9
118.0
153.0
162.1

3
4
5

Final products.......................................
Consumer goods................................
Equipment..........................................
Intermediate products...........................
6
7 Materials....................................................
Consumer goods
8 Durable consumer goods..........................

9

Automotive products.............................
Autos and utility vehicles.................

13
14
IS
16
17

Home goods..........................................

10
11
12

22

23
24
25
26

Auto parts and allied goods.............

Equipment

27 Business......................................................
28
29
Building and mining..........................
30
Manufacturing...................................
31

12.63
6.77
1.44
3.85
1.47

Farm...................................................

5.86
3.26
1.93
67

36 Defense and space.....................................

7.51

32
33
34
35

Commercial transit, farm .....................

Intermediate products

38 TOiisiness sunnlies .....................................
39 Commercial energy products................
Materials

150.8
148.2
152.9
141.7
160.4
156.3

148.4
145.4
149.1
140.4
159.7
154.5

150.3
147.8
152.0
141.9
159.5
155.7

150.1
147.6
151.7
142.0
159.2
156.0

149.8
147.2
150.9
142.1
159.4
156.9

148.0
145.1
147.7
141.4
159.1
155.3

161.8
186.9
179.2
151.9
206.5

160.4
181.4
173.2
145.8

161.1
179.3
170.3
144.9

163.6
186.8
178.8
153.8
202.2 202.2 207.2

151.6
163.0
147 4
128.6
202.7

160.5
182.7
176.3
153.1
199.0

158.5
175.9
167.4
148.0
197.5

155.8
169.1
155.2
141.8
204.4

147.4
147.5
125.6
118.5
203.0

149.2
132.4
133.1
167.1
150.9

147.7
129.8
130.6
164.3
150.6

148.6
124.0
124.8
170.7
152.8

150.9
129.8
131.4
171.8
153.7

150.6
128.4
130.3
173.5
153.2

145.2
115.6
116.5
170.7
150.8

148.1
128.4
130.2
170.2
149.6

148.8
129.3
131.2
170.6
150.4

148.4 147.3
129.6 127.2
131.5
170.0
149.7 150.0

144.9
130.4
148.9
141.1

146.3
133.3
149.9
141.9

147.3
132.2
151.5
143.2

146.7
130.1
151.3
141.8

147.7
130.7
152.4
142.4

148.6
130.9
153.6
145.1

148.0
127.7
153.7
145.2

148.7
128.6
154.2
145.7

149.0 148.9 147.9
128.9
154.6 154.8 154.0
146.2 146.7

158.0
193.3
117.8
152.3
161.7

159.2
194.1
118.4
154.0
161.7

161.2
196.5
118.0
157.6
162.5

162.4
200.3
119.2
156.0
166.2

164.0
203.1
122.7
155.2
167.7

202.8 201.6 205.2 206.0 206.3
121.4 120.9 121.3 121.1 119.4

160.3 160.1 161.7 163.4
145.8 146.1 147.0 148.0
207.3 210.5 210.3 209.0
121.2 121.6 121.4 123.2
149.4 147.0 151.7 153.3

166.8
148.4
206.3
124.5
154.2

168.1
151.4
208.8
127.4
157.8

169.0
152.5
207.9
129.1
159.1

170.8
152.8
205.2
130.3
160.2

177.2 176.2 178.8 181.2 188.0 187.4 188.1

163.4 163.5 164.1 164.3 164.1

163.8

154.7 156.4 154.3 154.2 154.6
167.9 169.1 167.8
168.7
150.4
204.2
128.0
156.0

171.4
151.8
203.7
130.1
157.7

171.6
152.0
205.4
130.1
156.9

171.6
152.1
208.6
130.1
154.1

170.3
151.2
210.0

129.0
151.4

191.6 189.9 193.9 194.2 194.2 192.3

212.0 211.6 214.4 215.3 218.7 220.8 221.2 224.4 223.0 224.9 226.4 227.3 227.5

133.8 131.9 134.7 139.2 151.0 146.8 146.6 150.5 148.8 156.7 155.6 153.0 147.5
132.8 131.7 132.4 136.0 144.6 142.0 146.9 150.0 147.7 150.8 148.6 152.0
86.5

85.6

87.5

87.9

91.4

92.4

92.4

92.9

92.9

92.5

92.3

92.4

92.9

6.42 151.7 151.5 152.4 153.8 158.3 159.1 159.3 157.1 156.0 156.4 156.2 156.8 156.9
6.47 156.5 165.5 156.9 157.4 161.5 162.5 163.6 163.8 163.2 162.5 162.3 162.0
1.14 168.2 167.3 167.8 169.5 175.0 173.6 173.7 173.5 174.6 172.6 168.3 168.8
158.1
148.5
182.2
149.7
124.4

158.0
146.0
184.4
149.4
124.1

159.2
145.8
186.8
150.6
126.7

155.7
136.9
187.0
147.7
123.2

157.9
142.5
188.0
149.0
122.9

159.6
142.0
191.0
150.9
126.1

160.0
136.1
193.5
152.9
128.6

45 Nondurable goods materials.................... 10.47 165.6 166.3 164.5 165.3 171.9 171.0
46 Textile, paper, and chemical materials. 7.62 171.8 172.3 171.3 170.7 178.9 177.5
1.85 116.9 116.5 115.5 115.6 120.1 118.3
Textile materials.................................
47
Paper materials................................... 1.62 137.0 139.4 134.6 130.0 139.1 133.3
48
4.15 210.0 210.1 210.7 211.2 220.8 221.2
Chemical materials............................
49
1.70 159.8 160.8 154.2 162.6 164.8 167.8
50 Containers, nondurable.........................
51 Nondurable materials n.e.c...................
1.14 132.7 134.3 134.2 133.7 135.7 132.5

172.4
179.6
117.4
137.4
223.9
165.8
134.1

173.1
180.1
119.0
139.9
223.0
167.3
135.6

173.0
180.7
117.0
140.8
224.7
162.0
138.2

173.8
181.5
118.8
140.1
225.7
163.3
138.4

172.4
180.4
119.1
141.1
223.1
159.2
139.0

174.9 174.1
183.0 182.4

40 Durable goods materials...........................
41
Durable consumer parts.......................
42 Equipment parts....................................
43
dd
Rasir. metal materials........................

53
54

Primary energy.......................................
Converted fuel materials.......................
Supplementary groups

57
58

For notes see opposite page.




20.35
4.58
5.44
10.34
5.57

149.0
140.8
166.5
143.3

147.7
140.3
165.7
141.5
121.2 118.8

150.5
142.3
169.4
144.2
122.1

151.9
142.1
168.8
147.3
126.5

159.5
148.6
179.2
154.0
132.0

157.1
130.5
191.1
150.9

121.0

144.7
225.6
163.5
138.0

8.48 125.3 127.6 127.7 127.5 128.8 127.8 127.1 128.7 128.4 127.7 126.9 127.0 127.9
4.65 112.6 116.2 116.5 115.6 116.1 111.9 110.6 114.6 113.0 111.7 111.3 112.0
3.82 140.8 141.6 141.5 141.9 144.4 147.0 147.2 145.9 147.1 147.2 145.9 145.3
9.35
12.23
3.76
8.48

140.0
135.4
158.0
125.3

141.1
136.8
157.3
127.6

141.0
136.7
157.0
127.7

141.9
137.1
158.7
127.5

140.6
139.1
162.2
128.8

140.1
138.1
161.4
127.8

141.6
137.5
160.8
127.1

141.6
138.4
160.3
128.7

137.2
138.7
161.9
128.4

139.1
137.6
159.9
127.7

139.7
136.6
158.5
126.9

138.9 137.5
136.8 137.4
158.9
127.0 \2 7 .9

Output

A49

June

Aug . e

2.13 Continued

Grouping

SIC
code

1967
pro­
por­
tion

1978
average»

1978
June

July

Aug.

1979
Dec.

Jan.

Feb.

Mar.

Apr.

May

143.5
122.3
167.1
188.8

143.8
122.7
167.4
189.0

143.4 142.9 143.3 144.3
122.8 123.5 124.0 125.8
166.5 164.4 164.8 165.0
186.4

July?

Index (1967 = 100)
=

M ajor I ndustry
2
3

Mining.......................................
Utilities.......................................

12.05
6.36
5.69
3.88

6

Nondurable...............................
Durable......................................

87.95 146.8 146.4 147.7 148.6 152.9 152.5 153. 3 154.5 151.6 153.8 153.8 153.8 151.9
35.97 156.9 157.0 157.2 158.4 161.7 160.7 162.0 163.0 161.7 162.8 162 7 163.3 162.7
51.98 139.7 139.0 141.1 141.8 146.8 146.8 147.2 148.6 144.6 147.6 147.6 147.3 144.4

7

Mining

8 Metal..............................................
9 Coal................................................
10 Oil and gas extraction..................
Nondurable manufacturers

13
14

.51
.69
4.40
.75

20
21
22

141.7
124.0
161.4
182.2

143.1
127.4
160.6
181.1

13
14
15
16

Tobacco products.........................
Textile mill products.....................
Apparel products..........................
Paper and products.......................

23
26

17
18
19
20
21

Printing and publishing................
Chemicals and products...............
Petroleum products.......................
Rubber and plastic products........
Leather and products...................

27
28
29
30
31

143.2
126.2
162.2
183.3

117.0 118.0
114.7 136.0 133.1 125.9
124.6 126.2 126.6 126.2
131.2 130.8 131.4 132.1
121.0 121.0

2.68

10
11,12

143.6
127.1
162.0
183.2

8.75 142.7 142.8
.67 118.3 118.5
137.5 136.6
3.31 134.2 133.7
3.21 144.8 148.0
131.5
197.4
145.2
253.6
.86 73.8

4.72
7.74
1.79
2.24

131.1
196.4
143.3
257.3
74.2

145.0
127.4
164.7
186.7

143.9
123.8
166.2
188.4

143.0
120.9
167.7
189.9

123.8
144.7
123.8
134.8

124.2
115.9
123.0
135.9

125.3
104.5
120.4
135.7

126.9
124.0
119.3
135.6

128.9
130.1
118.6
135.3

123.1
133.4
118.6
137.8

123.4
137.5
119.0
137.3

120.5
136.6 145.8
120.1

138.4

121.0

143.1
118.2
137.0
132.7
142.1

143.9
118.5
137.1
137.7
142.2

144.7
119.1
141.7
136.5
148.5

143.9 145.5
120.6 116.2
141.6 139.9
130.3 133.5
144.6 144.6

147.6
123.3
142.3
136.5
149.0

147.0 149.2 150.0 149.3
120.0 120.2 118.3
141.2 141.5 142.2 142.8
130.8 128.2 130.2
148.7 147.9 148.0 152.0 151.1

131.4
198.6
144.1
260.3
73.2

131.9
199.3
146.0
263.4
73.3

134.4
207.2
151.3
263.3
73.8

135.6
206.5
147.0
267.4
74.8

138.2
208.6
146.0
267.5
73.4

137.3
107.4
143.8
270.4
72.9

135.7
207.7
145.4
265.5
69.6

136.8
209.7
142.4
270.0
72.3

136.9
207.8
142.8
269.1
70.1

135.1 135.3
209.3
144.8 143.9
271.1
71.1

Durable manufactures

22 Ordnance, private and govern­
ment ...........................................
23 Lumber and products...................
24 Furniture and fixtures..................
25 Clay, glass, stone products..........

19,91
24
25
32

3.64 73.7 74.1 74.1 74.0 74.6 74.9 75.8 75.1 75.1 75.3 75.1 75.3
1.64 136.3 136.3 136.2 136.0 144.0 137.3 137.2 137.7 137.2 136.1 136.7 137.2
1.37 155.8 156.9 159.3 159.5 157.6 161.7 163.1 163.6 159.4 159.6 159.6 159.2
2.74 157.2 156.7 157.0 157.6 164.0 167.4 166.9 164.9 161.2 163.8 162.8 163.0

26
27
28
29
30

Primary metals..............................
Iron and steel............................
Fabricated metal products...........
Nonelectrical machinery...............
Electrical machinery.....................

33
331,2
34
35
36

6.57
4.21
5.93
9.15
8.05

31 Transportation equipment...........
32 Motor vehicles and parts.........
33 Aerospace and miscellaneous
transportation equipment...
34 Instruments...................................

37
371
372-9
38
39

119.9
113.2
141.6
153.6
159.4

118.3
113.1
141.1
152.9
158.8

122.5
116.5
142.8
154.7
162.5

124.9
118.3
143.7
155.5
161.5

132.1
125.3
147.1
158.1
167.7

123.4
113.3
149.1
161.2
170.9

120.4 123.7
110.8 116.2
150.8 150.2
162.9 164.0
173.2 174.2

121.7
115.8
148.8
161.8
170.6

121.0

114.3
150.3
164.3
174.7

124.3
118.1
149.4
164.5
175.2

126.5
118.9
149.7
165.7
174.5

75.6

124.1
i48.’6
164.9
173.4

9.27 132.5 131.4 133.4 134.2 142.9 141.2 139.9 143.7 131.6 141.9 139.4 135.0 123.4
4.50 169.9 168.9 171.5 171.6 182.1 177.9 173.1 179.7 156.0 176.3 169.6 159.5 136.0
4.77
2.11

1.51

97.2 96.1 97.5 98.9 106.0 106.6 108.6 109.7 108.6 109.6 111.0 111.9 111.5
167.1 166.2 167.7 170.3 173.1 175.2 176.0 177.3 176.3 174.7 175.8 175.4 175.9
151.0 150.3 150.6 151.8 151.7 152.0 154.0 154.5 152.3 150.7 151.9 152.2 152.0
Gross value (billions of 1972 dollars, annual rates)

M ajor M arket
36 Products, total.........................

1507.4 610.2 609.7 610.8 613.9 631.1 626.8 627.3 636.1 620.8 632.3 628.5 624.0 609.5

37 Final..............................................
38 Consumer goods.......................
39 Equipment.................................
40 Intermediate..................................

1390.9
1277.5
U13.4
U16.6

471.0
326.6
144.4
139.2

470.8
326.6
144.2
138.9

471.2
326.0
145.1
139.7

1. 1972 dollars.
N ote. Published groupings include some series and subtotals not
shown separately. For description and historical data, see Industrial




474.0
327.5
146.5
139.9

486.6
334.1
152.4
144.5

481.7
328.9
152.9
145.1

482.0
329.4
152.6
145.3

491.0
334.7
156.3
145.1

476.4
323.9
152.5
144.4

488.2
331.5
156.7
144.2

485.2
329.8
155.4
143.3

480.3
326.5
153.8
143.7

466.8
317.2
149.6
142.7

Production—1976 Revision (Board of Governors of the Federal Reserve

System: Washington, D.C.), December 1977.

A The industrial production series has been revised. For a description
of the changes, see “Revision of Industrial Production Index” in the
August 1979 Bulletin, pp. 603-05.

A50

Domestic Nonfinancial Statistics □ September 1979

2.14 HOUSING AND CONSTRUCTION
Monthly figures are at seasonally adjusted annual rates except as noted.
1979
1976

1977

1978

Item

Jan.

Feb.

Mar.

Apr.

May r

June

July

Private residential real estate activity
(thousands of units)
N ew U nits
1 Permits authorized.............................
2
1-family............................................
3 2-or-more-family.............................

1,296
894
402

1,677
1,126
551

1,801
1,182
619

1,442
920
522

1,425
881
544

1,621
1,056
565

1,517
1,036
481

1,618
1,047
571

1,012

627

1,521
987
534

4 Started.................................................
5 1-family............................................
6
2-or-more-family.............................

1,538
1,163
377

1,986
1,451
535

2,019
1,433
586

1,679
1,139
540

1,381
953
428

1,786
1,266
520

1,745
1,278
467

1,835
1,226
609

1,935
1,298
637

1,799
1,223
576

7 Under construction, end of period1..
8
1-family............................................
9 2-or-more-family.............................

1,147
655
492

1,442
829
613

1,355
1,378
553

1,360
812
549

1,344
793
551

1,304
770
534

*•1,256
*•793
519

1,244
729
515

1,251
723
527

n.a.
n.a.
n.a.

10 Completed...........................................
11
1-family............................................
12
2-or-more-family.............................

1,362
1,026
336

1,652
1,254
398

1,866

1,368
498

1,815
1,331
484

1,894
1,376
518

1,957
1,412
545

2,015
1,438
577

2,029
1,347
682

1,871
1,337
534

n.a.
n.a.
n.a.

13 Mobile homes shipped.......................

246

277

276

311

272

270

273

271

279

263

639
433

819
407

817
423

774
412

697
410

784
424

*■709
425

709
430

695
418

819
416

44.2
41.6

48.9
48.2

55.9
n.a.

60.3
n.a.

61.2
n.a.

60.4
n.a.

r62.6
n.a.

63.0
n.a.

64.2
n.a.

64.0
n.a.

48.1

54.4

62.7

67.7

68.7

68.5

71.1

71.8

74.1

72.3

3,002

3,572

3,905

3,710

3,620

3,650

3,760

3,860

3,560

3,770

38.1
42.2

42.9
47.9

48.7
55.1

52.0
59.8

51.9
59.5

53.8
61.8

54.7
62.5

55.9
64.2

56.8
66.1

57.9
66.7

Merchant builder activity in 1-family
units

14 Number sold.......................................
15 Number for sale, end of period i ........
Price (ithousands o f dollars) 2
Median
16 Units sold........................................
17 Units for sale...................................
Average
18 Units sold........................................

1,639

Existing U nits (1-family)
19 Number sold.......................................
Price o f units sold (thous. o f dollars) 2
20 Median................................................
21 Average................................................

Value of new construction 4
(millions of dollars)
Construction
22 Total put in place...............................

148,778

172,552

202,219

212,195

210,849

216,824

216,785

223,239

224,502

229,993

23 Private..................................................
24 Residential.......................................
25 Nonresidential, total......................
Buildings
26
Industrial.................................
27
Commercial.............................
28
Other........................................
29
Public utilities and other............

110,416
60,519
49,897

134,723
80,957
53,766

157,455
93,088
64,367

165,768
93,660
72,108

169,262
97,724
71,538

172,820
96,591
76,229

171,962
95,992
75,970

174,847
95,498
79,349

178,705
97,958
80,747

180,027
98,899
81,128

7,182
12,757
6,155
23,803

7,713
14,789
6,200

25,064

10,762
18,280
6,659
28,666

12,711
19,775
6,764
32,859

13,401
18,985
6,511
32,640

15,201
20,990
7,071
32,967

14,034
21,463
7,150
33,325

14,504
23,601
7,141
34,101

14,697
23,679
7,306
33,958

15,197
24,491
7,441
34,135

30 Public..................................................
31
Military............................................
32 Highway..........................................
33 Conservation and development. . .
34 Other 3..............................................

38,312
1,521
9,439
3,751
23,601

37,828
1,517
9,280
3,882
23,149

44,762
1,462
8,627
3,697
23,503

46,427
1,645
10,015
4,865
29,902

41,587
1,059
9,037
4,476
27,015

44,004
1,983
9,332
4,862
27,827

44,823
1,550
n.a.
n.a.
n.a.

48,391
1,517
n.a.
n.a.
n.a.

45,798
1,638
n.a.
n.a.
n.a.

49,966
1,467
n.a.
n.a.
n.a.

1. Not at annual rates.
2. Not seasonally adjusted.
3. Beginning January 1977 Highway imputations are included in Other.
4. Value of new construction data in recent periods may not be strictly
comparable with data in prior periods due to changes by the Bureau of
the Census in its estimating techniques. For a description of these changes
see Construction Reports (C-30-76-5), issued by the Bureau in July 1976.




N ote. Census Bureau estimates for all series except (a) mobile homes
which are private, domestic shipments as reported by the Manufactured
Housing Institute and seasonally adjusted by the Census Bureau, and
(b) sales and prices of existing units, which are published by the Na­
tional Association of Realtors. All back and current figures are avail­
able from originating agency. Permit authorizations are those reported
to the Census Bureau from 14,000 jurisdictions through 1977, and 16,000
jurisdictions beginning with 1978.

Prices

A51

2.15 CONSUMER AND PRODUCER PRICES
Percentage changes based on seasonally adjusted data, except as noted
12 months to

Item

1978
June

1979
July

3 months (at annual rate) to
1978

1 month to

1979

Sept.

Dec.

Mar.

1979

June

Mar.

Apr.

May

June

July

Index
level
July
1979
(1967
= 100)3

Consumer P rices 1
1 All items........................................................

7.7

11.3

8.5

8.5

13.0

13.4

1.0

1.1

1.1

1.0

1.0

218.9

2 Commodities................................................
3 Food..........................................................
4
5
6
Nondurable..........................................
7 Services.........................................................
8
R ent..........................................................
9

7.3
10.5
5.9
6.7
4.5
8.4
6.9
8.7

11.6
10.2

9.6

14.5
17.7
12.9

1.1
1.1
1.1

.9
.7

1.0
.2

.9

210.5
236.9
197.0
192.6

3.6
11.7

13.3
7.5
15.8
9.1
25.8
13.8
8.7
14.5

1.2
1.0

12.3
9.9
15.5
10.9
7.1
11.4

7.3
4.8
8.3
9.1
6.9
10.3
7.3

7.2
7.3
10.7

12.0

14.9

9.5
15.2

8.1
8 .0

10.1
10.6

Other groupings

10 All items less food.......................................

11.6

10.2

16.5

10.8

9.6
11.3
6.7
7.2
7.7
7.1

9.3
9.7
14.6

8.5
7.7
10.9

9.3
16.7

7.4
7.5
4.9

10.5

10.0
10.6

.5
1.9
.9

.2
1.0
1.0
.8

1.3
.9
1.9
.9
.5

1.0
1.2

1.1

.5

1.3

.8
2.1
1.0

1.3

1.1

1.8
1.0

1.2

18.0

1.3

.9
1.4

.9
1.3

r 14.3
*6.8
•
*•16.0
*6.1
■
r21.0 *■-11.1
*•13.4
*•16.8
*•9.2
r 10. 3
r 17.9
*•11.3
r 14.0
r 14.3

*1.0
*
rl.l
r 1.2
rl.l

r .8
r —A

.4
.3
- 1 .3
1.3
.7

rl.l
*1.1
•

r.9

*■1.4

r.9
1.0

- .5
*•-.4

2.3
- .3

11.2

1.3

.5

1.1
.8

1.4

.1
1 ..2

.7

2.1
1.1
.8
1.2

201.1

1.2

214.2
207.3
263.0

.7
1.4

234.7
175.9
245.6

Producer Prices
14
15
16
17
18 Materials......................................................
19 Intermediate 2............................................
Crude
20
Nonfood................................................
21
Food......................................................

9.5
7.1
8.4
8.4
6.4
13.9
16.1

6.7

12.8

8 .8

8.8
8 .8

8.9
13.9
13.0

7.0
7.5
6.9

21.0

16.9

19.8

2 .8

21.2

14.5

1. Figures for consumer prices are those for all urban consumers.
2. Excludes intermediate materials for food manufacturing and manu­
factured animal feeds.




11.1

15.3
13.0
11.2

r29.2
*■31.0

r22.0
r —7.1

r .6

2 .2

r.3

*-.7

*■1.3
*1.0
■

3. Not seasonally adjusted.
Source. Bureau of Labor Statistics.

.5
.5
- 1.2
1.4
.5
.9

1.1
1.2
0 .0

1.0

1.6

3.3
- 1.2

2.1

1.9
.8

1.7
1.4

215.8
215.2
224.6
208.4
216.9
252.6
245.0
350.0
254.1

A52

Domestic Nonfinancial Statistics □ September 1979

2.16 GROSS NATIONAL PRODUCT AND INCOME
Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates.

Account

1976

1977

1978

1978

1979

Ql

Q2

Q3

Q4

Ql

Q 2r

G ross N ational Product
1,702.2

1,899.5

2,127.6

2,011.3

2,104.2

2,159.6

2,235.2

2,292.1

2,329.4

2 Personal consumption expenditures....................
3 Durable goods..................................................
4 Nondurable goods............................................
5 Services..............................................................

1,089.9
157.4
443.9
488.5

1 , 210.0

1,350.8
200.3
530.6
619.8

1,287.2
185.3
505.9
596.0

1,331.2
200.3
521.8
609.1

1,369.3
203.5
536.7
629.1

1,415.4
212.1

1,454.2
213.8
571.1
669.3

1,475.2
208.1
580.8

6 Gross private domestic investment.....................

243.0
233.0
164.9
57.3
107.6

303.3
281.3
189.4
62.6
126.8
91.9

351.5
329.1

352.3
326.5
218.8
75.2
143.6
107.7
104.3

356.2
336.1
225.9
79.7
146.3

370.5
349.8
236.1
84.4
151.8
113.7

373.8
354.6
243.4
84.9
158.5

88.8

76.5
144.6
108.0
104.4

327.0
304.1
203.7
66.9
136.8
100.5
96.8

20.0

1
By source

7

178.8
481.3
549.8

110.0

107.8

20.6

19.3

19.1
18.8

34.6
33.8

220.6

- 4 .5
224.9
229.4

4.0
238.5
234.4

-7 .6
244.0
251.6

428.3
148.2
280.1

440.9
152.3
288.6

453.8
159.0
294.8

460.1
163.6
296.5

466.1
161.5
304.6

1,988.5
873.0
358.7
514.3
934.1
204.2

2,078.4
922.5
378.0
544.5
956.2
225.6

2,139.5
940.9
382.6
558.3
981.7
237.0

2,214.5
983.8
402.3
581.6
1,005.3
246.0

2,272.9
1 , 011.8
425.5
586.2
1,041.4
238.9

2,294.7
1,017.4
421.3
596.1
1,064.5
247.4

22.3
13.9
8.4

22.8

18.6
4.2

25.8
13.1
12.7

20.0

20.6

13.4
7.2

19.1
18.4
.7

34.6
25.3
9.3

1,340.5

1,399.2

1,367.8

1,395.2

1,407.3

1,426.6

1,430.6

1,422.1

10
11
12

13
14

Change in business inventories.......................
Nonfarm........................................................

10.0
12.1

21.9
20.7

22.3
21.3

22.8
22.0

25.8
25.3

15 Net exports of goods and services.......................
16 Exports..............................................................
17 Im ports........................................................ .

8.0

163.3
155.4

- 9 .9
175.9
185.8

- 1 0 .3
207.2
217.5

- 22.2
184.4
206.6

- 7 .6
205.7
213.3

18 Government purchases of goods and services...
19 Federal...............................................................
State and local..................................................

361.3
129.7
231.6

396.2
144.4
251.8

435.6
152.6
283.0

419.4
150.9
268.5

1,692.1
762.7
305.9
456.8
776.7
162.7

1,877.6
842.2
345.9
496.3
866.4
190.9

2,105.2
930.0
380.4
549.6
969.3
228.2

10.0

21.9
11.9
10.0

9

20

By major type o f product
21 Final sales, total....................................................
22
Goods.................................................................

23
24
25
26

Nondurable....................................................
Services..............................................................
Structures..........................................................

27 Change in business inventories............................
28 Durable goods...................................................
29 Nondurable goods............................................

68.1

65.7

5.3
4.7

30 M emo: Total GNP in 1972 dollars.................... 1,273.0

686.2

395.7
361.1
247.6
89.9
157.7
113.5
109.7

Fixed investment...............................................
Nonresidential...............................................
Structures...................................................
Producers' durable equipment.................
Residential structures...................................
Nonfarm ....................................................

8

558.1
645.1

221.1

110.2

106.4
18.5

- 6.8
213.8

10.3
9.7

111.2

N ational I ncome
1,359.8

1,525.8

1,724.3

1,621.0

1,703.9

1,752.5

1,820.0

1,869.0

1,897.0

32 Compensation of employees................................ 1,037.8
33 Wages and salaries............................................
890.0
34
188.0
Government and government enterprises . .
35
702.0
O ther........................... .......... ......................
36 Supplement to wages and salaries...................
147.8
37
Employer contributions for social
70.4
insurance................................................
38
77.4
Other labor income.......................................

31

1,156.9
984.0
201.3
782.7
172.9

1,304.5
1,103.5
218.0
885.5

1,244.0
1,052.0
212.3
839.7
192.0

1,288.2
1,090.0
215.3
874.6
198.3

1,321.1
1,117.4
219.2
898.1
203.7

1,364.8
1,154.7
225.1
929.6

1,411.2
1,189.4
228.1
961.3
221.8

1,439.4
1,211.3
231.2
980.1
228.2

81.2
91.8

94.6
106.5

91.0
101.1

93.6
104.7

95.5
108.2

98.2
111.9

105.8
116.0

107.8
120.3

89.3
71.0
18.3

100.2

116.8
89.1
27.7

109.1
83.4
25.7

115.0
87.3
27.7

117.4
91.3
26.1

125.7
94.4
31.3

129.0
94.8
34.2

129.2
95.5
33.7

39 Proprietors’ income1............................................
40 Business and professional1...............................
41
Farm 1 ................................................................

80.5
19.6

201.0

210.1

42 Rental income of persons2 ...................................

22.1

24.7

25.9

25.2

24.4

26.8

27.1

27.3

26.8

43 Corporate profits1................................................
44 Profits before tax 3 ............................................
45 Inventory valuation adjustment.......................
46 Capital consumption adjustment.....................

126.8
156.0
- 1 4 .6
- 1 4 .5

150.0
177.1
- 1 5 .2
- 12.0

167.7
206.0
- 2 5 .2
-1 3 .1

141.2
177.5
- 2 3 .9
- 1 2 .4

169.4
207.2
-2 5 .1
- 12.6

175.2
- 2 3 .0
-1 3 .8

212.0

184.8
227.4
-2 8 .8
- 1 3 .8

178.9
233.3
-3 9 .9
-1 4 .5

175.5
226.9
- 3 6 .6
- 1 4 .7

47 Net interest............................................................

83.8

94.0

109.5

101.5

106.8

111.9

117.6

122.6

126.0

1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustments.




3. For after-tax profits, dividends, and the like, see table 1.50.

Source. Survey of C
urrent Business (U Dept, of Com erce).
.S.
m

National Income Accounts

A53

2.17 PERSONAL INCOME AND SAVING
B
illions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted.
1976

1977

1978

1978

1979

Ql
P ersonal I ncome

and

Q
2

Q
3

Q
4

Ql

Q2r

Saving
1.381.6

1.531.6

1,717.4

1.634.8

1.689.3

1.742.5

1.803.1

1.852.6

1.892.8

2 Wage and salary disbursements................... .
3 Commodity-producing industries..............
4
Manufacturing.........................................
5 Distributive industries.................................
6
Service industries........................................
7 Government and government enterprises.,

1 Total personal income.

890.0
307.2
237.4
216.3
178.5
188.0

984.0
343.1
266.0
239.1
200.5
201.3

1.103.3
387.4
298.3
269.4
228.7
217.8

1.052.0
363.9
285.6
257.6
218.2
212.3

1.090.0
383.4
294.1
265.9
225.4
215.3

1,116.8
393.7
300.8
272.5
231.9
218.7

1.154.3
408.6
312.7
281.6
239.4
224.7

1,189.3
423.0
324.8
291.1
247.2
228.0

1,212.1

8 Other labor income........................................

431.8
328.5
295.6
252.7
232.1

77.4

91.8

106.5

101.1

104.7

108.2

111.9

116.0

120.3

9 Proprietors’ income 1............
10 Business and professional1
11
Farm 1 ................................

89.3
71.0
18.3

100.2

116.8
89.1
27.7

109.1
83.4
25.7

115.0
87.3
27.7

117.4
91.3
26.1

125.7
94.4
31.3

129.0
94.8
34.2

129.2
95.5
33.7
26.8

80.5
19.6

12 Rental income of persons2.

22.1

24.7

25.9

25.2

24.4

26.8

27.1

27.3

13 Dividends............................

37.5

42.1

47.2

45.1

46.0

47.8

49.7

51.5

52.3

14 Personal interest income...

127.0

141.7

163.3

152.2

159.4

167.2

174.3

181.0

188.1

15 Transfer payments.........................................
16 Old-age survivors, disability, and health
insurance benefits...............................

193.8

208.4

224.1

217.4

218.8

228.3

231.8

237.3

243.7

92.9

105.0

116.3

111.4

112.4

119.8

121.5

123.8

127.1

17

L ess: Personal contributions for social
insurance...........................................

18 Equals: Personal income....................................

55.6

61.3

69.6

67.3

69.0

70.2

71.8

78.7

79.8

1.381.6

1.531.6

1.717.4

1.634.8

1.689.3

1.742.5

1.803.1

1.852.6

1.892.8

L ess: Personal tax and nontax paym ents.. . .

197.1

226.4

259.0

239.8

252.1

266.0

278.2

280.4

290.7

20 Equals: Disposable personal income................

1,184.5

1.305.1

1.458.4

1.395.0

1.437.3

1.476.5

1,524.8

1,572.2

1,602.1

21

Less: Personal outlays.....................................

1,115.9

1.240.2

1.386.4

1,320.4

1.366.1

1.405.6

1.453.4

1,493.0

1,515.3

22 Equals: Personal saving.....................................

68.9

65.0

72.0

74.6

71.2

70.9

71.5

79.2

86.8

5,916
3,813
4,144
5.8

6,181
3,974
4,285
5.0

6,402
4,121
4,449
4.9

6,277
4,051
4,390
5.3

6,392
4,099
4,426
5.0

6,433
4,138
4,462
4.8

6,506
4,197
4,522
4.7

6,514
4,197
4,536
5.0

6,459
4,155
4,513
5.4

271.9

295.6

324.9

308.9

324.2

330.4

336.1

345.2

360.8

68.6

25.5
- 1 4 .6

65.0
35.2
-1 5 .2

72.0
36.0
- 2 5 .2

74.6
25.3
- 2 3 .9

71.2
38.7
-2 5 .1

70.9
40.0
-2 3 .0

71.5
40.1
- 2 8 .8

79.2
36.1
- 3 9 .9

35.0
-3 6 .6

111.6
66.1

121.3
74.1

132.9
84.0

128.9
80.2

131.7
82.7

134.3
85.2

136.8
87.7

139.9
89.9

145.1
93.9

- 3 5 .7
- 5 3 .6
17.9

-1 9 .5
-4 6 .3
26.8

- .3
-27.7
27.4

-19.2
-49.4
30.2

5.0
- 2 4 .6
29.6

2.3
-20.4
22.7

- 1 6 .3
27.1

10.8

15.8
-1 1 .7
27.6

12.4
- 7 .5
19.9

1.1

1.1

242.3
243.0

283.6
303.3
- 1 9 .6

327.9
351.5
-2 3 .5

292.7
327.0
-3 4 .2

331.5
352.3

-20.8

336.5
356.2
-1 9 .6

351.0
370.5
- 1 9 .4

362.8
373.8

373.9
395.7
-2 1 .9

7.5

3.3

3.0

2.3

3.9

4.1

19

23
24
25
26

M emo:
Per capita (1972 dollars)
Gross national product.....................
Personal consumption expenditures.
Disposable personal income..............
Saving rate (percent)............................
G ross Saving

27 Gross private saving.................
28 Personal saving..............................................
29 Undistributed corporate profits 1.................
30 Corporate inventory valuation adjustment.,
Capital consumption allowances

31 Corporate......................................................
32 Noncorporate................................................
33 Wage accruals less disbursements................
34 Government surplus, or deficit ( — national
),
income and product accounts......................
35 Federal...............................................................
36 State and local..................................................
37 Capital grants received by the United States,
n et...............................................................
38 Investment.........................
39 Gross private domestic.
40 Net foreign....................
41 Statistical discrepancy.

-.1
6.1

1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.




-11.0

Source. Survey of C
urrent Business (U Dept, of Com erce).
.S.
m

86.8

- .5

A54

International Statistics a September 1979

3.10 U.S. INTERNATIONAL TRANSACTIONS

Summary

Millions of dollars; quarterly data are seasonally adjusted except as noted.i

Item credits or debits

1977

1976

1978

1978

1979

Ql
4,605 -14,092

1

?

3
4
5
6

7
8

9

10
11

-13,895

Q2

Q3

-6 ,9 3 5
-5 ,8 0 5

-3 ,4 2 6
-2 ,8 5 8

-3 ,2 2 7
-5 ,9 5 5

Q4

Ql

-313
722

157
1,475

Merchandise trade balance 2 ...............................................
- 8,012 -6 ,3 6 9
-7 ,9 0 7
-9 ,3 0 6 -30,873 -34,187 -11,899
-6 ,0 9 8
35,267
36,491
Merchandise exports........................................................
114,745 120,816 141,884 30,811
39,315
41,350
Merchandise imports....................................................... -124,051 -151,689 -176,071 -42,710 -43,174 -44,503 -45,684 -47,448
244
674
1,679
492
237
247
-239
Military transactions, net....................................................
-1 2 5
5,239
4,854
4,952
6,599
15,975
17,989
21,645
6,776
Investment income, net 3.....................................................
819
3,241
708
2,260
1,783
703
1,010
933
Other service transactions, n e t...........................................
-1 ,9 9 4
9,603 -9 ,4 2 3
-8 ,8 0 9 -5 ,7 0 7
-2 ,1 1 3
1,001
1,486
Memo: Balance on goods and services3-4 .........................
Remittances, pensions, and other transfers.......................
U.S. government grants (excluding military)....................

12 Change in U.S. government assets, other than official
reserve assets, net (increase, — .....................................
)

-1,851
-3 ,1 4 6

-1 ,8 9 5
-2 ,7 7 5

-1 ,9 3 4
-3 ,1 5 2

-463
-765

-4 8 6
-8 2 7

-463
-7 7 0

-5 2 4
-7 9 0

-5 2 5
-8 0 4

-4 ,2 1 4

-3 ,6 9 3

-4 ,6 5 6

-1 ,0 0 9

-1 ,2 6 3

-1 ,3 9 0

-9 9 4

-1 ,0 9 6

13 Change in U.S. official reserve assets (increase, — .............
)
14
15 Special drawing rights (SDRs)...........................................
16 Reserve position in International Monetary Fund...........
17 Foreign currencies...............................................................

-2 ,5 5 8

-375
-118

187

248

115

- 2,212
-268

-2 9 4
158

732
-6 5
1,249
4,231
-4 ,6 8 3

-1 6
324

-4 3
U95
-3 7

-1 ,1 4 2

-1 2 1

-1 0 4
437
-8 5

182
-6 5
1,412
3,275
-4 ,4 4 0

-2 ,3 6 1

18 Change in U.S. private assets abroad (increase, — 3 ..........
)
19 Bank-reported claims..........................................................
Nonbank-reported claims...................................................
20
21
Long-term.........................................................................
Short-term........................................................................
22
23
U.S. purchase of foreign securities, net.............................
24 U.S. direct investments abroad, net 3.................................

-44,498
-21,368
-2 ,2 9 6
-4 2
-2 ,2 5 4
-8 ,8 8 5
-11,949

-31,725
-11,427
-1 ,9 4 0
-9 9
-1,841
-5 ,4 6 0
-12,898

-57,033 -14,366
-33,023 -6 ,2 7 0
-3 ,8 5 3 -2 ,2 4 1
-5 3
-6 3
-3 ,8 0 0 -2 ,1 7 8
-3 ,4 8 7
-9 9 9
-16,670 -4 ,8 5 6

-4 ,4 5 1
715
315
78
237
-1 ,0 9 5
-4 ,3 8 6

-8 ,7 7 4 -29,442
-5 ,4 8 8 -2 1 ,9 8 0
-2 9
-1 ,8 9 8
61
-1 2 9
-9 0
-1 ,7 6 9
-4 7 5
-9 1 8
-2 ,7 8 2
-4 ,6 4 6

-1 ,4 7 3
5,836
n.a.
n.a.
n.a.
-1 ,0 5 6
-6 ,2 5 3

25 Change in foreign official assets in the United States
(increase, + ) .....................................................................
U.S. Treasury securities......................................................
Other U.S. government obligations..................................
Other U.S. government liabilities5 ...................................
Other U.S. liabilities reported by U.S. banks...................
Other foreign official assets*..............................................

17,573
9,319
573
4,507
969
2,205

36,656
30,230
2,308
1,240
773
2,105

33,758
23,542
656
2,754
5,411
1,395

15,618
12,904
117
723
1,456
418

-5 ,2 6 5
-5 ,8 1 3

18,826
10,990
-578

- 1,000
422

14,167
6,719
473
-5 2 0
993

29,956
16,975
1,640
-1 9 4
1,834

2,557
-4 0 4
498
28
470

6,207
1,865
315
-6 3
378

10,717
7,958
1,004

2,783
1,284
4,347

534
2,713
3,728

2,180
2,867
6,294

881
453
1,130

803
1,347
1,877

26
27
28
29
30

31 Change in foreign private assets in the United States
(increase, + ) 3 ..................................................................
U.S. bank-reported liabilities.............................................
U.S. nonbank-reported liabilities.......................................
Long-term.........................................................................
Short-term........................................................................
Foreign private purchases of U.S. Treasury securities,
n et.................................................................................
37 Foreign purchases of other U.S. securities, n et................
38 Foreign direct investments in the United States, net 3.......

32
33
34
35
36

39 Allocation of SDRs.................................................................
40 Discrepancy.............................................................................
41
Owing to seasonal adjustments..........................................
42 Statistical discrepancy in recorded data before seasonal
adjustment........................................................................
43
44
45
46

M emo:
Changes in official assets
U.S. official reserve assets (increase, — .........................
)
Foreign official assets in the United States (increase, + ) ..
Changes in Organization of Petroleum Exporting Countries official assets in the United States (part of line 25
above)...................................................................................
Transfers under military grant programs (excluded from
lines 4, 6 , and 11 above).....................................................

0

-7 8

0

0

211

-1 3 6
-1 6 4
637

0

4,641
3,029
443

-3 ,5 8 9

0

-8 6

18,764
13,422
-1 1 5
2,045
3,156
256

-8 ,4 9 0
-8 ,8 7 1
-5
19
153
215

86

10,475
7,556
-1 7 7
-2 4 5
68

12,832
8,124
n.a.
n.a.
n.a.

-1 ,0 5 3
528
2,280

1,549
540
1,008

2,586
790
1,332

122

963
84

918

10,265

-9 3 7

11,139

3,947
901

7,950
517

-2 ,0 8 2
-2 ,7 1 6

1,328
1,301

0

1,139
519
999

10,265

-9 3 7

11,139

3,046

7,433

634

27

-4 8 0

-2 ,5 5 8
13,066

-375
35,416

732
31,004

187
14,895

248
-5 ,1 2 9

115
4,519

182
16,719

-3 ,5 8 9
-8 ,5 0 8

9,581

6,351

-7 2 7

1,969

-2 ,7 0 5

-1 ,7 9 4

1,803

-1 ,0 5 9

373

204

259

76

50

69

63

33

0

1. Seasonal factors are no longer calculated for lines 13 through 46.
2. Data are on an international accounts (IA) basis. Differs from the
census basis primarily because the IA basis includes imports into the
U.S. Virgin Islands, and it excludes military exports, which are part of
line 6 .
3. Includes reinvested earnings of incorporated affiliates.
4. Differs from the definition of “net exports of goods and services” in
the national income and product (GNP) account. The GNP definition




-1 2 1

0

0

0

0

0

makes various adjustments to merchandise trade and service transactions.
5. Primarily associated with military sales contracts and other transac­
tions arranged with or through foreign official agencies.
6 . Consists of investments in U.S. corporate stocks and in debt securi­
ties of private corporations and state and local governments.

Note. Data are fromBureau of Econom A
ic nalysis, Survey of C
urrent
B
usiness (U Department of Com erce).
.S.
m

Trade and Reserve Assets

A55

3.11 U.S. FOREIGN TRADE
M
illions of dollars; m
onthly data are seasonally adjusted.
Item

1976

1977

1979

1978
Jan.

Feb.

Mar.

Apr.

May

June

July

13,132

13,507

14,452

13,883

13,862

15,037

15,669

1 EXPORTS of domestic and foreign
merchandise excluding grant-aid
shipments........................................

115,156

121,150

2 GENERAL IMPORTS including
merchandise for immediate con­
sumption plus entries into bonded
warehouses......................................

121,009

147,685

172,026

16,231

14,806

'15,274

16,036

16,342

16,937

16,777

-26,535

-28,452

-3 ,0 9 9

-1 ,2 9 9

-8 2 2

-2 ,1 5 3

-2 ,4 8 0

-1 ,9 0 0

-1 ,1 0 8

3 Trade balance......................................

-5 ,8 5 3

143,574

Note. Bureau of Census data reported on a free-alongside-ship
(f.a.s.) value basis. Effective January 1978, major changes were made in
coverage, reporting, and compiling procedures. The internationalaccounts-basis data adjust the Census basis data for reasons of coverage
and timing. On the export side, the largest adjustments are: (a) the addition
of exports to Canada not covered in Census statistics, and (b) the exclusion
of military exports (which are combined with other military transactions

and are reported separately in the “service account”). On the import
side, the largest single adjustment is the addition of imports into the
Virgin Islands (largely oil for a refinery on St. Croix), which are not
included in Census statistics.
Source. FT 900 “Summary of U.S. Export and Import Merchandise
Trade” (U.S. Department of Commerce, Bureau of the Census).

3.12 U.S. RESERVE ASSETS
Millions of dollars, end of period
1979
Type

1976

1977

1978

Feb.

Mar.

Apr.

May

June

July

Aug.p

1 Total i ..................................................

18,747

19,312

18,650

20,292

21,658

21,403

22,230

21,246

20,023

20,023

2 Gold stock, including Exchange
Stabilization Fund 2 ........................

11,598

11,719

11,671

11,544

11,479

11,418

11,354

11,323

11,290

11,259

3 Special drawing rights 1•3...................

2,395

2,629

1,558

2,672

2,667

2,602

2,624

2,670

2,690

2,689

4 Reserve position in International
Monetary Fund 1.............................

4,434

4,946

1,047

1,120

1,121

1,097

1,193

1,204

1,200

1,277

5 Foreign currencies4 ............................

320

18

4,374

4,956

6,391

6,286

7,059

6,049

4,843

4,798

1. Beginning July 1974, the IM F adopted a technique for valuing the
SDR based on a weighted average of exchange rates for the currencies
of 16 member countries. The U.S. SDR holdings and reserve position in
the IMF also are valued on this basis beginning July 1974.
2. Gold held under earmark at Federal Reserve Banks for foreign and
international accounts is not included in the gold stock of the United
States; see table 3.24.




3. Includes allocations by the International Monetary Fund of SDRs as
follows: $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710
million on Jan. 1, 1972; and $1,139 million on Jan. 1, 1979; plus net
transactions in SDRs.
4. Beginning November 1978, valued at current market exchange rates.

A56

International Statistics □ September 1979

3.13 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data
Millions of dollars, end of period

Asset account

1975

1976

1977

1979

19782
Jan.

Feb.

Mar.

Apr.

May

June?

All foreign countries
1 Total, all currencies............................

176,493

219,420

2 Claims on United States....................
3 Parent bank.....................................
4 Other................................................

6,743
3,665
3,078

7,889
4,323
3,566

5 Claims on foreigners...........................
Other branches of parent bank. . . .
7 Banks...............................................
8
Public borrowers1 ...........................
9 Nonbank foreigners.......................

163,391
34,508
69,206
5,792
53,886

204,486
45,955
83,765
10,613
64,153

6

258,897 r306,795 "296,453 "296,812 "307,517 "303,631

310,126

326,486

"19,957
"14,231
"5,726

23,801
17,192
6,609

29,204
22,572
6,632

238,848 278,135 "268,569 "268,501 "271,665 "270,786
55,772 r70,338 "66,934 "64,518 "65,256 "64,076
91,883 r 103,111 "98,126 "99,587 "101,691 "101,622
14,634 r23,737 "23,768 "24,586
24,895 "24,828
76,560
"79,810 "79,823 "80,260
80,949 "79,741

274,019
65,900
103,074
24,689
80,356

284,165
69,779
106,884
24,891
82,611

11,623
7,806
3,817

"12,239

"22,888
"17,294
5,594

"12,964

12,306

13,117

227,462

237,668

"18,987
"13,992
"4,995

22,853
17,010
5,843

28,134
22,318
5,816

203,498 "194,767 "193,635 "196,396 "196,306
49,615
r55,408 "52,020 "49,864 "50,077
r78,686 "73,864 "74,785 "77,144 "77,436
19,567
21,091
19,818
20,338
"20,851
48,648
48,084 "48,404
49,837 "49,065

198,433
50,738
78,897
20,814
47,984

203,193
53,314
80,702
20,549
48,628

7,045

132,901

167,695

12 Claims on United States....................
13 Parent bank.....................................
14 Other................................................

6,408
3,628
2,780

7,595
4,264
3,332

11,049
7,692
3,357

15 Claims on foreigners...........................
16 Other branches of parent bank.. . .

123,496
28,478
55,319
4,864
34,835

156,896
37,909
66,331
9,022
43,634

178,896
44,256
70,786
12,632
51,222

2,997

3,204

3,820

20 Other assets.........................................

"16,072
"11,195
4,877

" 12,888

6,359

11 Total payable in U.S. dollars.............

Public borrowers 1...........................

r 16,208
"11,657
4,551

193,764 "224,940 "215,543 "214,486 "224,346 "221,799

10 Other assets.........................................

18

r 17,340
'■12,811
4,529

8,425

11,320

r 16,382
r 12,625
3,757

5,060

"11,676

"15,374
"11,464
3,910

"5,402

"15,137
"10,965
"4,172

"5,714

"22,023
"17,102
"4,921

"5,927

"6,506

6,176

6,341

United Kingdom
21 Total, all currencies.............................

74,883

81,466

90,933

106,593

100,786

101,179

102,144

102,876

104,915

112,881

22 Claims on United States....................
23
Parent bank.....................................
24 Other................................................

2,392
1,449
943

3,354
2,376
978

4,341
3,518
823

5,370
4,448
922

3,960
2,930
1,030

3,912
2,689
1,223

5,019
3,544
1,475

5,268
3,679
1,589

6.303
4;410
1,893

2,022

25 Claims on foreigners...........................
26 Other branches of parent bank.. . .
27 Banks...............................................
28
29 Nonbank foreigners.......................

70,331
17,557
35,904
881
15,990

75,859
19,753
38,089
1,274
16,743

84,016
22,017
39,899
2,206
19,895

98,137
27,830
45,013
4,522
20,772

93,690
25,911
42,531
4,549
20,699

94,032
24,474
44,032
4,548
20,978

93,840
24,911
42,964
4,608
21,357

94,120
24,435
43,308
4,547
21,830

95.266
25,248
43,657
4,579
21,782

7,517
5,495

101,668

29,158
44,800
4,872
22,838

2,159

2,253

2,576

3,086

3,136

3,235

3,285

3,488

3,346

3,696

57,361

61,587

66,635

75,860

70,502

70,525

71,499

72,015

73,480

78,155

32 Claims on United States.....................
33 Parent bank.....................................
34 Other................................................

2,273
1,445
828

3,275
2,374
902

4,100
3,431
669

5,113
4,386
727

3,738
2,878
860

3,618
2,610
1,008

4,710
3,488
1,222

4,946
3,612
1.334

5,981
4,374
1,607

7,058
5,386
1,672

35 Claims on foreigners...........................
36 Other branches of parent bank.. . .
37 Banks...............................................
38 Public borrowers1...........................
39 Nonbank foreigners........................

54,121
15,645
28,224
648
9,604

57,488
17,249
28,983
846
10,410

61,408
18,947
28,530
1,669
12,263

69,416
22,838
31,482
3,317
11,779

65,364
21,171
29,113
3,342
11,738

65,416
19,884
30,185
3,414
11,933

65,214
20,370
29,393
3,523
11,928

65,356
19,866
29,924
3,429
12,137

65,968
20,505
30,211
3,331
11,921

69,426
23,999
29,803
3,396
12,228

40 Other assets........................................

967

824

1,126

1,331

1,400

1,491

1,575

1,713

1,531

1,671

30 Other assets.........................................

Bahamas and Caymans
45,203

66,774

79,052

"91,735

"88,767

"88,999

"97,509

"93,832

97,317

103,322

42 Claims on United States....................
43
44 Other...........................................

3,229
1,477
1,752

3,508
1,141
2,367

5,782
3,051
2,731

"9,635
"6,429
3,206

"10,621
"7,514
3,107

" 10,000
"6,786
3,214

"15,774
"12,158
3,616

"12,859
"9,332
"3,527

15,635
11,519
4,116

19,913
15,896
4,017

45 Claims on foreigners....... ...................
46 Other branches of parent bank.. . .
47 Banks...............................................
48 Public borrowers1...........................
49 Nonbank foreigners.......................

41,040
5,411
16,298
3,576
15,756

62,048
8,144
25,354
7,105
21,445

71,671

79,774
"12,904
"33,677
11,514
21,679

75,792
"11,475
"31,640
11,392
21,285

76,507
11,841
31,534
12,125
21,007

79,057
12,086
33,821
12,573
20,577

"77,992
11,756
33,524
12,360
"20,352

78,859

27,939
9,109
23,503

80,597
11,725
36,025
12,502
20,345

50 Other assets.........................................

933

1,217

1,599

2,326

2,354

2,492

2,678

2,981

2,823

2,812

51 Total payable in U.S. dollars.............

41,887

62,705

73,987

"85,417

"82,423

"82,616

"91,184

"87,875

91,089

96,963

For notes see opposite page.




11,120

11,886

34,056
12,702
20,215

Overseas Branches

A57

3.13 Continued

Liability account

1975

1976

1977

IS>79

19782
Jan.

Mar.

Apr.

May

June®

'296,812

'307,517

'303,631

310,126

326,486

'54,731
'24,529
9,196
21,006

'56,447
'21,484
12,544
'22,419

'56,039
'23,992
'9,884
'22,163

56,975
22,771
9,900
24,304

61,030
19,536
14,919
26,575

'240,804 '237,217
'62,422
'61,973
'102,338 '100,140
'33,006
'34,275
'41,769
'42,098

241,976
63,698
101,698
34,107
42,473

253,581
66,622
108,832
34,567
43,560

Feb.

All foreign countries
52 Total, all currencies............................

176,493

219,420

53 To United States................................
54 Parent bank.....................................
55 Other banks in United States........
56 Nonbanks........................................

20,221

32,719
19,773

57 Foreigners...........................................
58 Other branches of parent b a n k .. . .
59 Banks...............................................
60 Official institutions.........................
61 Nonbank foreigners.......................

149,815
34,111
72,259
22,773
20,672

12,165

179,954
44,370
83,880
25,829
25,877

258,897 '306,795 '296,453
44,154
24,542

206,579
53,244
94,140
28,110
31,085

62 Other liabilities...................................

6,456

6,747

63 Total payable in U.S. dollars.............

135,907

173,071

64 To United States................................
65 Parent bank.....................................
66
Other banks in United States........
67 Nonbanks........................................

19,503
11,939

31,932
19,559

42,881
24,213

68 To foreigners......................................

Other branches of parent b a n k .. . .
Banks...............................................
Official institutions.........................
Nonbank foreigners.......................

112,879
28,217
51,583
19,982
13,097

137.612
37,098
60,619
22,878
17,017

151,363
43,268
64,872
23,972
19,251

73 Other liabilities...................................

3,526

3,527

4,328

69
70
71
72

8,163

'57,948
'28,564
12,338
17,046

'53,349
'25,445
8,200

'19,704

238,912 '233,108 '232,121
67,496 '64,993
'62,400
97,711
'93,006 '94,305
31,936
31,137
32,028
41,769
'43,972 '43,388
'9,960

'10,266

'10,375

11,175

11,875

198,572 '230,810 '221,270 '220,948

9,935

'9,996

'229,600

'226,362

231,387

242,795

'51,313
'24,462
7,939
'18,912

'52,577
'23,523
8,855
20,199

'54,357
'20,452
12,299
21,606

'54,070
'23,048
9,681
'21,341

54,843
21,834
9,667
23,342

58,490
18,514
14,621
25,355

169,927 '164,573
53,396 '50,969
63,000 '58,529
26,404
25,567
27,127 '29,508

'162,928
'48,411
'59,226
26,413
'28,878

'169,561
'48,134
'65,597
'28,524
'27,306

'166,825
'48,371
'63,977
27,108
'27,369

170,383
49,420
65,181
28,310
27,472

177,960
50,968
70,523
28,307
28,162

'5,443

'5,682

'5,467

6,161

6,345

'55,811
'27,493
12,084
16,234

5,072

'5,384

United Kingdom
74 Total, all currencies...........................
75 To United States...............................
76 Parent bank...................................
77 Other banks in United States. . . . )
78 Nonbanks...................................... >
79 To foreigners.....................................
80 Other branches of parent bank. . .
81 Banks.............................................
82 Official institutions.......................
83 Nonbank foreigners.....................

74,883

81,466

90,933

106,593

100,786

101,179

102,144

102,876

104,915

112,881

5,646

2,122
5
J,JZJ

5,997
1,198
A *700
4, /70

7,753
1,451
0 , JUZ

9,730
1,887
4,232
3,611

8,118
1,585
2,693
3,840

9,214
1,731
3,216
4,267

10,086
1,461
3,677
4,948

10,781
1,814
3,541
5,426

11,697
2,113
3,380
6,204

12,779
1,505
4,280
6,994

67,240
6,494
32,964
16,553
11,229

73,228
7,092
36,259
17,273
12,605

80,736
9,376
37,893
18,318
15,149

93,202
12,786
39,917
20,963
19,536

88,942
12,712
36,142
19,700
20,388

88,122

11,303
36,655
20,637
19,527

88,068
i0,910
38,318
21,845
16,995

88,174
11,023
39,391
20,115
17,645

88,796
10,931
38,417
21,312
18,136

95,385
11,353
42,297
23,140
18,595

1,997

2,241

2,445

3,661

3,726

3,843

3,990

3,921

4,422

4,717

57,820

63,174

67,573

77,030

72,048

72,293

72,639

72,653

74,127

79,256

5,415
Parent bank...................................
2,083
Other banks in United States. . . . ) -j i n
Nonbanks......................................

5,849
1,182
4,667

7.480
1,416
6,064

9,328
1,836
4,144
3,348

7,736
1,539
2,601
3,596

8,855
1,694
3,122
4,039

9,756
1,418
3,626
4,712

10,439
1,780
3,492
5,167

11,200

2,047
3,321
5,832

12,199
1,460
4,209
6,530

84 Other liabilities.................................

86 To United States...............................

87
88

89

90 To foreigners.....................................
91 Other branches of parent bank. . .
92 Banks.............................................
93 Official institutions.......................
94 Nonbank foreigners......................

51,447
5,442
23,330
14,498
8,176

56,372
5,874
25,527
15,423
9,547

58,977
7,505
25,608
15,482
10,382

66,216
9,635
25,287
17,091
14,203

62,629
9,890
21,642
15,834
15,263

61,729
8,393
21,911
16,868
14,557

61,215
7,985
23,017
18,030
12,183

60,689
7,706
24,002
16,197
12,784

60,948
7,777
22,684
17,486
13,001

65,081
7,711
25,436
19,093
12,841

95 Other liabilities.................................

959

953

1,116

1,486

1,683

1,709

1,668

1,525

1,979

1,976

Bahamas and Caymans
45,203

66,774

79,052

'91,735

'88,767

'88,999

'97,509

'93,832

97,317

103,322

97 To United States...............................
11,147
98 Parent bank...................................
7,628
99 Other banks in United S tates.. . . > D, jZU
100
Nonbanks......................................

96 Total, all currencies...........................

22,721
16,161
OjjOU

32,176
20,956
11 , Z K
ZJ

'39,431
'20,456
6,199
'12,776

'37,795
'18,336
4,275
'15,184

'37,552
'16,732
4,863
15,957

'38,672
'14,877
7,041
'16,754

'37,698
'16,627
5,220
15,851

38,071
15,388
5,400
17,283

40,038
12,460
8,885
18,693

101 To foreigners.....................................
Other branches of parent bank...
103 Banks.............................................
104 Official institutions.......................
105 Nonbank foreigners.....................

42,899
13,801
21,760
3,573
3,765

45,292
12,816
24,717
3,000
4,759

50,447
16,094
23,104
4,208
7,041

49,153
14,266
22,290
4,602
7,995

49,534
13,697
23,299
4,429
8,109

'56,742
'13,923
'28,749
'5,181
'8,889

54,124
14,716
25,964
5,328
8,116

57,097
15,997
28,543
4,970
7,587

61,147
17,104
31,420
4,264
8,359

102

32,949
10,569
16,825
3,308
2,248

106 Other liabilities.................................

1,106

1,154

1,584

1,857

1,819

1,913

2,095

2,010

2,149

2,137

107 Total payable in U.S. dollars...........

42,197

63,417

74,463

'87,014

'84,020

'84,337

'92,673

'88,942

92,057

97,936

1. In May 1978 a broader category of claims on foreign public bor2. In May 1978 the exemption level for branches required to report
rowers, including corporations that are majority owned by foreign governwas increased, which reduced the number of reporting branches,
ments, replaced the previous, more narrowly defined claims on foreign
official institutions.




A58

International Statistics □ September 1979

3.14 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1979
Item

1976

1977

1978
Jan.

Feb.

Apr.

Mar.

May

June?

July2
3

By type
1 Total1 .....................................................................
2 Liabilities reported by banks in the United
States2 .............................................................
3 U.S. Treasury bills and certificates 3.....................
U.S. Treasury bonds and notes
4 Marketable.........................................................
5 N onmarketable 4 ................................................
6 U.S. securities other than U.S. Treasury
securities5........................................................

95,634 131,097 162,345 162,606 159,869 153,650 147,494 140,725 143,987 147,706
17,231
37,725

18,003
47,820

23,097
67,651

22,519
68,415

23,034
65,714

22,534
59,652

24,252
51,460

25,384
43,747

25,363
46,304

25,480
49,455

11,788
20,648

32,164
20,443

35,907
20,970

36,056
20,952

35,538
20,912

36,063
20,471

36.305
20,467

36,156
20,467

36,454
20,697

37,487
19,847

8,242

12,667

14,720

14,664

14,671

14,930

15,010

14,971

15,169

15,437

By area
7 Total.......................................................................

95,634 131,097 162,345 162,606 159,869 153,650 147,494 140,725 143,987 147,706

8 Western Europe 1....................................................

45,882
3,406
4,926
37,767
1,893
1,760

9
10
11
12
13

Canada...................................................................
Latin America and Caribbean..............................
Asia.........................................................................
Africa......................................................................
Other countries6 ....................................................

70,748
2,334
4,649
50,693
1,742
931

92,984
2,486
5,026
58,662
2,443
744

1. Includes the Bank for International Settlements.
2. Principally demand deposits, time deposits, bankers acceptances,
commercial paper, negotiable time certificates of deposit, and borrowings
under repurchase agreements.
3. Includes nonmarketable certificates of indebtedness (including those
payable in foreign currencies through 1974) and Treasury bills issued to
official institutions of foreign countries.
4. Excludes notes issued to foreign official nonreserve agencies. Includes
bonds and notes payable in foreign currencies.

94,456
2,150
4,331
58,845
2,299
525

92,867
1,908
4,402
57,532
2,371
789

90,191
3,088
4,201
53,363
2,135
672

85,040
3,044
4,773
51,275
2,529
833

80,995
1,993
4,802
49,518
2,604
813

83,478
2,014
4,592
50,573
2,614
716

86,513
2,166
5,317
50,404
2,618
688

5. Debt securities of U.S. government corporations and federally
sponsored agencies, and U.S. corporate stocks and bonds.
6 . Includes countries in Oceania and Eastern Europe.
N ote. Based on Treasury Department data and on data reported to
the Treasury Department by banks (including Federal Reserve Banks)
and securities dealers in the United States.

3.15 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in Foreign Currencies
Millions of dollars, end of period

1976

1977

Sept.
1 Banks’ own liabilities.............................
2 Banks’ own claims1 ...............................
3 Deposits..............................................
4 Other claims.......................................
5 Claims of banks’ domestic customers2.

781
1,834
1,103
731

1. Includes claims of banks’ domestic customers through March 1978.
2. Assets owned by customers of the reporting bank located in the
United States that represent claims on foreigners held by reporting banks
for the accounts of their domestic customers.




925
2,356
941
1,415

2,235
3,547
1,672
1,875
367

1979

1978

1978

1,772
2,957
1,375
1,582
446

Dec.
2,235
3,547
1,672
1,875
367

M ar.r
1,933
2,620
1,139
1,481
476

June**
1,986
2,530
1,345
1,185
521

N ote. Data on claims exclude foreign currencies held by U.S. mone­
tary authorities.

Bank-reported Data

A59

3.16 LIABILITIES TO FOREIGNERS Reported by Banks in the United States
Payable in U.S. dollars
M
illions of dollars, end of period
1977

Holder and type of liability

1979

1978
Jan.

1 All foreigners................
2 Banks’ own liabilities..
3 Demand deposits.. . .
4 Time deposits1.........
5 Other 2.......................
6
Own foreign offices3.
7 Banks’ custody liabilities4 .....................................
8
U.S. Treasury bills and certificates5.................
Other negotiable and readily transferable
instruments6 ...................................................
10 Other...................................................................

12 Banks’ own liabilities.
13 Demand deposits...
14 Time deposits 1.......
15 Other 2 .....................
16 Banks’ custody liabilities4 .....................................
17 U.S. Treasury bills and certificates..................
18 Other negotiable and readily transferable
instruments6..................................................
19 Other...................................................................

Apr.

June?

May

July?

110,657 126,168 167,005 164,575 163,738 166,307 159,252 158,320 167,220 168,432

290
205

2,701

77,178
17,201
12,145
9,247
38,585

85,242
16,696
12,389
8,321
47,836

88,046
68,182

89,268
69,000

86,560
66,508

17,849
2,418

3,274

2,617

231
139

916
330
94
492

88

102

340

131

1,555
183

1

5,714

75,307
17,765
12,336
8,927
36,278

1,701

40,744

78,959
19,201
12,473
9,615
37,669

17,371
2,493

16,803
11,347

9

11 Nonmonetary international and regional
organizations7 .......................................

Mar.

Feb.

18,996
11,521

48,906

706

201

1,499

44,840

92,910
18,091
12,738
13,290
48,791

99,219
19,366
12,705
12,469
54,752

96,791
19,014
12,492
12,784
52,501

81,065
60,587

73,525
53,280

65,410
45,123

67,928
47,425

71,641
51,498

17,889
2,162

18,309
2,169

18,096
2,150

18,083
2,203

18,130
2,373

17,896
2,247

2,317

2,095

2,364

2,300

2,757

2,851

3,438

762
333

506
272

769
276
99
394

791
270
422

1,306
298
85
923

1,500
264
87
1,150

845
216
79
549

1,589
193

1,595

1,509

211

212

1,451
175

1,350
199

2,593
1,345

1,367
5

1,395

1,382

1,294

2

2

1,274

1,151

1

1

1,247

1

85,727
18,367
12,520
10,000

100

1

20 Official institutions8.

54,956

65,822

90,492

90,749

88,591

82,186

75,713

69,131

71,667

74,396

21 Banks’ own liabilities.
22 Demand deposits...
23 Time deposits 1.......
24 Other 2.....................

3,394
2,321

3,528
1,797

11,960
3,390
2,546
6,024

10,725
2,699
2,504
5,522

11,275
2,759
2,365
6,151

10,425
2,864
2,524
5,036

12,411
3,583
2,491
6,337

13,647
3,170
2,572
7,905

13,320
3,198
2,486
7,636

14,090
2,850
2,475
8,765

37,725

47,820

78,532
67,395

80,024
68,230

77,317
65,558

71,762
59,652

63,301
51,460

55,484
43,747

58,347
46,304

60,846
49,455

10,967
170

11,603
191

11,703
55

12,067
43

11,802
40

11,667
70

12,003
40

11,340
50

42,335

57,873

55,542

56,637

65,915

64,192

69,679

75,738

73,035

50,808
14,530
10,405
1,479
2,646

51,929
13,344
9,426
1,322
2,596

61,005
13,169
9,349
1,262
2,558

59,225
14,385

10,933
2,040

53,088
15,419
11,239
1,479
2,700

1,306
2,877

64,511
15,720
10,265
1,315
4,140

70,709
15,957
11,176
1,397
3,384

68,049
15,548
11,287
1,241
3,020

37,669

36,278

38,585

47,836

44,840

48,791

54,752

52,501

4,785
300

4,733
302

4,708
399

4,910
425

4,967
456

5,168
508

5,029
407

4,986
347

2,425
2,060

2,404
2,027

2,336
1,973

2,421
2,064

2,489
2,022

2,593
2,066

2,480
2,143

2,559
2,081

14,736

16,023

15,967

16,415

15,842

17,047

16,753

16,964

17,023

4,015
6,524

4,304
7,546

12,995
4,242
8,353
399

13,012
4,328
8,264
420

13,469
4,744
8,357
368

13,044
4,207
8,504
333

13,299
4,312
8,623
364

13,446
4,358
8,766
322

13,762
4,728
8,735
299

13,808
4,661
8,697
449

198

240

3,028
285

2,956
285

2,946
358

2,798
299

3,748
1,152

3,307
693

3,202
516

3,215
350

2,481
262

2,476
195

2,455
133

2,439
60

2,511
85

2,549
66

2,497
190

2,750
115

11,007

11,132

10,992

11,254

11,118

10,809

10,634

10,584

25 Banks’ custody liabilities4 .................................
26 U.S. Treasury bills and certificates5.............
27 Other negotiable and readily transferable
instruments6................................................
28 Other...............................................................
29 Banks9.
30 Banks' own liabilities............
31
Unaffiliated foreign banks.
32
Demand deposits.............
33
Time deposits1.................
34
Other2...............................
35

37,174

9,104
2,297

Own foreign offices3.

36 Banks’ custody liabilities4 .....................................
37 U.S. Treasury bills and certificates..................
38 Other negotiable and readily transferable
instruments6....................................................
39 Other...................................................................
40 Other foreigners.........
41 Banks’ own liabilities.
42 Demand deposits...
43 Time deposits1.......
44 Other 2.....................
45 Banks’ custody liabilities4 .................................
46 U.S. Treasury bills and certificates...............
47 Other negotiable and readily transferable
instruments 6 ...............................................
48 Other...............................................................

119

12,814

141

49 M emo: Negotiable time certificates of deposit
held in custody for foreigners...........................
1. Excludes negotiable time certificates of deposit, which are included
in “Other negotiable and readily transferable instruments.”
2. Includes borrowing under repurchase agreements.
3. U.S. banks: includes amounts due to own foreign branches and
foreign subsidiaries consolidated in “Consolidated Report of Condition”
filed with bank regulatory agencies. Agencies, branches, and majorityowned subsidiaries of foreign banks: principally amounts due to head
office or parent foreign bank, and foreign branches, agencies or wholly
owned subsidiaries of head office or parent foreign bank.
4. Financial claims on residents of the United States, other than long­
term securities, held by or through reporting banks.
5. Includes nonmarketable certificates of indebtedness (including those




10,202

payable in foreign currencies through 1974) and Treasury bills issued to
official institutions of foreign countries.
6 . Principally bankers acceptances, commercial paper, and negotiable
time certificates of deposit.
7. Principally the International Bank for Reconstruction and Develop­
ment, and the Inter-American and Asian Development Banks.
8. Foreign central banks and foreign central governments and the
Bank for International Settlements.
9. Excludes central banks, which are included in “Official institutions.”
N ote. Data for time deposits prior to April 1978 represent short-term
only.

A60

International Statistics □ September 1979

3.16 LIABILITIES TO FOREIGNERS Continued
Area and country

1976

1979

1978

1977

Jan.

Feb.

Mar.

Apr.

May

June?

July?

1

110,657 126,168 167,005 164,575 163,738 166,307 159,252 158,320 167,220 168,432

2 Foreign countries....................................................

104,943 122,893 164,388 162,258 161,644 163,943 156,952 155,563 164,369 164,994

3 Europe....................................................................
4 Austria................................................................
5 Belgium-Luxembourg........................................
6
Denmark............................................................
7 Finland................................................................
8
France.................................................................
9 Germany.............................................................
10
Greece.................................................................

11
12

13
14
15
16
17
18
19
20
21
22

23

Netherlands........................................................
Norway...............................................................
Portugal..............................................................
Spain...................................................................
Sweden................................................................
Switzerland.........................................................
Turkey................................................................
United Kingdom................................................
Yugoslavia.. . . ...................................................
Other Western Europe i .....................................
U.S.S.R...............................................................
Other Eastern Europe 2......................................

47,076
346
2,187
356
416
4,876
6,241
403
3,182
3,003
782
239
559
1,692
9,460
166
10,018
189
2,673
51
236

60,295
318
2,531
770
323
5,269
7,239
603
6,857
2,869
944
273
619
2,712
12,343
130
14,125
232
1,804
98
236

85,502
513
2,552
1,946
346
9,208
17,286
826
7,674
2,402
1,271
330
870
3,121
18,612
157
14,379
254
3,346
82
325

84,672
562
2,746
2,036
379
8,609
15,770
683
8,723
2,536
1,411
254
759
2,955
20,014
141
13,292
174
3,328
150
150

82,050
505
2,192
2,074
357
8,207
13,868
761
8,056
2,786
1,445
246
868

2,656
19,810
141
13,861
184
3,800
62
171

81,899
524
2,443
2,131
361
8,891
12,997
671
8,142
2,766
1,572
279
763
2,520
18,563
132
15,370
176
3,284
59
258

77,241
484
2,359
1,596
367
9,291
9,364
656
8,939
2,816
1,477
231
950
2,596
15,587
110

16,005
207
3,863
84
258

75,187
475
2,282
1,526
399
9,755
7,619
673
9,751
2,889
1,456
244
897
2,524
13,730
127
16,679
184
3,664
58
254

79,432
449
2,413
1,165
456
9,594
8,492
684
9,656
2,629
1,349
353
1,210

2,437
15,934
156
18,006
151
3,959
62
277

81,210
473
2,475
1,563
466
9,614
10,715
760
8,432
2,355
1,264
303
1,107
2,227
16,767
193
18,522
160
3,509
61
245

24 Canada...................................................................

4,659

4,607

6,966

6,622

6,813

8,044

8,819

7,980

6,606

7,611

25 Latin America and Caribbean.............................
26 Argentina............................................................
27 Bahamas..............................................................
28 Bermuda..............................................................
29 Brazil...................................................................
30 British West Indies............................................
31 Chile...................................................................
32 Colombia............................................................
33 Cuba...................................................................
34 Ecuador..............................................................
35 Guatemala3 ........................................................
36 Jamaica 3.............................................................
37 Mexico................................................................
38 Netherlands Antilles4........................................
39 Panama...............................................................
40 Peru.....................................................................
41
Uruguay..............................................................
42 Venezuela............................................................
43 Other Latin America and Caribbean...............

19,132
1,534
2,770
218
1,438
1,877
337

23,670
1,416
3,596
321
1,396
3,998
360

30,956
1,682
7,429
386
1,099
5,717
376
1,769
7
321
387
72
3,178
321
2,823
320

32,671
1,789
7,695
464
1,150
6,845
358
1,867
13
274
386
43
3,158
361
2,491
347

38,067
1,534
13,078
375
1,137
6,971
343
1,925

39,907

3,339
1,509

3,709
1,501

330
339
75
3,178
318
2,938
403
236
3,211
1,669

36,081
1,483
10,014
351
1,251
6,916
447
2,074
7
335
360
80
3,234
335
3,368
360
230
3,426
1,809

11,164
345
1,581
9,313
368
2,192
9
318
318
78
3,215
396
2,909
321
223
3,672
1,601

44,400
1,891
15,803
402
1,335
8,938
404
2,402
7
391
319
54
3,476
414
3,125
380
248
2,982
1,828

41,206
1,692
13,020
339
1,294
7,785
606
2,292
7
443
319
104
3,628
422
3,055
425
219
3,920
1,636

320

330

2,870
158
1,167
257
245
3,118
1,797

2,876
196
2,331
287
243
2,929
2,167

31,622
1,484
6,743
428
1,125
5,991
399
1,756
13
322
416
52
3,417
308
2,992
363
231
3,821
1,760

44 Asia.........................................................................
China
Mainland........................................................
45
46
Taiwan............................................................
47 Hong K ong........................................................
48 India...................................................................
49 Indonesia............................................................
50 Israel...................................................................
51 Japan...................................................................
52 K orea..................................................................
53 Philippines..........................................................
54 Thailand..............................................................
55 Middle East oil-exporting countries5...............
56 Other A sia..........................................................

29,766

30,488

36,336

36,449

36,169

32,211

30,674

28,227

29,520

30,622

48
990
894
638
340
392
14,363
438
628
277
9,360
1,398

53
1,013
1,094
961
410
559
14,616
602
687
264
8,979
1,250

67
502
1,256
790
449
674
21,927
795
644
427
7,392
1,414

65
552
1,400
804
575
642
21,428
771
617
379
7,934
1,285

105
534
1,390
838
357
598
21,769
827
549
307
7,595
1,300

280
600
1,254
857
479
608
18,110
748
642
277
7,107
1,249

45
667
1,459
929
567
673
14,896
728
562
343
8,435
1,371

41
605
1,496
1,016
394
650
12,262
995
609
302
8,444
1,412

46
740
1,555
940
410
710
12,581
806
689
409
9,003
1,634

42
769
1,452
873
509
624
13,099
819
640
305
9,667
1,824

57 Africa.....................................................................
58 Egypt...................................................................
59 Morocco.............................................................
60 South Africa.......................................................
61 Zaire...................................................................
62 Oil-exporting countries6....................................
63 Other Africa.......................................................

2,298
333
87
141
36
1,116
585

2,535
404

2,886

174
39
1,155
698

404
32
168
43
1,525
715

2,693
337
29
179
48
1,379
721

2,804
278
32
207
42
1,549
697

2,650
329
43
242
50
1,256
729

2,986
359
34
246
55
1,554
738

3.056
297
36
206
47
1,523
946

3,236
305
45
316
56
1,566
948

3,183
378
35
196
37
1,656
881

64 Other countries......................................................
65 Australia.............................................................
66
All other.........................................................

2,012

1,905
107

1,297
1,140
158

1,076
838
239

865
655
209

1,136
934

1,072
862
211

1,149
957
192

1,206
991
215

1,175
890
286

1,162
806
355

5,714
5,157
267
290

3,274
2,752
278
245

2,617
1,485
808
324

2,317

2,095
919
865
311

2,364
1,189
872
303

2,300
1,128
872
300

2,757
1,535
892
330

2,851
1,738
829
284

3,438
2,257
917
263

67 Nonmonetary international and regional
organizations..................................................
International......................................................
69 Latin American regional..................................
70 Other regional7 ..................................................

68

1,021
6

1,221
6

66

1. Includes the Bank for International Settlements. Beginning April
1978, also includes Eastern European countries not listed in line 23.
2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, German
Democratic Republic, Hungary, Poland, and Romania.
3. Included in “Other Latin America and Caribbean” through March
1978.
4. Includes Surinam through December 1975.




222

1,210

809
299

220

202

6

1,886

5. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia,
and United Arab Emirates (Trucial States).
6 . Comprises Algeria, Gabon, Libya, and Nigeria.
7. Asian, African, Middle Eastern, and European regional organizations,
except the Bank for International Settlements, which is included in
“Other Western Europe.”

Bank-Reported Data

A61

3.17 BANKS’ OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
M
illions of dollars, end of period
Area and country

1976

1977

1979

1978
Jan.

Mar.

Feb.

Apr.

May

JuneP

July p

1

79,301

90,206 115,030 105,583 103,933 108,736 105,266 105,503 114,027 112,800

2 Foreign countries....................................................

79,261

90,163 114,974 105,543 103,894 108,690 105,220 105,457 113,982 112,751

3 Europe....................................................................
4 Austria................................................................
5 Belgium-Luxembourg.........................................

14,776
63
482
133
199
1,549
509
279
993
315
136

18,114
65
561
173
172
2,082
644
206
1,334
338
162
175
722
218
564
360
8,964
311

24,231
140

86

122

6

7
8

France.................................................................

10
11
12

Netherlands........................................................

9

13
14
15
16
17
18
19
20
21
22

23

88

Spain....................................................................
Sweden................................................................
Turkey.................................................................
Other Western Europe 1.....................................
Other Eastern Europe 2 ......................................

745
206
379
249
7,033
234
85
485
613

413
566

1,200

20,790
147
1,504
172

1,110

2,664
840
162
1,402
681
251
169
905
449
1,051
179
8,444
400
135
327
629

254
305
3,742
900
164
1.504
680
299
171
537
1,283
283
10,156
363
366
652

281

20,474
115
1,378
170
264
2,286
717
169
1,395
619
252
173
1,103
388
970
132
8,886

409
110

309
628

21,299
177
1,804
166
297
2,921
907
192
1,311
581
206
209
909
312
1,068
144
8,575
448
124
319
628

20,890
130
1,377
204
250
2,907
806
170
1,420
532
242
208
806
300
878
148
8,684
475
424
298
633

20,285
150
1,330
168
184
2,701
792
155
1,440
531
196
190
926
231
959
119
8,546
492
171
291
713

24,283
151
1,677
153
186
3,507
843
168
1,334
517
200

172
995
247
1,071
136
11,197
535
188
301
708

24,105
188
1,657
137
226
3,205
927
129
1,196
797
181
235
999
401
1,027
118
10,688

541
199
291
965

24 Canada....................................................................

3,319

3,355

5,145

4,961

5,049

5,181

4,775

4,718

4,880

5,085

25 Latin America and Caribbean..............................
26 Argentina............................................................
27
28
29
30 British West Indies............................................
31 Chile....................................................................
32 Colombia............................................................
33 Cuba....................................................................
34
35 Guatemala 3 ........................................................
36 Jamaica 3..............................................................
37 Mexico................................................................
38 Netherlands Antilles4.........................................
39
40 Peru.....................................................................
41
42 Venezuela............................................................
43 Other Latin America and Caribbean...............

38,879
1,192
15,464
150
4,901
5,082
597
675
13
375

45,850
1,478
19,858
232
4,629
6,481
675
671

52,514
2,137
21,006
175
6,261
5,368

50,379
2,359
18,640
155
6,254

56,210
3,211
18,042
126
6,097
9,182
1,091
1,102

4,909
224
1,410
962
80
2,318
1,394

48
5,398
217
3,493
846
44
3,481
1,487

52,055
3,098
18,715
135
6,198
5,524
970
945
4
903
95
63
5,778
213
3,504
839
48
3,555
1,468

53,389
3,338
15,971
192
6,164
6,510

1,054
*
700
87
37
5,449
264
3,179
873
50
3,324
1,538

54,149
2,753
19,899
150
6,291
7,435
964
1,004
4
839
89
61
5,562
282
2,900
834
46
3,527
1,512

52,584
3,406
18,825
198
6,274
4,895
1,058
1,017
4
877

4,822
140
1,372
933
42
1,828
1,293

56,850
2,274
21,116
189
6,251
9,505
968
1,012
*
705
94
40
5,417
273
3,074
918
52
3,474
1,487

64
6,024
234
3,728
744
61
3,601
1,472

4
898
96
40
6,455
282
3,568
722
58
3,793
1,442

1,206
4
916
98
47
7,166
392
4,186
727
56
3,814
1,483

44 Asia.........................................................................
China
Mainland........................................................
45
Taiwan............................................................
46
47 Hong Kong........................................................
48
49 Indonesia............................................................
50
51
52 K orea..................................................................
53
54
55 Middle East oil-exporting countries5...............
56

19,204

19,236

25,538

24,219

25,088

25,131

24,641

24,947

25,504

27,115

3
1,344
316
69
218
755
11,040
1,978
719
442
1,459
863

10

4
1,499
1,573
54
143
872
12,739
2,277
680
758
3,135
1,804

15
1,457
1,620
61
141
996
12,550
2,241
607
757
2,333
1,444

13
1,767
1,960
60
123
896
12,196
2,478
692
832
2,487
1,585

16
1,841
2,036
52
124
909
12,811
2,546
660
778
1,939
1,419

20

22

10

2,221

107
82
860
164
452
556

2,145
82
97
838
156
438
533

2,092
83

1,968
73

88

760
155
456
550

66

914
792
122

40

10

517

1,719
543
53
232
584
9,839
2,336
594
633
1,746
947

57 Africa......................................................................
58 Egypt...................................................................
59
60 South Africa.......................................................
61
62 Oil-exporting countries6....................................
63

2,311
126
27
957
524
565

2,518
119
43
1,066
98
510
682

64 Other countries......................................................
65

772
597
175

1,090
905
186

988
877

67 Nonmonetary international and regional
organizations7 ...................................................

40

43

56

66

112

1. Includes the Bank for International Settlements. Beginning April
1978, also includes Eastern European countries not listed in line 23.
2. Beginning April 1978 comprises Bulgaria, Czechoslavkia, German
Democratic Republic, Hungary, Poland, and Romania.
3. Included in “Other Latin America and Caribbean” through March
1978.
4. Includes Surinam through December 1975.
5 . Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia,
and United Arab Emirates (Trucial States).




111

1,012

5,122

939
1,019
*
768
110

1,823
1,717
73
135
781

101

1,120

20

1,812
1,993
56
138
824
12,342
2,966
705
836
1,723
1,531

138
842
12,478
3,369
675

1,967

2,122

701
155
455
518

1,977
104
64
680
151
462
516

46
719
151
460
471

177
37
743
151
474
540

2,043
115
34
745
189
452
508

813
704
108

961
830
131

882
755
127

956
789
167

983
775
208

1,013
765
248

39

46

46

46

45

49

12,121

2,712
710
760
2,437
1,352

121

1,896

2,112
86

888

1,585
1,426

1,889
1,965
43
131
865
13,928
3,465
751
910
1,783
1,367

6 . Comprises Algeria, Gabon, Libya, and Nigeria.
7. Excludes the Bank for International Settlements, which is included
in “Other Western Europe.”

N ote. Data for period prior to April 1978 include claims of banks’
domestic customers on foreigners.

A62

International Statistics □ September 1979

3.18 BANKS’ OWN AND DOMESTIC CUSTOMERS’ CLAIMS ON FOREIGNERS Reported by Banks in the
United States
Payable in U.S. Dollars
Millions of dollars, end of period

1976

Type of claim

1977

1979

1978
Jan;

1 Total.......................................................................

79,301

Feb.

90,206 126,139

Mar.

Apr.

May"

June

"120,384

July*

127,575

115,030 105,583 103,933 108,736 105,266 105,503 114,027 112,800
10,095 10,312 10,509 10,774 11,000 10,534 11,128 11,611
41,217 38,073 35,583 "36,931 36,206 34,701 36,295 35,606
40,381 34,496 34,759 37,388 34,509 35,530 41.474 38,873
5,664
4,862
5,397
6,340
5,698
7,390
6,972
5,566
34,716 29,635 29,362 31,048 28,811 29,964 34,084 31,901
23,338 22,701 23,081 23,643 23,552 24,738 25,131 26,709

2
3
4
5

Banks' own claims on foreigners.........................
Foreign public borrowers.....................................
Own foreign offices1..............................................
Unaffiliated foreign banks.....................................
6
Deposits..............................................................
7 Other...................................................................
8 All other foreigners................................................

11,109
994

11,646
1,143

13,548
1,438

4,762
5,353

4,863
"5,641

6,230
5,879

13 M emo* Customer liability on acceptances...

14,917

"15,098

16,838

Dollar deposits in banks abroad, reported by
nonbanking business enterprises in the United
States 5.................................................................

11,674

9 Claims of banks' domestic customers2...............
10 Deposits..................................................................
11 Negotiable and readily transferable in­
struments 3. . ......................................................
12 Outstanding collections and other claims4..........

5,756

6,176

1. U.S. banks: includes amounts due from own foreign branches and
foreign subsidiaries consolidated in “Consolidated Report of Condition”
filed with bank regulatory agencies. Agencies, branches, and majorityowned subsidiaries o f foreign banks: principally amounts due from head
office or parent foreign bank, and foreign branches, agencies, or wholly
owned subsidiaries of head office or parent foreign bank.
2. Assets owned by customers of the reporting bank located in the
United States that represent claims on foreigners held by reporting banks
for the account of their domestic customers.
3. Principally negotiable time certificates of deposit and bankers ac­
ceptances.

14,677

15,563

15,749

16,472

17,340

14,976

4. Data for March 1978 and for period prior to that are outstanding
collections only.
5. Includes demand and time deposits and negotiable and nonnegotiable
certificates of deposit denominated in U.S. dollars issued by banks abroad.
For description of changes in data reported by nonbanks, see July 1979
Bulletin, p. 550.
N ote. Beginning April 1978, data for banks’ own claims are given
on a monthly basis, but the data for claims of banks’ domestic customers
are available on a quarterly basis only.

3.19 BANKS’ OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions of dollars, end of period
1978

Maturity; by borrower and area

1979

June
1 Total..................................................................................................................

Sept.

Dec.

Mar."

June?

55,470

59,948

73,557

71,539

77,339

44,138
3,067
41,071
11,333
3,226
8,107

47,097
3,702
43,395
12,850
4,230
8,620

58,277
4,558
53,719
15,280
5,328
9,952

55,356
4,627
50,729
16,183
5,937
10,246

59,763
4,551
55,212
17,575
6,372
11,204

9,631
1,598
17,221
13,707
1,457
523

10,463
1,948
18,775
13,786
1,535
591

15,116
2,670
20,850
17,575
1,496
569

12,373
2,512
21,647
16,993
1,290
541

13,998
2,678
22,937
18,166
1,423
563

2,920
344
5,889
1,298
631
252

3,102
794
6,859
1,305
580

3,152
1,426
8,452
1,401
636
214

3,108
1,456
9,336
1,473
629
180

10,214
1,871
613
182

By borrower

2 Maturity of 1 year or less1..............................................................................
3 Foreign public borrowers.............................................................................
4 All other foreigners.......................................................................................
5 Maturity of over 1 year 1 .................................................................................
6
Foreign public borrowers.............................................................................
7 All other foreigners.......................................................................................
By area
8

9
10
11
12
13
14
15
16
17
18
19

Maturity of 1 year or less1
Europe...........................................................................................................
Canada..........................................................................................................
Latin American and Caribbean...................................................................
Asia...............................................................................................................
Africa.............................................................................................................
A llother 2 ......................................................................................................
Maturity of over 1 year 1
Europe...........................................................................................................
Canada..........................................................................................................
Latin America and Caribbean.....................................................................
Asia...............................................................................................................
Africa.............................................................................................................
All other 2 ......................................................................................................

1. Remaining time to maturity.
2. Includes nonmonetary international and regional organizations.




211

N ote. The first available data are for June 1978.

3,484
1,212

Bank-Reported Data

A63

3.20 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1
B
illions of dollars, end of period
Area or Country

1975

1977

1976

1978

1979

June
1

2 G-10 countries and Switzerland...............................
3 Belgium-Luxembourg............................................
4 France......................................................................
5 Germany..................................................................
6
Italy.........................................................................
7 Netherlands............................................................
8
Sweden....................................................................
9 Switzerland..............................................................
United Kingdom....................................................
10
11
Canada....................................................................
12 Japan.......................................................................

Sept.

Dec.

Mar.

June 7

Sept.

Dec.

Mar.

June

167.0

207.7

217.8

226.7

239.4

247.2

245.7

246.7

265.3

263.4

273.6

88.0

100.1
6.1
10.0

104.1
6.3

108.8
7.1
10.5

115.3
8.4

116.6
8.3
11.4
9.0

112.8

113.7
8.4
11.7
9.7

124.9
9.0

124.5
9.2

6 .0

6 .6

118.8
9.4
11.7
10.5
5.7
3.8

5.3
8.5
7.8
5.2

8.7
5.8

10.6
8.2

2.4
36.3
3.8
14.9

3.0
41.5
5.1
15.9

6.4
3.1
1.7
3.0
41.4
6.4
17.0

13 Other developed countries........................................
14 Austria.....................................................................
15 Denmark.................................................................
16 Finland....................................................................
17 Greece......................................................................
18 Norwav...................................................................
19 Portugal...................................................................
20
Spain.......................................................................
21
Turkey.....................................................................
22
Other Western Europe...........................................
23 South Africa............................................................
24 Australia..................................................................

10.7
.7

15.1

16.9

25 Oil-exporting countries2 ............................................
26 Ecuador...................................................................
27 Venezuela................................................................
28 Indonesia.................................................................
29 Middle East countries............................................
30 African countries....................................................

6.9
.4
2.3
1.6
1.6
1.0

4.2
1.4

31 Non-oil developing countries....................................
32 Argentina................................................................
33 Brazil.......................................................................
34 Chile........................................................................
China
35
Mainland.............................................................
36
Taiwan.................................................................
37 Colombia................................................................
38 Mexico....................................................................
39 Peru.........................................................................
40 Other Latin America..............................................
41 India........................................................................
42 Israel........................................................................
43 Korea (South)........................................................
44 Malaysia 3 ................................................................
45 Philippines..............................................................
46 Thailand..................................................................
47 Other Asia..............................................................
48 Egypt.......................................................................
49
Morocco..................................................................
50 Zaire........................................................................
51 Other Africa4 ..........................................................

34.2
1.7

43.1
1.9

8.0

11.1
.8

.3
.5

.2
.2
.6

52 Eastern Europe..........................................................
53 U.S.S.R....................................................................
54 Yugoslavia..............................................................
55 Other.......................................................................

3.7

5.2
1.5

2.8
1.0

.6

.9
1.4
1.4
.3
1.9
.6
.6
1.2

1.3

.5
*
1.7

1.2

9.0
1.4
2.6
.2

.9
2.4
.3
1.7
.7
.4
.4
.1

1.0
.6
2.1

2.8
1.2

1.2
1.0
1.1

1.7
1.5
.4

1.2

1.4
1.1
1.8

6.6

17.6
18.1
1.3
1.5
1.2
2 .0
1.8
.6

18.6
1.3
1.6
1.2
2 .2

1.9

2.8

2.2
1.2

2.3
1.5

2.3
1.5

3.6
1.5
.9
2.4
1.4

12.6

15.0
.9
4.6

16.5

17.6

5.5
1.8

6.3
1.9

45.8

47.6
2.4

1.3
.7

.7
4.1
2.2

*

2.3
1.3
11.7
1.8

2.7

.2
1.0

3.1
.5

2 .2

.7
.4
.4

.8
2 .8

26.2

.8

2 .2

2.1
11.8

.7
*
2.7

1.2
12.2
2 .0

2.4
.2
.8

3.4
.7
2.3
.8

.3
.4
.3
.3

*
2.9
1.2
12.6

1.9
2.5
.3
.7
3.6
.7
2.4
.9
.4
.4
.4
.3

6.9
1.9

18.7
1.5
1.9

19.2
1.7

18.3
1.7

18.8

2 .0
1.2

2 .0
1.1

2.7
1.9
.7
3.6
1.5
1.4
2.5
1.9
19.2
1.3
5.5
2.1

8.3
2 .0

6.5

6.3
1.4

1.1

*
2.5
1.3
11.2

1.7
3.5
.3

.1

5.4

5.1

.2

1.2

1.0
2 .2

2.4
1.4

20.4

48.9
3.0
13.3
1.3
*
2.4
1.3

49.5
2.9
14.0
1.3
*
2.4
1.3
10.7

11.0
1.8

3.3
.2

2.7

.4
.3
.4
.3
1.4

1.2

.6

4.5
.7
3.2
.2

1.3

19.1
1.4
5.6
1.9
8.3
1.9

.6
2 .6
1.1

3.7

.2
2.8

3.6
1.4

.5
3.5
1.5

2.1
.6

.7
3.6

29.0
11.3

3.8
.7
3.1

2.3

1.0
2.2
2.1

.8

3.8

.6
2.8
.1

1.1

3.7

26.1
9.8
.6

2 .0

19.3
1.5
1.7

1.6
1.2

49.9
3.0
13.0

1.6
1.1

4.0

20.5
1.5

3.0

1.0

2 .0

4.8
50.2
5.5
19.1

50.0
2.9
12.7
.9
*
3.1
1.3
11.9
1.9
2.7
.3
.9
3.9
.7
2.5
1.7
.3
.3
.5
.3
1.2

2.1

4.5
46.4
5.8
19.0

25.3
9.9
.5
4.3

4.1

1. The banking offices covered by these data are the U.S. offices and
foreign branches of U.S.-owned banks and of U.S. subsidiaries of foreignowned banks. Offices not covered include (1) U.S. agencies and branches
of foreign banks, and (2) foreign subsidiaries of U.S. banks. To minimize
duplication, the data are adjusted to exclude the claims on foreign branches
held by a U.S. office or another foreign branch of the same banking
institution. The data in this table combine foreign branch claims in table
3.13 (the sum of lines 7 through 10) with the claims of U.S. offices in table
3.17 (excluding those held by agencies and branches of foreign banks
and those constituting claims on own foreign branches). However, see
also footnote 2 .
2. Includes Algeria, Bahrain, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria,

11.8
.8

2 .2

4.4

12.8
10.8
6.1

5.4
47.2
5.9
20.7

25.4
9.5
.5
4.8
.5
2.9

66 Miscellaneous and unallocated6 ...............................

.1

2.2

1.1

5.5

3.5

2.2

11.4

4.3
44.4
4.9
18.6

5.5
1.5

4.2
*

.6

2.7

1.1

5.1

2.1

12.2

4.1
45.0
5.1
17.9

5.5
1.5
.9
3.1

2.3
4.4
*

.5
3.8

1.2

3.4

2 .0

8.3
11.4
9.1
6.4
3.4

4.0
46.5
6.9
19.1

1.2

3.8

11.8

3.5
1.4

.6

6 .0

1.0

19.4
7.3
.5
2.5




3.0
1.9
3.3
44.1

9.6
6.5
3.5
1.9
3.3
46.5
5.8
18.8

1.7
.5
3.2
1.4

56 Offshore banking centers...........................................
57 Bahamas..................................................................
58 Bermuda..................................................................
59 Cayman Islands and other British West Indies...
60 Netherlands Antilles..............................................
61 Panama...................................................................
62 Lebanon..................................................................
63 Hong Kong.............................................................
64 Singapore................................................................
65 Others 5 ....................................................................

.6
2 .6
.2
1.6

8.6
6.0

11.0

.6

1.1

.3
.3
.5

.2
1.2

1.6
6.2

1.9
8.7

2 .0

1.8

3.4
.3
.7
3.5

2.3

2.1
.6

3.4
1.5

1.0
2 .0

1.4

22.8
1.6

7.2

2 .0

9.5
2.5

52.4
3.0
14.9
1.6

*
2.9
1.4
10.8

1.7
3.6
.2
1.0

2.3

2.1
.6

3.0
1.4
1.1

1.7
1.3
22.9
1.5
7.2
1.9
9.7

.5
3.0
1.4
1.2
1.8

1.3
22.6
1.6

7.5
1.9
9.0

2 .6

2 .6

53.1
2.9
14.6
1.7

56.1
3.5
15.0

.1

3.1
1.5
10.9
1.6

3.5
.2
1.0

3.9

4.2

.6
2.8
1.1

.6
2.8
1.2
.2

3.2

.4

.3
.4

.2

.6
.2

.6
.2

.3
.4
.5

2.2
2 .0
1.1
2.2
2.1

.6

1.2

1.8
.1

3.3
1.5

11.0

1.4
3.3
.2

.9
5.0
.7
3.7
1.4
.4
.7
.5
.2

1.3

1.4

1.4

1.5

6.4
1.4
1.3
3.7

6 .6

6.9
1.3
1.5
4.1

6.7

6.7
.9
1.7
4.1

31.1

29.2

11.8

11.1

.6

6.2
.6

.7
6.3
3.2
.1

1.4
1.3
3.9

1.1
1.6

4.0
34.1

.7

30.0
9.9
.7
6.9

3.1

2.9

7.3
.7
3.3

.1

.8

.1

12.8
.6

.1

35.0
13.2
.7
7.1
.8

3.4
.1

3.1
3.9
.1

3.7
3.7
.5

4.0
4.0
.5

4.1
3.8
.5

4.0
2.9
.5

4.3
3.9
.5

4.7
4.1
.5

5.1
4.2
.4

5.0

5.3

5.7

8.1

8.6

9.1

9.5

9.9

Oman, Qatar, Saudi Arabia, and United Arab Emirates in addition to
countries shown individually.
3. Foreign branch claims only through December 1976.
4. Excludes Liberia.
5. Foreign branch claims only.
6 . Includes New Zealand, Liberia, and international and regional
organizations.
7. For June 1978 and subsequent dates, the claims of the U.S. offices
in this table include only banks’ own claims payable in dollars. For
earlier dates the claims of the U.S. offices also include customer claims
and foreign currency claims (amounting in June 1978 to $10 billion).

A64

International Statistics □ September 1979

3.21 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Holdings and Transactions
M
illions of dollars
Country or area

1977

1979

1979

1978
Jan.JulyP

Jan.

Feb.

Mar.

Apr.

May

JuneP

JulyP

Holdings (end of period )4
1 Estimated total 1........................................

38,640

44,938

46,210

45,667

47,529

48,131

47,218

47,494

48,991

2 Foreign countries 1 .....................................

33,894

39,817

41,341

40,963

42,932

43,177

43,055

43,454

44,544

3 Europe 1 ....................................................
4 Belgium-Luxembourg...........................
5 Germany 1..............................................
6
Netherlands..........................................
7 Sweden.................................................
8
Switzerland............................................
9 United Kingdom..................................
10 Other Western Europe.........................
11 Eastern Europe.....................................
12 Canada......................................................

13,936
19
3,168
911

17,072
19
8,705
1,358
285
977
5,373
354

18,360
19
8,864
1,433
320
1,818
5,489
417

18,502
19
8,860
1,517
355
1,508
5,823
420

20,172
19
10,216
1,587
360
1,537
5,991
461

20,593
19
10,812
1,637
415
1,510
5,735
464

20,667

10,828
1,672
479
1,458
5,697
513

21,047
24
10,751
1,695
484
1,582
6,016
496

22,213
24
10,781
1,655
481
1,843
6,938
491

13
14
15
16
17
18
19
20

551
199
183
170
18,745
6,860
362

Latin America and Caribbean............
Venezuela..............................................
Other Latin American and Caribbean
Netherlands Antilles...........................
Asia..........................................................
Japan....................................................
Africa......................................................
All other..................................................

21 Nonmonetary international and regional
organizations...................................
22
23

International.......................................
Latin American regional....................

100
497
8,888
349
4
288

20

152

150

146

166

226

216

227

232

416
144

433
183

1
1

162
21,488
11,528
691
-3

162
21,709
12,226
691
-3

417
183
72
162

418
183
72
162
21,488
12,729
691
-3

397
183
52
162
21,273
12,982
691
-3

387
183
42
162
21,097
13,014
691
-3

387
183
42
162
21,103
13,040
691
-3

537
183
192
162
20,874
13,090
691
-3

4,746

5,121

4,869

4,704

4,597

4,954

4,163

4,040

4,447

4,646

5,089
33

4,837
33

4,666
38

4,560
38

4,915
38

4,114
48

3,993
48

4,400
48

100

110

88

21,210
12,422
691
-3

Transactions (net purchases, or sales ( —), during period)
24 Total i.

22,843

6,297

25 Foreign countries1. ..
26 Official institutions.
27 Other foreign i ........

21,130
20,377
753

5,921
3,734
2,188

28 Nonmonetary international and regional
organizations.......................................

1,713

375

M emo: Oil-exporting countries
29 Middle East 2..............................
30 Africa 3........................................

4,451
-181

4,054
4,727
1,580
3,148
-6 7 2

-1 ,7 8 5 - 2,012
329

1. Beginning December 1978, includes U.S. Treasury notes publicly
issued to private foreign residents.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia,
and United Arab Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.

1,272

-5 4 3

1,862

602

-9 1 3

277

1,497

1,524
150
1,375

-3 7 8
-5 1 7
141

1,968
524
1,443

246
242
4

-1 2 2

399
298
101

1,090
1,033
57

-2 5 2

-165

-1 0 6

356

-791

-1 2 1

407

-461

-6 9 3

-3 1

-4 5 2

-1 9 0

8

-193

-149
27

4. Estimated official and private holdings of marketable U.S. Treasury
securities with an original maturity of more than 1 year. Data are based
on a benchmark survey of holdings as of Jan. 31, 1971, and monthly
transactions reports. Excludes nonmarketable U.S. Treasury bonds and
notes held by official institutions of foreign countries.

3.22 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS
Millions of dollars, end of period
Assets

1976

1977

1979

1978
Feb.

352
Assets held in custody

66,532
16,414

424

343

Apr.

May

June

July

Aug.p

303

388

407

326

372

325

91,962 117,126 114,005 107,854
15,988 15,463 15,432 15,426

99,674
15,406

91,327
15,381

95,301
15,356

98,794
15,322

98,794
15,296

1. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable
U.S. Treasury securities payable in dollars and in foreign currencies.
2. The value of earmarked gold increased because of the changes in
par value of the U.S. dollar in May 1972 and in October 1973.




367

Mar.

N ote. Excludes deposits and U.S. Treasury securities held for international and regional organizations. Earmarked gold is gold held for
foreign and international accounts and is not included in the gold stock
of the United States.

Investment Transactions

A65

3.23 FOREIGN TRANSACTIONS IN SECURITIES
M
illions of dollars
Transactions, and area or country

1977

1978

1979

1979

JanJulyP

Mar.

Feb.

Jan.

Apr.

May

June**

JulyP

U.S. corporate securities
Stocks
1 Foreign purchases..................................................
2 Foreign sales..........................................................

14,155
11,479

20,142
17,723

11,502
10,473

1,361
1,301

1,384
1,264

1,941
1,437

1,614
1,520

1,578
1,386

1,859
1,792

1,765
1,772

3 Net purchases, or sales ( — ...................................
)

2,676

2,420

1,029

60

120

504

94

191

66

-7

4 Foreign countries....................................................

2,661

2,466

1,011

61

104

501

94

191

67

-7

5 Europe....................................................................
France..................................................................
Germany.............................................................
8
Netherlands........................................................
9 Switzerland..........................................................
10 United Kingdom................................................
11 Canada....................................................................
12 Latin America and Caribbean..............................
13 Middle East 1..........................................................
14 Other Asia..............................................................
15 Africa......................................................................
16 Other countries......................................................

1,006
40
291

1,283
47
620

52
16

104
33

11

-8 6

-4 1
18

6

7

22

-2 2

253
181

-7
-6

41
-1 6
-1 5
-3
5
33
-2 8
15
39
-3

-6
-2

-4

6
1

-1

16

3

1

*

581
489

589
378

863
922

1,081
802

-1 5

8

15

-4 6

18

18 Foreign purchases..................................................
19 Foreign sales...........................................................

7,739
3,560

7,955
5,509

5,061
4,490

641
704

453
547

17 Nonmonetary international and regional

136
48

-94
-8 4
333
199
3
348
217

20

-585
1,230
74
151
781
187
-1 3
3

152
613
65
127
1,390
59
5

-2

31
-5 9

-1 8
-3 5
-3 0
85
7
34
-1 6
49
-2

12

19
-6

-2 5
46
30

-2

-1 9
-1 2

109
57
36
242
61

1
1

-1 0

-1 7
52
30
22

48
-3
-3
2

-1

-7
18
74
47
-1 8
20

9

-2
-1

-1 1
8

-5 2
-1 1

30
-1 7
-7
32
-4

-1

1

-1

*

Bonds 2
853
647

20 Net purchases, or sales ( — ...................................
)

4,179

2,446

571

-6 3

-9 4

92

210

-5 9

279

206

21 Foreign countries....................................................

4,083

2,037

807

54

28

79

106

87

245

207

22
23
24
25
26
27
28
29
30
31
32
33

1,850
-3 4

915
30

707

1

139

121
-1
6

153

81
-1 3 9

39
18
42
-4

110

68

143
-3 4
-2 7
-9
-4
232

Europe....................................................................
France.................................................................
Germany.............................................................
Netherlands........................................................
Switzerland.........................................................
United Kingdom................................................
Canada....................................................................
Latin America and Caribbean..............................
Middle East1..........................................................
Other Asia..............................................................
Africa......................................................................
Other countries......................................................

72
94
1,690
141
64
1,695
338
-6
*

34 Nonmonetary international and regional
organizations.......................................................

96

-2 0

19

-1 0 0

930

102

78
810
131

-1
1

409

2

-2 0

753
72
73
-1 5 7

8

-5 4

11

*
13

-1 0
6

93

10

*

23
-3 4
16
*
*

9
-106
4
1
*

-2 3 7

-118

-1 2 2

112
1

13
4
-2 7
12

27
33
24
25
-3
*
1

13

-2

19

-2 0
8

134
6

9
-6 1
14
*
-1

-3 7
-4 1
151
4
7
-7 3
28
*
*

8

24
-3 2
-1 0

169
*

-1 0

52
48
*
*

8
11

40
5
*
*

104

-1 4 6

34

13
369
356

67
554
487

-1 8
403
421

-6 7
329
396

5
851
847

-6 8 4
1,006
1,690

-331
998
1,330

-1

Foreign securities
35 Stocks, net purchases, or sales ( — ......................
)
36 Foreign purchases..............................................
37 Foreign sales.......................................................

-410
2,255
2,665

527
3,666
3,139

2,482
2,502

265
254

11

-2 8
232
260

331
329

38 Bonds, net purchases, or sales ( — ......................
)
39 Foreign purchases..............................................
40 Foreign sales......................................................

-5 ,0 9 6 -4 ,0 1 7 -1 ,9 9 2
8,040 11,044
6,641
13,136 15,061
8,633

-600
783
1,383

-322
942
1,264

1,220

41 Net purchases, or sales ( — of stocks and bonds..
)

-5 ,5 0 6

-3 ,4 9 0

-2 ,0 1 3

-5 9 0

-3 4 9

-3 7

-8

71

-7 0 3

-3 9 8

42
43
44
45
46
47
48

-3 ,9 4 9 -3 ,3 1 3 -1,4 6 5
-4 0
- 1,100
-819
-2 ,4 0 4 -3 ,2 3 7 - 1,022
-8 2
201
348
-9 7
350
23
-441
2
-7
-1 4 6
-267
11

-5 1 3
-1 2 4
-305
60
-141
-3

-141
-4 2
-1 8 4
70
19
-5

-1 9
3
-2 2 8
54
152

-2 1

-4 2 0
-139

-4 2 2
-311
-178
30
37
*

1

2

7

2
2

70
-3 1
85
26
-1 4
4

-209

-1 7

13

Foreign countries....................................................
Europe....................................................................
Canada....................................................................
Latin America and Caribbean..............................
Asia.........................................................................
Africa......................................................................
Other countries......................................................

49 Nonmonetary international and regional
organizations.......................................................

-1 ,5 5 7

-177

-2 0

-547

♦-7 7

2

-3 9
1,182

-8

-2 1

879
900

-1 7 4
10

55
84

-2 2 1

1

53
-1 1 4
4
-4

1

-2 8 2

2

24

1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq,
2. Includes state and local government securities, and securities of U.S.
Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial
government agencies and corporations. Also includes issues of new debt
States).
securities sold abroad by U.S. corporations organized to finance direct
investments abroad.




A66

International Statistics □ September 1979

3.24 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States ▲
Millions of dollars, end of period
1976

Type, and area or country

1979

1978

1977
June

Sept.

Dec.

Mar.

June

11,085

11,870

12,786

13,888

11,044
825

11,955
831

11,166
2,723

10,930
2,440
5,238
3,419
1,819

8,481
3,930
4,552

8,131
3,431
4,700

7,701
780

7,511
620

3,467
287
157
334
360
207
1,947

Dec.

13,370

10,284
801

5,407
3,465
1,942

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

10,099
9,390
709

1 Total

Sept.

3,281
254
133
293
391
187
1,852

By type

By area or country

Financial liabilities

205

233

20
21
22
23
24
25
26

Latin America and Caribbean.........................
Bahamas........................................................
Bermuda........................................................
Brazil..............................................................
British West Indies........................................
Mexico............................................................
Venezuela.......................................................

971
422
56
77
46

969
407
41
13
132
73
52

27
28
29

A sia....................................................................
Japan.
......................................................
Middle East oil-exporting countries 2. ........

754
671
48

745
667
36

30
31

Africa.................................................................
Oil-exporting countries 3 ...............................

5

5

2

1

32

All other 4 ..........................................................

5

5

33
34
35
36
37
38
39

Commercial liabilities
Europe................................................................
Belgium-Luxembourg...................................
France. .
....
................
..........
Germany........................................................
Netherlands....................................................
Switzerland............................... ....................
United Kingdom...........................................

2,927
73
312
519
206
321
760

2,809

10
122

68

336
390
193
343
811

40

Canada..

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

653

601

41
42
43
44
45

Latin America...................................................
Bahamas........................................................
Bermuda........................................................
Brazil.
. . . .
............
British West Indies. ..
...........................

1,102

.

. . .

47

Venezuela.......................................................

1,031
25
95
75
53
130
306

48
49
50

A sia. . . .
....
............
Japan.
..
...............................
Middle East oil-exporting countries 2 .. .

2,942
430
1,543

2,627
411
1,117

51
52

Africa.................................................................
Oil-exporting countries3.
...
............

724
313

754
345

53

All other 4

204

239

1. Prior to December 1978, foreign currency data include only liabilities
denominated in foreign currencies with an original maturity of less than
one year.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia,
and United Arab Emirates (Trucial States).




16
40
62
89
240
359

3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
A For a description of the changes in the International Statistics
tables, see July 1979 Bulletin, p. 550.

Nonbank-Reported Data

A67

3.25 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States A
M
illions of dollars, end of period
Type, and area or country

1976

1979

1978

1977
June

Sept.

Dec.

Mar.

71,298

23,229

23,260

27,138

21,665
1,564

21,292
1,968

24,160
2,978

19,097
13,989
13,087
903
5,108
3,573
1,535
10,762
10,008
754

10,938
357

Dec.

27,036
2,823

15,843
10,735
9,694
1,041
5,108
3,528
1,580

Sept.

29,859

19,880
1,418

11,295
10,647
647

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

19,350
18,300
1,050

1 Total

June

10,377
385

5,333
63
180
263
91
96
4,409

By type

By area or country

Financial claims

22

United Kingdom...........................................

5,054
48
179
529
107
98
3,850

23

Canada...............................................................

4,454

5,130

24
25
26
27
28
29
30

Latin America and Caribbean.........................
Bahamas........................................................
Bermuda........................................................
Brazil..............................................................
British West Indies........................................
Mexico............................................................
Venezuela.......................................................

5,197
2,836
80
151
1,231
146
149

7,566
4,124
62
137
2,394
145
142

31
32
33

A sia.................................................................
Japan..............................................................
Middle East oil-exporting countries2 ..........

918
306
18

825
206
17

34
35

Africa.................................................................
Oil-exporting countries 3 ...............................

180
10

203
26

36

All other 4 ..........................................................

41

39

37
38
39
40
41
42
43

Commercial claims
Europe................................................................
Belgium-Luxembourg...................................
France............................................................
Germany........................................................
Netherlands....................................................
Switzerland....................................................
United Kingdom...........................................

3,935
145
607
392
256
213
802

3,800
172
487
495
270
253
678

44

Canada...............................................................

1,102

1,106

45
47
48
49
50
51

Latin America and Caribbean.........................
46
Bahamas
........................................................
Bermuda........................................................
Brazil..............................................................
British West Indies........................................
Mexico............................................................
Venezuela.......................................................

2,535
109
215
624
9
513
293

2,461
117
241
489

52
53
54

Asia....................................................................
Japan..............................................................
Middle East oil-exporting countries2.........

3,087
978
711

2,748
894
665

55
56

Africa.................................................................
Oil-exporting countries 3 ...............................

449
137

445
132

57

All other 4 ..........................................................

187

201

1. Prior to December 1978, foreign currency data include only liabilities
denominated in foreign currencies with an original maturity of less than
one year.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia,
and United Arab Emirates (Trucial States).




10

497
273

3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
A For a description of the changes in the International Statistics
tables, see July 1979 Bulletin, p. 550.

A68

International Statistics □ September 1979

3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS
Percent per annum
Rate on Aug. 31,1979

Rate on Aug. 31,1979
Country

Per­
cent

Argentina........................
Austria.............................
Belgium...........................
Brazil...............................
C anada............................
Denmark.........................

Country

Month
effective

18.0
3.75
9.0
33.0
11.75
9.0

Feb.
Jan.
June
Nov.
July
June

Per­
cent

France............................
Germany, Fed. Rep. of.

1972
1979
1979
1978
1979
1979

Netherlands...................

N ote. Rates shown are mainly those at which the central bank either
discounts or makes advances against eligible commercial paper and/or
government securities for commercial banks or brokers. For countries with

9.5
5.0
10.5
5.25
4.5
8 .0

Rate on Aug. 31,1979
Country

Month
effective
Aug.
July
Sept.
July
June
July

1977
1979
1978
1979
1942
1979

Per­
cent
7.0
7.0
1.0

14.0
5.0

United Kingdom..........

Month
effective
Feb.
July
Feb.
June
Oct.

1978
1979
1978
1979
1970

more than one rate applicable to such discounts or advances, the rate
shown is the one at which it is understood the central bank transacts the
largest proportion of its credit operations.

3.27 FOREIGN SHORT-TERM INTEREST RATES
Percent per annum, averages of daily figures
1977

1976

Country, or type

1979

1978
Mar.

4 Germany...............................................................
5 Switzerland............................................................

5.58
11.35
9.39
4.19
1.45

7 France....................................................................
8 Italy.......................................................................
9 Belgium.................................................................
10 Japan.....................................................................

7.02
8.65
16.32
10.25
7.70

May

June

July

Aug.

8.74
9.18
8.52
3.67
0.74

4.73
9.20
14.26
6.95

10.64
11.98
11.08
4.42
0.03

10.60
11.64
11.18
5.50
0.93

10.75
11.76
11.26
5.89
1.54

10.52
13.02
11.17
6.40
1.51

10.87
13.87
11.29
6.77
1.19

11.53
14.06
11.78
7.04
1.67

6.53

6.03
8.07
7.47
4.30
2.56

1 Eurodollars...........................................................
2 United Kingdom...................................................

Apr.

7.35
7.05
11.46
7.63
4.54

7.23
6.96
11.52
7.63
5.13

7.82
7.63
11.37
8.16
5.25

8.55
8.63
11.27
9.09
5.46

9.53
9.90
11.46
11.18
6.26

9.51
10.85
11.50
11.42
7.00

8.10

11.40
7.14
4.75

6.22

N ote. Rates are for 3-month interbank loans except for the following:
Canada, finance company paper; Belgium, time deposits of 20 million

francs and over; and Japan, loans and discounts that can be called after
being held over a minimum of two month-ends.

3.28 FOREIGN EXCHANGE RATES
Cents per unit of foreign currency

Country/currency

1976

1977

1979
1978
Mar.

1
2
3
4
5

Australia/dollar..................
Austria/schilling.................
Belgium/franc.....................
Canada/dollar.....................
Denmark/krone..................

6 Finland/markka.................
7 France/franc.......................
8 Germany/deutsche m ark...
9 India/rupee.........................
10 Ireland/pound.....................

11 Italy/lira..............................
13 Malaysia/ringgit.................
15 Netherlands/guilder............

Apr.

May

122.15
5.5744
2.5921
101.41
16.546

110.82
6.0494
2.7911
94.112
16.658

114.41
6.8958
3.1809
87.729
18.156

112.15
7.3312
3.3971
85.187
19.269

110.85
7.1862
3.3271
87.235
18.958

110.57
7.1222
3.2732
86.534
18.562

25.938
20.942
39.737
11.148
180.48

24.913
20.344
43.079
11.406
174.49

24.337
22.218
49.867
12.207
191.84

25.161
23.328
53.754
12.138
203.73

24.976
22.967
52.745
12.191
201.97

24.974
22.691
52.422
12.066
198.43

.12044
.33741
39.340
6.9161
37.846

.11328
.37342
40.620
4.4239
40.752

.11782
.47981
43.210
4.3896
46.284

.11888
.48470
45.440
4.3835
49.801

.11858
.46241
45.023
4.3780
48.794

.11744
.45797
44.934
4.3805
48.132

June
111.11

7.2081
3.3048
85.296
18.401
25.250
22.914
53.084
12.317

200.01

.11828
.45750
45.474
4.3767
48.374

July

Aug.

112.83
7.4628
3.4240
85.920
19.072

112.83
7.4786
3.4140
85.425
18.964

26.040
23.535
54.817
12.651
206.79

26.075
23.491
54.666
12.484
205.79

.12192
.46189
46.422
4.3767
49.821

.12219
.45890
46.363
4.3804
49.805

18 Portugal/escudo.................
19 South Africa/rand..............
20 Spain/peseta.......................

99.115
18.327
3.3159
114.85
1.4958

96.893
18.789
2.6234
114.99
1.3287

103.64
19.079
2.2782
115.01
1.3073

105.39
19.619
2.0855
118.40
1.4490

104.96
19.444
2.0482
117.94
1.4679

104.37
19.270
2.0214
118.22
1.5131

103.29
19.398
2.0192
118.31
1.5131

102.04
19.824
2.0551
118.46
1.5118

101.40
19.877
2.0332
119.38
1.5132

23 Switzerland/franc...............
24 United Kingdom/pound. . .

11.908
22.957
40.013
180.48

11.964
22.383
41.714
174.49

6.3834
22.139
56.283
191.84

6.4593
22.901
59.473
203.78

6.4455
22.772
58.220
207.34

6.4239
22.755
57.894
205.87

6.4059
23.028
58.884
211.19

6.3786
23.687
60.650
225.98

6.4174
23.693
60.349
223.68

M emo:
25 United States/dollar i ..........

105.57

103.31

92.39

88.39

89.49

90.31

89.56

86.93

87.24

1. Index of weighted average exchange value of U.S. dollar against currencies of other G-10 countries plus Switzerland. March 1973 = 100.
Weights are 1972-76 global trade of each of the 10 countries. Series
revised as of August 1978. For description and back data, see “Index of




the Weighted-Average Exchange Value of the U.S. Dollar: Revision” on
page 700 of the August 1978 Bulletin.
N ote. Averages of certified noon buying rates in New York for cable
transfers

A 69

G uide to
Tabular Presentation and Statistical Releases
G u id e

to

T a b u l a r P r e s e n t a t io n

S ym bols an d A b b revia tio n s
c
e
P
r
*

Corrected
Estimated
Preliminary
Revised (Notation appears on column head­
ing when more than half of figures in that
column are changed.)
Amounts insignificant in terms of the last
decimal place shown in the table (for
example, less than 500,000 when the
smallest unit given is millions)

0
n.a.
n.e.c.
IPCs
REITs
RPs
SMSAs

Calculated to be zero
Not available
Not elsewhere classified
Individuals, partnerships, and corporations
Real estate investment trusts
Repurchase agreements
Standard metropolitan statistical areas
Cell not applicable

G en eral Inform ation
Minus signs are used to indicate (1) a decrease, (2)
a negative figure, or (3) an outflow.
“ U.S. government securities” may include guaran­
teed issues of U.S. government agencies (the flow of
funds figures also include not fully guaranteed issues)

as well as direct obligations of the Treasury. “ State
and local government” also includes municipalities,
special districts, and other political subdivisions.
In some of the tables details do not add to totals
because of rounding.

S t a t ist ic a l R e l e a se s
L ist P u blish ed S em ian n u ally, with L a te st B u lletin R eferen ce
Anticipated schedule of release dates for individual releases.................




Issue
June 1979

Page
A-76

A 70

F e d e ral R e se rv e B o a rd o f G o v e rn o rs
P a u l A . V o l c k e r , C hairm an
F r e d e r i c k H . S c h u l t z , V ice C hairm an

H e n ry C. W a llic h
P h ilip E . C o l d w e l l

O ffice

O ffice of S taff D ir e c to r for
M o n e t a r y a n d F in a n c ia l P o l ic y

of

B o a r d M em bers

Joseph R. C oyne, Assistant to the Board
K e n n e th A. G u e n th e r, Assistant to the Board
Jay P a u l B rennem an, Special Assistant to the
Board
F ra n k O ’B rien, J r ., Special Assistant to the
Board
Joseph S. Sims, Special Assistant to the Board
D o n ald J. W inn, Special Assistant to the Board

S tephen H. A x ilro d , Staff Director
E dw ard C. E ttin , Deputy Staff Director
M u rra y A ltm a n n , Assistant to the Board
P e te r M. K eir, Assistant to the Board
S ta n le y J. S ig el, Assistant to the Board
N orm and R. V. B e rn a rd , Special Assistant to
the Board

L e g a l D iv isio n

D iv i s i o n

N e a l L. P e te rse n , General Counsel
R o b e rt E. M annion, Deputy General
Counsel
C h a rle s R. M c N e ill, Assistant to the General
Counsel
J. V irg il M a ttin g ly , Assistant General
Counsel
G ilb e rt T. S c h w a rtz , Assistant General
Counsel

James L. K ich lin e, Director
Joseph S. Z eisel, Deputy Director
John H. K a lc h b re n n e r, Associate Director
John J. M ingo, Senior Research Division
Officer
E le a n o r J. S to c k w e ll, Senior Research
Division Officer
James M. B ru n d y , Associate Research Division
Officer
R o b e rt A. Eisenbeis, Associate Research
Division Officer
Ja re d J. E n z le r , Associate Research Division
Officer
J. C o r tla n d G. P e re t, Associate Research
Division Officer
M ich ael J. P r e l l , Associate Research Division
Officer
H elm u t F. W en d el, Associate Research
Division Officer
R o b e rt M. F isher, Assistant Research Division
Officer
F red erick M. S tr u b le , Assistant Research
Division Officer
S tephen P. T a y lo r, Assistant Research
Division Officer
Levon H. G arab e d ian , Assistant Director

O ffice

of th e

Se c r e t a r y

T heodore E. A llis o n , Secretary
G riffith L. G arw ood, Deputy Secretary
R ichard H. P u c k e tt, Manager, Regulatory
Improvement Project
D iv isio n

of

C o n su m e r A ffairs

J a n e t O. H a r t, Director
N a th a n ie l E. B u t le r , Associate Director
J e ra u ld C. K luckm an, Associate Director
A nne G eary, Assistant Director
D iv is io n of B a n k in g
S u p e r v isio n a n d R e g u l a t io n
John E. R yan, Director
IF re d e ric k C. S ch ad ra ck , Deputy Director
F re d erick R. D a h l, Associate Director
W illiam T a y lo r, Associate Director
W illiam W. W iles, Associate Director
Jack M. E g e rtso n , Assistant Director
R o b e rt A. Jacobsen, Assistant Director
Don E. K lin e , Assistant Director
R o b e rt S. P lo tk in , Assistant Director
Thomas A. Sidman, Assistant Director
Sam uel H. T a lle y , Assistant Director




D iv isio n

of

of

R esearch

and

S t a t is t ic s

I n t e r n a t i o n a l Fi n a n c e

Edwin M. T rum an, Director
R o b e rt F. G em m ill, Associate Director
G eorge B. H en ry , Associate Director
C h a rle s J. Siegman, Associate Director
Sam uel P izer, Senior International Division
Officer
Je ffre y R. S h a fe r, Associate International
Division Officer
D ale W. H en d erso n , Assistant International
Division Officer
L a rry J. Prom isel, Assistant International
Division Officer
R alp h W. Sm ith, J r., Assistant International
Division Officer

A 71

and O ffic ia l S ta ff
J. C h a r l e s P a r t e e
N ancy H . T eeters
O ffice of
S taff D ir ec to r

for

E m m e t t J. R ic e

M anagement

John M. D e n k le r, Staff Director
E dw ard T. M u lre n in , Assistant Staff Director
Joseph W. D an iels, S r., Director of Equal
Employment Opportunity
D iv isio n

of

D a t a P r o c e ssin g

C h a rle s L. H am pton, Director
B ruce M. B e ard sle y , Associate Director
U yless D. B la c k , Assistant Director
G len n L. Cummins, Assistant Director
R o b e rt J. Zem el, Assistant Director
D iv isio n

of

o f th e

C ontroller

John K a k a le c , Controller
D iv isio n
D o n a ld
John L.
W a lte r
John D.

of

S u p p o r t S e rv ic es

E. A n d e rso n ,Director
G riz z a rd , Associate Director
W. K reim ann, Associate Director
Sm ith, Assistant Director

tOn loan from the Federal Reserve Bank of New York.



W illiam H. W a lla c e , Staff Director
H a rry A. G u in te r, Assistant Director for
Contingency Planning
D iv isio n of F e d e r a l R e se r ve
B a n k E x a m in a t io n s a n d B u d g e t s
C ly d e H. F a rn s w o rth , J r., Associate
Director
C h a rle s W. B e n n e tt, Assistant Director
John F. H oover, Assistant Director
P. D. Ring, Assistant Director
Raymond L. Teed, Assistant Director

Pe r so n n e l

D avid L. S h an n o n , Director
John R. Weis, Assistant Director
C h a rle s W. W ood, Assistant Director
O ffice

O ffice of S taff D ir ec to r for
Fe d e r a l R e se r v e B a n k A c t iv it ie s

D iv isio n of F e d e r a l R e se r ve
B a n k O p e r a t io n s
James R. K u dlinski, Director
W a lte r A lth a u s e n , Assistant Director
B rian M. C arey , Assistant Director
Lorin S. M eeder, Assistant Director

A 72

Federal Reserve Bulletin □ September 1979

FOMC and Advisory Councils
Fe d e r a l O p e n M

arket

C o m m it t e e

P a u l A. V o lc k e r ,

Chairman
Frederick H . S c h u l t z
N a n c y H. T eeters
H e n r y C. W a l l i c h

M o n r o e K imbrel
R obert M ayo
J. C h a r l e s P a r t e e
E m m e t t J. R ice

Jo h n B a l l e s
R ober t B lack
P h i l i p E. C o l d w e l l

M u r r a y A l t m a n n , Secretary
N o r m a n d R . V. B e r n a r d , Assistant Secretary
N e a l L. P e t e r s e n , General Counsel
J a m e s H. O l t m a n , Deputy General Counsel
R o b e r t E. M a n n i o n , Assistant General Counsel
S t e p h e n H . A x i l r o d , Economist
A l a n R . H o l m e s , A dvisor for Market Operations
H ar r y B r a n d t , Associate Economist
R i c h a r d G . D a v i s , Associate Economist

E d w a r d C. E t t i n , Associate Economist
G e o r g e B . H e n r y , Associate Economist
P e t e r M . K e i r , Associate Economist
M i c h a e l K e r a n , Associate Economist
J a m e s L. K i c h l i n e , Associate Economist
J a m e s P a r t h e m u s , Associate Economist
K ar l S c h e l d , Associate Economist
E d w i n M . T r u m a n , Associate Economist
J o s e p h S. Z e i s e l , Associate Economist

P e t e r D . S t e r n l i g h t , Manager for Domestic Operations, System Open Market Account
S c o t t E. P a r d e e , Manager for Foreign Operations, System Open Market Account

Fe d e r a l A

d v is o r y

C o u n c il
J. W . M c L e a n ,

t e n t h district,

President

H e n r y S. W o o d b r i d g e , J r ., fi r st d is t r i c t
W a l t e r B . W r i s t o n , s e c o n d d i s t r ic t
W i l l i a m B . E a g l e s o n , J r ., t h i r d d is t r i c t
M e r l e E . G i l l i a n d , f o u r t h d is t r i c t
J. O w e n C o l e , f i f t h d is t r i c t

F r a n k A . P l u m m e r , s i x t h d is t r ic t
R o g e r E. A n d e r s o n , s e v e n t h d is t r ic t
C l a r e n c e C . B a r k s d a l e , e i g h t h d is t r ic t
C l a r e n c e G. F r a m e , n i n t h district
J ames D . B e r r y , e l e v e n t h district
C h a u n c e y E. S c h m i d t , t w e l f t h d is t r ic t
H e r b e r t V. P r o c h n o w , Secretary
W i l l i a m J. K o r s v i k , Associate Secretary

C o nsu m er A

d v is o r y

C o u n c il

D. W a r r e n , L os Angeles, California, Chairman
A. H a k a l a , Omaha, Nebraska, Vice Chairman
P er cy W. L o y , Portland, Oregon
R o l a n d E. B r a n d e l , San F r a n c isc o , C aliforn ia
R. C. M o r g a n , El Paso, Texas
J a m e s L. B r o w n , M i l w a u k e e , W i s c o n s i n
F l o r e n c e M . R i c e , New York, New York
M a r k E . B u d n i t z , A tlan ta , G e o r g i a
R a l p h J. R o h n e r , Washington, D. C.
Jo h n G . B u l l , Fort L a u d er d a le , F lo rida
R a y m o n d J. S a u l n i e r , New York, New York
R o b e r t V. B u l l o c k , Frankfort, K en tu c k y
C a r l F e l s e n f e l d , N e w Y o r k , N e w York
H e n r y B . S c h e c h t e r , Washington, D. C.
J e a n A . F o x , P ittsburgh, P e n n s y lv a n ia
E. G . S c h u h a r t II, A m a r i ll o , T e x a s
B l air C. S h i c k , C a m b r id g e , Massachusetts
R i c h a r d H. H o l t o n , B e r k e l e y , Californ ia
W i l l ia m
M arcia

E d n a D e C o u r s e y J o h n s o n , B a lt im o r e , M a r y ­
land
R i c h a r d F. K e r r , Cincinnati, Ohio
R o b e r t J. K l e i n , New York, New York
H a r v e y M. K u h n l e y , Minneapolis, Minnesota




T h o m a s R. S w a n , Portland, M a in e
A n n e G a r y T a y l o r , A le x a n d r ia , V ir g in ia
R i c h a r d A . V a n W i n k l e , Salt L ake C it y , Utah
R i c h a r d D. W a g n e r , S i m s b u r y , C o n n e c tic u t
M a r y W . W a l k e r , M o n r o e , G e o r g ia

A 73

Federal Reserve Banks, Branches, and Offices
FEDERAL RESERVE BANK,
branch, or facility
Zip

Chairman
Deputy Chairman

President
First Vice President

BO ST O N *....................... 02106

Robert M. Solow
Robert P. Henderson

Frank E. Morris
James A. McIntosh

NEW Y O R K * ................ 10045

Robert H. Knight
Boris Yavitz
Frederick D. Berkeley, III

Vacancy
Thomas M. Timlen

PHILADELPHIA...........19105

John W. Eckman
Werner C. Brown

David P. Eastburn
Richard L. Smoot

CLEVELAND*.............. 44101

Robert E. Kirby
Arnold R. Weber
Lawrence H. Rogers, II
G. J. Tankersley

Willis J. Winn
Walter H. MacDonald

Maceo A. Sloan
Steven Muller
I. E. Killian
Robert E. Elberson

Vice President
in charge of branch

Robert P. Black
George C. Rankin

B u ffa lo ......................... 14240

C incinnati....................45201
Pittsburgh.................... 15230
R IC H M O N D *................ 23261
Baltimore..................... 21203
C harlotte..................... 28230

John T. Keane

Robert E. Showalter
Robert D. Duggan

Jimmie R. Monhollon
Stuart P. Fishburne

Culpeper Communications
and Records Center 22701
A T L A N T A ..................... 30303
Birmingham................35202
Jacksonville................ 32203
M ia m i...........................33152
N a sh v ille..................... 37203
New O rleans.............. 70161
CHICAGO* ....................60690
Detroit...........................48231
ST. L O U IS ..................... 63166
Little Rock ................ 72203
Louisville ..................40232
Memphis ....................38101
M INNEAPOLIS.............55480
H elena...........................59601
KANSAS C IT Y .............64198
D en v er......................... 80217
Oklahoma C ity...........73125
Omaha .........................68102
D A L L A S .........................75222
El P a so .........................79999
H ouston ....................... 77001
San A ntonio................ 78295
SAN FRANCISCO....... 94120
Los A ngeles................ 90051
Portland....................... 97208
Salt Lake City .........84125
Seattle .........................98124

Albert D. Tinkelenberg
Clifford M. Kirtland, Jr.
William A. Fickling, Jr.
William H. Martin, III
Copeland D. Newbern
Castle W. Jordan
Cecelia Adkins
Levere C. Montgomery

Monroe Kimbrel
Robert P. Forrestal

Robert H. Strotz
John Sagan
Jordan B. Tatter

Robert P. Mayo
Daniel M. Doyle

Armand C. Stalnaker
William B. Walton
G. Larry Kelley
James F. Thompson
Frank A. Jones, Jr.

Lawrence K. Roos
Donald W. Moriarty, Jr.

Stephen F. Keating
William G. Phillips
Patricia P. Douglas

Mark H. Willes
Thomas E. Gainor

Harold W. Andersen
Joseph H. Williams
A. L. Feldman
Christine H. Anthony
Durward B. Varner

Roger Guffey
Henry R. Czerwinski

Irving A. Mathews
Gerald D. Hines
A. J. Losee
Gene M. Woodfin
Pat Legan

Ernest T. Baughman
Robert H. Boykin

Joseph F. Alibrandi
Cornell C. Maier
Caroline L. Ahmanson
Loran L. Stewart
Wendell J. Ashton
Lloyd E. Cooney

John J. Balles
John B. Williams

Hiram J. Honea
Charles D. East
F. J. Craven, Jr.
Jeffrey J. Wells
George C. Guynn

William C. Conrad

John F. Breen
Donald L. Henry
L. Terry Britt

John D. Johnson

Wayne W. Martin
William G. Evans
Robert D. Hamilton

Fredric W. Reed
J. Z. Rowe
Carl H. Moore

Richard C. Dunn
Angelo S. Carella
A. Grant Holman
Gerald R. Kelly

* Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford,
New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South
Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee,
Wisconsin 53202.




A 74

Federal Reserve Board Publications
A va ila b le from Publications S ervices, D ivision o f Sup­
p o rt S ervices, B oard o f G overnors of the Federal R e ­
serve System , W ashington, D .C . 20551. W here a
charge is indicated , rem ittance should accom pany re-

quest and be m ade p a y a b le to the order of the B oard
of G overnors o f the F ederal R eserve System . R em it­
tance from foreign residents should be draw n on a U .S.
bank. (Stam ps and coupons are not accepted.)

T he

B a n k C r e d it -C a r d a n d C h e c k -C r e d it P l a n s . 1 968.
102 pp. $ 1 .0 0 each ; 10 or m ore to on e ad d ress,
$ .8 5 each .
S u r v e y of C h a n g e s in F a m il y F i n a n c e s . 1 9 6 8 . 321
p p. $ 1 .0 0 each; 10 or m ore to on e ad d ress, $ .8 5
each .
R epo r t of t h e Jo in t T r e a s u r y -F e d e r a l R e se r ve
S t u d y o f t h e U .S . G o v e r n m e n t S e c u r it ie s
M a r k e t . 1 969. 4 8 p p. $ .2 5 each; 10 or m ore to
on e address, $ .2 0 each .
J o in t T r e a s u r y - F e d e r a l R e s e r v e S t u d y o f t h e
G o v e r n m e n t S e c u r itie s M a rk et: S t a f f S tu d ­
ie s — P a r t 1. 1 9 7 0 . 8 6 pp. $ .5 0 each ; 10 or m ore
to on e ad d ress, $ .4 0 ea ch . P a r t 2 . 1 9 7 1 . 153 pp.
and P a r t 3 . 1 9 7 3 . 131 pp. E ach v o lu m e $ 1 .0 0 ;
10 or m ore to on e ad d ress, $ .8 5 each .
O p e n M a r k e t P o l ic ie s a n d O p e r a t in g P r o c e ­
d u r e s — S t a f f S t u d i e s . 19 7 1 . 2 1 8 pp. $ 2 .0 0
each ; 10 or m ore to o n e ad d ress, $ 1 .7 5 each .
R e a p p r a is a l o f t h e F e d e r a l R e s e r v e D i s c o u n t
M e c h a n is m . Vol. 1. 1 9 7 1 . 2 7 6 pp. Vol. 2. 1 9 71.
173 pp. Vol. 3. 1 9 7 2 . 2 2 0 pp. Each v o lu m e $ 3 .0 0 ;
10 or m ore to on e ad d ress, $ 2 .5 0 each .
T h e E c o n o m et r ics of P rice D e t e r m in a t io n C o n ­
f e r e n c e , O ctober 3 0 - 3 1 , 1 9 7 0 , W ash in gton , D .C .
1 972. 3 9 7 pp. C loth ed . $ 5 .0 0 each; 10 or m ore
to on e address, $ 4 .5 0 each . Paper ed . $ 4 .0 0 each ;
10 or m ore to on e ad d ress, $ 3 .6 0 each .
F e d e r a l R e se r ve S t a f f S t u d y : W a y s to M o d e r a t e
F l u c t u a t io n s in
H o u s in g
C o n s t r u c t io n .
19 7 2 . 4 8 7 pp. $ 4 .0 0 each ; 10 or m ore to on e
ad d ress, $ 3 .6 0 each .
L e n d in g F u n c t io n s o f t h e F e d e r a l R e se r v e
B a n k s . 1 973. 271 pp. $ 3 .5 0 each ; 10 or m ore
to on e address, $ 3 .0 0 each .
I m p r o v in g t h e M o n e t a r y A g g r e g a t e s : R e po r t of
t h e A d v iso r y C o m m it t e e o n M o n e t a r y S t a ­
t is t ic s . 1976. 43 pp. $ 1 .0 0 each ; 10 or m ore to
on e address, $ .8 5 each .
A n n u a l P e r c e n t a g e R a t e T a b l e s (Truth in L en d ­
ing— R egu lation Z ) Vol. I (R egular T ransactions).
19 6 9 . 100 pp. Vol. II (Irregular T ransactions).
1 9 6 9 . 116 pp. E ach v o lu m e $ 1 .0 0 , 10 or m ore
o f sam e volu m e to o n e ad d ress, $ .8 5 each .
F e d e r a l R ese rve M e a s u r e s of C a pa c it y a n d C a ­
pa c ity U t il iz a t io n . 1978. 4 0 pp. $ 1 .7 5 ea ch ,
10 or m ore to on e ad d ress, $ 1 .5 0 . each .
T h e B a n k H o l d in g C o m p a n y M o v e m e n t to 1978:
A C o m p e n d iu m . 1 978. 2 8 9 pp. $ 2 .5 0 ea ch , 10
or m ore to on e ad d ress, $ 2 .2 5 each .
I m p r o v in g t h e M o n e t a r y A g g r e g a t e s :
S t a ff
P a p e r s . 1978. 170 pp. $ 4 .0 0 ea ch , 10 or m ore
to on e address, $ 3 .7 5 each .
1977 C o n su m e r C r e d it S u r v e y . 1978. 119 pp. $ 2 .0 0
each .

F e d e r a l R e se r v e S y st e m — P u r p o s e s
F u n c t i o n s . 1 9 7 4 . 125 pp.

and

A n n u a l R epo rt.
F e d e r a l R e se r v e B u l l e t i n . M on th ly. $ 2 0 .0 0 per
year or $ 2 .0 0 each in the U n ited S tates, its p o s s e s ­
sio n s, C anada, and M e x ic o ; 10 or m ore o f sam e
issu e to o n e ad d ress, $ 1 8 .0 0 per year or $ 1 .7 5
ea ch . E lsew h ere, $ 2 4 .0 0 per year or $ 2 .5 0 each .
B a n k in g a n d M o n e t a r y S t a t is t ic s , 1 9 1 4 - 1 9 4 1 .
(R eprint o f Part 1 o n ly ) 1 976. 6 8 2 pp. $ 5 .0 0 .
B a n k in g a n d M o n e t a r y S t a t is t ic s , 1 9 4 1 -1 9 7 0 .
1 9 7 6 . 1 ,1 6 8 p p. $ 1 5 .0 0 .
A n n u a l S t a t ist ic a l D ig est
1 9 7 1 -7 5 . 1 9 7 6 . 3 3 9 pp. $ 4 .0 0 per co p y for each
paid su b scrip tion to Federal R eserve B ulletin ;
all others $ 5 .0 0 each .
1 9 7 2 -7 6 . 1977. 3 3 8 pp. $ 1 0 .0 0 per co p y .
1 9 7 3 -7 7 . 1 9 78. 361 pp. $ 1 2 .0 0 per co p y .
F e d e r a l R ese r v e C h a r t B o o k . Issu ed four tim es a
year in F ebruary, M a y , A u g u st, and N ovem b er.
S ubscription in clu d es on e issu e o f H istorical Chart
B o o k . $ 7 .0 0 per year or $ 2 .0 0 each in the U nited
S tates, its p o ss e ss io n s, C anada, and M e x ic o . E ls e ­
w h ere, $ 1 0 .0 0 per year or $ 3 .0 0 each .
H isto r ic al C h a r t B o o k . Issu ed annually in Sep t.
Subscription to Federal R eserve Chart B o o k in ­
clu d es on e issu e. $ 1 .2 5 each in the U n ited S tates,
its p o ss e ss io n s, C anada, and M ex ico ; 10 or m ore
to on e address, $ 1 .0 0 each . E lsew h ere, $ 1 .5 0 each .
C a pit a l M a r k e t D e v e l o p m e n t s . W e e k ly . $ 1 5 .0 0 per
year or $ .4 0 each in the U n ited S tates, its p o s s e s ­
sio n s , C anada, and M e x ic o ; 10 or m ore o f sam e
issu e to on e a d d ress, $ 1 3 .5 0 per year or $ .3 5 each .
E lsew h ere, $ 2 0 .0 0 per year or $ .5 0 each .
S e l e c t e d I n t e r e st a n d E x c h a n g e R at es — W e e k l y
S eries of C h a r t s . W e e k ly . $ 1 5 .0 0 per year or
$ .4 0 each in the U n ited S tates, its p o ss e ss io n s,
C anada, and M e x ic o ; 10 or m ore o f sam e issu e
to on e ad d ress, $ 1 3 .5 0 per year or $ .3 5 each .
E lsew h ere, $ 2 0 .0 0 per year or $ .5 0 each .
T h e F e d e r a l R e se r v e A c t , as am ended through D e ­
cem b er 1 9 7 6 , w ith an ap p en d ix con tain in g p ro v i­
sio n s o f certain other statutes affectin g the Federal
R eserv e S y stem . 3 0 7 pp. $ 2 .5 0 .
R e g u l a t io n s o f t h e B o a r d o f G o v e r n o r s of t h e
F e d e r a l R e se r v e S y st e m
P u b l is h e d I n t e r p r e t a t io n s o f t h e B o a r d of G o v ­
e r n o r s , as o f D e c . 3 1 , 1 9 7 8 . $ 7 .5 0 .
I n d u s t r ia l P r o d u c t io n — 1976 E d i t i o n . 1 9 7 7 . 3 0 4
p p. $ 4 .5 0 each ; 10 or m ore to on e ad d ress, $ 4 .0 0
ea ch .




Federal Reserve Board Publications

C o n su m e r E d u c a t io n P a m p h l e t s
(Short pam phlets suitable fo r classroom use. M ultiple
copies available without charge.)
T h e B o a r d of G o v e r n o r s of t h e F e d e r a l R e se r ve
S ystem
C o n su m e r H a n d b o o k T o C re d it P r o t e c t io n L a w s .
T he E q u a l C r e d it O p p o r t u n it y A ct a n d . . . A g e .
T he E q u a l C r e d it O p p o r t u n it y A ct a n d . . .
C r e d it R ig h t s in H o u s i n g .
T he E q u a l C r e d it O p p o r t u n it y A ct a n d . . .
D o c t o r s , L a w y e r s , S m a ll R e t a il e r s , a n d
O t h e r s W ho M a y P r o v id e I n c id e n t a l C r e d it .
T h e E q u a l C r e d it O p p o r t u n it y A ct a n d . . .
W om en.
F air C r e d it B i l l i n g .
T he F e d e r a l O p e n M a r k e t C o m m it t ee
F e d e r a l R e se r v e B a n k B o a r d o f D irectors
F e d e r a l R e se r v e B a n k s
A G u id e to F e d e r a l R e se r ve R e g u l a t io n s .
H o w to F ile A C o n s u m e r C r e d it C o m p l a in t .
If Y o u B o rr o w T o B u y S t o c k .
I f Y o u U se A C r e d it C a r d .
T r u t h in L e a s in g .
U .S . C u r r e n c y .
W h a t T r u t h in L e n d in g M e a n s to Y o u .

S t a f f S t u d ie s
(Studies and p a p e rs on econom ic and financial sub­
jec ts that are o f general interest.)

Summaries Only Printed in the Bulletin
(R equests to obtain single copies o f the full text or
to be added to the m ailing list fo r the series may be
sent to Publications S ervices.)
T h e B e h a v i o r o f M e m b e r B a n k R e q u ir e d R e s e r v e
R a tio s a n d t h e E f f e c t s o f B o a r d A c t io n ,
1 9 6 8 - 7 7 , by T h om as D . S im p so n . July 1 978. 39
pp.

F o o t h o l d A c q u i s it i o n s a n d B a n k M a r k e t S t r u c ­
t u r e , by S teph en A . R h oad es and Paul S c h w e it­
zer, July 1 9 7 8 . 8 pp.
I n t e r e st R a t e C e il in g s a n d D i s in t e r m e d ia t io n , by
Edward F. M c K e lv e y . S ep t. 1978. 105 pp.
T h e R e l a t io n s h ip B e t w e e n R e se r ve R at io s a n d
t h e M o n e t a r y A g g r e g a t e s U n d e r R e serves
a n d F e d e r a l F u n d s R a t e O p e r a t in g T a r g e t s ,
by K enneth J. K o p eck y . D e c . 1978. 58 pp.
T ie - in s B e t w e e n t h e G r a n t in g o f C r e d it a n d
S a l e s o f I n s u r a n c e by B a n k H o l d in g C o m p a ­
n ie s a n d O t h e r L e n d e r s , b y R obert A . E isen b eis
and Paul R . S ch w eitzer. F eb . 1979. 75 pp.
G e o g r a ph ic E x p a n s io n o f B a n k s a n d C h a n g e s in
B a n k in g S t r u c t u r e , by S teph en A . R h oad es.
M ar. 19 7 9 . 4 0 pp.
I m pac t o f t h e D o l l a r D e p r e c ia t io n o n t h e U .S .
P rice L e v e l : A n A n a l y t ic a l S u r v e y of E m ­
pirica l E s t im a t e s , by Peter H oop er and Barbara
R . L o w rey . A pr. 1979. 53 pp.
In n o v a t i o n s i n B a n k L o a n C o n t r a c t i n g : R e c e n t
E v i d e n c e , b y P a u l W . B o lt z an d T im S . C a m p ­
b e ll. M a y 1 9 7 9 . 4 0 p p .




A 75

M e a s u r e m e n t o f C a pa c it y U t il i z a t io n : P r o b le m s
a n d T a s k s , by Frank de L e eu w , L aw ren ce R.
F orest, Jr., R ichard D . R ad d ock , and Z oltan E.
K en esey . July 1979. 2 6 4 pp.
T h e M a r k e t for F e d e r a l F u n d s a n d R e pu r c h a se
A g r e e m e n t s , by T h om as D . S im p so n . July 1979.
106 pp.

Printed in Full in the Bulletin
(Included under “R e p r in ts .”)

R e p r in t s
(Except for Staff P apers, Staff Studies, and som e
leading articles, m ost of the articles reprinted do not
exceed 12 p a g e s.)
M e a su r e s o f S e c u r it y C r e d it . 1 2 /7 0 .
R e v isio n of B a n k C r e d it S e r ie s . 1 2 /7 1 .
A ssets a n d L ia b il it ie s o f F o r e ig n B r a n c h e s of
U .S . B a n k s . 2 /7 2 .
B a n k D e b it s , D e p o s it s , a n d D e po sit T u r n o v e r —
R e v ise d S e r ie s . 7 /7 2 .
Y ie l d s o n N e w l y Is s u e d C o r po r a t e B o n d s . 9 /7 2 .
R e c e n t A c t iv it ie s o f F o r e ig n B r a n c h e s o f U .S .
B a n k s . 1 0 /7 2 .
O n e - B a n k H o l d in g C o m p a n ie s B e fo r e t h e 1970
A m e n d m e n t s . 1 2 /7 2 .
Y ie l d s o n R e c e n t l y O ff e r e d C o r po r a t e B o n d s .
5 /7 3 .
R a t e s o n C o n s u m e r I n s t a l m e n t L o a n s . 9 /7 3 .
N e w S eries for L ar g e M a n u f a c t u r in g C o r p o r a ­
t i o n s . 1 0 /7 3 .
U .S . E n e r g y S u p p lie s a n d U s e s , Staff E conom ic
Study by C layton G eh m an. 1 2 /7 3 .
T h e S t r u c t u r e o f M a r g in C r e d i t . 4 /7 5 .
N e w S t a t ist ic a l S eries o n L o a n C o m m it m e n t s at
S e l e c t e d L arg e C om m er c ial B a n k s . 4 /7 5 .
A n A s s e s s m e n t o f B a n k H o l d i n g C o m p a n ie s , Staff
E conom ic Study by Robert J. L aw ren ce and S a m ­
uel H . T a lley . 1 /7 6 .
I n d u s t r ia l E l ec t r ic P o w e r U s e . 1 /7 6 .
R e v isio n of M o n e y S to ck M e a s u r e s . 2 /7 6 .
S u r v e y of F in a n c e C o m p a n ie s , 1 9 7 5 . 3 /7 6 .
R e v ise d S e ries for M e m b e r B a n k D e po sit s a n d
A g g r e g a t e R e s e r v e s . 4 /7 6 .
I n d u s t r ia l P r o d u c t io n — 1976 R e v is i o n . 6 /7 6 .
F e d e r a l R e se r ve O pe r a t io n s in P a y m e n t M e c h a ­
n is m s : A S u m m a r y . 6 /7 6 .
N e w E st im a t e s of C a pa c it y U t il i z a t io n : M a n u ­
fa c t u r in g a n d M a t e r ia l s . 1 1 /7 6 .
B a n k H o l d in g C o m p a n y F in a n c ia l D e v e l o p m e n t s
in 1 976. 4 /7 7 .
S u r v e y of T erm s of B a n k L e n d in g — N e w S e r ie s .
5 /7 7 .
T h e C om m er c ial P a pe r M a r k e t . 6 /7 7 .
T h e F e d e r a l B u d g e t in t h e 1 9 7 0 ’s. 9 / 7 D
S u m m a r y M e a su r e s of t h e D o l l a r ’s F o r e ig n E x ­
c h a n g e V a l u e . 1 0 /7 8 .
S u r v e y of T im e a n d S a v in g s D e po sit s at C om m er ­
c ial B a n k s , January 1 979. 5 /7 9 .
R e d e f in in g t h e M o n e t a r y A g g r e g a t e s . 1 /7 9 .
U .S . I n t e r n a t io n a l T r a n s a c t io n s in 1978. 4 /7 9 .

A76

Index to Statistical Tables
References are to p ages A -3 through A -6 8 although the prefix “A ” is om itted in this index
A C C E P T A N C E S , bankers, 11, 2 5 , 27
A gricultural lo a n s, com m ercial b an k s, 18, 2 0 - 2 2 , 26
A ssets and lia b ilities ( See also F oreign ers)
B an k s, by c la s s e s , 16, 17, 18, 2 0 - 2 3 , 29
D o m estic finance co m p a n ie s, 39
Federal R eserve B an k s, 12
N onfinancial corp oration s, current, 38
A u to m o b iles
C on su m er in stallm en t cred it, 4 2 , 43
P roduction, 4 8 , 4 9
B A N K E R S b a la n ces, 16, 18, 2 0 , 2 1 , 22
(See also F oreign ers)
Banks for C o o p era tiv es, 35
B on d s ( See also U .S . govern m en t secu rities)
N ew issu es, 3 6
Y ie ld s, 3
Branch banks
A ssets and lia b ilities o f foreign branches o f U .S .
b an k s, 5 6
L iab ilities o f U .S . banks to their foreign
bran ch es, 23
B u sin ess a ctiv ity , 4 6
B u sin ess exp en d itu res on new plant and
eq u ip m en t, 38
B u sin ess loan s (See C om m ercial and industrial
loan s)
C A P A C IT Y u tilization , 4 6
Capital a ccou n ts
B an k s, by c la s s e s , 16, 17, 19, 20
Federal R eserve B an k s, 12
Central b an k s, 68
Certificates o f d ep o sit, 2 3 , 27
C om m ercial and industrial loans
C om m ercial b an k s, 15, 18, 26
W eek ly reporting b an k s, 2 0 , 2 1 , 2 2 , 2 3 , 24
C om m ercial banks
A ssets and lia b ilities, 3 , 1 5 - 1 9 , 2 0 - 2 3 , 6 9 - 7 2
B u sin e ss lo a n s, 2 6
C om m ercial and industrial loan s, 2 4 , 26
C on su m er loan s h eld , by ty p e , 4 2 , 43
L oans sold outright, 23
N u m ber, by c la s se s , 16, 17, 19
R eal estate m ortgages h eld , by type o f holder and
property, 41
C om m ercial paper, 3 , 2 5 , 2 7 , 39
C on d ition statem ents (See A ssets and liab ilities)
C on stru ction , 4 6 , 50
C on su m er installm ent cred it, 4 2 , 43
C on su m er p rices, 4 6 , 51
C on su m p tion ex p en d itu res, 5 2 , 53
C orporations
Profits, ta x es, and d iv id en d s, 37
S ecu rity issu e s, 3 6 , 65
C ost o f liv in g (See C onsum er p rices)
C redit u n io n s, 2 9 , 4 2 , 43
C urrency and c o in , 5 , 16, 18
Currency in circu lation , 4 , 14
C u stom er cred it, stock m arket, 28
D E B IT S to d ep osit a cco u n ts, 13
D eb t (S ee specific types of debt or securities)




D em an d d ep osits
A d justed , com m ercial b an k s, 13, 15, 19
B an k s, by c la s se s , 16, 17, 19, 2 0 - 2 3
O w n ership by in d ivid u als, partnerships, and
corp oration s, 25
Subject to reserve req u irem en ts, 15
T urnover, 13
D ep osits (See also specific types)
B an k s, b y c la s se s , 3 , 16, 17, 1 9 , 2 0 - 2 3 , 2 9 , 6 9 - 7 2
F ederal R eserve B a n k s, 4 , 12
Subject to reserve requ irem en ts, 15
T urnover, 13
D iscou n t rates at R eserve B anks (See Interest rates)
D isc o u n ts and ad van ces b y R eserv e B an k s ( See L oan s)
D iv id en d s, corporate, 37
E M P L O Y M E N T , 4 6 , 47
E urodollars, 27
F A R M m ortgage lo a n s, 41
Farmers H om e A d m in istration , 41
Federal a gen cy o b lig a tio n s, 4 , 1 1, 12, 13, 34
Federal and fed erally sp on sored credit a g en cies, 35
Federal finance
D eb t subject to statutory lim itation and
types and ow n ersh ip of gross d eb t, 32
R eceip ts and o u tla y s, 3 0 , 31
Treasury operating b alan ce, 30
Federal F in an cin g B an k , 3 0 , 35
Federal fu n d s, 3 , 6 , 18, 2 0 , 2 1 , 2 2 , 2 7 , 30
Federal H om e Loan B an k s, 35
Federal H om e Loan M ortgage C orporation, 3 5 , 4 0 , 41
Federal H ou sin g A d m in istration , 3 5 , 4 0 , 41
Federal Interm ediate Credit B an k s, 35
Federal Land B an k s, 3 5 , 41
Federal N ational M ortgage A sso c ia tio n , 3 5 , 4 0 , 41
Federal R eserve Banks
C on d ition statem ent, 12
D iscou n t rates (S ee Interest rates)
U .S . govern m en t secu rities h eld , 4 , 12, 13, 3 2 , 33
Federal R eserve cred it, 4 , 5 , 12, 13
Federal R eserve n o te s, 12
F ederally sp on sored credit a g e n c ie s, 35
F inance com p an ies
A ssets and lia b ilities, 39
B u sin ess cred it, 39
L oan s, 2 0 , 2 1 , 2 2 , 4 2 , 43
Paper, 2 5 , 27
Financial in stitu tion s, loans to, 18, 2 0 - 2 2
F loat, 4
F low o f fu n d s, 4 4 , 45
F oreign
Currency op eration s, 12
D ep o sits in U .S . b an k s, 4 , 12, 19, 2 0 , 2 1 , 22
E xch an ge rates, 68
T rade, 55
F oreigners
C laim s o n , 5 6 , 5 8 , 6 1 , 6 2 , 6 3 , 67
L iab ilities to , 2 3 , 5 6 - 6 0 , 6 4 - 6 6
GOLD
C ertificates, 12
S to c k , 4 , 55
G overn m en t N ational M ortgage A sso c ia tio n , 3 5 , 4 0 , 41
G ross national product, 5 2 , 53

A 77

H O U S IN G , new and ex istin g un its, 50
IN C O M E , personal and nation al, 4 6 , 5 2 , 53
Industrial p rod u ction , 4 6 , 48
Installm ent lo a n s, 4 2 , 43
Insurance co m p a n ie s, 2 9 , 3 2 , 3 3 , 41
Insured com m ercial b an k s, 17, 18, 19, 6 9 - 7 2
Interbank lo a n s and d ep o sits, 16, 17
Interest rates
B o n d s, 3
B u sin e ss loan s o f b anks, 26
Federal R eserve B an k s, 3 , 8
F oreign co u n tries, 68
M on ey and capital m arkets, 3 , 27
M ortg a g es, 3 , 4 0
Prim e rate, co m m ercial b anks, 26
T im e and sa v in g s d ep o sits, 10, 72
International capital transactions ot the U nited
S tates, 5 6 - 6 7
International org an ization s, 5 6 - 6 1 , 6 4 - 6 7
In ven tories, 52
Investm ent co m p a n ie s, issu es and a ssets, 37
In vestm en ts ( See also specific types)
B an k s, by c la s se s , 16, 17, 18, 2 0 , 2 1 , 2 2 , 29
C om m ercial b anks, 3 , 15, 16, 17, 18
Federal R eserv e B an k s, 12, 13
L ife insurance co m p a n ie s, 29
S a v in g s and loan a sso cia tio n s, 29
L A B O R fo rce, 4 7
L ife insurance co m p an ies ( See Insurance com p an ies)
Loans (See also specific types)
B an k s, by c la s se s , 16, 17, 18, 2 0 - 2 3 , 29
C om m ercial b an k s, 3 , 1 5 -1 8 , 2 0 - 2 3 , 2 4 , 26
Federal R eserv e B an k s, 3 , 4 , 5 , 8 , 12, 13
Insurance co m p a n ie s, 2 9 , 41
Insured or guaranteed by U nited S tates, 4 0 , 41
S a v in g s and loan a sso cia tio n s, 29
M A N U F A C T U R IN G
C apacity u tilization , 4 6
P rod uction , 4 6 , 4 9
M argin req u irem en ts, 28
M em ber banks
A ssets and lia b ilities, by c la s se s , 16, 17, 18
B o rro w in g s at Federal R eserve B an k s, 5 , 12
N u m ber, by c la s se s , 16, 17, 19
R eserve p o sitio n , b a sic, 6
R eserve req u irem en ts, 9
R eserv es and related item s, 3 , 4 , 5 , 15
M ining p ro d u ction , 4 9
M ob ile h om e sh ip m en ts, 50
M onetary a g g reg a tes, 3 , 15
M on ey and capital m arket rates ( See Interest rates)
M on ey stock m easu res and co m p o n e n ts, 3 , 14
M ortgages (S ee Real estate loan s)
Mutual funds (S ee In vestm en t com p an ies)
Mutual sa v in g s b an k s, 3 , 10, 2 0 - 2 2 , 2 9 , 3 2 , 3 3 , 41
N A T IO N A L b anks, 17
N ational d efen se ou tla y s, 31
N ational in co m e, 52
N on m em b er b an k s, 17, 18, 19
O P E N m arket tran saction s, 1 1
P E R S O N A L in co m e, 53
Prices
C on su m er and producer, 4 6 , 51
S tock m arket, 28
Prim e rate, co m m ercial b anks, 26
P rod uction , 4 6 , 4 8
Profits, corp orate, 37




R E A L estate loans
B an k s, by c la s se s , 18, 2 0 - 2 2 , 2 9 , 41
L ife insurance c o m p a n ie s, 29
M ortgage term s, y ie ld s, and a ctiv ity , 3 , 4 0
T yp e o f holder and property m ortgaged , 41
R eserve p o sitio n , b a sic, m em ber b an k s, 6
R eserve requ irem en ts, m em ber b an k s, 9
R eserves
C om m ercial b an k s, 16, 18, 2 0 , 2 1 , 22
Federal R eserve B an k s, 12
M em ber b an k s, 3 , 4 , 5 , 15, 16, 18
U .S . reserve a ssets, 55
R esidential m ortgage loan s, 4 0
Retail credit and retail sa le s, 4 2 , 4 3 , 4 6
S A V IN G
F lo w o f fu n d s, 4 4 , 4 5
N ational in com e a cco u n ts, 53
S avin gs and loan a ss n s., 3 , 10, 2 9 , 3 3 , 4 1 , 4 4
S a v in g s d ep osits (S ee T im e d ep osits)
>S a v in g s in stitu tion s, se lecte d a ssets, 29
S ecu rities (See also U .S . govern m en t secu rities)
Federal and fed erally sp on sored a g e n c ie s , 35
F oreign tran saction s, 65
N ew issu e s, 36
P rices, 28
S p ecial D raw in g R ig h ts, 4 , 12, 5 4 , 55
State and local govern m en ts
D e p o sits, 19, 2 0 , 2 1 , 22
H old in gs o f U .S . govern m en t secu rities, 3 2 , 33
N ew security issu e s, 36
O w n ership o f secu rities o f, 18, 2 0 , 2 1 , 2 2 , 29
Y ield s o f se cu rities, 3
State m em ber b an k s, 17
S tock m arket, 28
S tock s (See also S ecu rities)
N ew issu es, 36
P rices, 28
T A X receip ts, fed eral, 31
T im e d ep o sits, 3 , 10, 13, 15, 16, 17, 19, 2 0 , 2 1 ,
22, 23, 6 9 -7 2
T rade, fo reig n , 55
Treasury cu rren cy, Treasury ca sh , 4
Treasury d ep o sits, 4 , 12, 30
Treasury operating b alan ce, 30
U N E M P L O Y M E N T , 47
U .S . balance of p aym en ts, 5 4
U .S . govern m en t b alan ces
C om m ercial bank h o ld in g s, 19, 2 0 , 2 1 , 22
M em ber bank h o ld in g s, 15
Treasury d ep o sits at R eserve B an k s, 4 , 12, 30
U .S . govern m en t secu rities
Bank h o ld in g s, 16, 17, 18, 2 0 , 2 1 , 2 2 , 2 9 ,
3 2 , 33
D ealer tran saction s, p o sitio n s, and finan cin g, 34
Federal R eserve Bank h o ld in g s, 4 , 12, 13, 3 2 , 33
F oreign and international h o ld in g s and
tran saction s, 12, 3 2 , 6 4
O pen market tran saction s, 1 1
O u tstan d in g, b y type and ow n ersh ip , 3 2 , 33
R ates, 3 , 27
U tilities, p rod u ction , 4 9
V E T E R A N S A d m in istration , 4 0 , 41
W E E K L Y reporting b an k s, 2 0 - 2 4
W h o lesa le p rices, 4 6 , 51
Y IE L D S ( See Interest rates)

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The Federal Reserve System
B o u n d a rie s o f F e d e ra l R e s e rv e

—

Boundaries of Federal Reserve Districts

----- Boundaries of Federal Reserve Branch
Territories
Q

D is tric ts a n d T h e ir B ra n c h

Board of Governors of the Federal
Reserve System




T e rrito rie s

®

Federal Reserve Bank Cities

•

Federal Reserve Branch Cities
Federal Reserve Bank Facility