Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-21
AMERICAN BANKS STRONGER
AT CLOSE OF YEARS BUSINESS
Reserve Board Review Notes Increase of
Liquidity of Assets During Previous
15Months- Closings Fewer.

Chicago district. 1S in the st. Louis dis
trict, in the Minneapolis district,
making 43 reopenings in all districts.
OF banks suspended last year, lat had
reopened at the time the Reserve fig
ures were received.
The Reserve Board said that since
the turn of the year there had been a
continuous liquidation Of bank credit,
rejecting reductions in security loans,
Offset in part by increases in invest
ments. Federal Reserve bank credit,
which had increased rapidly in Novem-
Der and December in response to q de-
mand for currency only partly seasonal
in character, declined after the turn of
the year and stood at the end of Janu-
airy below its level at the beginning
of November. Money rates further
eaSed.
Changes in the volume of Reserve
bank credit outstanding during the
past three months have been largely
traceable to the movement of currency
into and out of circulation in response
to the banking situation, according to
the report, BY combining gold with
Reserve bank credit, the two principal
sources of Reserve bank funds available
to member banks, it appears that be-
tween the first week in November and
Christmas week Reserve bank funds
used by member banks increased by
$400, 100000, representing $3.50, 000, 900
of additional credit and the remainder
in gold.
1.-The increase in member bank re-
serve balances since the turn of the year
has not represented an increase in re-
serve requirements, since both member
bank deposits and their loans and in
vestments have decreased" the report
said.
Excess Reserves Up.
THE larger volume of reserves held
by the banks has represented rather
the accumulation of excess reserves
caused by the inflow of currency from
circulation at a time of continuous de-
crease in the demand for short-time
funds in the money market" it con-
tinued. 1.-The amount of excess reserves
carried by member banks in January
has been considerably larger than
usual"
There was a decrease of $7OO, 00O, 900
in total loans and investments of men,
Der banks between September "a and
the end of the year, the amount for the
close of the year having been $34, 784, :
000 900. The total was said to have re-
suited from relatively slight changes in
| lOdIlS W CuSIOIneTS, lIlCluQlI1B DdDkS,
growth of 25O,000,O0O in banks in
vestments and liquidation of 81 ,000,-
900 of open-market loans, particu-
larly to brokers and dealers in New York
City and in other central Reserve cities
and in country banks
Taking the 15-month period from
october 4, 1929, prior to the break in
the stock market, to the present it would
appear that during the first IL months
there was large liquidation of loans
to customers, and particularly of loans
to trade and industry, rejecting the
effects of reduction in current credit
requirements at time of diminished
business activity" the board said, and
added:
THE heavy liquidation Of local Gus
toner loans was Offset during that pc
Rod by an increase in investments and
in open-market loans, including ac-
ceptances, commercial paper and Street
loans. The increase in Street loans dur
ing that time represented taking over
by the banks of part of the loans with
drawn by non-banking lenders after the
break in security prices"