The Kenna record. (Kenna, Roosevelt County, N.M.) 190?-1924, 1921-07-15
CONTRACTION OF CURREN-
CY CAUSES REDUCTION
OF LOANS AND BILLS
FED. RESERVE BANK REPORT
. -
The Foreign Trade is OF. The Bania
Abroad Fail to Make Showing Of
U. S. in the Cut of Paper
Money

Washington Federal reserve bank
operations during the past year have
resulted in an increase Of its gold
holdings by $4S9, ,6O7,O 900, a decrease in
its notes in circulation of s48O,O00,O0O
and an increase in it's total reserves
of $519, 100000, according to a state
ment issued by the board of govern
ors. The contraction of the currency
indicated the board said, the degree to
which the country had entered a per-
iod of deflation.
characteristics Of this period on
the banking side have been reduction
of loans and bills held, retirement of
note circulation, gain in gold and
liquidation of investments the state
ment said while on the business side
there has been lowering of production
growth of unemployment, failing off
OF foreign trade and reaction of prices.
Recovery Is Prepared
"The spring months of 1921 would
seem in the light of information now
available, to be a period of approach
to equilibrium in certain lines of busi-
ness and of preparation for recovery
from depressed conditions that had
developed"
Total resources Of the reserve sys-
TEN, amounting to $5,242,OOO,O0O on
June 29, 1921, were decreased 1877
percent from the total on June rs,
1920, of $6,O74, 100000. The capital
of federal reserve banks, however, In
creased from $94,5O0,000 to $1O2,194,-
900 during the same period due to
the fact that the System has steadily
increased in membership and
strength during the year. This, the
board remarked, was in striking con-
trast with the decline in total re-
sources"
Government obligations continued
to work out of the banking system of
the country, and into hands of pli-
vate or corporate investors, it was
said because reserve loans on treas
ury bonds and certificates of indebt-
edness dropped from $1,3OO,O00 in
June 1920 to s648O00 in June of
this year. The total of reserve notes
in circulation last month was s2,634,-
100000 while in the same month of
1920, it was $3,117 100000.
Discussing the gold movements, the
board pointed out y that the metal
flowed out of the United States in
1919 in considerable quantities but be-
gan returning in even greater volume
in 1920, the import for the past year
being $616,O00OOO Offsetting imports
against exports since the armistice
and to June 10, the country's gold
stock showed net increase of $780,
100000 and was still bound upward.
Relationship IS Disturbed
"The great shipments of gold to the
United States have been the result of
the slackening and disorgaEization Of
trade. and the disturbance of financial
relationship" the board said. How
far the inward gold movement will be
continued cannot now be predicted,
but it should be noted that such Inn
portations even when entirely depos-
tied In the federal reserve bank, arc
by no means the sole smeasure Of
their increasing iquidity.
Banking system abroad were not
able to accomplish the reduction Uf
paper currencies the statement said.
to anything like the degree which the
federal system showed. In England
circulating notes were reduced per
cent during the year, while in France
they increase the rate per cent, In
Italy IL percent and in Germany 81
percent