been steadily downward, recoveries being slight and temporary. The combined reserves of the banks on December 27 were 50.6 per cent, and excepting seasonal recoveries anticipated in January and February, 1919, further declines may be expected until the financial program of the Treasury has been finally completed.

Due to accessions to membership of State banks and to the following up by the Federal Reserve Banks of the Board's policy of concentrating gold and gold certificates in the vaults of the Federal Reserve Banks, the total gold reserves of the banks have shown an increase during the year of $402,554,000, having increased from $1,687,720,000 on January 4, 1918, to $2,090,274,000 on December 27. Of this increase approximately $200,000,000 is due to exchanges made with the Treasury of Federal Reserve notes for gold.

EFFECT OF WAR FINANCING UPON THE FEDERAL RESERVE BANKS.

The effect of two years of war financing upon the Federal Reserve System can best be shown by the following table, from which it will be seen that the enormous needs of the country, both for military and commercial purposes, have been provided for and that our surplus over minimum reserves required by law has been lowered only by $17,400,000:

The table next subjoined, showing the combined resources and liabilities of the 12 Federal Reserve Banks, indicates the changes in the various items of resources and liabilities of the Federal Reserve System during the years 1917 and 1918. The figures of March 30, 1917, show the situation immediately before the entry of the United States into the war, and those of December 27 show the condition at the close of the year, while the figures for the intermediate dates show the changes directly attributable to the Liberty loan flotations.

Combined resources and liabilitics of the Federal Reserve System.

RESOURCES.

Nov. 8,
1918.

Dec. 27,
1918.

167,994

552, 790

1,052,377

1,068,295

1,373,799

2,293, 223

2,318, 170

been steadily downward, recoveries being slight and temporary. The combined reserves of the banks on December 27 were 50.6 per cent, and excepting seasonal recoveries anticipated in January and February, 1919, further declines may be expected until the financial program of the Treasury has been finally completed.

Due to accessions to membership of State banks and to the following up by the Federal Reserve Banks of the Board's policy of concentrating gold and gold certificates in the vaults of the Federal Reserve Banks, the total gold reserves of the banks have shown an increase during the year of $402,554,000, having increased from $1,687,720,000 on January 4, 1918, to $2,090,274,000 on December 27. Of this increase approximately $200,000,000 is due to exchanges made with the Treasury of Federal Reserve notes for gold.

EFFECT OF WAR FINANCING UPON THE FEDERAL RESERVE BANKS.

The effect of two years of war financing upon the Federal Reserve System can best be shown by the following table, from which it will be seen that the enormous needs of the country, both for military and commercial purposes, have been provided for and that our surplus over minimum reserves required by law has been lowered only by $17,400,000:

The table next subjoined, showing the combined resources and liabilities of the 12 Federal Reserve Banks, indicates the changes in the various items of resources and liabilities of the Federal Reserve System during the years 1917 and 1918. The figures of March 30, 1917, show the situation immediately before the entry of the United States into the war, and those of December 27 show the condition at the close of the year, while the figures for the intermediate dates show the changes directly attributable to the Liberty loan flotations.

Combined resources and liabilities of the Federal Reserve System.