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255
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INTRODUCTION

FLOW OF FUNDS

FEBRUARY 1975

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BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

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INTRODUCTION
TO
FLOW OF FUNDS

FEBRUARY 1975

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

Price: 50 cents a copy: in quantities of 10 or more sent
to one address, 40 cents each. Copies may be obtained
from Publications Services, Division of Administrative
Services, Board of Governors of the Federal Reserve
System, Washington, D.C., 20551, and remittance should
be made to the order of the Board of Governors of the
Federal Reserve System in a form collectible at par in
U.S. currency. (Stamps and coupons not accepted)

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CONTENTS

Preface

Concept of accounts

Organization of accounts

111

Relation to income and product accounts

Definition of sectors and transaction categories

Flow of funds data publications

Data sources

Bibliography

Text Tables
1
2
3
4
5
6
7
8

Model flow of funds matrix
Model credit market summary
Private claims on U.S. Govt. institutions
Gross national saving and investment-summary comparison, 1961
Saving and physical investment in flow of funds accounts, 1961
Sector structure
Financial transaction categories
Sources of financial data for flow of funds accounts

Appendix Tables
S.1
S.2, S.3
S.4
S.5
S.6
S.7
S.8
S.9
S. l O

MARlQ
1975

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Summary ·of flow of funds accounts for the year 1973
Financial assets and liabilities, December 31, 1973
Funds raised in credit markets
Credit market supply of funds
Credit market debt outstanding
Claims against credit market debt
Household sector savjng and investment
Household sector assets and liabilities
Nonfinancial business sector saving and investment and assets and liabilities

3
9
25
31
33
35
41
50

PREFACE
Flow of funds accounting is a national statis
tical system that has been under development
by the Federal Reserve since 1947 and that
has been published in several forms during
that period. Descriptions and definitions of the
successive forms of accounts have appeared
both in the Federal lleserve Bulletin. and in
separate publications. 1 In the following pages
that descriptive material is pulled together and
brought up to date with the current form of the
accounts. The material appears in Sections III
and IV as a set of relationship tables and defi
nitions of sectors and financial categories that
are reference material on the subject. An intro
duction to the conceptual framework of the
system is in Section II, and Section I provides
a broad description of the purposes of the
system and an aggregative view of recent de
cades that emerges from the data in its present
form.
This is not a statistical publication, although
a few tables in the appendix underlie the his-

torical material in Section I. Nor does it include
descriptions of specific statistical sources and
derivation procedures used in compiling the
accounts. The data are published and made
available in several forms as described in Sec
tion V. A separate publication on the details
of derivation methods is mentioned in Section
VI, which discusses briefly the problems of
adapting data sources to the account structure. 2
This publication is at a general level and is
intended merely to indicate why the system has
been constructed and what it encompasses. The
Bibliography includes several review papers
that go into further detail on uses of financial
accounts for judgmental and econometric anal
ysis and that include their own extensive bibli
ographies on macroeconomic work in financial
analysis. This publication is an introduction
to that work as well as to the flow of funds
accounts themselves.
2 All requests for data and for information about the ac
counts should be addressed to Flow of Funds Section, Divi
sion of Research and Statistics, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551.

1 For earlier publications, see Bibliography, p. 53.

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CONCEPT OF ACCOUNTS
The flow of funds system of national accounts
is designed to bring the many financial activities
of the U.S. economy into explicit statistical
relationship with one another and into direct
relation to data on the nonfinancial activities
that generate income and production. The pur
pose of the accounts is to provide, systemati
cally, the aggregate measures of transactions
needed to identify both influences of the non
financial economy on financial markets and
reciprocal influences of financial market devel
opments on demand for goods and services,
sources and amounts of saving and investment,
and the structure of income. The accounts are.
intended to provide an empirical base for ex
ploring such questions as the sensitivity of
borrowing to interest rates as against other
influences, the effects of cost and supply of
credit on physical investment demand, the role
of money holdings in the public's structure of
assets and liabilities, and the relation of finan
cial positions - levels of assets and liabilities
- to demands for goods and services, for
credit, and for investment in• financial claims.
The flow of funds system focuses on such
questions in a macroeconomic setting that
covers, as far as possible, all of the institutional
groups and all types of transactions in the
economy. Some elements of the system exist
elsewhere and separate from the structure - as
statements of, for example, corporate finance,
government finance, balance of payments,
money and banking activities, individuals'
saving, residential· finance, and security market
activity. These elements are incorporated into
the system as integral parts, together with in
formation from income and product accounts
on saving and capital formation. Each such
element is one aspect of an integrated economy,
and each connects with the others in several
ways. The security markets, for example, are

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a point of intersection among business devel
opments generating long-term credit needs,
international capital movements, bank credit
availability, flow of credit through financial
institutions, and the financing of government
deficits. When all of the relevant information
is put together in mutually consistent fashion in
one framework, each element is seen as part
of a broader macroeconomic system, and its
connection with the other parts can be made
explicit enough for analysis. Like the national
income and product accounts published by the
Department of Commerce, the flow of funds
system is a social accounting structure that
records both the payment and the receipt
aspects of any transaction included in the sys
tem and that includes a balance in each ac
count of the structure between total payments
and total receipts. The flow of funds accounts
can in fact be · viewed as a direct extension of
the Commerce income and product structure
into the financial markets of the economy, with
the purpose of establishing direct linkages be
tween the Commerce data on saving and invest
ment - the capital account in the income and
product structure - and the lending and bor
rowing activities that are associated with saving
and investment.

MODEL ACCOUNT STRUCTURE
The nature of those linkages and, more gen
erally, the relation of financial markets to the
nonfinancial activities of the economy are
portrayed in Table 1. The table is a severely
condensed and simplified form of the flow of
funds matrix found on page S.1 that maps
more completely the basic structure of the fl.ow
of funds system.3 The arithmetic of the matrix
3 The note to Table 1 is important for working out the
relation between the general description in this section and
the more complex form that financial activity takes in the
actual economy.

into several sector groups, each of which has a
column in the matrix, and all transactions of
each group are recorded on one or another of
the matrix rows. The top row - saving - is
for each sector the net sum of current receipts
from income less current outlays for consump
tion, operating expenses, and so forth. Saving
appears as a net amount available from current
operations for investment purposes. Other
amounts are borrowed in financial markets by
each sector, and borrowings and saving to
gether are the sources of funds used to acquire
physical and financial assets.
A distinction is drawn between nonfinancial

is fairly simple, and when applied to the full
system of accounts it provides a basis for
understanding both the accounting relation
ships among the time-series tables in this publi
cation and the analytic approach underlying
the system.
The accounting rules of the matrix, their
consequences for analysis, and the relation of
the matrix to the tables are spelled out in Sec
tion II. Very briefly, Table 1 is a statement of
capital account for the economy as a whole,
showing investment in assets in the uses columns
and means of financing that investment in the
sources columns. The table divides the economy
TABLE 1 MODEL FLOW OF FUNDS MATRIX
(Hypothetical data; billions of dollars)
Private
domestic
nonfinancial
sector

Government
sector

Financial
interme diaries
sector

Rest of
world
sector

Totals

Memo:
domestic
totals

Transaction
Use Source Use Source Use Source Use Source Use Source Use Source
category
Nonfinancial:
179
1. Saving
-10
-4
5
170
174
2. Capital outlays
170
170
170
Financial:
3. Net financial
investment
9
-10
4
-4
5
0
4. Total financial uses
140
and sources (5+6) 69
60
5
147 144
15
70
7 147
65
3 -----5. Deposits at financial
intermediaries
55
53
50
55
55
3
2
55
85
91
19
6. Loans and securities
92
60
2
92
15
7
1
70
to
Norn. -This table compresses about 20 sectors in the full system into four columns for sector types that are to be
distinguished in the present discussion, and the rows are a similar grouping of transaction categories. In addition, the matrix
is simplified by omitting the row and the column for discrepancies and a number of items peripheral to the main stream of
financial transactions. These omitted items are treated in the model as nonexistent in the simple economy shown. Specifically,
the relation of transactions in this table to the full matrix on page S. l of the fables is conceptually as follows:
Full matrix
Model
Gross saving
Saving
Gross investment
Omitted
Private capital expenditures, net
Capital outlays
Net financial investment
Net financial investment
Total firiancial uses and sources
Financial uses, net and financial sources
Omitted
Gold, foreign exchange, Treasury currency
Deposits at financial intermediaries
Demand deposits, currency, and time an.d savings accounts
Omitted
Insurance and pension reserves, and interbank items
Loans and securities
Credit market instruments
Security credit, trade credit, taxes payable, noncorporate
Omitted
equities, miscellaneous, and sector discrepancies
The Government sector should be interpreted as central Government only, with State and local governments omitted as
another simplification. Of the omissions, the most important for the discussion that follows is insurance and pension reserves,
which are a major form of intermediation. This item is left out because part of such reserves are liabilities of governments
and complicate the relation between intermediation on the one hand and financial institutions on the other. The present
section is focused only on the broad outlines of structural relationships, and a more detailed descript!.on requires many
qualifications and additions to the broad form in order to incorporate these governmental reserves and the other omitted items.

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transactions reflected in the first two rows of
Table 1 - purchases and sales of goods and
services, transfer payments and receipts, and
taxes - and financial transactions in the fol
lowing rows - net changes in the capital
amounts of claims owed as liabilities or held as
assets by each sector. All of the financial trans
actions of a sector are combined into a net
financial investment that is the excess of the
sector's lending ( financial uses) over its borrow
ing (financial sources).
The two most basic constraints in the matrix
are ( 1) that for each sector total investment,
which is the sum of capital outlays plus net
financial investment, is by definition equal to
the saving shown in row 1 for the sector, and
(2) that on any one row of the matrix the sum
of all uses of funds shown across the columns
is equal to the sum of all sources of funds in
that row. (Rows 1 and 2 of Table 1 are the
source and use sides respectively for a single
row covering all nonfinancial transactions to
gether.') With balance vertically between saving
and investment and horizontally between pay
ments and receipts, each column and each row
constitutes one full account of the structure,
and the relationships among columns, among
rows, and between columns and rows express
the interlocking nature of the accounting system
as a whole.
As one illustration of the structure, the gov
ernment column in Table 1 can be seen to be
a particular form of budget statement, with
a nonfinancial deficit in the first row offset by
a net sum of changes in cash balances, loans,
and debt outstanding in the rows below. This
column is a balanced account that differs from
other budget statements for governments mainly
in that it distinguishes sharply between non
financial and financial transactions and arranges
transactions so that they can be identified across
the rows in the accounts of other parties to the
transactions. The rest of the world column is

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similarly a particular form of balance of pay
ments statement, arranged so as to connect it
with other sector columns along specific rows.
A loan from the government to abroad, for
example, appears on row 6 as a government use
of funds and a foreign source of funds, regard
less of how it may be treated in other budget
statements or balance of payments statements.
Each of the two loan entries - the use and the
source - is then playing a double role in the
matrix, vertically as a component of its sector's
column balance, and horizontally as part of the
row balance. In the row they of course balance
each other, but vertically they integrate in more
complex ways with the other transactions of
the two sectors separately. The interlock of the
system consists of establishing such double
roles, horizontally and vertically, for all trans�
actions of all sectors in the system simultane
ously. The result is an integrated structure that
can be used to measure linkages either vertically
or horizontally or, in the most complete forms
of analysis, in both directions simultaneously.
The condition that saving equals investment
for each sector is identical in form with the
well-known equality of saving and investment
for the over-all economy in income-and-product
accounting. For the total economy, investment
on a consolidated basis consists of outlays for
capital goods plus net foreign investment, the
excess of lending abroad over borrowing from
abroad. In the flow of funds accounts, similarly,
each sector's investment consists of its pur
chases of capital goods plus a net financial
investment that includes net lending to the
rest of the domestic economy as well as to
abroad. In the model matrix (Table 1), the
first three rows state the equality of saving
and investment for each sector, and at the
right of the model matrix is a separate column
of totals for the three domestic sector columns
of the table. This memo column is one form
of the capital account in the Commerce De-

partment income and product system. It can be
seen that the matrix, in its domestic sector
columns, constitutes a deconsolidation of that
capital account, with capital outlays distributed
among the domestic sectors and for each a net
financial investment that is a more general form
of the net foreign investment in the consolidated
total.
This relation to the Commerce domestic
capital account is in the first three rows of the
matrix. In the lower rows, the matrix goes into
detail on the forms of lending and borrowing
by each sector that underlie the sector's net
financial investment. Only two types are shown
on the model - deposits at intermediaries and
loans and securities-but the full matrix (p. S.1)
has many more than this, as shown by Table
7 on page 41. For each of these financial. rows
a full accounting of purchases and sales of the
particular type of instrument is required in the
system. It is this detailing of credit transactions
in the capital account that brings the financial
statistics of the economy into coherent relation
to one another and into direct relation to the
nonfinancial statistics in income and product
accounts. The accounting link to nonfinancial
transactions is net financial investment ( row 3
of Table 1 ) , but the economic substance of
the information is in the interactions among
specific types of credit flows - deposits and
loans - and between such flows and specific
forms of capital outlay, income generation, and
saving, all within the accounting constraints of
the system.
The matrix goes beyond the Commerce capi
tal account in that it incorporates the foreign
sector ( rest of the world) as an explicit column.
This form requires that the consolidated do
mestic capital account be shown as a memo
column, but it has the advantage that for each
financial transaction row the matrix states di
rectly all of the transactions in the market,
whether domestic or foreign. Alternative forms

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tend to complicate or obscure the matrix with
out adding information.

ANALYTIC ROLE OF MATRIX
The matrix is an essential framework for both
calculating and using financial market statistics
on an economy-wide basis. It is general enough
in form to assimilate the creation of new types
of financial instruments, new forms of relation
ship, and changes in emphasis or practice that
are continually occurring in individual financial
markets. The explicit constraints of the system
enforce a consistency of analysis not easily
reached without the framework, particularly in
questions at a macroeconomic level, where all
market forces interacting with one another are
to be accounted for. Such questions become
operable only when the transactions involved
have been stated within the matrix context on
a complete basis but without double-counting.
The role of the matrix for such purposes can
be seen by the simple exercise of assuming
some major financial - development - such a� a
sharp rise in government borrowing or in de
posit flows to banks - placing that flow in its
appropriate cell of the matrix, and working out
even a minimum possible conjunct set of en
tries that must exist to keep the matrix in
balance. If the example is in government bor
rowing, that source of funds to the government
must be mirrored in the government column in
some combination of a nonfinancial deficit
( negative saving) and government lending as
an offsetting use of funds, since the money
raised is obviously being absorbed in one way
or another. At the same time, the borrowing
itself must be matched by an equal amount of
lending somewhere along the row that carries
government securities. And in whatever column
that lending appears, there must be a source of
funds available for this use. In the simplest
situation that source can be the positive private

saving and borrowing from the government that
are already implied in the government account.
For example, a minimum complete accounting
for the government borrowing might be:
Saving
Government loans
Government securities

in touch with one another. The merit of such
constrained systemwide forecasts is that each
element can be tested by the plausibility of its
counterparts in other areas of the matrix. The
structure as a whole is reasonable only when
all of its parts are reasonable. Whether the
elements are derived econometrically from
empirical models or put together judgmentally
by hand, there is room in the procedure for
successive approximations that approach the
final result by working out the effects of each
change on the rest of the structure and by then
working back from the effects to revised ver
sions of the initiating change.
Developing a complete forecast on this basis
illustrates the integral role of financial market
behavior in capital theory and in general
theories of income, production, and economic
growth. For each individual in the economy,
the choices he makes as to consumption, physi
cal investment, financial investment, and bor
rowing are related to one another and are con
fined only as a group within the limits of his
income and net worth. The option of borrow
ing lets a person shift his consumption and
investment patterns over time, and higher levels
of debt allow him to carry higher levels of
either physical or financial assets at any time.
He may in his mind attach priorities to one or
another use of his income, but in practice all
of his demands work against one another to
some extent and indeed are also influencing
the amount of income he tries to earn.
The columns of the matrix recognize these
relations among the activities of an individual
transactor by putting all of his transactions
together in the general form of a statement of
sources and uses of funds. 4 The system be
comes macroeconomic when the columns for
all sectors are put against one another to gen
erate the market summary rows where the
demands of different transactors impinge on

Government
Private
Use Source Use Source

-7

When this form of speculation is extended
from the merely possible into the realm of the
likely, economic analysis enters the exercise. In
the example above there are questions of the
probable demand by private sectors for other
types of financial assets, such as cash and other
deposit claims, that are competitive with gov
ernments as investment forms and that affect
the volume of flow into financial intermediaries
and the volume of credit supplied by inter
mediaries. More broadly, analysis raises ques
tions as to the circumstances that generated the
government deficit, including income distribu
tion and private demand for capital goods, and
the resulting influences on credit market flows.
Each aspect of the picture interacts with the
others, and as the vadous tendencies are
itemized they are to be fitted into the frame
of the whole in mutually consistent forms.
The operation of the matrix is also illustrated
by considering the que�tion of what happens
when the money supply increases. Money is a
liability of the banking system and an asset of
the public; if it increases, the increase must be
accompanied by some combination of a de
crease in other bank liabilities, an increase in
bank assets, and offsets in the accounts for other
sectors. The organization of the accounts forces
these contra-entry questions to the surface and
in the process spells out the initial question in a
complete form.
Analysis of this kind can be applied to an
actually expected set of developments by using
the matrix structure as a device in forecasting
or projecting the future, with the specific func
tion of keeping individual parts of the forecast

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4
. _Although t�ey are combined, by statistical necessity, with
s1m1lar transactions of many other individuals.

INTERMEDIATION AND PRIMARY
CREDIT FLOWS

one another. The effect is a joining of financial
investment analysis directly to theories of
production, income, saving, and physical in
vestment in a manner that adds generality to
the model as a whole.

STOCKS AND FLOWS

The immediate connection between financial
markets and nonfinancial activity is in terms of
net flows of claims, since it is as flows that
financial markets absorb funds from income
and supply funds to spending. °These financial
flows are always increments in amounts of
assets and liabilities outstanding, however, and
the levels of these claims in existence are as
much a part of the picture as the flows them
selves. Economic equilibrium ( in any sense of
that term) must be a balance . simultaneously
among stocks, among flows, and between the
stocks and flows, a consideration that is re
flected not only in advanced models but also
in such rule-of-thumb indexes as liquidity ratios,
turnover rates, and debt-service coverage by
income.
Over the period covered by the flow of
funds accounts, several types of credit have
shown fairly stable relations to expenditures or
receipts in terms of flows, but the flows have
been at such rates as to generate strong secular
drifts, relative to activity, in levels of debts and
assets, either upward or downward. The mean
ing of these drifts in stock relationships, or even
whether they have meaning, is an important
aspect for financial analysis for the near and
intermediate future, and for such questions data
on stocks of financial claims outstanding are
included in this publication on a basis parallel to
the tables on flows, including both a matrix of
claims as assets and as liabilities, on pages S.2
and S.3, and time series compilations for indi
vidual rows and columns.5
5 As of this publication, the accounts on outstandings are
incomplete as balance sheets in that they exclude physical
assets and therefore exclude any measure of net worth; as the
problems of valuation and data are worked out in this area,
it will be possible to complete the balance sheets at some time in
the intermediate future.

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The generality of the matrix tends to obscure
certain structural aspects of the financial sys
tem that are of continuing interest in analysis.
These structural aspects have to do with con
cepts such as intermediation, "primary" de
mands for credit, arid "ultimate" sources of
credit- or more broadly with "double-count
ing" of credit flows and the position of financial
institutions in the system. In a general sense,
intermediation consists of borrowing for the
purpose of lending rather than for nonfinancial
outlays. The term is usually associated with
financial business, such as banks, savings in
stitutions, insurance companies, and investment
companies that concentrate on such activities.
The distinction between intermediaries and non
intermediary sectors must be recognized as
institutional and a question of degree rather
than a concept definable in theory; on the one
hand households, nonfinancial business, and
governments also engage in intermediation to
some extent, whereas on the other hand inter
mediaries are subject to the same general in
vestment principles as nonfinancial sectors.
Nevertheless, the difference in degree is extreme
and the distinction justified in practical analysis.
Intermediaries tend to specialize in the forms
of debt they offer, or the forms of credit they
extend, or both. Insurance companies, for
example, raise funds primarily through policy
premiums but invest broadly in credit markets,
while finance companies specialize in their lend
ing but not their borrowing forms. Savings and
loan associations are specialists both in borrow
ing- through savings accounts- and in lend
ing- mortgages. In whatever way they special
ize, however, these institutions are filling a gap
between the types of claims the nonfinancial
public wants to hold as assets, such as liquid de
posits and insurance reserves, and the very

different types of claim the public wants to ( or
FLOW OF FUNDS SUMMARY
is able to) owe as debts, such as bank loans,
TABLES
consumer credit, and mortgages. With or with
out intermediaries, the total of claims held as The process of intermediation immediately im
assets by nonfinancial transactors is nearly equal plies some basic or primary flow of credit in the
to the total of their debts, because directly or economy that in part passes through these insti
indirectly they owe the debt to one another. But tutions and raises the question as to what that
with intermediation the composition of their basic flow might be or, more specifically, how
assets becomes very different from the composi it might be defined in an analytically useful
tion of their debts. The intermediaries are thus form. The matrix itself is too general in form
performing a transformation process within the to show such a concept, since it puts financial
financial markets between the asset and the intermediaries parallel to other sectors and adds
up totals along the rows that include all sectors
liability sides of the public's balance sheet.
indiscriminately.
This matrix form accommo
Intermediaries are important to analysis in a
�iates
both
the
intermediary-type
debt owed by
number of ways. Their presence in the market
broadens enormously the forms of both finan nonfinancial sectors, particularly governments,
cial investment and borrowing available to the and the marketable debt of intermediaries, such
public - there is no question that capital for as bonds and open market paper, that are not
mation, saving, income, and consumption are distinguishable as debt instruments from the
all higher than they would be without the ca same types of claim owed by nonfinancial
talytic influence of intermediaries in raising sectors.
Nevertheless, the elements needed to ap
financial flows. In the U.S. economy a large part
of all credit goes through intermediaries. In the proximate a concept of a basic flow of credit
short run much of financial analysis is con that may or may not be intermediated can be
cerned with how well intermediaries are meet abstracted from the matrix, and one such ap
ing demands for the specialized forms of credit proximation is put together in the two credit
they offer with the funds they are able to attract market summary tables that appear at the
from savers. Legal constraints on their rate beginning of most flow of funds presentations,
structures, lending practices, and forms of bor one on the structure of borrowing in credit
rowing often prevent intermediaries from ad markets and the other on sources and forms of
justing fully to current conditions and decision supply of funds to credit markets. They appear
patterns, causing sizable shifts of funds into and in this publication beginning on page S.4 for
out of them. On the other hand intermediaries flows and page S.6 for outstandings. The sum
frequently introduce new practices or new credit mary tables are not directly part of the flow of
instruments that also have major effects on the funds structure, but they are useful in out
structure of flows. Both the constraints and the lining relationships among forms of borrowing,
innovations of intermediaries have to be taken among forms of lending between credit demand
into account in even simple and summary and supply, and between intermediary and
direct lending in markets.
analysis of economic development.6
Using figures from the model matrix in Table
6 A review of depositary intermediation in recent years
1, the two summary tables are illustrated to
appears in "Time Deposits and Financial Flows," Federal
gether in Table 2, with borrowing in the upper
Reserve Bulletin, December 1966, pp. 1739-52.

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that generate private credit demands. That
comparison is not included in Table 2.
Part II of Table 2 is a summary structure
of the sources of supply for the credit flows
listed in Part I. It is more complex than
Part I in that it shows supply at more than
one level simultaneously-direct lending in
credit markets by nonfinancial sectors and by
intermediaries as well as the sources of funds
to intermediaries to finance their part of the
direct credit supply. The first item (line 6 in
Table 2) shows lending activity by Federal
Government units, federally sponsored inter
mediaries, and the Federal Reserve, a source
of funds to credit markets that is almost en
tirely directed by public policy objectives such
as assistance to particular credit markets and
open market operations by the Federal Reserve.
Foreign lending on line 7 includes foreign pri
vate funds, but in recent years it has been
dominated by foreign official transactions in
U.S. Government securities as a reflection of
balance of payments developments. Both line
6 and line 7 are largely external influences on
credit markets in that most of the amounts that
appear do not reflect profit-making decisions
in the narrow sense but are rather policy
directed or almost automatic.
The middle section of Part II summarizes
credit market lending by intermediaries, includ
ing commercial banks, and the main types of
financing for that lending. In the Table 2 ex
ample intermediaries supplied credit of 70,
mainly from private deposit growth but also
from their own borrowing in credit markets
and from other sources, such as foreign and
Government deposits, insurance and pension
reserve growth, and their own retained income.
The several sources of intermediary funds vary
greatly in relative proportions as credit condi
tions change, and shifts in their sources are
reflected elsewhere in the table,· such as in

part and credit supply in the lower. Table 2
identifies the intermediation process through an
institutional distinction, isolating certain groups
of firms that are mainly in the business of
borrowing funds for the purpose of relending
and treating these groups as a channel of finan
cial flows rather than a primary source of credit
demand or supply. The primary credit flow, on
the first line of the table, is thus borrowing by
everyone else, that is, nonfinancial sectors,
itemized by sector in the next three lines. The
total of 82 is less than the matrix total of 92,
on the bottom row of Table 1, by the amount
of credit market borrowing by intermediaries.

TABLE 2 MODEL CREDIT MARKET SUMMARY
(Billions of dollars; figures from Table 1)
1. I.
2.
3.
4.

Funds raised by nonfinancial sectors
Government
Foreign
Private domestic nonfinancial

5. II.
6.
7.

Sources of credit supplied
Government
Foreign

8.
9.
10.
11.

Financial intermediaries
Total funds advanced
Sources of funds
Private domestic deposits
Funds raised in loans and securities
Other sources

82
7
60
82
1
70
50
10
10

13.
14.

Private domestic nonfinancial sectors
Direct purchases of loans and securities
(lines 5-6-7-8+10)
Deposits in intermediaries (line 9)
Total financial investment (lines 12+ 13)

15.

Credit sources not in line 14 (lines 6+7+11)

12.

19
50

The full form of the table, beginning on page
S.4 of the annual-flow set, includes the types of
instruments used as well as a listing of borrow
ing sectors. 7 Also on page S.4 is a comparison,
for households and business, between funds
raised as shown on the upper part of the page
and their major forms of capital expenditures
7 Notes to Table 1 list several types of financial claims that
have been omitted from the model matrix for simplification,
such as trade credit and taxes payable. These omitted forms
are not part of organized credit markets and are omitted from
the full form of Table 2, as on page S.4. Types of credit
included in the Table 2 total are listed in the full version
on page S.4 on lines 7-21.

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Government lending to intermediaries and the
forms of financial investment by the private
nonfinancial sectors.
The bottom section of Part II, beginning line
12, integrates into the preceding picture the
structure of financial investment by private do
mestic nonfinancial sectors-households, busi
nesses, and State and local governments. Line
12 is their direct lending in credit markets,
which consists of any of the credit flow in
line 1 not supplied by Government, foreign, or
intermediaries, together with credit market bor
rowing by intermediaries on line 10. From the
viewpoint of the private sectors, this direct
lending is but one of several possible forms of
financial investment, with alternatives that in
the model table are wrapped together as de
posits, such as checking accounts, savings de
posits, and negotiable certificates of deposit.
These deposits, shown here as a use of funds,
are the same flows that appear on line 9 in the
intermediary section of the table as a source
for intermediary credit supply. The distribution

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of private funds between direct lending and
deposit flows has sizable influence, although
not total control, on the flow of credit through
intermediaries and thus on supply of the spe
cialized forms of credit, such as mortgages and
bank loans, that come mainly from intermedi
aries. Line 14 contains the total flow from the
private nonfinancial groups that is distributed
between direct and deposit flows. It is some
what less than total borrowing on line 1 al
though closely related. The difference, on line
15, consists of direct flows from Government
and foreign sources and the "other" sources
of intermediary lending.8 In recent years a
major element of change in line 15 has been
foreign official lending that reflects shifts
in the U.S. trade balance and capital outflows
in the balance of payments statements. Most
movements in Government lending are re
flected directly or indirectly in the private total
on line 14, while intermediary "other" sources
are relatively stable over the long run.
s Line 15 is not included in the full form of the table.

DIAGRAM OF FINANCIAL
STRUCTURE
The view of the economy that is reflected in
Table 2 is indicated in the diagtam on page
12, which is a picture of the Nation's capital
account that, again, uses the model matrix
(Table 1) and that abstracts in the same way
from the full complexity of the system. The
diagram is specific to the data in the model in
that it shows current-account deficits for the
government and foreign sectors on the right, in
parallel with physical investment, as "uses" of
private saving entering the capital account on
the left; if either of these sectors had a posi
tive current balance, it would have appeared at
the left side of the diagram. In a fully detailed
picture, the dissaving of any individual trans
actor with a negative current-account balance
would also appear on the right, with treatment
of financial flows parallel to a deficit govern
ment. To simplify the diagram, all of the pri
vate domestic sectors' saving is on the left, even
though the total for the sector is a net sum of
savers and dissavers together. 9 The diagram
takes on precision if each sector is viewed as a
si�gle person in an economy made up of only
four persons, each different from the others."
This primitive view can be extended easily to a
more general picture with many separate units
in each sector.
The diagram pictures saving entering the capi
tal account as a diversion from the current payi.
ments stream and passing through a number of
channels to finance physical investment outlays
and government and foreign deficits that inject
spending back into the current stream. Part of
the saving goes directly into physical assets, to
the extent that people buying capital goods pay
for them without recourse to borrowing, and
this appears as "internal finance," the excess of
9 Saving in the diagram is the total for private sectors,
including intermediaries. Intermediary saving is an internal
source of funds for lending in the diagram.

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capital outlays ( 170) over private borrowing
(60). Another part of saving goes into financial
assets, however, such as cash and deposits for
liquidity and marketable securities for capital
gains. Part of this financial investment goes di
rectly to nonfinancial borrowers ( 12), but most
of it is put into deposit (55) and security claims
on intermediaries ( 10), who turn around and
relend the funds to nonfinancial sectors through
quite different forms of credit instruments, such
as mortgages and bank loans (70).10 These
credit flows from intermediaries combine with
the lending directly from savers to make up the
total volume of borrowing (82) by nonfinancial
sectors that is used mainly to cover the deficits
of dissavers and to pay for investment outlays
not covered by internal finance.
The bottom of the diagram show's a reverse
flow of funds from the borrowing to the lending
side of the structure that is equal to the invest
ments in financial assets made by the two deficit
sectors. In the model matrix (Table 1), these
two sectors have not limited their borrowing to
the minimum amounts needed to cover their
deficits but rather have found it worthwhile to
borrow extra amounts that allow them to add
some to their asset positions (8), in part per
haps for liquidity and in the government's case
to help carry out lending programs for public
policy purposes. These extra credits are borrow
ing for the purpose of relending and as such
constitute a form of intermediation by nonfinan
cial sectors. The U.S. Government does in fact
act as an intermediary to financial markets,
floating its own securities to assist agriculture,
small business, the home mortgage market, and
other private markets, and a more complex dia
gram could show that activity explicitly. The
more general point, however, is that quasi
intermediation occurs in many forms in non
financial sectors, that all forms of it C!:eate re
verse flows in the diagram, and that they add
10 Intermediaries use their own retained incomes (5)
lend somewhat more than they borrow.

CURRENT PAYMENTS ►

----...;ilNTER
MED
--------1 IAR IE S 1---.,..---__
Total
borrowing
by nonfinan.
sectors
182)

financial
investment
by nonfinan.
sectors

1771

an extra element to the relation between the
total flow of credit as defined in the diagram and
the associated totals of saving and investment.
Typically, this kind of intermediation is diffi
cult to identify, as illustrated by taking the pri
vate domestic nonfinancial sector in the diagram
to be a single individual. Even though this per
son's saving ( 179) was greater than his capital
outlays ( 170), he chose to put a substantial
amount into financial investments ( 69) and
then to borrow some of these funds again on the
other side of the market in different forms ( 60).
This is normal and reasonable behavior, since
the combination of assets and liabilities he now
has suits his short-term and long-term needs
better than lower totals of both assets and lia
bilities. However, it raises the question as to
whether he borrowed to invest in physical or in
financial assets, and the answer is that he bor
rowed for the two purposes jointly in unidentifi
able and even undefinable proportions. Only in
special cases, such as the two deficit sectors in

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this model or a borrowing total that is larger
than total investment outlays, can such inter
mediation be even partially measured.
This discussion illustrates the ambiguities in
the concept of intermediation and thus in the
concept of a basic or primary flow of credit that
is to some extent intermediated. Intermediation
can nevertheless still be a useful construct for
analysis when it is given an institutional sense
that is based on the characteristics of a set of
financial businesses, including the legal con
straints on their operations, their typical prac
tices as borrowers and lenders, and their flexi
bility in changing economic conditions. Isolating
financial institutions as an intermediary group
brings out on a broad basis the division of finan
cial flows between those that enter this area of
specialized and constrained lending operations
and those that are available only in more broadly
marketable instruments. It is this institutional
foundation for analysis that underlies Table 2.
As applied to nonfinancial sectors, the concept

financial assets that are suggested by the dia
gram. The effects of restricting or expanding
credit flows are thus -not necessarily or immedi
ately on saving and investment but rather tend
to be diffused throughout the system inside and
outside financial markets. Such relations as exist
between credit flows and nonfinancial activity
must be found analytically and empirically, with
credit seen both as borrowing by nonfinancial
sectors and as lending by those same sectors.

of intermediation is too ambiguous to be useful,
and it is well replaced by the integrated balance
sheet view of physical investment, financial in
vestment, and borrowing that is implicit in this
discussion.
In comparison with the actual accounts as
published, the diagram is primitive although ac
curate as far as it goes. In both the model ma
trix and the diagram, credit flows are limited to
the main-stem group of financial claims that are
handled in organized credit markets, such as se
curities, mortgages, consumer credit, and bank
loans, and that in flow of funds publications are
labeled credit market instruments. It is this cen
tral group of claims that is the focus of the
summary tables in publications as well as in the
model used for this discussion. A glance at the
full matrix on page 1 shows that the financial
structure as a whole includes a variety of other
claims, such as gold, foreign exchange, trade
credit, and equities in noncorporate business.
These are more specialized instruments that are
also part of the financing of the economy and
that appear in the accounts where appropriate,
but for summary purposes they are treated as
outside the credit markets proper. The diagram
is also primitive in that it cannot easily show
negative financial flows, such as debt repayment
or reductions in asset holdings, and because it
ignores the layers of intermediation that exist
among financial firms, such as bank loans to
security dealers and insurance company pur
chases of finance company bonds.
The purpose of the diagram is only to illus
trate in broad outline the relation between sav
ing and investment on the one hand and the
aggregates of borrowing and intermediation
shown in Table 2 on the other. The financial
markets absorb part of saving and supply part
of the funds for spending, but the total volume
of credit flows as 9efined here has no necessary
relation, dollar for dollar, either with saving or
with investment because of the opportunities
for internal finance and for borrowing to carry

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HISTORICAL RELATIONSHIPS
Examples of the empirical relationships that
exist in the data at the broadest level are illus
trated in the charts on the following pages.
Some of these relations are close, but the con
clusions to be drawn from them must be based
on analysis of the economic system as a whole.
With credit flows dependent on borrowers' de
mands for financial assets as well as their non
financial outlays, the problem of identifying
supply and demand separately is more complex
for financial markets than for many other areas
of analysis, and useful solutions to the problem
are still to be worked out.
The charts start, somewhat arbitrarily, at
the point of household and business borrow
ing, proceed to the total borrowing by non
financial sectors that is pictured in the dia
gram, connect that total to private financial
investment, and summarize the results of these
flows in terms of amounts of debts and assets
outstanding.
Statistical relations of the charts to flow of
funds table presentations are listed in the Notes
to charts, which reference the few tables in
cluded at the back of this publication. Except
for matrices and two summary tables discussed
earlier, only such additional tables are included
as are reflected in the charts. 11 Before being
charted, all of the data used were deflated by
a compound index of prices and the 1952-73
11 The tables carry annual data for a few years only. They
are taken from the "Flow of Funds-1974 Supplement."

trend of gross national product in order to
highlight cyclical relationships apart from the
strong growth trends over the period in most of
the data. A single deflator was used for all of
the time series, and a rising trend in any of the
plotted series indicates a rate of growth faster
than the trend of GNP, although not necessar
ily faster than GNP growth in any short period.
A series with a falling trend is not necessarily
decreasing in actual dollar amounts; it may
be only increasing at a slower rate than the
GNP trend. The deflator itself is presented
and described in the Notes to charts; it is not
directly part of the accounts, which show only
current-dollar quantities.
Charts 1 and 2 illustrate the. associations
that have existed between short- and long-term
borrowing in credit markets by business and
households and their spending for capital goods.
Capital expenditures here cover all private
domestic investment in the national income
accounts except capital outlays by financial
sectors, and they also include purchases of con
sumer durables, which are consumption spend
ing in NIA. Chart 1 illustrates that net changes

in short-term business credit were closely re
lated to net inventory movements, on almost
a dollar-for-dollar basis, for a long stretch of
years through the 1950's and the first half of
the 1960's. Since 1966 the relationship has
become very much weaker, mainly because of
the more diversified use of bank loans and open
market paper as substitutes for or interim
financing of longer-term requirements, particu
larly during the tight-credit periods of 1969-70
and 1973. Later charts in this set show changes
in the mid-1960's in trends of total outstanding
private debt and assets, and the more complex
behavior of short-term credit in the years after
• l 965 is part of a more mature private debt
structure than had existed in the 1950's. The
1969 spurt of short-term loan credit was fol
lowed by low volumes in 1970 and 1971, when
many of the loans were funded by longer-term
financing, but beginning in 1972 short-term
credit started to show another strong growth
tendency as the economy picked up speed after
the 1970-71 pause. With the higher inflation
rates that appeared in 1973 book values of in
ventories started rising much faster than the

CHART 1

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Billions of 1972 dollars, SAAR

50
40
30
20
10
+
0

'53

'57

'8
5

'81

20
9

'73

national-income measure of inventories, which
is adjusted to exclude price-change effects, and
in the last year of the chart the relation of
short-term credit is much closer to book values
than to the inventory-change component of
GNP. Before 1973 there was not enough dif
ference between book and GNP inventory
movements to distinguish between them statis
·tically in their relation to short-term credit
movements.
Chart 2 illustrates a similar pairing of longer
term private investment and credit, which in
this chart is a mixed collection of corporate
bonds, mortgages, and consumer credit. 12 In
the early years of the chart the high rate of
investment relative to credit was primarily in
residential construction, with households in
vesting a larger part of equity funds in new
homes ( and borrowing less of the purchase
cost) than in later years. Beginning in 1970,
on the other hand, credit flows moved ahead of
investment, at first to fund the high short-term

borrowing of 1969-70 that appears in Chart 1
and later to take advantage of the expanded
credit supply available through 1972. Both
business and household borrowing were un
usually high after 1971 relative to net invest
ment spending.
Chart 3 combines the data from Charts 1
and 2 and illustrates the extent to which move
ments in private capital outlays have been a
dominant component of GNP fluctuations. The
two vertical scales in Chart 3 have the same
dollar gradient even though their absolute val
ues are very different, and only during the
Vietnam period of the later 1960's are the
movements in GNP substantially larger than
in the investment series. Total private borrow
ing has almost the same volatility as net invest
ment and thus is almost as closely related to
GNP fluctuations. 13
,13 A common practice in current analysis is to measure either
investment or net borrowing as a percentage of GNP. The
relationship illustrated in the chart-that is, roughly equivalent
amplitudes on very different base levels-produces volatile
percentage movements relative to GNP that have some use
fulness as sensitive indicators of cyclical movements. The chart
suggests, however, that the movements in percentages are some
what beside the point and that comparisons of absolute move
ments indicate more directly regular and irregular cyclical
developments.

12 Investment appears in Charts 2 and 3 net of depreciation
charges, which are measured primarily on an historical-cost
basis. The investment is thus the amount that in conventional
accounting would appear to require financing from external
funds or from net saving of the investor.

Billions of 1972 dollars, SAAR

CHART 2

140

120

100

Private Net Fixed

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•s
5

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much the most volatile of these other elements
and is the source of most of the changes in
differences between the private and total series.
In general its effect has been to shift peaks and
troughs into an earlier quarter, making total

Chart 4 completes the structure of borrowing
by adding to the business and household com
ponents net funds raised by foreign borrowers,
State and local governments, and the U.S. Gov
ernment. U.S. Government net borrowing is

Billions of 1972 dollars, SAAR

CHART 3

240

1280

GNP

+--

1230

190

1180

140

1130

Borrowing.
40

1080

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'85

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CHART 4

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Billions of 1972 dollars, SAAR
200

150

100

Household + Business Borrowing
50

'53

'5 7

'65

'61

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borrowing a slightly leading series at GNP
turning points. 14 State and local governments
have a hybrid position in the economy and
hence. in the social accounts-as governments
the group is attributed no physical investment
outlays in income and product data, but. these
units are . nevertheless independent decision
makers that base their financial planning on
much the same market considerations as house
holds and businesses and in this respect are
part of the "private" segment of credit markets.
Although borrowing by State and local gov
ernments is excluded from the private totals
in Charts 1 through 4 that are related to physi
cal investment, inves�ment by them in financial
assets is included with other private financial
investment in later charts on supply of funds
to credit markets.

Charts 5 and 6 indicate the cumulative effect
on debt outstanding that has resulted from . the
structure of borrowing since 1952 that appears
in preceding charts. Within a total debt owed
by nonfinancial sectors that has risen only
slightly in relation to GNP, there has been a
major shift from public to private liabilities
outstanding, with U.S. Government debt shrink
ing from 50 per cent of the total in 1952 to 18
per cent at the end of 1973. 15 The explanation
for the shift lies in a combination of circum
stances-the legacy still remaining from de
pression and war at the beginning of the period
in the form of high public ( and low private)
15 Deflating flows and levels by a single index of growth and
prices for the charts creates a special relation between the
deflated figures for net borrowing and changes in debt out
standing. If the deflator increases 5 per cent a year, borrowing
must equal 5 per cent of outstanding debt merely to keep
deflated debt constant. A borrowing rate of more than 5 per
cent will raise the debt level, but if less than 5 per cent, de
flated debt goes down even with positive borrowing. In the
data used for the charts, average growth in the deflator was
6.7 per cent per year, 1952 to 1973, whereas U.S. Government
debt was growing in absolute terms at a 2.3 per cent rate that
by deflation was converted to a 4.1 per cent rate of decrease.
Private debt, on the other hand, was growing at a 9.1 per
cent annual rate, well above the deflator. These figures ex
clude corporate equity issues from both debt and borrowing.

14 Turning-point relationships among series are affected by
the deflation of the data that was described earlier. With unde
flated data, the leading characteristic of total borrowing is
more pronounced, because adding growth trends to the data
shifts peaks in GNP farther into later quarters than peaks
in borrowing. The reason is that GNP is a proportionately
more stable quantity than net credit flows and has a rela
tively larger trend component.

CHARTS

Amount outstanding, billions of 1972 dollars

900

1500
Other Nonfinancial Debt

1400

800

1300

700

1200

600

1100

500

1000

400

900
800

300

U.S. Gov•nment Debt

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200

debt, the strength of private investment demand
stemming partly from the same cause and tend
ing to generate private debt, and the favorable
Government budget position that reflected
strong private demand for goods and services.
The resulting trends in debt composition are
strong but cannot be expected to continue in
definitely. Arithmetically, the ratio of debt out
standing to GNP trends, broadly, to approach
an asymptotic level that is determined by a
trend ratio of net borrowing to GNP. If, then,
there is any stability over many years in the
borrowing ratio to GNP the growth rate in
private debt can be expected to slow gradually
as it approaches the limiting level set by bor
rowing rates. The slowdown in the private debt
growth rate after 1965 is more marked than
this arithmetic would suggest, however, and
indicates a change in environment from the
earlier years. The increasing concern that has
been expressed in recent years about the vol
ume of private debt outstanding, particularly
for certain types of marginal borrowers, and
the increasing problems of financing in some
markets are symptoms . that postwar private
borrowing rates may be higher than markets

are prepared to accept indefinitely. The impli
cation is that if capital formation is to be main
tained at the general rates of roughly the last
two decades, financing may have to shift away
from the heavy reliance on debt that we have
seen toward a larger use of either internal or
external equity funds. The broad totals in the
charts are only suggestive of this, however,
and it might take another 5 years or more to
extract such a shift in trend out of the volatile
short-term data.
Chart 6 divides private debt into four major
types, including State and local government
securities. All of these forms were growing
relative to GNP trends until the mid-1960's,
but since then the growth has been predomi
nantly in business debt, with a tendency toward
larger cyclical swings away from trend than
earlier. Both residential and State and local
government debt appear to have reached a sta
bility in relation to activity that they had not
had before 1965.
Charts 7 through 12 shift to the supply side
of credit markets and summarize aspects of
private nonfinancial sectors as lenders rather
than as borrowers. As illustrated in the diagram
Amount outstanding, billions of 1972 dollars

CHART 6

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600
500
400
300
200

State and Local Govt. Debt

Business Loans

'53

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'65

'61

100
0

'69

'73

on pages 11-13 and in Table 2, most of the
total borrowing by non.financial sectors that ap
pears in Chart 4 has a counterpart in financial
asset accumulation by private domestic nonfi
nancial sectors, either directly through security
purchases in markets, or indirectly through in
vestment in deposits or other claims on interme
diaries that are lending directly in markets. In
amounts outstanding the relationship appears
in Chart 7, where the top line is total debt of
nonfinancial sectors-the sum of the two lines
in Chart 5-the middle line is holdings of such
debt by private domestic sectors including inter
mediaries, and the bottom line is deposits and
security holdings by households, nonfinancial
business, and State and local governments.16
In terms of the model Table 2 on page 9,
these are respectively item 5, items 8 plus 12,
and item 14. The gap between total debt and

the middle line consists of federally related and
foreign direct holdings, and the 1971 increase
in that gap reflects mainly the large increase
that year in foreign official holdings of U.S.
Government securities. The gap between the
middle and bottom lines consists of net hold
ings by intermediaries financed by sources
other than private domestic deposits and secu
rities, mainly insurance and pension reserves,
Federal and foreign deposits, and the equity
funds of intermediaries. The changes over
1969-71 in that gap are mainly the build-up
of foreign funds in commercial banks in 1969
and their subsequent run-off.
Chart 8 illustrates the marked shift over two
decades in the position of financial assets and
debt in the private economy. This shift com
bines the close relation in Chart 7 between pri
vate assets and total debt, both of which have
had little trend over the last 20 years relative to
activity, with the shift in Chart 5 from Federal
to private debt outstanding. 17 To an increasing

16 Insurance and pension reserves appear as assets of house
holds in the total accounting structure and on that basis could
be included in the bottom line as assets of the nonfinancial
group. Such reserves are, however, more remote from day-to
day investment decisions of households than their deposit and
security portfolios and on that basis are set aside in summary
tables and in these charts as a separate financial relationship
in the system.

17 The small foreign debt component in Chart 5 is omitted
from the debt total in Chart 8.

Amount outstanding, billions of 1972 dollars

CHART7

1600

1800

1500

1700
Privately Held Credit
Market Instruments

1400

1600

1300

1500

PDNF Deposits and

1400

1200

1300

1100
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extent since the late 1940's, the financial assets
that private investors hold have come to be
based directly or indirectly on claims owed by
themselves rather than by others.
Paralleling this change in assets and debt
structure has been a sizable increase in the de
gree of intermediation in financial markets. Pri
vate sectors as borrowers must look mainly to
financial institutions for mortgages, consumer
credit, and business loans, all of which are usu
ally too specialized and too small in individual
loan size to be broadly marketable; and even
for their marketable debt,. such as municipal
and corporate bonds, the purchasers are heavily
institutional. As their debts have grown, private
sectors as lenders also have turned increasingly
to institutional deposits as an investment alter
native to the diminishing supply of Federal se
curities outstanding. Over the period covered
in the charts, institutional holdings of credit in
struments increased from 68 per cent of the to
tal held privately-the middle line of Chart 7to 87 per cent at the end of 1973. Most of this

growth was financed by the shift in private
investment away from direct market instru
ments and toward deposits in intermediaries,
which increased from 59 per cent of private
portfolios-the bottom line of Chart 7-to 72
per cent in 1973.
That shift in private investment is broadly
indicated in Chart 9, which divides the private
asset total in Chart 8 ( and Chart 7) into de
posit and credit instrument components. The
two components have been rather more volatile
over short-run periods than their total was,
reflecting the sizable short-run changes over
time in yield relationships between deposits and
market instruments. Interest rates on most de
posits have been much more stable cyclically
than market rates, partly because of regulatory
ceilings on deposit rates that have restrained
those rates from following market rates upward
in tight credit conditions. In the sequence of
tight financial conditions covered by the chart
-principally 1959, 1966, and 1969-high
rates on market instruments attracted increas-

Amount outstandirg, billions of 1972 dollars

CHART 8

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Federal Reserve Bank of St. Louis

1400
Private Domestic Nonfinancial Sectors - PDNF

1300

1200

1100

1000

900

800

'53

'57

'61

'6
9

700
'73

ing amounts of funds out of institutions and
into direct investment, partly because of in
creasing yield spreads and partly from increas
ing investor sensitivity to those spreads. Some
of the deposit growth in the first half of the
1960's represented the development of large
negotiable certificates of deposit by commercial
banks, which introduced the CD's as money
market instruments to attract funds from large
investors such as major corporations, which
had been holding liquidity mainly in Treasury
bills. With the diminishing position of Treasury
debt in the market, the CD became a major
investment medium and an important conduit
for transmitting liquidity holdings into bank
credit for the growing volume of private debt.
The effect of rate ceilings on deposits was
most extreme in 1969, as Chart 9 indicates,
when CD's in particular fell from $23 billion at
the beginning of the year to $9 billion at year
end (in actual dollars). Following that episode
ceilings were lifted on CD rates, and in the
1973 tight-credit period the effect of yield

spreads was much more moderate than in
1969. As of 1973 the development of CD's
as an open money market instrument, together
with bank facilities for borrowing directly in
commercial paper, Euro-currency, and bond
markets, had done much to diversify the nature
of bank intermediation and to diminish the sig
nificance of a distinction between deposit and
direct market investments in financial market
analysis.
The nature of deposits was also changed by
the introduction of consumer-type CD's by
both banks and savings institutions. These are
nonnegotiable deposits with specified maturity
dates that can be withdrawn before maturity
only at a substantial cost in yield. By the end
of 1973 almost half of savings institution de
posits were of this dated form, and the penal
ties of converting these to market instruments
have reduced further the sensitivity of deposit
flows to market instruments. At the end of the
period covered by the chart, therefore, deposit
security relationships in private portfolios had

CHART 9

Amount outstanding, billions of 1972 dollars

550

800
Private Domestic Nonfinancial Sectors - PDNF

850

500

800

450

750

400

700

350

850

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Federal Reserve Bank of St. Louis

'53

'57

'85

'81

'6
9

'73

300

become more complex than in earlier years,
both in their connection to yield structures and
in their meaning for the extent of intermedia
tion.
Chart 10 combines again the deposits and
credit instruments from Chart 9 to compare
the total holding-the same total that is in
Chart 7 and Chart 8-with GNP. In spite of
the shifts in composition of total assets, the re
lationship to GNP is unusually close over most
of the chart in both movement and-in what
is presumably only a coincidence�absolute
value. The asset total tends to have somewhat
smaller cyclical movements than GNP, and.
after 1965, when private debt growth started
to slow, assets have been slightly lower relative
to GNP than in earlier years. These differences
are small compared to the total relation, how
ever, and within the span of years covered no
significant drifts in trend are apparent. The
relation is closer than that between GNP and
debt totals, with the differences absorbed in
connective elements of credit supply, such as

Government, foreign, and miscellaneous inter
mediary sources of supply, that constitute the
gaps between the three lines in Chart 7.
This connection between private financial
assets and activity is, like the rest of the mate
rial in the charts, an empirical "black box" in
that it neither supports nor is explained by any
broadly accepted analytical system. Without
analytic support there is no basis for predicting
that it will or· will not continue into other eco
nomic circumstances such as chronically higher
inflation rates or slower economic growth rates.
The persistence of the relation on a quarterly
basis nevertheless suggests a relation between
activity and financial structure that may be a
macroeconomic constraint of importance both
to forecasting and to policy.
Chart 11 breaks out the household com
ponent of private assets to illustrate that within
the total there has been drift in sector distribu
tion of holdings. Over the period of the chart
the household share increased from 71 per cent
of the total to 80 per cent, with an offsetting

Billions of 1972 dollars

CHART10

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Federal Reserve Bank of St. Louis

1280

1230

GNP-SAAR

1180

1130

1080

'53

'57

'61

'73

decrease, from 21 to 12 per cent, in holdings
by nonfinancial business-mainly business
liquid assets. State and local government hold
ings stayed at about 8 per cent of the total over
the period, even with the steadily rising im
portance of these governments in total activity.
Statistically, the total is more reliable than its
parts, particularly the distribution between
household and business assets, and the shift
may be weaker than source data suggest. For
corporations, however, a drop in liquid asset
position from the early 1950's is fairly well
supported, and there is little question that over
20 years they have held diminishing . amounts
of a total that has stayed almost constant rela
tive to GNP.
Chart 12, finally, introduces corporate equity
holdings to the picture. The preceding charts
have focused on debt instruments, both as lia
bilities and as assets, and it is for this total of
claims that the relationships have appeared.
Equities have a separate position in the finan
cial system in that as liabilities they are only

residual claims, and, in a legal sense at least,
are not burdens on issuers. In the flow tables
net new stock issues appear as external sources
of funds to business and as net financial uses of
funds by investors. In tables on outstanding
assets and liabilities, however, they appear only
as assets valued by market prices, and no spe
cific liability for them is attributed to issuers.
While corporate equity net flows are a small
component of household financial investment,
holdings valued at market are a major part of
household assets, as large as all deposits and
debt securities over the general period of the
chart. Chart 12 shows that such holdings, be
cause they reflect movements in stock market
prices, are also far more volatile in amount
than other financial assets. There is a mild cor
relation over the period between the two quan
tities, a correlation that is obscured by the
compressed vertical scale of Chart 12 that is
needed to cover stock value movements. In
the deflated dollars o� the chart equity values
have moved by roughly $7 for each $1 change

Amount outstanding, billions of 1972 dollars

CHART 11

1250

1050

1200

1000
PDN F D8S>osits and

1150

950

1100

900
Credit Market Assets

1050

850

1000

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'57

'61

'65

'6
9

800

'73

in holdings of deposits and credit instruments,
neglecting the many short-term perturbations
in the equity series and some irregularities in
the timing of movements. There may be inter
action between the two totals that is exagger
ated for equity values because of the lack of net
flows of new issues, but to some extent both
series are probably also responding in parallel
to other conditions in the economy.
The shift in credit structure from directly
held central government debt to intermediated
private debt, which is a dominant feature of
the charts, is put into another perspective in
Table 3. This table pulls together, again in
detrended and deflated dollars, a set of claims
on the U.S. Government and closely related
institutions as a proxy for a total of basic re
serve assets that are available for private in
vestment, and it indicates the changes in hold
ings of these assets over the 20 years shown in
the charts. The set of claims is broader than
Government debt in Chart 5 in that it includes
reserve money and also the debt of federally

sponsored credit agencies, which have played
a greatly expanded role in recent years as
Government-related intermediaries, lending
housing and farm credit on the basis of public
issues of their own debt. 18
The total of these reserve assets, although
sharply diminished from earlier years, contin
ued to be held in roughly equal parts by finan
cial institutions and private nonfinancial -inves
tors, with a small third component held abroad.
Nonfinancial sectors have offset their drop in
official claims through an increase in deposits
at institutions (line 12 of the table) of a nearly
equal amount, ancl the total of the two types
of. assets was virtually unchanged over 20
years. These claims also constituted most of
their total deposits and securities (line 13)
during the period. For financial institutions,
the substitution was of a quite different type,
namely the build-up of private loans and secu
rities that constituted most of the growth in
18 The total is also a little narrower than in Chart 5 in that
it omits Government debt held by the Federal Reserve.

Amount outstanding, billions of 1972 dollars
1200

CHART 12

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Household Assets

Corporate
Equity Holdings

1100

1000

900
800

700
800

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'8
5

'81

500
9

'73

private debt that appears in Chart 5 and Chart
8. By the end of the period private finance was
thus playing an increasingly central role in in
termediating between nonfinancial sectors as
investors and between the same sectors as bor
rowers, with central government much dimin
ished as a source of safe or liquid claims for
either group.
One of the effects of this increasing exposure
of private finance in credit markets has been
the burgeoning of the federally sponsored credit
agencies mentioned earlier. Although operating
in specialized credit markets-mainly housing
and farm credit-their component of the Gov
ernment debt on line 5 of Table 3 grew from
$7 billion in 1952 to $60 billion at the end of
1973 (in the deflated dollars of the table) to
finance an almost equal increase in their hold
ings of private credit. If private debt continues
in the future to push up relative to activity,
these agencies will probably absorb a rapidly
increasing share of the total growth with sup
port from a variety of Government guarantee

programs for private credit. Direct lending and
loan guarantee operations by the Government
have focused on particular kinds of credit that
have been in difficulty and are seen mainly as
a method by which the Government can help
those specific loan markets to compete against
other kinds of demand. While the agencies ap
pear sometimes to be "draining" loanable funds
from private markets and creating credit tight
ness that wouldn't otherwise exist, it is impor
tant to see also their function in supplying to
the economy an investment and liquidity instru
ment-in the form of their own debt--of a
kind that is becoming increasingly scarce.
This review of the historical data has not
tried to explain analytically the cycles and
trends of postwar financial developments or to
point up trends with alarm. Its purpose has
been rather to illustrate certain main connec
tions within the flow of funds accounts among
lending, borrowing, balance sheet positions,
and nonfinancial activities--connections that
are close over the period covered and that

TABLE 3 PRIVATE CLAIMS ON U.S. GOVERNMENT INSTITUTIONS
(Amounts outstanding at year-end in billions of 1972 dollars, trend removed)

1952

Item

844
103
68
2
671
844
417
16
412
94
318

1. Total claims, by type
Currency in circulation
2.
Member bank reserves
3.
Foreign deposits at F.R. Banks
4.
U.S. Govt. securities held outside F.R. System
5.
6. Holdings, by sector group
Financial business
7.
Foreign (including official)
8.
Private domestic nonfinancial
9.
Currency outside banks1
10.
U.S. Govt. securities
11.
12. Memo: Private domestic nonfinancial sector
deposits at financial institutions
Total private money, deposits, and
13.
credit instruments
Financial business total holdings of
14.
reserves and credit instruments

1960

586
73
38
*

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Federal Reserve Bank of St. Louis

384
63
24
*

475
586
265
24
296
65
231

297
384
159
48
177
54
123

601

621

780

1,183

1,133

1,153

1,050

1,142

1,333

• Less than $500 million.
1 Includes unknown amounts held by other sectors, mainly foreign.
NOTE.-Details may not add to totals because of rounding. Values of deflator appear in Notes to charts (page 26).

1973

NOTES TO CHARTS
the data on levels outstanding were processed to eliminate
the many discontinuities that occur in time series on levels
outstanding because of changes in coverage in basic statistical
sources. To make the levels continuous, the 1973 year-end
levels were taken as a base and incremented back to 1/52 by
the seasonally adjusted quarterly flows. Corporate stocks are
omitted from all data in the charts both as assets and as lia
bilities except in Chart 12.
Data for the charts are derived from tables at the back of
this publication and are identified in the following list:

All data in Charts 1 through 12 have been deflated by a
single compound index (1972 = 100) that is the product of
(1) the U.S. noninstitutional population 16 years of age and
over, (2) the GNP price deflator, and (3) an exponential
growth trend in deflated GNP per capita found by least
squares regression to be 2.2 per cent per year for the period
1952-73. After deflation, all flow data are plotted as centered
two-quarter moving averages (three quarters weighted 1-2-1),
with 1/52 omitted from the charts. Assets and liabilities out
standing are deflated by the same index, but before deflation

4
5
6

9
10
11
12

Table

Item

Chart

Line

S.10
Net change in inventories
S.10
Business loans
S.5
Private net fixed investment
Households
business borrowing
S.5
except business loans
S.4
Private net capital outlays
S.4
Households
business borrowing
S.4
Total nonfinancial borrowing
S.4
Households + business borrowing
S.6
U.S. Government debt
S.6
Other no!1financial debt
S.10
Business Joans
S.6
Residential mortgages
S.6
Other business
household debt
S.6
State & local government debt
S.6 & S.7
Total debt
S.7
Privately held credit market
instruments
Private domestic nonfinancial sector
S.7
deposits and credit market assets
S.7
Deposits and credit market assets
S.6
Credit market debt
S.7
Deposit .assets
S.7
Credit market assets
Not included
GNP
S.7
PDNF deposits and credit market asset
holdings
S.7
PDNF deposits and credit market assets
S.9
Household deposits and credit market assets
S.9
Deposits and credit market assets
Corporate equity holdings
S.9

9, 1.Jpper section
18
19, upper section
3, lower section Jess inventories in Chart 1

26 + 27, upper section less business loans in Chart 1
3, lower section
26 +21, upper section
1, upper section
From Chart 3
2
5
13
14, lower section
10
11
22
23 less business loans and residential mortgages
21
I, total credit market debt owed by nonfinancial sectors
12

46, credit instruments, deposits, and currency
46
21 +22 + 23
38
32
46
46
2
2
17 (at market value)

Fourth-quarter values of the deflator are presented below in reciprocal form, as multipliers against actual data:
1952
1953
1954
1955

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Federal Reserve Bank of St. Louis

3.388
2.278
3.127
2.970

1956
1957
1958
1959

2.762
2.587
2.450
2.329

a.206
2.113
2.013
1.905

1960
1961
1962
1963

1964
1965
11966
1967
1968

1.801
1.706
1.591
1.482
1.369

1969
1970
1971
1972
1973

1.247
1.135
1.051
.973
.871

tailed analysis of those markets or sectors. They
occur within the frame of the whole, however,
and are in part reactions to changes in that
frame. Whether as a framework that constrains
particular markets or as elements acting on
one another within a system, however, the main
members of the structure appear to have an
empirical existence that should be recognized
explicitly in the data and in analysis of the data.

are basic data for analysis of the economy
as a whole. Some of the connections have
shown tendencies to shift over the 20 years.
The 1960's in particular have demonstrated the
facility and speed of financial markets in adapt
ing to new practices and new financial instru
ments. These changes in financial flow structure
usually appear in individual markets or sectors
and can be explained to some extent by de-

II ORGANIZATION OF ACCOUNTS
Section I, on the concept of flow of funds
accounts, discussed the system only in broad
terms and does not constitute an operating
description of the system. Sections II, III, and
IV define the accounts on the basis of the rules
that organize the system, the relation of the
accounts to income and product information,
and descriptions of individual sector and trans
action categories. Statistical derivation proce
dures for individual items in the accounts and
procedures for processing source data are de.:..
scribed in a separate publication in preparation.
Section I emphasized that the matrix organi
zation of data is fundamental to the calculation,
understanding, and analysis of flow of funds
information. The matrix is also the organizing
principle for the statistical tabJes in the body
of this publication, each of which is a state
ment, in time series form, of one column or
one row of the matrix taken as a balanced
account of debits and credits. The tables for
individual columns are sector statements of
sources and uses of funds, while the tables for
rows summarize purchases and sales in markets
for individual transaction categories. The table
of contents is organized to indicate the matrix
organization of the time series tables as di-

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rectly as possible. This section describes in
more specific terms the organization of the
matrix of accounts and hence of the system
itself. References to the matrix are to the table
on page S 1 of the statistical section.
As a device in social accounting, the flow of
funds matrix has the following items as char
acteristics:
l. Sectors. The economy is divided into a

number of major groups of transactors, such as
households, businesses, and governments. These
groups are termed sectors in flow of funds discus
sions and consist of sets of commonly identifiable
economic units. The term sector thus always has
an institutional meaning in these accounts, con
trasted with many other bodies of data, economic
models, and analytic discussions in which it some
times refers to types of activities, as in the invest
ment sector or the financing sector. Investment
and financing are forms of activity that any insti
tutional group might undertake and are referred
to here as types of transactions ( see item 3
below) . 19
2. Sector uses and sources. A pair of col
umns, one for out-payments (U for uses of funds)
and one for receipts (S for sources of funds), is
established for each major sector, and all transac
tions by the members of the sector are reflected
in one or the other of these two columns.
19 Noncorporate business is something of an exception to
this principle, as discussed in Section IV.

3. Financial transaction categories. All pay
ments and receipts of each sector are classified
into standard transaction categories, which con
stitute the rows of the matrix. Just as each family,
firm, or governmental unit is classified entirely
into one or another column, so each individual
financial claim - such as a savings account pass
book or a single Treasury bill - is exclusively in
one or another row, and all transactions in that
claim are recorded in that row. Summation of all
uses of funds along a row and across the sectors
of the matrix gives a total of outlays made to
acquire a particular kind of asset, whereas summa
tion of sources along a row yields a total of funds
raised in that particular manner.
4. Financial sources and uses. Financial
claims are shown in the S column of a sector only
to the extent that members of the sector issued
such claims as liabilities to raise funds. Corre
spondingly, transactions in the U columns refer
only to dealings in the claim as an asset. Sale of
the claim as an asset is a negative offset against
acquisitions of claims in the U columns, and debt
repayment is an offset to borrowing in the S
columns.
Every transaction in financial claims appears in
the table as both a source of funds and a use of
funds, since all borrowing is someone else's lend
ing. The money supply is one of these claims,
specifically a combination of demand deposits,
which are liabilities of and sources of funds to
banks, and currency held by the public, which is
a claim on and source of funds to the monetary
authorities.
Gold is treated as a financial asset but not a
claim. It is a metal widely used as a monetary
reserve, but it is not owed by anyone to the holder.
5. Financial market summaries. Each pur
chase of a claim is always someone else's sale of
that same claim. Hence, taking the economy as a
whole, and including transactions with foreigners,
total funds raised by issuing a particular type of
claim are necessarily equal to total funds used to
acquire that claim as an asset.
Total borrowing then equals total lending in
any type of claim and for any set of claims taken
together. Each row or set of rows for financial
claims therefore is a summary of all funds coming
into and going out of a particular financial market
or set of markets.

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6. Floats in financial transactions. Because
in many instances a single transaction is not
entered into the books of the buyer and seller on
the same day, there are many discrepancies in the
basic accounting records of the economy between
total assets and liabilities outstanding. The result
is a certain amount of floating supply of claims as
assets or liabilities that is an exception to item 5
above. In the flow of funds accounts, the floats
that can be estimated appear in the Discrepancy
column of the matrix (discussed under item 10
below).
7. Nonfinancial transactions. The first 9 rows
of the matrix, through "inventory change," are for
each sector a condensed summary of all non
financial transactions - payments and receipts
for wages, goods and services, taxes, and transfers.
Current receipts and payments are netted into a
sector total of saving, while purchases of physical
capital are shown separately.
Cumulated across the columns for domestic
sectors, the row for saving adds to total saving in
the U.S. economy, which is shown in a memo
column (National saving and investment). The
physical investment rows add across in a similar
way to total capital formation in the economy.
8. Sector balances-saving and investment.
As an accounting matter, every receipt of funds
by an individual or a sector is reflected in one or
more uses of funds, if only to increase cash bal
ances.20 For each sector, then, a balance exists
( except for statistical discrepancies) between total
sources and total uses of funds. This balance can
be shown in a variety of ways, but in the matrix
presented on page s.1 sector-account balances are
shown as an equality between gross saving of each
sector and its gross investment (rows 1 and 4 of
the matrix). The concepts of saving and invest
ment used here for sectors are the same as those
20 In the flow of funds context the terms source of funds
and use of funds mean no more than the standard terms
credit and debit in double-entry bookkeeping. The sector
statement is not a traditional sources and uses of funds
aimed at explaining movements in a single item such as
working capital, bank reserves, Treasury cash, or gold and
foreign exchange. Any such single item in the accounts is a
concept of funds special to one or another activity in the
economy. When parallel statements are set up for all sectors,
there is no one concept of funds that can be useful uniformly
across the matrix. Even cash loses its generality in this
setting, because cash of the public is different from cash of
a bank or monetary reserves of a central bank. Hence the
flow of funds statement evolves to a generalized form in
which the funds themselves vanish, and there remains only
the balance between total debits and total credits.

applied to national aggregates, and for each sector
saving equals investment in the same sense as for
the total economy. For each sector saving equals
that sector's physical capital formation plus a net
financial investment that measures the sector's
excess of lending to other sectors over its borrow
ing from other sectors. At the national level,
similarly, total saving equals capital formation
plus net foreign investment, where the latter is the
excess of lending abroad over borrowing from
abroad.
With this accounting structure, the particular
types of financial transactions by _a sector, both
borrowing and lending, are subcategories under
net financial investment. The totals shown for
financial sources and uses of funds by a sector in
general include financial flows within as well as
between sectors. It is only in the net of the two
totals, where intrasector flows are canceled out,
that the. financial figures become intersector flows.
This netting is carried across to the national total
of net financial investment, where all domestic
flows are washed out and where net financial in
vestment of the economy becomes identically equal
to net foreign investment. 21
9. Balance of the matrix as a whole. The
effect of the preceding eight items is to produce in
the matrix a severely constrained accounting sys
tem that undertakes to place every transaction of
the economy into direct juxtaposition to its coun
terparts, both vertically in sector accounts and
horizontally in transaction or market-summary
accounts. Horizontally the matrix is constrained
by the equalities between saving and investment,
between total nonfinancial sources and nonfinan
cial uses of funds, between net financial investment
and net foreign investment, and between total
borrowing and total lending in each financial
market. Vertically it is constrained by the equality
between saving and investment by each sector and
for the economy as a whole.
The upshot of these constraints is that in using
21 Net foreign investment is measured in flow of funds
accounts from the capital flows (that is, the net of financial
flows) in the balance of payments statement, whereas net
foreign investment in the income and product accounts is
measured from the current accounts - exports les& imports
and net transfer payments. The difference between the two
measures is the errors and omissions item in balance of
payments, shown in the matrix as the sector discrepancy
(row 44) for the rest-of-the-world sector.

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this organization of data as a framework for
analysis - construction of models, simulation
exercises, forecasting, or estimation of the data no one cell of the matrix can be altered without
changing at least three others: one in another
row of the same sector column, one in another
column of the same row, and at least one other
for the second column and second row.
Discrepancy column and a Discrepancy row tl,
absorb unaccounted entries in transaction rows
and sector columns. The Discrepancy column
carries the net sums of sources of funds less uses
of funds across rows, and the sector discrepancy
row carries correspondingly the net sums verti
cally. Because all elements of the matrix are
reflected in both of the two accounts, they add to
identical net totals in the corner of the matrix.
While they are net totals in the matrix, the two
discrepancy accounts can also be viewed as a
final sector and a final transaction account in a
matrix that identically adds to zero in both
directions. With that viewpoint, the statements in
item 9 on constraints take on added generality,
since one option in changing the matrix is to alter
sector or transaction discrepancies. Indeed, if any
single cell within the matrix is altered without
explicit offsetting adjustments, the three other
changes will auto{Tlatically be in a sector dis
crepancy, a transaction discrepancy, and the joint
sum of sector-transaction discrepancies.
All discrepancy entries have the sign of net
uses of funds ( the net sum of all sources minus
allocated uses in an account). This is an arbitrary
convention; it happens to be the same as that
used in balance of payments and the opposite of
the convention in the income and product accounts,
where the statistical discrepancy is on the saving
side of the capital account as a net source.
11. Matrix as capital account. The most
general and most important characteristic of the
matrix is that it constitutes a capital account for
the economy as a whole deconsolidated among a
number of institutional sectors. It is a capital
account in the sense that it is a statement of ac
quisition of assets - both physical and financial
- together with the sources of funds used to ac
quire those assets. For each sector the entry for
gross saving is the net sum of internal sources of
funds - a residuum of current receipts less cur-

rent outlays - and constitutes in the matrix. an
addition to sector net worth plus capital con
sumption reserves. Investment is stated gross of
capital consumption and net of borrowing and is
thus a use of funds consistent witb. the saving
concept as a source.
. The matrix deconsolidates among sectors the
capital account of the national income and prod
uct statistics. The nature of th.! matrix as an
expansion of that capital account into individual
sectors and into individual financial markets is
central to the concept of flow of funds accounting
and analysis. The position of the income and
product capital account in flow of funds is dis
cussed in Section III.

As already mentioned, each table in the
sector and transaction accounts is a statement
in time series form of one column or one row
of the matrix. The sector tables are statements

of sources and uses of funds, and the transac
tion tables cut across sectors to summarize
flows into and out of individual markets. Any
one cell of the matrix appears in both a sector
table and a transaction table and is a link be
tween the two.
This simple matrix organization of flow of
funds tables allows flexibility in grouping of the
data for specific purposes. Flow of funds data
lend themselves to many views of economic
activity, and each view characteristically needs
its own summary structure, with particular
items or relationships emphasized. The matrix
itself provides a map from which more con
densed systems can be designed with explicit in
dication of where each cell will fall and with as
surance that balance of the accounts as a whole
can be maintained to the degree necessary.

Ill RELATION TO INCOME AND PRODUCT ACCOUNTS
As stated earlier, a rnajor purpose of the flow
of funds accounts is to relate financial-market
developments directly to the nonfinancial
activities of the economy. For that purpose, the
nonfinancial economy is taken to be measured
by the scope, definitions, and data of the U.S.
income and product accounts published by the
Department of Commerce. The capital ac
counts for individual sectors of the economy
that are pictured in the matrix on page 1 are
in accounting form essentially a deconsolidation
of the single capital account published by the
Commerce Department (1966 National Income
Supplement, Table V - Gross Saving and In
vestment, page xiii). In that account all finan
cial claims within the United States are offset
against one another, and there is no recording
of financial flows within the economy or of
financial investment by individual sectors. The
consolidation leaves a measure of net financial
investment for the economy as a whole that is

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conceptually the same as net foreign invest
ment - the excess of U.S. lending abroad over
U.S. borrowing abroad.
The flow of funds deconsolidation distributes
the national totals of saving and tangible in
vestment among domestic sectors. It introduces
explicit recording of financial flows among
sectors, detailed by type of instrument, that
indicates the routes - direct or through inter
mediaries - by which sectors, such as house
holds, that have excesses of saving over physi
cal investment lend to sectors, such as business
and governments, .that may have an excess of
spending.
The position of the Commerce Department
capital account in the flow of funds system is
described in Tables 4 and 5, by using data
for the year 1961. These tables refer to Com
merce Department categories of saving and in
vestment as presented in the 1966 National
Income Supplement (page 79).

SAVING AND INVESTMENT
TOTALS
Table 4 gives the relationship between the na
tional totals of saving and investment in the two
systems of accounts. Total gross national saving
( line C) in the flow of funds· accounts is equal
to the Commerce Department total with the
one major exception that purchases of con
sumer durable goods have been treated in the
flow of funds accounts as capital expenditures
rather than as consumption. This shift produces
a smaller amount of current outlays and a larger
amount of saving in flow of funds accounts. 22
This treatment of durable goods is based on
the consideration that expenditures on con
sumer durable goods are, in a financing con
text, closely similar to those on producers'
durnbles: ( 1 ) a household purchase of dur
ables typically represents an investment in a
product that will be useful over a period of
several years; ( 2) consumer durable goods
substitute to a significant degree for related
business capital equipment; and ( 3) purchases
of durable goods are debt-financed to a large
extent. To bring consumer durable goods into
the complex of saving and investment, a total
for household saving is taken before deduction

for these purchases, and total saving and invest
ment are correspondingly higher.
The flow of funds accounts have a somewhat
different distribution from Commerce a�counts
between private and public saving. This dif
ference arises from the treatment of Govern
ment life insurance and retirement fund activi
ties. In the Commerce accounts Government
life insurance and retirement fund transactions
with households are treated as social insurance
contributions and transfer payments in the cur
rent account, both part of personal income.
In flow of funds, however, life insurance and
pension claims by households are established
as part of househ0ld �ssets, and claims of these
types against government funds are treated
the same as private insurance and retirement
funds. This difference in distribution shifts sav
ing from governments to households relative to
the Commerce ,Department accounts but has
no effect on total saving. 23
Federal Government insurance funds are
consolidated directly into the flow of funds sec
tor account for the U.S. Government, where
net growth in insurance reserves is deducted
from current surplus and appears as a financial
source of funds under liabilities. State and local
employee retirement funds, however, are shown

22 The shift includes introducing capital consumption allow
ances for consumer durables but is made without imputing
income from use of durables to total income or services from
durables to product.

23 Government retirement funds here cover Government em
ployees and persons covered by railroad retirement. Old-age
and survivors insurance is treated the same in the two account
ing systems; in neither does it give rise to household saving.

TABLE 4

GROSS NATIONAL SAVING AND INVESTMENT- SUMMARY COMPARISON, 1961

(Millions of dollars)

Item

Income Flow of
and
product funds

Difference

A
B

Gross private saving
Government surplus

79,818 127,392
-4,334 -7,728

47,524
-3,394

C
D

Gross national saving
Gross private domestic investment

75,484 119,664
71,699 115,879

44,180
44,180

Net foreign investment

f Gross national investment
G Statistical discrepany ( C - F)

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3,035

2,029

74,734 117,908
1,756
750

Source of difference
Lines Band C
Insurance and pension funds

Consumer durables
Consumer durables
and omissions in balance
-1,006 { Errors
of payments statement
43,135
1,006

Lines D and E
Line E

as a financial sector separate from the operat
ing accounts of these governments. The treat
ment there is to transfer savings from general
government (in the flow of funds State and
local governments-General funds sector) to
households, and to impute a lending from
households to the retirement funds (in the flow
of funds State and local government employee
retirement funds sector). The amount of both
transactions is measured by total net growth
in the funds' assets.
In Table 4 the only difference between
the measures of gross private domestic in
vestment (line D) in the two systems is the
presence of consumer durables in the flow of
funds total, as discussed above. The one other
difference in total investment is in the measure
ment of net foreign investment. In the Com
merce Department accounts, net foreign invest
ment is measured as the net of current-account
transactions in balance of payments - im
ports, exports, and unilateral transfers.24 In
flow of funds accounts, net foreign investment
is defined as one form of net financial invest
ment and is in fact a consolidation of that item
for all domestic sectors. It is measured as the
excess of foreign borrowing from the United
States over foreign lending to the United States
and is thus a net figure in the capital rather
than current account of the balance of pay
ments statement. The net current balance and
net capital balance, which in concept should be
equal, differ statistically by the amount of
errors and omissions in the balance of payments
statement, which thus appears as the difference
between the net foreign investment totals on
line E of Table 4. As may be seen from Table

4 (line G), this difference in foreign investment
totals is reflected in a difference between the
income and product statistical discrepancy and
flow of funds discrepancy between saving and
investment (row 44, last column of the matrix,
page S.1).25

SECTOR DISTRIBUTION OF
TOTALS
Table 5 spells out the allocation of national
saving and investment among flow of funds
sectors. Part A.1 shows the allocation among
the flow of funds sectors of each component of
total saving as published in the income and
product accounts (total column). Part A.2
shows the changes in the total and their dis
tribution in the flow of funds accounts occa
sioned by differences in treatment of specific
transactions. Part A.1 is based entirely on
Commerce Department data underlying the in
come and product accounts, whereas A.2 is
based on flow of funds estimates except for
consumer durables. In A.1 a few specific points
of allocation should be mentioned. Corporate
farms are in the farm sector, and household
capital consumption on line 8 is on owner
occupied housing and nonprofit facilities. Mu
tual savings banks are included with savings
institutions rather than with banking as in Com
merce Department tables.
Gross saving of nonfarm nonfinancial cor
porations in flow of funds is different from the
Commerce Department total of cash flow net
of dividends (for example, Survey of Current
Business, July 1973, page 23) only in that
the figure in Table 5 includes inventory valu-

24 Beginning in 1970 the Commerce Department accounts
include as part of foreign investment the January allocations
of Special Drawing Rights by IMF to the United States with
this form of investment financed by a capital transfer item
from the foreign sector to the United States. These allocations
are omitted from flows in the flow of funds accounts, and
hence from the measure of net foreign investment. They are
included in tables on amounts outstanding as part of U.S.
international reserve holdings, which are thus increased from
year to year relative to flows. A similar effect resulted from
changes in the official dollar price of gold in 1972 and 1973.
These price changes, like SDR allocations, increased dollar
value of reserve holdings without transactions.

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25 The flow of funds saving/investment discrepancy is to be
distinguished from the nonfinancial discrepancy that appears
in the matrix, row 1, discrepancy column. The latter matches
total gross savings (the net on current nonfinancial transac
tions), including the foreign sector's, with total nonfinancial
investment (row 5). In this matching, the foreign component
is the balance of payments current-account balance (with
opposite sign) used as net foreign investment in the Com
merce Department statement. The flow of funds nonfinancial
discrepancy is thus identically equal to the Commerce Depart•
ment statistical discrepancy, although opposite in sign.

TABLE 5

SAVING AND PHYSICAL INVESTMENT IN FLOW OF FUNDS ACCOUNTS, 1961

(Millions of dollars)
Nonfinancial business
Item

Total

1
2
3
4
5
6
7

Personal saving
Undistributed corp. profits
Corporate IV A
Wage accruals less disburs.
U.S. Government surplus
State & local govt. surplus
Net natl. saving (Nl&P)
Cap. consumption allows.:
8
Corporate
9
Noncorporate
10 Gross natl. saving (NI&P)
11
12
13
14
15
16
17

18
19
20
21
22

HouseNonholds Farms corp.
nonfarm

21,151 21,151
13,475
-52
0
-3,812
-522
30,240 21,151
26,240
19,004 6,soi
75,484 27,653

Corp.
nonfarm

Total

Government
BankState
and Federal ing
local

Savings
institutions

Insurance & Other
pen- finance
sion
funds

A.1 Allocation of NI&P saving among F IF sectors
-25

-25
147
4,062 8,440
4,184 8,440

10,188 10,163
-52
-52
0
0
10,136 10,111

-522
-522

25,438 25,585
12,502
35,574 48,198

-522

1,087

992 1,049

is4

1
2

-3,812 1,087

992 1,049

184

5
6
7

0
-3,812
321
-3,812

1,408

204

1,04i 1,253

80 8
9
264 10

A.2 Transaction differences between NI&P and F IF affecting saving
Consumer durables
44,180 44,180
11
U.S. Govt. insur. & pen. res.
1,017
-1,oi1
12
State & local govt. pen. res.
2,377
13
-2,377
Cap. gns. dvds. of inv't. cos.
499
-499 14
Gross natl. saving (FIF)
119,664 75,726 4,184 8,440 35,574 48,i98 -2,899 -4,829 1,392 1,058 1,253 -235 15
Depree. on consumer dur.
41,309 41,309
16
Net natl. saving (FIF)
15-8-9-16
33,111 27,915 -25
10,136 10,111 -2,899 -4,829 1,087
992 1,049 -315 17

Nonfarm residen. constr.
1- to 4-family houses
Other
Farm residen. constr.
Nonresiden. plant & equip.
Change in business invent.
Gross pvt. dom. inv. (NI&P)

23 Consumer durables
24 Gross pvt. dom. inv. (FIF)

B.1 Allocation of gross private domestic investment in NI&P among F IF sectors
22,043 17,569
2,580 1,894 4,474
18
17,827 17,569
130
128
258
4,216
2,450 1,766 4,216
602
602
602
19
47,032
2,980 3,537 6,556 33,ijs 43,331
275
n.e.
446 .n.e. 20
2,022
279
222 1,521 2,022
21
71,699 20,549 4,418 9,358 36,653 50,429
275
n.e.
446
n.e. 22
44,180
m,879

B.2 Transaction differences between NI&P and F IF affecting investment
44,180
64,729 4,4is 9,jss 36,653 5o,4i9
275
446
n.e.

23
n.e. 24

n.e. = Not estimated.
NI&P = National income and product account.

IVA = Inventory valuation adjustment.
F IF = Flow of funds.

ation adjustment and net profits of branches
abroad and excludes farm corporations.
The major differences in transaction treat
ment between the two accounting systems,
recorded in Part A.2 of Table 5, have been
discussed in relation to Table 4: consumer
durables (row 11), which affect total saving,
and government life insurance and retirement
funds ( rows 12 and 13), which affect only
distribution among sectors. Part A.2 has one
further adjustment to allocation of saving
among sectors - capital gains dividends of
open-end investment companies, both cash and
retained, are treated in Commerce Department
accounts as a capital transfer rather than a
dividend component of personal income. In
flow of funds these are a current-account pay
ment from investment companies to households
in order to avoid using a capital transfer ac-

count in the system for this one item. Saving is
reallocated accordingly.
Line 18 gives a flow of funds estimate of
capital consumption on consumer durable
goods needed to derive net household and
national saving in the flow of funds accounts,
where such durables are viewed as capital
goods rather than as consumption at the time
purchased. The estimate is a declining-balance
calculation in constant dollars on 10 classes of
durables; the result is stated in current-year
prices.
Part B.1 of Table 5 shows sectoring of totals
of gross private domestic investment by type.
Both totals and details are estimated by the
Commerce Department. Business investment in
1- to 4-family units represents only changes in
work in process on houses for sale to house
holds and is essentially an inventory-change

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component of the total residential figure.26
Other residential construction consists of multi
family units, additions and alterations, and
nonhousekeeping units. That part of other resi
dential construction allocated to households is
mainly additions and alterations, but it includes
a small amount of multifamily and nonhouse
keeping construction for nonprofit organiza
tions. Farm residential construction is allocated
to farms as purchasers, since it is com
mingled with other farm expenditures in
financing. Nonresidential plant and equipment
(line 20) is allocated as a single figure among

sectors rather than separately for construction
and producers' durable goods. The household
allocation is for plant and equipment of schools,
churches, and other nonprofit organizations.
Table 5 carries no allocation of net foreign
investment among domestic sectors. Each sec
tor's net foreign investment is part of its net
financial investment, but not yet entirely identi
fiable as such. To complete identification would
require allocation of miscellaneous financial
sources and uses of funds in the balance of
payments statements that are occasionally
sizable but not specified as to nature. Pending
further specification of those items, net foreign
investment can be viewed only as the con
solidated total of net financial investment for
the United States, mixed for individual sectors,
with similar net investment in domestic daims.

26 All income and product and financial activities associated
with owner-occupied housing are allocated directly to house
holds in flow of funds. This includes purchases of completed
new houses, additions and alterations, mortgage borrowing
secured by such properties, capital consumption allowances,
imputed rents in consumption, and imputed net rental income.
The noncorporate business account includes only activities in
cash rental housing and in construction itself.

IV DEFINITION OF SECTORS AND TRANSACTION
CATEGORIES
finance into three parts each. Flow of funds
publications frequently carry, as on page S.3, a
submatrix for nonbank financial sectors at the
most detailed level available.
The sector structure from the most detailed
level to the broadest groupings used in the
sector and transaction accounts tables is as
shown in Table 6.

SECTORS
Any group for which a complete statement of
sources and uses of funds has been estimated in
flow of funds accounts can constitute a sector
for analytic purposes. At the most detailed
level there are about 20 such sectors for which
data are maintained on a continuing basis. In
table presentations and discussions of the data,
these elemental sectors are often combined into
broader sector groupings, which can also be
treated as sectors analytically.

Sector definitions

Households include - in addition to persons
as members of households - personal trusts
and nonprofit organizations serving individuals,
such as foundations, private schools and hos
pitals, labor unions, churches, and charitable
organizations. There are no separate data avail
able on a continuing basis for personal trusts
and nonprofit organizations. Their importance
in the financial transactions of the sector might
be estimated for the early 1960's when, of

Sector structure

The matrix on page S.1 simultaneously shows
two levels of sector detail, of which one is a
very broad summary of the accounts into four
sector groups - private domestic nonfinancial,
U.S. Government, finance, and foreign - while
the other breaks the private domestic and the

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total sector financial assets on the order of
$1,100 billion, roughly $60 billion were in
bank-administered personal trusts and perhaps
$25 to $30 billion in nonprofit organizations.
The household sector excludes farm and non
corporate business activities of individuals. On
housing, see footnote 26.
Farm business covers all farming activities in
the United States including corporate farms.
The sector includes farm credit cooperatives
consolidated with the farms that own them, and
it includes farm housing activities. Consump
tion activities of farmers are in the household
sector. Farm income in the accounts is as
defined and measured for national income pur
poses, including imputed- incomes. Except for
retained profits of corporate farms, income is
transferred entirely to the household sector and
is reflected in household saving. Owner equity
investments in noncorporate farming enter the
TABLE 6

farm sector through the transaction account
"equity jn noncorporate business."
To the extent that farmers commingle house
hold and business activities in their own ac
counts, this sector departs somewhat from the
principle that all activities of a unit are to be
in a single sector account. The farm business
sector can be viewed as an activity subaccount
of the household sector, with connection
through the proprietors' equity transaction
account.
Nonfarm noncorporate business consists of
partnerships and proprietorships in nonfinancial
enterprises, including individuals' rental activi
ties and the professions. Like farming, this sec
tor is treated in the accounts as an activity sub
account of the household sector: all current
income is transferred tc households, net sav
ing is shown as zero, gross saving is equal to
capital consumption allowances, and all changes

SECTOR STRUCTURE

Households
Fann business
Nor.farm noncorporate business
Corporate nonfinancial business
State and local governments General funds
Rest of the world
U.S. Government
Federally sponsored credit agencies
Monetary authorities
Commercial banks
Domestic affiliates of
commercial banks
Foreign banking agencies
Banks in U.S. territories
and possessions
Savings and loan associations
Mutual savings banks
Credit unions
Life insurance companies
Other insurance companies
Private pension funds
State and local government
employee retirement funds
Finance companies
Real estate investment trusts
Open-end investment companies
Security brokers and dealers

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Noncorporate
}business

f
}

}No�financial
busmess

Private
domestic
nonfinancial

Non
financial

Commercial
banking
Savings
institutions

Finance
Private
nonbank
finance

agencies described below. The sector account
is consolidated, and transactions and claims
among agencies are not shown.
Federally sponsored credit agencies are a fi
nancial sector consisting of five types of special
ized lending institutions that had originally been
created by the Government and owned by the
Government to varying extents. Government
equity has been fully retired, and they are now
excluded from the Government budget accounts
as private insti1:utions. In the flow of funds ac
counts they are separate from the Government
sector for all years. These agencies finance
their lending activities mainly through issues of
their own debt securi1:ies, and through 1972
such issues have been closely coordinated with
Treasury debt operations. The agencies are:

in equity capital appear as net inflows in "pro
prietors' net investment."
Corporate nonfinancial business comprises
all private corporations not specifically covered
in financial sectors. It includes holding com
panies and closed-end investment companies on
a consolidated basis, and it includes real estate
firms. It is identical with the nonfinancial cor
porate group shown in Commerce tables except
that it excludes farm corporations. Activities
of pension, welfare, and profit-sharing funds
are excluded from the sector to the extent that
they are excluded from basic data in corporate
tax returns.
State and local governments--General funds
comprise all political subdivisions of the United
States, and all corporations, enterprises, debt
issuing authorities, and trust funds operated
by these subdivisions, other than employee re
tirement funds; these last are shown separately
as a financial sector. Basic data for the sector
are the aggregates in the U.S. Census Bureau's
Census of Governments.
Rest of the world is as defined in the balance
of payments statement for the United States,
and the data in this sector account are from
that statement, with financial transactions clas
sified into flow of funds categories and non
financial transactions as published in the income
and product accounts. The sector discrepancy
is "errors and omissions" in the balance of pay
ments statement.
U.S. Government covers, for all years, the
agencies and funds that are in the Government's
unified budget as of 1969, except the District of
Columbia. Included are the Exchange Stabiliza
tion Fund, employee retirement funds, life in
surance funds, and all corporations that are
wholly or partly owned by the Government.
Many of these agencies operate lending pro
grams, and a few issue their own debt to the
public separate from Treasury securities. The
sector does not include the Federal Reserve Sys
tem and certain Treasury monetary accounts
that constitute the monetary authority sector,
and it does not include a set of sponsored credit

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Agency

Federal home loan banks
Federal National Mortgage
Association
Federal land banks
Federal intermediate credit
banks
Banks for cooperatives

Principal type of credit

Loans to savings and loan
associations
Residential mortgages
Farm mortgages
Short-term farm credit
Short-term farm credit

The figures for this group also include
GNMA-guaranteed mortgage-backed pass
through securities as liabilities, with the pools
of mortgages backing the securities as assets.
Pass-through securities first appeared in 1970
as a result of the 1968 Housing Act, and by the
end of 1973 about $9 billion had been issued.
The pools are organized by private groups, but
liability for the securities is in the mortgage
pools themselves, not in any identifiable trans
actor group. The pools and securities have a
quasi-public character because of the GNMA
guarantee and are included in this sector for
that reason.
Monetary authorities consist of the Federal
Reserve System and certain monetary accounts
of the Treasury: the gold account, the silver
account, and an account constructed to record
other currency liabilities of the Government
and the assets behind those liabilities. The sec
tor is identical with the group of institutions
and accounts for which the "Member Bank
Reserves, Federal Reserve Bank Credit, and
36

banking under Section 25 of the Federal Re
serve Act. They are not included in consoli
dated bank reports published by bank regula
tory agencies, but their international flows are
included in balance of payments data on trans
actions of U.S. banks. They have a liability for
part of the U.S. money stock and are active in
domestic money markets.
Agencies of foreign banks are U.S. offices
operating under special banking charters that
do not allow taking of U.S. deposits. Like Edge
Act corporations, their transactions are in
cluded in balance of payments banking flows,
and they have a liability for part of the money
stock. The group also includes some foreign
owned banking institutions chartered in New
York as investment companies.
Banks in U.S. territories and possessions are
also included in balance of payments totals for
U.S. banking transactions. The group consists
of those currently published by the FDIC. It
includes branches of U.S. and foreign banks in
these areas.
Savings and loan associations are mutual and
stock institutions chartered by States and ,the
Federal Government to accept share capital
inflows and to lend primarily in mortgages. The
group consists of associations covered in Fed
eral Home Loan Bank Board statistics, includ
ing noninsured associations.
Mutual savings banks are institutions oper
ating under savings bank charters in 19 States
with deposit insurance from FDIC. Data for
the group are those published by the National
Association of Mutual Savings Banks.
Credit unions are employee organizations re
lated to individual firms or agencies that are
organized under State or Federal charter to
accept share funds from members and to lend
consumer credit to members. The group con
sists .of all State and Federal credit unions in
statistics published by the Bureau of Federal
Credit Unions in the Department of Health,
Education, and Welfare.
Life insurance companies are those covered
in the Life Insurance Institute's Fact Book but

Related Items" table in the Federal Reserve
Bulletin is a sources and uses of funds state
ment. The "Factors supplying reserves" are
assets and the "Factors absorbing reserves" are
liabilities. The principal liabilities are thus bank
reserves and currency in circulation, and the
principal assets are U.S. Government securities,
gold, bank borrowings from the Federal Re
serve, Federal Reserve float, and Treasury cur
rency - assets that are backing for the reserve
money of the economy.21
Commercial banks cover all banks in the 50
States, as defined by the coverage of all-bank
statistics in annual reports of the Comptroller
of the Currency. The sector excludes banks in
U.S. territories and possessions, which are a
separate sector. This sector is in flow of funds
on a consolidated basis: all deposit and loan re
lationships among domestic commercial banks
have been "washed out." Interbank items in
general add to different totals as assets and as
liabilities because of items in transit and classi
fication variances, and the net differences are
included in the sector account as miscellaneous
unallocated liabilities.
Domestic affiliates of commercial banks are
mainly holding-company parents of banks and
nonbank subsidiaries of bank holding com
panies. The data included for the group are at
present limited to specific assets and liabilities
related directly to banking activity-loans to
banks, loans purchased from banks, and com
mercial paper issued to finance such activities.
Foreign banking agencies are a combination
of Edge Act corporations and agencies of for
eign banks. Edge Act corporations are sub
sidiaries of U.S. banks engaged in international
27 The structure of "Bank Reserves and Related Items" is
described in detail in "Member Bank Reserves and Related
Items," Section 10 of Supplement to Banking and Monetary
Statistics (Board of Governors of the Federal Reserve System,
1962). The flow of funds sector statement treats foreign ex
change holdings as a positive asset rather than a negative
liability and classifies minor items somewhat differently but
otherwise represents the Member Bank Reserves, Reserve Bank
Credit, and Related Items table as described in that publica
tion. The table on reserves published in the Federal Reserve
Bulletin has been modified recently to include all assets on the
asset side rather than as negative liabilities.

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exclude fraternal orders. Government life in
surance programs are also excluded; they are in
the U.S. Government sector account.
Other insurance companies are the fire,
casualty, and other companies covered in Best's
Aggregates and Averages.
Private pension funds are defined in the an
nual statistics on self-administered pension
funds published by the Securities and Exchange
Commission. They include retirement funds of
nonprofit organizations and multiemployer
plans shown in those data. Their total assets are
treated as_ a holding in trust for the household
sector and are the measure of a pension reserve
liability to households. By this treatment pen
sion funds have zero saving by definition. The
current-account transactions that affect pen
sion-fund assets are imputed to households and
are reflected in personal saving. This money is
then advanced by households to pension funds
in the financial accounts.
State and local government employee retire
ment funds are the group of such funds re
ported in the Census of Governments. They
have the same position in the accounts as
private pension funds, with zero saving and a
liability to households equal to their assets. A
current-account transfer of saving from govern
ments to households is required to finance this
household investment, however, because in the
income and product accounts the saving is
attributed to governments. This is described on
page 31.
Finance companies comprise sales finance,
consumer loan, and commercial finance com
panies covered in the Federal Reserve's 5-year
Censuses of Finance Companies.28 The group
also includes mortgage companies.
Real estate investment trusts (REIT's) are
a relatively new form of intermediary that,
through 1960 legislation, are exempt from
Federal corporate income tax provided they
distribute most of their ordinary income to
shareholders and provided most of their in-

vestments and grpss income are from real
estate or mortgages. They can be either open
end or closed end, but in practice all trusts
created so far have been closed-end companies.
Their investments have been mainly in con
struction and development loans, and their
funds have been raised through diversified pat
terns of bond and share issues, bank loans,
and commercial paper issues.
Open-end investment companies (mutual
funds) are the group reported by the Invest
ment Company Institute. Closed-end companies
are consolidated with the nonfinancial corpo
rate business sector.
Security brokers and dealers are based on
aggregates for such firms registered with the
Securities and Exchange Commission.
Discrepancy, the last column in the matrix,
records the residual excess of total sources over
total uses of funds along each transaction row.
These discrepancies have the sign of a net use
of funds. In an accounting sense the discrep
ancy column is the last sector account needed
to complete the matrix. As indicated in descrip
tions of transaction accounts below, many of
these discrepancies have substantive meaning
and are not solely the result of statistical defi
ciencies. The discrepancy for nonfinancial trans
actions is identically equal to the statistical dis
crepancy in the income and product accounts
(with sign reversed), reflecting the integration
of Commerce data into the· system discussep in
Section III. Transaction accounts with zero
discrepancies have residual estimates along the
row for some actual sector's transactions in the
account. Typically the residual is in the house
hold account, but not always. The discrepancy
column is discussed below in its relation to the
discrepancy transaction row.

TRANSACTION CATEGORIES
Transactions in the flow of funds accounts are
arranged in three major transaction groups current nonfinancial, capital nonfinancial, and
financial. In addition there are several internal

211 The 1970 Census was published in the November 1972
Federal Reserve Bulletin, p. 958.

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Financial

entries, subtotals, and transfers between current
and capital subaccounts, such as capital con
su.mption charges, current surplus, saving, in
vestment, corporate profits, and unincorporated
business net income. Many sectors also have a
residual discrepancy item - the excess of sav
ing over investment in the data.

All financial transactions are entered into the
accounts in a particular form of net basis: asset
sales by a sector are entered as negative uses
of funds - deductions from purchases of the
same kind of asset - whereas debt repayments
are entered under sources as deductions from
new borrowing of the same type. There are in
the matrix no deductions of liabilities against
assets either within a type ( for example, house
hold mortgage assets and liabilities are entered
separately), nor in different types (such as a
deduction of security credit from security hold
ings). 2 ° Certain time-series tables of the ac
counts show such deductions, but they are
within special formulations and not part of the
general structure of the accounts.
Net financial investment for each sector is
the excess of net acquisitions of financial assets
over net increases in liabilities. It measures net
funds advanced by each sector to all other sec
tors. Net financial investment for each sector
plus the statistical discrepancy for that sector
equals the sector net surplus on all nonfinancial
. transactions.
Table 7 lists the types of financial claims for
which separate transaction accounts are main
tained in the flow of funds accounts. The items
listed are categories normally shown in the pub
lished tables. Some are sums of subcategories
for which accounts are also maintained; sub
categories are indented. The groupings are
those frequently used to summarize transaction
accounts.
Gold and Special Drawing Rights consist of
gold held as a monetary reserve and SDR hold
ings. Transactions in gold are recorded only for
monetary authorities, the Exchange Stabiliza
tion Fund in the U.S. Government sector, and
the rest of the world. All gold transactions are
treated as uses of funds, and no liability is
imputed for not holding gold or for SDR's. All

Current nonfinancial
Current-account transactions are not shown on
a basis that is uniform for all sectors. In the
matrix, which is a sectoring of the economy's
capital account, all current items are netted to
gether into gross saving as a source of funds to
capital account. In individual sector accounts a
certain amount of current-account information
is included to indicate links between gross sav
ing and the income and product data from
which it is derived. For households the items
are directly identifiable in the income and prod
uct statistics except two that are from other
sources. Current items for corporate business
are those for nonfinancial corporations in in
come and product with farm corporations ex
cluded as part of farm business. Branch profits
from foreign operations are added to undis
tributed profits from domestic activities in
measuring total internal funds. Inventory valua
tion adjustment is included for consistency with
the inventory investment figure included in
GNP and business capital account.

Capital nonfinancial
Capital nonfinancial transactions - saving and
investment - are described in Section III in
the discussion of the relationship of the Com
merce Department's income and product data
to the flow of funds matrix.
Flow of funds publications of annual and
seasonally adjusted quarterly data include as a
first table a distribution among sectors of both
current and capital nonfinancial transactions
taken from the Commerce Department's in
come and product accounts. The table includes
a sector distribution of profits as well as of the
capital entries discussed in Section III.

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ze The one exception to this rule in the matrix is the n.!t
International Monetary Fund position ( capital subscription
less certain IMF claims on the United States), which. is
counted in the U.S. foreign exchange position as an asset on
a net basis.

gold in the Treasury gold account is in mone
tary authorities assets, while gold held by the
Exchange Stabilization Fund is in U.S. Govern
ment assets together with all SDR holdings. As
mentioned in Section III, SDR allocations to
the United States, which began in 1970, are
included in asset holdings but not in flows.
Revaluations of the U.S. dollar also appear as
changes in gold and SOR holdings not reflected
in flows. The flow data include only purchases
and sales of these assets.
Official foreign exchange position is as de
fined in balance of payments accounts - con
vertible foreign currencies and the net IMF
gold _tranche position. This is a liability of the
rest of the world and a net asset distributed be
tween the U.S. Government (Treasury holdings
of currencies plus IMF subscription less IMF
notes and letters of credit) and monetary au
thorities (Federal Reserve holdings of curren
cies less certain deposits of the IMF).
Treasury currency consists of silver held as
monetary reserve by the domestic economy and
certain asset-debt relationships between the
banking system and the Federal Government in
connection with the monetary system - seign
iorage on silver, deposits with the U.S. Govern
ment for redemption of Federal Reserve Bank
notes and national bank notes, and liability of
the U.S. Government in connection with minor
coin and United States notes backed by gold
reserves.30 Transaction flows for this category
occur only between the Treasury and the mone
tary authorities. Beginning with 1970, this ac
count also includes SDR certificates as a mone
tary authorities asset and a Treasury liability.
The large difference between total assets and
total liabilities in the estimates of amounts out
standing reflects the fact that gold and silver
are shown in the accounts as assets but not as
liabilities (except seigniorage revaluations on
·silver, which are treated as a U.S. Government

liability). Gold and silver are treated as tan
gible assets rather than as claims.
Demand deposits and currency cover de
mand deposits at commercial banks in the
United States, Government and foreign deposits
at Federal Reserve Banks, and U.S. currency
outside banks. The definition is identical with
that of money supply plus U.S. Government
deposits in the daily-average statistics on money
stock.31
The matrix on page S. l indicates in the dis
crepancy column differences in this category be
tween liabilities as seen in bank records and
assets as recorded in holder-sector accounts.
These differences are mail float, representing
checks in the mail that are moneys no longer
on the books of senders and not yet on the
books of receivers. Mail float relates to checks
that have not yet entered the banking system
clearing procedure. It exists in parallel with and
separate from cash items in process of collec
tion and Federal Reserve float. Cash items and
Federal Reserve float are deducted from gross
demand deposit liabilities of banks to consoli
date the bank liability down to an amount owed
to nonbanks.32 Mail float is a further deduction
to arrive at holder records of money balances.
This deduction of mail float is nece�ary to
bring holder entries for cash into consistent tim
ing with the other entries in nonbank accounts.
It is mainly an accounting requirement, how
ever, and does not imply that holder records are
analytically more important than bank records.
In general the public looks at the bank record
of its deposits as more relevant in managing
cash than the balance on its own books. Were
ni A very small exception is IMF deposits with the Federal
Reserve, which in flow of funds are negative in the foreign
exchange position. Apart from this, relation to money supply
is presented in the Federal Reserve Bulletin, August 1962,
p. 945.
The June 1971 Federal Reserve Bulletin introduced a new
series on ownership of demand deposits. For the relation
between those data and flow of funds estimates, see Table 8,
p. 463, of that Bulletin.
82 The role of these items in measurement of money supply
is described in the Federal Reserve Bulletin, October 1960,
pp. 1108-12. The money supply as published by the Federal
Reserve is a banking-system liability record rather than a
holder asset record.

:io For a detailed discussion of these relationships, see Flow
of Funds in the United States, 1939-1953 (Board of Governors

of tlte Federal Reserve System, 1955), chapter 17.

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TABLE 7

FINANCIAL TRANSACTION CATEGORIES

Gold and Special Drawing Rights
Official foreign exchange position
IMF gold tranche position
Convertible foreign exchange
Treasury currency

f Monetary reserves

Demand deposits and currency
Private domestic
U.S. Government
Foreign
Time deposits at commercial banks
Savings accounts at savings institutions

Life insurance reserves
Pension fund reserves

Interbank claims
Corporate equities

U.S. Government securities
Treasury issues
Short-term
Other marketable
Savings bonds
Nonguaranteed agency issues
Loan participation certificates
State and local obligations
Corporate and foreign bonds
Home ( 1- to 4-family) mortgages
Other mortgages
Multifamily residential
Commercial
Farm
Consumer credit
Instalment
Noninstalment
Bank loans n.e.c.
Other loans
Open market paper
Finance co. loans to business
U.S. Government loans
Sponsored credit agency loans
Loans on insurance policies

financial institutions

Insurance and pension
reserves

Credit market instruments

Security credit
Owed by brokers and dealers
Owed by others
Taxes payable
Trade credit
Equity in noncorporate business
Miscellaneous
Deposit claims
Equities
Insurance claims
Unallocated claims and bank floats

Other claims

Sector discrepancies

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Deposit claims on

Li/e insurance r�serves are established in the
accounts as a claim by households as policy
holders against life insurance companies and
U.S. Government insurance programs. The
category includes deposit claims of policy
holders and beneficiaries against insurance com
panies arising from supplementary contracts
not involving life contingencies. Policyholders'
borrowing on policies from insurance com
panies and from Government insurance pro
grams is a positive element of the other loans
category rather than a negative element here.
Statistically, the category is estimated to be
equal to policy reserves against private and
U.S. Government life insurance policies, in
cluding individual and group annuities and
supplementary contracts. Changes in policy
dividend accumulations and accident and health
reserves are in the miscellaneous transaction
group as liabilities to policyholders.34
Pension fund reserves are in the accounts as
a claim of households as beneficiaries against
retirement programs. They cover private pen
sion plans (both those administered by insur
ance companies and other private plans, and
both vested and unvested plans), government
employee retirement funds, and the Railroad
Retirement Fund. They do not cover the OASI
social insurance program. Statistically, the cate
gory is estimated as equal to changes in reserves
of private plans administered by insurance com
panies and total assets of other private plans,
government employee retirement funds, and the
Railroad Retirement Fund.35
Interbank claims are a set of relationships
between the Federal Reserve and commercial
banks and among the several subsectors of
commercial banking. Claims among banking
subsectors--deposits and loans-appear in

it possible statistically to shift timing of all non
cash entries in sector accounts to a basis con
sistent with bank record of money supply lia
bility, the entire body of accounts would
perhaps be improved for analysis. Short of this
the mail float deduction is necessary.33
Mail floats are shown in the matrix for pri
vate domestic and for U.S. Government de
posits. Foreign deposits are on a bank-record
basis in the balance of payments accounts (and
hence here), consistent in timing with at least
the large bulk of capital-account transactions.
A mail float in demand deposits implies cor
responding floats in many if not all other trans
action categories. As a general matter records
of sales and purchases and of lending and bor
rowing are not timed simultaneously, and it is
not possible to balance both sector accounts
and transaction accounts without float items.
Statistically, most of these floats cannot be esti
mated. The largest volume of transactions gen
erating float is undoubtedly in trade credit, how
ever, and as noted below, a float exists in the
system for that account.
Time deposits and savings accounts consist
of all time deposits at commercial banks (in
cluding negotiable certificates of deposit) and
all deposit and share accounts at mutual sav
ings banks, savings and loan associations, and
credit unions. Flows include crediting of in
terest and dividends as well as deposits and
withdrawals. Postal Savings System deposits are
in the miscellaneous category, and savings
bonds are in U.S. Government securities.
33 Statistically, mail float is estimated directly and used in
calculating household cash as a residual. The nature and
meaning of household cash as an "other-party" record are
discussed in George Garvy, "The Float in Flow-of-Funds
Accounts," Flow of Funds Approach to Social Accounting,
vol. 26 of Studies in Income and Wealth, NBER, pp. 431-61.
A further note on the meaning of the bank-record liability:
If all check-writing were to cease for a fortnight and all
checks in the clearance system to reach their final destination,
both the bank gross records of liabilities and holder records
of assets would settle at the level of demand deposits shown
in money supply statistics, that is, net of cash items and
Federal Reserve float. Bank records would come down from
a higher level and holder records up from a lower level. It is
t)J.is ultimate view of the present state of balances plus checks
in transit that in general has most meaning to t�e public as a
cash balance.

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M Measurement of life insurance claims is discussed in the
Federal Reserve Bulletin, August 1959, p. 837.
33 Treatment of pension funds claims is discussed in the
Federal Reserve Bulletin, August 1959, p. 838. With corporate
equities valued at market prices in pension fund assets,
year-to-year changes in total reserves outstanding can differ
substantially from net flows into reserves as a result of market
price changes. The net flows represent premium receipts and
investment income less benefit payments and operating costs.

U.S. Government securities consist almost
entirely of the issues covered in the Treasury
Surveys of Ownership during 1972 and are
measured by the amounts shown in the sur
veys.36 They include:

tables for the total commercial banking sector
as both assets and liabilities of equal amounts.
As among the bank subsectors, the total tables
are thus combined statements rather than con
solidated statements. This is in contrast to the
commercial bank subsector, which is consoli
dated for the banks included.

All Treasury issues, including savings bonds,
foreign currency series, and other nonmar
ketable issues in the survey;
Agency issues by TV A, Export-Import Bank,
Postal Service, Federal Housing Adminis
tration, and other Government agencies;
Loan participation certificates issued by
Export-Import Bank and GNMA;
CCC certificates of interest and CCCguaranteed bank loans;
Farmers Home Administration insured notes;
Issues by federally sponsored credit agencies;
GNMA-guaranteed pass-through securities
backed by mortgage pools.

Corporate equities represent net issues of
and transactions in equity securities of private
domestic corporations and U.S. net purchases of
stocks of foreign corporations. The category
includes investment company shares and covers
both common and preferred stock. Figures for
asset levels of sector holdings are stated at
market value, and annual changes in levels
differ from net purchases because of fluctua
tions in market price. No estimates of liabilities
for corporate stock are attributed to issuing
sectors except open-end investment companies.
These companies differ from other corporations
in that they have an obligation to redeem shares
on demand at values based on current values
of portfolio assets.

As a group, these securities are issued by
two sectors in the account structure-U.S.
Government and federally sponsored credit
agencies. Liabilities of each sector held within
that sector are consolidated out, but issues held
by the • other sector are included. The U.S.
Government liability, for example, excludes
Government investment account holdings of
the Government's issues but includes holdings
by sponsored agencies. Federal Reserve hold
ings are included in both totals of liabilities. In
addition to the issues covered in the Treasury
surveys of ownership the category includes
small amounts of "special issues" held by Fed
eral home loan banks and other non-Govern
ment groups. GNMA-guaranteed pass-through
securities are combined in tables with secur
ities issued by federally sponsored agencies, as
mentioned above in the description of the
sponsored-agency sectors.
Liabilities of the U.S. Government not
covered by this category are shown in the fol
lowing list:

Credit market instruments is a core group
of debt claims that is the principal medium
used by nonfinancial sectors in raising funds
through formal credit channels. It excludes
trade credit arising in the normal course of
business, tax liabilities, security credit, and
proprietors' equities in noncorporate business.
It also excludes miscellaneous claims, which are
mainly accruals for private sectors and various
trust deposits for the U.S. Government.
Credit market instruments are used by finan
cial as well as nonfinancial sectors as a source
of funds but to a much smaller extent relative
both to borrowing in this form by nonfinancial
sectors and to borrowing in other forms by fi
nancial sectors. In the matrix financial sectors'
borrowing in credit markets is included in the
credit market rows, but the principal summary
tables on credit flows, discussed in Section I
as illustrated in Table 2, focus on the use of
these markets by nonfinancial sectors.

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aG Where maturity detail is shown, "short-term marketable"
consists of all bills, certificates, notes, and bonds due within a
year of the date shown, regardless of original maturity. The
amounts also include part of issues due within 2 years on a
sliding-scale basis. "Other" issues are marketable issues not
classified as short term and all nonmarketable issues.

U.S. Government liability

Transaction category

Special notes issued to
the IMF

Negative in official
foreign exchange
position
Home mortgages

farm properties. The category has statistically
the same coverage as the corresponding series
published monthly in the Federal Reserve
Bulletin. The tables include full statements of
borrowing and lending in the three types
separately.
Consumer credit comprises short- and
intermediate-term consumer instalment and
noninstalment credit and is statistically the same
as the consumer credit series published monthly
in the Federal Reserve Bulletin.
Bank loans n.e.c. (not elsewhere classified)
cover the following types of bank loans:

Defense Department and
Coast Guard housing
mortgages
Trust and deposit liabilities
Certain accrued interest
(beginning fiscal year f Miscellaneous
financial
1956)
Postal Savings System
deposits
Currency items in the
public debt
} Treasury currency
Other Treasury currency
liabilities
Trade debt
Certain accounts payable

1. By the commercial banking sector (in terms
of call report classifications) :
a. Commercial loans, except open market
paper (in other loans category);
b. Farm loans, except CCC-guaranteed
loans and CCC certificates of interest
(included as a Government liability in
U.S. Government securities);
c. Loans to individuals for person-al pur
poses, other than those included in con
sumer credit statistics;
d. Loans to foreign banks (loans to
domestic commercial banks are either
in interbank claims, when between
banking subsectors, or eliminated in
consolidating banking subsector state
ments);
e. Loans to other financial institutions
except commercial paper (in other
loans category);
f. All other loans.
2. By Federal Reserve Banks:
a. Foreign loans on gold;
b. Industrial loans.

State and local obligations cover the total
debt of all State and local government units,
except loans from _the U.S. Government (which
are in other loans) and trade debt. State and
local obligations held by the State and local
government sector are included in both assets
and liabilities of that sector. Both short-i.term
and long-term securities are included, conform
ing in amount and maturity division to data
shown in the Census Bureau's annual surveys
of governmental finances.
Corporate and foreign bonds consist of the
funded debt of U.S. private corporations and
foreign (private, governmental, and interna
tional agency) bonds held in the United States.
The domestic liability has the coverage re
flected in the Securities and Exchange Com
mission series on bonds and notes in "Net
Change in Outstanding Corporate Securities"
as published before 1974. It thus includes con
vertible issues until converted into equities.
Conversions appear as debt retirements and
equity issues.
Home mortgages cover all debt secured by
1- to 4-family nonfarm residential properties.
The category is statistically the same as the cor
responding series published monthly in the
Federal Reserve Bulletin.
Other mortgages consist of all debt secured
by multifamily residential, commercial, and

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Real estate and security loans are excluded
entirely from bank loans n.e.c. as credit in the
flow of funds mortgage and security credit
categories. Consumer credit is also excluded
from this category.
Both the asset and liability sides of the cate
gory are measured gross of valuation reserves.
Other loans is the final grouping within
credit market instruments and consists of the
following types:
1.
2.
3.
4.

Directly placed finance company paper;
Dealer-placed commercial paper;
Bankers' acceptances;
Loans to banks from nonbank lenders that
are in the form of Federal funds or security
repurchase agreements in borrowings in -the
balance sheets of banks. Borrowings within

5.
6.

7.
8.
9.

Taxes payable are the excess of taxes ac
crued from a period's operation over taxes
paid during the period. Both U.S. Government
and State and local taxes are included. At
present the item covers only corporate profit
taxes, but it would be useful and relevant to
include parallel liabilities for personal income,
social insurance, and indirect taxes. Unlike
most other financial items in the accounts,
this is not a claim that has been formally
recognized by both debtors and creditors. Until
final settlement on a year's liability, each party
makes his own estimate as to the amount in
volved. Taxes payable are nevertheless recog
nized in financial planning by. both business
and governments and in business accounting.
Because opinions can differ on the amount
of claim, the discrepancy in this transaction ac
count is different in concept from the mail
floats discussed above. Statistically the liability
side is estimated from corporate balance sheets,
whereas the receivable side is the excess of
Commerce Department estimates of accruals
over governmental reports of actual receipts.
While part of the discrepancy between the two
arises from data problems, an element remains
that is conceptual.
The data discrepancy in taxes appears in
the corporate business sector account. Alge
braically, accruals less payments of profit taxes
should equal the change in the sector's profits
tax liability, but in the statistics this is not
the case. Accruals, receipts, and balance-sheet
liabilities are taken from independent data
sources, derived from separate tabulations of
profit estimates, governmental receipts data,
and corporate balance sheets, and there are
inevitable inconsistencies in timing, coverage,
and estimating procedures among the three.
In addition there is always some amount of
payments or refunds in tax settlement cases
that have not been entered into either balance
sheets or accrual estimates. For these reasons
the three tax items shown in the corporate sec
tor table typically do not balance exactly in the
statistics.

the banking sector either appear in interbank
claims or are consolidated out within bank
ing subsectors;
Finance company loans to business mainly
for financing of equipment purchases or to
carry inventories or receivables;
Loans from U.S. Government (other ·than
mortgages and trade credit, both included in
other financial categories, and most CCC
direct nonrecourse loans, treated as purchases
of inventories),37 such as student loans, small
business loans, and foreign aid loans;
Loans other than mortgages by federally
sponsored credit agencies;
Policy loans on life insurance policies;
Consumer credit secured by hypothecated
deposits (through June 1966) . These loans
are excluded from consumer credit statistics,
but until June 1966 bank statistics included
the loans in assets and the hypothecated
deposits in time deposits. After that time
both loans and deposits are eliminated from
monthly banking statistics and from the flow
of funds accounts. The semiannual call
reports on commercial banks continue to
carry the loans and deposits on a gross basis.

The first four of these types are combined
together in tables as "open market paper" even
though not all of these types are negotiable.
The four types have in common that they are
short-term money market investments from the
lender's view and are close substitutes for
short-term Government securities and for time
deposits as liquidity investments.
Security credit consists of loans for the pur
po.5e of purchasing or carrying securities subject
to Federal Reserve regulation. It includes loans
to security dealers from banking and customer
debit and credit balances with brokers and
dealers. This credit is, in the first instance, an
indirect form of supply of funds to credit mar
kets, rather than a credit market demand for
funds. On the main stem of the relationship,
banks finance private security holdings through
direct security loans and loans covered by
broker and dealer credit to customers, and in
addition banks finance dealer direct holdings
of securities. It does not include all loans with
security collateral, many of which are in bank
loans n.e.c.
37 CCC loans to cooperatives for tobacco and CCC storage
facility loans are treated as loans and included in the other
loans category.

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Tax liabilities include Federal Reserve pay
ments to the Treasury that have been declared
but not paid. This treatment corresponds to the
income and product classification of such pay
ments as profit taxes.
Trade credit is an approach to a book credit
category; it consists of receivables and pay
ables other than consumer credit, finance com
pany paper, business debt to finance companies,
bankers' acceptances, and other open market
paper. In the flow tables noncorporate receiv
ables are netted against payables, but in the
tables on amounts outstanding they are shown
separately.
A large mail float exists between receivables
and payables in trade credit for two reasons:
receivables are recorded before buyers have re
ceived and recorded amounts payable, and buy
ers write down payables when checks are
mailed and before sellers have received them.
This float is in the transaction discrepancy
along with statistical inconsistencies of the
estimates.
Equity in noncorporate business represents
net flows of equity funds invested by pro
prietors in unincorporated businesses, both
farm and nonfarm. No figures on amounts out
standing can be presented in flow of funds
accounts without estimates of physical asset
stocks that are part of the basis of net worth.
Given the statistical and conceptual problems
involved in distinguishing household and busi
ness accounts for proprietors of unincorporated
businesses, any measure of proprietors' net in
vestment must be arbitrary to some extent. For
the annual estimates in the present treatment,
all net income of noncorporate business is
treated as withdrawn by proprietors, and net
saving (retained income) of the firms is arbi
trarily put at zero. Gross saving, by this device,
becomes identically equal to capital consump
tion allowances. This means that all investment
in physical and financial assets by noncorporate
sectors beyond the amount of capital consump
tion is to be viewed as financed externally in

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the accounts. Such funds as are not raised from
credit markets or trade debt enter the sectors
as net equity investment by proprietors in the
household sector. To the extent that noncorpo
rate business has in fact an identifiable retained
income, this treatment overstates household
saving as a source of funds (by overstating in
come receipts), but it also overstates household
equity flows to business as a use of funds by
the same amount. Discrepancies in household
or other accounts are thus unaffected by the
treatment.
For the quarter�y estimates, it is assumed
that income withdrawals and equity inflows are
more uniform over the year than business in
come and that in unadjusted quarterly accounts
there are positive and negative retained earn
ings that add to zero over the year. In sea
sonally adjusted accounts, retained earnings are
zero quarterly as well as annually. 38
Miscellaneous financial claims consist of
several forms of specific claims together with
certain commercial bank floats and a variety of
unallocated sources and uses of funds in sector
statistics. The largest identified flows stem from
international relationships of business firms with
their foreign affiliates. For commercial banks
these flows represent net credit positions of
foreign branches with the home office; dur
ing the 1960's such branches were a major
channel for Euro-currency borrowing by U.S.
banks. For foreign banking agencies the figure
is the total of all credits, including home office
equities. Banking claims on foreign affiliates
appear in another section of the tables, in hold
ings of foreign currencies along with foreign
deposits held by other domestic sectors.
Nonbank direct investment by business in
foreign affiliates appears separately in the
foreign-claims section of the tables in miscel
laneous claims. Such direct investments are as
defined and reported in balance of payments
38 These remarks apply to noncorporate farms, but it should
be noted that the farm business sector has a small net saving
equal to retained income of corporate firms.

data, and they include both U.S. investments
abroad and foreign investments in the United
States.
Other specific items are equity and deposit
claims on the U.S. Government-related agen
cies and accrual items arising in the course of
insurance business to such as dividend accumu
lations' and accident and health reserves in life
insurance and prepaid premiums and benefits
in fire and casualty insurance.
The unallocated items arise in the course of
sector accounting, when known totals of finan
cial sources and/or uses of funds are adopted
as controls for the sector's financial accounts.
Any components of the totals that cannot be
attributed to one of the specific transaction ac
counts then fall residually into the unallocated
items. As a social accounting practice this is
arbitrary> since unknown items can alterna
tively be left in a sector's discrepancy. Treating
them as miscellaneous claims, however, keeps
them within the bounds of financial transactions
and sharpens the meaning of most sector dis
crepancies.
At the most simple level, the principle is
illustrated by sector accounts for commercial
banks, life insurance companies, savings and
loan associations, and mutual savings banks.
For each of these, there exists an established
universe estimate of the balance sheet and
financial transactions of the industry as a
whole. 39 For each, the bulk of financial assets
and liabilities is clearly identifiable in terms of
flow of funds transaction types, but for each
there is a minor remainder of assets and lia
bilities - mainly income receivable and ex
penses payable - that is left unspecified. These
accrual claims are generated by the calculation
of income on an accrual basis and must be in
cluded in financial accounts to maintain con
sistency with income statistics. When they are
included, the sector discrepancy for each of
these groups then becomes a measure of the

statistical inconsistency between, on the one
hand, the body of the income and product data
from which saving and physical investment are
derived and, on the other hand, the body of
balance-sheet data that constitutes financial ac
counts. That some of the balance sheet is of
unknown nature can be approached within the
framework of financial statistics.
Rest of the world unallocated claims are only
slightly different. Here the control totals are
from balance of payments data, and preserving
them maintains the discrepancy in the balance
of payments statement.
The miscellaneous account also contains cer
tain floats in commercial bank data. These
floats, entered as net liabilities, are the excess
of deposit and loan liabilities reported as owed
to U.S. commercial banks over banks' deposit
and loan assets reported as due from U.S.
banks. They include the excess of member bank
borrowing reported as a liability over the Fed
eral Reserve's measure of member bank bor
rowing and the excess of the Federal Reserve's
figure for member bank reserves over the asset
item reported for banks. To some extent these
floats reflect inconsistencies in classification in
bank reports, but in the main they reflect items
in transit that are of the same nature as mail
float on demand deposits and trade credit.
Preserving these floats in the bank statement
maintains the meaning of the �ctor discrepancy
discussed above. The floats rt:!flect claims
among the banking subsectors as well as within
subsectors.
Sector discrepancies is the last line of the
matrix, a final transaction account that closes
the matrix vertically. A few sector accounts
have no discrepancy entry because data are
lacking to put together independently estimated
totals of saving and investment. For such sec
tors - noncorporate business, pension funds,
and most elements of finance n.e.c. - one or
another source or use of funds is derived
residually in the sector account as the amount

39
Each, in fact, is defined operationally in terms of universe
data available.

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needed to balance saving and investment. The
effect is to shift whatever discrepancy actually
exists in the sector's column of data into some
other account - in the first instance, the trans
action account row that the residual is taken in
and then perhaps into another sector through
further residuals. In any social accounting sys
tem, the designer in effect chooses where to
show discrepancies or whether to show them at
all. For this and other reasons there may be a
low correlation between actual data errors and
discrepancies as recorded in the system.
For the sectors mentioned in the discussion
of unallocated claims, sector discrepancies rep
resent inconsistencies between a few major
bodies of data for the sector. For governments
and nonlife insurance, discrepancies are more
complex because totals of financial sources and
uses were built up for these sectors from identi
fiable components rather than broken down

from clearly demarked totals with unallocated
residuals.
The household sector discrepancy is the most
complex in the system and in general the
largest. Statistically every transaction of house
holds is a residual, since all items in the account
are derived from the books of other sectors,
including wages and personal taxes. The house
hold discrepancy is thus a final resting place for
data inconsistencies throughout the system.
Because much of the data in the system be
comes available as coherent sector information
-for example, balance sheets of financial insti
tutions - data inconsistencies are to a large
extent between sector columns of the structure,
such as differences between borrower and lender
records on the timing of credit flows. Most of
these inconsistencies are carried along the trans
action rows into the residual household account.

V FLOW OF FUNDS DATA PUBLICATIONS
The prindpal publication of current data for
flow of funds accounts consists of quarterly
tables of both seasonally adjusted and unad
justed flows. These current tables are exten
sions for up to five or six quarters of base data
that are produced each year by a review and
revision process. The base data are published
as tables of year-total flows from 1946 to the
present and year-end outstanding claims from
1945 to date. The base data exist in quarterly
form from 1952, and these quarterly data are
made available to the public as computer data
tapes; they are not published as quarterly tables
because of the amount of paper required. As
an alternative to the computer tapes, computer
printouts are supplied on request for quarterly
data in selected sections of the accounts that
are of particular interest to individual users.

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Both the current quarterly tables and the
annual tables are separate Board publications
that are available on request, and mailing lists
are maintained for quarterly and annual dis
tributions. In both types of publications the
tables include a full set of sector statements of
saving and investment and a full set of transac
tion account tables that give net borrowing and
lending in individual types of claims. They also
include the two summary financial tables de
scribed earlier, in Section I, as well as a table
showing the sector distribution of national in
come accounts data used in the system. Esti
mates of outstanding assets and liabilities are
maintained on a quarterly basis and are on the
computer data tapes, but they are printed only
in year-end amounts in the annual publications,
where they parallel the flow tables in coverage

years that have already appeared in the annual
publication mentioned previously, even when
source data are revised for several preceding
years. Such longer-run revisions are postponed
until the annual revision.
Annual revisions are intended to introduce
all of the new information that has become
available in the preceding year. The revision
includes as a routine matter new benchmarks
for earlier years or-as in the case of NIA
revisions of source data based on new bench
marks, but it can also include shifts to new
data sources, changes in derivation methods,
improvements in table formats, or even changes
in sectoring and transaction categories. Such
changes can affect the accounts back to the
earliest years covered, even when no new data
have appeared for those periods. Annual revi
sions thus have more potential scope in flow of
funds than in NIA, where they are usually
limited to 3 years.

of summaries, sectors, and transaction types.
The two summary tables appear monthly in
the Federal Reserve Bulletin, and once each
year a more extended set of tables appears in
the Bulletin to present the new and revised
base data.
Current quarterly tables become available
about 6 weeks after the end of the most recent
quarter included in the data, but the data for
that most recent quarter are very preliminary
and tentative. Each issue of the quarterly tables
includes revisions for the next-to-last quarter
that result from the large amount of data that
has become available since the quarter's first
preliminary tabulation. The tables may also
include revisions in earlier quarters of the cur
rent calendar year to conform to revisions in
source data resulting from new benchmarks
such as the semiannual call report for commer
cial banks. On a current quarterly basis, how
ever� revisions are not carried back to earlier

VI DATA SOURCES
Table 8 has two conspicuous omissions. The
first is in sources of nonfinancial data such as
saving, corporate cash flows, government sur
plus, and capital outlays. These data come di
rectly from the Commerce Department's na
tional income accounts, and while the sectoring
in flow of funds requires detail that does not
appear in the published NIA, the Commerce
Department makes all the necessary break
downs and supplies them to the Federal Re
serve. For the first preliminary calculation of a
quarter, the 15-day NIA estimates are used.
These figures omit corporate profits and profit
tax accruals, which must therefore be estimated
by the Federal Reserve for that first run.
The other major omission from the table
is the household sector. Data for this sector

While a full derivation statement is outside the
scope of this publication, it is possible and
useful to list the principal bodies of data that
go into flow of funds calculations at present
and to indicate briefly the availability schedules
for these data. 40 The summary list in Table g
omits many peripheral and occasional sources
of information, but it indicates the statistical
skeleton of the system. For some areas both
benchmark and current sources are listed;
where no such distinction is shown, the sources
used for current information are not subject
to revision except as indicated.
40 The most recent description of calculation methods is
"Flow of Funds Accounts-Data Sources and Derivations"
(October 1971). This publication is available on request from
the Flow of Funds Section, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551.

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TABLE 8 SOURCES OF FINANCIAL DATA FOR FLOW OF FUNDS ACCOUNTS
Source

Area

Availability

Federal Govt.

Monthly Treasury statement of
receipts and expenditures,
Treasury Bulletin

Monthly, about 30 days after
month-end; June data subject
to revision after 5 months

Federally sponsored credit agencies

Statements of condition for
five groups

Monthly, quarterly, or semi-annual;
25 days

State and local govts.
Benchmark

Census Bureau, Governmental

Current

Commercial banking
Benchmark

Finances

Gross offerings of securities,
Securities Industry Assn.
Banking data
Treasury Bulletin

Annual, about 17 months lag
Monthly, 30 days
Weekly, 10 days, revised by
semiannual call reports
Monthly, 60 days

Call reports
Severai weekly and monthly
reporting systems

Semiannual, about 4 months
10 to 20 days after period
end, revised twice a year

Savings and loan associations

Federal Home Loan Bank Board

Monthly reports, 25 days

Mutual savings banks

National Association of Mutual
Savings Banks
Call reports

Semiannual, 8 months

Credit unions

National Credit Union Admin.

Monthly reports, 24 days

Life insurance
Benchmark
Current

Life Insurance Fact Book

Annual, 8 months
Monthly, 50 days, revised
after 12 months

Private pension funds

SEC Statistical Bulletin

Current

State & local govt. retirement
systems-Benchmark

Institute of Life Insurance,
Tally

Monthly reports, 45 days

Quarterly, 10 weeks, revisions
annually

Census Bureau, Governmental

Annual, 17 months

Census Bureau

Quarterly, 10 weeks

Best's Aggregates & Averages

Annual, 9 months
Monthly, 60 days
Quarterly, 10 weeks

Federal Reserve, Census of
finance companies
Federal Reserve monthly survey

Quinquennial, 28 months

Real estate investment trusts

National Association of RETT's

Quarterly, 3 months

Security brokers and dealers
Benchmark
Current

SEC Annual Report
Banking data

Annual, 12 months
Weekly, 10 days and monthly,
20 days

Investment companies

Investment Company Institute

Quarterly, 6 weeks and
monthly, 30 days

BEA (Commerce Dept.), Balance of
payments and International
investment position
BEA, Balance of payments
Treasury
Banking data

Annual, 6 to 9 months

Current
Other insurance
Benchmark
Current
Finance companies
Benchmark
Current

Rest of world
Benchmark
Current

Corporate business-
Benchmark
Current

Nonfarm noncorporate business
Benchmark
Current

Finances

Treasury Bulletin
SEC

SEC, Current assets and liabilities
of nonfinancial corps. revised
to IRS Statistics of Income
Same as above
Also banking data (q.v.)
Balance of payments (q.v.)
SEC, Net change in corporate
securities outstanding
Mortgage data (q.v.)
IRS, Business tax returns;
Partnership tax returns:
Corporate income tax returns
Census Bureau, Census of Housing
Banking data (q.v.)
Corporate data (q. v.)
Consumer credit statistics

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Monthly, 35 days

Quarterly, 10 weeks
Monthly, 6 weeks
Weekly, 10 days
Annual, 4 years
Quarterly, 10 weeks
Quarterly, 10 weeks

Annual or biennial, 3 to 4
years
Approx. decennial, 2 years

TABLE 8 SOURCES OF FINANCIAL DATA FOR FLOW OF FUNDS ACCOUNTS-Continued
Area
Fann business
Benchmark
Current

Source
USDA, Balance sheet of the farminK
sector

Availability
Annual, 9 months

Banking data (q.v.)
Federally sponsored agency data (q.v.)
Mortgage data (q.v.)

Mortgages

Federal Reserve

Quarterly, with preliminary
in 30 days, revisions from
institutional data

Consumer credit

Federal Reserve

Monthly, 35 days, revised at
various intervals

Open-market paper

Federal Reserve Bank of New York

Monthly, 20 days, revised
occasionally

are almost entirely residuals from the rest of
the calculation in that virtually all of the trans
actions and balances are measured from re
ports by other parties to their transactions.
(The exceptions consist only of mortgage and
trade debt liabilities of nonprofit organizations
included in the sector.) The residual status of
the sector means that a listing of data sources
for all other sectors together is implicitly a
listing of sources for households. Some of the
chains of relationships are extremely long, but
a discussion of their nature belongs in a de
scription of the derivation methods rather than
in a listing of sources.
None of the inputs listed in Table 8 are
compiled explicitly or exclusively for flow of
funds accounts, although the needs of the ac
counts have been one consideration in the de
sign of many of the reporting forms. Rather,
flow of funds accounting consists of absorbing
and digesting a wide variety of financial infor
mation, both flows and balances, each part of
which has been constructed in isolation from
others with its own accounting procedures,
timing classifications, and institutional cover
age. The digestion process is intended to stand
ardize the accounting as far as possible, so
that a transaction in a financial claim appears
consistently in the seller's and buyer's state
ments in the same transaction category, at the
same value, and in the same time period.
Consistency problems can be illustrated in

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certain specific areas. One is in federally related
securities-about $85 billion outstanding at
the end of 1973-which are known collectively
as the agency-issue market. These issues re
ceive widely varying treatment in holders'
balance sheets and are frequently combined
with bonds of the International Bank for Re
construction and Development and the Inter
American Development Bank that are unre
lated to the Government in any direct sense.
Commercial paper is another difficult section
of money markets analysis, partly because no
formal definition exists for this important mar
ket instrument. Because of the definition prob
lem, no .figures are reported for bank holdings
of ·commercial paper-an important gap in
estimating ownership distribution.
In consistency of timing, the major problems
are again in commercial banking, where cer
tain balance sheet items are highly volatile
on a day-to-day basis, including money supply
liabilities. The dating of bank balance sheets
is frequently not coincident with those of the
other parties to the transactions, and the dif
ferences can generate sizable discrepancies in
the data. These differences occur routinely for
the March and September bank balance sheets,
which are always for the last Wednesdays of
those 2 months rather than the last day of the
month. For June and December, however, most
bank data are for the last day, with the effect
that timing differences cause problems between

the first and second quarters and then again
between the third and fourth. Half-year data
and annual data are substantially more reliable
in bank-related transactions than the estimates
for a single quarter.
Probably the broadest area of inconsistency
is the balance of payments statement, which is
used as the basic document for indicating inter
national capital flows into and out of individual
domestic financial markets such as Government
securities or time deposits at banks. Data col
lection systems for balance of payments are
separate from domestic data sources for banks,
Government, and business, and they include a
number of definitions of claims and of groups
that are difficult to match with domestic data.
As a result, the transformations used to convert
the balance of payments statement into do
mestic financial market categories are only ap
proximate in several cases. The result, more
over, is a "rest of the world" sector that is as
alien to international payments analysts as the

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balance of payments statement is to domestic
financial analysts.
These are a few illustrations of the statistical
problems that arise in combining a variety of
separate accounting systems into an integrated
structure that matches payments and receipts
throughout the economy. The process of ad
justment unavoidably produces sector and mar
ket statements that differ to varying extents
from the conventional statements used by spe
cialists in particular financial activities. This
is the price of constructing the broader system.
One direction for future development of the
system is a deepening of the detail in financial
accounts in ways that show continuously the
relationships to other presentations of the same
information. However, the principal uses of
the data are in studies of intersectoral and
intermarket relationships, and for these the
standard categories of the accounts are un
avoidable even when they are somewhat un
familiar to individual activities.

BIBLIOGRAPHY
DATA PRESENTATIONS IN PRINT, 1974
Annual total flows and year-end assets and liabilities: Flow of Funds Accounts, 1945-72 (August
1973); 1974 Supplement-Flow of Funds, 1965-73 (September 1974).
Current quarterly data available 6 weeks after quarter-end: Flow of Funds, Seasonally Adjusted;
Flow of Funds, Unadjusted.

EARLIER FORMS OF ACCOUNTS
"A Quarterly Presentation of Flow of Funds, Saving, and Investment," Federal Reserve Bulletin,
vol. 45 (August 1959), p. 828.
Board of Governors of the Federal Reserve System. Flow of Funds Accounts, 1945-62 _ 1963
Supplement. 1963.
---------------· Flow of Funds in the United States, 1939-1953. 1955.
Copeland, Morris A. A Study of Moneyff,ows in the United States. New York: National Bureau
of Economic Research, 1952.
"Flow of Funds Seasonally Adjusted," Federal Reserve Bulletin, vol. 48 (November 1962),
p. 1393.
"Revision of Flow of Funds Accounts," Federal Reserve Bulletin, vol. 51 (November 1965),
p. 1533.

OTHER
Bain, A. D. "Surveys in Applied Economics: Flow of Funds Analysis," Economic Journal,
December 1973, pp. 1055-93.
Cohen, Jacob. "Copeland's Moneyflows After Twenty-five Years," Journal of Economic Litera
ture, vol. X, no. 1 (March 1972).
Dawson, John C. "A Cyclical Model for Postwar U.S. Financial Markets," American Economic
Review, Papers and Proceedings, vol. 8 (May 1958), pp. 145-57.
Dorrance; Graeme S. "Financial Accounting: Its Present State and Prospects," IMF Staff Papers,
vol. 13, no. 2 (July 1966), p. 198.
Flow of Funds Approach to Social Accounting, vol. 26 of Studies in Income and Wealth. Prince
ton University Press, 1962.
Freund, William C., and Zinbarg, Edward D. "Application of Flow of Funds to Interest Rate
Forecasting," Journal of Finance, vol. 18 (May 1963), p. 231.
Ritter, Lawrence S. "An Exposition of the Structure of the Flow of Funds Accounts," Journal of
Finance, vol. 18 (May 1963), pp. 219-30.
Taylor, Stephen P. "Uses of Flow of Funds Accounts in the Federal Reserve System," Journal of
Finance, vol. 18 (May 1963), pp. 249-58.
------· "Revision Experience in Flow of Funds Accounts," mimeo for GNP Data
Improvement Project, December 12,.1973.

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SUMMARY OF FLOW OF FUNDS ACCOUNTS FOR THE YEAR

1973

(Seasonally adjusted annual rates; in billions of dollan)
Printe domestic non.financial aecton

Sector
Transaction
category

State
and local
govt&

Buaineae

Total

the
world

.z .....

1
2
3

34Z.5 .....
Gross saving .......................... ..... %29.1 ..... 11Z.I .....
Capital �onsumption................. ..... 116. 7 .. ... 96.2 ..... ..... ..... 211.0 .....
.2 ..... 131.6 .....
Net savmg (1-2)..................... ..... 113.9 ..... 17.4 .....

4
5
6
7
8
9

Gross investment (5+10)................ Z35.I .....
Private capital expenditures.............. 174.1 .....
Consumer durables ••••....•...•..... 130.3 .....
Residential construction .............. 37.6 .....
Plant and equipment................. 6.3 .....
Inventory change .................... ..... .....

18.8 .....
160.6 .....
..... .....
19.6 .....
126.7 .....
16.4 .....

-S.4..... ffl.1 .....

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

334. 7 .....
130.3 .....
67.0 .....
132.0 .....
16.4.....

U.S.

Govt.

Fe�na.

Total

agencies

�-

Mone-

.z .....

-.1 ..... -8.Z ..... lt.5 .....
3.1 ..... ..... .....
-.1 ..... -8.2 ..... 7.4 .....
.2 .....

Z.1 .....
..... .....
..... .....
..... .....
..... .....

-7.7
.....
.....
.....
.....

..... 13.7 .....
..... 6.0 . ....
..... ..... .....
.....
.2 .....
..... 4.8 .....

.I.....
..... .....
..... .....
..... .....
..... .....

Coml.
banb

Pvt.
nonbank
finanoe

.1 .....
.1 .... .

4.4 .....

1.7 .... .
2.7 .....

All
aecton

Diacrepanoy

Natl,
•Ting
and inT-.
ment

5.7 ..... 144.7 ..... ..... 144.7 ..... l
1.4 ..... 214.1 ..... ..... 214.1 ..... 2
4.3 ..... 130.6 ..... ..... 130.7 ..... 3

.1 ..... I.I..... 7.4 .....
..... ..... 3.0 ... .. 2.0 .....
..... ..... ..... ..... ..... .....
..... ..... ..... .....
.2 .....
..... ..... 3.0 ..... 1.8 .....
..... ..... ..... ..... ..... .....

117.1 ..... 7.4 ..... 111.1
339. 7 ..... 5.0 ..... 339. 7
130.3 ..... ..... ..... 130.3
67.2 ..... ..... ..... 67.2
136.8 ..... ..... ..... 136.8
15.4
15.4 .....

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

4
5
6
7
8
9

Netfinancialinvestment(ll-12)........... 11.5 ..... -tt.7 ..... -S.4 ..... -5.1 .....

Financial uses ......................... 131.8 ..... 43.1 ..... 7.t ..... lSZ.I ..... 17.4 ..... 4.3 ..... %17.8 ..... ff.I..... 7.8 ..... 111.Z ..... 87.7 ..... ffl.1 ..... Z.4 ..... H.I ..... 11
ffl.l ..... ..... 17.4 ..... 12
Financial sources....................... ..... U.3 ..... 115.5 ..... 13.3 ..... 188.1 ..... 15.3 ..... U.I..... Zit.I ..... %1.8 ..... 7.7 ..... 17.1 .....

Houaeholds

Financial aectora

Ren

Z.1 ..... -7.7 .....

8.7 .....

.I.....

.1 .....

z.t .....

5.4 ..... -Z.4 .....

sz., .....

Z.4 ..... -Z.l ..... 10

13
14

• -.2
Gold and official foreign exchange... . ..... ..... ..... ..... ..... ..... ..... .....
Treasury currency........ . . . . . . . . . . ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... .....

15
16
17
18

Demand deposits and currency... • ••.•• 13.1 ..... -.3
Private domestic................... 13.1 ..... -.3
U.S. Government..• •. ....•.•.•.•... ..... ..... .....
Foreign...•...... ......•...•.....
.....

19
20
21

Time and savings accounts............. 67.7 ..... 1.4 ..... 7.2 ..... 76.3 ..... 2.9 .....
At commercial banks................ 39.5 ..... 1.4 ..... 7.2 ..... 48.1 ..... 2.9 .....
At savings institutions............... 28.2 ..... ..... ..... ..... ..... 28.2 ..... .....

22
23
24

Life insurance reserves............... 7.3 ..... ..... ..... ..... ..... 7.3 ..... ..... ..... .....
Pension fund reserves.. •. ............ 24.4 ..... ..... ..... ..... ..... 24.4 ..... ..... .... . .....
Interbank items . • . .• .. .........•.... ... .. ..... ..... ..... ..... ..... ... .. ..... ..... ..... .... .

Corporate shares .................... -8.2 ..... .....

26
30
31
32
33
34

Credit market instruments ............ 29.7
U.S. Government securities .......... 20.4
State and local obligations ........... 4.3
Corporate and foreign bonds......... 1.1
Home mortgages.................. -.9
Other mortgages................... 1.4
Consumer credit................... .....
Bank loans n.e.c................... .....
Other loans....................... 3.5

35
36
37

Security credit....................... -.2 -4.6 ..... ..... ..... ..... -.2 -4.6
: -.2 ..... ..... -8.0 -3.4 ..... ..... ... .. ... .. -3.4 ..... -4.6 -3.4 -8.2 -8.2 ..... ..... ..... ..... 35
To brokers and dealers............. -.2 ..... ..... ..... .... . ..... -.2 .....
..... ..... ..... -3.2 -3.4 ..... .....
-3.2 ..... ..... -3.4 -3.4 -3.4 ..... ..... ..... ..... 3 6
To others••.....•.•...•...•.•.•••. ..... -4.6 ..... ..... ..... ..... ..... -4,6 ..... -.2 ..... ..... -4.8 ..... ..... .....
-.2 ..... -4.6 ..... -4.8 -4.8 ..... ..... ..... ..... 3 7

38
39

Taxes payable....................... ..... ..... ..... 2.3
.6 .....
. 6 2.3 ..... .....
Trade credit......................... .....
.6 24.1 20.1 ..... 1.1 24.1 21.8 1.0 1.9

Equity i n noncorporate business ........ -4.4 ..... ..... -4.4 ..... ..... -4.4 -4.4 ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... ..... -4.4 -4.4 ..... ..... ..... ..... 40
.4 9.6 2.6 ..... ..... 11.1 2.9 7.6 6.3 1.0 -.4 12.8 27.8 1.7 2.2 .....
.8 7.2 17.5
.9 7.4 32.4 36.7 4.3 ..... ..... ..... 41
Miscellaneous claims................. 1.6

28
29

72.8
.....
.....
.....
44.2
1.4
22.9
1.8
2.6

..... -.3
..... -.3
..... .....
..... .....

7.4 ..... ..... -8.2

9.1 77.6
-1.8 .....
-.1 1.8
..... 9.2
..... -.9
..... 28.4
3.3 .....
..... 34.0
7.8 5.1

Sector discrepancies(l�)............... -6.0 ..... 13.8 .....

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

..... 12.6 ..... 2.5
..... 12.5 ..... .....
..... ..... ..... .....
2.5
.....

7.4

2.8

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

-.2 ..... ..... .....
.4 ..... ..... .....

-1.8 ..... 2.4 16.0
.1 .....
..... ..... 2.4 15.0
.1 .....
-1.8 ..... ..... -1.6 ..... .....
..... ..... ..... 2.5 ..... .....
-.2 .....
-.2 .....

5.6 ..... 13.4 ..... -2.2 .....

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

-.2
.4

-.2 ..... ..... ..... ..... 13
.4
..... 14
•

.3 12.6 2.0 ..... 15.5 16.0
.4 .....
3.4
3.9
.3 11.0 2.0 ..... H.9 15.0
.1 .....
.3 .....
-.5 ..... -1.0 ..... ..... -1.8 -t.5
-.1 ... .. 2.6 ..... ..... 2.5 2.5 ..... .....

.1 79.1 ..... ..... ..... ..... ..... 60.9
.1 60.9 ..... ..... ..... ..... ..... 60.9
• 28.1 ..... ..... ..... ..... .....

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

16
16
11
18

.1 28.1 79.1 79.1 ..... ..... ..... ..... 19
.1 ..... 60.9 60.9 ..... ..... ..... ..... 20
• 28.1 28.1 28.1 ..... ..... ..... ..... 21

.1 ..... 7.2 ..... ..... ..... ..... ..... ..... .... . 7.2 7.3 7.3 ..... ..... ..... ..... 22
2.1 ..... 22.3 ..... ..... ..... ..... ..... ..... ..... 22.3 24.4 24.4 ..... ..... ..... ..... 23
7.9 7.9 ..... ..... -1.6 3.5 9.5 4.4..... ..... 7.9 7.9 ..... ..... ..... ..... 24

-.2 ..... ..... 13.4

.4 12.3 39.3 162.7
.7 7.7
.2 ..... 18.8 .....
.3 .....
.2 11.9 4.4 13.7 ..... .....
.1 1.0
..... ..... 1.1 9.2
•..... -.9 43.3 ..... .....
..... ..... 1.4 29.8 ..... .....
..... ..... 3.3 22.9 ..... .....
..... .....
36.8 ..... 2.8
.....
.3 11.3 7.9
.3 3.9

-.2 ..... ..... ..... ..... .....
.4 ..... ..... ... ..

3.0 9.7 188.3
• 9.8. 10.3
..... ..... 9.3
..... ..... 11.3
-1.2 -.1 43.9
.6 ..... 28.1
..... ..... 19.7
..... ..... 52.1
3.6 ..... 13.7

.8 ..... ..... ..... .....
51.2
19.6
.....
2.3
-1.5
.3
.....
13.5
17.0

20.3 19.6 9.2 .....
1.3 19.6 9.3 .....
..... ..... ..... .....
..... ..... ..... .....
6.4 ..... ..... .....
4.0 ..... ..... .....
..... ..... ..... .....
..... ..... ..... .....
8.6 .....
•

1.2 13.4

-.4

8.0

8.0 ..... ..... ..... ..... 26

86.6 10.6 72.2 21.0 231.3 231.3 ..... ..... .....
-1.3 .....
.9 ..... 29.4 29.4 ..... ..... .....
5.7 ..... 3.6 ..... 13.7 13.7 ..... ..... .....
.5
• 10.9 2.3 12.5 12.5 ..... ..... .....
11.0 ..... 26.5 -1.6 41. 7 41.7 ..... ..... . ....
8.8 ..... 16.4
.3 30.2 30.2 ..... ..... .....
10.6 ..... 9.0 ..... 22.9 22.9 ..... ..... .....
62.1 5.1 ..... 8.4 52.1 52.1 ..... ..... .....
-.8 5.5 6.9 11.6 28.8 28.8 ..... ..... .....

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

26
27
28
29
30
31
32
33
34

2.2 ..... .....
. 3 ..... .....
.1 .....
.1 .....
.1 2.8 2.7 -.1 ..... ..... ..... 38
.3
.1
.7 ..... ..... ..... ..... ..... ..... .....
.7 ..... 26.0 23.7 -2.3 ..... ..... ..... 3 9

-.5 ..... -3.3 .....

-1.6 ..... -1.7 .....

7.4 .....

7.2 ..... �2

FINANCIAL ASSETS AND LIAB�, DECEMBER 31, 1973
(Amounts outstanding in billions of dollan)
(A) Allteeton

Financial aecton

Private domestic nonfinancial eecton
Sector Houaeholda
Transaction
category

Buainea

State
an d local
govemmenta

Rfllt
of the
world

Total

U.S.
Government

. .

Total

Federally
spoDIOred
credii
acenciee

Monetary
authority

Commercial
banks

Private
nonbank
finance
A

Total1

. .

1 Total aaetl .............. zan.1 ...... HS.I ...... 18.5 ...... ztZS.8 ...... nt.8 ...... 1n.1 ...... ZMl.8 ......
71.1 ...... IN.I ...... 751.2 ...... un., ...... lfH.2 ......
2 Totalliabilitie1 .................. Ml.I ...... IZl.l ...... M.f ...... 1788.1 ...... lH.2 ...... "8.1 ...... lffl.5......
77.5...... lN.7 ...... 7H.5...... 1128.8...... 4.117.1
3
4
S
6

f7.3 ......

Gold ...............••.•.......
Official foreian cxchaqe. •.......
IMF position.••.••... •.........
Treasury currency.••.••.........

2.3 ......

...... ......
.6
.6 ......
· · · · · · · · · · ·. ...... ......
7.f

11.6 ...... ......
9.1 ...... ......

.4 ......
701.6 ......
12.8 ......
363.7 ......
12.8 ......
.4 ......
347.8 ...... ...... ...... ......

14 Life insurance reserves..... 160.3 ...... ......
15 Pension fund reserves...... 307.8 ...... ......
16 Interbank claims . •. •........... ...... ......

160.3 ...... ......
370.8 ...... ......

17 Corporate shares 2 • • ••.. • • (7ff.4 ...... ......

7ff.4 ......

7.6 ......

24.8 ...... ...... ......

18 Othercredit mkt. instr.• •.• 266.4 634.8 74.6 679.2 36.7 193.5 366.5 1607.5 61.5 68.5 66.2 3M.4
19
U.S.Govt.securities3 ... 105.3 ......
6.4 ......
31.0 ...... 141.7 ......
M.8 ......
• 363.1
20
State&localgovt.oblig.. 60.6 ......
4.0
2.4
2.6 187.6 67.1 190.0...... ...... ...... ......
21
Corp.&fgn. bonds..... 66.8 ...... ...... 207.6...... ......
66.8 207.6
2.3 16.6 ...... ......
22
Home mortgages........ 10.1 379.0......
6.3
2.2 ......
12.3 38'.4...... ......
3.9
1.3
23
Other mortgages........ 28.0 24.6...... 223.4......
28.0 2'7.9 ...... ......
4.8 ......
24
31.9 180.6...... ...... ...... ......
Consumer credit.............. 180.6 31.9 ...... ......
25
Bank loans n.e.c..............
24.7...... 180.6...... ...
...... 206.2......
13.0...... ......
26
Other loans............
6.7 26.1 33.1 60.1 ......
s:li 38.8 92.0 4.4 38.9 66.5 ......
27
28

Security credit.. ..........
4. 8 13.1 ......
4. 8 ...... ......
To brokers and dealers • •
To others....................
13.1 ......

4.8
13.1
.3 · .2 ......
4.8 ......
.3 ...... ...... ......
...... ......
13.1 ......
.2 ...... ......

30 Taxes payable .................. ...... ......
16.6
3.7 ......
3.7 16.6 ......
31 Trade credit •..................
6.8 2'0.9 212.6 ......
8.9 2'0.9 228.3
8.3
9.0
32 Miscellaneous............ 32.8
6.4 136.8 17.7 ...... ...... 168.6 2'.l 36.1 116.8
For notes see facing pqe.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

198. 7

1.2 348.2 716.9 716.9
.8 ...... 367.7 367.7
.4 348.2 348.2 348.2

11
12
13

142.7 160.3 160.3
272.4 307.8 307.8
57.1 67.1

14
16
16

i�:1 :::::: ...... ···4;. "ai:S "sis "ili:4 ::::::

16.4
16.4
.1

7
8
9
10

46.6

663.6 23.8 836.4 116.4
88.8 ......
62.4 ......
96.7 ......
37.3 ......
4.1 Ul8.7 36.8
6.2
4.7
68.0 ...... 274.6
61.1 ...... 160.0
1.6
81.2 ...... 67.4 ......
255.9
8.0......
29.6
6.7 11.7 66.0 44.8

2139.6
422.1
190.0
26'.0
390.3
2'9.3
180.6
255.9
187.4

18
19
20
21
22
23
2'
26
26

16.0
16.0

29.3
16.0
13.4

27
28
29

.7 ......

46.6 ..... .

198.0

16.1 ......
9.1
10.8 ...... ......
4.3 ......
9.1

46.6 968.0

U J l� ·i65:S ...is ...s:a :::::: ...ii ..ai2 .. sli:S aU . . 84:i ��:g �J
3.0...... ...... ......

3
4
6
6

367.7
367.7

1M6.3 209.1 76.9 68.9 80.6 ......
226.6 68.9
4.0 68.9 80.6 ......
132.9 ...... ...... ...... ......
20f.9 39.9...... ...... ......
374.1
4. 7 31.6 ...... ......
1.6 16.4 ...... ......
216.6
148.6 ...... ...... ...... ......
255.9 37.6...... ...... ......
87.7 56.5 2'.9 ......
.1

11.9 ...... ......
3

·:...:u

1
2

18.2 . . . . . . 283.0 298.6
18.2 . . . . . . 269.8 276.1
. . . . . . . . . . . . 12.6 12.7
. . . . . . . . . . . . 10.6 10.6

142.7 ...... ...... ...... ...... ...... ...... ......
2

24.2 16.0......
10.8 16.0......
13.4 ...... ......

.6
7.4

26.2

1.0 233.6
66.0
1.0 213.3
61.8
9.9
2.9 . . . . . .
10.3
.3......

1.2 716.9 ......
.8 367.7 ......
.4 348.2 ......

au "57j

.6
9.1

9.1 ...... ......

.3 ...... ......
19.4 298.6
14.7 ...... 240.3 ......
10.6 ......
12.6 ......
7 Demand dep. and currency 170.2 ......
55.4 ......
8
.3 ...... ......
19.4 276.1
Private domestic ....•... 170.2 ......
55.4 ......
14.7 ...... 240.3 ...... ...... ...... ...... ......
9
12.7 ...... ...... ......
U.S.Government............. ...... ...... ...... ...... ...... ...... ...... ...... ......
12.6 ...... ......
10
Foreign...................... ... ... ...... ...... ...... ...... ...... ......
10.6 ...... ...... ...... ......
10.6 ...... ...... ......
11 Time and savings accounts 636.6 ......
21.6 ......
tt.4 ......
12
At commercial banks. .•. 287. 8 ......
21.6 ......
ff.4 ......
13
At savings institutions... 347.8 ...... ...... ...... ......

61.1......

11.6 ...... ......

.3......

.8 ......

1.8

16.6

18.6

2.9
-19.1
28.6

30
31
32

FINANCIAL ASSETS AND LIABILITIES, December 31, 1973-Continued
(Amounts outstanding in billions of dollars)
(B) Private nonbank financial institution

Sector
Transaction
category
1
2

Demand deposits and currency
4 Time and savings accounts ....
At commercial banks .......
5
At savings institutions ......
6

18.2
1.2 348.2
.8
.4 348.2

9 Corporate shares2 ........... 198.0
10 Other credit mkt. instr ........
11
U.S. Govt. securities3 ....
12
State & local govt. secs...
13
Corp. and fgn. bonds .....
14
Home mortgages ..•......
15
Other mortgages .........
16
Consumer credit.........
17
Bank loans n.e.c.........
Other loans .............
18
21

Security credit ...............
To brokers and dealers .....
Other . . . .................
Taxes payable ...............
Trade credit .................
Miscellaneous ...............

3.4

227.3
227.3.

24.1
99.0 ...

1.2 ....
.8 96.3
.8
96.3

24.6

1.0
.4

24.6 .

24.6.

9.1
6.5
32. 7

22.0
4.7
2.1
15.1

23.2
2.6

98.2
7.1
.9
13.1
44.2 ...
29.0
1.7 ...

1.0
19.6

204.6
4.4
3.4
92.5
22.0
59.2

5.8

81.1

133.3

cos.

A
18.8

41.1

1.5

2.6.

A
88.4

Real
estate
investment
trusts

Open-end
inves�ent
COB,

841.4 ..

17.0

14.4.

3.5

12.0

18.6

19.6

36.8
4.3

62.1
4.6
1.4
49.4

41.1
3.4
30.4
7.2

6.7

4.9

41.5

1.2

18.4
1.1

11.1
3
4
5
6
7
8

38.3
84.9
12.5
43.4
29.0

30.5

Security
brokers
and dealers

81.6.

89.2 ..

. 8 ....
2.5

81.1

Finance

80.1
33.9

15.1
4.1
11.0

20.5
25.7.

14.4
1.9

46.5

7.0
1.2
4.2 ...

2.4
5.8
2.0

I.I

2.6

1.5 ......
7.0 .....
4.0
1.6

10
11

12
13
14
15
16
17
18

9.1

16.0 19
16.0 20
9.1 ...... 21

...... .....

.2
11.5

1.0

· 29.8
2.7

...... ···•·

1.8

Other
insurance

23.2 ..

2.1

16.0 .
16.0

133.3

2.3

2.1

1 Excess of total assets over liabilities consists of gold (row 3) and corporate shares (row 17) other
than investment co. shares less total discrepancies (row 1), which are not included in sector assets.
2 Assets shown at market value; nonbank finance liability is redemption value of shares of open
end investment companies. No specific liability is attributed to issuers of stocks other than open
end investment companies for amounts outstanding.
3 Includes savings bonds, other nonmarketable debt held by the public, issues by agencies in the

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

133.3

%31.5

25.9 ..

4.0

46.5 .
.

84.7

142.7 ...
57.5 .....

836.4 116.4 257.5
22.8
52.4
37.3
198.7 35.8
4.7 188.1
274.6
1.5 44.1
150.0
2.6
67.4 ..
29.6
56.0 44.8.
9.1

244.1

State and
local govt.
retirement
funds

Private
pension
funds

cos.

142.7
272.4

1. Life insurance reserves ........
8 Pension fund reserves ......... ...

Life
insurance

Credit
unions

banks

1K.I
272.4
Total assets .. ............... 1102.0
1'28.8
255.3
Total liabilities............... ..

Mutual
savings

Savings
and loan
assns.

Total

6.5

.3
45.8

.4
1.9

·r

.2 22
23

...... 24

budget (CCC, Export-Import Bank, GNMA, TVA, FHA) and by sponsored credit agencies in
financial sectors, and loan participation certificates. Postal savings system deposits are included
in line 32.
4 Business asset is corporate only. Noncorporate trade credit is deducted in liability total to con
form to quarterly flow tables.

AUGUST 1974
CREDIT MARKET SUMMARY

CREDIT MARKET SUIIMARY
TOTAL FUNDS RAISED IN CREDIT MARKETS BY NONFINANCUL SECTORS

ANNUAL FLOIIS, 1959 + 1965-73

1959 11

19�5

1966

1967

1968

1969

1970

1971

1972

1973

I. FUNDS RAISED, IIY TYPE At-0 SECTOR
TOlAL FUNDS RAISED
IIY NOHFINANCIAL SECTORS
EXCLUDING EQUITIES

52.1125
50.552

69.892
69.622

67.900
66.894

82.433
79.986

95.944
95.948

91.829
87.956

98.233
92.471

147.402
135.940

169.394
1511.1184

187 .365
180.145

7.089
7.42?
-334

1.768
1.301
467

3.633
2.340
1.293

13.005
8.913
4.092

13.398
10.::a9
3.079

-3.646
-1.277
-2.369

12.802
12.886
-84

25.500
26.023
-523

17.317
13.919
3.398

9.714
7.739
1.975

3
4
5

45. 736
2.273
43.463

68.124
270
67.854

64.267
1.006
63.261

69.428
2.447
66.981

82.546
-4
82 .550

95.475
3.873
91.602

85.431
5. 762
79.669

121.902
11.462
110.440

152.077
10.510
141.567

177.651
7.220
170.431

6
7
8

12
13
14
15
16

DEBT CAPITAL INSTRUMENTS
s. + L. GOVERNMENT SECS.
CORPORATE + FOREIGN BOHO�
MORTGAGES
HOME MORTGAGES
OTHER RESIDENTIAL
COMMERCIAL
FARM

28.312
6.280
3.428
18 .604
12.720
1�820
3.072
992

38.845
7.34,
5.852
25.648
15.382
3.618
4.415
2.233

38.901
5.647
10.959
22-295
11.698
3.124
5.691
1.782

45.6119
7.769
15.874
22.046
11.491
3.603
4.676
2.276

50.592
9.516
13.977
27.099
15.055
3.371
�.431
2.242

50.609
9.924
13.003
27.682
15.656
4.739
5.345
1.942

57.605
11.246
20.630
25. 729
12.805
5.823
5.326
1.775

84.162
170561
19.747
46.854
26.091
8.n2
9.980
2.011

94.851
14.379
13.213
67.259
39.630
10.268
14.781
2.580

97.050
13.709
10.150
73.191
43.344
8.417
17.047
4.383

9
10
11
12
13
14
15
16

17
18
19
20
21

OTHER PRIVATE CREDIT
BANK LOANS N.E.C.
CONSUMER CREDIT
OPEN-MARKET PAPER
OTHER

15.151
6.438
6.415
-386
2.684

29.009
14.070
9.615
-321
5.645

24.360
10.746
6.355
1.036
6.223

21.292
9.500
4.545
2.126
5.121

31.958
13.127
9.987
1.621
7.223

40.993
15.266
10.376
3.334
lZ.017

22.064
6.355
6.017
3.765
5.927

26.278
9.313
11.231
-894
6.628

46.716
21.777
19.170
-1.565
7.334

73.381
38.626
22.922
1.818
10.015

19
20
21

22
23
24
25
26
27
28
29
30

BY BORROIIJNG SECTORt
DEBT INSTRUMENTS
FOREIGN
S. + L. GOVERNMENTS
HOUSEHOU>S
NOMFINANCJAL BUSINESS
FARM
HONFARM NONCIIRPORATE
CORPORATE

45.736
43.463
63.9
6.465
21.524
14.1135
1.932
2.367
10.536

68.124
67.854
2.416
7.6511
28.319
29.461
3.290
5.749
20.422

64.267
63.261
1.772
6.274
22.672
32.543
3.110
5.416
24.017

69.428
66.981
3.978
7.944
19.319
35. 741
3.622
4.957
27.162

82.546
82.550
2.674
9.826
29.954
40.096
2.1132
5.559
31.705

95.475
91.602
3.215
10.670
31.717
46.DOO
3.176
7.359
35.465

85.431
79.669
2.671
11.323
2�.374
42.301
3.249
5.273
33. 779

121.902
110.440
4.617
17.840
39.827
411.156
4.098
8.700
35.358

152.077
141 .567
4.6911
14.176
63.125
59.5611
4.1157
10.3511
44.353

177.651
170.431
7.7211
12.258
72.815
77.630
11.617
9.282
59.731

22
23
24
25
26
27
211
29
30

2.273
195
2.078

270
2911
-28

1.006
-253
1.259

2.447
50
2.397

-4
155
-159

3.873
467
3.-.06

5.·,62
5.694

611

11.462
27
11.435

10.510
-412
10.922

1.220
-zoo
7.420

31
32
33

1134
16.-913
12.614

2.714
29.4!13
20.394

1.519
33.1102
25.276

4.0211
311.138
29.559

2.829
39.937
31.546

3.682
49.406
311.871

2.739
47.995
39.473

4.644
59.591
46.793

4.286
70.490
55.275

7.5211
115.050
67.151

34
35
36

-1.011
612
37 MEMOt U.S. GOVT. CASH BALANCE
TOTALS NET OF CHANGES IN U.S • GOVT. CASH BALANCES70.903
52.213
38 TOTAL FUNDS RAISED
BY U.S. GO\IE101MENT
39
6.477
2,779

-399

1.164

-1.135

401

2.754

3.194

-323

-l.675

611.299
4.032

111.269
11.041

97.079
14·.533

91.4211
-4.D4r

95.479
10.048

144.208
22.306

169.717
17.640

189.040
11,3119

3 U.S. GOVERNMENT
PUBLIC DEBT SECURITIES
4
AGENCY ISSUES + MORTGAGES
5
b All OTHER NONFINANCIAL SECTORS
CORPORATE EQUITIES
7
8
DEBT INSTRUMENTS
9
10

31
32
33
34
35
36

CORl'ORATE EQUITIES
FOkEIGH
CORPORATE BUSINESS
TOTALS INCLUDING EQUITIES
FOREIGN
NONFINANCIAL BUSINESS
CORPORATE

17
111

PRIVATE DOMESTIC NET INVESTMENT AND 8011ROIIING IN tr.EDIT MARKETS

1
2
3
4

6
7
II
9
10
11

13
14
15
16
17

111

19
20
21
22
23
24
25
26

TOTAL, HOUSEHOLDS + BUSINESS
TOTAL CAPITAL OUTLAYS Ill
CAPITAL CONSUMPTION 121
�T PHYSICAL INVESTMENT
NET FUNDS RAISED
EXCESS Nl!T Il!YESTMENT 131
TOTAL BUSINESS
TOTAL CAPITAL OUTLAYS
CAPITAL CONSUMPTION
NET PHYSICAL INYE$TMENT
NET DEIT FUNDS RAISED
CORPORATE EQUITY ISSUES
EX&ESS NET INVESTMENT 131
CORPORATE BUSINESS
TOTAL CAPITAL OUTLAYS
CAPITAL CONSUMPTION
NET PHYSICAL INVESTMENT
NET OUT FUNDS RAISED
CORPORATE EQUITY ISSUES
EXCESS NET INVESTMENT 131
HOUSEHOLDS
TOTAL CAPITAL OUTLAYS
CAPITAL CONSUMPTION
NET PkYSICAL INVESTMENT
NET FUNDS ltAJSED
EXCESS NET INVESTMENT 131
OF IIHICHI
HOUSES LESS HOME MORTGAGES
DURABLES LESS CONS. CREOIT
NONPROFIT P+E LESS MORTGAGES
LESSt UNALLOCATED DE�T

173.126
110.303
62.1123

190.6311
1111.4611
72.170

1118.062
128.362
59.'700

207.5118
14D.388
67.200

226.715
154.304
72.411

224.220
166.017
58.203

253.525
1711.945
l4.58o

293.035
194.3111
98.717

334.657
21D.976
123.681

2
3

38.437
496

!17,752

,.on

56.lt74
15.696

57.456
2.244

69.891
-2.691

81.123
-11.712

n.369
-13.166

99.418
-24.1138

133.615
-34.1191

157.865
-34.1114

4
5

50.313
35.151t
15.159

n.576
!!O.lt!IO
33.126

96.441
54.162
42.279

93.427
511.452
34.975

97.930
63.231
34.699

108.1176
69.470
39.41)6

1011.0lt2
74.579
33.463

117.127
80.323
36.804

134.264
1111.231
46.033

160.525
95.235
65.290

6
7
II

14.1135
2.078
-l.754

29.461
3.693

-ze

32.543
1.259
11.477

35.741
2.397
-3.163

40.096
-159
-5.2311

"6.000
3.406
-10.000

42.301
5.694
-14.532

411.156
11.435
-22.7117

59.5611
10.922
-24.457

77.630
7.420
-19.760

9
10
11

36.667
22.uo
13.797

62.2112
35.226
27.056

76.519
38.202
38.317

71.377
41.463
29.914

75.006
45.104
29.902

113.670
49. 790
33.1110

84.049
53.629
30.420

117.162
57.650
29.512

102.473
63.0211
39.445

121.509
67.464
54.045

12
13
14

10.536
2.078
1.183

20.422
-211
6.662

24.017
1.259
13.041

27,162
2.397
355

31. 705
-159
-1.644

35.465
3.406
-4,991

33.779
5.694
-9.053

35.358
11.435
-17.2111

44,353
10.922
-15.1130

59,731
7.420
-13.106

15
16
17

68.269
44.495
23.774

119.550
59.853
29.697

94.197
�4.306
29.1191

94.635
69.910
24.725

109.658
77.157
32.501

117.839
84.1134
33.005

116.178•
91.4311
24.740

136.3911
98.622
37.776

1511.771
106.0117
52.6114

174.132
115.741
58.391

111
19
20

21.524
2.2,0

28.319
1.378

22.672
7.219

19.318
5.407

29.954
2.547

31.717
1.2111

23.374
1.366

39.827
-2.051

63.125
-10.441

72,115
-14.424

21
22

3.913
-915
987
1. 735

-3.278
5.176
1.777
2.297

-1.133
8.796
1,964
2.408

-l.214
7.8119
1.940
3.208

-1.1136
6.672
1.919
4.207

-2.796
5.8S5
2.222
3.993

-1.851
4.537
2.196
3.516

-6.567
5.222
2.504
3.210

-14,149
5.1113
2.635
4.110

-17.029
4.136
2,746
4,277

23
24
25
26

111 CAPITAL OUTLAYS ARE TOTALS FOR RESIDENTIAL AND NONRESIDENTIAL
FIXED CAPITAL, NET CHANGE IN INVENTORIES, ANO CON�UMER OURAISLES•
EXCEPT OUTLAYS BY FINANCIAL IIUSINESS.
121 CAPITAL CONSUMPTION INCLUDES Al'IOUNTS FOR CONSUMER DURABLES
ANO EXCLUDES FINANCIAL BUSINESS CAPlTAL COHSUMPTION.
,
�31 EXCESS OF NET INVESTMENT OYER NET FUNDS RAISED.
MONEY AMOUNTS ARE IN MILLIONS O F DOLLARS.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

1111.5112
79.649
38.933

S.4

AUGUST 1974
CREDIT MARKET SCPPl Y OF FUNDS

CREDIT MARKET SUPPLY OF FUNDS
DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS

ANNUAL FLOWS, 1959 + 1965-73
1959

50.5�2

1965

69.622

ANNUAL FLONS, 1959 + 1965-73

1966

66.894

1967

79.986

1968

95.948

1969

87.956

2
3
4
5
6

7.192
3.418
1.8,5
836
1.043

8.8e9
3.707
393
672
4.117

1�.•942
3.394
2.776
938
4.834

11.25e
6.809
2.063
-2.549
4.935

12.192
3.381
2.811
873
5.127

15.686
697
4.632
4.030
6.327

7
9
10

1.778
2.224
315
2.875

2.773
2.231
3.828
57

4.911
5.117
3.479
-1.565

4.552
-93
4.801
1.998

4.937
3.241
3.719
295

2.274

2.114

4.825

-621

3.476

1971

1970

92.471

135.940

�

1972

1973

TOTAL FUNDS ADVANCED IN CREDIT MARKETS
TO NONFINANCUL SECTORS
158 .884 180.145
BY PUBLIC AGENCIES + FOREIGN

28.114
15.876
5.725
1.326
5.187

41.684
33.822
5.656
-2.679
4.885

18.326
8.410
5.228
43
4.645

33.202
10.952
7.607
7.168
7.475

2.876
8.870
4.223
-283

2.833
10.030
4.981
10·.210

3.236
3.167
8.866
26.415

2.622
7.030
271
8.403

2.982
20.255
9.227
738

8.783

8.234

3.844

6.182

19.589

TOTAL NET ADVANCES
U.S. GOVERNMENT SECURITIES
RESIDENTIAL MORTGAGES
FHLB ADVANCES TO S+L'S
OTHER LOANS + SECURITIES
BY AGENCYI
U.S. GOVERNMENT
SPONSORED CREDIT AGENC JES
MONETARY AUTHORITIES
FOREIGN
AGENCY BORRONING NOT INCLUDED
IN LINE 1

2
3

4
5
6

7
8
9
10
11

PRIVATE DOMESTIC FUNDS ADVANCED
12
13
14
15
16
17
18

45.634
5.5-51
6.280
3 ....84
12.960
18.195
836

62.847
-49
7.345
5.999
18.626
31.598
672

59.777
5.359
5.647
10.339
11.984
27.386
938

68.107
5.705
7.769
16.002
12.968
23.114
-2.549

87.232
13.312
9.516
13.790
15.549
35.938
873

81.053
4.804
9.92,.
12 ....67
15.682
42.206
4.030

72.591
5.235
11.246
19.959
12.828
2....649
1.326

74.871
35.068
16.878
17.267
5.6�8

TOTAL NET ADVANCES
GOVERNMENT SECURITIES
STATE + LOCAL OBLIGATIONS
CORPORATE + FOREIGN BONDS
RESIDENTIAL MORTGAGES
OTHER MORTGAGES + LOANS
LESS• FHLB ADVANCES

12
13
1"
15
16
17
18

146.740
15.175
14.379
13.150
44.584
59.4'15
43

166.532
18.422
13.709
10.053
44.083
87.433
7.168

110.61>1
50.592
41....17
13.332
5.320

153.359
70.543
49.264
17.722
15.830

158.843
86.600
35.081
22.132
15.030

CREDIT MARKET FI.JttOS ADVANCED
BY PRIVATE FINANCIAL INSTS.
COMMERCIAL BANKING
SAYINGS INSTITUTIONS
INSURANCE + PENSION FUNDS
OTHER FINANCE

19
20
21
22
23

SOURCES OF FUNDS
PRIVATE DOMESTIC DEPOSITS
CREDIT MARKET BORRONING

24
25
26

98.100
-4.406
17.561
19.475
29.135
33.656
-2.679

u.s.

PRIVATE FINANCIAL IIITERHEOUTIDN

19
20
21
22
23

29.210
4.812
10.714
9.952
3.732

62.879
28.711
14.336
13.600
6.232

45.362
17.465
7.940
15.496
4.461

63.465
35.869
15.C40
12.863
-307

75.326
38.741
15.603
14.032
6.950

55.344
18.247
14.459
12.708
9.930

24
25
26

29.210
10.969
3.837

62.879
38 .351
7.920

45.362
22.450
3.162

63.465
49.968
-394

75.326
45.914
8.451

55.344
2.561
18.769

74.871
63.164
-278

110.661
90.348
9.344

153.359
97.531
20.330

158 .843
84.875
31.598

27
28
29
30
31

14.404
-660
800
8.864
5.400

16.608
787
-985
11.410
5.396

19.750
3.655
-533
13.638
2.990

13.891
2.211
242
U.989
-611

20.961
2.603
-224
11.393
7.189

34.014
9.333
44
10.792
13.8 ...5

11.985
-8.455
2.884
13.126
4.430

10.969
-3.238
2.2J1
9.077
2.899

35.498
5.192
10.,
13.071
16.529

42.370
6.466
-1.010
16.7,.2
20.172

32
33
34
35
36

20.261
13.122
3.986
258
-202
3.097

7.888
2.884
2.613
984
1.529
-122

17.577
8.351
2.596
1.982
2.327
2.321

4.248
-1 .404
-2.534
4.599
1.903
1.684

20.357
8.058
-233
4.651
5.796
?..085

44.478
11.012
8.694
6.616
10.161
1.995

-2 .558
-9.028
-1.218
10.680
-4.407
1.415

-3.217
-13.956
586
9.318
-633
1.4!>8

13.711
1.606
2.13b
5.i85
3.974
810

39.287
18.753
4.433
1.05?
11.219
3.763

DIRECT LENDING IN CR. MARKETS
U.S. GOVERNMENT SECURITIES
STA"!"E + LOCAL OBLIGATIONS
CORPORATE + FOREIGN 80NOS
COMMERCIAL PAPER
OTHER

32
33
34
3536
:H

38
39
40
41
"2

11.604
10.515
0
2.030
8.485

40.469
32.718
3.568
15.984
13.166

24....28
20.342
-229
13.278
7.293

52.080
39.32,.
4.305
18.290
16.729

48.346
33.855
3.516
17.45"
12.885

5.409
-2.285
-13.672
3.356
8.031

66.645
56.102
15.018
24.155
16 .929

93.740
81.1)09
7.66'•
32.934
40.411

101.9,.3
85.247
8.710
30.63,.
...5.903

88.816
76.251
18.548
29.541
28.162

OEPOS ITS + CURRENCY
TIME + SAYINGS ACCOUNTS
LARGE NEGOTIABLE co• s
OTHER AT COMMERCIAL BANKS
AT SAYINGS INSTITUTIONS

38
39
40
41
42

43
44
45

1.089
454
635

7. 751
5.633
2.118

4.086
2.108
1.978

12.756
10.644
2.112

14.491
12.059
2.432

7.694
4.8 ...6
2.8 ...8

10.543
7.062
3.481

12. 731
9.339
3.392

16.696
12.284
....412

12.565
8.624
3.941

,.6

31.865

48 .357

42.005

56.328

68.703

49.887

64.087

90.523

115.654

12S.103

47
48
49

14.226
64.009
2.215

12.767
100.050
844

17.852
75.885
2.090

14.074
93.184
4.269

12.706
86.351
2.898

17.833
68.281
9.05-0

30.403
103.!40
1.815

30.663
112.804
23.177

11.534
104.510
13.595

18.430
95.382
7.204

PUBLIC SUPPORT RATE Iii
47
PVT. FINAN. INTERMEDIATION Ill 48
TOTAL FOREIGN FUNDS
49

OTHER SOURCES
FOREIGN FUNDS
TREASURY BALANCES
INSURANCE + PENSION RES.
OTHER, NET

-------

27
28
29
30
31

PRIVATE DOMESTIC NONFlNANCUL INYEST!1RS

HONEY
DEMAND DEPOSITS
CURRENCY

TOTAL OF CREDIT MARKET INSTRUMENTS, DEPOSITS + CURRENCY

43
44
45
46

CORPORATE EQUITIES NOT INCLUDED ABOVE

4
5

4.305
1.765
2.540

3.514
3.221
293

4.753
3.677
1.076

5 ....77
2.957
2.520

6.403
5.798
605

9.988
4.787
5.201

10.356
2.629
7.727

14.768
1.145
13.623

12.936
-696
13.632

8.032
-1.586
9.618

TOTAL NET ISSUES
MUTUAL FUND SHARES
OTHER EQUITIES

3.354
951

6.014
-2.560

5.994
-1.241

9.090
-3.613

10.808
-4.405

12. 219
-2.231

11.388
-1.032

19.266
-4.498

16.034
-3.098

13.446
-5.414

ACQ. BY FINANCIAL INSTITUTIONS
OTHER NET PURCHASES

MONEY AMOUNTS ARE IN MILLIONS OF DOLLARS.

S.5

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

2
3
4

AUGUST 1974
CREDIT MARKET DEBT

CREDIT MARKET DEBT
CREDIT MARKET DEBT OWED BY NCINFINANCUL SECTORS
YEAR-END DUTSTANDINGS, 1959 + 1965-73

YEAR-END OUTSTANDING$, 1959 + 1965-73

II
1959 II

1965

1966

1967

1968

1969

1970

1971

1972

1973

TOTAL CREDIT MARKET DEBT OUTSTANDING
708.801 1037.588 1102.800 1181.622 1276.882 1363.881 1456.650 1592.269 1751.444 1930.415
DIIED BY NONFINANCUL SECTORS
2 U.S. GOVERNMENT
PUBLIC DEBT SECURITIES
3
AGENCY ISSUES + MORTGAGES
4
5 ALL OTHER NONFINANCIAL SECTORS
DEBT CAPITAL INSTRUMENTS
6
s. + L. GOVERNMENT ·secs.
7
CORPORATE + FOREIGN BONDS
8
MORTGAGES
9
HOME MORTGAGES
10
OTHER RESIDENTIAL
11
COMMERCIAL
12
FARM
13
14
15
16

OTHER PRIVATE CREDIT
BANK LOANS N.e.c.
CONSUMER CREOIT

19
20
21
22
23
24
25
26

BY BORRDIIING SECTOR I
FOREIGN
STATE + LOCAL GOVERNMENTS
HOUSEHOLDS
NONFINANCIAL BUS INESS

17
18

OPEN-MARKET PAPER

OTHER

FARM

NONFARM NONCORPORATE
CORPORATE

237.981
236.185
1.796

262.178
257.663
4.515

470.820
330.874
65.486
76.710
188.678
128.714
18.668
29.195
12.101

775.410
529.952
100.278
107.965
321. 709
208.894
37.183

139.946
53.387
51.544
1.466
33.549

245.458

470.820
21.075
66.521
198.360
184.864
18.934
23.486
142.444

775.410
38.872
103.055
333.213
300.270
32.299
46.195
221. 776

54.457

21. 175

265.811
260.003

278.816
268.916
9.900

292.214
279.235
12.979

836.989

902.806
613.432
113. 703
133.461
366.268
232.083
43.910
64.824
25.451

984.668 1075.313 1155.280 1264.899 1406.757 1576.014
663.689 713.286 771.459 855.475 950.512 1046.348
123.219 133.143 144.389 161.950 176.329 190.038
147.277 159.268 180.466 200. 767 214.166 224.092
393.193 420.875 446.604 492.758 560.017 632 .218
247.138 262.794 275.599 301.379 341.009 384.353
57.843
66.616
85.300
47.280
76.883
52.019
76.601
81.926
91.905
71.256
106.687 123. 734
31.236
38.83.l
27.519
29.461
35.438
32.858

289.374
114.078
100.783
7.351
67.162

320.979
127.205
110.770
8.972
74.032

902.806
42.849
117 .282
374.003
368.672
39.249
56.521
272.902

984.668 1075.313 1155.280 1264.899 1406.757 1576.014
45.309
50.585
55.758
47.500
61.004
68.548

5.808

568.856
105.925
118.567
344.364
220.592
40.307
60.148
23.317

93.834

268.133
104.579

57.552

5.225
62.091

89.883
4.189

96.238

836.989

39.900
109.329
354.686
333.074
35.769
51.565
245.740

MONEY AMOUNTS ARE IN MILLIONS OF DOLLARS.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

S.6

127 .212
404.293
407.854
41.907
62.079
303.868

288.568

277.958
10.610

362.027
142.538
121.146
12.306
86.037

137.882
435.900
454.031
45.083
69.460
339.488

301.370
290.844

10.526

383.821

148.785

127.163
16.071
91.802

149.205
459.274
496.216
48. 332
74.722
373.162

327.370
316.867
10.503

409.424
158.099
138.394
15.177
97.754

167.045
498.793
543.303
52.041
83.424
407.838

344.687
330.786
13.901

456.245
179.619
157.564
13.612
105.450

181.221
562.018
602.514
56.898

93.779

451.837

354.401
338 .525
15.876

529.666
218.245

180.486
15.430

115.505

193.479
634.833
679.154
64.525
103.064
511.565

2
3

4
5
6

8
9
10

11
12
13
14

15
16
17

20
21
22
23
24
25
26

AUGUST 1974
CREDIT MARKET SUPPLY OF FUNOS
YEAR-END OUTSTANDINGS, 1959 + 1965-73
1959

II
II

1965

1966

CREOIT MARKET SUPPLY OF FUl'()S

DIRECT AND INDIRECT SOURCES OF FUNDS TO CREDIT MARKETS

1967

YEAR-END OUTS TANDINGS, 1959 + 1965-73

1968

1969

1970

1971

--------------1972

1973

TOTAL CREDIT MARKET DEBT CLAIMS
708.801 1037.588 ll02.800 1181.622 1276.882 1363.881 1456.650 1592.269 1751.444 1930.415
AGAINST NONFINANCIAL SECTORS
2
3
4
5
6

7
8
9
10

73.579
37.975
7.160
2.134
26.310

112.826
55.936
7,445
5.997
43.448

124.187
59,330
10.221
6.935
47.701

135.194
66,139
12.284
4.386
52 .385

146.772
69.520
15.095
5.259
56.898

7.259

14.182

19.007

18.386

21.862

25.677
9,908
26.728
11.266

37.672
18,265
40.996
15. 893

42.049
23 .382
44.475
14.281

46.551
23.289
49.276
16.078

51.135
26.530
52.995
16.112

161.467
70,217
19.72'Jlt
9.289
62.234
53.999
35.400
57.218
14.850

30,645

190,004
86,093
25,452
10.615
67,844

231.327
119.915
31,108
7.936
72.368

250,262
128.325
36.336
7.979
77.622

283,183
139.277
43.943
15.147
84.816

38.879

43. 175

49.357

68.946

56.670
45.430
62.199
25.705

59.230
48.597
71.065
52.435

62.214
55.627
71.336
61.085

642.481
206.279
65.486
76.176
141.069
155.605
2.134

938.944
218.243
100.278
107.281
240.477
278.662
5.997

997.620 1064.814 ll51.972 1233,059 1305 .525 1404. ll 7 1550.539 1716.178
223.602 229.307 242.619 247.423
252,658
249.204
264.379 282.801
105.925 113. 703 123.219 133.143
144.389
161.950 176.329 190.038
117.310 132.533 146.423 158.857 178,799 198. 513
211.602 221.752
252.461 265 .429 280.977 296.659 309.488
338.313 382 .896 426.979
305,257 328 .228 363.993 406.266
464.073
430.806
523.312 609. 755
6.935
5.259
4.386
9.289
10,615
15.147
7.936
7.979

19
20
21
22
23

463,352
1B8.501
99,783
150.144
24.924

752,347
300.938
183.013
219.062
49,334

796.916
317.253
191.311
234.55B
53.794

27
28
29
30
31

177.400
7.306
5.050
125.284
39.760

32
33
34
35
36
37

463.352
265.810
20.142

752.347
439.895
48,492

860.339
353. 122
206,209
247 .521
53.487

935,507
391.86�
221.653
261,553
60.43B

991.882 1066.646 1177,636 1330,996 1489.839
410.681
445.749
496,341 566.884 653.484
236.046 252,816 294,533 343.797 378.B78
274,261
291,528
304,860 322,582 344,714
70.894
76.55.3
97.733 112.763
81,902

353,384
32.906
5.054
228.871
86.553

365.202
24.451
7.938
242.268
90.545

376,501
21,213
10,169
249,798
95.321

4ll.743
26,405
10.B75
260.131
114,332

320.118
145. 334
51.167
30.302
28.601
64. 714

317.542
136,305
49.949
40.965
24,194
66,129

314,487
122.301
50. 535
50,522
23.561
67.568

328.136
123.906
52.671
55.646
27.535
68.378

226,564
173. 126
53,438

243.260
185,410
57.850

263.960
15.044
5.525
181,472
61.919

284.066
18.699
4.992
195.749
64.626

860,339
511.038
51-262
298,039
20.970
5.234
206.454
65.381

318,919
23,573
5.010
216.851
73.485

199.271
uo.222
32.674
9,877
906
45,592

235,089
113,317
43,132
13.504
8.414
56.722

252.359
121.669
45. 728
15.176
10.741
59.045

255.737
120.265
43 .139
18 .983
12.644
60. 706

276, 8
128,li2
42,9 6
23,719
18.440
62.791

43
44
45

136,871
107.292
29,579

164.258
127.053
37.205

168,344
129.161
39,183

494.660

47
48
49

295.389
158.518
0
64.846
93,672

10,380
72,119
18,572

477.100
312,842
15.011
126.217
171,614

712,189
10,873
80,126
30.937

935,507
556.875
59.713

12
13
14
15
16
17
18

CREDIT MARKET CLAIMS HELD BY
PRIVATE FINAN, INSTITUTIONS
COMMERCIAL BANK ING
SAVINGS INSTITUTIONS
INSURANCE + PENSION FUNDS
OTHER FJIIIANCE

19
20
21
22
23

OTHER SOURCES
FOREIGN FUNDS
TREASURY BALANCES
INSURANC.E + PENSION RES.
OTHER, NET

27
28
29
30
31

CREDIT MARKET CLAIMS
U,S, GOVERNMENT SECURITIES
STATE + LOCAL OBLIGATIONS
CORPORATE + FOREIGN BONDS
COMMERCIAL PAPER
OTHER

32
33
34
35
36
37

500.378
332.034
14.782
138,345
178.907

552,333
371,223
19.087
156.635
195.501

600.602
404.996
22 .603
174.089
2011.304

752,737

808 .010

11,261
79.881
32.980

181.110
139.815
41.295

11,441
80. 797
37.048

PRIVATE DOMESTIC NONFINANCIAL INVESTORS
366,530
141.669
57. 104
56.802
38.814
72,141

195.606
151.879
43.727

606. 122
402.832
8.931
177.566
216.335

203.290
156.725
46.565

672.827
458.994
23,949
201,721
233.324

876.780

926.240

990.369 1081,054 1196,646 1323.723

ll.494
81.209
39.685

11.838
80.440
47,756

213.833
163,787
50.046

13,043
81.702
50,156

766.567
540.003
31.613
234.655
273.735

14,528
83.870
73.648

868.510
625.250
40,323
265.289
319,638

DEPOSITS + CURRENCY
TIME + SAVINGS ACCOUNTS
LARGE NEGOTIABLE co• s
OTHER AT COMMERCIAL BANKS
AT SAVINGS INSTITUTIONS

957.193
701.501
58.871
294.830
347,800
255,692
193.901
61,791

MONEY
DEMAND DEPOSITS
CURRENCY

TOTAL OF CREDIT MARKET INSTRUMEN TS, DEPOSITS + CURRENCY

14,288
85,840
87,490

14.669
86.811
94.506

900.555 1046, 144 1223.080
4 7.618
56.694
59,831
852.937
989.450 1163,249

967,957
46.519
921.438

7
8
9
10

lOTAL PRIVATE HOLOINGS
U.S. GOVERNMENT SECURITIES
STATE + LOCAL OBLIGATIONS
CORPORATE + FORHGN BONDS
RESIDENTIAL MORTGAGES
OTHER MORTGAGES + LOANS
LESS: FHLB ADVANCES

SOURCES OF FUNDS
PRIVATE DOMESTIC DEPOSITS
CREDIT MARKET DEBT

454.246
33.004
9.865
281.356
130,021

2
3
4
5
6

PRIVATE DOMESTIC HOLDINGS

991.882 1066,646 1177,636 1330,996 1489.839
559.557
622.781 713,129 810.660 895,402
78.941
78.663
88.006 108,593 140.191

AGENCY DEBT NOT IN LINE l

PRIVATE FINANCIAL INTERMEDIATION

796,916
461,195
51.655

38
39
40
41
42

TOTAL HELD
U.S. GOVERNMENT SECURITIES
RESIDENTIAL MORTGAGES
FHLB ADVANCES TO S+L'S
OTHER LOANS + SECURITIES
BY AGENCY:
U. S, GOVERNMENT
SPONSORED CREDIT AGENCIES
MONETARY AUTHORITIES
FOREIGN

65.236
75.882
80.563
61.502

12
13
14
15
16
17
18

24
25
26

BY PUBLIC AGENCIES + FOREIGN

24
25
26

38
39
40
41
42

43
44
45
46

PUBLIC SUPPORT RATE Ill
47
PVT, FINAN. INTERMEDIATI ON Ill 48
TOTAL FOREIGN FUNDS
49

CORPORA TE EQUITIES NOT INCLUDED ABOVE

4
5

453.988
15.818
438.170
41.946
412,042

748,968
35.220
713. 748

96.902
652,066

682,653
34.829
647.824

93,089
589.564

869. 539 1027.629
44.701
52.677
824.838 974.952
120.320
749,219

"ONEY AMOUNTS ARE IN MILLIONS OF DOLLARS,

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

143,009
884.620

907.642
48.289
859,353
139.539
768.103

148.309
752.246

S.7

190,989
855.155

236,146
986.934

198. 716
769.241

TOTAL MARKET VALUE
MUTUAL FUND SHARES
OTHER EQUITIES

ACQ, SY FINANCIAL INSTITUTIONS
OTHER HOLDINGS

1
2
3
4

AUGUST 1974
HOUSEHOLDS

HOUSEHO LDS
SECTOR STATEMENTS OF SAVING ANO INVESTMENT
ANNUAL FLOIIS, 1959 + 1965'-73

.H'NUAL FLOIIS, 1959 + 1965-73
1959

II
II

1966

1965

1967

1968

1969

1970

1971

1972

1973

HOUSEHOLDS, F'ERSONAL TRUSTS, ANO NONl'ROFIT ORGANIZATIONS

1 PERSONAL INCOME
2 - PERSONAL TAXES + NONTAXES

383.530
46.213

538.893
65.653

587.216
75.364

629 .335
82.994

688 .924
97.927

750.921
116.535

808.290
116.591

864.038
117.607

944.884 1055.042
151.330
142 .383

l
2

=
=
+
1 +
8 +

337.317
318.234
19.083
2.919
427
5.500

473.240
444.808
28.432
4,743
939
14.791

511.852
479.325
32.527
5.586
1.318
15.151

546.341
505.975
40.366
5.488
1.690
12.434

590.997
551.239
39.758
6.142
2.458
16.659

634.386
596.174
38.212

691.699
635.498
56.201
8.752
923
10.554

746.431
685.933
60.498
9.199
776
16.453

802.501
749.907
52.594
11.oeo
1,420
24.353

903.712
829.364
74.348
l}.540
944
27.058

:I
4
5
6

59.978
69.910
129.888

65.017
77.157
142.174

64.052
84.834
148.886

76.430
91.438
167.868

86.926
98.622
185.548

89.447
106.087
195.5�

113.890
115,741
229.631

9
10
11

3
4
5
6

OJSPOSA8LE PERSONAL INCOME
PERSONAL OUTLAYS
PERSONAL SAVING, NIA BASIS
CR EDITS FROM GOVT. INSURANCE
CAPITAL GAINS DIVIDENDS
NET DURABLES IN CONSUMPTION

1.013

2.536
16.231

9 = NET SAVI NG
10 + CAPITAL CONSUMPTION
11 = GROSS SAVING

27.929
44.495
72.424

48.905
59.853
108.758

54.582
64.306
118.888

12 GROSS INVESTMENT
CAPITAL EXPENO.--NET OF SALES
13
RESIDENT! AL CONSTRUCTJON
14
CONSUMER DURABLE GOODS
15
NONPROFIT PLANT + EQUIP.
16

79.190
68.269
21.373
44.306
2.590

115.263
89.550
19.097
66.308
4.145

129.332
94.197
18.941
70.752
4.504

134.922
94.635
11.001
73. 120
4.514

145 .517
109.658
21.091
84.032
4.535

145.435
117.839
21.960
90.790
5.089

167. 711
116. 178
19.627
91.297
5.254

186.082
136.398
26.906
103.918
5.574

203.816
158.771
34.283
118.442
6.046

235.640
174.132
37.537
130.310
6.285

12
13
14
15
16

11 NET FINANC JAL INVESTt;ENT
NET ACO. OF FINANCIAL ASSETS
1�

10.921
32.974

25.713
55.261

35.135
58.�69

40.287
63.984

35 .859
69.575

27.596
56. 788

51. 533
74.057

49.684
92.783

45.045
113.990

61.508
130.760

17
18

DEP. + CR. MKT. INSTR. Ill
DEMAND DEP. + CURRENCY

24.817
2.462

40.183
7.676

41.642
3.854

48.758
11.200

54.295
12.312

42.492
1.531

54.432
11.173

72,276
10.964

93.643
11,843

110.439
13.054

19
20

21
22
23

TIME + SAVINGS ACCOUNTS
AT COMMERCIAL BANKS
AT SAVmGS INST.

11,325
2.840
8.485

28 .022
14.856
13.166

20.456
13.163
7.293

3,,.513
18.086
16. 729

30.263
17 .378
12.885

6.009
-2.022
8.031

44.402
27.473
16.929

70.250
29.839
40.411

75 .360
29.457
45.903

67 .673
39.511
28-162

21
22
23

21.
2S
26
27
28
29

CREDIT MKT. INSTRUMENTS
U.S. GOVT. SECURITIES
S. + L. OBLIGATIONS
CORPORATE + FGN. BONDS
COMMERCIAL PAPER
MORTGAGES

11.030
5.723
3.258
258
5
l,'186

4.485
2.52'1
1,749
984
-9
-766

n.332
7.685
3.599
1.982
2,748
1,318

2. 743
1,522
-Z.195
4.599
-2.125
942

11.120
5.554
-761
4.651
729
1.547

34.952
12.84"
9.611
6.616
4.759
1.123

-1.143
-9.686
-751
10.680
-1.524
1311

-8.938
-14.376
-151
9.318
-3.922
193

6.440
595
960
5.185
1.546
-1.846

29.712
20.i60
4.335
l.059
3.464
494

24
25
26
27
28
29

l.'165
-1.165

3.221
-5.381

3.677
-4.613

2.957
-7.268

5.798
-12.300

4.787
-8.583

2.629
-4.358

1.145
-6.479

-696
-4.670

-1.586
-6.586

30
31

3.421
8.446

4.825
12.218

4.694
14.136

5.063
14.570

4.621
15.486

4.978
16.274

5.242
19.058

6.172
21.559

...560
23. 760

1.211

24.359

32
33

19
20

30
31

INVESTMENT COMPANY SHARES
OTHER CORPORATE SHARES

32
33

LIFE INSURANCE RESERVES
PENSION FUND RESERVES

34
35
36

NET INV. IN NONCORP. BUS.
SECURITY CRF.DIT
MISCELLANEOUS ASSETS

-4.647
-167
504

-1.942
864
1.273

-3.180
197
1,216

-3. 774
2.213
1.465

-2.218
2.096
1.797

-3.460
-1.818
2.118

-4.663
-867
2.584

-4.729
535
2.304

-7.409
134
2.668

-4.434
-206
1.497

34
35
36

37
38
39
40
41
42
43
44

NET INCREASE IN LIABILITIES
CREDIT MARKET INSTRUMENTS
HOME MORTGAGES
OTHER MORTGAGES
INSTALMENT CONS. CREDIT
OTHER CONSUMER CREDIT
BANK LOANS N.E.c.
OTHER LOANS

22.053
21.524
12.560
814
5.605
810
1.012
663

29.548
28.319
15.232
1.175
8.201
1.•"14
1.359
938

23.234
22.672
12.652
1.257
5.351
1.004
364
2.044

23.697
19.318
10.371
1.194
3.184
1.361
1.888
1.320

33.716
29.954
14.625
1.135
8.317
1.670
2.492
1.715

29.192
31. 717
16.072
1.276
9.360
1.016
1.ooe
2.985

22.524
23. 374
12.481
1.360
4.959
1.058
915
2.601

43.099
�9.827
24.169
1.211
9.231
2.000
1.837
1.373

68.945
63.125
38.424
1.421
16.037
3.133
2.780
1.330

69 .252
72.815
44.208
1.408
20.105
2.817
1.eoo
2.477

37
38
39
40
41
42
43
44

14
297
218

736
229
264

-73
279
356

3.684
407
288

2.918
489
355

-3.400
489
386

-l. 780
500
430

2.609
345
318

4.672
608
540

-4.570
607
400

45
46
47

-6.766

-6.505

-10.444

-5.034

-3.343

3.451

157

-534

-8.282

-6.009

45
46
47

SECURITY CREDIT
TRADE DEBT
MISCELLANEOUS

48 DISCREPANCY
11 l EXCLUDES CORPORATE EQUITIES.

49
50
51
52

MEMORANDA:
NET PHYSICAL INVESTMENT:
IAl RE SIDENTJAL CONSTRUCTION
EXPENDITURES
- CAPITAL CONSUMPTION
- HOME MORTGAGES
= EXCESS NET INVESTMENT

21.373
4.900
12.560
3.913

19.097
7.143
15.232
-3.278

18.941
7.422
12.652
-1.133

11.001
7.844
10.371
-1.214

21.091
8.302
14.625
-1.836

21.960
8.684
16.072
-2. 796

19.627
8.99'1
12.481
-1.851

26.906
9.304
24.169
-o.567

3 ,.283
10.008
38.424
-14.149

37.537
10.358
44.208
-17.029

49
50
51
52

53
54
55

(Bl CONSUMER DURABLES
EXPENDITURES
- CAPITAL CONSUMPTION
= NET INVESTMENT

44.306
38.806
5.500

66.308
51.517
14.791

70. 752
55.601
15.151

73.120
60.686
12.434

84.032
67.373
16.659

90.790
74.559
16.231

91.297
80. 743
10.554

103.918
87.465
16.453

118.442
94.089
24.353

130.310
103 .252
27.058

53
54
55

56
57

- CONSUMER CREDIT
= EXCESS NET INVESTMENT

6.415
-915

9.615
5.176

6.355
8.796

4.545
7.889

9.987
6.672

10.376
5.855

6.017
4.537

11.231
5.222

t9.170
5.183

22 .922
4.136

56
57

58
59
60
61

(Cl NONPROFIT PLANT + EQUIP.
EXPENDITURES
- CAPITAL CONSUMPTION
- NONl'ROFIT MORTGAGES
= EXCESS NET INVESTMENT

2.590
789
814
987

4.145
1.193
1. 175

1.111

4.504
1.283
1.257
1.964

4.514
1.380
1.194
1.940

4.5::15
1.482
1.135
1.918

5.089
1.591
1.276
2.222

5.254
1.698
1.360
2.1'16

5.574
1.853
1.211
2.504

6.046
1.990
1.421
2.635

6.285
2.131
1.408
2.746

58
59
60
61

12.049
5.657

12.182
6.007

12.834
6.354

13.187
7.388

14.214
6.727

15.518
6.023

14.424
8.125

13.611
8.104

15.068
6.553

14.343
8.226

62
63

PER CENT RATIOS:
62 EFFECTIVE TAX RA TE
63 SAVING RATE, NIA BASIS

PER CENT OF DISPOSABLE INCOME ADJ. 121:
6 4 GROSS SAVING
21.259

22.708

22.917

23.465

23. 711

23.119

23.934

24.530

23.991

25.063

20.040
9.679
6.473
6.318

18.698
11.538
6.169
5.913

18.158
11.251
4.478
4.370

17.096
ll.559
4.281
3.490

18.288
11.603
5.623
4.995

18.298
8.e1e
4.532
4.925

16.564
10. 558
3.211
3.332

18.032
12.266
5.697
5.265

19.481
13.986
8.459
7.745

19.005
14.272
1.558
7.947

65
66
67
68

69 121 DISPOSABLE INCOME ADJ.
478.922
51.8. 756
340.663
599.597
553.519
(NU DISPOSABLE INCOME + GOVT. INSURANCE CREDITS + CAPITH GAINS DIVID. l

643.995

701.374

756.406

815.001

916.196

65
66
67
68

CAPITAL EXPENDITURES
iCQUISITION OF FINAN. ASSETS
NET INCREASE IN LIABILITIES
CREDIT MARKET BORROIIING

l!ONEY AMOUNTS ARE IN Ml LLIONS OF DOLLARS.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

S.8

AUGUST 1974
HOUSEHOLDS

HOUSEHO LDS
SECTOR STATEMENTS OF FINANCIAL ASSETS AND LIABILITIES

YEAR-END OUTSTANDINGS, 1959

1959 11

1965

1965-73

1966

YEAR-END OUTSTANDINGS, 1959
1967

1968

1969

1970

1971

1972

1965-73

1973

HOUSEHOLDS, PERSONAL TRUSTS, AND NONPROFIT ORGANIZATIONS
946.538 1464.429 1460.006 1694.952 1910.277 1853.685 1918.860 2134.482 2405.781 2302 .342

TOTAL FINANCIAL ASSETS

365.820
71,499

547.761
94.221

587.946
98.075

635.800
109.376

690.102
121.693

732.300
123.347

7116.774
134.520

859.212
145.484

952 • 793 1062.206
157.327 170.248

4
5
6

153.839
60.167
93.672

287.525
115.911
171.614

306.831
127.924
178.907

341.511
146.010
195.501

371.692
163.388
2011.304

377.822
161.487
216.335

422.284
188.960
233 .324

492.534
218.799
273.735

567.894
248.256
319.638

635.567
287.767
347.1100

TIME + SAVINGS ACCOUNTS
AT COMMERCIAL BANKS
AT SAVINGS INSTITUTIONS

7
8
9
10
11
12

140.482
73.457
45.907
11,808
13.380
2.362

166.015
81.801
49.595
12.411
15.237
4.558

183.040
89.487
50.249
13.173
11.113
8.952

184.913
91.009
51.139
12,204
17.359
10.307

196.717
96.562
51.512
20.!19
14.739
10.1•n

231.131
109 ,4D5
51,126
31. 730
13.596
12.953

229.970
99.718
51.407
22.664
9.919
15.728

221.194
85.294
§3.832
10.206
10.259
10.997

227.572
85.888
57.127
10.874
6.986
10.901

256.391
105.258
59.827
17.668
6,713
21.050

CREDIT MARKET INSTRUMENTS
U.S. GOVT. SECURITIES
SAVINGS BONDS
SHORT-TERM MARKETABLE
OTHER DIRECT
AGENCY ISSUES

13
14
15
16

27.251
9.877
11
29.886

36.?65
13.504
3
34.342

39.964
15.176
2.751
3S.662

37.714
18.983
626
36.581

36.953
23.719
1,355
38.128

46,131
30.302
6,114
39 .179

45.380
40.965
4.590
39.317

45.229
50.522
668
39.481

46.189
55.646
2.214
37.635

50.524
56.802
5.678
38 • 129

17
18
l"

402.679
15.818
386.861

637.467
35.220
602.247

576.921
34.829
542 .092

733. 708
44.701
689.007

865.069
52.677
812.392

749.962
48.289
701.673

733.557
47.618
685.939

833.726
56.694
777.032

959.107
59.831
899.276

744.418
46.519
697.899

CORPORATE EQUITIES
INVESTMENT COMPANY SHARES
OTHER CORPORATE SHARES

17
18
19

20
21

81.956
82.273

105.876
153.eo9

110.570
163.640

115.424
185.229

120.045
206.377

125.023
217.416

130.265
237 .563

136.437
271.567

142.997
314.542

150.274
307.811

LIFE INSURANCE RESERVES
PENSION FUND RESERVES

20
21

22
23

989
12.821

2.533
16.983

2.730
18.199

4.943
19.848

7.039
21.645

5.221
23.763

4.354
26.347

4.889
28.651

5.023
31.319

4.817
32.816

SECURITY CREDIT
MISCELLANEOUS ASSETS

22
23

208.150

348.658

370.693

394.388

428.440

457.522

480.046

522.837

591.8112

661.1111

25
26
27
28
29

198.:;60
125.966
8.317
39.247
12.297

333.213
206.338
14.228
70.893
18.990

354.6116
218.990
15.485
76.244
19.994

374.003
229.361
16.679
79.42e
21.355

404.293
243.986
17.814
87.745
23.025

435 .900
260.058
19.090
97.105
24.041

459.274
272.539
20.450
102.064
25.099

498.793
296.397
21.667
111.295
27.099

562.018
334.821
23.088
127.332
30.232

6:;4.833
379.029
24.496
147.437
33.049

30
31

6.430
6.103

11.715
11.049

12.030
11.943

13.917
13.263

16.409
15 .314

17.307
18.299

18.222
20.900

20.062
22.273

22.942
23.603

24.742
26.080

32
33

5.536
2.067

9.098
3.044

9.025
3.323

12. 709
3.729

15.627
4.218

12.221
4.707

10.447
5.207

13.056
5.552

17.72�
6.160

13.142
6.767

2,187

3.303

3.659

3.947

4.302

4.688

5.ll8

5.436

5.976

6.376

DEP. + CR. HKT. INSTR, 111
DEMAND DEPOSITS + CURRENCY

S. + L. OBLIGATIONS
CORPORATE + FGN. BONDS
COMMERCIAL PAPER
HORTGAGcS

TOTAL lIABilITIES
CREDIT MARKET INSTRUH�NTS
HOME HOR TGAGES
OTHER MORTGAGES
INSTALMENT CONS. CREDIT
OTHER CONSUMER CREDIT
BANK LOANS N.E.c.
OTHER LOANS
SECURITY CREDIT
TRADE CREDIT
DEFERRED AND UNPAID LIFE
INSURANCE PREMIUMS

111 EXCLUDES CORPORATE EQUITIES.
HONEY AMOUNTS ARE IN MILLIONS OF DOLLARS•

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

S.9

7
8
9
10
11
12
13
14
15
16

24
25
26
27
28
29
30
31
32
33
34

AUWST 1974
l-OTAL + NONCORP BUSINESS

TOTAL + NONCORP BUSINESS
SECTOR STATEMENTS OF SAVING AND INVESTMENT
ANNUAL FLOWS, 1959 + 1965-73

ANNUAL FLOWS, 1959 + 1965-73

II
II

1959

1965

1966

1967

1968

NONFINANCUL

1969

1970

1971

1972

1973

BUSINESS - TOTAL

1 INCOME BEFORE TAXES
2 GROSS SAVING

96.226
47.232

129.534
71.812

139.117
77.138

136 .248
78.387

142.449
79.780

139.466
80.418

128. 166
80.298

137.545
90.590

155.249
104.074

183.881
112 .649

3 GROSS INVESTMENT
4 CAPITAL EXPENDITURES
FIXED INVESTMENT
5
BUSINESS PLANT + EQUIPMENT
6
NONFARM HOME CONST. 111
7
MUL TJ-FAMILV RESIDENTIAL
8
CHANGE IN INVENTORIES
9

42.945
50.313
45.556
41.478
846
3.232
4.757

62.962
83.576
73.956
65.825
706
7.425
9.620

68.976
91!'1.441
81.639
75.538
-650
6.751
14.802

72.617
93.427
85.234
11.112
1.970
6.092
8,193

70.164
97.930
90.865
82 .ooo
1.087
7.778
7.065

74.447
108.876
101.011
90.508
123
10.440
7.805

73.585
108.042
103.514
92.045
881
10. 588
4.528

80.400
117.127
110.815
95.011
2.960
12.844
6.312

89.314
134.264
125. 730
106.418
2.062
17.250
8.534

98.845
160 .525
145.156
125,696
-573
20.033
15.369

3
4
5
6
7
8
9

10 NET FINANCIAL INVESTMENT
FINANCIAL USES OF FUNDS, NET
11
FINAN. SOURCES OF FUNDS, NET
12
CORPORATE SHARE ISSUES
13
CREDIT MARKET INSTRUMENTS
14
CORPORATE BONDS
15
HOME MORTGAGES
16
OTHER MORTGAGES
17
llANK LOANS N.E.C.
18
OTHER LOANS
19

-7.368
13.040
20.408
2.oi8
14.835
2.955
160
5.070
5.143
1.507

-20.614
21.214
41.828
-28
29.461
5.392
150
9.091
12.209
2.619

-27.465
13.663
41.128
1.259
32.543
10.224
-954
9.340
10.564
3.369

-20.810
18.028
38.838
2.397
35. 741
14.658
1.120
9.361
7,879
2.723

-27.766
30.576
58.342
-159
40.096
12.893
430
10.909
11,099
4.765

-34.429
30.246
64.675
3.406
46.000
11.975
-416
J0.750
14.495
9.196

-34.457
14.788
49.245
5.694
42.301
19.756
324
11.564
5. 777
4.880

-36.727
25.264
61.991
11.435
48.156
18.807
1.922
19.546
5.914
1.881

--44.950
33.793
78.743
10.922
59.568
12.187
1.206
26.208
16.083
3.336

-61.680
43.858
105 .538
7.420
77.630
9.159
-864
28.439
34.024
5.076

10
11
12
13
14
15
16
17
18
19

5.465
-1.970

12.119
276

10.214
-2.888

8.943
-8.243

17.442
963

21.203
-5.934

8.589
-7.339

5.254
-2.854

15.371
-7.118

20.062
426

20
21

4.287

8.850

8.162

5.770

9.616

5.971

6. 713

10.190

14.760

13.804

20
21

TRADE DEBT
OTHER LIABILITIES

22 DISCREPANCY

YEAR-END OUTSTANDINGS, 1959 + 1965-73

YEAR-END OUTSTANOINGS, 1959 + 1965-73
1959

II
II

1965

1966

1968

1967
NONFINANCIAL

l TOTAL FINANCIAL ASSETS
DEMAND DEPOSITS + CURRENCY
2
TIME DEPOSITS
3
4
CREDIT MARKET INSTRUMENTS
TRADE CREDIT
5
MISCELLANEOUS ASSETS
7 TOTAL LIABILITIES
CREDIT MARKET INSTRUMENTS
8
TAX-EXEMPT BONDS
9
CORPORATE BONDS
10
HOME MORTGAGES
11
OTHER MORTGAGES
12
BANK LOANS N.E.C.
13
OTHER LOANS
14
15
16

TRADE OEBT, NET
OTHER LIABILITIES

1969

1970

1971

1972

1973

BUSINESS - TOTAL

207 .300
48.103
1.500
40.773
78.247
38.677

290.924
47.430
13.131
45.939
120.967
63.457

306.253
47.748
u.141
44,388
132.968
69.408

325 .918
49.294
13.820
46.240
141.310
75.254

358.784
51.208
14.194
52.592
159.960
80.830

391. 792
53.766
11.790
55.674
182.689
87.873

409.320
54.818
13.485
53.949
191.051
96.017

437 .661
55.465
17.0B5
61.673
196.742
106.696

476.075
55.620
20.195
65.318
216 • 789
118.153

527 .991
55.350
21.549
74.454
240.868
135.770

l
2
3
4
5
6

273.153
184.864
0
2.748
51.647
44.104
14.509

433.804
300.270
0
97. 800
2.556
98.587
74.941
26.386

477.287
333.074
0
108 .024
1.602
108.287
85.496
29.665

517.960
368.672
0
122 .682
2.122
117.506
93.374
32.388

578 .267
407.854
0
135. 575
3.152
128.241
104.473
36,413

643.632
454.031
0
l'-7. 5SO
2.736
138 .991
119.145
45.609

692.241
496.216
0
167. 306
3.060
150. 555
124.814
50.481

746.859
543.303
86
6. l 3
4.982
169. 712
130.729
51.681

822.600
602.514
634
198.3 0
6.188
195.920
146.455
55.017

925 .124
679.154
2.430
207 .459
5.324
223.369
180.479
60.093

7
8
9
0
11
12
13

65 .868
22.421

104.568
28.966

114,785
29.428

123.718
25.570

141.090
29.323

162.581
21.020

171.283
24. 742

176.556

192.570
27.516

212.646
33.324

15
16

71.856

111 CHANGE IN WORK IN PROCESS,

Ma-lEY .AMOUNTS ARE IN MILLIONS OF DOLLARS.

https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

------

S.10

21.000

Full text of Introduction to Flow of Funds, 1975

FRASER