Because of the close connection between brokers and the banks every broker and operator is vitally interested in the condition of the money market. At times the stock market asserts its independence and advances in spite of high rates for loans, but as a rule a shortage in the supply of loanable funds at the banks leads to a general calling of loans and a consequent check upon stock speculation. Brokers as well as bankers are anxious, therefore, to know from time to time the real situation of all the banks in the community. This information is furnished in the form of the weekly bank statement.
In New York the Clearing House issues such a statement every Saturday at twelve o'clock, and in other cities similar statements are issued once a week. The central banks of Europe also issue weekly statements. The Bank of England's statement, issued on Thursday, is carefully watched by the brokers in the large cities of this country, as it is an index of money market conditions in the world's greatest financial center. The Federal Reserve Act provides that the Federal Reserve Board shall publish a weekly statement showing the condition of each Federal reserve bank and a consolidated statement for all Federal reserve banks. These statements will show in detail the assets and liabilities of the Federal reserve banks, single and combined, and will furnish full information regarding the character of the money held as reserve and the amount, nature and maturities of the paper and other investments owned or held by Federal reserve banks.
The weekly bank statement of the New York Clearing House gives the condition of all the member banks, showing the average amount of loans and discounts, specie, legal tender notes, deposits and circulation, and the gains or losses in each item as compared with the preceding week. This statement of the condition of the banks in the most important financial center of the country is regarded as a fair index of the condition of the money market. The accuracy of the New York bank statement is somewhat impaired by the system of weekly averages used. The condition of the banks as presented in the Saturday statement is the average for the week, which may be either better or worse than the condition on that day. The actual condition, as well as the average, is now published.
While the general bank statement is of interest to most brokers as reflecting the condition of the banks and their ability to lend, they examine carefully the detailed statement which appears later than the general summary, and of course they will be especially interested in the condition of those particular banks with which they do business. The reserve of one bank may be well above the legal requirement, while another bank may be below that limit, and so must curtail its loans.