1959. Corporations continued to hold large amounts of Government securities as a reserve against heavy tax liabilities resulting from the sustained high level of corporate profits during the year. Except for minor declines during tax payment periods in September and December, corporate holdings of Federal securities steadily increased during the first eight months of fiscal 1960, reaching an alltime peak of $26.2 billion by the end of February. Liquidation of Federal securities at March and June tax payment dates, however, brought corporate holdings down to $21.7 billion on June 30, 1960.

In January of 1960 the Treasury added approximately 500 of the largest nonfinancial corporations in the United States to the Treasury Survey of Ownership of U.S. Government Securities. The results are published as part of the regular monthly Survey of Ownership in the Treasury Bulletin. The average length of the marketable securities held by the reporting corporations on June 30, 1960, was 12 months. Holdings of Federal securities by State and local governments are estimated to be $18.1 billion at the close of the fiscal year, a level $1.4 billion higher than that of June 1959. About one-third of the Federal security holdings of these State and local governmental units are in employee retirement funds.

The holdings of all other private nonbank investors amounted to $22.5 billion on June 30, 1960, an increase of $2.9 billion. Foreign balances invested in Federal securities rose $1.3 billion to a level of $8.4 billion on June 30, 1960. In addition, international institutions increased their holdings by $0.8 billion as the International Monetary Fund acquired $0.3 billion of marketable Treasury securities and $0.3 billion of special notes, and the International Bank for Reconstruction and Development acquired $0.2 billion of short-term securities.

Savings and loan associations increased their holdings of Federal securities during the fiscal year by $0.2 billion. In February 1960, approximately 500 large savings and loan associations were added to the Treasury Survey of Ownership of U. S. Government Securities. These results are also being published as part of the regular Survey in the monthly Treasury Bulletin. On June 30, 1960, their marketable securities had an average length of 8 years 8 months.

Holdings of the remaining classes in this group of private nonbank investors (nonprofit associations, dealers and brokers, corporate pension funds and certain smaller institutional groups) are estimated to have increased $0.5 billion during the fiscal year.

Government investment accounts increased their holdings of Federal securities by $0.7 billion. The largest increases in holdings were registered by Government employee retirement funds ($0.9 billion), the railroad retirement account ($0.3 billion), and the Federal disability trust fund ($0.5 billion). Offsetting reductions in holdings

were made by the Federal old-age and survivors insurance trust fund ($0.7 billion) and the highway trust fund ($0.4 billion). Of the $55.3 billion Federal securities held by Government investment. accounts on June 30, 1960, $44.9 billion, or more than 80 percent, was in the form of special issues held only by these accounts. Details on the ownership by Government investment accounts are shown in table 61.

The decline in holdings of the banking system during the fiscal year consisted of a drop of $5.9 billion in commercial bank holdings and a $0.5 billion increase on the part of the Federal Reserve System. The major drop in holdings of commercial banks occurred in marketable securities, with the larger banks showing the greatest decreases. Of the $5.5 billion marketable securities liquidated by commercial banks during the year, New York City central reserve city banks accounted for $1.1 billion, Chicago central reserve city banks $0.5 billion, and the reserve city banks $3.2 billion. The average length of marketable securities held by commercial banks on June 30, 1960, was 3 years 7 months, a decrease of 3 months from June 1959.

An analysis of the estimated changes during fiscal 1960 in bank versus nonbank ownership is given by type of issue in the following table.

Estimated changes in ownership of Federal securities by type of issue, fiscal year 1960 [In billions of dollars]

1 Gross public debt, and guaranteed obligations of the Federal Government held outside the Treasury.

Corporations and Certain Other Business-type Activities of the United States Government

Financial operations

Business-type programs administered by Government corporations and certain other agencies are financed, according to law, from their own receipts, from capital stock subscriptions or by appropriations, and from sale of their obligations to the public, or from borrowing from the United States Treasury. The Secretary of the Treasury is authorized not only to purchase obligations of many of the agencies, but he is also, under certain circumstances, authorized to approve the terms and conditions of such obligations. Under provisions of the Government Corporation Control Act (31 U.S.C. 868), the obligations of most agencies issued to the public must be approved by the Secretary of the Treasury; the few agencies which are exempt from this requirement must consult with the Secretary of the Treasury before issuing obligations to the public. Most Government corporations and all other business-type activities are required to maintain their checking accounts with the Treasurer of the United States, although with the approval of the Secretary of the Treasury such accounts may be kept with the Federal Reserve Banks or with private banks designated as depositaries or fiscal agents of the United States.

Financial statements submitted to the Treasury.-Reports consisting of balance sheets, statements of income and expense, and statements of source and application of funds, are submitted to the Treasury by all Government corporations and certain other agencies. These reports are required, under the provisions of Department Circular No. 966 and Supplement No. 1 thereto, to be submitted quarterly and a statement of long-range commitments and contingencies is required to be furnished semiannually. The reports serve as a basis for combined statements designed to provide full disclosure regarding the operations as well as the financial condition and investment of the United States in these enterprises. The total combined assets of Government corporations and certain other agencies reporting under Circular No. 966, consisting primarily of inventories, loans and accounts receivable, and fixed property (land, structures, and equipment), amounted to $111,129 million as of June 30, 1960, compared with $106,228 million on June 30, 1959. The combined liabilities as of June 30, 1960, consisting primarily of accounts payable and borrowings from the public, amounted to $6,924 million, compared with $6,467 million on June 30, 1959. Borrowings from the Treasury are reported as part of the Government's investment. The combined total of the Government's investment as of June 30, 1960, amounted to $104,205 million and to $99,761 million on June 30, 1959. The Government's investment is exclusive of the U.S. interest in mixedownership or Government-sponsored corporations amounting to

$2,650 million on June 30, 1960, and $2,569 million on June 30, 1959. Individual and combined statements of the financial condition and operations of the reporting agencies are published periodically in the Treasury Bulletin. The comparative combined financial statements as of June 30, 1952-1960, are shown in table 116.

Borrowing authority and outstanding obligations. Certain Government corporations and agencies are given authority to borrow funds for their operations and the Secretary of the Treasury is authorized to purchase the obligations of many of the agencies. New borrowing authority made available during fiscal 1960 amounted to $932 million, while reductions in authority amounted to $841 million, a net increase of $91 million. The unused borrowing authority as of June 30, 1960, amounted to $19,204 million as compared with $19,406 million on June 30, 1959. Data on the outstanding obligations and status of borrowing authority of these corporations and agencies are shown in table 113.

Advances by the Treasury. The Secretary of the Treasury is authorized by legislation to advance funds to certain Government corporations and agencies by the purchase of obligations or by the acceptance of notes of these agencies. Such loans or advances are generally applicable to the borrowing authority of the corporation or agency.

As indicated in the section on the financial statements submitted to the Treasury, the balance sheets of Government corporations and agencies show the borrowings and advances from the Treasury as part of the net investment of the United States in the enterprise. The advances by the Treasury generally are secured by formal obligations or agreements executed between the Secretary of the Treasury and the head of the agency involved. Excluding refinancing transactions, advances by the Treasury during the fiscal year 1960 amounted to $6,734 million, compared with $8,584 million in 1959, and repayments amounted to $6,441 million, compared with $5,099 million in the preceding year. The outstanding loans and advances as of June 30, 1960, amounted to $25,636 million, compared with $25,343 million on June 30, 1959. Details of the loans and advances are shown in table 112.

Interest and other payments made to the Treasury.Interest rates on borrowings from the Treasury, except where fixed by statute, are determined by the Treasury from month to month, taking into account the cost which the Treasury would have to pay to borrow money in the current market, as reflected by prevailing market yields on Government obligations with maturities corresponding to the approximate duration of the advances to be used by the agencies for their programs. Information on amounts of borrowing from the Treasury outstanding as of June 30, 1960, a description of the securities held, and the applicable rates of interest are given in table 115.

On the basis of operating results of an enterprise, or as may be required by statute, Government corporations and agencies make payments into the Treasury representing interest, dividends, and other earnings. Interest paid to the Treasury amounted to $755 million, and other payments amounted to $76 million during fiscal 1960, compared with $415 million and $73′ million, respectively, during 1959. Information covering these payments to the Treasury is given in table 119.

Guaranteed obligations of Government agencies.-Certain Government corporations and agencies have statutory authority to issue obligations which are guaranteed as to principal and interest by the United States. Currently, the issuance of such guaranteed obligations is confined to notes of the District of Columbia Armory Board and to Federal Housing Administration debentures issued in exchange for foreclosed mortgages on behalf of its various mortgage insurance funds. Issues of guaranteed obligations amounted to $87 million and redemptions to $59 million during fiscal 1960, compared with $72 million and $62 million, respectively, during 1959. As of June 30, 1960, the total outstanding held outside the Treasury was $140 million, compared with $111 million a year earlier. The amount outstanding on June 30, 1960, included $0.5 million of matured obligations of the now liquidated Federal Farm Mortgage Corporation and Home Owners' Loan Corporation. Funds are on deposit with the Treasurer of the United States for the payment of the principal and interest on these matured obligations. Details regarding the outstanding guaranteed obligations are given in table 28.

Nonguaranteed obligations of Government agencies.-Under their available borrowing authority, certain mixed-ownership and Government-sponsored corporations issue nonguaranteed obligations to the public. Corporations issuing such obligations include the banks for cooperatives, Federal intermediate credit banks, Federal land banks, Federal home loan banks, and the Federal National Mortgage Association. Issues amounted to $8,462 million, and redemptions and other reductions amounted to $6,787 million during fiscal 1960, compared with $6,197 million and $4,887 million, respectively, during 1959. The total outstanding amounted to $8,444 million as of June 30, 1960, and $6,768 million on June 30, 1959.

Subscriptions to and repayments of capital stock of Government corporations. During fiscal 1960 subscriptions to capital stock of Government-owned and Government-sponsored corporations amounted to $6 million representing subscriptions to capital stock of the Federal intermediate credit banks. Reductions in the Government-held capital stock amounted to $8 million, representing repayment by the banks for cooperatives. The amount of Government

Revised.