Anna Jacobson Schwartz

Elma Oliver

English

Research Papers in Economics

This PDF is a selection from an out-of-print volume from the National Bureau of
Economic Research
Volume Title: Currency Held by the Public, the Banks, and the Treasury, Monthly,
December 1917-December 1944
Volume Author/Editor: Anna Jacobson Schwartz and Elma Oliver
Volume Publisher: NBER
Volume ISBN: 0-87014-449-9
Volume URL: http://www.nber.org/books/schw47-1
Publication Date: 1947
Chapter Title: Definitions
Chapter Author: Anna Jacobson Schwartz, Elma Oliver
Chapter URL: http://www.nber.org/chapters/c9489
Chapter pages in book: (p. 1 - 2)How much currency is held by the public isa question often asked
in recent years, but not easily answered, for no monthly estimates
have been available for 1935-42.' Currency in public circulation
has a continuing interest as a component, albeit the lesser one, of
the means of payment, which, of course, consist chiefly of deposits
subject to check. Monthly statistics are desirable not only to lend
precision to any discussion of the public's currency holdings but
also as a step toward the monthly measurement of the means of
payment.2
The main purpose of this Paper isto present new monthly
estimates of the public's holdings of currency from December
1917 to December 1944. Before currency in public circulation could
be estimated, however, a series of vault cash held by all banks had
to be derived. To give a complete view of the amounts of United
States currency in the possession of different classes of holders, it
seemed worth while to assemble also series on the currency holdings
of the Federal Reserve Banks and of the Treasury. 'While the latter
were compiled directly from official sources, currency holdings of
the public and of all banks al-c entirely new estimates,as it was not
considered desirable to continue computing either of the two earlier
monthly estimates of vault cash by methods hitherto used(see
Note 1 and App. C). The earlier series are unsatisfactory inour view
for various reasons. 1\'Iost serious is that the intra-weekly movement
of vault cash is disregarded. We not only take this movement into
account and try tcorrect other defects in these series but also 1111
the gap between December 1934 and December 194-2, whichno
series covers.
SectionIdefines the chief terms used; Section 2 describes the
derivation of the estimates and the series of Federal Reserve Bank
and Treasury currency holdings; Section 3, the character of these
four series and their fluctuations during the 27 years covered.
IDEFINITIONS
Currency in the United States comprises all kinds of bankor
Treasury issues of coin or paper money, including gold coin, gold
certificates, standard silver dollars, silver certificates, Treasury notes
of 1890, subsidiary silver, minor coin, United States notes, Federal
tin February 19-14 the Federal Reserve Bulletin began to publish a monthly series of the rublic's
currency holdings back to December 1942. For the period before 1935 two monthly series have
been compiled, one by Y. S. Leong, for January 1914-January 1927 (first of month): Money in
Circulation in the United States, Journal of Political Economy (XXXVIII), April 1930,pp. 184-7;
the other by J. \V. Angell, for January 1919-December 1934 (end of month) : Behavior of
Money, pp. 180-1 (see App. C for comment on these series).
2To supplement the estimates of the public's currency holdings, we hope in the future topresent
monthly estimates of deposits subject to check (minus duplications and interbank deposits).
1Reserve notes, Federal Reserve bank notes, and national banknotes.
xlii banks, unless otherwise qualified,are all member and non-mem-
ber banks combined.
iVon-nationd banks are member and non-member banks without
national charters, including commercial banks, loan andtrust com-
panies, savings banks, and private banks.
J"ault cash includes all kinds of United Statescurrency, metallic
and paper, issued by all banks, Federal Reserve Banks,and by the
Treasury, whetheror not considered part of legal reserves, either
held on the premises of member and non-member banksor in transit
to or from a Federal Reserve Bank.
Currency in publiccirculation, i.e., outside all banks, Federal Re-
serve Banks, and both the Treasury Department in Washington,
D. C. and the mints andassay offices in the country, includes cur-
rency in active use or in hoards held by individuals, businessfirms,
municipalities, states, and non-excluded federalgovernment agen-
cies; also such United Statescurrency as may have been carried
abroad, lost, or destroyed.
2DERIVATION OF THE SERIES
CURRENCY HOLDINGS OF ALL BANKS
Monthly estimates ofcurrency in the hands of the public are the
difference betweena published monthly series of 'Currency outside
the Treasury and the FederalReserve Banks' (i.e.,currency held by
the public and by all banks)and estimates of all bank vaultcash.3
The monthly serieson vault cash in all bankswas constructed from
data on vault cash holdingsreported by the first fivegroups of banks
listed in Table 1.
The weekly reportingmember bank series, for Wednesdays(Fri-
days before May 1921)closest to the end of eachmonth and to call
dates (Chart 1), and themember bank call date series(Chart 2)
are familiar data. Call date figureson vault cash in non-member
banks, however, havenot previously been published.Many state
banking departmentsreport on the condition ofnon-national com-
mercial banks and trustcompanies, savings banks, loancompanies, and private banksmemberand non-member. Eachstate banking
department regulates thefrequency with whicheach class of bank within its jurisdictionmust report, as wellas the form of the con-
dition statement. Many,however, requireCondition statements as
3End-of-,nonth data, published inthe Treasury CirculationStatement, are reprinted in the Federal Rehrve huFf/in underthe heading Money (Or Currency)in Circulation (App. A). 'Currency in public circulation' isused here to describecurrenc' in the hands only of the public, and should not be confusedwith the Treasury term,which includes currency in thevaults of all banks.
2

Currency Held by the Public, the Banks, and the Treasury, Monthly, December 1917-December 1944

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