Great Falls daily tribune. [volume] (Great Falls, Mont.) 1895-1921, 1921-01-02
US. BANKS SHOLD
LESS WAR PAPER
THAN YEAR AGO
Government Obligations
Decline $3o1,OO0,O 900
States Annual Review.
Gold Reserve Shows Lit
tie Change at End of
1920 Despite Exports.

Washington, Jan. Holdings
by federal reserve banks of paper
secured by government war
obligations declined from nearly
81, 800, 100000 at the opening of
the year to S1,141, 100000 on
December Al, said the annual re-
view issued Saturday night by
the federal reserve board.
'At the end of the year." it added. cont
Of total of S2,119.1G0,000 of discounted
bills about ~ per cent was composed of
paper secured by United States war obi
cations. against 81 per cent of total
of S2.231 200, 900 held on the first Fri
day of the year.
The gold reserve. according to the re-
view. shows little change at the end of
the year as compared with the condition
II months earlier Although consider
able gold was exported to South America
and to the Orient early in the year it ex-
ceeded gold shipments from England. In
anticipation of the maturity of the Anglo
French bonds on October Is were re-
sponsible in a measure for subsequent
recovery so that on December so the
amount was only S3,300000 below the
total shown on January .
Capitalization Increased.
Increase in the capitalization of exist
ing member banks and accessons of new
members were responsible in part tor an
increase in the paid in capital of the
fedora! reserve banks during the yea~
froI1 S87, 100000 to S99.S0O.0OO. This
coTresponded with an increase OF a8Ffrs
SAIL 100000 in capital and surplus of
member banks
Changes in conditions of the federal
reserve banks during 1920, according to
the 1cview, reflecc to a large e.tent
changes in the crai:t policy originated
about the last of 1916.
fre.erenttal rates on paper secured
by Liberty bonds and Victory notes" the
review continued. "were abrogated by
some reserve banks and raised BY 9th
ers to level more nearly approximating
the rate total for ordinary commercial
paper In the case of paper secured by
treasury certificates. the rates adopted
were in most cases identical with the
higher coupon rates fixed by the govern
ment, thus holding out no inducement to
the member banks to carry these securi-
ties among their own Investments and
use them as collateral for loans at the
federal reserve banks, but rather provid-
ing a stimulus to place them in the
hands of ultimate investors. The results
are seen in the gradual decrease of
amounts of war paper held during the
year by the reserve banks.
Interest Rates Raised.
. Early in the year the federal reserve
banks, raised their discount rates on
commercial paper, but the influence of
the higher rate is seen in retarding the
progress of borrowings rather than re-
stricting them. In fact total federal re-
serve bank holdings of discounted bills on
December 80. of $2,719, 100000 is S4s1,-
100000 larger than at the beginning of
the year
Net deposits of the reserve banks
show general downward tendency for
the year. the December so total of
81. .604 100000 being $2+6, 100000 below
the corresponding total at the beginning
of the year. decreases in reserve aud net
reposits refleetng reductions in demawI
deposits of member banks. especially dur
ing the latter part of the year"