Evening star. [volume] (Washington, D.C.) 1854-1972, 1915-03-21
easy Money" Is the Condition
Now Confronting Financial
Institutions.
EUROPE'S ABSENCE AS
BORROWER MAIN CAUSE
Short Term Loans Are Quoted at
Low Rates, But Commercial Bor-
rowers Pay Regular Price.

L.
Just now the banks of the country
are confronted with that condition
known as easy money" and it is now
recognized that the banks as a whole
have plethora of funds which they
would be quite willing to pass along
to be employed in legitimate and re-
munerative enterprises. The recent call
of the controller of the currency for
statements of condition of the national
banks, for instance, will show an ap-
preciable gain in deposits since the last
compilation, December 81, and those
statements already tabulated give am
pie evidence of that fact.
From Chicago comes the statement
that the twenty national banks Of that
city, reporting to the controller of the
currency under date of March 4, 1915,
show deposits aggregating $500,7O0.61S,
an increase of sos, 36S,616 since the last
previous reports under date of Deem
Der 81, 1914. Total loans were $347,-
994.514, an increase of S16,458,030, and
cash resources totaled $208,373,454, a
gain of s39.597.361. by similar compare
son. Including the state banks figures
of February is last, the total deposits
an increase of $S0,1s3,s1S, compared
with the combined previous totals OF the
two groups of banks. The recent rul-
ing of the controller that banks could
count only the net difference in de-
posits between banks. cut down the de-
posits Of the two largest institutions
alone about $12.O00,000.
Greatest in History.
Considerable publicity has been given
to the fact that the banks of the north
west section now have on deposit more
money than at any time in their his
tory. Approximately $11.O00.0O0 more
money is on deposit in the banks OF
Minneapolis now than there was De-
cember 81, 1914, the grand total OF the
national and state banks and trust
companies being $133.1s9,7s6 at the
close of business March 4.
Clearing House Association for the
week ending March 10 shows that the
associated banks of this city hold $lZ9,-
739,53O in actual cash In their vaults
over and above the amount called ioI
by law In the corresponding week OF
last year the amount of their surplus
reserve was s6,137,500; while 1t Is true
that in the meantime as one or the
conditions of the organization OF the
federal reserve system, the legal re-
serve rate has been reduced from 20
to 1S per cent of deposits, there is
nevertheless a matter of over $lO0,000,-
900 which might better be more prom
tably employed. ,z
One of the CHIEF reasons 1or .n.s eu'n
surplus is the absence of the European
nations from the borrowing market
here; for, though a few foreign loans
have already been negotiated In New
York, the proceeds have peen oeso. s,,
bargained for in our markets, anu
thus there has been no occasion FOR
the calling out of actual cash for thelr
own purposes abroad. The war loans
will, as rule. be subscribed by the
citizens Of those countries calling FOR
the loans, though it is to be noted that
in the case of a German government
loan, subscriptions were taken in TINS
s sanRIng house oy IN chie eatan
Short-Term Loans Low.
While money rates are comparatively
low for short-term funds. there has
been but slight reduction for the COM
mercial borrowers, and the banks seem
ill-disposed to commit themselves to
lone-term financing except on very
sure basis of prompt payment at MAJ
turity and at the most favorable terms.
They feel that for the present 1T is
safer to have their money within can
at short notice, and that 1t is the wiser
policy to accept a lower interest rate
rather than to sacrifice the control OF
the situation which they now have. 1t
is pointed out In authoritative circles
that the banking world is unwilling or
unable to Join the business community
in any ventures that involve hazards
of the ordinary variety. While there Is
much current discussion of revival
of business. 1t Is we'll known that
such revival cannot become general
without the action of individuals and
the application of individual capital
and effort. Uncertainty regarding the
future, however. is SO widespread, and
the disposition to await action by 9TH
Of general belief or at all events as
sertion of recovery in the near future.
there has been comparatively little
definite action or disposition of gen
eral nature to make these optimistic
predictions really good, except spo-
radically. The consequence is a sur
plus Of current funds as compared with
effective current demand. This nat
urally results in low interest rates or
easy money for the restricted class
of operations that Is considered salts
factory or legitimate, under existing
conditions. by those who control the
supply of loans. 1t Is thus clear that
the prevailing ease Of money which
has produced a lower bank rate that
exists anywhere else in the world is
as anomalous as the prevailing high
rate for the use of capital. Both grow
out of similar conditions, and both are
apparently due to the destruction Of
fixed capital, as well as to the desire
to husband current funds against pos
sible emergency. From one standpoint
both conditions. although anomalous as
thus pointed out, are wholesome be-
cause they represent. when analysed,
the result Of an attitude of caution on
the part of the financial and banking
community.
Wars Effect on Commerce.
With the opening Of April the Euro
pean war will have been in progress for
eight months. This period of time is
sufficient to disclose the effect Of the
present worldwide hostilittes on COM
merce. As far as the United States is
concerned. the influence has been slim
ulatine beyond all previous precedence.