WAR  BORROWING

188

January  25
1,069,395,000

April  26
2,178,252,000

United  States  securities  owned 19 .
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
a gg re g ate  $3,012,085,500,  the  reporting  member
banks  acquired  and  retained  something  more  than
$1,100,000,000  certificates  of  indebtedness  —  without ­
  allowance  for  any  possible  reduction  by  distribution ­
  and  sale  of  their  holdings  of  Liberty  bonds.
This  huge  investment  was  unaccompanied  by  any  reduction ­
  in  the  banks’  commercial  deposits,  the  volume ­
  of  net  demand  deposits  on  which  reserve  is  computed ­
  actually  increasing  in  the  period  $207,769,000.
Such  additional  deposits  were  not  however  loancreated.
  Banking  restraint  appeared  in  a  net
liquidation  of  loans  secured  by  government  obligations ­
  and  in  a  moderate  reduction  of  other  loans  and
investments.  On  the  other  hand,  of  the  great  volume ­
  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.