THE IMPORTANCE OF A "CALL-MONEY" MARKET

Call money in some form is indispensable to every important financial center. There must be not only an outlet for the employment of funds temporarily idle, but a large volume of call and short-time money is essential to the successful and economical conduct of business. It is particularly essential to the international and domestic commercial business, but the diversion of the use of the major portion of such money to the securities markets is not in accordance with sound banking principles. It is to be noted that in no great world market, other than New York, is the call-money market so dependent upon investment securities and so susceptible to speculative influences. In other markets the reverse is true, as their call money is based principally on commercial paper upon which realization can be had at the central bank, at a price, in case of need. We have seen that in this country call loans on securities lack this essential quality of liquidity required for quick and certain realization, and that this fact has now been more generally taken into consideration by our lenders. But the safe and successful divorce in this country of the use of call money from dependence upon investment securities as a basis requires careful study in order that safe and adequate methods may be substituted for the present methods of the securities market.

1 Including Exchequer, Savings Banks, Commissioners of National

Debt, and Dividend Accounts.

Gold and bullion (of the gold and bullion, 172,143,000

reichsmarks are deposited abroad).

613,625,000

Reserve in foreign currencies.

204,541,000

Bills of exchange and checks.

2,153,943,000.

Coin, bank and currency notes and balances with the bank of
England...

Balances with and cheques in course of collection on other
banks in the United Kingdom...

189,173.

45,094

Ratio of cash to current deposit and other accounts.

11.51

67,932

53,472

1,642,848

99,346

2,659

166

1,866,423

5. CONSOLIDATED STATEMENT OF

(1) LE CRÉDIT LYONNAIS: (2) LE COMPTOIR NATIONAL D'Escompte de PARIS; (3) LE SOCIÉTÉ GÉNÉRALE POUR FAVORISER LE DÉVELOPPEMENT DU COMMERCE ET DE L'INDUSTRIE EN FRANCE

1 Le Crédit Lyonnais.

2 Le Comptoir National d'Escompte de Paris.

Le Société Générale pour Favoriser de Développement du Commerce et de Industrie en France.

*This increase is due to the fact that the Comptoir National d'Escompte de Paris authorized an increase of 50,000,000 francs in its capital, of which 32,038,000 had been paid in on August 31, 1920.