New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-09-11

them in the order in which they ap-
pear, they are as follows: "Gold and
gold certifcates"-this represents ac-
tual gold and gold certificates held
by the banks. "Gold settlement fund
Federal Reserve Board"-this is
the fund contributed to by all twelve
regional banks. 1t is domiciled at
board, and is the fund out of which
all balances between Reserve banks are
settled. Considered broadly. this fund
IL o,le OF the most important contribu-
tlci.5 the Federal Reserve system has
made to American finance Operated
by telegraph and telephone connec-
tlons, it has made possible virtually the
Instantaneous settlement of all bal
ances throughout the country and is
probably the greatest single factor in
giving mobility to the nations funds.
Gold with Federal Reserve agents"
Is the gold which has been trusted
by the several Reserve banks to cover
the circulating notes which they have
withdrawn and allocated to their mem.
Der banks. The other cash reserve
items are more or less unimportant.
The remaining items in the resources
are of minor consequence except that
side Of the float" between the Reserve
banks. This item finds an Offset in
liabilities in the item deferred avail
ability items.'
In the liabilities the first item is
Capital paid in" The capital paid in
is 80 per cent of the subscribed capital,
the remaining so per cent never having
been called by the Reserve Board. I'm
der the Federal Reserve act it is re-
quired that every member bank sub
acrlbe to stock an amount equal to 6
per cent of the member banks COM
bined capital and surplus. Thus the
"Capital paid in" item represents 3 per
cent of the capital and surplus of all
member banks. The surplus of the
Reserve banks, which is now somewhat
in excess Of the subscribed capital, has
been built up in the seven years Of the
Reserve banks existence out of earn
ings. The law permits the individual
Reserve banks to credit surplus earn
ings to surplus account until the sur-
plus account is equal to 100 per cent
of subscribed capital. After that 10
per cent of surplus earnings may be
paio into surplus, while the remaining
go per cent is paid to the United States
Treasury as franchise tax.
Under the general caption "Depos-,
its" the Reserve statement now shows
three items, the total Of which is
called "T'otal deposits" as distinguished
from what was previously called 'Net
deposits" The three items now given
are Government deposits" Member
banks-reserve account" and Cali
other" The government deposits are
the current balances kept by the Treas
ury with the Reserve Banks. Member
bank deposits are at the present time
the entire legal reserve of the member
banks. The third item is a miscellany
of balances for foreign correspondents,
ate.
Federal Reserve notes IN actual cir
culation" is the net amount Of Federal
Reserve notes actually outstanding
Federal Reserve Bank notes in crcula-
ton are the notes issued in relation
with the Pittman act operations re-
ferred to above. There is q distinction
between Federal Reserve notes and
Federal Reserve Bank notes. The
former, which are secured by 40 per
cent gold and 60 per cent commercial
paper, are issued to member banks
These notes are an obligation of the
United States. Federal Reserve Bank
notes are an obligation of the Reserve
banks and are secured entirely by gov
eminent bonds or certificates. Pre-
sumably in the act and certainly in
the administration of the Reserve sys-
tenn, it is intended that Federal Re-
serve Bank notes shall be used only
on special occasions, while the Federal
Reserve notes are designed to supply
ultimately the chief circulating media
of the country.
As stated above. deferred availa-
bility items" is the liability Offset to
unsolicited items" listed among the
| resources.
If there is any criticism to be made
OF this statement it is on the ground
that 1t is not complete enough. Many
believe that the item showing redis-
counts secured by United States gov
! eminent obligations should be divided