The Birmingham age-herald., 1914-11-27
UNDERESTIMATE OF
 CASH CIRCULATED Reduction of Reserve Re- quirements Misleading  HOW THE PLAN WORKS Large Percentage of Reduction Is Figured by Board to be Mere
 ly Credit" and Not Ac- tual Cash

Washington, November 2e.--fSpecial.) ] comptroller of the currency that s4s4,- 91s,o76 in cash would be released from bank vaults and put into active service through reduction Of reserve require- ments under the new banking law, a high official of the reserve board to- day informed the correspondent of The Age-Herald that the release of concrete cash would be far below that figure although the true amount could not be estimated at the present
 Also. it was learned that Secretary Willis of the board is hard at work In an effort to ascertain even approxi- mately the amount of actual cash which may be taken from the vaults and placed at the disposition of the manu- featuring, commercial and investment clements of the country. This true TO- lease, it is explained. cannot be figured till the net cash reserve holdings and banks have all been received and listed.
 Reduction in Requirements
 Under the new--that is, the present. law, the reserve requirements in the three central reserve cities of New York, Chicago and St. Louis have been reduced from 20 per cent to IS per cent; For reserve city and "country" banks the reserve has been lowered from 25 to 15 per cent Thus, on its face, the statement of the comptroller that the amount released by the reduction of r per cent in central reserve city re- quirements and 10 per cent in reserve city and Country" banks would ag- gregate over s46oooo. 900 seemed plaus- ible and reliable.
 On the other hand. however, it was board that substantial amount of the reserve city and Country" bank re- serves were not in the shape of actual money, but in the form of credits on the books of central reserve city banks. To just how much these credit reserves will amount cannot yet be even esti- mated. but they are expected to total between $200,0oO,0OO and $225.o0o.0oo. Moreover, to ascertain the true amount is somewhat complicated pro- cedure. To take a hypothetical case as a concrete illustration, 8 country bank may be notified by the comptroller of the currency that its report falls short of the reserve requirement. by 5000, and the deficiency must be made up at once. This bank then telegraphs to the Alphabetical National bank in Washington that it wants credit of s50o0 for 60 days, and is immediately informed that 1t may have that amount at or 5 or per cent This 5000 then Is placed to the credit of the country bank. without enc penny of actual cash being involved.
 But. to go further. explained this re- serve board authority, the Alphabetical National bank may transfer this credit to the Multimillion National bank In New York, or another central reserve city, and so the credit of S5000 would appear on the books of two banks as part of the reserve of the country bank, and all this without a cent in concrete cash having been added to the reserve in the vaults of any one of the three institutions involved in the trans action.
 Hard to Find True Amount
 Thus, to ascertain the true amount of real money which will be released through the reduction of reserve re- quirements. it will be necessary to trace all such transactions through the vari- GUS banks involved, and to separate