MONEY: What Becomes of It?

Last week Treasury statisticians issued a significant report: money in circulation on Sept. 30 was a record $8,151,000,000, up $850,000,000 from a year ago; 70% over 1929’s $4,819,000,000. Money in circulation has increased steadily since 1934. It now equals $61.58 for every U. S. man, woman and child. Excluding minors, per capita circulation is over $100.

An ordinary citizen, pulling a few crumpled bills, odd change and trolley tokens from his pocket, may wonder who has all this money. Bankers (holding about $1,200,000,000 in currency, about 15%) wonder too. Some possible explanations: 1) hoarding by foreigners, 2) increased need for small coins for sales taxes, vending and pinball machines, 3) decline in checking accounts because of service charges.

The fact is that small change has not increased much. On Aug. 31 (latest breakdown), $174,000,000 in 1¢ and 5¢ pieces was at large in the U. S., only $18,000,000 over last year. Dimes, quarters and halves (”subsidiary silver coin”) totaled $389,000,000, up only $24,000,000 from 1939. Over $800,000,000 of the “missing” money is in the form of bills—mostly silver certificates and Federal Reserve notes.

Unlikely as it seems, some Americans may be stuffing bills into mattresses or up the chimney. Unlikely is it too that $800,000,000 is being used in place of checks. That would mean that on the average every adult man or woman is carrying around $9 more in his pocketbook than a year ago. Unlikely is it also that so much money can have gone abroad. Travelers in these days probably carry more cash than formerly, but travelers are fewer. Considerable amounts of money may have been sent abroad by mail. U. S. currency exported by banks (net) amounted to $117,000,000 from January 1939 to August 1940, but $680,000,000 is still to be accounted for. Best bet seemed to be that some of the missing money had disappeared in all these ways, most perhaps abroad.