years. Since the middle of the year, however, such sales have been at a much lower level. This shift probably reflects both the change in Federal Reserve open market policy and the declining demand for real-estate mortgage credit.

CHART 9. CHANGES IN ASSET HOLDINGS OF MUTUAL SAVINGS BANKS 1948-51

Mutual savings banks also curtailed their sales of United States Government securities after mid-1951, as can be seen from chart 9. Such sales, which had amounted to 670 million dollars in the second half of 1950 and close to 700 million in the first half of 1951, totalled about 400 million in the second half of last year.

As with life insurance companies, a combination of changed open market policy and declining demand for mortgage credit probably accounted for the smaller reduction in Government security holdings during the last six months of 1951. As shown in appendix A-9, mutual savings banks' holdings of real-estate mortgages increased by a record 950 million dollars in the last half of 1950, by

roughly 870 million in the first half of last year and less than 750 million in the second half.

CHART 10. CHANGES IN LOAN AND INVESTMENT HOLDINGS OF SAVINGS AND LOAN ASSOCIATIONS

Mortgage loans of savings and loan associations increased more slowly in each quarter of 1951 than in the same quarter of 1950, as shown in chart 10. For the year 1951 as a whole, the increase of 1.8 billion dollars in mortgage loans compared with an increase of 2.1 billion dollars in 1950. Reflecting the excess of savings and other funds flowing into these institutions over the increase in mortgage loans, savings and loan associations added to their holdings of United States Goverment securities in each quarter of 1951.

Prospective public and private credit demand during 1952 suggests that the voluntary credit restraint program may continue to make an important contribution to economic stability by screening private financing requests and discourag ing less essential investment outlays and credit expansion. While a moderat decline in the volume of new capital offerings by State and local governments and a more pronounced reduction in demand for real estate mortgage credit are anticipated for 1952, corporate business demands for long-term funds from the securities markets and life insurance companies are likely to be even larger this year than last. This increase in corporate requirements for long-term funds, coupled with the new borrowing needs of the Federal Goverinment, may result in a total credit demand close to that of 1951.

In the case of business corporations, anticipated plant and equipment expenditures afford a significant measure of their prospective financing requirements.

As is shown in chart 11, total capital outlays by business in 1952 are expected to exceed the 1951 peak level. According to a recent McGraw-Hill survey, manufacturing, mining, transportation, and utility industries are planning to spend 13 percent more on new plant and equipment this year than last. It is expected that this increase in plant and equipment outlays will be coupled with a substantial rise in Federal income tax payments and some decline in corporate profits. Outstanding commitments of 45 life insurance companies, whose combined assets represent 85 percent of all life insurance company assets, to acquire loans and investments declined gradually from April through August 1951, and again from November 1951 through January 1952, as is shown in chart 12. Starting in September the coverage of the commitments data was broadened to include business mortgage loans of less than $100,000 and foreign investments; consequently, comparison of the April 1951 total of 4.5 billion dollars with the January 1952 total of 4.1 billion understates somewhat the decline in outstanding commitments over this period.

Commitments to acquire non-farm residential real-estate mortgages declined by nearly 700 million dollars from April through January, while those to acquire loans and investments of business concerns engaged in defense or defense-supporting activities rose from somewhat more than one-third to slightly less than

CHART 12. OUTSTANDING COMMITMENTS OF 45 LIFE INSURANCE COMPANIES TO ACQUIRE LOANS AND INVESTMENTS

Defense

one-half of total commitments. Practically all of the April to January increase in defense and defense-supporting loan and investment commitments was accounted for by manufacturing, especially such basic industries as chemicals and rubber, machinery, iron and steel, and petroleum and coal.

CHART 13. NEW COMMITMENTS MADE BY 45 LIFE INSURANCE COMPANIES TO ACQUIRE LOANS AND INVESTMENTS

Starting in September 1951 the 45 life insurance companies which had been reporting since April on their outstanding loan and investment commitments began to compile data on new commitments made each month. The volume of such new commitments rose appreciably in October, remained at a rate of about 750 million dollars a month through December, then declined to 630 million in January, as is shown in chart 13.

During the 3-month period October to December 1951, commitments to business concerns engaged in defense and defense-supporting activities accounted for onehalf of all new commitments made, while the other half was about equally divided between business concerns engaged in nondefense activities and purchases of farm and nonfarm residential properties.