The Washington herald., 1922-07-13
U. 5. SECURITIES 80
PROVING POPULAR
AS INVESTMENTS
Federal Reserve System
Notes Shrinkage of :
Collateral Loans.

Evidence is afforded by both FED
eral Reserve and member bank nr-
ures OF the steady absorption O.
United States government obligations
Tor investment 70 a large extent by
banking institutions themselves. ac-
cording 70 statement made by the
Federal Reserve Board last night Al
the same time. the statement die
closes. there has been a significant
decrease In volume Of loans coIlater~
aied by securities OF this kind. As
long as preferential rates existed ON
such paper IL was natural for the
banks and banking community 70 bor-
row In this form. while. IN addition.
many people who had purchased Lib-
erty bonds during the war period
needed to be carried by their banks
until they could. In the regular course
Of events. liquidate the debts they
had incurred in purchasing the bonds.
The process OF liquidatinE debts Of
this description had already COM
menced at Federal Reserve banks in
the middle Of 1919. long before the
volume Of other loans reached a peak
at the close of 1920. At member
banks the volume Of such loans. how
ever. commenced 70 fall only al the
close Of 1890. While during the mast
year the decrease in member banls'
loans secured in this manner was
fairly continuous. the figure shown
by the Federal Reserve banks re-
mained relatively stable in the last
quarter Of 1921. but has again de-
creased about 20 per cent since the
opening Of 1922.
When United States government OBJ
legations which banking institutions
themselves hold are considered. the
position. however. is different Re
cent months reflect distinctly the
existence Of surplus funds and their
investment in public securities. After
remaining relatively constant through
1920 and 1891. Federal Reserve bank
holdings OF Federal obligations have
increased about 40 per cent since
the opening OF the present wear.
serving to keep earnings assets al
constant level in face OF the fallin.-
on Of member bank discounts Mem
Der banks themselves commenced 10
increase their holdings in Septembor.
1921. although they have not done -
nearly to the same relative extent as
the Federal Reserve institutions.
Steel sftust1oa-
The coal strike. combined with the
SoH euOi ldke ana FdliSaN congestion
produced by the wslkout Of the shop-
men. has caused a slight curtailmeut
in the output OF the United States
Stee Corporation during the past
week. and several OF the independent
companies may be forced to cur1aF
production also IL the situation is not
soon Improved. According to Iron
Age. the corporation is now oper
ating at slightly less than rs per cen.
OF capacity. compared with - Der
cent and over during the two or thraa
preceding weeks. Even II there shoull
be an early settlement Of the coal
strike. the railway congestion NAV be-
come more serious as the new crop
movement begins. CONGESTION il
most acute al present on the roads
which have been hauling coal from
the Kentucky and West virgfnfn
mines to the coke ovens ana steo1
works in Pennsylvania and Ohio. ana
number OF blast furnaces are
Threatened with shutdowns. An en-
couraging feature Of the past week
has been the orders from RAILWAYS
for car and locomotive repair work
as result OF the idleness in their
own shops. Three railway companscs
have asked for bids on repairin.
5000 cars. and orders for new loco.
motives are also Of satisfactory vol
ume