Federal reserve notes appeared in circulation shortly after the opening of the reserve banks. The amount outstanding on November 27, 1914, was reported as $2,700,000. By December 31, 1914, this had increased to $10,608,000; by December 30, 1915, to $189,026,000; and by December 29, 1916; to $275,353,000. A considerable part of this issue, however, was covered by gold or lawful money deposited with federal reserve agents. Net liabilities for outstanding reserve notes for the dates indicated were as follows:

Issue

1 Section 18 required the purchase of bonds by the reserve banks only two years after the passage of the act.

Experience with federal reserve notes has not yet been Elasticity sufficiently prolonged to permit safe conclusions concerning whole money and credit situation in the United States so abnormal that such conclusions as might be drawn would hardly be the same as those that would be arrived at under normal conditions. To these considerations must also be added the fact that, at least as far as the total issue of reserve notes is concerned, experience thus far shows little. The movement in the net liability of the banks for their notes is the real criterion of elasticity of note issue, but the change here has been on too small a scale to suggest real flexibility for the system as a whole. As an indication of possibilities, however, there is given in the preceding diagram the movement of the net liability of the Dallas reserve bank for the two-year period, December, 1914-December, 1916.

Net Liability for Federal Reserve Notes of the Dallas Reserve Bank, Last Friday of each Month, Dec, 1914-Dec, 1916 their elasticity. Moreover, since the outbreak of the Great War the heavy importations of gold have rendered the