Bluebook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. Content last modified 6/05/2009. (CONFIDENTIAL FR) November 13, 1970. MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM November 13, 1970. CONFIDENTIAL (FR) MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) The adjusted money supply in October rose only slightly, thus falling considerably short of the 4-1/2 per cent rate of increase expected at the time of the last meeting of the Committee. While spread throughout the banking system, the greater portion of the weakness in the money supply appears to have been at reserve city banks and to be associated with the weakness in demands for short-term credit, perhaps in large part related to the auto strike. As shown in the table in paragraph (3), since mid-October the weekly data have, without exception, run below the path indicated in the last Blue Book; and in the week of November 4 the shortfall amounted to some $1-1/2 billion. (2) Growth in the adjusted bank credit proxy in October fell even further below expectations than the money supply. Currently the proxy is estimated to have increased at only about a 1/2 of 1 per cent rate over the month, compared with a 7 per cent rate expected at the time of the Committee meeting. In addition to the weakness in private demand deposits, the increase in the proxy was held down by a slightly more rapid pace of runoff of non-deposit sources of funds than allowed for, a slower growth in time deposits than earlier anticipated, and a greater decline in U.S. Government deposits. The October rate of increase in time deposits is estimated at 22 per cent, compared with a projection of 26-1/2 per cent, -2reflected some slowing savings deposits. in net inflows of both CD's and other time and Like the weakness in the money supply, this slowing was concentrated at reserve city banks, (3) The following table shows recent developments in the money supply and the adjusted credit proxy. Recent Paths of Key Monetary Aggregates (Seasonally adjusted, billions of dollars) Adjusted Credit Proxy Indicated at Last Meetingi/ Actual Results Mone Indicated at Last Meetingi Supply 2// Actual Results 1970 Month September 324.5 324.5 210.8 210.7 October 326.4 324.7 211.6 210.8 14 324.4 323.9 210.2 210.0 21 325.7 324.3 212.4 212.1 28 329.1 324.9 212.2 209.6 4 329.1 325.5 211.4 210.0 11 329.6 326.3 212.6 210.4 Week ending October November % Annual Ratesof Change Third Quarter (Sept. over June) October over September 1/ % Annual Rates of Change 17.2 17.2 5.0 4 .8-3 7.0 0.7 4.5 0,.6 Alternative A path of previous Blue Book. 2/ Estimated money supply levels and per cent annual rates of growth after correction for bias. Data on the published money supply, both target path and actuals, are shown in appendix table 1. 3/ 4.6 per cent annual rate for third quarter average over second quarter average. -3(4) In view of the shortfall in monetary growth rates in October, as well as in the fourth quarter, the Desk has encouraged more comfortable money market conditions than those generally prevailing around the time of the October 20 meeting. With the "even keel" constraint lessened after the auction date of the new note, Federal funds began to trade more frequently below 6 per cent and in the last day or two have been trading around the new 5-3/4 per cent discount rate. Net borrowed reserves over the statement weeks since the last meeting have fluctuated in a $120 to $290 million range while average member bank borrowings have remained quite stable around $430 million. (5) Short-term interest rates have declined markedly since the Committee meeting, particularly in the Treasury bill market where the rate on 3-month issues has dropped about 50 basis points to around 5.45 per cent. The fall in bill rates was influenced by anticipation of a near-term cut in the discount rate and the commercial bank prime rate (both of which subsequently were reduced by 1/4 point),by reinvestment of the proceeds of the heavy recent volume of capital market offerings, and, also, by reduced demands for short-term credit partly as a result of the prolonged auto strike. These same influences have worked to re- duce rates on private short-term market instruments as well, and most of these rates are about 25--50 basis points below their levels as of October 20. Bond markets have rallied in the last two weeks, bringing yields somewhat below those prevailing around the time of the last FOMC meeting. -4(6) On October 23, the Treasury announced a rights exchange for the $7.7 billion of maturing 5 per cent notes, $6.0 billion of which were publicly held. Holders of the maturing notes were given the option of an exchange into either a 3-1/2-year, 7-1/4 per cent note at par or a 5-3/4-year, reopened 7-1/2 per cent note priced to yield 7.39 per cent. The exchange was very successful with an attrition rate of only 11 per cent, or about $650 million, of the public's holdings. These two new issues were most recently trading at premiums of 1-3/4--2 points. In conjunction with the October 30 announcement of the results of the rights exchange, the Treasury announced a $2.0 billion cash financing in the form of an auction on November 5 of a 6-3/4 per cent, 18-month note, with 50 per cent tax and loan credit allowed for banks. The note auction was very successful, and an average issuing rate of 6.21 per cent resulted, a rate considerably below earlier market expectations. (7) The following table summarizes seasonally adjusted annual rates of change in major financial aggregates for selected periods: Most Recent Month Past Year First Half of 1970 Third Quarter (Oct. over October) (June over December) (Sept. over June) Total Reserves 6.5 - 0.2 19.2 -3.8 Nonborrowed Reserves 9.4 1.9 24.4 -0.3 Money Supply, published 3.5 4.0 5,1 -0.6 Money Supply, adjusted 4.3 5.5 4.8 0.6 Large CD's (dollar amount) $11.7 $ 1.7 $8.7 $1.9 8.7 5,7 15,5 12.9 6.0 4.3 10.0 12.9 Total member bank deposits (Bank credit proxy) 9.6 3.3 24.1 10.1 Proxy plus Euro-dollars and other nondoposit sources 7.4 3.5 17.2 0.7 6.6 2.5 17.0 0.8 outright to affiliates and foreign branches 6.4 4.5 13.9 -1.7 Nonbank commercial paper 9.3 14.2 -17.7 32.3 Other time and savings deposits (October over September) Savings account at nonbank thrift institutions Member bank deposits and related sources of funds Commercial bank credit (Month end) Total loans and investments L&I plus loans sold All items are averages of daily figures (with "other noudeposit sources" based on an average for the month of Wednesday data), except the commercial bank credit series, which are based on total outstanding on last Wednesday of month, and the nonbank commercial paper and thrift institutions series, which are end-of-month data. All additions to the total member bank deposit series are seasonally unadjusted numbers, since data have not been available for a long enough time to make seasonal adjustments. Actual dollar change over the period in billions. NOTE: 1/ Prospective developments (8) The recent weakness in demand deposits, and also to a degree in time deposits, suggests that the fourth quarter target growth rate for the money supply of 5 per cent (and the anticipated attendant bank credit growth rate of 9 per cent) are not likely to be attained, even with money market conditions similar to the most recently prevailing. easier conditions The latter might be taken to include a Federal funds rate around the new 5-3/4 per cent discount rate and a net reserve position for banks in a +$50 to -$200 million range. Given these money market conditions, the staff's current projections of likely growth in money supply, bank credit, and total reserves are shown below. As may be seen the money supply over the quarter would be expected to grow at a 3 per cent annual rate, with growth expected to accelerate from the very low recent rates as economic activity picks up in connection with the ending of the auto strike. is expected to grow at only The adjusted bank credit proxy a 3-1/2 per cent annual rate for the quarter, partly as U.S. Government deposits show a substantial decline. -7Selected Monetary Aggregates, Monthly ($ billions, seasonally adjusted--% annual rate change in parenthesis) Money Supply Published Adjusted Basis Adjusted Bank Credit Proxy Total Reserves 29.2 (27.5) September 206.2 (+1.2) 210.7 (1.1) 324.5 (9.7) October 206.1 210.8 324.7 (-0.6) (+0.6) (0.7) 206.6 211.3 (+3.0) (+3.0) 207.6 212.3 (+6.0) (+5.5) November December Fourth quarter (Dec. over Sept.) 2 (2.5)-' 2/ (3.0)- 29.4 (.3.8)! 29.6 326.2 (5.5) (9.5) 29.7 327.3 (4.0) (8.5) (3.5) 1/ (5.0)- 1/ There was a break in the total reserve series effective October 1 as a result of the application of reserve requirements to bank-related commercial paper. The rates of change shown here were calculated excluding commercial paper reserves. 2/ 2.5 per cent annual rate for fourth-quarter average over third-quarter average. With these aggregates and money market conditions, the staff would expect the 3-month bill rate to be in a 5-1/4--5-3/4 per cent range. It is possible that the bill rate could rise in the last few weeks of the year as the result of an expected $2 billion Treasury bill offering for new cash to be announced shortly, of usual seasonal pressures, and of some renewed short-term credit demands following settlement of the auto strike, A back-up in short-term rates, should it develop, would tend to limit, though perhaps not completely halt, further declines in long-term interest rates. (9) In light of the staff's estimate of the outlook for monetary aggregates noted above for the fourth quarter the Committee may wish to consider a further easing in money market conditions in an effort to move back to its previously desired track. But since it seems likely that some of the recent deposit weakness may have been related to diminished short-term credit and cash working balance needs as a result of the auto strike, the Committee may also wish to consider settling for a somewhat slower aggregate growth in the fourth quarter than previously desired. This approach might then allow for a counterbalancing growth in the money stock at a rate above 5 per cent in the first quarter when the economy will be doing most of its catching up from strike effects. For example, the Committee may not wish to ease money market conditions, and other interest rates, as much as now seems likely to be required to attain a 5 per cent money stock growth in the fourth quarter, and then have to turn around and tighten money market conditions in the first quarter in order to keep money growth to 5 per cent at a time when transactions demands for cash will likely be accelerating. One alternative would be for the Committee to strive for, say, a 4 per cent money growth rate in the fourth quarter and a compensating 6 per cent rate in the first, thus maintaining the annual rate over the fourth and first quarters together at around 5 per cent. (10) The following table summarizes relationships between money market conditions, typified for convenience by the Federal funds rate, and rates of increase in monetary aggregates thought at the moment to be consistent for the fourth quarter. Federal funds rate! / Annual rates of increase Bank credit Money supply (a) 5-3/4 3 3-1/2 (b) 5 4 4-1/2 (c) 3-1/2 5 6 1/ Between now and year-end. Needless to say, these relationships are, at best, approximate, are no doubt subject to considerable error, and should be considered as midpoints of fairly wide ranges, But they are presented so that the Committee might have some basis for expressing its preferences with respect to trade-offs over the near-term between monetary aggregates and money market conditions. (11) The choice to be made among the range of alternatives summarized in paragraph (10) would appear to depend to an important extent on the trend rate of growth that the Committee desires for money and bank credit over a longer period of time. As earlier noted, if the FOMC wished to remain on a 5 per cent growth trend for money stock, it might accept a slower rate in the fourth quarter and a more rapid rate in the first quarter in the interest of not unduly wrenching money and credit markets. If the FOMC's basic desired path, on the other hand, were to move up to a trend rate of growth that was about 6-7 per cent for money in the fourth and first quarters taken together, the Committee might then wish to be more aggressive with respect to reserve provision in the fourth quarter in order to effect a smooth adjustment to the more rapid money supply growth path. the next two subsections: Two broad alternatives are discussed in one (alternative A) calls for maintaining the target for money growth for the fourth and first quarters taken together at a 5 per cent annual rate; the other (alternative B) calls for a higher average rate of growth over that time span. Policy alternative A. (12) If the Committee wishes to stay on a 5 per cent growth path for the money supply, but is wiling to -10- permit some shortfall in the fourth quarter which would be made up in the first quarter, it might consider the following language for the second paragraph of the directive: "To implement this policy, the Committee seeks to promote some easing of conditions in credit markets and moderate growth in money and attendant bank credit expansion over the months ahead, WITH ALLOWANCE FOR TEMPORARY SHIFTS IN MONEY AND CREDIT DEMANDS RELATED TO THE AUTO STRIKE. System open market operations until the next meeting of the Committee shall be conducted with a view to maintaining bank reserves and money market conditions consistent with those objectives-[DEL:taking account of the forthcoming Treasury financings."] This alternative might be best achieved if the Federal funds rate were permitted to move progressively downward in a 5-3/4 - 5 per cent range over the weeks ahead in the interest of attaining the Committee's longerrun money supply and bank credit objectives. As noted earlier, our estimates would suggest that a 5 per cent funds rate may be required to achieve 4 per cent money growth over the fourth quarter. At such a funds rate, it would be expected that this money growth shortfall might be made up in the first quarter without any very substantial further alteration of money market conditions. But in view of uncertainties about the funds rate-deposit relationship and given the possibility of exaggerated market reactions, it may be prudent to work the funds rate down gradually between now and the next meeting while checking incoming data to determine whether expected relationships are in fact developing. -11(13) The table below shows monthly patterns of monetary aggregates consistent with this policy alternative. Selected Monetary Aggregates, Monthly ($ billion, seasonally adjusted--% annual rates of change in parentheses) Adjusted Money Supply Adjusted Bank Credit Proxy Total Reserves September, 1970 210.7 (1.1) 324.5 (9.7) 29.2 (27.5) October 210.9 (0.6) 324.7 (0.7) 29.4 (-3.8) November 211.4 326.3 29.6 (3.0) (6.0) (11.5) December, 1970 212.8 (8.0) 328.1 (6.5) 29.8 (10.5) March, 1971 216.1 334.1 30.3 Fourth quarter (Dec. over Sept.) (4.0) (4.5) (6.0) First quarter (March over Dec.) (6.0) (7.5) (7.5) (14) A weekly pattern of monetary aggregates consistent with a 4 per cent money growth rate in the fourth quarter is shown below: Monetary Aggregates Weekly ($ billion, seas. adj.) Money Supply Bank Credit Total Reserves November 11 210.4 326.3 29,4 18 211.8 326.3 29.6 25 211.8 326.5 29.8 2 212.3 326.2 29.7 9 212.2 327.8 29.8 16 212.5 327.6 29.7 December -12- If it proved necessary to push the Federal funds rate to around the low end of a 5 - 5-3/4 per cent range over the next few weeks, the 3-month Treasury bill rate would be likely to move into a lower range than the 5-1/4 - 5-3/4 per cent specified in paragraph (8). It might well drop to 5 per cent, or below, partly on expectations that the discount rate would soon be reduced again. And longer-term interest rates would tend to decline more rapidly than otherwise as banks continued to acquire securities even as loan demands picked up. (15) It is most difficult to specify the net reserve position of banks likely to be consistent with a Federal funds rate in the 5 5-3/4 per cent range, particularly a rate around the bottom end of the range. Member bank borrowings would likely average in a $300-$400 million range (with the lower end of the range respesenting largely necessitous long-term borrowing from the window by two banks). But it is very unclear as to how banks' demands for excess reserves are likely to change as the Fed funds rate drops further. One would expect that banks would want to hold somewhat more excess reserves as the Fed funds rate declined, but at a rate still as high as 5 per cent the level of excess reserves desired over time may be only $50 - $100 million above recent experience. This would mean that over a period of several weeks sizable net free reserves are not likely to be prevalent. But, with required reserves in a given week fixed by the lagged reserve scheme, the banking system as a whole (with borrowings at minimal levels) would have no way in any particular statement week to dispose of excess reserves -13- created when open market operations supply nonborrowed reserves in excess of current required reserves in order to encourage bank credit and deposit expansion. Individual banks could, of course, reduce their own excess reserves, and the rapidity and eagerness with which they did so would affect the Federal funds rate. In practice, though, banks may be slow to realize that the System is easing the money market and thus, at least for a while, may be sluggish in selling off excess reserves in the Federal funds market. This could mean that at the beginning of an effort significantly to ease the money market it would take fairly sizable excess reserves in the banking system to lower the Federal funds rate to, say, a 5 per cent average for a statement week. But once indivdual banks realized that it did not pay to be slow in disposing of excess reserves, a lower average level of excess reserves for the banking system would result for any given Fed funds rate. Policy alternative B. (16) This alternative is presented in the event that the Committee may wish to consider a more aggressive easing in the money market than under alternative A in order to increase the likelihood of moving closer to a 5 per cent money growth rate (and around 6 per cent bank credit) in the fourth quarter, partly as a way station to moving on to a 6 - 7 per cent growth path for money for the fourth and first quarters taken together. Suggested language for such a directive is shown below. "To implement this policy, the Committee seeks to promote some FURTHER easing of conditions in credit markets and moderate -14SOMEWHAT GREATER growth in money THAN SOUGHT EARLIER and attendant bank credit expansion over the months ahead. System open market operations until the next meeting of the Committee shall be conducted with a view to maintaining bank reserves and money market conditions consistent with those objectives; taking account [DEL: of the forthcoming Treasury financings."] To achieve a 5 per cent money growth in the fourth quarter (17) (with the quarter already half over) the staff would expect the Federal funds rate to have to drop well below 5 per cent, and probably also below 4 per cent, as indicated in line (c) of paragraph (10). One might, however, expect that a Federal funds rate in a 4--5 per cent range would prove consistent with a money growth rate somewhere in a 4--5 per cent annual rate range. The weekly patterns of money supply and bank credit in the inter-meeting period consistent with a 5 per cent growth rate in money are shown in the following table: Monetary Aggregates, Weekly ($ bil'., seae. cdj.) Money Supply November 11 December Bank Credit Total Reserves 210.4 326.3 29.4 18 211.8 326.4 29.7 25 211.8 326.7 29.9 2 212.6 326.7 29.8 9 212.6 328.7 30.0 16 213.2 328.8 29.9 _ _~~ ___ __ ______ -15(18) Over this period member bank borrowings would be expected to be at minimal levels (apart from the necessitous borrowing noted earlier) and net free reserves might consistently emerge, although it is very difficult, for reasons noted earlier, to predict how large net free reserves may be. The 3-month Treasury bill rate might drop to around 4-1/2 per cent, at least temporarily, and a very substantial and sustained rally in bond markets would likely be generated. With short-term market rates low, Euro-dollar borrowings of banks would tend to drop significantly further as banks would be willing and able to obtain domestic CD's in volume; moreover, as markedly lower interest rates developed, banks would begin to lengthen CD maturities to lock up relatively low interest cost funds, and short-term Euro-dollars (maturing within thirty days) would become relatively less attractive. (19) If a 5 per cent growth rate in money supply were attained in the fourth quarter, the Federal funds rate could likely remain in a 4 - 5 per cent range to achieve a 7 - 8 per cent money growth in the first quarter, assuming GNP in nominal terms rises in the first quarter by about the 9 per cent annual rate that is projected. If money growth were less than 5 per cent in the fourth quarter, money market conditions probably would have to be eased somewhat further in the first quarter since it would take a larger than 7 - 8 per cent money growth rate in that quarter to compensate for the shortfall from 5 per cent in the fourth quarter. (20) The table below shows monthly patterns of monetary aggregates consistent with alternative B. -16- Selected Monetary Aggregates, Monthly ($ billion, seasonally adjusted--% annual rates of change in parentheses) Adjusted Money Supply September, 1970 Adjusted Bank Credit Proxy Total Reserves 324.5 (9.7) 29.2 (27,5) 324.7 (0.7) (-3.8) 326.4 (6.5) (11.5) (11.3) 329.5 (11.5) (14.0) 217.1 338.1 210. 7 (1.1) October 210.8 (0.6) November 211.4 (3.5) December, 1970 March, 1971 213.4 29.4 29.7 30.0 30.7 Fourth quarter (Dec. over Sept.) (5.0) (6.0) (7.5) First quarter (March over Dec.) (7.0) (10.5) (9.5) _ __ __ ____ CHART 1 STRICTLY CONFIDENTIAL (FR) 11/13/70 MONETARY AGGREGATES MONEY SUPPLY Published BILLIONS OF DOLLARS ADJ. MONEY SUPPLY PATH: 5% 214 -212 210 - ADJ. CREDIT PROXY ADJUSTED CREDIT PROXY PATH: 9% -334 -332 330 328 326 324 I I S I I 0 N 'r D TOTAL RESERVES Wkly., Indicated at FOMC Meeting (10/20/70) S - Actual ~ 1969 1970 Currently Projected Longer Run Path CHART 2 11/13/70 INTEREST BEARING SOURCES OF BANK FUNDS BILLIONS OF DOLLARS 220 TOTAL TIME AND SAVINGS DEPOSITS 200 - 180 TIME AND SAVINGS DEPOSITS180 OTHER THAN CD'S NONDEPOSIT SOURCES / 1969 1970 - 20 CHART 3 MONEY MARKET CONDITIONS AND INTEREST RATES INTEREST RATES Long-term PER CENT FWEEKLY FFHA MORTGAGES FNMA MONDAY AUCTION NEW CORPORATE Aaa WEDNESDAY MUNICIPAL Aaa WEDNESDAY GOVERNMENT BONDS 20-YEAR AVERAGES 1111 1969 1970 1969 1970 11 I I 1969 I I I I I I II I I 1970 I I STRICTLY CON FIDENTIAL (FR) Table 1 PATHS OF KEY MONETARY AGGREGATES NOVEMBER 13, 1970 SEASONALLY ADJUSTED Adjusted Credit Proxy 1 Path Period Money Supply As Published 3 Path 2 as of Current Oct. 20 Proj as of Oct. 20 Money Supply Adjusted 5 Path 4 Current as of Projl Oct. 20 U.S. Government Demand Deposits 7 Path 6 Current Pro as of Oct 20 Time Deposit 9 Path 8 Current Proj. as of Oct 20 Total Reserves 11 10 Current Pro. path as of Oct. 20 12 Current Proj. Monthly Pattern in Billions of Dollars 1970: June July Aug. Sept. Oct. p Nov. Dec. (proj.) (proj.) 311.1 315.8 321.9 324.5 311.1 315.8 321.9 324.5 203.6 204.3 206.0 206.3 203.6 204.3 206.0 206.2 208.2 209.0 210.5 210.8 208.2 209.0 210.5 210.7 201.0 206.9 211.8 216.9 201.0 206.9 211.8 217.0 27.9 28.0 28.6 29.2 27.9 28.0 28.6 29.2 326.4 329.4 331.6 324.7 326.2 327.3 207.1 208.2 206.1 206.6 211.6 212.7 213.4 210.8 211.3 212.3 221.7 225.5 228.8 221.0 223.9 226.6 29.1 29.9 30.0 29,4 29.6 29.7 Annual Percentage Rates of Change--Quarterly and Monthly 1970: 1st 2nd 3rd 4th Qtr. Qtr. Qtr. Qtr. June July Aug. Sept. 0.5 6.5 17.2 9.0 0.5 6.5 17.2 3.5 7.0 18.1 23.2 9.7 7.0 18.1 23.2 9.7 - 1.8 4.1 10.0 1.7 7.0 11.0 8.5 0.7 5.5 4.0 4.5 6.0 4.9 6.0 5.0 5.0 4.9 6.0 4.8 3.0 0.4 13.8 31.6 22.0 0.4 13.8 31.8 17.5 - 1.8 4.1 1 0.0 1.2 1.2 4.6 8.6 1.7 1.2 4.6 8.6 1.1 8.4 35.2 28.4 28.9 - 0.6 3.0 6.0 4.5 6.0 4.0 0.6 3.0 5.5 3.8 4.2 5.3 5.0 3.8 4.2 5.1 3.0 - 2.9 - 2.9 2.6 19.1 7.5 2.6 19.2 5.0 8.4 35.2 28.4 29.5 0.5 6.0 23.3 31.0 0.5 6.0 23.3 27.5 26.5 20.5 17.5 22.1 15.5 14.5 -16.5 33.5 5.5 - 3.8 Oct. Nov. Dec. p (proj.) (proj.) Oct. 14 21 28 324.4 325.7 329.1 323.9 324.4 324.9 205.7 207.9 207.7 20 5.1 20 7.2 20 5.0 210.2 212.4 212.2 210.0 212.1 209.6 221.2 222.1 223.0 220.8 221.5 221.8 28.4 29.5 29.5 29.2 29.5 29,3 Nov. 4 11 18 329.1 329.6 329.4 325.5 326.3 326.3 206.9 208.1 208.6 20 5.4 205.8 20 7.2 211.4 212.6 213.1 210.0 210.4 211.8 224.0 224.7 225.5 222.2 223.3 223.9 29.5 29.9 30.0 29.3 29.4 29.6 9.5 8.5 Weekly Pattern in Billions of Dollars 1970: _ _I I _ I NOTES : Annual rates of change other than those for the past are rounded to the nearest half per cent. Money supply adjusted series reflectsR R712 Current the preliminary adjustment for certain cash items in the process of collection associated with Euro-dollar transactions. projection for weekly and monthly data have been adjusted by a constant amount of $4.9 billion. D CONFIDENTIAL (FR) Table 2 AGGREGATE RESERVES AND MONETARY VARIABLES RETROSPECTIVE CHANGES, SEASONALLY ADJUSTED (In per cent, annual rates based on monthly averages of daily figures) Reserve Aggregates Monetary Variables Money Supply 3 Total 4 S2 Period I Member Bank Deposits Total Reserves Nonborrowed Reserves Annually 1968 1969 + 7.8 - 1.6 + 6.0 + 9.0 - 3.0 - 4.0 Semi-annually 1st Half 1969 2nd Half 1969 + 0.7 - 3.9 - 3.7 - 2.4 - 3.5 4.6 1st Half 1970 - 0.2 + 1.9 + 3.3 Quarterly 3rd Qtr. 1969 4th Qtr. 1969 - 9.3 1st Qtr. 2nd Qtr. 3rd Qtr. 1970 1970 1970 7 Time Deposits Adjusted Private Demand Deposits Total Currency + 7.2 + 2.5 + 7.4 + 5.8 + 7.1 + 1.5 +11.5 - 5.3 + 6.3 + 3.4 + 4.3 + 0.6 + 6.5 + 4.9 + 3.7 1.2 - 4.0 6.7 + 4.8 + 1.9 n.a. +27.6 + 3.5 + 4.0 + 8.3 + 2.9 + 7.1 + 4.3 +14.0 -13.3 + 2.3 + 1.4 +31.0 +22.4 n.a. - - 0.6 - 4.8 - 9.4 - 4.3 + 0.1 + 2.0 + 1.2 + 3.6 + 6.2 - - 0.1 - - 0.4 + 4.1 + 0.6 + 6.0 +24.1 + 0.5 + 6.5 +17.2 + 3.8 + 4.2 + 5.1 + 7.0 + 9.4 + 3.3 +2.9 + 2.8 + 5.4 + 0.4 +13.8 +31.8 + 1.7 + 6.9 +10.0 +13.2 +14.3 -17.7 2.9 + 2.6 +19.2 +24.4 1.3 + 7.7 + 1.6 2.6 - 0.8 - 2.5 + 3.7 +40.7 -11.7 + 9.7 + 6.3 -17.9 + 5.5 +12.1 - 7.9 +13.1 + 0.8 + 0.6 + 1.2 + 1.8 +10.6 + 7.9 - 0.8 1.6 - 3.7 0.6 - +20.0 +11.7 +34.2 Jan. Feb. Mar. + 3.1 -12.0 + 7.2 -15.6 + 7.5 - + Apr. May June +21.3 -13.9 + 0.5 +25.4 -19.0 + 6.2 +16.8 July Aug. Sept. + 6.0 +23.3 +27.5 -16.1 +48.8 +40.1 - - p 3.8 - 4.2 8.0 9.0 + 3.0 + 1.9 + 2.3 + 4.3 + 5.2 + 7.8 + 7.8 +10.1 -15.5 +14.1 -12.4 - - +14.4 + 2.8 + 6.6 + 3.6 +35.7 + 0.4 + 7.7 +15.3 + 5.0 +10.9 + 8.1 + 5.3 + 7.0 +71.3 +10.7 -37.3 4.2 -10.7 +13.2 +10.7 + 3.5 + 5.8 +13.7 - 1.2 + 7.0 2.3 +22.2 +10.3 + 8.4 +22.7 +29.2 +19.0 +18.1 +23.2 + 9.7 + 4.1 +10.0 + 1.2 + 7.5 + 2.5 + 2.3 +12.3 + 1.5 +35.2 +28.4 +29.5 +13.3 + 6.1 +10.5 -88.4 -14.1 +53.0 +10.1 + 0.7 - + 7.5 - +22.1 + 9.8 +32.3 - £ 3.5 0.7 - 5.5 +10.7 +14.0 0.3 - 4.5 J - L 1.8 0.6 a __ _ _ - _ _L_ _ 3.0 __ _ _A_ 1970 Addenda 10 Thrift Nonbank nst. Commercial Deposits Paper Oct. Nov. Dec. Gct. NOTE: r 9 8 + 1.4 Monthly Sept. 1969: 1970: Adjusted 5 Credit Proxy NOVEMBER 13, 0.6 _ _ _ _ Aggregate reserve series have been adjusted to eliminate changes in percentage reserve requirements against deposits, but reserve requirements on Euro-dollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. FR 712 - E CONFIDENTIAL (FR) Table 3 AGGREGATE RESERVES AND MONETARY VARIABLES NOVEMBER 13, 1970 SEASONALLY ADJUSTED (Based on averages of daily figures) ber Bank Deposits ei U.S. Govt.and Demand Money Supply 6 ' 7 Total Currel (In billions of dollars) (In millions of dollars) 1969: 1970: 202.3 201.7 200.8 18.1 17.2 16.0 184.2 184.5 184.8 n.a. n.a. 307.5 25.5 154.4 153.8 153.7 197.7 194.5 194.1 14.0 12.7 12.7 183.7 181.8 181.4 305.7 303.8 304.2 26.1 26.6 27.5 45.6 45.9 45.9 153.6 153.4 153.7 193.5 193.4 194.1 11.8 11.4 11.2 181.7 182.0 182.9 302.2 305.5 305.7 27.9 28.2 29.0 201.1 199.3 201.5 46.1 46.4 46.7 155.0 153.0 154.8 192.1 192.0 194.3 10.7 10.5 11.2 181.4 181.5 183.1 304.8 303.4 306.1 29.1 30.0 30.0 290.2 289.1 290.5 203.3 203.9 203.6 47.0 47.6 47.8 156.2 156.2 155.9 197.9 199.6 201.0 12.7 13.0 12.9 185.2 186.6 188.1 309.6 309.3 311.1 31.8 32.0 31.0 27,896 28,408 29,024 296.0 303.2 308.0 204.3 206.0 206.2 48.1 48.2 48.2 156.2 157.8 158.0 206.9 211.8 217.0 16.0 18.8 21.6 190.9 193.0 195.4 315.8 321.9 324.5 28.8 28.4 29.7 28,916 29,134 310.6 206.1 48.5 157.6 221.0 23.5 197.5 324.7 30.5 27,318 27,206 27,024 27,902 27,832 27,729 297.0 296.7 294.2 195.8 196.3 196.8 43.5 43.8 44.1 152.3 152.5 152.6 Apr. May June 27,775 28,235 28,056 26,754 26,888 26,705 27,614 27,942 27,742 295.4 295.1 292.6 198.1 198.3 199.0 44.2 44.5 44.8 154.0 153.8 154.2 July Aug. Sept. 27,530 27,401 27,402 26,275 26,214 26,383 27,334 27,161 27,144 288.0 285.3 285.7 199.3 199.0 199.0 45.0 45.3 45.2 Oct. Nov. Dec. 27,354 27,783 27,928 26,210 26,538 26,806 27,129 27,548 27,707 283.5 285.8 285.8 199.1 199.3 199.6 Jan. Feb. Mar. 28,001 27,722 27,723 26,966 26,615 26,782 27,823 27,523 27,536 284.8 282.9 286.2 Apr. May June 28,216 27,890 27,902 27,350 26,916 27,056 28,046 27,692 27,713 July Aug. Sept. 28,041 28,585 29,240 26,694 27,780 28,708 29,373 p I 203.2 202.4 202.3 I Sept. 2 9 16 23 30 28,801 29,402 29,482 28,878 29,322 28,160 28,741 28,996 28,518 28,734 28,623 29,068 29,126 28,985 29,030 306.8 307.1 308.3 307.9 308.2 206.2 205.8 207.1 205.0 206.1 48.1 48.4 48.3 48.3 48.1 158.1 157.4 158.8 156.7 158.0 213.8 215.4 216.6 217.7 218.9 20.4 20.9 21.5 22.5 22.7 193.4 194.5 195.1 195.2 196.2 325.0 324.3 324.9 324.0 323.7 29.5 29.7 30.1 30.4 29.3 Oct. 7 14 21 28 p 29,497 29,205 29,496 29,307 29,142 28,803 29,930 28,772 29,155 29,138 29,250 29,022 310.6 309.5 310.2 311.3 207.2 205.1 207.2 205.0 48.3 48.6 48.6 48.5 158.9 156.5 158.7 156.5 219.8 220.8 221.5 221.8 23.1 23.5 23.7 23.7 196.7 197.2 197.7 198.0 325.4 323.9 324.4 324.9 30.0 30.2 31.0 31.1 29.346 28,955 205.4 48.6 156.8 222.2 24.2 198.0 325.5 30.4 Nov. NOTES: 181.1 182.2 183.3 28,139 28,060 27.972 Oct. 1970: 22.1 20.2 19.0 Jan. Feb. Mar. 4 p I 29,045 L 312.3 -- I ______ Aggregate reserve series have been adjusted to eliminate changes in percentage reserve requirements against deposits, but reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. Adjusted credit proxy includes mainly total member bank deposits subject to reserve requirements, bank-related commercial paper, and Euro-dollar FR712 Monthly data are daily averages except for nonbank commercial Weekly data are daily averages for statement weeks. borrowings of U.S. banks. paper figures which are for last day of month. Table 4 MARGINAL RESERVE MEASURES (Dollar amounts in millions, based on period averages of daily figures) Member eriod Monthly (reserves weeks ending in): 1969--January February March April May June July August September October November December Free reserves Excess reserves Total Banks Borrowings Res e r v e C ity Other Major banks Outside N.Y. 8 N.Y. Country - 477 - 580 - 635 - 844 -1,116 -1,078 -1,045 - 997 - 744 - 995 - 975 - 849 359 256 202 187 243 277 266 214 282 195 238 278 836 836 837 1,031 1,359 1,355 1,311 1,211 1,026 1,190 1,213 1,127 131 62 58 85 123 57 89 81 83 106 120 268 302 255 233 411 346 459 250 253 236 327 387 310 149 215 254 260 397 288 364 256 222 293 250 220 253 304 293 275 493 550 608 621 485 464 456 329 - 759 916 751 - 687 - 765 - 736 -1,134 169 210 129 178 159 171 183 928 1,126 880 865 924 907 1,317 148 106 90 227 165 140 218 287 317 225 331 241 289 460 232 289 287 119 228 217 348 261 414 278 188 290 261 291 - 706 175 881 143 278 273 187 - 374 283 610 317 9)15 811 783 235 184 339 179 102 158 111 609 467 949 496 1,017 969 894 101 12 232 -322 517 63 115 40 264 269 509 252 361 274 312 161 49 47 81 259 119 103 292 178 139 119 211 6 13 20 27 - 424 782 965 889 350 28 214 44 774 810 1,179 933 93 150 332 86 248 254 310 150 220 202 243 247 213 204 June 3 10 17 24 -1,029 - 721 - 390 - 799 195 136 268 88 1,224 857 658 887 269 195 -97 354 238 251 313 262 169 188 248 339 255 219 229 July 1 8 15 22 29 - 718 -1,219 -1,451 -1,201 -1,078 273 75 230 185 153 991 1,294 1,681 1,386 1,231 93 360 467 139 29 260 412 569 531 528 304 283 371 395 388 333 240 274 321 286 Aug. 5 12 19 26 - 822 84 589 522 188 280 92 138 1,010 1,174 681 660 114 382 21 56 362 362 243 144 303 229 262 231 130 188 198 Sept. 2 9 16 23 30 - 482 348 144 507 389 178 415 356 -47 272 660 763 500 460 661 79 160 89 75 103 181 143 93 77 79 221 343 224 259 324 179 117 94 49 155 Oct, 7 14 21 28 p - 46 409 388 291 332 41 200 144 398 450 588 435 -21 16 11 4 46 97 13 305 310 342 293 89 73 133 118 Nov. 4 p 11 p - 131 178 292 267 423 445 11 69 15 29 311 282 86 65 1970--January February March April May June July August September October p I 1970--.Apr. 8 15 22 29 May p - Preliminary. 300 294 450 Table 5 SOURCE OF FEDERAL RESERVE CREDIT Retrospective Changes (Dollar amounts in millions of dollars, based on weekly averages of daily figures) Total Federal Reserve credit (Excl. float) Period Year: 1968 (12/27/67 1969 (12/25/68 - 12/25/68) 12/31/69) U.S. Government securities Total holdings Bills I/ Other +3,757 +5,539 +3,298 +5,192 +2,143 ( +4,279 ( 1 8 15 22 29 + 179 - 720 - 111 (+ 71) 40 ( -) + + 947 222 + + + + + 156 ( 2( -- ) ) - 72 ( -- ) 6 13 20 27 +1,047 + 131 + 512 +1,154 ( -- ) + 397 ( -- ) - 50 ( -- ) - 664 - 221 ( -- ) 3 10 17 24 + 639 - 213 ) ) + 224 - 449 1 8 15 22 29 + 544 + 231 +1,181 - 185 460 5 12 19 26 + + + 362 591 231 - 343 2 9 + + 189 473 16 - 248 23 30 - 982 + 689 7 - --- Repurchase agreements ) ) + +1,176 + 707 Federal Agency Securities Bankers' acceptances + Member banks borrowings 21 206 - 3 + 67 225 182 214 134 108 + + + + 34 37 24 14 6 + 13 - 453 + 521 - 48 - 75 36 202 138 138 + + - 43 62 36 36 + + - 120 36 369 246 71 15 86 + + + 291 367 199 229 + + + 104 303 387 - 295 - 155 + 221 164 - 493 201 + 103 - 263 + 40 201 + + - 263 52 136 151 52 35 + + 514 245 Weekly: 1970--Apr. May June July Aug. Sept. Oct. Nov. S 17 482 5 14 21 + 224 28 p - 477 4 p 11 p + 690 - 48 - 114 222 370 132 36 +1,118 + 195 + 88 359 + + + - 326 158 453 678 + + 255 ( 143 ( --- + - 539 ( 678 (- -- + + + - 445 73 632 194 230 + 445 (+ - 73 ( -- ( -- + + + + + + + -- ) 145) ) 540 462 653 243 + + 293 (+ 71) 266 ( -) + + 644 ( 209 ( --- ) ) 164 316 14 864 418 + + 31 ( -193 ( -- ) ) - 236 (358 (- 90) 256) + 222 (+ 346) 183 - 56 + 67 268 - 165 ( -( 16( 63 ( ---- + - + - 241 ( 94 (- 29) 42) 632 444 188 + - 247 196 9 452 + 99 - 61 - 38 33 S28 + 45 - 50 133 123 250 506 196 + + + 13 37 12 38 49 ) ) ) ) 18 56 83 205 + + - - 25 4 16 44 -) 214) 369 19 + - 63 6 SI Figures in parenthesis reflect reserve effect of match sale-purchase agreement. p - Preliminary. 1/ + ) 638 (42 (- 610 75 22 6 16 145) + - - - I .1. 2 14 - 12 + 22 Table 6 MAJOR SOURCES AND USES OF RESERVES Retrospective and Prospective Changes (Dollar amounts in millions, based on weekly averages of daily figures) se r v e s y of r up a f f e c t ing F a c t o r s Treasury Foreign Other nonmember Federal Reserve Gold and Currency credit (excl. spec. dr. outside era s Float deposits deposits and Period float) 1/ rights (Sign banks indicat tionsand e ff s gold loans F.R. accounts on re.serves) ct Year: 1968 (12/27/67-12/25/68) 1969 (12/25/68-12/31/69) +3,757 +5,539 Weekly: 1970--Apr. 1 + 179 + 219 8 15 - 720 + 582 + + 947 - 554 + - 222 - 17 + 658 - 409 22 29 May 6 July Sept. Oct. Nov. -3,221 + 928 +1,309 2,676 - 813 + 241 + + - 79 152 + 264 + 27 - 664 - 346 + 3 10 17 24 + 639 - 213 + 224 - 449 1 + 544 + 231 +1,181 + + 63 182 348 230 543 574 521 503 605 - 460 + + - 5 12 19 26 + 362 - + + 591 231 - 343 166 - 13 + 259 169 2 9 16 23 30 + + 189 473 + 217 379 + + - 248 + 183 + + - 552 833 + + 20 174 7 14 21 28 p 4 p 11 p I/ For retrospective p - Preliminary - 185 - 982 + 689 - 482 + 5 224 + 576 - 477 - 351 + 690 - 359 - 48 + 476 details, see Table 5. 67 54 + 869 - 898 51 24 78 - 54 100 + + 98 174 - 2 20 8 15 22 29 Aug. -- +1,047 + 131 + 512 13 June -2,067 + + + + + 28 = Change in total = Bank use of reserves R ired Required rves reserves r +1,508 +1,448 +1,563 +1,340 + 334 + + - 97 554 110 246 + + 91 72 + + 621 54 - 199 34 55 44 84 - 163 174 354 + - 461 842 + 222 - 520 + 350 + 164 - 312 - 764 - 594 15 11 12 50 - 192 - 33 + 282 + 131 - 144 - 85 + +. 290 79 + 234 + 102 - 430 - 245 + 44 + + 550 24 + 365 + 222 375 151 + + 220 196 190 - 44 23 39 37 35 17 18 22 26 - 32 - 213 40 + 113 + + 7 - -105 - 45 + 21 - 152 - 20 4 6 15 210 - 14 45 + + + 100 169 95 10 4 9 15 + + + + 271 1 230 1 24 1 - 271 86 - 41 + 446 73 338 + 158 - + 76 354 + 115 - 384 193 + 153 561 - 10 527 + + - 324 49 124 + 640 + 321 - 248 322 - 328 - 11 + 426 + 278 - 484 - 439 + + 228 61 + + 69 97 + E Excess reserves + - 55 108 

Federal Reserve (1970, November 16). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19701117

@misc{wtfs_bluebook_19701117,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1970},
  month = {Nov},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19701117},
  note = {Retrieved via When the Fed Speaks corpus}
}