TOTAL
EXCESS
EXPORTS
000
Jan.
$32,747

TOTAL
EXCESS
IMPORTS
000

4.8657

54.7

$98.99 99.20

48.1

51.0

4.8679

59.4

4.8697

64.1

49.4

99.79

60.9

4.3

99.76

59.9

99.64

58.5

4.8697

65.4

March

4.6

32.6

March

99.33

54.2

19.7

52.7

99.06

51.5

99.02

51.1

4.8

38.1

51.5

4.8704

65.9

29,888

14..

4.0

23.8

53.0

99.16

53.6

99.25

54.8

99.24

54.2

4.4

26.9

54.7

4.8739

76.3

148,048

19

3.5

19.5

55.2

99.44

54.5

99.40

53.4

31.3

99.49

54.8

24.

2.4

7.7

4.1

15.3

42.8

27.

3.4

13.6

4.5

25.0

5.3

4.6

31.1

57.0

32.

2.5

6.3

4.8

40.5

49.5

12.3

5.3

4.8626

50.4

36....

4.1

64.7

5.3

4.8557

31.9

Oct.

Oct.

€ 5.2

c 61.7

4.8538

27.3

152,716

41.

4.0

24.4

63.0

€ 4.9

4.8554

38.8

46.

4.8

26.1

4.8594

44.1

€ 4.7

€ 46.0

€ 4.7

strong market with which the previous period ended the principal factors appear to be: (1) The hot summer months, comprising the vacation period, the period before the great crop movements of the fall set in, are naturally dull months; and this summer dullness is to a considerable extent discounted in advance. (2) The decline in money market rates in New York in the late spring and early summer is hastened by the large flow of currency from the Middle West in April, May, and June, particularly in May, after the spring demand of agriculturists has subsided. The movement of cash toward New York at this time is of course due largely to the practice of New York banks of paying two per cent interest on bankers' balances, and to the greater opportunities in New York City for short time investments and speculation. For the four years 1905-1908, the total amounts of currency reported by New York banks as received from the Middle Western States, were for the months of March, April, May, June, and July respectively, $9,625,000, $17,420,000, $21,601,000, $19,499,000, and $7,299,000. The corresponding average index numbers were 15.3, 38.1, 75.6, 43.5, and 28.1.23 Factors tending to counteract this influence are the large gold exportations which normally begin in April and reach their highest point in May or June,24 and the increase of subtreasury holdings of cash, which normally takes place from May to July.25 (3) Our foreign trade at this period tends on the whole to favor an easy money market.26 The export trade is relatively small, reaching its minimum in July, while the import trade tends to be at its maximum in March and April; and payments to banks against importations are normally made from two to three months or more after the date of shipment. Of the 43 years, 1867-1909, eighteen showed the highest merchandise imports in March, seven in April, none in May (though eight showed second highest imports in May), and two in June; on the other hand, only four years showed highest exports in March, and none showed maximum exports in April, May or June.

The fourth important seasonal swing is represented by the early part of the crop-moving period. Its beginnings are evidenced by the upward movement of call rates and the downward movement of bank reserves about the first of August, and although its other

boundary is difficult to define, it may probably best be placed about the first of October (40th week). Beginning after the 29th week (latter part of July)-the week of lowest call money in the year-call rates advance until the latter part of September. From the 29th week to the 38th week (latter part of September), the average rate rose from 2.3 per cent to 4.3 per cent, and the average index number from 5.3 to 30.6. Sixteen of the nineteen years showed a higher rate in the 38th week than in the 29th, one year (1893) showed a lower rate, and the other two showed the same rate for the two weeks. Bank reserves begin to decline rapidly about the last of July-the time when call rates begin their advance and they continue to decline until about the middle of September. The average percentage of reserves fell from 28.7 for the 30th week to 27 for the 37th, the average index number falling at the same time from 65.4 to 28.8. In eighteen of the nineteen years the percentage of reserves was lower for the 37th week than for the 30th.

27

The cause for this rapidly hardening money market is of course primarily the demand made upon the banks of New York for funds for moving fall crops, especially corn, cotton, and wheat.2 Few people appreciate the enormous proportions of these great American crops. The mind can hardly grasp such figures as 2,772,376,000 bushels of Indian corn (1909), 6,336,072,000 pounds of cotton (1908), and 737,189,000 bushels of wheat (1909). In August and September heavy demands for cash are made upon New York City banks by banks in the West and South. The deposits of reserve money kept at New York by these outside banks for the purpose of realizing the two per cent interest allowed by New York banks on bankers' balances are now rapidly depleted, and millions upon millions of cash flow out of New York City, with the results for the New York money market with which all are familiar. The figures collected directly from the New York banks by the National Monetary Commission show that for the four years, 1905-1908, $78,315,000 of cash were shipped by the New York banks to the Middle Western and Southern States during the months of August and September, or an average for these months of nearly $20,000,000 a year.28 This "For a good discussion of the Influence of Crops on Business in America the reader is referred to the article of that title by A. Piatt Andrew in the Quarterly Journal of Economics, May, 1906.

strong westward and southward movement is in part offset by the heavy gold importations which normally take place about this time; by the increase of gold (coin and certificates) in circulation resulting principally from the large deposits of bullion at the assay offices, deposits which are fortunately at their maximum in the months of greatest need;29 and finally by the lessening of subtreasury hoards and increasing of federal government deposits in national banks, which during this period appears to represent the policy of our Treasury Department.30

The last of September the demands upon the New York money market are increased somewhat by the requirements for quarterly settlements. In August and September both import trade and export trade tend to be relatively small.31

The fifth and last important seasonal period in the New York money market extends from about the first of October to the end of the year. During this period the market exhibits many minor fluctuations and much instability; nor does it show the regularity from year to year which characterizes the other seasonal periods. On the whole, however, the relative demand for money and capital tends to remain at substantially the high level reached about the first of October.

Call rates of interest, as measured by average figures, continue at their relatively high level until the forepart of December, with the exception of the two minor declines shown on the chart, which did not occur in a sufficient number of years to be representative. During this period, however, the rates from year to year exhibited much irregularity.32 Throughout December there occurs an increase in call rates, reaching the maximum figure for the year in the fifty-second week. The average rate rose from 4 per cent in the 48th week, to 7.4 per cent in the 52nd week, while the average index number rose from 26.8 to 49.3. This upward movement of the average figures in December was due more to a very few high figures than to any strong tendency for rates to advance at this time. The figures for percentages of reserves to deposits give like testimony to the irregularity of the market durReport, 146-152.

"Ibid., 158-159.

"Ibid., 138.

For the nineteen years there were ninety-five index numbers in the 44th, 45th, 46th, 47th, and 48th weeks together, and of this number there were fifty-three below 25, twenty-five between 25 and 49, ten between 50 and 74, and seven between 75 and 100.