Finance

Abstract

Finance—Credit and Banking B conditions have undergone distinct improvement during the past month as a result of remedial legislation designed to halt the rapid deflation of bank credit, and arrest hoarding and bank failures. Since the enactment of the Glass-Steagall bill, bank failures have been reduced to an average weekly number of 12, compared with the monthly total of 342 in January and 115 for the full month of February. Concurrently, there has been a reversal in the trend of money in circulation with a decline in the weekly circulation figures for the past six weeks. The important influence of bank failures on the curve of money in circulation has been amply demonstrated over the past year and a half and the reduction in the circulating media reflects this decline in suspensions, as well as the organized efforts to arrest hoarding. Liquidation of bank credit has not yet been halted, despite the various aids extended to the banks. Loans on securities of reporting member banks declined throughout February and the first three weeks of March, and the total of such accommodations is currently about 28 per cent below a year ago. Similarly, the commercial loans, as represented by the "all other" category, have continued to experience a weekly recession of important proportions. Both of these movements have been accompanied in recent months by a continued shrinkage in the investment portfolios of the member banks, although an increase in mid-March was reported as a result of the treasury financing. The gold movement from this country, which again assumed large proportions in January and February, has more recently shown a tendency to subside and under the provisions of the recently enacted legislation the free gold stocks have been augumented in order to meet any further demands from foreign sources. Federal reserve credit outstanding underwent further reduction during February and the first three weeks of March. The decline has resulted from the reduction in bill holdings of the member banks which has been partially offset by increased holdings of government securities. Government securities held are currently $208,000,000 above a year ago. Total reserve credit outstanding for the week ended March 19, was $222,000,000 under the total at the end of January, but $718,000,000 in excess of a year ago. Bank debits tended downward in February, and, while the weekly figures for March have moved era tically, they continue around the February level. February debits outside New York were 25 per cent below the same month of last year, or slightly less than the percentage decline in January. While part of the fall has resulted from the lowering of prices, the figures reflect a continued shrinkage in the volume of transactions. The upward trend of postal savings, which has been particularly rapid in recent months, resulted in a February total 134 per cent above a year ago. The actual gain for the month was smaller than for the two months immediately preceding.