﻿THE PRICE LEVEL

187

and in money in circulation. This expansion is not
to be explained on the score of loan created deposits
— there having been a substantial reduction in the
loan account — but must be at least considered in
connection with the marked decline in government
deposits.

Second, as redemption periods: In the second
cycle (November 20-December 31, 1917,) the
volume of checkable deposits increased from $7,208,-
406,000 to $7,497,821,000 or $289,415,000; the vol-
ume of loans and discounts declined from $9,535,-
527,000 to $9,390,836,000 or $144,691,000; and the
amount of money in circulation increased (Novem-
ber 1, 1917-January 1, 1918,) from $4,924,928,-
348 to $5,120,424,908 or $195,496,560. There was
thus for the period a large increase of deposits, de-
spite a sharp contraction in loans and a heavy with-
drawal of currency.

It is possible to supplement the foregoing, in the
case of the third cycle and to a less extent in the
case by the fourth cycle by an examination of the op-
erations of the “ member banks in leading cities,” as
reported weekly to the Federal Reserve Board after
December 7, 1917. The issue period of the third
cycle extended from January 22 to April 22, 1918.
The deposits and investments of the banks at approx-
imately the corresponding dates are shown in the fol-
lowing table;

January 25 April 26

Number of reporting banks......	671	681

Net demand deposits on which re-
serve is computed ............. $8,892,320,000 $9,100,089,000

Government deposits ........... 485,086,000	669,352,000