Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-22
HOARD|NG OF CASH
HAS BEEN RESUMED
Reserve Board Finds Much
Money Is Deposited in Side
boards and Socks.
BY WILLIAM BRUCKERT.

Special Dispatch to The Star.
The Federal Reserve Board thought
in the early months of 1881 that the
boarding habit of that part of the
American public given to such things
was about broken, Blu: It now says
that developments of the months Of
April, May and June show a consid-
cradle amount Of cash was taken out
of banks for re-deposit in sideboards
or socks.
In fact, the Withdrawals of money
have grown so great in some instances
that the board says in its latest dis
cussion of the situation today that
they constitute a considerable factor
In the general credit position and the
relation of the Federal Reserve system
to it. In other words, here is an old
problem that under present conditions
has become decidedly new. and it Is
Just one more cause for worry among
those whose responsibility it is to see
that things financial move along in a
course that Is least disturbing to all
concerned.
No Accurate Figure.
There is no accurate figure obtain
able on the amount of cash so boarded
according to the Federal Reserve au-
thoritieS, yet they have a feeling that
the sum runs into hundreds of mil
lions, perhaps even billion dollars.
1t is so great, in any event. that fur
ther study will be given it by experts
on the subject of currency circulation.
Undoubtedly. it was explained, bank
ing troubles, like those which occurred
in Chicago a month ago, contribute
to the boarding. both among the banks
and individuals. but the amount OF
cash which banks store in vaults is
traceable to an extent and may be
calculated. As to this part of the cur
rency it is well known that the banks
increase their stores of reserve cash
somewhat whenever rumors are af1oat
that may cause runs. That Is solely
a precautionary proposition.
Continuation Of the increase in gold
stocks of this country, now at the high
est point in history and very near to
$1,000 900 900, has had no effect on the
demand for Federal Reserve Bank
credit as a result of the currency hoard
ing that has been going on, the board
explained. There has been a return
flow of currency to the banks twice
since the first of the current year, when
by all the rules of the game there
should have been no such return. These
came when there were temporary lullS
in the fear held by those who hide their
cash.
Money in circulation. which. In this
country, is used only for a relatively
small proportion of the total payments.
fluctuateS usually in accordance with
changes in the volume of retail trade,
factory pay rolls and changes in the
cost of living. Since 1926. however,
there has been gradual decrease in
the volume of money in circulation. Up
to the Autumn of 1929, a period Of
active business. this was due chiefly to
increased use of checks and to a return
flow of American currency from for
eign countries after sterilization of
their own currencies, as well as to
gradual decline in the cost of living
and to some economies in the use of
cash by banks.
Shrinkage in Circulation.
BY October. 1929, the volume OF
, money in circulation was 5000. zoo. 900
lower than for the same month of 1925.
There was decline of about $780,
100000 from October. 1929, to October,
1880. because the circulation shrank In
respon5e to the business decline.
Beginning with November, 1880. how
e"er, there was rapid increase in
circulation, far in excess of the holiday
requirements. due. in part, to the bank
ing disturbances in Kentucky and Ten
nessee. along with scattered failures
among financial institutions elsewhere.
This non-seasonal increase apparently
carried over into January as result of
important bank closings in New York
and Philadelphia.
Around the first Of February the
board said, confidence was re-estab-
lished. and a considerable amount Of
currency was redeposited with the banks
and passed along to the Federal Re-
serve banks. so that in February and
March the return flow of currency was
far in excess of the seasonal volume.
During those months the normal volume
of currency in circulation is larger than
in January in normal years. This year.
however, there was no change of conse-
uuence, and so the board judged that
the seasonal demand had been largely
offset by money coming out from its
hiding places in the households OF
hoarders.
Copyright. 1870.