Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-24
u. S. GOLD HOLDING
. OVER FIVE BILLIONS
Sum Almost Half of Total
World SuppIy-FederaI
Reserve Ratio 81.4.

The Federal Reserve banks last week
held nearly one-half of the worlds
gold supply with a total of more thai,
SIS. 000, 00O, 000 The additional strength
of the system was demonstrated by the
fact that member banks hold in their
gold reserve about $4,000, 100000 more
than required by law, the excess being
one-f1fth of the world total.
In its August review issued yesterday
the Reserve Board also showed that
Great Britain, which temporarily aban-
doned the gold standard this week,
had net loss OF $67,87S.000 in gold
from January / to the end of July,
during which time France imported
5000, 935, 900 from Great Britain and
exported $4,000 to her neighbor.
The reserve ratio In the United States
in August was 81.4 per cent, while under
the law the banks are required to have
a 40 per cent reserve in gold against
notes in circulation and IS per cent
against deposits. The volume in excess
of legal requirements Is about $780,
100000 more than it was two years ago.
Free Gold Drops.
The board reviewed the laws requir-
ing all Federal Reserve currency be pro-
BILE paper and said that. while gold re-
serves had increased free gold" or
that above legal requirements. had de-
creased by about $3.50, 100000 in the
last two years. The drop in the free
gold" was brought about through action
of the banks in Withdrawing eligible
paper from their reserves and substitute
ing gold fer 1t. During the two years
the banks eligible paper decreased by
about $500, 900 900 and the free gold"
held during August averaged about
$700 100000.
cat a time Of active business, such
as 1928 and 1928, when borrowings at
Federal Reserve Banks are large" the
board said, there is abundance of eligi-
BILE paper and the amount of gold that
has to be pledged with the Federal Re-
serve agent is relatively small, leaving a
considerable volume of free gold.
"At time like the present, when the
borrowing at the Reserve banks is at a
low level and the portfolio of the Re-
serve banks consists to an unusually
large extent of Government securities,
the ma jor part of the collateral back Of
Federal Reserve notes has to be held in
gold. with consequence that the
amount of free gold available is consid-
erably smaller than at time of active
business"
The board said Reserve bank credit
outstanding increased Yin August by
$240.000.O00 and at the end of the
month amounted to 81 200 ,0O0, 900.
The additional demand for credit, It
said, was caused in part by continued
transfer Of funds by foreign CORE
spondentS of the reserve banks from the
acceptance market to balances with the
reserve banks and in part by the in
crease of money in circulation which
was 100000, 900 larger in August than
is usual at that season of the year.
ss5,OOO,OOe From Japan.
At the end of August Government
security holdings by reserve banks
amounted to $728, 000, 900, close to the
largest amount on record. Gold hold
ings Of the banks increased in the
month by SAC, 000, 900. of which SOS. 00O,-
600 came from Japan and the re-
maindeE from Latin America.
The board reported failures in Au-
gust OF 154 banks with deposits Of
1855 ,022, 900. making the number since
January ] 932, with deposits OF 1893, :
10000. In the same period of the
previoNs year 500 banks failed with
deposits of SCOOPS 900. y
Four banks With deposits OF sl4.-
1896, 000 reopened in August, while Ia
eight months Of the year 1875 banks re-
opened with deposits OF sli7,1s0 600.
In the entire year Of 1880 only l47
banks with deposits Of $6l 500 900 re-
opened.