Results of a January simulation experiment with the two-layer version of the NCAR global circulation model are discussed. The model includes a hydrological cycle, horizontal and vertical turbulent transports of momentum, heat, and water vapor from the lower boundary and within the atmosphere, and calculations of solar and terrestrial radiation. Although the water vapor field interacts with the radiation calculations, the cloud distribution is a function of latitude and season. In this version of the model, the earth's orography is omitted as well as an explicit calculation of the surface temperature. This version of the model has a spherical horizontal mesh spacing of 5° in both longitude and latitude and two vertical layers at 6-km height, increments. The details of the finite-difference scheme for the model are presented. The initial conditions for this experiment are based on an isothermal atmosphere at rest. The zonal mean cloudiness, the mean sea level temperature distribution, and the sun's declination are specified for January. The early stage of the numerical integration is characterized by a Hadley-type direct circulation due to the thermal contrasts between the continents and oceans. Within 2 weeks, the Hadley circulation breaks down due to baroclinic instability. This results in the typical three-cell meridional circulation. The comparison between computed and observed January climatology is discussed together with the presentation of momentum, moisture, and energy budgets. The main result from these budget calculations is that the Hadley cell is of dominant importance in the transport of various quantities within the Tropics and that baroclinic eddies are important in midlatitudes.