Evening star., 1934-03-04
Excess Reserves Hit New
AIl.Time Peak at
s1,100,000,00o.
BUSINESS IS SPURRED
BY CREDIT EXPANSION
Commercial Paper Begins to Ap-
pear in Larger Volume as Trade
Hits Faster Pace.
BY JOHN A. CRONE.
ecial Dispatch to The Star.

b1 JOhN "A. ShONL.
Special Dispatch to The Star.
NEW YORK. March 3.-Busines.
today is better than a year ago. Their
virtually every bank in this country
was closed. Today there are some
200 banks that have been unable tc
reopen since the official national
banking holiday of March s to 9. 1888
Business betterment has been basee
on improved banking and all that
such implies-easier money rates
broadened extension of credit lines
and safety of deposits.
A year ago, when banking distrust
was general throughout the Nation
money in circulation approximated
S7,700. 100000. Then trade was al
the low level OF the depression. Money
in circulation today approx!mates
$1,000, 100000. Many lines of trade
are now operating at their highest
rate in three years or more. There.
fore. logically, circulation of money
should be greater.
The ease in money rates late Fri
day directs attention to rates a year
ago. Call money, better than any
other type of short accommodation
sensitively reflects supply and de-
mand A call loan. usually used to
finance commodity and security deal
ings. practically can be paid off or
the instant demand of the borrower
Compared to Year Ago.
Call loans on the New York Stock
Exchange March 3. 1893, when 1t
closed its doors not to reopen until
March Is, were quoted at %, per
cent. On the Curb Exchange call
loans were per cent Between that
day and the reopening of the ex-
changes they rose to and Az per
cent. respectively. Today the ex-
change quotes per cent and the curb
1l2 per cent.
Time loans. usually utilized to
finance transactions ranging from 80
days to a year, we're priced at 2la per
cent March 3, 1888 They reached 4
per cent before the exchanges re-
opened. Today they may be had at
"a of l per cent to 1la per cent. de-
pending on maturities, ranging from
80 to 180 days or longer.
Bankers acceptances. which by yir-
tue Of their high degree of safety are
always bracketed with United States
Government bonds. register an equal
ly wide difference They ranged from
2ls to 25s, according to maturity. at
this time last year-some of these
prices almost doubling within two
weeks-as against one-half of per
cent to / per cent at present. The
supply of bankers acceptances is
light and demand strong.
Commercial paper rates are the best
barometer Of what business has to pay
to finance short-term transactions.
With the uptrend in commerce and
industry. this class Of paper has
shown a steady rise in the volume
outstanding from the low level Of last
March to the end of this February.
New Paper Increases.
Prices commanded by commercial
paper a year ago today ranged from
3 to 3l2 per cent, but touched S per
cent within a fortnight. Today COM
mercial paper Is priced at l to IL
per cent. The lower rate is for 90
day paper. An evidence Of the quick
ened business pulse is the report of
commercial paper dealers that new
paper is appearing in slightly larger
volume"
The price at which the district Fed
eral Reserve banks are willing to re-
discount commercial paper of men,
Der banks likewise is indicative of
business and credit conditions The
rediscount rate of the Federal Re-
serve Bank of New York a year ago
was 21a per cent against ll2 per cent
today. its record low rate
What the heart is to the body, re-
serves are to the bank. Therefore,
the amount of member bank reserves
in the Federal Reserve System is an
indication of the state of economic
health. Excess reserves of member
banks this week approximate $1.100,-
100000, the highest mark ever re-
corded.
tCopyright. 1934.)