Finance
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Abstract
Finance O October 13 the Secretary of the Treasury announced that the United States, Great Britain, and France had agreed on an arrangement providing for the stabilization of their respective currencies in line with their announcements of September 25 The United States agrees until further notice to sell gold at a specified price (although subject to change) to the stabilization funds of those countries which, through their own funds, agree to sell gold to the United States. The announced step followed the devaluation of the French and Swiss francs and the Italian lira and the depreciation of the Netherlands florin. It involves the removal of restrictions which had virtually prohibited gold shipments from the United States to countries which are not technically on the gold standard. Among the assumed effects of the recent action will be a reduction in the volume of international gold movements. During the past 2 years, political and financial uncertainties in the gold-bloc countries have been the major factors periodically influencing heavy movements of capital, through gold transfers, from Europe to the United States. The heavy inflow of gold during the month ending October 21 and the continued Treasury disbursements of funds with the Federal Reserve banks have increased the excess reserves of the member banks from $1,743,000,000 to $2,127,000,000, while at the same time the total volume of Reserve bank credit outstanding decreased by $10,000,000. Total loans and investments of the weekly reporting member banks during the month ended October 14 decreased $46,000,000. Security loans fell $75,000,000, while "other loans", including commercial loans, rose $111,000,000. The latter have risen each week from the end of July, when the seasonal rise of commercial loans got off to an early start, but the amount of the increase this year has been particularly significant. In its September Bulletin the Board of Governors of the Federal Reserve System summarized the results of a recent survey of the growth and distribution of large deposits of member banks. The survey covered the period from October 25, 1933, to November 1, 1935, and showed a rapid growth in bank deposits during this period which was widely distributed among various economic classes of depositors, as well as regionally. The Board stated that "the growth of deposits of concerns engaged in trade, commerce, and industry, not only indicates that business has been building up large cash balances but also helps to explain the small demand for commercial and industrial borrowing at banks and also in part the small amount of securities issued to obtain new capital." Favorable corporate earnings reports for the third quarter have contributed to strength in stock quotations during October. Price rise was more pronounced in the industrial and railroad stocks than in the utilities. Bond prices have continued strong and new issues of quality have found a ready market at low rates of interest. On October 20 the Treasury announced that for the first time since 1928 tax collections in the initial quarter of the fiscal year passed the billion-dollar mark. The collections amounted to $1,009,994,623, an increase of $164,523,370over the corresponding months of last year.