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OWNERSHIP OF AT ALL  INSURED  SIXTH  FEDERAL   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  DEMAND  DEPOSITS  COMMERCIAL BANKS RESERVE  DISTRICT  AND  UNITED STATES  ON  JANUARY  27, I960  Federal Reserve Bank of Atlanta Research Department  May 13, I960  I960 SURVEY OF THE OWNERSHIP OF DEMAND DEPOSITS  Individuals, partnerships, and corporations held about $8.2  billion demand deposits at all Sixth District banks in 5«6 million separate Recounts on January 27, i960, according to a survey recently  completed by the Federal Reserve Bank of Atlanta.  The results of the  annual survey of the ownership of demand deposits showed that on  January 27, i960 there were about one-half million more accounts than a year earlier, and that the dollar total of these accounts was about $1 billion greater.  The average size of the account, however, declined  from $1550 to $lUOO. The recent estimates are based upon reports received by the Federal Reserve Bank of Atlanta from a representative sample of member  and nonmember banks in Alabama, Florida, Georgia, the southern halves  of Louisiana and Mississippi, and the eastern two-thirds of Tennessee,  the area included in the Sixth Federal Reserve District.  The survey  conducted by the Atlanta Bank was part of a nationwide survey carried  out every year by the Federal Reserve System.  Information secured in  the survey is used extensively by the Federal Reserve System, Govern­  ment agencies, and private organizations in analyzing the condition of the nation's financial structure. Summary tables showing the principle findings for the Sixth  District and a discussion of the survey results for the United States  are attached. Table I shows the percentage distribution of the accounts by type  of owner.  The table shows that so far as their number of accounts is  concerned, the banks deal overwhelmingly with individuals.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Over 80  percent of all accounts are personal accounts although their dollar  total was only about one-third of the dollar amount for all types of accounts.  On the other hand, the accounts of incorporated businesses,  making up only 3 percent of the number, constituted over 32 percent of  the dollar total.  The importance of the accounts held by farmers  declined between 1959 and i960 as it has for the preceding two years.  The deposit accounts of unincorporated businesses, however, continued to become more important.  Table II lists the proportion of accounts and demand deposits  held by various groups and individuals at small, medium-sized and large banks.  Over 5° percent of the demand deposits of banks with  total deposits of less than two million dollars were held by individuals. This proportion declined sharply at larger banks, and amounted to less than 30 percent at banks with deposits over 50 million dollars.  Demand  deposits of corporate businesses accounted for less than 8 percent of the total at the small banks, while the proportion increased to over  36 percent at the large banks. The percentage distribution of demand deposit accounts by size of account is listed on Table III.  Almost UO percent of all accounts had  balances of less than $100 on January 27, i960.  The total dollar  amount of these accounts amounted to less than 1 percent of demand deposits, however.  At the other end of the scale, accounts with  balances in excess of $100,000 accounted for over one-fourth of demand  deposits, but only two-tenths of one percent of the number of accounts.  Corporate financial holders accounted for the greatest percentage of large accounts, while personal accounts of individuals dominated the small accounts.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  TABLE I SIXTH FEDERAL RESERVE DISTRICT PERCENTAGE DISTRIBUTION OF DEMAND DEPOSIT ACCOUNTS OF  INDIVIDUALS, PARTNERSHIPS, AND CORPORATIONS, 1957 - I960  (At all Insured Commercial Banks) Number of Accounts, Percent of Total  1957  1258  1222  1260  Corporate Financial  1.3  .8  .5  .5  Non-Corporate Financial  1.0  1.0  .4  .4  Corporate Non-Financial  2.2  2.5  2.9  3.0  Non-Corporate Non-Financial  5.1  5.7  6.4  6.3  Non-Profit Organizations  4.9  4.9  5.3  5.0  Farmers  6.9  5.4  4.7  4.2  78.5  79.3  79.8  80.4  «  .1  .1  .1  .1  .3  •  .2  Domestic Business  Individuals Trust Funds of Banks  Foreigners  Dollar Amount of Accounts, Percent of  1251  1258  1252  1260  14.5  10.3  8.1  7.8  Non-Corporate Financial  2.0  2.5  1.5  1.7  Corporate Non-Financial  28.8  31.3  33.1  32.1  Non-Corporate Non-Financial  11.4  13.8  14.0  15.1  Non-Profit Organizations  3.7  3.8  6.1  4.0  Farmers  4.6  3.7  3.5  3.3  33.2  32.2  31.8  33.8  1.5  1.5  1.6  1.9  .3  .9  .2  .2  Domestic Business Corporate Financial  Individuals  Trust Funds of Banks Foreigners  * Less than 5/100 of 1%   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  TABLE II  SIXTH FEDERAL RESERVE DISTRICT  OWNERSHIP OF DEMAND DEPOSITS RELATED TO SIZE OF BANK, JANUARY 27. I960 (Percent Distribution Within Size Group)  TYPE OF HOLDER  SIZE OF BANK (Total Deposits in Millions of $)  Under 2  2-10  10-50  Over 50  Number of Accounts  Domestic Business Corporate Financial  •5  .4  .3  .5  Non-Corporate Financial  .8  .3  .3  .3  Corporate Non-Flnanclal  1.4  2.2  3.3  3.4  Non-Corporate Non-Flnanclal  4.3  6.4  6.4  6.6  Non-Profit Organizations  7.5  5.5  3.5  4.9  Farm Operators  9.3  6.0  1.0  3.7  76.1  79.1  84.7  80.4  .1  .1  *  .1  •  •  .5  .1  Individuals - Personal Trust Funds of Banks  Foreigners  Amount of Deposits  Domestic Business Corporate Financial  4.8  4.9  6.5  8.7  Non-Corporate Financial  2.5  1.4  3.6  1.4  Corporate Non-Flnanclal  7*9  19.5  28.1  36.4  14.3  16.1  14.1  15.2  4.9  5.0  3.6  3.9  Farm Operators  12.4  8.1  .6  2.4  Individuals - Personal  53.0  42.8  41.4  29.8  Trust Funds of Banks  .1  2.1  1.6  2.0  Foreigners  .1  .1  .5  .2  Non-Corporate Non-Flnanclal Non-Profit Organizations  ♦Less Than 5/100 of 1%   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  TABLE III SIXTH FEDERAL RESERVE DISTRICT OWNERSHIP OF DEMAND DEPOSIT ACCOUNTS  RELATED TO SIZE OF ACCOUNT, JANUARY 27, i960 (Percent Distribution Within Size Group)  Size of Account, Dollars  TYPE OF HOLDER  Unclassified!  Number  Amount Number  1,000-9,999  100-999  0-99  Amount Number  Amount Number  10,000-24,999  25,000-99,999  Amount  Number  Amount  Number  Amount  Over 100,000  Number  Amount  Domestic Business  Corporate Financial  0  0  11.0  *  19.4  .4  36.5  5.7  14.9  8.5  12.6  25.2  5.6  60.2  Non-Corporate Financial  0  0  21.4  .1  33.6  2.1  37.0  17.0  5.2  12.3  1.5  11.5  1.3  57.0  Corporate Non-Financial  0  0  12.9  «  25.0  .7  39.2  9.9  11.8  11.6  8.4  26.1  2.7  51.7  Non-Corporate Non-Financial  0  0  23.5  .2  36.6  4.5  33.2  31.7  4.5  19.7  1.9  23.9  .3  20.0  Non-Profit Organizations  0  0  44.6  1.3  40.4  12.2  13.5  32.8  .9  12.4  .5  20.3  .1  21.0  Farmers  0  0  35.1  .8  41.4  15.1  22.1  51.8  1.1  14.9  .3  14.9  #  2.5 3.7  Individuals  Trust Funds of Banks Foreigners Total  ♦Less Than 5/100 of 1%   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  11.9  3.6  40.2  1.8  36.1  21.7  11.2  47.6  .5  12.8  .1  8.8  «  9.3  93.8  18.8  «  40.6  .3  28.1  1.7  1.6  .4  0  0  1.6  3.8  .2  1.0  39.9  .7  31.8  6.7  24.0  43.5  3.6  30.2  .5  17.9  0  0  9.5  3.0  38.1  .7  36.1  9.3  14.2  27.9  1.3  13.0  .6  18.5  .2  27.6  Ownership of Demand Deposits Demand deposits of individuals, partner­ ships, and corporations at insured commer­ cial banks rose an estimated $2.2 billion, or 2 per cent, in the year ending January 27, 1960. According to the Federal Reserve System’s most recent Survey of Demand De­ posit Ownership, demand deposits of nonfinancial businesses increased by the same dollar amount as the total, but the relative increase was 4 per cent. Personal demand  accounts of individuals increased $600 mil­ lion, or 2 per cent, while demand balances of farmers declined $500 million, or 11 per cent. As in the past several years the number of demand deposit accounts held by individ­ uals, partnerships, and corporations rose fur­ ther. The 2.7 million increase in the current year was nearly one-fourth larger than in the two previous years combined. OWNERSHIP GROUPS  Note.—This article was prepared by Edward P. Snyder of the Board’s Division of Research and Statis­ tics. For results of the January 1959 Survey see the Federal Reserve Bulletin for April 1959.  Holdings of nonfinancial businesses account for about one-half of total demand deposits  Table 1  Demand Deposit Accounts  of  Individuals, Partnerships,  and  Corporations  January 27, 1960 [Estimates for insured commercial banks]  Number  Amount  Increase, or decrease (—), from Jan. 28, 1959  Jan. 27. 1960  Type of holder  Millions  Percentage distribution  Jan. 27, 1960  Increase, or decrease ( — ), from Jan. 28, 1959  Millions  Per cent  Billions of dollars  Percentage distribution  Billions of dollars  Per cent  2.0  A1I holders......................................  57.1  100.0  2.7  5.0  109.5  100.0  2.2  Domestic business.............................  6.1  10.6  0.3  5.6  64.5  58.9  2.2  3.5  Corporate.................................... Noncorporate.............................  2.1 3.9  3.8 6.9  0.3 (')  15.0 1.0  49.5 15.0  45.2 13.7  2.0 0.1  4.3 0.9  Financial business............................... Corporate.................................... Noncorporate.............................  0.4 0.2 0.2  0.8 0.4 0.4  <•) (')  G)  1.2 8.3 -5.9  9.6 7.7 1.9  8.7 7.0 1.7  -0.1 0.1 -0.1  —0.6 0.8 -6.0  Nonfinancial business............. Corporate.................................... Noncorporate.............................  5.6 1.9 3.7  9.9 3.4 6.5  0.3 0.3 0.1  5.9 15.9 1.4  54.9 41.8 13.1  50.1 38.2 11.9  2.2 2.0 0.3  4.2 4.9 2.0  Nonprofit organizations................... Farm operators.................................. Individuals—personal....................... All other............................................... Trust departments of banks........ Foreigners........................................  2.9 3.0 44.9 0.1 (J) 0.1  5.1 5.3 78.7 0.2 0.1 0.1  0.1 -0.1 2.4 0)  3.6 -4.6 5.7 3.8 -1.7 7.3  5.2 4.4 32.3 3.2 2.2 1.0  4.8 4.0 29.5 2.9 2.0 0.9  0.2 -0.5 0.6 —0.3 -0.3 (*)  4.9 -10.9 2.0 — 8.2 -10.9 -2.0  G) 0)  > Increase of less than 50,000 accounts. 2 Decrease of less than 50,000 accounts. 2 Less than 50,000 accounts. * Decrease of less than $50 million.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  Note.—Corporate farming enterprises are classified as corporate nonfinancial business. Details may not add to totals because of rounding.  367 REPRINTED FROM FEDERAL RESERVE BULLETIN FOR APRIL 1960  368  FEDERAL RESERVE BULLETIN • APRIL 1960  of individuals, partnerships, and corpora­ tions. The 4 per cent increase in the balances of these businesses in the 12 months ending January 27, 1960, appears to have reflected a continued growth in need for cash. How­ ever, the increase in their balances was evi­ dently less than the increase in their use of cash. In January 1960 demand deposits at 337 centers outside New York City and six other leading centers were turning over 6 per cent faster than they were a year earlier, and industrial production was up 10 per cent. Nonfinancial businesses also expanded their holdings of liquid assets during the year, as interest rates moved upward. A large part of these assets were invested in short-term U. S. Government securities.1 Personal deposits of individuals, which ac­ count for about 30 per cent of the total, in­ creased by $600 million in the year ending  January 27, 1960, two-fifths as much as the exceptionally large growth of the preced­ ing 12 months. The past year’s increase ac­ companied a continued growth in disposable personal income, but its pace was slower than that in income. The slower growth in deposits probably reflects continued prefer­ ence by individuals, as well as other holder groups, for interest-bearing types of liquid assets when interest rates are relatively high. Balances of farm operators declined nearly 11 per cent this year to the lowest levels reported since the Survey was under­ taken on the new basis in January 1957. The decline more than offset last year’s in­ crease and appears to reflect the sharp reduc­ tion in net farm income during the year. Increased production expenses and a decline in prices received by farmers more than offset the gains in income from larger output. The relatively large decline in deposits of trust departments of banks this year offset  1 See also article “Money and Bank Credit in 1959“ in the Bulletin for February 1960, pp. 119-25.  Table 2 Demand Deposits of Individuals, Partnerships,  and  By Federal Reserve District and  by  Corporations, January 27, 1960  Type of Holdfr Amount (in billions of dollars)  Number (in millions)  Type of holder Federal Reserve district  All holders  Finan­ cial busi­ ness  Nonfinan-  Farm  busi-  ators  Type of holder  Individ­ uals— per­ sonal  All other1  All holders  Finan­ cial busi-  Nonfinancial busi-  Farm  Individ-  ators  personal  All other*  All districts......................  57.1  0.4  5.6  3.0  44.9  3.1  109.5  9.6  54.9  4.4  32.3  8.4  Boston................................... New York............................ Philadelphia.........................  2.7 5.8 2.9  0. 1 0.1  P)  2.2 4.6 2.3  0.1 0.3 0.2  6.1 21.2 6.5  0.6 1.9 0.7  3.5 12.6 3.2  0.1 0.1  (9  1.5 4.3 1.9  0.5 2.3 0.6  Cleveland.............................. Richmond............................. Atlanta..................................  4.3 5.2 5.6  P) P) P) P) P)  0.4 0.8 0.3 0.4 0.4 0.5  0. 1 0.3 0.2  3.5 4.1 4.5  0.3 0.3 0.3  8.7 6.7 8.1  0.8 0.6 0.8  4.5 2.9 3.8  0.1 0.3 0.3  2.6 2.1 2.7  0.7 0.8 0.5  Chicago................................. St. Louis................................ Minneapolis..........................  7.5 4.2 2.5  0.1  0.8 0.3 0.2  0.6 0.5 0.4  5.7 3.2 1.7  0.4 0.2 0.2  16.9 5.0 2.9  1.4 0.3 0.2  9.0 1.9 1.1  0.8 0.5 0.5  4.5 2.0 1.0  1.2 0.3 0.2  Kansas City.......................... Dallas.................................... San Francisco......................  4.4 4.3 7.7  0.4 0.4 0.8  0.4 0.3 0.2  3.3 3.4 6.4  0.3 0.2 0.3  7.2 7.8 12.5  0.6 0.7 1.2  3.2 3.2 6.0  0.7 0.6 0.5  2.4 3.0 4.2  0.3 0.3 0.7  0. 1  p) P) P) P)  0. 1  > Nonprofit organizations, trust departments of banks, and for­ eigners. 2 Less than 5(1,000 accounts.   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  2 Less than $50 million. Note.—Details may not add to totals because of rounding.  369  OWNERSHIP OF DEMAND DEPOSITS  a part of the increase reported a year ear­ lier. As indicated at that time, there are few of these accounts and changes in their bal­ ances do not affect the total importantly. Deposit balances held by trust departments are influenced by interest rates, the condition of the stock market and capital markets gen­ erally, and other financial factors. De­ posits of foreign holders, which may also be influenced by these factors, changed little. Deposits of financial businesses, too, were almost unchanged in the year ending January 27, I960. A small reduction for noncorpo­ rate firms more than offset a slight increase for corporations. The degree of change in their holdings during this period reflects their sensitivity to trends in interest rates. After the reduction in their demand deposits last year, a development attributed in part to their purchases of long-term Treasury bonds offered in late January 1959, financial busi­ nesses appear to have kept new funds in­ vested as interest rates moved upward. The rise in balances of nonprofit organiza­ tions in the current year was about in line with the usual expectation for this holder group. The rise this year more than offset a slight decline in these balances in the year ending January 28, 1959. NUMBER OF ACCOUNTS  Continued growth in the number of per­ sonal accounts of individuals and an increase in the number of accounts of corporate busi­ ness firms accounted for the over-all in­ crease in the number of accounts of individ­ uals, partnerships, and corporations in the year ending January 27, 1960. A small de­ cline in the number of accounts of farm operators, possibly associated with a con­ tinued reduction in the number of independ­ ent farm operators, was offset by a small in­   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  crease in the number of accounts of nonprofit organizations. The number of accounts of other ownership groups changed very little during the year. Except in the case of corporate businesses, the relative change in number of accounts held by each of the more important owner­ ship groups was roughly proportional to the change in total deposits held by the group. Multiple-account holding by corporate busi­ ness firms is common and the decision to open an account may be related to many factors including the desire to establish a credit line at a particular bank and internal cash-management practices. Thus, shortTable 3  Ownership to Size  of of  Demand Deposits Related Bank, January 27, I960  [Percentage distribution within size group]  Size of bank (total deposits, in millions of dollars) Type of holder  Un­ der 2  210  1050  50- 250- 1,000 and 250 1,000 over  Number of accounts All holders.............................. 100.0 100.0 100.0 100.0 100.0 100.0 Domestic business.....................  8.2  9.3 10.7 12.6 13.9  Corporate............................ Noncorporate......................  1.7 6.4  2.5 6.8  Financial.............................. Nonfinancial.......................  0.6 7.6  0. 7 0.8 0.9 1.2 0.9 8.6 10.0 11.8 12.7 11.8  Nonprofit organizations........... Farm operators.......................... Individuals—personal............... All other1....................................  3.9 6.8  5.6 7.0  6.4 7.4  12.6  5.4 7.3  7.6 5.7 4.4 4.2 4.1 3.0 14.7 7.3 2.1 1.0 1.2 1.0 69.3 77.6 82.6 82.0 80.5 82.6 0.1 0.1 0.2 0.1 0.3 0.9 Amount of deposits  All holders..................  100.0 100.0 100.0 100.0 100.0 100.0  Domestic business.........  30.5 40.2 52.3 66.5 69.5 71.4  Corporate............... Noncorporate........  13.6 22.5 34.4 54.1 58.1 62.2 16.9 17.6 17.9 12.4 11.4 9.3  Financial................. Nonfinancial...........  3.4 5.0 8.0 10.1 12.3 9.2 27.1 35.2 44.3 56.4 57.2 62.2  Nonprofit organizations Farm operators............. Individuals—personal.. All other1........................  5.2 4.8 5.5 4.1 4.2 5.1 1.0 0.7 20.7 10.5 1.8 0.8 43.3 43.1 38.0 24.5 22.0 18.7 0.4 1.0 3.0 2.7 3.4 5.0  1 Trust departments of banks and foreigners. Note.—Details may not add to totals because of rounding.  370  term changes in the number of accounts held by these firms are probably not very sig­ nificant. OTHER CLASSIFICATIONS  Data on the ownership of demand deposits by Federal Reserve districts are shown in Table 2. District comparisons should be made with care since the statistics not only reflect regional differences but also are af­ fected by sampling errors. Table 3 shows the distribution of deposits by ownership groups within bank-size classes. A similar table, based on the 1957 Survey, was published in the Bulletin for May 1957, page 514. Comparison of the data for the two Surveys indicates that no important changes have occurred in this over-all distribution. STATISTICAL NOTE  Estimates of sampling errors for various Survey statistics are shown in Table 4. These estimates are based on the 1959 and 1960   https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis  FEDERAL RESERVE BULLETIN • APRIL 1960  Survey results. Additional computations of sampling errors for the estimates of deposit holdings and of changes in deposit holdings of the various combinations of ownership groups, such as all nonfinancial business, will be made later this year in order to pro­ vide measures of reliability for all Survey statistics. Table 4 Estimated Sampling Errors for Survey of Demand Deposit Ownership Standard deviations (in millions of dollars) Type of holder  Deposits outstanding Jan. 28, 1959  Change in deposits, Jan. 28, 1959 to Jan. 27, 1960  Financial business: Corporate................................ Noncorporate......................... Nonfinancial business: Corporate................................ Noncorporate.........................  450 175  400 200  2,000 350  1,125 375  Nonprofit organizations............... Farm operators................................ Individuals—personal.................... Trust departments of banks......... Foreign holders...............................  250 175 550 275 50  225 175 575 275 50  Note.—All estimates rounded to nearest $25 million.