The sun., 1918-10-09
RESERVE BANK NOTE
ISSUES EXPLAINED
Apprehension Over Increase Is
Unfounded, Says Fed
eral Board.
CIRCULATION GAIN SMALL
Currency Volume Enlarged
736,174,090 in Nine
teen Months.
CIRCULATION GAIN SMALL

The net increase in the volume of cur
rency issued by the United States be-
tween February /, 1917. and September
/. 1918. was s73s.174.o9o. according to
the October circular issued yesterday by
the Federal Reserve Board. which pointed
out that the apprehension frequently
expressed at the rapid increase of the
volume outstanding Of Federal reserve
notes Is unfounded.
At the beginning Of September there
were outstanding about S2.100.000,000
Federal reserve notes. and at the end Of
the month about $2,300.000,000. The
following tabulation prepared by the
Federal Reserve Board shows the cur
rency changes in the nineteen months
between February l, 1917, and Septem-
Der /, 1918:
September /, Change In 10
1918. months
Gold coin and
gold certificates ssiS 2sc,ss2 Dec. N,olo lo5, go
Federal reserve
notes and re-
serve bank
notes ,.......... 2,ilIss6,66s Inc. l,As.Sl ,75s
All other cur.
rency ........,,. l.6.I. ie7,lIs Dec. 1036I2. OBS
Total ............ 4.s5s,64s50s Inc. 73s,l7+, $50
Commenting upon this relatively small
increase considering the normal gain
in circulation. the increased activity in
industry and the greater demands on ac-
count Of the crop moving period the
Federal Reserve Board says:
The increase in the country's total
circulation Is far from commensurate
with the increase In Federal reserve note
circulation. What has been overlooked
by careless observers is that an i'm
portant change has been taking place
in the composition of our circulating me-
dunn by the substitution in large volume
of the Federal reserve note for the gold
certificate. This decrease in the out
standing volume of gold and gold certif-
Gates was offset by substantially COM
mensurate increase In the holding Of gold
by the Federal reserve system to the
extent of about billion dollars.
Moreover. to get a faithful picture OF
the situation deduction from the total
figures should be made of the normal
Increase in circulation. which would in
any case. have taken place. Based
upon comparative figures OF population
this normal Increase in currency would
have been about 100000. 900, so that
the residual figure representing tho
growth OF our circulation is reduced to
about s63s,000.000 But even from this
figure deduction should be made II a.
full statement of the situation were to
be attempted, because OF the increased
activity OF industry. measured not
simply by value OF output but also by
physical volume. Allowance should also
be made for the very considera bic
amounts OF currency which It is under
stood are being carried on their per-
sons by prosperous wage earners who
have not developed the banking habit,
"There should fuSthermore be de-
Quoted the currency consisting largely
OF Federal reserve notes. which has
been drawn from the United States in
substantial volume (probably in ex
cess of fifty millions since September
1910 for use notably In Canada, Mex-
leo and Cuba. Finally, the fact that
the period of the year in which the
most rapid increase in the issue OF Fed
eral reserve notes has occurred syn
chronizes with the crop moving season.
and that at time when the prices OF
all agricultural staples rule abnormally
high. may be taken as Indicating that
the increase in the circulation OF the
Federal reserve note has been in the
main In response to actual needs. In
consequence of all of which whatever
imitation OF prices may be said TO exist
cannot properly be said to have been
induced by the overksue OF Federal
reserve notes"