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FEDERAL RESERVE BANK L.4.3 of KANSAS CITY SEP 1 7 1958 RESEARCH LIBRARY BANKING AMD MONETARY DEVELOPMENTS IN AUGUST 1958 Summary. T o t a l commercial bank c r e d i t I n c r e a s e d In August a s a d d i t i o n s t o h o l d i n g s of U. S, Government and o t h e r s e c u r i t i e s were o f f s e t only i n p a r t by f u r t h e r r e d u c t i o n s i n l o a n s . Although b u s i n e s s , r e a l e s t a t e , and consumer loans r o s e , t h i s growth was more t h a n o f f s e t by f u r t h e r s u b s t a n t i a l d e c l i n e s i n s e c u r i t y l o a n s . S e a s o n a l l y a d j u s t e d demand d e p o s i t and c u r rency h o l d i n g s of b u s i n e s s e s and i n d i v i d u a l s d e c l i n e d f o l l o w i n g s h a r p growth i n J u l y . U. S . Government d e p o s i t s a t commercial banks r o s e s u b s t a n t i a l l y , b u t time d e p o s i t s a t t h e s e banks rose much l e s s t h a n i n o t h e r r e c e n t months. F r e e r e s e r v e s of member banks d e c l i n e d . The d i s c o u n t r a t e was i n c r e a s e d a t s i x F e d e r a l Be serve Banks i n August and e a r l y September. Market interest rates rose. Bank c r e d i t . T o t a l loans and investments a t a l l comm e r c i a l banks i n c r e a s e d $ 1 . 1 b i l l i o n d u r i n g August, a s shown in Table 1 . Holdings of U. S. Government s e c u r i t i e s i n c r e a s e d $ 1 . 3 b i l l i o n and h o l d i n g s of o t h e r s e c u r i t i e s , $200 m i l l i o n , b u t t o t a l loans d e c l i n e d $300 m i l l i o n , a s r e d u c t i o n s i n s e c u r i t y loans more t h a n o f f s e t growth i n most o t h e r major l o a n c a t e g o r i e s . Holdings of U. S . Government s e c u r i t i e s r o s e s h a r p l y d u r i n g t h e f i r s t week of August when commercial banks a c q u i r e d $ 3 . 1 b i l l i o n of t h e new $ 3 . 6 b i l l i o n 1 - 5 / 8 p e r cent t a x a n t i c i p a t i o n c e r t i f i c a t e s d a t e d August 6 and maturing March 14, 1959* I n t h e f o l l o w i n g t h r e e weeks, h o l d i n g s of Government s e c u r i t i e s d e c l i n e d s u b s t a n t i a l l y , p a r t i c u l a r l y Treasury b i l l s . S e c u r i t y loans d e c l i n e d $800 m i l l i o n i n August, l a r g e l y r e f l e c t i n g f u r t h e r broker and d e a l e r l i q u i d a t i o n of t h e l a r g e borrowings p r i o r t o t h e mid-June T r e a s u r y f i n a n c i n g and r e d u c t i o n i n t h e i r i n v e n t o r i e s of m u n i c i p a l and c o r p o r a t e s e c u r i t i e s . Since J u n e , s e c u r i t y l o a n s have d e c l i n e d $ 1 . 7 b i l l i o n t o a l e v e l subs t a n t i a l l y below t h a t i n l a t e May p r i o r t o t h e f i n a n c i n g and n e a r t h e low p o i n t of t h e l a s t t h r e e y e a r s . B u s i n e s s loans a t a l l commercial banks i n c r e a s e d $300 m i l l i o n d u r i n g August, about t h e same a s i n August l a s t y e a r , b u t somewhat l e s s t h a n t h e average i n c r e a s e i n o t h e r r e c e n t y e a r s . At c i t y banks, s e a s o n a l borrowing by food p r o c e s s o r s , commodity d e a l e r s , and t r a d e concerns accounted f o r t w o - t h i r d s of t h e i n c r e a s e . While l e s s t h a n l a s t y e a r , borrowings by t h e s e i n d u s t r i e s exceeded t h e average of o t h e r r e c e n t y e a r s . Loans t o s a l e s Not f o r p u b l i c a t i o n L.li.3 ' —2 — Table 1 Estimated Changes i n loans and Investments a t A l l Commercial Banks (In b i l l i o n s of d o l l a r s ) 1 • X fX>V) -O H 1958: II Item 1958: 1957: Aug. Aug. 1 28 1958: 1957: June 26- June 27- J a n . Aug. 2 7 Aug. 2 8 Aug. 1— 27 1957: Jan. Aug. 1 28 I& Total loans (excluding Business Real e s t a t e Security Agricultural Consumer All other - 0.3 + 0.5 - 1.7 - 0 . 5 - 1.5 + — + 2 .It 1.0 + 1.2 + 0.3 — + 0.3 0.2 — 0 . 5 + 0.3 + 0.3 - 0.6 — 0.6 + 0.2 + 0.1 + o.Zt + 0.2 — 0.8 + 0.1 - 1.7 - 0 . 1 + 0.2 0 . 1 — + 0 . 1 0.1 - 0.1 + 0.1 — + 0.2 0.2 + 0 . 1 + 0.1 U. S. Government s e c u r i t i e s + 1.3 - + 0.9 Other s e c u r i t i e s + 0.2 + 0.1 + 1.1 + Total loans and investments (less interbank) 1956 Total loans (excluding interbank) 0.5 : y - 1955 0.8 o.5 + 0,6 + 0.2 - 0.3 - 0.2 + + + 0.1 + + U. S. Government s e c u r i t i e s + 1.0 - Other s e c u r i t i e s + 0.1 Total loans and investments (less interbank) 0 . 1 0.9 y y 1 / + 0.7 + 7>h + 0.1 + 2.1 + 0.3 + 8.0 - O.it + i.i + 0.1 - 2»h 0.< + 0,1 - Change during August: Item Business Real e s t a t e Security Agricultural Consumer All o t h e r 1 / 1.9 1.5 0.8 0.3 0.3 0.3 0.2 0.1 1.2 - + + 0.2 + 0.3 - 1.3 0.2 0.2 2.3 + o.li 0.2 + o.5 + 0.5 + 0.1 + 0.1 0.1 +' + 0.6 - 0.9 + o.h + 0.2 + 0.3 - - — O.ii + 0.2 0.1 3.0 0.3 1951 0.1 + + + 1952 0.2 0.7 + 0.2 - 1953 1951* - 0.3 0.1* 0.1 0.2 0.2 + o.i - 0.3 + 0.1 o.i + 0.8 t 1 7 Less than $50 m i l l i o n . ITotes Data f o r August 27, 1958, are p r e l i m i n a r y e s t i m a t e s based on d a t a f o r weekly r e p o r t i n g member banks and e s t i m a t e s f o r o t h e r banks. L a t e r e s t i m a t e s f o r August w i l l be shown i n t h e Board's statement, "Assets and L i a b i l i t i e s of A l l Banks i n t h e United S t a t e s " a v a i l a b l e a t t h e end of September. Not f o r p u b l i c a t i o n . L.it.3' ~ 3 ~ Table 1 (continued) Estimated Changes i n Loans and Investments a t A l l Commercial Banks —————— ( i n b i l l i o n s of d o l l a r s ) End of December t o end of August Item Total loans (excluding interbank) 1956 i95Zt 1955 l.lt + 2.0 — _L.lt + 0.9 1/ - 1.2 — 0.1 + 0.2 - 0.2 + 0.7 — O.lt 1/ + ~l.it + 0.1 + + + + OA 0.7 0.1 0.5 1.1 1/ — 6.5 + 3.9 - 0.7 + 0.5 — 0.3 + 0.6 + 1.0 + O.Zt + 1.1 - - 0.1 + 3*ii + 1.0 + 3.5 + h*3 + 5.8 - + + — + + 3.2 1.3 1.0 0.5 i.i 0.3 + + — + + 3.0 1.9 0.3 1.3 1.6 0.8 U. S e Government s e c u r i t i e s — h»k Other s e c u r i t i e s Business Real e s t a t e Security Agricultural Consumer A l l other Total loans and investments (less interbank) + 1951 + 2.h + Lo 1919 - 1918 1.5 1917 + 3.7 2.0 0.8 0.7 0.I4 1/ + 0.1 + 1.2 + l.ii 1/ — 0.3 + 1.3 + O.ii U. S. Government s e c u r i t i e s - — 2.8 + i^.i - ii.i - 4*5 Other s e c u r i t i e s + 0.3 + 1.6 + 0.8 + o.U + 0.7 — 0.2 + 2.8 + 3.U — i.l& *= 0 . 1 Total l o a n s and' investments (less interbank) n. a . Not a v a i l a b l e . 1 / Less than $50 m i l l i o n . Not f o r p u b l i c a t i o n . + + + 1950 CM Business Real e s t a t e Security Agricultural Consumer All other 0.5 1.5 End of December t o end of August Item Total l o a n s (excluding interbank) 1952 1953 2.9 n. ne n• n• Tie rw a. 3, # a* a# a. a# ti« n* n« n* n• n» a« a* a» a* a* a* n0 n0 no ti • n« He a» a* a# a* a# ae finance companies a l s o rose in August, but outstanding loans t o these companies r e c e n t l y had declined t o the lowest l e v e l in more than three y e a r s . Small increases occurred in most other industry categories except metals manufacturers where outstanding loans declined f u r t h e r . Net repayments in these loans were large from l a t e June through e a r l y August, but in l a t e August, outstanding loans t o metals manufacturers increased s l i g h t l y . Since midyear, business loans a t c i t y banks have declined $550 m i l l i o n , about the same as in the comparable period l a s t year, as shown in Table 2. Borrowing in June 1958, however, had been s u b s t a n t i a l l y l e s s than the record June 1957 borrowing. Most of the decline since midyear has been in loans to metals manufacturers, public u t i l i t i e s , s a l e s finance companies, and petroleum producers. These repayments have been concentrated a t banks in New York and Chicago; elsewhere, on balance, business loans have increased s l i g h t l y . Excluding the c i t i e s of New York and Chicago, increases occurred in eight of the twelve Federal Beserve D i s t r i c t s , the l a r g e s t generally being in t h e Midwest and Far West. Real e s t a t e loans a t commercial banks increased $200 million f u r t h e r in August, So f a r t h i s year, they have increased $1 b i l l i o n compared with $300 million l a s t y e a r . Consumer loans increased $100 million in August, They have shown l i t t l e change t h i s year compared with a growth of over $1 b i l l i o n l a s t year and comparable increases in other recent y e a r s . A g r i c u l t u r a l loans declined $200 m i l l i o n in August r e f l e c t i n g l a r g e l y redemptions of CCC c e r t i f i c a t e s , as i s usual in t h i s month. These loans have shown l i t t l e change t h i s year. Since midyear, t o t a l c r e d i t a t a l l commercial banks has declined $900 m i l l i o n . In other recent years, i t has increased during t h i s p e r i o d . Reductions in loans l a r g e l y t o s e c u r i t y dealers were o f f s e t only in p a r t by increases in investments. Sharp c r e d i t reduction in J u l y , however, followed a record growth in June, which alone had accounted f o r half the $8.9 b i l l i o n increase t h a t occurred during the f i r s t half of the y e a r . Generally t o t a l loans and investments declined over the January-June p e r i o d . Money supply. Preliminary estimates indicate t h a t seasonally a d j u s t e d demand deposit and currency holdings of businesses and individuals declined $800 m i l l i o n in August, following a record increase of $2.2 b i l l i o n in J u l y . In the seven months since January, the annual r a t e of growth in the money supply has been about 6 percent. At t h e end of August, seasonally a d j u s t e d deposits and currency were about 1-1/2 per cent above the year-ago l e v e l . Not f o r p u b l i c a t i o n L.jf.3 Table 2 Changes i n Commercial and I n d u s t r i a l Loans (In m i l l i o n s of d o l l a r s ) .business ox .borrower Food p r o c e s s o r s Commodity d e a l e r s Trade concerns Total 1958 J u l y 31Aue. 27 + 90 + 97 + 16 + 203 1957 51 + All o t h e r - t o t a l Metals and products T e x t i l e s , apparel and l e a t h e r Petroleum, c o a l , etc. Other manufacturing and mining Public u t i l i t i e s Construction A l l o t h e r types of b u s in e s s + - 9 83 + + 1/ 2/ "" 1951* 1953 1952 Aug. 1 - Aug. 2 - Aug. 3 - Jul~ 28- J u l y 29.- J u l y 30Aug. 28 Aug. 29 Aug. 31 Aug; 25 Aug. 26 Aug. 27 + 96 + 71 + 56 + 167 - 21* + 89 + 156 + 52 + 33 + 1*5 - 11 + 83 + 26 + 29 + 13 + 9 3 5 + l6l + 256 + 115 + 30 + 21*7 + 73 + Total change 1955 r Sales f i n a n c e Classified Unclassified 1956 1/ — 71 + l81| - 1*1* - - 10 - 138 + 180 - 12b. + 235 + 21 - 1*9 99 + 190 - 13 - 105 13 21* + - + 1*0 + 7k + lt5 + 12 + 1*0 + 2 + + 33 18 + + 37 68 + 7 9 21 + 11 + 17 + 5 + + + 51 1*8 27 + + + 9 36 13 + + 2 16 19 + + + 7 76 19 + + + 7 38 12 + 50 + + 61 + 99 + 3 + 50 + 36 li 50 1 1*6 + 60 - 37 + 93 + 263 + 35 + 21*9 + 2k + 1*12 + 8 - 61* + 535 + 86 2/- 687 + 201 + 1*7 + 30l* + 1*8 + 298 + 273 + k20 + 621 + 21*8 + 352 751 P r i o r t o week ending January 11, 1956, included changes i n a g r i c u l t u r a l loans, CCC c e r t i f i c a t e s of i n t e r e s t which a r e included i n d a t a a r e e s t i m a t e d t o have declined $1*35 m i l l i o n . Notes C l a s s i f i e d d a t a a r e f o r a sample of about 210 banks r e p o r t i n g changes i n t h e i r l a r g e r l o a n s j t h e s e banks hold over 90 p e r cent of t o t a l commercial and i n d u s t r i a l loans of a l l weekly r e p o r t i n g banks and n e a r l y 70 p e r cent of t h o s e of a l l commercial banks. Data are p r e l i m i n a r y f o r week of August 27, 1958. Not f o r p u b l i c a t i o n . L.4J Table 2 (continued) Changes in Commercial and I n d u s t r i a l Loans 1 / (In m i l l i o n s of d o l l a r s ) ~ End of June t o end of August: Duexiiuoti ujl uuri'uwer 1958 1957 1956 1955 1954 1953 1952 Food processors Commodity d e a l e r s Trade concerns Total - 27 + 117 + 3 + 93 + + + 15 + 249 2 + 262 5 + 95 + 60 +150 - 19 + 111 - 18 + 74 - 30 + 13 - 21 - 38 + + + 143 142 36 249 Sales f i n a n c e - 64 - 276 - 67 + 238 - - - 69 All other - t o t a l Metals and products T e x t i l e s , apparel and l e a t h e r Petroleum, c o a l , etc. Other manufacturing and mining. Public u t i l i t i e s Construction All other types of business - 554 - Ma - 311 - 367 + 208 - 259 + 442 - 13 r 324 - 232 + 149 — 63 - 66 - 214 - + - 70 28 + 76 + 118 + 106 + 38 + - + 67 4 + 57 + 97 - 19 - 135 + 31 + 20 - 66 + lit + 135 + 24 + It + 46 + 43 + 37 - 11 — 104 + 35 + 17 + 59 + 14 + 13 - 127 + 18 + + 43 + 110 + 185 - + + - 525 - 32 — 416 - 98 + 403 + 830 - 81 2 / - 160 - 309 3 / - 803 + 88 + 6 - 557 - 514 + 322 3/-V-11 + 94 ; . + 1 5 3 Classified Unclassified Total change 1/ 2/ 3/ 9 60 79 12 197 12 173 2/+ 670 58 76 62 26 24 59 + 114 + 39 P r i o r t o week ending January 11, 1956, included changes i n a g r i c u l t u r a l loans. Includes CCC c e r t i f i c a t e s of i n t e r e s t which are estimated t o have declined $300 m i l l i o n . Includes CCC c e r t i f i c a t e s of i n t e r e s t which are estimated t o have declined $1*75 m i l l i o n . Notes C l a s s i f i e d d a t a a r e f o r a sample of about 210 banks r e p o r t i n g changes i n t h e i r l a r g e r l o a n s ; these banks hold over 90 p e r cent of t o t a l commercial and i n d u s t r i a l loans of a l l weekly r e p o r t i n g banks and n e a r l y 70 p e r cent of those of a l l commercial banks. Data are p r e l i m i n a r y f o r week of August 27> 1958. Not f o r p u b l i c a t i o n . 90 The r e d u c t i o n i n demand d e p o s i t s a d j u s t e d i n August was a s s o c i a t e d i n p a r t with a $ 1 . 6 b i l l i o n b u i l d - u p i n U. S . Government d e p o s i t s . Changes during August i n U. S . Government d e p o s i t s have been e r r a t i c i n r e c e n t y e a r s , b u t g e n e r a l l y t h e s e d e p o s i t s have increased l e s s t h a n i n 1958 or have d e c l i n e d . I n l a t e August ( f o l l o w i n g t h e r e p o r t i n g d a t e ) and i n e a r l y September, t h e s e d e p o s i t s were drawn down somewhat. Time d e p o s i t s a t commercial banks increased $300 m i l l i o n f u r t h e r i n August, considerably l e s s t h a n i n o t h e r r e c e n t months. At weekly r e p o r t i n g banks, t h e s e d e p o s i t s r o s e only $25 m i l l i o n , compared with an average monthly i n c r e a s e of $450 m i l l i o n during t h e f i r s t seven months of t h e y e a r . Reduced growth a t r e p o r t i n g banks o u t s i d e New York was o f f s e t i n p a r t by a $50 m i l l i o n d e c l i n e a t New York C i t y banks. I n a l l p r e vious months t h i s y e a r , time d e p o s i t growth a t weekly r e p o r t i n g banks exceeded t h a t of t h e comparable month of 1957# g e n e r a l l y by a s u b s t a n t i a l margin. At nonweekly r e p o r t i n g banks, t o o , growth i s estimated t o have moderated i n August. So f a r t h i s y e a r , time d e p o s i t s a t commercial banks have increased $ 6 . 6 b i l l i o n compared w i t h $ 4 . 1 b i l l i o n l a s t y e a r and much more t h a n i n any previous y e a r . Since June, however, t h e y have increased $ 1 b i l l i o n compared with $700 m i l l i o n l a s t y e a r and more t h a n in any previous year except 1$45. Over t h e p a s t t h r e e months, interbank time d e p o s i t s ( l a r g e l y f o r e i g n ) a t weekly r e p o r t i n g banks have d e c l i n e d $200 m i l l i o n compared w i t h an increase of $ 1 . 1 b i l l i o n i n t h e f i r s t f i v e months of t h e y e a r . The e a r l i e r growth i n t h e s e d e p o s i t s r e f l e c t e d i n l a r g e p a r t s h i f t s out of Treasury b i l l s a t a time when money market y i e l d s were d e c l i n i n g r a p i d l y . Recently, s h o r t - t e r m r a t e s have r i s e n s h a r p l y , and t h e r e a p p a r e n t l y has been some s h i f t i n g out of time d e p o s i t s i n t o o t h e r l i q u i d a s s e t s . In l a t e August, a t New York C i t y banks, t h e r a t e paid on f o r e i g n d e p o s i t s was increased i n two s t e p s from 1 - 3 A Per cent t o 2 - 1 / 4 per c e n t . I n February 1958, t h e r a t e had been lowered l / 2 p e r c e n t . Bank r e s e r v e s . Free r e s e r v e s of member banks averaged $400 m i l l i o n in August (preliminary d a t a ) compared w i t h $550 m i l l i o n i n J u l y , a s shown i n Table 4 . Reserves t i g h t e n e d somewhat a t a l l c l a s s e s of banks, w i t h t h e l a r g e s t d r a i n s a t r e s e r v e c i t y banks. Average member bank borrowings from t h e F e d e r a l Reserve r o s e t o $250 m i l l i o n while excess r e s e r v e s remained around $650 m i l l i o n . Reserve p o s i t i o n s t i g h t e n e d p r o g r e s s i v e l y over t h e month but most of t h e r e d u c t i o n In f r e e r e s e r v e s was concentrated i n l a t e August and e a r l y September. I n t h e week ending September 3, f r e e r e s e r v e s averaged $130 m i l l i o n with borrowings r i s i n g t o Not f o r p u b l i c a t i o n L.4.3- - 8 - Table 3 Estimated Changes l a Deposits and. Currency ( I n b i l l i o n s of d o l l a r s ) Item Seasonally a d j u s t e d d a t a 1/ Demand d e p o s i t s a d j u s t e d Currency o u t s i d e banks Total Unadjusted data 1 / Demand d e p o s i t s a d j u s t e d Currency o u t s i d e banks Total Time d e p o s i t s Commercial banks Mutual savings banks U, S . Government d e p o s i t s Total Factors a f f e c t i n g deposits and currency Bank loans and investments other t h a n U . S . Govt. sec. 3 / Commercial ~~ Mutual savings Bank holdings of U. 8 . Government s e c u r i t i e s : F e d e r a l Reserve Commercial Mutual saving and o t h e r Gold stock and f o r e i g n d e p o s i t s a t F . B. Banks Other f a c t o r s 4 / 17 1958 1958 1957 1958 1957 1957 J u l y 31- Aug. 1 - June 26- June 27- J a n . 1 - Jan* 1 Aug. 27 Aug. 28 Aug. 27 Aug. 28 Aug. 27 Aug. 28 0.8 lis 1;2 Oil - 1.3 - lil + 0.1 1;0 OA 0;3 0;1 1;6 + 1.0 -1.5 + 0.4 + 0.3 + 0.1 + 0.7 - 0.3 + 1.4 -2/ + 1.4 + + + + lA 0.1 1.5 1.2 + 1.0 + 0i2 - 3.8 - 1.1 if - 0.5 - 0.5 2/ 0.5 0.7 0.7 0.1 + 3.7 ~ 0.1 TITS - 3.2 - 0.4 3.3 8.0 6.6 1.5 1.7 i f 0.1 0.2 + 0.3 - 6.3 - 0. "O 4.9 4.1 1.0 0.4 - 1.5 ( s i g n s i n d i c a t e e f f e c t on d e p o s i t s and currency) + 0.1 + 0.7 - Oil + 0.6 + 1;6 + 0i3 + 1.3 % + 0.2 2/ - 0.1 - 0.6 + 0.2 - 1 - 1 + 0 + 1 2/ 2/ - 0.9 0.3 0.7 - 0#1 - 0.4 + 0.3 + 2, 4- 0# + 2. + 0.4 + 0.7 - 0.1 8 .1 + 1 0 + 7 .4 - 0 2 + 0.1 - lei - 1 6 - 3 .0 + 1.1 ±Jsl + 2.5 + 1.5 - 4.3 " 1*6 - 2,4 - 0.3 + 0.6 - 1.5 Seasonally a d j u s t e d d a t a a r e f o r l a s t Wednesday t h r o u g h o u t ; unadjusted data a r e f o r l a s t Wednesday except i n case of June and December c a l l d a t e s , when a v a i l a b l e , Less than $50 m i l l i o n . T o t a l includes f o r e i g n loans on gold, holdings of b a n k e r s ' acceptances a t t h e F e d e r a l Reserve, and loans t o f o r e i g n banks; changes i n t h e s e items a r e genera l l y r e l a t i v e l y s m a l l . I n a d d i t i o n even i f t h e r e were no changes i n t h e s e items, changes a t commercial and mutual savings banks would not add t o t o t a l change which i s " n e t " because commercial banks exclude a l l inte rba nk l o a n s , domestic and f o r e i g n . Includes time d e p o s i t s of f o r e i g n banks which increased about $900 m i l l i o n a t weekly r e p o r t i n g banks between December 31; 1957 and August 2 7 , 1958. Note: Data f o r August 27, 1958, a r e p r e l i m i n a r y e s t i m a t e s based on d a t a f o r weekly r e p o r t i n g member banks and e s t i m a t e s f o r o t h e r banks. Later e s t i m a t e s f o r August w i l l be shown i n t h e Board's s t a t e m e n t , "Assets and L i a b i l i t i e s of A l l Banks i n t h e United S t a t e s " a v a i l a b l e a t t h e end of September. Hot f o r p u b l i c a t i o n y - 9 - L.4.3 Table 3 (continued) Estimated Changes In Deposits and Currency (In b i l l i o n s of dollars) End of December t o end of August Item 1956 1955 1954 1953 Seasonally a d j u s t e d data l / Demand deposits a d j u s t e d Currency outside banks Total + 0;4 + Oil + 0.5 + 2.8 + 0.3 + 3.1 + lv5 - 0.4 + 1.1 + 1.3 + 0.4 + 1.7 + 2.9 + 0.8 + 3.7 + 2.8 + 0.8 + 3.6 Unadjusted data l / Demand d e p o s i t s a d j u s t e d Currency outside banks Total Time deposits Commercial banks Mutual savings banks U. S. Government d e p o s i t s Total + + + + - + + + + - + + + + + + + + + + - 2.4 2/ - 2.4 + 2.7 + 1.7 + l.l + 3.0 + 3.2 + + + + + 5.4 0;8 6;2 2;5 1;5 1.2 1+9 1.9 2.7 0.6 3.2 2.1 1.2 1.2 °'3 0.6 3.1 1.2 k.2 3.6 2.5 1.2 1.3 0.7 1952 4.0 0.2 4.2 2.9 1.8 1.2 2.1 0.7 1951 0.9 0.1 1.0 1.1 0.8 0.5 0.9 1.0 End of December t o end of August Item 1950 1949 1948 1947 1946 Seasonally a d j u s t e d data l / Demand d e p o s i t s a d j u s t e d Currency outside banks Total + 3:6 - 0.2 + 3.4 + Oil - 0.3 - 0.2 - 1.2 - 0.3 - 1.5 + 1.8 n.a. n.a. H0& 0 Unadjusted data l / Demand d e p o s i t s a d j u s t e d Currency outside banks Total Time deposits Commercial banks Mutual savings banks U. 8 . Government d e p o s i t s Total + + + + + + + + + + + - + + + + - + + + + 1;7 0;9 Oil 0;5 Oil 0;5 0;4 1.6 2.1 Ii0 3a 0.9 0;3 0;6 0.1 2.1 3.3 0.9 4.2 0.9 0.5 0.5 2.0 1.3 2/ 0.6 0.6 1.8 1.1 0.6 0.9 0.3 BoBo + 4.7 + 0.1 + 4.9 + 4.2 + 3.0 + 1.0 -14.6 - 5.5 n.a» Hot a v a i l a b l e . l / Seasonally a d j u s t e d d a t a a r e f o r l a s t Wednesday throughout; unadjusted data a r e f o r l a s t Wednesday except i n case of June and December c a l l d a t e s ; when a v a i l a b l e , 2 / Less than $50 m i l l i o n . Hot f o r p u b l i c a t i o n $460 m i l l i o n , t h e h i g h e s t since e a r l y i n J a n u a r y . Bates on F e d e r a l funds f l u c t u a t e d from a low of l / 4 p e r cent t o a high of 1 - 3 A p e r c e n t . Bates were low e a r l y i n t h e month but were g e n e r a l l y a t 1 - 3 A P e r cent during most of t h e l a t t e r p a r t of August. Over August, on a monthly average b a s i s , r e s e r v e s were absorbed p r i m a r i l y through f u r t h e r gold s a l e s , reductions in F e d e r a l Beserve Bank f l o a t , a build-tip i n Treasury d e p o s i t s a t t h e Beserve Banks, and increases i n nonmember d e p o s i t s and other F e d e r a l Beserve accounts. System purchases of U. S. Government s e c u r i t i e s o f f s e t these r e s e r v e d r a i n s only i n p a r t , and f r e e r e s e r v e s declined $150 m i l l i o n . During t h e t h r e e weeks ending August 20 f r e e reserves declined about $100 m i l l i o n . Beserves absorbed p r i n c i p a l l y through a s u b s t a n t i a l increase i n required r e s e r v e s r e f l e c t i n g a build-up i n U. S . Government d e p o s i t s , an outflow of currency i n t o c i r c u l a t i o n and f u r t h e r gold s a l e s more t h a n o f f s e t r e s e r v e s becoming a v a i l a b l e through an increase of $370 m i l l i o n in System holdings of U. S. Government s e c u r i t i e s and t h e intramonthly seasonal r i s e i n f l o a t . On August 1, t h e System acquired $ 1 . 1 b i l l i o n of t h e new 1 - 5 / 8 per cent c e r t i f i c a t e s , p r e v i o u s l y a l l o t t e d on a when-issued b a s i s , b u t t h i s Increase was o f f s e t in l a r g e p a r t by subsequent s a l e s and r u n - o f f s of Treasury b i l l h o l d i n g s . During t h e two weeks ending September 3, r e s e r v e s absorbed through reductions In f l o a t , outflows of gold and currency, and some n e t decline in System holdings of U. S . Government s e c u r i t i e s s u b s t a n t i a l l y exceeded those supplied through reductions in required r e s e r v e s and small changes in other f a c t o r s . Free r e s e r v e s declined $300 m i l l i o n . Since midyear, member bank reserve p o s i t i o n s have t i g h t e n e d somewhat with f r e e r e s e r v e s d e c l i n i n g about $100 m i l l i o n . Gold outflows have absorbed about $400 m i l l i o n of r e s e r v e s , currency d r a i n an a d d i t i o n a l $230 m i l l i o n , whereas other market f a c t o r s on balance have absorbed $200 m i l l i o n of r e s e r v e s . Beserve funds have been supplied t o member banks p r i m a r i l y through System purchases of TJ. S . Government s e c u r i t i e s t o t a l i n g $660 million" 1 and a $50 m i l l i o n d e c l i n e In r e q u i r e d r e s e r v e s . Hot f o r p u b l i c a t i o n L.l*»3 - 11 - Table 1* Free Reserves (Excess r e s e r v e s minus member bank borrowings; based on average of d a i l y f i g u r e s j i n m i l l i o n s of d o l l a r s ) All member Q u a r t e r l y averages 1956s F i r s t Second Third Fourth 1927: 1958 i 1957: 1958: 1958: 310 241 230 128 New York 170 329 1*18 314 211* 336 278 338 365 - 221 373 1*28 320 316 109 115 114 56 105 276 9 16 - 27 63 1*22 166 First Second 313 508 18 117 1*1 January February March April May June July August J u l y 30 Aug. 6 13 20 27 Sept. 3 88 196 21*1 11*1 80 105 336 301 252 277 1*6 25 - 11*1* 1 337 353 1*1* 89 1*59 399 23 1*71 1*39 101* 185 181 289 251* 3W* 293 133 122 321* 1*93 1*93 52i7 1*81* 51*6 391* 530 2*6 1*57 1*21* 320 128 101 300 -8 51 16 22 52 111 26 I 53 253 210 165 1*8 28 26 6 18 7 7 12 1* 12 3 3 2 62 - i - 11*2 1*3 31* 31 138 dote: Datp for second half of August and September are preliminary! Note for publication 365 115 115 123 77 1*1*1* JU66 ho 286 172 21*9 21*2 263 367 1*88 1*52 boo 1*33 389 31*2 228 123 508 383 1*71 1* 221* - 126 316 505 Country - 108 January February March April May June July August September October November December Reserve City 11*7 175 71 113 96 157 First Second Third Fourth 1*85 MtO 256 Chicago 369 299 280 269 192 210 278 210* 1*06 1*08 321* 1*1*7 1*62 500 391* 31*9 I n t e r e s t r a t e s . E f f e c t i v e between August 15 and September 5> w i t h t h e approval of t h e Board of Governors, t h e discount r a t e was r a i s e d t o 2 p e r cent from 1 - 3 / 4 p e r cent a t t h e F e d e r a l Reserve Banks of San F r a n c i s c o , D a l l a s , A t l a n t a , Kansas C i t y , Chicago, and Minneapolis. I n t e r e s t r a t e s on p r i v a t e open market paper a l s o increased i n August and e a r l y September f o r t h e f i r s t time s in c e t h e f a l l of 1957* Bates on h-6 month commercial paper r o s e seven times from l - l / a p e r cent t o 2 - 7 / 8 p e r c e n t . Bates on 90~day bankers• acceptances r o s e from 1 - 1 / 8 t o 2 - 1 f k p e r c e n t , and t h o s e on 3 - 6 month f i n a n c e company paper from 1 - 1 / 8 p e r cent t o 2 - 3 / 8 p e r c e n t . Wot f o r p u b l i c a t i o n i # - 13 - L.4.3 Table 5 Changes In Member Bank Reserves, with Relevant F a c t o r s (Monthly average of d a i l y f i g u r e s ; in m i l l i o n s of d o l l a r s ) August Item 1958 1957 J u l y - August J a n . - August 1958 1957 1958 - 20 -148 - 84o - 701 909 - 583 1957 Member bank reserve balances Total Required r e s e r v e s l / E f f e c t of r e d u c t i o n i n requirements E f f e c t of deposit change Excess r e s e r v e s l / Z-22 -19 -295 - 40 -185 - - 19 -295 - 2*0 + 20 -185 + 37 -1,440 + 531 + 69 - 10 Principal factors + 81 -229 -133 + 29 + 2 -186 + 49 + 27 -l8l I M -371 - 86 - 58 - 36 ZJL2 -357 -183 -780 -307 -1,793 ±2g8 -113 ±158 .+ + 664 + 7%0 8Er»S| ITNOJ 4 t i l l E f f e c t of above f a c t o r s on r e s e r v e s - + 707 + 32 - 644 - 191 lf\ H Currency in c i r c u l a t i o n Gold stock and f o r e i g n accounts Treasury operations Federal reserve f l o a t Other f a c t o r s 583 118 (signs i n d i c a t e e f f e c t on r e s e r v e s ) t i l l r + 644 Federal Reserve loans and investments: Total U. S. Govt, s e c u r i t i e s Outright Repurchase agreements Acceptances Discounts and advances: To member banks To o t h e r s l/ +192 +185 + 4 - 7 +143 Data f o r August 1958 a r e p r e l i m i n a r y . Hot f o r p u b l i c a t i o n - 69 -136 - 1 + 88 + 5 +661 +700 - 48 - 10 +110 +i?7 +212 - 55 + 1 +1,428 +1,790 - 363 10 -1,619 -1,369 - 250 30 - + - 458 6 317 13 • I<«4«3» - i4 Loaiis and Investments a t A l l Commercial Banks (In b i l l i o n s of d o l l a r s ) • Date • ^ • U. S. Other Total Govt, seeur-securloans ities ities 1947: Dec. 31 1948: Dec. 31 1949: Dec. 31 1950: Dec. 31 1951: Dec. 31 1952: Dec. 31 1953: - T J e c T j r " " 1954: Dec. 31 1955: Dec. 31 116.2 114.2 120.1 126,6 132.5 141.5 145.5 155.7 160.3 69.2 62.6 67.0 62.0 61.5 63.3 63.4 69.0 61.6 1956g Mar. 28 June 30 Sept.26 Dec. 31 158.5 159.3 160.7 164.5 58.6 , 56.6 57.0 58.6 1957: J a n . 30 Feb. 27 Mar. 27 Apr. 24 May 29 June 26 J u l y 31 Aug. 28 Sept.25 Oct. 30 Nov. 27 Dec. 31 • • m 9 J a n . 29p Feb. 26p Mar. 26p Apr. 30p May 28p June 25P J u l y 30p 0 Aug. 27e p - Preliminary e - Estimated ^ Loans and investments 1958: Business Real Secu- estate r i t y 9.0 37.9 9.2 42.4 10.2 42.9 12.4 52.2 13.3 57.6 14.1 64.0 14.7 - ""FHT 16.3 70.4 16.7 82.0 18.2 18.9 17.1 21.9 25.9 27.9 27.2 26.9 33.2 9.4 10.8 11.5 13.5 14.6 15.7 16.7 18.4 20.8 16.6 16.5 16.6 16.3 83.3 86.2 87.2 89.7 34.5 36.1 37.0 38.7 161.6 161.1 161.4 163.8 163.8 164.3 164.1 164.6 165.1 166.5 165.9 169.3 57.7 16.2 56.8 1 6 . 3 ' 55.7 16.5 57.5 16.7 57.1 16.8 5 5 . 5 16.8 56.3 16.8 56.2 16.9 55.9 1 7 . 1 57.3 17.6 56.9 17.4 58.2 17.9 87.7 87.9 89.1 89.7 89.9 92.0 91.0 91.5 92.2 91.6 91.5 93.2 166.2 167.1 169.9 174.0 173.8 178.2 176.2 177.3 57.7 58.3 59.6 62.8 , 63.2 64.7 64.3 65.6 17.9 18.2 18.9 19.3 19.4 20.0 19.8 20.0 90.5 90.6 91.5 91.9 91.2 93.4 92.0 91.7 2.1 2.3 2.6 2.9 2.6 3.2 Farm Con- All sumer o t h e r 1 4:5 5.0 1.7 2.9 3.1 2.9 3.4 3.9 5.0 5.2 4.5 3.8 4.8 5.8 7.4 7.5 9.4 10.9 10.9 13.2 2.9 3.1 3.4 4.2 4.5 4.9 5.1 5.6 6.5 21.2 21.8 22.3 22.5 4.5 4.4 4.1 4.3 4.4 4.3 4.2 4.2 13.4 14.2 14.4 14.6 6.6 6.8 6.7 7.0 37.6 37.8 39.0 39.0 38.9 40.5 39.6 39.9 40.3 39.7 39.6 40.5 22.5 22.5 22.5 22.5 22.5 22.6 22. 7 22.8 22.9 22.9 23.0 23.1 3.7 3.7 3.6 3.8 3.8 3.9 3.7 3.8 3.8 3.7 3.6 4.2 4.2 4.2 4.2 4.1 4.1 4.0 3.9 3.8 3.8 4.0 4.0 4.1 14.5 14.5 14.6 14.9 15.1 15.4 15.5 15.6 15.7 15.8 15.7 15.8 6.8 6.8 6.8 6.9 7.0 7.1 7.1 7.1 7.2 7.1 7.2 7.2 38.8 38.6 39.2 38.4 38.1 38.7 37.8 38.1 23.1 23.2 23.2 23.3 23.5 23.7 23.9 24.1 3.6 3.9 4.2 5.1 4.4 5.6 4.7 3.9 4.2 4.4 4.4 4.4 4.4 4.4 4.5 4.3 15.7 15.5 15.4 15.5 15.5 15.7 15.7 15.8 7.0 6.9 6.8 6.9 7.0 7.1 7.1 7.2 Note: Data exclude i n t e r b a n k l o a n s . Total l o a n s are a f t e r and t y p e s of l o a n s b e f o r e deductions f o r v a l u a t i o n r e s e r v e s . Consumer and " o t h e r l o a n s " a r e p a r t l y estimated f o r a n d a t e s . Other d a t a a r e p a r t l y e s t i m a t e d on a l l b u t June and Decenfcer c a l l d a t e s . Monthly d a t a on i n d i v i d u a l loan items appear t o correspond r e l a t i v e l y w e l l w i t h p r e l i m i n a r y member bank c a l l r e p o r t d a t a f o r June 23, 1958. A l l d a t a f o r August 27, 1958, are ^ n a t e s and subject to error. Not for p u b l i c a t i o n Baddag Section, Board of Governors, September 11, 1958
@FedFRASER