INTERPRETATION 
355 
are accorded similar privileges of rediscounting, and, by classes, 
are subject to the same reserve requirements. 
They customarily and continuously keep on deposit with cor- 
respondents a part of their funds in order to meet the financial 
requirements of trade and industry. These funds, placed at the 
disposal of city banks, and by them variously invested, are sub- 
ject to withdrawal on demand, thus giving rise to a flow of credit 
funds and gold'® from country to city and from city to country, 
seasonal in part, but tending to repeat itself year after year. 
Moreover, the purchase and sale of goods and services at near 
and remote points keep in continual flux not only the state of 
trade and industry, but also the movement of money and credit 
into and out of banks, into and out of different parts of the coun- 
try, into and out of liquid securities and permanent investments. 
And in this mechanism of exchange, in this state of business, not 
one but all banks take such part as their resources permit and 
their specialized or general clientéle demands. 
The following statement, descriptive of the New York money 
market, applies with more or less precision to each of the larger 
centers to which the hinterland, in a banking and financial sense, 
is tributary. 
“The New York money market is national in scope, and the member 
banks in New York City, because of the system of correspondent rela- 
tionship which characterizes American banking, carry balances for 
interior banks, both members of the Federal Reserve system and non- 
members, and lend funds received from out-of-town banks in the money 
market. It is in the New York money market that sales and purchases 
of securities for account of persons in all parts of the United States are 
largely made, and that the large issues of domestic and foreign secur- 
ities are floated. It is to New York houses that issue and distribute 
securities that investors in all parts of the country turn to purchase 
stocks and bonds. Thus the sources of the funds that flow into the 
New York money market are country wide, and the uses to which these 
funds are put also represent demands that arise in all parts of the 
country, particularly in connection with the purchase, sale, and carry- 
ing of securities. Changes in the condition of the New York money 
“Some of the more important occasions for interdistrict gold movements are 
the following: “(1) Settlement of interdistrict balances on account of checks and 
drafts cleared or collected through the Federal Reserve System, also transfers be- 
tween Federal Reserve banks for account of member and non-member banks; 
(2) Government operations in issuing and redeeming obligations and in transfer- 
ring funds in connection with tax collections, payments on contracts, etc.; (3) in- 
erdistrict accommodation; (4) interdistrict movement of reserve notes.” Federal 
Reserve Bulletin, April, 1022. D. 400.