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46 Fed. Res. Bull. 1 (1960)

handle is hein.journals/fedred46 and id is 1 raw text is: DEMANDS FOR CREDIT AND CAPITAL were large throughout 1959. In addition to rec- ord peaceti ne borowing by the Federal Government, private financing reached a new peak, one- 44d above 1958 and one- tenth above ta previous peak in 1955. Increases in borrowing last year were pri- marily in short- and intermediate-term debt. Consumer financing of durable goods pur- chases and business borrowing for working capital needs rose sharply. Moreover, Fed- eral Government borrowing was almost en- tirely through short- and intermediate-term issues, as the statutory ceiling on interest rates on new Treasury bond issues prevented the Government from competing effectively for long-term funds. Federal bond financ- ing in 1959 was only one-seventh as large as in 1958. Private long-term financing increased only slightly. A rise in mortgage bor- rowing was largely offset by a decline in security financing by domestic corporations and foreign borrowers. Also, expansion in State and local government debt was some- what smaller than the record growth in the preceding year. Interest rates rose further in 1959, reach- ing new postwar highs. Sharpest increases were in short-term rates, reflecting the ex- ceptionally large demands for short-term credit. Despite contraction in total long- term financing, bond and mortgage yields also advanced. The increase in long-term borrowing costs reflected in part a decline in the flow of savings to institutions that customarily No=.-Flow of fundi data; for description see But.cnw for August 1959, p. 928 ft. Estimate, for 1959 preUminary. ank loans n.e.c. are mainly loans to businers. Federal obli- gations include nonguaranteed debt of Governnent-.ponooied enterrises. Corporate securities include Isues of forein cor- pora.ns, international institutions, and foreign ~overnesest solto te United States as well as issues of domnestic cor- porations. supply the bulk of long-term funds to capital markets. Growth in time and savings de- posits at compercial and mutual savings banks was much smaller last year than in 1958. The decline in savings flows to banks more than offset the rise in flows tQ savings and loan associations and pension funds; saving through life insurance companies was little changed. Expansion in short- term lending and tighter reserve positions also limited the supply of commercial bank funds available for longer term investment. Rising interest rates, however, attracted an increased volume of consumer and busi- Capital Markets in 19 59 IfJ It'_

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