Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-21

L All dDuOTILal
Der OF suspensions, the banking stu
alton of the United States was substan-
TALLY stronger at the close of 1880 than
Is months earlier, stated the Federal
Reserve Board in its monthly bulletin
on business and financial conditions.
1.-THE period of Is months between
october, 1929, and the end of 1880 was
one of readjustment and liquidation for
the banks of the country. as well as
of an unusually large number of bank
suspensions" the board said. "At the
end of the period the active banks,
taken as a whole, were in a position of
greatly increased liquidity resulting both
| from a decrease in the total volume of
their outstanding credit and a decrease
in the proportion Of their assets that
depend on local situations and are
under the influence Of the customer re-
lationshlp"
The board estimated reduction in
outstanding bank credit at $4,000, 000,-
600, which 1t said was accompanied by
a liquidation of about SIS, $500 900 900 of
loans made by non-banking lenders to
brokers and dealers in securities, thus
placing the total liquidation of credit
extended by banks and by others
through the banks at about $4,000, 0OO,-
900 for the fifteen month period.
It added that while the total volume
of member bank credit showed a large
decrease during the last quarter of
1880. there was little change in the
total volume of credit at member banks
in New York City.
Open market holdings of the banks
which are in part an the nature of
secondary reserves, the board said, in
creased during the period in relation to
their total resources.
Fewer Banks Closed.
Although 1877 banks having deposits
of $91, 1850, 900 closed in January, this
was a great improvement over the pre-
ceding two months. In November there
were 254 suspensions of institutions
holding $186, 306, 900 in deposits and in
December 344 suspensions with deposits
Of 1857, 10000. During 1880 the num-
Der of suspensions was 1,345, as COM
pared with 642 in 1929 and 491 in 1928.
Deposits of suspended banks in 1880
totaled $864,715, 900, in 1929 1924, $780,
900 and in 1928 $138, 900.
Some of the suspended banks have
been or will be reorganized without
losses to the depositors.
The Reserve boards bulletin dis
closed the effort on the part of the
Reserve system and of the larger banks
of the country to prevent failures
through the maintenance of abnormally
large supplies of cash in their vaults.
Beginning with the third week in
November the volume of currency in
creased at rate more rapid than the
usual seasonal growth. A marked
growth from non-seasonal factors was
first evidenced chiefly in the st. Louis
and Richmond districts, where unsettled
conditions resulting from important
bank failures caused Withdrawals of
cash from the Reserve banks, both for
the purpose of increasing the cash held
in vaults by local commercial banks
and of meeting the increased demand
for cash by the public.
Cash Demands Rose.
"On December IL the suspension of
a member bank in New York City, with
100000 900 of deposits, gave rise to
increased demand for cash at several
banks in that city, which was an i'm
portant factor in the growth in the vol
ume of money in circulation by $780,
100000 between December 10 and De-
cember IT, the bulletin continued.
This e-than-seasonal increase was
not confined to New York, but was felt
also in other districts, chiefly Rich
mond, San Francisco and Chicago.
In the last week before Christmas
an important bank failure occurred in
Philadelphia, and the growth of circu-
lation for that week was $4,000, 900
AoA BCI lLlSiIi LLlc USUAL SEASONAL amount,
it continued
The review showed that after Christ
mas currency began to return to the
Reserve banks. In the first two weeks
the return flow was smaller than usual
but after that time it was accelerated,
indicating somewhat relieved tension in
the banking situation.
In the last part of January, when the
post-holiday seasonal decrease in cur
-
volume of money in circulation was still
somewhat larger than year ago and
was SlO0,000,000 larger than in October,
although in an ordinary year the VOL
| ume at the end of January is about
$50, 100000 to 200,000,0OO smaller
than in october.
Additional Funds Held.
1T may be estimated therefore ="
the board added, that an additional
amount of cash aggregating between
| S250,000,000 and $500 900, 900 is held
outside of the Treasury and the Fed
eral Reserve Bank as the result of de-
velopments in the banking situation in
the last two months of 1880"
! 1t went on: "Of this amount, probably
less than one-third is still held in vault
by commercial banks, particularly in
country districts, for the purpose of
|
ton with view to being prepared to
meet any possible further Withdrawals
of deposits.
THE increase of cash held in the
vaults of banks for that purpose was
considerable in November and Deem
ber but with the return of confidence
most of this cash, especially in the
| financial centers. has been returned to
the Federal Reserve banks. Cash with
drawn by the public, however, still re-
mains outstanding in large volume"
| An analysis of bank suspensions
showed that there were no suspensions
in the Boston district during January
For other districts suspensions and de-
posits were: New York, 2, $685., 900;
Philadelphia, g. $3,486,O0O Cleveland,
| Z, $6.391 900; Richmond, 10, $7,183 900;
Atlanta, SO, $24,196.00O; Chicago, AZ,
$16,988,000; st. Louis, At, $16,5O1 900;
Minneapolis. IS, $3.946, 900; Kansas City.
| Is, $685. 900; Dallas, 4, $685. 600, and
San Francisco, 3, $1,402,000.
Banks Have Reopened.
Of the institutions which suspended
in January, l reopened in the Cleve-
| land district IL in the Richmond dis
| trict, in the Atlanta district, in the
! - -