Evening star., 1921-07-08
TWENTY BILLIONS
IN BANKS VAULTS

There is a potential credit eXpan-
sion of approximately 100000. 1000. 900
in the banks of the country at the
present time. according to careful COM
pilation of conditions. This is in
part due. it Is pointed out. to the
heavy gold importations now under
way and to the contraction in loans
that has already taken place.
Cash held by the federal reserve
system in excess o: .ha legal require
ments now exceeds all previous rec
ords. Reserve banks hold sl.Ooo.ooo,-
600 more than necessary TO secure
outstanding notes and deposit haoil'-
ties.
At present notes outstanding amount
to S2.s3i.475 900, and deposit liablll-
ties stand at S1.6S5.T 5000 making
total liahi!rias si.32o. 2S3, ,oeo o,.o
Cash reserves amount TO S2,b-3,4ao'-
600. or Sos per cent.
Potential Possibilities.
Potential possibilities of credit eX-
MANSION are thus greater than ever
before On June so. 1870. according
to the report of the controller or the
currency. total loans and investments ,.s $
amounted to s4o6i3.61c 900. Against
this the federal reserve system held
s2lhS sos. .oO0 Cash-or E~arly 81 III
cash for every ST. of loans and in
yestments.
In the last twelve months loans
have been reduced approNirn"t' "
$4,000 900 900. so that they now
amount to about S31.50o.ooO.00 With
cash now held amounting to S2,6oO.-. :.
600 OnO and assuming that S21 of
loans can be extended for each 81 of
cash held, there is a possible credit
expansion in the present reserves OF
the country of $1,000 100000: And
such credit expansion would ieaVe
u of 4 q
cent we'll above legal requirements.
1t is pointed out.
Explanation of Increase.
Near the end of 1916 officials here
estimated credit expansion posslblil-
ties for the country at $4,000 600, 900.
Explanation of .his increase IN
increase in our gold supply and in
the fact that it is concentrated in
the system that can make the best
use of il.
Federal reserve banks have re-
duced their discount rates with great
caution. 1t has beGn feared that any
reduction would be interpreted AS an
invitation to indulge in wild specu-
lation. However. tine two reductions
that have already heen made have
esS. This fact leads many observers
to believe that a further reduction
may be expected in the near future
Personal Property Tax.
Following a special meeting of the
District of Columbia Bankers ASSo-
citation held June -. when the Ques-
tion of proper returns to be made by
the member bank to the board of
personal tax appraisers of the Dis
trict of Columbia of personal prop
erty tax was discussed. notices were
received by all member banks today
advising them of the following de-
cision rendered by Frank J. Hogan,
attorney for the association:
1.-THE member banks of the asso-
citation are advised to use precisely
the same form as that prepared for
them and used last year. Each bank
should obtain the assessors personal
property tax schedule form and
should append thereto the specially
prepared form used last year. Thus
will be saved whatever rights each
bank has when a judicial determina-
tion of the controverted tax question
is obtained"
Mr. Hogan further stated that dur
ing the summer he would prepare and
file suit. in the name of some one
member. to test the validity of so
heretofore contested, and says that
he hopes to be able to have the case
disposed of in the trial court on de-
murrer. so as to have it ready Tor
nearing IN the Court OIL ApedlS IN tlle
fall at the same time that there is
heard the already pending case
brought by the Security Savings and
Commercial Bank. which presents
several of the questions. though not
precisely. that have been raised by
members of the Bankers Association
The banks of the country yesterday
paid to the Treasury, through the
federal reserve banks. 5 per cent of
the balance remaining on deposit as
O result of the purchase of Treasury
certificates and three-year notes on
June Is. Expectation is that another
payment will be called for early next
week.
Local Market.
Demand for bonds continued on the
local Stock Exchange again today. a
total S1S.500 worth of Washington
Gas Light. Washington Railway and
Electric and Potomac Electric COM
panies securities changing hands. One
$500 per ent bond of the first named
company sold at IT: $4,000 worth of
Washington. Railway and Electric
general SIS. in 81 900 lots. brought 80 q
while two Potomac Electric per cent
debenuture bonds were disposed of.
one at 93A and one 93l&. There were
also three $1,000 general mortgage IS
of the same company sold. one at 95 4