Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-07-08
BY I. A. FLEMING.

= A larger percentage OF the resources
of the Federal Reserve system are being
EMPLOYED in caring for the business,
investment and speculative interests OF
the American people than for long
period of time. Resources have rarely
slipped under the 10 per cent marx,
while they were. usually several points
better than that and the system was
forced to go into the open market as
a buyer of commercial paper IN compe-
tition with the bankers themselves.
THE most positive evidence OF the
truth of the above statement is found
in the report of bills rediscounted In
the consolidated statement of the sys-
tenn showing that bankers have aValled
themselves of this privilege to greater
extent than ever before, the total now
being $1.l91 100000.
Bankers have been quick to take ad-
vantage of the difference between the
discount rates and the interest rates IN
the open market. Corporations. prepar..
ing for July dividends and seml.annuai
interest payments called for much cash,
increasing New York City's rediscount-
ing by $328.50O 600.
some banks that have heretofore not
taken advantage of the rediscount
privilege are now doing so. The re-
suit is a little more strained condi-
ton In credit and little better earn
ines for bankers. as stated last week.
Shift Deposits.
Some of the regional bank governors
have noticed prediction on the part
of a small number of bankers TO report
part of their deposits that should be
included as demand in the time oe-
posits. The object OF this is TO re-
o.
ouiring 10 per cent and time but
per cent.
Commenting on this very matter,
Gov Seav of the Richmond Federal
Reserve Bank. recently said, in re-
nlv to a question: There Is no doubt
in nv mind and l think in the minds
Of A good many bankers. who have
had experience In the matter that a
vast amount of deposits that are CLASH
fed as time should be really included
In demand
"I do not say that banks are vio-
lating the law In their classification put
I do venture to express the opinion
that some limitation will have TO De
placed on the amount OF time deposits
that will bear 3 per cent reserves. or the
reserve ratio will have to be increased,
one or the other.
You cannot 90 DuSlIiCcS AL
country on per cent reserves on time
deposits. 1t cannot be done Wltnout
danger"
As to June Bank Ciearings.
Recent comparison of the bank clear
incs of Washington for the month OF
June of this year with the same month
of 1927 showed about 100000 In favor
of June. 1927.
For the first six months of 1928 there
was an apparent loss in the figures
given of about s3,500,000.
AS a real matter of fact there was
no actual loss between the business OF
the city in the months under COMPARE
son. If one will recall that during June,
1927. the Potomac Electric Co. deliveries
to thousands of our citizens. banks and
brokers, a matter Of $5.000000 OF its
5ia per cent preferred stock. considered
by MANY as one of the finest invest
ments to be found on the local list
The clearings of June 2 and 3. 1927
showed the transfer of funds from the
BUYERS to the Potomac Electric Co.. for
while many borrowed to pay large
part of their purchase price. 1t was
cash transaction so far as the seller
was concerned.
Reflected In the Market.
Taking s5,000000 investment funds
out OF the local security market at one
time has had distinct effect on trad
ing from that time to this. coupled with
the fact that investors were bit
nervous over the long continued upturn
In Wall Street and afraid of the de-
ciines which have followed in logical
sequence and hesitated lest there might
be some sympathetic loss here.
There has been about the usual num-
Der of transactions. but business on the
local Stock Exchange has been largely
on the small lot and small bond order
Washington Gas featured a l0-point
advance and some large lots sold: there