pay-roll program. The experience has been that this promotion has to take the form of personal contact between the Treasury and management and labor to be successful.

Pay-roll savings participation among Federal employees as a group is greater on the average than among industrial employees as a group. The big decline in Federal employees' participation last year occurred as a result of the big reduction in Federal employment. Navy-yard workers were particularly good participants in the pay-roll-savings plan.

Number of persons participating in pay-roll savings plan

PURCHASES OF SAVINGS BONDS ON THE BOND-A-MONTH PLAN

Last summer the Treasury inaugurated a program of selling bonds to people who were not on the pay-roll savings plan through the bond-a-month plan. This plan provided an arrangement whereby professional people, business people, farmers, and other people not on pay rolls could have their banks charge their accounts each month for the purchase of a designated amount of savings bonds.

The table below shows the result of two surveys of the participation of the bond-a-month plan that were made about August 1. The figures indicate that in a thousand banks surveyed, there were 50,000 people participating. Their bond purchases were $3,000,000 a month. The survey covered a representative sample of banks. On the basis of the fact that there are about 50,000,000 depositors in banks having a bond-a-month plan, we think it fair to estimate that there are probably a quarter of a million persons participating in the bond-a-month plan. They are acquiring probably $15 million of savings bonds a month through the bond-a-month plan.

The bond-a-month program is wholly voluntary and has been able to show successful operation because of the cooperation of the commercial bankers of the country. There have only been a handful of Treasury people assigned to the program. With greater attention to the program on our part through an enlargement of the sales staff, we think it would be possible to run up substantially the purchases on the bond-a-month plan.. We feel that the experience to date warrants the conclusion that the number of people now participating could be multiplied a number of times within a relatively short period.

Purchases of savings bonds on the bond-a-month plan survey on Aug. 1, 1947

DENOMINATION BREAK-DOWN OF SALES OF E BONDS SINCE BEFORE THE WAR

Sales of large-denomination bonds held up well in the period immediately after the war and showed a marked increase this year over last. Estimated sales of $1,000-denomination bonds in 1947 are exceeded only by sales during the war years. Series E bonds of $1,000 denominations go mainly to those persons in the investment market who find that the largest E bond fills a part of their portfolio requirements rather well.

*Includes D bonds 1939-41; figures for 1944 and 1945 adjusted for War Loan carryovers

It is clear from the chart that the decline in the sales total has taken place mainly in the smaller-denomination bonds. Sales of these denominations in 1947 will amount to about 1.8 billion dollars which is about one-fifth of the 1944 peak. Series E bonds of the 10- through 200-dollar denomination are the one generally involved in pay-roll plans. It is to be expected, therefore, that sales of these bonds would decline as the proportion of pay-roll sales dropped.

Most of the prewar sales of savings bonds were in $1,000 denominations. In 1939 and 1940 the $1,000 denominations represented 75 percent of total sales. During the war this proportion dropped to 17 percent as the pay-roll plan spread across the country. In 1946 the amount in $1,000 denominations was 31 percent of total E sales, and this year the proportion will be about 41 percent.

E BOND SALES COMPARISON, 1946-47

The map below on this page gives a quick picture of the E bond sales situation in the various areas of the country. Sales this year are compared with 1946. For the country as a whole the sales volume is down by 2 percent, but in the midwestern agricultural area, where most of the sales increases this year are concentrated, sales are up 24 percent.

Higher farm income and the momentum of the savings-bond buying habit developed during the war have kept sales up in this area. Some of the Midwestern farm States were leaders during the war and their present performance is still outstanding. This is particularly true in the case of North and South Dakota and Iowa.

Sales in the remaining geographic areas are off about 5 percent. In the industrial areas, this reflects, in particular, the decline in the pay-roll purchases of E bonds. In the farm areas of some Southern States this reflects the fact that incomes in these States are low on the average, and many people are earning relatively low income.

MONTHLY REDEMPTIONS OF E BONDS

Before concluding the discussion of E bonds it is interesting to take a look at the redemption situation. Redemptions reached their peaks in the winter of 1945-46. October 1945 was the highest month with redemptions of $562,000,000. The trend has been downward since and redemptions in February 1947 of $290,000,000 were the lowest in over 2 years. Redemptions during October 1947 were $316,000,000.

During the war it was freely predicted that an avalanche of redemptions would follow the end of the war, particularly when a large volume of goods became available. The fact is that this did not happen.

Some savings bonds were bought during the drives by "weak holders" and most of these holdings were shaken out during the 7 or 8 months following the close of the war. There is some evidence from the large volume of redemptions of low-denomination bonds after the war that the "weak holders" were pinched during this period. The decline in redemptions, it is interesting to note, has been accounted for largely by a reduction in the redemptions of the $10, $25, and $50 bonds.

Percentagewise, the rate of redemptions appears to be rather low and reassuring. In October 1947 redemptions amounted to 1.02 percent of the amount outstanding. This is extremely favorable experience.

SAVINGS TURN-OVER AND SERIES E REDEMPTION RATIO

One of the gratifying things with respect to the series E bond redemption experience is that it is favorable not only in aggregate amount but also when compared to the turn-over of other comparable forms of savings. For the fiscal year ended June 30, 1947, series E bond redemptions averaged 1.2 percent per month of the amount outstanding. In the fiscal year 1946 the ratio was 1.6 of the amount outstanding.

Figures on deposits of the Postal Savings System and on deposits in mutual savings banks in New York State indicate that deposit turn-over-that is, withdrawals in relation to total deposits-is considerably higher than these percentages. In these cases the rate has been running about 3 percent per month for many years in the case of Postal Savings System, and about 2 percent per month in the case of mutual savings banks in New York State.

Moreover it is interesting to note that the trend of deposit turn-over in postal savings and in saving banks has been upward in recent years, whereas the redemption ratio for series E bonds was lower in 1947 than it was in 1946 and was the same as it was in 1945.

The good experience with savings bonds in the period since the end of the war when goods have become increasingly available leads to the conclusion that a large part of savings bonds outstanding are extremely well placed.

SAVINGS TURNOVER AND

SERIES E REDEMPTION RATIO......

E redemptions lower than turnover on comparable forms of savings

Fiscal Years

*Turnover and redemption ratio are percents of amounts outstanding