The Washington times., 1925-05-09
CREDIT VOLUME
CONTINUES
Federal Reserve Board Finds
Level Higher in April Than
on January I
By RICHARD HATTON.

The volume Of bank credit during
the first quarter Of 1925 has con
tinued at. the high level reached at
the close Of last year, according to
a bulletin issued eoday by the Fed
eral Reserve Board. Loans in in
vestments 81 member banks in prin-
cipal cities, says the bulletin. were
larger in April than at the begin
ming Of the year, though demand
deposits had declined by about $780,
100000 from the high point in the
middle OF January.
This decline in demand deposits
at time of a sustained volume of
borrowing at the banks has been
due primarily to the withdrawal of
gold for export and to the reduction
in balances carried by country banks
with their city correspondents.
The reduction in these balances,
which amounted to about $400, ,000,-
900 during the first three months
OF the year, has been due chiefly
TO the employment of these balances
by the city banks in loans on Sc.
curities for account of the country
banks, rather than Withdrawals of
funds from financial centers for use
in the interior.
Country Banks Benefit
With the rise in the rate for call
money during the period the country
banks have employed larger pro-
portion Of their funds held with
city correspondents in making loans
in the security market. The figures
for loans on stocks and bonds OF
the reporting member banks defect
this. transfer Of funds from idle bal.
ances to loans on securities.
There was. a continuous growth
of this class of loans until the
middle of March and the increase
has been chiefly at banks outside
OF New York city. Since that
time, however, with the recession
OF activity on the stock exchange
and the decline in security values,
the volume Of loans on stocks and
bonds has decreased. Loans for
commercial purposes have con.
tfnued throughout the period at
about the level reached last autumn
and considerably above the amount
=, OF these loans a year ago.
The banks holdings of investment
securities, which had been in record
volume IN the autumn of 1924, de-
cliRed by about 5000, 900 900 by the
beginning of March, most of the
decline bajng at banks in New York
city. Stree that time investments
have increased by about one-half
the previous decline, and, in con-
trast to the decline, the recent
growth has been general through
out the country.
Earning Assets Greater.
At the Federal reserve banks
earning assets in the middle of
April we-ee about 800. .OOO. 900 abov.
the level of three months earlier
when. the seasonal liquidation at
the turn of the year had come to
an end. This growth of reserve
bank credit in use. with relatively
little change in demand for cur.
rency or in the volume of reserve
balances, reflected chiefly borrow.
ing by member banks for the pur.
pose Of meeting the export demand
for gold.
> Reserve bank holdings Of United
States securities and Of acceptances
declined after the middle of
January, but discounts for member
banks increased considerably and
were in April near the high level
for the year reached at the end
Of February when discounts were
larger than at any time since
May, 1924. A large part of the
growth in discounts was at the
Federal. Reserve Bank Of New York,
and the proportion of total dis
counts for the system held by the
New York bank was consequently
much larger in the middle of April
than in January.
Gold Export Drops.
During recent weeks the outward
movement of gold diminished in
volume and the larger part of the
gold which was exported represented
Withdrawals of portions of the gold
previously earmarked for account of
the German Reichsbank, and, there
Tore, caused no increase in the de-
mand for reserve bank credit AS
consequence Of the recent falling
off in the demand arising from
gold exports and of a smaller de-
mand for currency, earning assets
of the reserve banks declined some
what since the beginning of March
and on April % were considerably
below the high point reached in
the latter part of February
NiI C$aoLe