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PHIA
SEPTEMBER 1961
BUSINESS
REVIEW
Pushing on a String — Then and Now
The Vault Cash Provision: Has it Changed
the Way Banks Manage Their Reserves?
Of Time and Banks
BUSINESS REVIEW
is produced in the Department of Research.
Bernard Shull was primarily responsible
for the article “ Pushing on a String— Then
and Now,” J. C. Rothwell for “ The Vault
Cash Provision: Has it Changed the Way
Banks Manage Their Reserves?” and Evan
B. Alderfer for “ Of Time and Banks.” The
authors will be glad to receive comments on
their articles.
Requests for additional copies should be
addressed to the Department of Public In
formation, Federal Reserve Bank of Phila
delphia, Philadelphia 1, Pennsylvania.
Congressman Goldsborough: You mean you cannot
push on a string.
Governor Eccles: That is a good way to put it,
one cannot push on a string.
Hearings on the Banking Act of 1935*
PUSHING
ON A STRING -
THEN AND NOW
The deep depression of the 1930’s seemed to
live a life of its own, impervious to all human
efforts to contain and dispel it. In the thirties,
economists and legislators often noted, with some
frustration, that the Federal Reserve could pull
on a string but couldn’t push on it. The thought
was that the Federal Reserve could effectively
combat inflation but not depression.
Since those gloomy days many important
changes have added to the recuperative powers
of the economy. For example, unemployment
insurance, progressive income tax rates, and
Government spending programs now help main
tain the stream of purchasing power in reces
sion. But, in addition, there have been important
changes in the financial habits and practices of
bankers, businessmen, and individuals. These
changes in financial practices have tended to
make the Federal Reserve more effective in the
fight against business slumps—it has been easier
to push on the string in recent years than it
was in the 1930’s.
THE GREAT DEPRESSION
After the financial panics of the 1929-1933
period had run their course, gold began to flow
* Before the House Com m ittee on Banking and Currency, March
18, 1935.
into the country; the effect was to increase the
reserves of commercial banks; but a large part
of these reserves were not used. Banks accumu
lated substantial— in fact, phenomenal—amounts
of excess reserves. These reserves reflected the
growing excess lending and investing capacity
of the banking system.
There were at least two major reasons why
these idle funds accumulated. On the one hand,
businessmen weren’t very anxious to borrow.
Their sales were at low levels and their profit
expectations were dim; after years of difficulty,
little improvement was expected. There was no
reason to borrow since borrowed funds could
not easily be used to advantage.
On the other hand, bankers were not anxious
to lend money except to the very best credit
risks. Everyone had been made aware of the
risks of lending during the crash of 1929 and
again during the banking crisis of 1933. More
over, interest rates on loans to customers had
dropped substantially, from over 6 per cent in
1929 to somewhat above 3 per cent in 1939.
All in all, it probably appeared to bankers of
that day that the cost of lending was more often
than not greater than the return.
The banks did increase their holdings of
Government securities after 1933, but as yet
3
business review
these securities did not provide the outlet for
funds they were destined to provide in later
years. Treasury bills— relatively liquid securities
with short maturities—were scarce and their
yields were quite low. At times, for all prac
tical purposes, there were no yields. The longerterm securities yielded more but entailed the
risk that their value would fall significantly if
interest rates increased.
So banks mainly acquired excess reserves. As
a result, the money supply, which had dropped
precipitously after 1929, did not grow to the
extent hoped for—and certainly not to the ex
tent possible—in the decade of the thirties.
Just as the banks were anxious to build up
their liquidity, so the public generally felt the
same way. Those who had money conserved it.
A large portion of total income was kept in cash.
As a result, the number of times the average
dollar became income each year—in the econo
mist’s terms, the velocity of money—declined.
In 1929 the average dollar became income about
four times a year. In 1932 this turnover was
MONEY IN A DECADE OF DEPRESSION
Between the crash of 1929 and the banking crisis of 1933,
the amount of money held by the public declined. There
after the money supply mainly increased; but because
bankers were accumulating large amounts of excess re
serves, it did not grow to the extent possible. The rate at
which the average dollar became income or turned over—
the velocity of money—also dropped after the crash in
1929; because the public was very cautious in spending
and investing, velocity remained at low levels throughout
the decade.
BILLIONS OF DOLLARS
VELO CITY O F M O NEY
NOTE: The velocity o f money presented above and on the follow ing
charts is the ratio of gross national p roduct to the money supply.
4
reduced to under three times a year; and there,
for the most part, it remained throughout the
decade.
Had bankers been more anxious to lend and
invest, had businessmen been more anxious to
borrow and spend, had both been less anxious to
hold relatively large amounts of money, the
money supply would have risen more rapidly,
velocity would have increased, spending and in
come would have risen. In short, recovery from
the Great Depression would have been quicker
and more adequate.
In the atmosphere prevailing, easy money
could not, by itself, bring about recovery. The
picture of the future people carried in their
minds looked suspiciously like the past—full
of danger and crisis. In any event, the cost of
holding money was nominal when an investor
considered the low returns on other liquid assets
and the high risk of illiquid assets. So people
adopted extremely cautious financial habits.
As a result, many concluded that Federal
Reserve policies could not be very effective in
combating depression. The Federal Reserve
could ease money markets; but bankers had to
make their own decisions on lending as did
businessmen on borrowing. In other, older
terms, the System could lead the horses to the
watering trough, but couldn’t make them drink.
Recently, within the past year or two, a widely
read report noted that “ monetary policy is com
monly admitted to be of no more than limited
value in stimulating recovery from reces
sion. . . .” This notion recalls the experience
of the 1930’s. The experience of the 1950’s has
been better.
THE EXPERIENCE OF THE 19 5 0 ’S
The postwar period in the United States has been
a period of growth and, at times, inflation.
business review
Recessions, in the 1950’s, have been short and
mild.
Nevertheless, when the economic outlook
darkens, there is a natural and well-understood
tendency for people to want to trim their
sails— to increase their holdings of money and
other liquid assets as opposed to other forms of
wealth. Moreover, when interest rates fall, as
they do during recessions, people give up less
by holding money. So even though they may
need less money to conduct their businesses—
because there is less business to conduct—they
tend to increase their holdings.
In the 1950’s, while the tendency to increase
money holdings in recession could be observed,
it was by no means so pronounced as one might
expect. The reason seems to be that over the
long run— in recession as well as expan
sion— there have been forces at work persuading
people to decrease their money holdings. In
other words, a counter-tendency has been at
work; it has permitted easy money policies to
operate more efficiently in recessions.
THE RISE AND FALL OF EXCESS RESERVES
After the banking crisis of 1933 was successfully resolved,
excess reserves at all classes of banks increased rapidly.
Businessmen were not anxious to borrow and bankers
were very cautious about lending. JFith economic revival
and the growth of war production in the early 1940’s, the
large central reserve city banks quickly found investment
and loan outlets for their excess reserves. Reserve city
banks followed hard on the heels of the larger banks.
Both reserve city and country banks continued to reduce
their excess reserves through the 1940’s and 1950’s.
BILLIONS O F DOLLARS
'37
At the banks
During the depression decade, excess reserves at
member banks increased tremendously—from
about $40 million in 1929 to over $6 billion in
1940. With the wartime expansion and economic
revival of the early 1940’s, excess reserves
dropped very quickly. The large central reserve
city banks led the way. In 1940, central reserve
city banks had almost $4 billion in excess
reserves. By 1943, they held only about $450
million. During the late 1940’s and 1950’s,
excess reserves continued to decline. But the
decline came at the smaller banks—country and
reserve city.
Since the end of the war, the decline in excess
reserves has been paralleled by a decline in
'3 9
'4\
'43
'4 5
'47
'4 9
'51
'5 3
'5 5
'57
'5 9
bank holdings of other types of liquid assets.
In part, this has been due to Federal Reserve
policy. Long- term Governments that were quite
liquid back in 1946 lost a good deal of their
liquidity when the Federal Reserve stopped sup
porting bond prices in the early 1950’s. But the
decline in liquid assets goes beyond this. The
entire investment portfolio of banks has fallen
from about $74 billion in 1946 to $60 billion
in 1960.
Loans—relatively illiquid assets—were at ab
normally low levels after a decade of depression
and half a decade of war. They expanded very
rapidly after the war and have continued to
grow since. Loans have increased almost four
fold since 1946. The ratio of loans to
5
business review
LOANS UP— LIQUIDITY DOWN
Total bank assets—and deposits as well—have increased
since the end of World War II. The asset expansion has
been mainly in the form -of loans. Investments, after reach
ing very high levels during the war, have declined.
Loans—relatively illiquid assets—have risen more rapidly
than deposits—relatively liquid liabilities. Bank liquidity,
as measured by the ratio of loans-to-deposits, has declined
with marked consistency.
BILLIONS O F DOLLARS
CZ)
LO ANSt
CD
INVESTMENTS OTHER TH A N G O VER N M EN T SECURITIES
■
G O V E R N M E N T SECURITIES M A TU R IN G IN OVER 5 YEARS
i
■ ■
G O V E R N M E N T SECURITIES M ATU R IN G W ITH IN 5 YEARS
M
EXCESS RESERVES A N D RELATED NEAR M O N E Y ASSETS*
RATIO
* Includes required reserves, bank premises, and other assets,
t Loans are net o f valuation reserves and exclude loans to banks.
{ Near-money assets include deposits at banks and loans to banks.
deposits—-an often-used measure of liquidity—
has risen with marked consistency and more
than doubled.
Excess reserves were built up to extraordinar
ily high levels before the war; liquid assets
and liquidity during the war. With expansion,
declines in excess reserves, liquid assets, and
liquidity were inevitable. But behind the con
tinuation of these declines over the past 15
years are some important changes in financial
markets and in bankers’ attitudes of at least
a semi-permanent nature. The needs of bankers
have changed and, because of this, so have their
asset preferences.
“ Lenders have long memories,” said a former
6
Treasury official. “ It is essential for the most
part they should be happy memories.” In the
1930’s the memories of bankers were mostly
unhappy. The crisis of 1933 was of traumatic
proportions; the attitude took away from it
might be expressed as “ burned once—never
again.”
But reforms and time have brought about im
portant changes in attitude. Reforms, such as
deposit insurance, have bolstered the banking
system; time has softened the memories of
many and brought many younger men, who
never actually experienced the banking crisis, to
positions of leadership. There are no statistics
to prove this sort of thing, but there has prob
ably been, over the last 20 years, a gradual
and growing confidence in economic and
financial stability among bankers.
Moreover, new financial mechanisms have
been developed to permit bankers to economize
on cash and other liquid assets. The federal
funds market—in which excess reserves are
“ bought” and “ sold” by banks—has grown con
siderably in the postwar period. It frequently
provides an alternative to holding idle funds, a
way of meeting unexpected drains and of mak
ing daily adjustments of reserve positions.
There has also been a renewed emphasis on
the benefits that can be obtained by spacing
loan maturities so as to efficiently regulate the
inflow of funds; and a growing awareness, also,
of how the built-in spacing in installment loans
helps to satisfy liquidity needs.
Such developments, once recognized and
adopted, continue to have significance in reces
sion as well as expansion— “ . . . once wrought,”
in the words of one writer, they “ become a per
manent part of the financial system.”
In recessions, in the past decade, the tendency
of bankers to build up liquidity has been at
business review
least partly offset; bankers have been revising
their liquidity needs in light of a new under
standing of the type of banking system of which
they are a part.
Bankers’ liquidity needs have changed; so has
the way they restore liquidity. The growth of the
federal debt obligations—high quality, highly
marketable, and including a large supply of short
maturities—has provided an instrument through
which bankers can increase their liquidity dur
ing recessions without building up huge quanti
ties of idle cash. In some recent recessions,
however, bankers have not always taken
advantage of the opportunity. They have fre
quently purchased large amounts of long-term
securities more for profit, it would seem, than
liquidity.
MORE MONEY IN RECESSIONS
When business declined in the 1930’s, and even more re
cently in the recession of 1948-1949, the amount of money
held by the public also declined. The decline in money
was principally the result of a decline in bank loans and
investments—total earning assets. In more recent reces
sions, bank earning assets have increased and so has the
money supply.
BILLIONS OF DOLLARS
NOTE: Dates fo r periods of economic contraction on this and fo l
lowing charts are those established by the National Bureau of
Economic Research: Aug. '29-M ar. '33
May '37—June '38
Nov. '48-O ct. '49
July '53-Aug. '54
July '57- A p r. '58
May '60-FeD. '61
For the pre-W orld W a r II contractions, the money supply fo r the
dates indicated was estimated.
The main impact of these developments—
declining needs for liquidity and the growth of
the federal debt as a way to satisfy today’s
more moderate needs—has probably been on the
money supply. In the severe contractions of the
1930’s and in the first postwar recession that
began in 1948 and continued through most of
1949, the money supply declined. In the last
three postwar recessions, the money supply
increased. When banks haven’t made loans,
they’ve purchased Government securities; they
have set up new deposits and added to the
money supply.
Declining needs for liquidity at banks may
affect the velocity of money also, for in recent
recessions bankers have been lending as well as
investing. Some observers consider bank loans
more stimulating to business activity than
investments. Loans go directly to businessmen
and consumers who borrow to make active use
of the money. The money they borrow will
probably be quickly spent. On the other hand,
many believe that when a bank invests, there is
no such guarantee of rapid turnover. The
money may be idle for some time.
In the prewar contractions, during the 1930’s,
bank assets declined mainly as a result of a de
cline in bank loans. In the first postwar reces
sion, bank investments increased but loans, as
usual, fell. However, during the last three
recessions the pattern of loan decline has been
broken. Bank loans as well as investments have
increased in these most recent recessions. More
over, in the recession that just ended early this
year, the increase in bank loans accounted for
an unusually high proportion of the increase in
total bank assets.
The increased reserves available to banks in
recessions have been used, then, not only to in
crease investments, but also to satisfy loan
7
business review
demand. The fact that bankers are willing to
meet loan demands and acquire investments is
of significance. In a recession, the early funds
made available by the Federal Reserve may be
used by banks to pay off borrowing; but little
more will be kept from the economy. In today’s
environment the Federal Reserve need not pro
vide an exorbitant and possibly dangerous
quantity of funds; banks need little encourage
ment to actively promote their loan business and
to invest in assets less liquid than Treasury bills.
MONEY— MOVING FASTER TODAY
Over the last decade and a half, the average dollar has be
come income an increasing number of times per year. In
other words, the rate at which the average dollar turns
over—the velocity of money—has been rising. Velocity
has decreased in recessions—as is shown in the shaded
areas—but these declines appear as brief hesitations in
the long-run upward movement.
VELO C ITY O F M O N E Y
Throughout the economy
When banks use the funds supplied by the
Federal Reserve to make loans or to invest, they
create deposits. These deposits represent pur
chasing ;power to borrowers and sellers of
securities; they help satisfy demands for
liquidity.
In the postwar period, however, it appears
that people have increasingly satisfied their
liquidity needs with financial assets other than
money. Time deposits, for example, have risen
sharply. As a result, money itself—primarily
checking deposits—has passed from hand to
hand with increasing speed in expansions. It has
dropped only moderately in recessions. Business
men and consumers, as well as bankers, have
economized on cash in the postwar period. In
1947 the number of times the average dollar
became income was a little bit over 2; in 1960
it was somewhat over 3.6.
Many observers have suggested that people
have economized on cash because it has become
profitable. Interest rates, reflecting the return
that can be earned by investing cash, have risen
over the last ten to fifteen years. There has been
a striking association between rising rates on
Treasury bills and rising money velocity in
expansions. Treasury bill rates may represent a
8
NOTE: Shaded areas represent recessions.
good measure of the return that can be obtained
by investing in an asset that is a very close
substitute for money; these rates may simply
reflect changes that are taking place throughout
the many markets for credit. As new investors
have become aware of the opportunities, and as
old investors have become more sure of them
selves, cash balances have fallen and the velocity
of money has increased.
It might seem to follow that a drop in in
terest rates in a recession would motivate people
to increase their cash balances. The resulting
business review
decrease in money velocity would, presumably,
tend to offset increases in the supply of money,
and the greater availability of credit generally.
In fact, when interest rates drop during reces
sions, velocity also slows down. However, what
appears to have been true of the bankers seems
to have been true of others also. Once people
have embarked on a program to minimize cash,
they do not seem to forsake it when money eases
and interest rates drop. Idle funds that are ac
tivated during expansions have not, for the most
part, been made idle again during the succeeding
recession. There is probably some natural law of
financial inertia. New financial practices seem
WHEN INTEREST RATES TURN DOWN
Some observers have noted a relationship between the ve
locity of money and the rate of interest on Treasury bills.
IThen bill rates turn down, the return investors forego by
holding money also declines. The chart below traces the
relationship between bill rates and velocity, quarter by
quarter, in the three most recent recessions. (For example,
the dot labeled “ 1953 II” indicates the velocity of money,
given on the scale below, and yield on Treasury bills,
given on the scale to the left, in the second quarter of
1953.)
As the bill rate has fallen, in each recession, so has
velocity. But, in line with the trend described in the pre
vious chart, velocity has been higher in each successive
recession. This was true despite the fact that in the first
and second recessions bill rates fell to similar low levels.
The level to which bill rates fell in the most recent reces
sion was also associated with higher velocity than in pre
vious years. The forces pushing velocity up in expansion
have helped maintain it in recession.
YIELD O N TREASURY BILLS
WHEN VELOCITY TURNS DOWN
The velocity of money typically turns down during periods
of easy money and business recession. In the last three
cyclical downswings of velocity, the declines have tended
to become more moderate.
PERCENTAGE C H A N G E
_____________________
1 9 5 3 -1 9 5 4
_4 1----------------------------- ----------------------NOTE: The percentage declines in velocity are measured from
peak to trough of the velocity series. In all cases, except one, these
dates coincide with the recession dates established by the National
Bureau o f Economic Research. The exception is the beginning of the
1953 recession; the peak in velocity was reached in the second
quarter of th a t year; the recession began at the beginning o f the
th ird quarter.
to perpetuate themselves unless altered by some
economic cataclysm such as a financial panic or
a war.*
In any event, a 2.5 per cent bill rate was
associated with a much higher velocity in the
1960-1961 recession than it was in the 19571958 recession; a 1 per cent bill rate was
associated with a much higher velocity in the
1957-1958 than it was in the 1953-1954
recession.
Even drastic reductions in the bill rate to be
low 1 per cent in the 1953-1954 and 19571958 recessions did not seem to have too much
of an effect on money velocity. The more mod
erate reductions in the most recent recession
seemed to have had even less effect. In fact, the
percentage declines in the speed at which money
circulates appear to have grown successively
* For the corporate poin t o f view, see "M anaging the C or
porate Money Position," in our Business Review o f March 1951.
9
business review
smaller in each of the last three cyclical down
swings in velocity.
Tentative and uncertain as such comparisons
are, this is an encouraging development. If the
incipient trend continues, it bodes well for the
future. It is possible that velocity declined very
moderately in the most recent recession because
the bill rate did not fall to as low a level as in
the two previous recessions. The Treasury bill
rate reached a low of about .65 in the 1953-1954
recession, .83 in the 1957—1958 recession, and
about 2.2 in the 1960-1961 recession. Investors
had far more to give up by adding to their cash
balances in the last recession than in the earlier
ones. It is also possible that the sustained pros
perity of recent years has continued to build
optimism and that each mild recession reflects
a growing confidence in financial stability.
Bankers and the public generally have sold
money short in the postwar period. Strange as
it may sound, the result has been that it is easier
to increase the money supply in recessions today
and money circulates more rapidly than one
might expect. The financial practices currently
engaged in by businessmen, bankers, and others
give greater thrust to an easy money policy in
recession.
CONCLUSIONS
Because of the experience of the 1930’s, many
careful observers questioned the effectiveness of
an easy money policy. They did not claim the
policy itself was wrong. Unlike other policies
that were advocated—for example, reducing
wages and reducing Government expenditures—
monetary ease in the depression did not pro
duce results opposite to those desired. But they
noted that the financial practices of the com
munity would not, at that time, permit easy
money to work effectively.
10
Since the end of World War II, there have
been important and continued changes in finan
cial practices. Some observers, concentrating on
the problem of rising prices, have contended
that these changes have made tight money a
less effective policy in combating inflation. In
effect, they claim that the rise in the velocity of
money during expansions tends to offset restric
tions on the supply of money. Moreover, they
argue that money supply restrictions themselves
tend to promote increases in velocity. On the
other hand, some would argue that increases
in velocity are desirable in expansion, and are
not so much an “ escape hatch” to a tight money
policy as an “ escape valve” that, in a desirable
way, regulates the tightening process.
Be that as it may, the effect of these changes
in financial practices do appear to have a sig
nificant impact in recessions. They make the
economy more susceptible to stimulation from
easy money. This is not to argue that easy
money is, in itself, an automatic remedy for
recessions; nor that, for all future time it will
continue to be effective; but in recent years it
has seemed to achieve better results than many
expected.
Some have recognized these better results but
have explained them by saying that monetary
policy is only effective when recessions are mild.
It might just as reasonably be argued that
recessions are mild when monetary policy is
effective. Not only is there logic in this argu
ment but it coincides with our experience over
the past 40 years. The truth seems to be that
monetary policy is effective when the financial
practices people engage in help rather than
hinder the flow of funds through the economy.
Partially as a result, recessions in the 1950’s
have been mild.
THE VAULT CASH PROVISION:
HAS IT CHANGED THE W AY BANKS
MANAGE THEIR RESERVES?
In the most recent business recession, the Fed
eral Reserve System became an active supplier
of reserves following its traditional policy of
leaning against the prevailing winds of the
business cycle. As a result, free reserves ex
panded and the capacity of the banking system
to grant credit was increased.
But in this recession a large portion of avail
able reserves were supplied in a new way,
reflecting basic changes in the national monetary
environment. For in 1960, the economic scene
was complicated not only by domestic business
recession but also by an international balance
of payments deficit and outflow of gold. In order
to meet both the domestic and international
problems, the Federal Reserve System sought to
supply lendable funds without unduly depressing
short-term interest rates. One of the operating
methods chosen to achieve this objective: allow
member banks to count their vault cash as
reserves (thereby carrying out a Congressional
mandate) instead of providing funds entirely
by purchasing Government securities.
NEW TECHNIQUE— NEW PROBLEMS
The vault cash allowance, of course, represented
'a new method of providing reserves to member
banks, and as such, the reaction of the banking
system could not be anticipated with 100 per
cent accuracy. Indeed, some observers feel that
member banks, even today, are not acting as
they used to, that they are now withholding in
the form of excess reserves a substantial portion
of the funds made available by the vault cash
provision.*
But why should banks behave in such a
manner? Why, in managing their reserve posi
tions, should they now prefer additional excess
reserves to additional earning assets? And how
might this behavior be connected with the vault
cash allowance? The answers to these questions
are implicit in an interesting hypothesis—one
which, if true, would have important implica
tions both for individual banks and the banking
system.
THE HYPOTHESIS
Most banks, and especially country banks, like
to keep a buffer of excess reserves as a sort of
insurance against losses of funds. Traditionally,
the single most important source of such losses
is adverse clearing drains—a situation in which
the individual bank pays out more funds in
checks drawn than it receives in checks de
posited, thus experiencing a loss of reserves. But
now, since the vault cash allowance, a new source
of reserve instability has arisen (or so the
reasoning goes). Now that vault cash counts as
reserves, any decline in vault cash means a
decline in reserves. Thus, the reasoning con
tinues, banks must now consider fluctuations in
vault cash as well as adverse clearing drains
* See, fo r example, Milton_ Friedman, "V au lt Cash and Free Re
serves," The Journal of P olitical Economy, Vol. LXIX, No. 2 (A p ril
1961), p. 1226.
11
business review
before calculating the buffer of excess reserves
they wish to hold. Since the fluctuation of both
of these factors is likely to have a wider swing
than the fluctuation of one alone, the reasoning
concludes that bankers—particularly country
bankers—will keep greater excess reserves than
before.
THE STATISTICS
Available data tentatively lend support to the
position stated above. As the chart shows, the
expansion in country bank earning assets during
the 1960-1961 recession was associated with
much higher levels of excess reserves when
compared with two other postwar recessions.
Excess reserves were rather consistently below
levels associated with the pre-recession peak in
business activity in the 1953-1954 recession and
showed a similar movement for many months of
the 1957-1958 downturn. But excess reserves in
the 1960-1961 period climbed over 73 per cent
above the pre-recession peak in economic ac
tivity immediately following the series of vault
cash moves and continue to fluctuate in a range
from 25 to 40 per cent above the pre-recession
peak.
Yet a mere examination of excess reserves
provides inconclusive evidence to support the
vault cash hypothesis, primarily because there
are so many other factors influencing excess
reserves. Higher levels of excess reserves in this
recession might, for example, be due to a
relatively weaker credit demand compared to
the ease generated by the Federal Reserve
System. A larger percentage increase in excess
reserves results partially from the fact that excess
reserves were lower during the base period for
the 1960-1961 period. Higher excess reserves
might be associated with the general diminution
of bank liquidity in the business expansion of
12
EARNING ASSETS AND EXCESS
COUNTRY BANKS
INDEX
Pre-recession p eak in business a c tiv ity =
RESERVES—
100
1958-1959. Higher excess reserves may be con
nected with Federal Reserve timing in this re
cession, ease being generated earlier and main
tained longer. Higher aggregate excess reserves
might result from the distribution of reserves
supplied by the System during the past recession.
That is, the vault cash provision favored country
banks which generally keep more cash in vault
than city banks and which traditionally hold
higher excess reserves relative to city banks.
In short, there are any number of factors
which might help to explain the relatively
higher levels of excess reserves in the 1960-1961
recession. Given this multiple causation, it is
difficult to prove or disprove the vault cash
hypothesis by statistical analysis.
But if one cannot decide what bankers are
doing by looking at aggregate records of their
business review
actions, there would seem to be an alternative:
ask the bankers themselves. Following this line
of reasoning, the Federal Reserve Bank of Phila
delphia constructed a random sequential sample
of Third District non-money-market country
banks and interviewed officers of each. Their
response provides a tentative indication of the
reaction to the vault cash allowance in the na
tion as a whole.
THE BANKERS’ REPLY
To make a long story short, each of the bankers
interviewed reported that no additional (a) ex
cess reserves, (b) correspondent balances, or
(c) short-term earning assets were maintained
specifically to provide a cushion against cur
rency-induced reserve drains.*
But these replies were based on limited ex
perience under the new provisions. What about
the future? It might be reasoned that bankers
will begin to keep additional excess reserves as
they actually see wider fluctuations in their
reserve account.
The interviews, however, cast doubt on this
reasoning as well. The reason for doubt: there
may well be no appreciably wider swing in
reserve accounts. For, in discussion with
bankers, it was found that a loss of currency
and coin before the vault cash move usually
was translated rather rapidly into a loss of
reserves (similar to what happens at the present
tim e).
•Technical note:
The sequential sample was designed as follows:
(a) If the proportion o f bankers in the population who would
answer "yes" to the questions asked equalled o r exceeded
.20, the sampling procedure lim ite d the risk o f a contrary
decision to .05 at most.
(b ) If the population proportion who would answer "yes" were
less than or equal to .10, the risk o f a contrary decision was
held to .05 a t most.
Twenty-five bankers were selected at random from among the
non-money-market country banks o f the Third Federal Reserve Dis
tric t. A ll 25 answered " n o " to all questions. This Jed to the de
cision, under the sampling plan, th a t the population represented
contained not more than 10 per cent who would answer "ye s".
It was found that banks typically have three
types of cash drains: a weekly drain, a monthly
outflow, and holiday losses. The weekly drain
generally comes close to the end of the week as
merchants build up till cash and shoppers ob
tain pocketbook money for weekend purchases.
This drain is followed by a return flow the first
of the following week. The monthly drain often
comes toward the end or very early part of the
month and is typically associated with such
factors as payroll needs and payment of monthly
bills. The seasonal cash drain occurs primarily
over holiday and vacation periods. At Christmas,
for example, both merchants and shoppers
typically build up currency balances to prepare
for an expanding volume of shopping.
Now some banks probably kept enough cash
on hand before the vault cash move to meet all
of these demands, so that a loss of currency
meant no additional orders of cash from the
Fed and, consequently, no reserve losses. Such
banks would indeed experience wider reserve
swings now that vault cash counts as reserves,
for now a loss of cash means a loss of reserves
by definition. The interviews, however, indicate
that such banks were the exception rather than
the rule. Indeed, the interviews indicate that the
amount of cash held to meet recurring drains
diminished sharply as the nature of cash drains
shifted from weekly to monthly to seasonal.
That is, many banks held sufficient cash to meet
weekly recurring drains before the vault cash
move, fewer held cash to meet monthly drains,
and fewer still held enough cash to meet
seasonal drains. Drains of the latter two types
were typically met by orders of new cash from
the Fed and a consequent debit to reserve ac
counts. The reason was that bankers tried to
hold vault cash to a minimum primarily
because cash was a non-earning asset, and
13
EFFECT OF THE VAULT CASH ALLOWANCE
The increase in vault cash holdings varied among
ON BANK
different size classifications of banks, larger banks
tending to increase their holdings the most in dol
lar amount, smaller banks holding more vault cash
OPERATING
as a percentage of net demand d e p o sits. . .
PROCEDURES
Deposit Size
(M illions)
A fter Third District banks began counting vault
cash as reserves, holdings of cash rose for all
classes of banks both . . .
Vault Cash H eld on
June 28, 1961 as a
Percentage of
Average Holdings—
Nov. 1958-Nov. 1959
Under $2
$2— $5.9
6— 9.9
10— 24.9
25— 49.9
50— 99.9
100—249.9
250—499.9
500-999.9
114.0
116.4
106.3
114.2
132.8
115.0
117.3
130.4
173.6
1.8
1.5
1.2
l.l
1.3
.6
.9
.4
.8
. . . in dollar amount
SEASONAL PEAK
^SEASONAL PEAK
A
^
W \
8.5
6.4
6.1
5.2
5.2
4.0
3.0
2.2
2.0
MILLIONS OF DOLLARS
®
(§ U T
6.7
4.9
4.9
4.1
3.9
3.4
2.1
1.8
1.2
All classes of banks held less reserves on deposit
with the Federal Reserve Bank of Philadelphia,
both. . .
. . . in dollar amount
MILLIONS OF DOLLARS
*
-
Vault Cash as a Percent,
of N et Demand Deposits
Nov. I , June 28,
In1958
I960
crease
V
SEASONAL PEAK
y
SEASONAL PEAK
SEASONAL PEAK
t
t
VAULT CASH I EXCESS VAULT CASH
OF 4 PERCENT OF NET
IN EXCESS
DEMAND DEPOSITS MAY BE OF 2Vi
COUNTED AS RESERVES
COUNTRY BANKS /
ALL VAULT CASH
MAY BE COUNTED
RESERVE CITY BANKS
I I
I
I I
1-1
1 .1 .1 1 M
i
l l ___ I
N D J F M A M J J A S O N D J F M A M J
I
I
I I___ L
JASO N
I I 1,1
OJFMAM
J
I 2 1 2 1 2 1 2 1 2 1 2 ) 2 1 2 1 2 1 2 12 1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2 31 2 12 1 2 12 1 23 1 2 1 2 1 2 1 2 121231
195 8
1959
196 0
RESERVE PERIODS
1961
. . . and as a percentage of net demand deposits
PER CENT
14
1958
1959
I9 6 0
1961
RESERVE PERIODS
. . . and as a percentage of net demand deposits
PER CENT
business review
secondarily because it represented a security risk.
Thus, a loss of currency before the vault cash
provision tended to be reflected in a loss of
reserves, as at present.
But so much for monthly and seasonal cash
drains. How about weekly flows? Although
weekly cash drains were often met out of vault
cash without orders of new cash from the Fed
(thus without a loss of reserves), this, too, is
similar to the present situation. For country
banks at present average their cash holdings
over the two-week reserve period to determine
their reserve credit. The averaging process
smooths out the peaks and valleys of the cur
rency flow, a loss in the last half of the week
being balanced by a gain in the first half.
CONCLUSIONS
On the balance, then, it would appear from
the interviews that conditions at present do not
differ substantially from those existing prior to
the vault cash move. In both periods a loss of
currency seems to have affected bank reserve
positions in much the same way.
It should be recognized, of course, that the
above conclusion is a tentative one. It is subject
to all of the difficulties of the interview pro
cedure and to sampling risks. Moreover, one
should be careful in generalizing from the
experience of the Third Federal Reserve District
to that of the nation as a whole. Final con
clusions regarding the effects of the vault cash
allowance on member bank reserves can only be
reached after a careful analysis of free reserves,
excess reserves, and the factors affecting member
bank reserves in future periods when reserves
are not being actively supplied by the Federal
Reserve System.
Yet, if our tentative conclusions do indeed
prove true, they have one implication that goes
far beyond mere management of reserve posi
tions. For as individual bankers behave, so be
haves the banking system.
If bankers should indeed hold greater excess
reserves as a result of the unique way in which
reserves were supplied in the past recession,
figures on excess and free reserves would be
inflated relative to prior periods. This would
mean two things: (1) the vault cash moves dur
ing the past recession would have been consider
ably less expansionary* than was generally sup
posed, and (2) even now figures on excess and
free reserves would not mean what they used to,
as such figures would now contain what might be
called “ captive excess reserves”—additional ex
cess reserves held as a buffer against swings in
vault cash. This latter situation might lead to an
overstatement or understatement of the degree
of ease or restraint achieved in present or future
periods.
If, on the other hand, the situation at present
is similar to that in the past (as our interviews
would seem to indicate), counting vault cash
as reserves would have little significant in
fluence on the value of excess, total, or net free
or borrowed reserves as indicators of the degree
of ease or restraint prevalent in the money
markets.
15
OF TIME AND BANKS
Threefold the stride of Time, from first to last:
Loitering slow, the Future creepeth—
Arrow-swift, the Present sweepeth—
And motionless forever stands the Past.
—Schiller
Nine to three are the conventional banking
hours. That is, the doors are open for business
from nine in the morning until three in the
afternoon. Only six hours—three hours on each
side of high noon. So you think bankers have
it soft—work only six hours a day, which leaves
18 hours for rest and recreation. All the time
in the world for golf, movies, fishing, the theatre,
or sitting on the sofa sipping soda before the
flicker box.
That’s a delightful myth, like some others:
the college professor who teaches eight hours a
week for nine months in the year, with a threemonth vacation; or the farmer who sows wheat
in the spring, harvests the crop in the summer,
and has all of fall and winter to rest up; or the
minister who occupies the pulpit for an hour on
Sunday, which leaves him with nothing to do
for the remaining 167 hours of the week.
Although a bank may have its doors open for
what seems like a short day, it is a mistake to
assume that banks waste time. Bankers can’t
waste time. They can’t afford to because bankers
are money merchants, and money is time just
as much as time is money.
The people streaming into banks during
business hours do so to make deposits, cash
checks, or borrow money. When they emerge,
the transactions are completed for them but
have only just begun for the banks.
16
On the trail of a check
Comes that time of the month when the mail
brings mostly bills. You write checks, seal the
envelopes, and consider the matter closed. In
advertently, however, you have set in motion a
chain reaction for a lot of banks, including
Federal Reserve Banks.
Suppose you live in Altoona and fly out to
Denver to see your grandson’s first tooth. While
there you buy $25 worth of toys and give the
merchant your check drawn on the First Na
tional Bank of Altoona. The merchant deposits
the check in his bank in Denver and there it
is microfilmed and forwarded to the Denver
branch of the Federal Reserve Bank of Kansas
City.
Chances are you never paid much attention
to the numbers arranged like a fraction on the
upper right-hand corner of your checks. They
are the sailing orders, and every number means
something. The code on your check reads
60~1316 —complete instructions for collection.
The 60 means Pennsylvania; 116 is the number
of the First National Bank of Altoona. The first
3 in the denominator means that the bank on
which the check is drawn is located in the Third
Federal Reserve District. The 1 means that the
bank is located in the area served by the Phila
delphia Federal Reserve Bank. The last 3 indi
cates that the check is drawn on a bank located
business review
outside of a Reserve city in a state (Pennsyl
vania, in this example) which is third, alpha
betically (preceded by Delaware and the south
ern half of New Jersey) in the Third Federal
Reserve District, and that the Denver bank which
forwarded the check for collection will get de
ferred credit in its reserve account for the $25.
Deferred credit is a gracious way of saying de
layed credit.
A glance at this code tells the sorting clerk
in the Denver bank that your check is to be
bundled with other Philadelphia-bound checks
ready to be tossed aboard the first eastbound
plane. In two or three days your $25 check has
traveled over 1,500 miles, was handled by about
20 people, and left a record of its passage at
every stopping place along the way. Should the
check have been destroyed en route, the Denver
bank— if it is one of the numerous banks that
microfilm the checks they handle—may forward
a picture of the check to complete the trans
action, provided you agree to accept the
substitute.
Your check will be one of about a million
received on an average day at the Philadelphia
Federal Reserve Bank. There on the third floor,
sandwiched between the silence of Research
and Bank Examination above and the quiet of
Cash and “ brass” below, one hears the clatter
and chatter of Check Collection.
Here the collection process is sped along with
the help of over 100 proof-machines and over
300 people (about one-third of the Bank’s en
tire personnel) consisting of a day force, a
twilight force, and a night force. Check collec
tion goes right around the clock, never stops.
The skilled operator who feeds into a machine
an endless stream of checks punches keyboards
to register the dollar amount of each check and
to position the proper slot of the revolving drum
for the check to drop into. In the machine there
is a pocket for bank No. 116 and a record of
the $25 is automatically registered on its paper
tape. After sorting and proofing are completed,
the check is dispatched to the drawee bank
where it is finally scrutinized by a “ signature”
clerk to make sure that the signature is genuine
and not forged, and then charged against grand
dad’s account, if he has a sufficient balance.
The check collection process not only saves
time but affords greater safety. It does away
with the transfer of cash. Each member bank of
the Federal Reserve System is required to keep
on deposit with the Reserve Bank of its district
a percentage of its own deposits. The Federal
Reserve branch at Denver credits the Denver
bank with $25 as though the Denver bank had
deposited that amount. In Philadelphia, the
Federal Reserve Bank charges the Altoona bank
with $25 as though it had withdrawn that
amount.
The accounts between the Federal Reserve
district offices are settled by a few employees
operating an electronic computer in the Inter
district Settlement Fund located in Washington,
D.C. There your $25 check is part of about $6
billion of settling up every day without moving
a penny of cash.
The latest third-floor installation to speed the
handling of checks is a family of check-tronic
machines (described at some length in the
Business Review for May, June, and July, 1960).
If your bank has gone M.I.C.R. (Magnetic
Ink Character Recognition), the symbols now
appearing on the bottom of your checks are the
aforementioned numbers of the code in mag
netic ink, which the electronic machines can
read with lightning speed. The computer while
performing the necessary arithmetic operations,
masterminds other machines, controls the high
17
business review
speed sorting of checks, and feeds information
to a high-speed printer which prints the re
quired records in plain English at rates up to
1,285 lines a minute. It took about five hours
to process a batch of 1,500 checks under the
old system of hand sorting and tallying on an
adding machine. The computer does the job
in ten minutes.
Time is distance over speed
A check in a pigeonhole at a bank or in a mailbag on a railway siding pays no bills. Its func
tion is not fully performed until the collection
and payment processes are completed. That’s
why it is important to keep checks on the move,
day and night, until they have completed their
circuits at the drawee bank. High-speed ma
chinery within banks is only half the story.
Speed of transportation between banks is the
other half. Time is distance divided by speed.
For years prior to World War II, member
banks of the district bundled their checks each
day and sent them to us by mail or railway
express. After processing and sorting in our
check department, we returned the checks to the
proper banks in like manner. Time was always
important because train schedules had to be met.
As the volume of checks became larger, the time
for processing checks was squeezed harder and
harder.
With the growth of automobile traffic and the
construction of highways, railway passenger
traffic declined and railroads were forced to cur
tail passenger service. As a consequence the
mail service deteriorated. Poorer mail service
inconvenienced the member banks and increased
pressure on our Check Collection Department
to shorten the processing time in the face of a
steadily expanding volume of checks.
Solution of the difficulty was sought in the
18
early post-World War II years by engaging the
services of motor truck carriers. Difficulties en
countered on the early runs were ironed out one
by one, and before long the motor carrier
service demonstrated its superiority over mail
service to numerous destinations throughout the
district.
Railway passenger service continued to de
cline, trains ran less frequently, and on some
lines, passenger service had to be discontinued.
More and more communities could no longer be
reached by railway mail out of Philadelphia,
and this applied not only to small communities
such as Driftwood and Turtlepoint but also
cities the size of Hazleton.
Meanwhile motor service expanded. Highways
were improved, turnpikes, expressways, and
limited access highways were built, motor trucks
became faster and more enterprisers went into
the business as private contract carriers. More
over, motor carriers, operating over the high
ways, are in a position to offer greater flexibility
in schedules and routes, and they give door-todoor service.
Consequently, we now have 555 motor car
rier points of delivery in contrast with 141 mail
points of delivery within the district. On a wall
in the check department hangs a district map
peppered with different colored pinheads show
ing precisely which delivery points are served
by each of the several carriers and the United
States mail.
Much of this check trucking takes place by
night when most people are asleep—or ought
to be. That’s when the truckers practically have
the highways to themselves and can make good
time. DuBois, for example, on the western fringe
of the district, is one of our most distant points.
The carrier serving DuBois leaves there about
3 p.m. and arrives in Philadelphia at approxi
business review
mately 11 p.m. About 2 a.m. he leaves here
with the checks for DuBois (and other points
along the route) and arrives at DuBois about
10 a.m., early enough for checks to be processed
that day.
In the dead of night when Chestnut Street at
the front door of the Federal Reserve Bank is
completely devoid of traffic, pedestrians, and
pigeons, little Ludlow Street, at the back door
of the Bank, is frequently jammed with a
dozen or more motor carriers bringing in the
“ raw material” and taking out the “ finished
product.” Motor carriers also operate between
here and the New York Federal Reserve Bank
and the Pittsburgh and Baltimore branches.
Check traffic with other Federal Reserve Banks
and branches is by air.
The postwar shift in check transportation from
railway to motor carrier keeps checks moving
faster, speeds the completion of business trans
actions, and saves time. It also brought about
more work for the night force. Formerly, 15
per cent or less of the check department per
sonnel worked on the night shift; now about
30 per cent of the people are in the night force.
Money at work
Early philosophers had a low opinion of money.
They said money is barren because money can
not beget money. But money does beget money
if it is given time, as every banker knows. The
begotten product of money and time we call
interest. Banks thrive on interest; without in
terest it is difficult to imagine any banking.
Bankers are custodians of other people’s
money. Deposits left with a bank are either time
deposits or demand deposits. Time deposits,
which have been growing recently, are left by
people with spare cash who want such funds to
earn them interest without much risk. People
with time deposits are usually not in a hurry to
withdraw their funds, so the banker invests
them in mortgages or other investments slow to
mature.
How much interest time deposits produce de
pends not only on the rate and the passage of
time but also on the frequency with which in
terest calculations are made. Some banks now
compute interest on savings deposits on a daily
basis instead of monthly, quarterly, or semi
annually.
Demand deposits may be withdrawn at will,
but bankers know from experience that only a
fraction will be checked out. So the greater
part of deposits are put to work earning interest.
Here, too, time plays an important role.
Some of the funds are lent to businessmen
borrowing money to expand their inventories;
some to consumers buying furniture; some to
farmers to buy feed or fertilizer. Loans are made
daily, and some run longer than others. Thus a
bank is more or less continuously making loans
and having loans mature. This requires proper
timing, and occasionally when a borrower’s
obligation falls due he may not be in a position
to pay and pleads for more time, which com
plicates the bank’s job of timing.
Time also enters into a banker’s calculations
on investments to which the banker turns for
alternative employment of funds when demand
for loans is diminishing. Long-term investments
ordinarily earn higher rates of interest than
short-term investments, which generally have
lower yields. For the higher yields the investor
gives hostages to time. Good banking requires
maintenance of a certain degree of flexibility
and liquidity. The banker is forever confronted
with difficult choices. If time didn’t count, the
decisions would be easier; but time is a hard
taskmaster.
19
business review
All the emphasis upon speedy collection of
checks is to keep money at work. Checks in
transit are idle money; money wasting time.
The banker cannot use funds until they are
available, so he wants checks to move as fast
as possible.
Time is everywhere
Inside a bank or out, time is a forward-flowing
tide. The man who says he likes to read books
but doesn’t have the time just doesn’t like books.
Or the man who says he would enjoy golf if it
didn’t take so much time, doesn’t really care for
golf. They are kidding themselves, because they
have every whit as much time as the readers
and the golfers. “ You wake up in the morning,
and lo! your purse is magically filled with 24
hours of the unmanufactured tissue of the. uni
verse of your life,” said Arnold Bennett. So
don’t blame time if you don’t like golf. Forth
right and frank is the man who said “ I hate a
book.”
Time is all the days there have been or will
be. That’s a long run—incomprehensibly long.
The day is a convenient measure of the flow of
time but it is too short for some purposes and
too long for others. The moon, as a ready-made
celestial chronometer, has a succession of phases,
each of about seven days’ duration, which gives
us the week, and a full circuit of the satellite
make a moon-th or month.
For geologists, even the year is too short a
20
time to be useful. They aggregate years into
great gobs of time called periods or ages that go
back millions and billions of years. By listening
to the ticks of a Geiger counter, antiquarians
delve deep into the past and can date pre
historic events with surprising accuracy.
A second, the sixtieth part of a minute, we
ordinarily think of as an elusive snippet of time.
It has long been the standard unit of time based
upon the earth’s rotation on its axis. For analysis
of the precise motion of artificial satellites, the
second is a long piece of time, and incidentally
is not absolutely reliable because of slight
changes of speed of the rotation of the earth.
So the satellite scientists use a refined second
based upon the earth’s trip around the sun
which is uniform. The difference between the
two kinds of seconds is very small but has to be
taken into account when accuracies of about a
millionth of 1 per cent are required.
Exploration into space is currently the thing,
and time seems to be very closely related to it.
The relativists who claim that time is a fourth
dimension of space are realists, as the explorers
of space well know.
Bankers are quick to adopt time-saving in
novations mutually beneficial to themselves and
their customers. Examples are: night de
positories, banking by mail, and drive-ins. Don’t
be too surprised when the first bank establishes
a “ soar-in” to accommodate the cosmonauts who
do fanciful things with time and space.
F O R TH E R E C O R D . . .
BILLIONS $
MEMBER BANKS 3RD F.R.D.
BA N K IN G
____ a
11
/
• CHECK PAYMENTS
j
(30 CITIES
| f /
1
A *
*
1
M
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/
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Vwl ' *
/
9 "
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/ • *
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* DEPO
LO ANS |
» T V
;
INVESTMENT
— ----- t
— ----------—
:
2 YEARS
AGO
T h ird F e d e ra l
R eserve D is tric t
U n ite d S tates
Per c e n t ch a n g e
Per c e n t c h a n g e
JUL Y
196 1
YE AR
AC3 0
F a c to ry *
D e p a rtm e n t S to r e f
E m p lo y
m ent
P a y ro lls
Sales
S tocks
Per c e n t
change
Ju ly 1961
fro m
Per c e n t
change
J u ly 1961
fro m
Per c e n t
ch a n g e
Ju ly 1961
fro m
Per c e n t
change
Ju ly 1961
fro m
C heck
Payments
SUMMARY
7
J u ly 1961
tr om
m o.
ago
year
ago
1961
fro m
year
ago
year
ago
m o.
ago
LOCAL
CHANGES
7
July 1961
fr<)m
1961
fro m
year
ago
—
E le c tric p o w e r c o n s u m e d ...........
M a n -h o u rs , t o t a l * ..........................
E m p lo ym e n t, t o t a l .............................
W a g e in c o m e * ..................................
C O N S T R U C T IO N * *
C O A L P R O D U C T IO N
year
ago
m o.
ago
M A N U F A C T U R IN G
-
6
1
0
-
1
+ 2
+ 7
+ 4
-
-
5
-
- 4
- 3
-
2
7
5
6
+14
+
+
16
-1 3
+
+
1
1
5
-
5
+
3
- 4
6
-
2
- 4
-
2
+
-2 0
3
-1 0
+ l
+ 1
+
2
1
0
—
2
+
i
-
year
ago
m o.
ago
year
ago
m o.
ago
m o.
ago
Per c e n t
change
Ju ly 1961
fro m
year
ago
m o.
ago
3
+
1
-
4
— 7
0
—5
-
i
-
6
—
5
+
6
0
-
-
i
+
7
+
4
-
3
L a n c a s te r..............
year
ago
1
2
+
7
-
6
+
3
+
1
-
+n
T R A D E *”
D e p a rtm e n t s to r e s a le s ..................
D e p a rtm e n t s to r e s to c k s ................
-1
+ 1
-
1
P h ila d e lp h ia . . . .
+
1
0
+ 3
+ 5
2
- lo t
+ 6
+
+ 6
+10
+ 13
+ 3
+ 12t
+
+
+
+
+
6
7
5
6
2
8t
+
+
+
+
-
1
0
4
5
1
9
+ 7
+ 3
+ 16
+ 17
+ 12
+11
+ 6
+ 4
+ 12
+ 13
+ 9
+ 9
PRICES
C o n s u m e r.............................................
•Production workers only.
••Value of contracts.
•••Adjusted for seasonal variation.
ot +
It
+
It
t20 Cities
0
0
— 1
+
1
0
+
1
{Philadelphia
-
3
+
2
+
3
+
3
-1 2
+10
1
-
3
-
5
+ 13
-
9
-1 2
+22
1
-
1
-
5
+ 10
3
-
i
3
+
3
+
2
-
3
0
-
-
3
-
9
4
-
-
1
-
5
0
-
4
+
2
1
-
8
-
1
-
8
+
1
0
-
2
-
3
+
1
+
1
-
T r e n to n .................
W ilk e s - B a r r e . . .
Y o r k .....................
1
-
+ 1
W ilm in g to n . . . .
1
-
S c r a n to n ..............
B A N K IN G
(A ll m e m b e r banks)
D e p o s its ................................................
Loa n s ......................................................
In v e s tm e n ts ..........................................
U.S. G o v t , s e c u ritie s .....................
O t h e r ..................................................
C h e c k p a y m e n ts ................................
-
R e a d in g .................
+
-
3
+
1
-
4
-1 5
-1 0
0
-
4
+
8
+25
+66
+
2
+
1
-
3
-
+
1
+
5
+
3
-2 3
+15
+
1
-
3
+
1
-1 1
+10
4
+ 10
*Not restricted to corporate limits of cities but covers areas of one or
more counties.
{Adjusted for seasonal variation.
@FedFRASER