The weekly chieftain. [volume] (Vinita, Craig County, Okla.) 1905-1913, 1911-02-10
Seasonable Variations in
In Demand for Currency

panics in the United States are most
likely to occur during the stringent
money markets of the "spri1S re- wal
or the crcbmoving season in the fall.
This is one of the conclusions drawn
from an investigation by Edwin Walter
Kemmercr, professor of &c )nomics and
finance at Cornell univers ty.
Prof. Kemmerer does not mean to
declare that the seansonal strmgencies
are the causes of the panics, but that
the months in which they occur are the
weakest links in the seasonal chain,
and that in periods of extraordinary
tension the chain breaks at those
links.
Statistics of great value to the stu
dent of monetary problems are made
available in volume written by Prof.
Kemmerer, just published by the Va
tional Monetary Commission, entitled,
Seasonal Variations in the Relative
Demand for Money and Capital in the
United States" 1t is statistical
study, in which Prof. Kemmerer has
gone beyond the range of any previous
field, and on the basis of statistical
evidence establishes many facts hitter
to obscure.
The object of the work, as stated by
Professor Kemmerer, "is to throw light
upon the regularity and the extent of
these seasonal variations, upon the de-
gree to which our currency and credit
system responds to them, and finally
to show some of their probable re-
suits upon more general economic con-
ditions as exemplified in such phen-
omena as security prices, commercial
failures, and panics." The study is
based. upon the nineteen-year period,
l189O-190S, so far as data for this period
is available. The material for the
large number of tables found in the
volume was, in part, secured by the
commission directly from clearing
house associations, from individual
bankers, and from public officials. 1t
was also, in part, compiled from gov
eminent reports and financial journals.
In his study the author has looked
for the expression of seasonal varia-
tions in the demand for money and
capital in such market data as interest
rates, bank loans, deposits, and re-
serves, domestic exchange rates d
interior currency shipments, foreign
exchange rates and the movement of
gold, amounts of money in circulation,
and clearings. His method of using
this data has been to tabulate the fig
ures themselves and also to construct
an index number for each figure. Then
for the period as whole he has made,
first, a simple average of the figures
themselves, and second, a simple aver
age of the index numbers.
Professor Kemmerer considers in
turn the changes in the demand for
moneyed capital in New York, Chi
cago, st. Louis, New Orleans, and San
Francisco. AS the best available
criteria of this demand he has select
ed interest rates and the ratios of bank
bank reserves to deposits from 1890
to 1908 A study of the data for New
York City leads the author to the con-
clusion that there are five periods in
New York's money market.
First throughout January there is a
rapid decline in the relative demand
for money, making the last part of
January and the fore part of February
a time of very cheap money This
leasing up" Professor Kemmerer
states, is due to the fact that the crop
moving remand for money in the west
and south has spent it's force. The
cash is flowing back in New York City.
Among other causes he mentions the
natural reaction after the heavy strain
on the money market incident to Jan
uary settlements.
The author puts the beginning of
the second period at about the middle
of February, the relative demand for
money advancing rapidly to a high
level and maintaining it through he
fore part of April. The cause of this
upward movement he finds in the en-
couragement to investment given by
the low interest rates and the high re-
serves of the former period. A Sec
ond reason is to be found in the in
crease in certain lines of trade activity
which normally takes place at about
this time of the year. The Great
Lakes, the Mississippi river, and other
inland waterways are opened to traffic
during this period. Railroad traffic
is released from the incubus of cold
weather and snow"