The Washington times., 1924-07-12
GOLD IMPORTS
HURT BANK
ASSETS
Reserve Board BIames De-
cline in Earning Assets on
Foreign Gold Shipments
Ply HARRY GUSACK.

ESy f1AfSh1 OOSACN.
The severe decline in the earning
assets Of the Federal reserve banks
is blamed upon uninterrupted ship
ments Of foreign gold to the United
States, according to the monthly re-
view for July issued today by the
Federal Reserve Board. The con-
tinued receipt of gold from abroad,
the board states, has in recent
months been in excess of the de-
mand for currency.
Volume of Credit Low.
The decline in the total earnings
assets at the Federal reserve banks
during the past six months, the
board reported, has brought the
volume of reserve bank or edit in use
to the lowest level in more than six
years. On June IS, the board stated,
the earning assets Of the twelve
banks combined were 1886, 900 900, or
$436, 100000 less than the seasonal
high point in January and $222,-
000, 900 less than for the correspond
ing date Of 1928 Additional gold,
the board observed, has supplied the
member banks with funds available
for increasing reserve balances and
reducing Indebtedness at reserve
banks.
"The conditions during the first
six months of this year" the board
said, "have been in contrast with
those during the first half of 1928.
when the increasing demand for
currency was sufficient to absorb
the gold imports of the period,
which were then on a somewhat
smaller scale. 1t was the coincl-
dence during 1923 of volume of
gold imports roughly equivalent to
the increased demand for currency
that accounted for the relative
constancy of reserve bank assets,
and it is the inflow of gold in
excess of present currency demands
which largely explains the recent
decline in caring assets"
Considering the composition of
the earning assets, the board re!
ported that the volume of Govern
ment securities has increased by
about 100000 since January, and
at mid-year constitute more than
one-half of the total earning assets.
This increase, the board notes, has
been accomplished by a nearly
equivalent decrease in the holdings
of acceptanceS. In view OF the pre-
vailing ease of the money market
and the active demand for accept
ances the board notes that dealers
have had less occasion to dispose of
their bills to the reserve banks.
Funds in Market.
"It is not possible to determine"
the, board said, ito what extent the
increased purchases by the reserve
banks of Government security, by
placing funds in the market, have
been a factor in decreasing their bill
holdings, but it seems not unlikely
that these purchases have resulted
in some net addition to total earn
ings assets, and have thus enabled
the reserve banks to maintain a
fuller operating contact with the
market"
Shifts in the funds Of member
b. nks in larger cities were COM
mented upon by the board in con-
nection with the practically continu-
Gus decline in the volume of Dor
rowing for commercial purposes
throughout the country during the
past two months and the increase
in demand deposits in the financial
centers.
Between the high point reached
early in April and the middle of
June" the board continued, com
mercial loans at reporting member
hanks decreased by more than
$500, 100000 and their net demand
deposits increased by over $500, 000,-
900 to the highest point on record.
NNhiS iocraoca in danOSitS iS ma ri w
accounted for by the fact that these
member banks are the principal
holders of bankers balances and
that recently, as a result of the in
active demand of funds, the surplus
has accumulated in these banks and
has been reflected in a rapid growth
of the deposits they hold for other
banks.
Some of the funds released by
the reduction in commercial loans
and arising out of the growth in
deposits have been used for making
leans on stocks and bonds, but a
much larger increase has taken
place in the investments of member
banks in corporate securities. While
this shift of funds from loans to in
Vestments has been general through
out the country, it has been much
more pronounced at member banks
in New York city.
LAS consequence of the net in.
crease in investments total loans
and investments of reporting mem.
her banks in June were not DIV
higher than at the opening of 1924
but higher than at any time in tho
past three years"