The most striking economic developments of 1950 were the recovery from the moderate business recession of 1949 and the sharp rise in prices during the second half of the year. The outbreak of the Korean war created an intensified demand for goods both on the part of industry and private consumers. The scare buying which followed set the stage for a rapid expansion of bank loans and deposits toward the end of the year. By the year-end total assets of all banks in the United States and possessions were $192 billion, deposits and other liabilities $178 billion, and capital accounts $14 billion. These amounts were respectively 7, 7, and 6 percent larger than at the beginning of the year. The amount and percentage distribution of bank assets, liabilities, and capital accounts at the close of 1950, 1949, and 1945 are presented in Table 19. Table 19. ASSETS AND LIABILITIES OF ALL BANKS IN THE UNITED STATES AND POSSESSIONS, DECEMBER, 1950, 1949, and 1945 Total liabilities and capital accounts $192,241 $180,043 $178,203 1 Asset and liability data were not available for 27 banks on December 30, 1950, 31 banks on December 31, 1949, and 104 banks on December 31, 1945. Detailed data for 1950: See Table 105, pp 232-33. ASSETS Significant changes in the distribution of assets held by all banks in the United States and possessions occurred during the period 1945 through 1950. During this time bank holdings of United States Government obligations decreased $29 billion, investments in municipal and other securities increased $6 billion, and loans rose $30 billion. Over the 5-year period the growth in bank loans amounted to 99 percent, while the decline in bank holdings of United States Government obligations was 28 percent. The amount and distribution of assets held by all banks in the United States and possessions from 1945 to 1950 are shown in Chart C. United States Government obligations constituted only 38 percent of total bank assets on December 30, 1950, contrasted with 57 percent on December 31, 1945. Loans, on the other hand, increased from 17 percent of the total assets in 1945 to 32 percent of the total in 1950. Chart C. ASSETS OF ALL BANKS, UNITED STATES AND POSSESSIONS, Investment in securities. On December 31, 1945, total investments in securities held by all banks in the United States and possessions amounted to $110 billion. By the end of 1950 the banks held only $88 billion in securities, a decline of 20 percent. However, as shown in Table 19, this decline is the result of divergent trends. Bank holdings of United States Government obligations declined over a fourth from 1945 to 1950, investments in obligations of States and subdivisions doubled, and holdings of other securities increased almost one-half. United States Government obligations held by insured commercial banks declined $5 billion in 1950. The principal changes in such holdings were an increase of $11 billion in notes, a decrease of over $10 billion in certificates, and a decline of about $6 billion in bonds. These changes largely reflected Treasury financing activities. The Treasury offered notes in exchange for most of the bonds, notes, and certificates maturing or called in 1950. The amount and percentage distribution by type and maturity of United States Government obligations held by insured commercial banks during the period 1941 to 1950 are given in Table 20. Table 20. MATURITIES OF UNITED STATES GOVERNMENT OBLIGATIONS HELD BY INSURED COMMERCIAL BANKS, DECEMBER, 1941-1950 1 Treasury bills are generally issued with maturities of 91 days; certificates of indebtedness have maturities of approximately one year; and Treasury notes are issued with maturities of from one to five years. Based upon number of years to final maturity. United States savings bonds, Treasury bonds (investment series A-1965), and depositary bonds. Prior to December 31, 1947, this item included United States savings bonds only; depositary bonds were included with other United States bonds according to maturity. Non-marketable issues were not reported separately on December 31, 1941. Loans. Total loans and discounts of all banks in the United States and possessions expanded $11 billion or 22 percent during 1950. Almost half of this increase was in commercial and industrial loans; real estate loans advanced nearly $4 billion and other loans to individuals $2 billion. Nominal increases were recorded in all other loan categories except agricultural loans, which were slightly lower at the year-end. Chart D shows that the volume of bank loans more than doubled from 1945 to 1950 in all but 9 of the 48 States. The lowest rate of growth, |