﻿WAR BORROWING

188

January 25
1,069,395,000

April 26
2,178,252,000

United States securities owned19.

Loans secured by U. S. bonds and

certificates .................. 374,276,000	316,352,000

All other loans and investments.. 9,967,941,000 9,907,521,000

It appears that during the fourteen weeks in which
the Treasury placed the six issues of certificates in
anticipation of the Third Liberty Loan, to a nominal
aggregate $3,012,085,500, the reporting member
banks acquired and retained something more than
$1,100,000,000 certificates of indebtedness — with-
out allowance for any possible reduction by distribu-
tion and sale of their holdings of Liberty bonds.
This huge investment was unaccompanied by any re-
duction in the banks’ commercial deposits, the vol-
ume of net demand deposits on which reserve is com-
puted actually increasing in the period $207,769,000.
Such additional deposits were not however loan-
created. Banking restraint appeared in a net
liquidation of loans secured by government obliga-
tions and in a moderate reduction of other loans and
investments. On the other hand, of the great vol-
ume of government deposits created in the period by
certificate borrowing, only $184,266,000 remained in
the banks as additional public deposits. It is to the
“ dispersed ” residue that the moderate increase in
commercial deposit accounts, as well as some part of
the increase in the outstanding volume of currency,
may be imputed.

The issue period of the fourth cycle extended from
June 25 to October 1, 1918, within which were

19 Certificates of indebtedness were not disassociated from
other government obligations until the statement of February
21, 1918.