The effects of the amendment of June 21, 1917, and the use made of the privileges conferred by it are indicated in the following statistical statement covering the month before and the month after that date:

Table Showing the Effects of the Amendment of June 21, 1917, on the Collateral Behind the Federal Reserve Notes (In Millions)

By the amendment the federal reserve bank may count the gold held with its federal reserve agent as part of the required reserve against its outstanding federal reserve notes, and may substitute commercial paper for the gold to any extent desired, provided that the gold remaining in the hands of the agent or specially segregated as a reserve against notes in the vaults of the bank itself does not fall below 40 per cent of the notes outstanding. During the strain that existed in the latter part of June 1917, due to the Liberty Loan payments and the tax and other payments at the end of the fiscal quarter, the Federal Reserve Bank of New York, which had carried 100 per cent gold and no commercial paper with its federal reserve agent, now carried $100,000,000 of paper to the federal reserve agent and withdrew a like amount of gold to strengthen its gold position with respect to deposits. As a result, the per cent gold reserve against notes declined. Since June 21, 1917, however, the matter of the per cent gold reserve against notes considered by themselves is wholly without significance, for the reserve bank can at any time shift notes or gold from the deposit-banking side to the note-issuing side, or vice versa. The reserve banks, following the recommendation of the board, endeavor to keep an equable distribution of funds held by the banks and the reserve agents, so as to be able to show in their reports approximately equal percentages of reserves against federal reserve notes and against deposits.