New-York tribune., 1919-08-11

August /, 1919. to s65s, s,11s.555, re-
dpction of $60,00O,000 since July I
1914. Those who see in the larger
volume of currency in circulation the
prime cause of the increase in the cost
of living, he said, must have in mind
the volume of Federal reserve notes
These increased from s357,239 900 on
April 1. 1917, to S2,504, ,754,0 900 on Au-
gust 1, 1919.
"In analyzing our present none
tary situation, and in considering
the causes which have led to the
expansion of credits and note issues
ing said, Eve should not lose sight
of some of the developments of the
pre-war period and of their effect
upon credits and prices. Very heavy
purchases of supplies of all kinds
were made in this country by Eu-
ropean belligerents during 1915 and
1916, payment for which involved
the shipment to MS of large amounts
of gold.
Gold Situation Reviewed
"The stock of gold in the United
States on July /, 1914 was $780,
678,304. This amount increased
steadily until April, 1917, the date
of our own entry into the war, when
it reached s3,OS8,9 ,904 S0S, an increase
posits likewise show large increase,
the net deposits of national banks
having risen from s7,495, ,149, 900 on
June 30, 1914, to $40 O,4S9, ,217,O0O on
March 5, 1917, while the net de-
posts of all banks in the United
States increased from S17,966, $50, 900
in June, 1914. to S24S91 .21SOO0 in
June, 1917.
met deposits of national banks
had further increased up to May ~,
1919. to s11,71S, ,O95 900. and those of
all banks in June, 1918 (the latest
date for which figures are available),
to SEC, ,769 $4,000. Shortly after
April 6, 1917, when the Congress de-
clared war, the Treasury began to
sell bonds, notes and certificates in
large amounts, resulting in net
increase in the public debt to Au-
guest |. 1919, of $2k518 ,064, $40
Mr.. Harding said the amount of
money in circulation had decreased
since the close of hostilities. The
serted, were s5,129 ,9S5,00O, while or
August l, 1910, the circulation totalled
but $4,796. 800, 900. The total on April
!, 1917, just before the declaration of
war; was S4,100, ,976.000. Mr.. Harding
gave the comparative per capita cir
culation as follows: April /, 1917.
$37S8: December |. 1918, S48.13, and
August /, 1919, S45.16.
Currency in Banks Deducted
Governor Harding pointed out tina,
the very large amounts of currency
heid by the Federal Reserve banks, BY
Federal Reserve agents and in the
Treasury form no part of the circulat-
lng maximum. In order 70 avoid con-
fusion in determining the amount OF
money in actual circulation, he said
1t was necessary TO limit the view to
amounts held by member and non
member banks and the public.
Governor Harding explained that an
der the Federal reserve act il was i'm
possible to keep in circulation an ex-
cessive volume of Federal reserve notes
"They are issued" he said, "only as
a need 70 them develops, and as they
become redundant in any locality they
are returned to the Treasury at Wash
ington or to Federal Reserve bank
for redemption. The increased volume
of Federal reserve notes in circulation
during the last three years, in so far
as it is not the result of direct eX-
changes for gold and gold certificates
which have been withdrawn from cir
culation, is the effect of advancing
wages and prices and not their cause. -
Governor Harding asserted the prin-
clpal cause of the advance in prices
before and during the war was the
urgent need of the Allies Tor goods
of all kinds for quick delivery in large
volume and The competition in this
buying by governments with purchases
BY private individuals.
War Economics Relaxed
I'm the postwar period, through
which we are now passing" he added
"the country has experienced rising
prices owing, in part, to a general re-
taxation of the wartime regime OF
personal economy, resulting in an in
created demand for commodities by in.
dividuals who restricted their purchase.
during the war, but who are now buy
ing in competition with export demand
In addition, accrued incomes and wages
have led to- heavy demands for com
modities not of prime necessity. which
have resulted in diverting labor ant
material from essentials to non~essen
tials"
The Senate Banking and Currenc,
Committee will meet early next weel
to consider Governor Hardings com
munication and decide whether it i
desirable that plans for arbitrarily re
ducing the volume of money in circu
lation should be carried out.
Half dozen committee meetings 70
dealing with suggestions made b.
PRESIDENT Wilson are scheduled at tn
capitol tomorrow. Representativ