The Alaska daily empire., 1922-07-21

customer in most tends to swell his deposit account approximately. In time of economic stress and readjustment it is not uncommon to find the relation ordinarily obtaining between deposits and loans consid- erably wrenched After June, 1920 deposits began considerable decline decline which has been greater than in the case of loans Little difference between the progress of decline in city and country banks is observable, though it is noteworthy that the decline among the country banks began earlier and has been somewhat more con sistent In some districts among the city banks the recession has been interrupted by temporary recoveries, particularly in the eastern district, which includes New York.
 No doubt this difference between city and country banks largely due to the relatively great activity of trade in cities, by which the flow of deposits tends to be maintained even in depression and thus pro- vides the means for meeting withdrawals of funds and maturing obligations for money borrowed On the other hand, country banks had relatively small amounts of cash coming in by way of current deposits and loan payments once the period of defation was under way.
 With regard to the recent movements of the deposit figures an index of business conditions, the conclusion seems plain that there has been more improvement recently in the cities than in the rural districts. On the whole, demand deposits in city banks have been increasing for the last six months, which Is not so generally the among country banks. The Harvard curve began about ten months ago to indicate improved business conditions, and city deposits seem to have followed suit after a lag of few months On all sides is heard the state ment that conditions in agricultural com munities improving. Perhaps an increase in country bank deposits can be expected to reflect this within the next few months.
 The increase of bank borrowings for many months after the depression began is indicat tive of the strain imposed upon the banking community in meeting the demands of liquidation. Indirectly such expansion of borrowings evidences the desirability of a banking system which keeps power in reserve to meet such unusual shocks
 The hardship that the period of liquida- tion has occasioned in agricultural communi- ties is directly reflected by the relative bor- rowings of banks in such communities. Bor- rowings of country banks increased up to the end of the year 1920. Moreover, the decline of their borrowings since that time has been only 35 per cent against the de- cline of 75 per cent. for all banks. De- crease in the amount of borrowings con- tinues to be the rule. This is condition of course that is to be expected as coincident with easier money conditions, and preced- ent to a sustained business revival.
 Deposits in recent months have shown more tendency toward improvement than have loans. It appears that the process of liquidation has put commercial firms in pos session of funds for meeting current operat- ing expenses without resort to borrowing
 In general, liquidation in city banks be- gan earlier and moved toward completion more rapidly than in country banks, though liquidation seems still to be incomplete as far as borrowings are concerned That country banks received considerable aid from the rest of the banking system during the period of stress is evidenced by the fact that their borrowings increased rapidly for sev- eral months after the turn in business con- ditions in the spring of 1920