Tuesdays & Fridays

That which bankers like least is guesswork. Yet every Tuesday and Friday all member banks of the Federal Reserve system have to make a hurried guess around 3 p.m. The guess is not what their condition is at the moment, for that is always ascertainable, but what it will be later in the day when they make their semiweekly reports to the Federal Reserve. Late transactions can turn proper reserves into surpluses or deficiencies. A surplus signifies a multiplied loss of profit owing to the fact that a dollar in reserve means many dollars in banking power; a deficit means the bank must pay 2% above the regular Federal Reserve rediscount rate. Often, suddenly afraid of late deposits which mean a larger reserve will be needed, banks call loans late Tuesday and Friday. The sensitive New York money market is frequently disturbed by this action.

Last week bankers won a long-sought victory. Henceforth they will report to the Federal Reserve their condition not as of the close of business Tuesday and Friday, but as of the opening. Thus the uncertainty will be removed, economies effected, the money market stabilized.

Next step for which large member banks are agitating: a weekly, instead of semiweekly, settlement.

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