Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-04-05
BROKERAGE LOAN
CURB IS DEMANDED
Federal Reserve Board Asks
for Continuation of Credit
Adjustment.

Adjustment.
Continued From First Page.)
one of its most important functions j.
to protect this country's gold reserves, -
1t said, "in existing circumstances these
! reserves need protection primarily
| against wasteful ABSORPTION into the
| base of an unduly expanded domestic
credit structure rather than against
demands from abroad !"
Loans to brokers and dealers by New
York Federal Reserve member banks
declined $4,000 in the week ending
April 8, on top of decline of $144,-
100000 in the preceding week. bringing
the total down to $500, 900 900. In
the two weeks that followed the Febru-
airy statement, the total declined
1892 100000 from peak of $500 ,000,-
600, but then turned upward again and
established a new peak of SIS. 793, 00o, 900
in the week ending March 20.
I'm recent weeks" the board observed
in the statement published today, there
has been considerable growth in the
,, volume of bank credit outstanding,
chiefly in response to seasonal demands
from trade and industry. Security loans
by banks have shown small increase
and bank investments have declined
slightly
I'm New York City the growth in
bank credit has BEEN practically Cfn-
fined to so-called all other loans that
is. loans not secured by stocks and
| bonds. This class of loans by New York
City banks increased by nearly $780,
600 900 between early February and the
end of March.
Notwithstanding the inclusion of
various kinds of borrowing in this item.
it would appear that the increase in
loans in recent weeks has been chiefly
in response to the seasonal demands of
active trade and industry"
The board made no announcement OF
the subjects discussed at its joint inset
ing Yesterday with the governors Of
the IL Federal Reserve banks. who
concluded their semi-annual conference
last night, after being in session a day
longer than usual. The preceding three
days were spent by the governors dis
cussing administrative affairs of their
banks, and Secretary Mellon, ex-oftlcio
chairman of the board. said that gen.
eral business of the system was con-
sidered at the Joint meeting yesterday.
The text of the Federal Reserve
Board statement issued last night fol-
lows:
Credit Trends by Districts.
"In recent weeks there has been a
considerable growth in the volume OF
bank credit outstanding, chiefly In re-
sponse to seasonal demands from trade
and industry. Security loans by banks
have shown a small increase and nank
investments have inclined slightly. In
New York City the growth In bank
credit has been practically confined to
so-called all other loans that Is, loans
not secured by stocks and bonds. This
class of loans by New York City banks
increased by nearly 5000 100000 be-
tween early February and the END OF
March. These loans include certain IN
terbank loans and loans on real estate.
as we'll as commercial paper, pnls OF
exchange and regular line-of-credit ad-
vances to customers. notwithstanding
the inclusion of various kinds OF borrow
ing in this item. it would appear that
the increase in loans in recent weeks has
been chiefly in response to the seasonal
demands of active trade and industry.
I'm Chicago, bank loans on securities
increased in February and up to the
last week in March. This growth was
accompanied by loss of funds through
intersectional clearings and by increas-
ed borrowing from the Reserve Bank,
indicating withdrawal from the dis
trict of funds to be used elsewhere
Notwithstanding sharp reduction in
that week, accompanied by decline in
borrowings, the total of security loans
in the Chicago district at the end OF
the month was considerably larger than
at the beginning of February. Security
loans increased also in several other
districts. including Boston, Philadel-
phia, Cleveland and San Francisco.
while in st. Louis. Kansas City and
Dallas they declined. Investment hold
ings of reporting banks declined in all
the districts, except Boston, Richmond
and Dallas, while commercial loans in
creased in all districts except Boston.
"A survey of credit developments dur
ing the 7-week period. therefore. in
idcates a general growth Of commercial
loans and a general decline in invest
ments throughout a large part of the
country. Security loans, which include
brokers' loans in New York City and
elsewhere, showed a small aggregate
increase, but declined in several Fed
eral Reserve districts.
Decline Of Bank Loans to Brokers.
Demand Tor FUNDS 10 nnance the
trading in securities in the New York
market has continued large, but the
only increase in brokers loans has been
in loans by lenders other than banks.
This class of loans showed an increase
of about $275 100000 for the period Of
seven weeks ending March 81, while
Street loans by banks, including both
New York banks and other banks, de-
clined by nearly $500, 600, 900. The IL
quotation of brokers loans by banks
since the boards statement of February
Z indicates an effort by banks to comply
with the desire of the board to restrain
the diversion of bank credit into spec
ulative channels. This liquidation has
been accompanied by a further rise in
money rates, which has attracted funds
from corporations and individuals in
this country and abroad.
Reduction of Reserve Bank Credit.
1.-THE volume of reserve bank credit
outstanding showed a decline of about
$60,000,000 during the seven-week
period ending March 81, due, in part, to
gold imports. The decline in reserve
bank credit has been In holdings os
acceptances,. as Government security
holdings have shown little change, and
discounts for member banks increased
by SITS, 1000, 600. Acceptance holdings
of the reserve hanks which in the last