The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-09-19
Trends
Big Part of Money
Supply Of U. S.
Now Idle.
by VINCENT LYONS
Times Financial Editor

A SOPHISTRY OF the last year
L n or so which has gained many
aCherents is the one stating that
things would be a lot better If the
supply Of money throughout the
country was increased. The sug-
gestion is naive and arrestingly at
tractive. hence, the intermittent
demands for increased issues Of cur
rency TO meet the soldiers bonus,
to retire some Of the governments
bond debt or to defray the cost Of
huge spending programs.
A look at the official figures.
however. would seem to point to
the conclusion that an expansion
in the money supply is not neces-
sary. The Treasury Department in
its monthly statement discloses
that al the end Of August only 81
per cent Of the nations entire cur
rency was in clrCulatiOn-paSslng
from corporation to wage Garner to
merchant and back TO the corpora
ton again.
Il may come as an unmitigated
surprise 10 many to learn that on
Aug 81 currency OF the country
aggregated Sl5.251 330O57 OF this
imposing sum only 81 per cent, or
5.629847Ol2. actually was in cir
culaton. Putting 1t another way
this means that SO per cent OF
Americas monetary resources IS
unemployed at the present time.
THE question might well be
i asked: What is happening to
the s9.621. 1905 Of currency which
is not now in use? The answer IS
that this sum Is lying idle in the
vaults OF either the United States
Treasury or the Federal Reserve
banks. How can the unemployed
currency be put to work?" IS an
alternate question. The answer
Is that the transfer will occur
when the needs Of the country de-
mand more money than is now
currently circulating
On the basis Of the Treasury
Departments figures it would seem
that an expansion in the volume
OF money OUtStaT ding can accom-
plish little Of permanent value.
If. perhaps. a new currency issue
were authorized the money would
find its way into circulation for
time, but before long an equiva-
lent amount would be added to
the unemployed funds.
This set of circumstances would
develop simply because business
and industry need so much TO
carry on their activities; the sur
plus remains untouched. If there
was to be a marked quickening IN
the pace of business activity, much
of the S9,621, 483, GAS in dormant
funds would flow back into active
circulation and be used for meet
ing Obligations incurred as a re-
suit OF the upturn in trade.
or the $5,629,841O12 in circula-
~ ton at the end Of August.
S3.362193.274 was in Federal Re
serve notes, S739. 278,137 IN silver
certificates and 1896, OH $50 in ma
tlonal bank notes outstanding An
increase of SI12,000,000 was regis
tered in circulation from July to
August, but the greater part Of this
is believed cue to an accelerated
demand for cash over the Labor
Day holiday.
Although the government has in
creased the use of silver notes
during the last year. in accordance
With one of the aims of New Deal
monetary policy, little progress has
peen made in its attempt to bring
silver stocks to a point where they
are equivalent to 25 per cent
IF combined silver and gold hold
ngs. At the end of August silver
monetary stocks, including stand
lrd dollars. bullion and small coins.
amounted TO approximate S1.221,-
10000 whereas monetary gold
stocks aggregated 100000
While the monthly circulation
statement of the Treasury Depart
ment is read with interest in
financial cirles. it gives no con-
sideration to another form of cur
rency-credit money. This is the
potential credit reservoir which has
been built up by banking depos-
its. Weekly figures issued by the
Federal Reserve Board keep tab on
this latter item.