Evening star., 1932-11-30
IDLE FUNDS SEEN
AS HOPEFUL SIGN
Reach Point That Brought
Quick Turn in Past
Depressions.
BY CHAS. p. SHAEFFER,

4 ASSOCldJeu FTeSS business writer.
Idle funds Of banks, carried as ex-
\ cess reserves, are now at the point
which set of the spark igniting busi-
ness recovery in previous depressions.
/ Surplus reserves of member banks
in the Federal Reserve system amount
ed to "a per cent Of required reserves
at the close Of the week ended Novem-
Der is. This fact is an important in
dicator, attested to by no less an au-
thority than Secretary Mills, who told
the American Bankers Association at
Los Angeles last Fall that during the
| latter phases of previous depressions
there was tendency for funds to pile
| UP In the money centers, and this pill
ing up Of funds was followed by higher
bond prices and then by resumption
of business.
The effect of an accumulation of
large excess reserves is to relieve the
banks OF pressure, to assure business
that a shortage Of credit will not be
an obstacle to recovery, and, finally,
idle long enough, to begin to exert an
influence on the banks to put them to
work.
Past Depressions Cited.
Secretary Mills told the bankers that
in 1885 the excess reserves of New York
City banks, computed as percentages
of required reserves, reached figure
in excess Of so per cent immediately
preceding the upturn in business activ-
ity: in 1894, nearly 10 per cent: IN
1908, 20 per cent, and 1915, 40 per cent.
In each of these periods piling UP of
the idle funds in the banks was fol-
lowed by improvement in bond prices
q e tho hQnkc in nrdar IN fntnroSt
on their idle funds, placed them in
high grade securities.
The excess reserves in member banks
on November 16 amounted to $475.-
000,0 900, or "a per cent of the required
reserves of 1924. 722, 900. The ratio,
therefore, was inside the zone in which
they had stood at the end of previous
depressions.
Wholesale commodity prices declined
slightly further during the week ended
November 26, on the basis Of calcula-
tions by the National Fertilizer Asso-
ciation
The general index Of the association
which quotes l926-1928 prices Of ats
individual commodities as 100. stood at
co., as compared with 60.4 the previous
week, sos a month ago and with 66.8
year ago.
Five OF the IA main groups compris-
ing the index declined during the week,
while advanced The declining groups
were foods, textiles, grains, feeds and
live stock, metals and fertilizer ma
terials, while fats and oils, fuel and
miscellaneous commodities moved into
higher ground. The largest gain was
shown in the fats and oil group, due
principally to higher prices for butter.
Leather Exports Increase.
Among the individual commodities
IS showed price drops and II showed
gains. Important items that lost
ground during the week were wheat.
corn, cattle, -four, ham, eggs, cotton
seed oil, lard, raw cotton, cotton yarns,
wool, heavy melting steel, silver, resin
and rubber. The gains included but
ter, potatoes, hogs, gasoline, coffee,
apples lambs and linseed meal.
The Commerce Department reports
further increase in American exports Of
leather in October, owing to the i'm
proved demand for the commodity pre-
vailing in most foreign markets.
For the three months ended August