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18 Fed. Res. Bull. 309 (1932)
Annual Report of the Bank of Japan

handle is hein.journals/fedred18 and id is 335 raw text is: ANNUAL REPORT OF THE BANK OF JAPAN The annual report of the Bank of Japan for 1931 was presented to the general meeting of shareholders on February 20, 1932. Sections of the address of Mr. Hisaakira Hijikata, governor of the bank, are given herewith:' The financial difficulties which, began in Austria and Germany, and led eventually to the suspension of the gold standard by Great Britain, made their influence felt in Japan, where the situation was further aggravated by the outbreak of the Manchurian disturbance about the same time. Prices of staple com- modities and securities underwent so sharp a decline that stock exchange transactions were temporarily suspended. Owing partly to anx- iety regarding the gold standard in Japan, the foreign exchange market had to meet a strong demand for dollars, which caused an outflow of gold in considerable amount and a decline in the volume of funds available to the market. Toward the end of the year money became tighter and dearer. With the change of Government on December 13, gold exports and the conversion of bank notes into gold coin were prohibited except under license, and there- after the yen exchange declined steadily, while commodity prices advanced. The advance was most marked in prices of international commodities which were influenced by specula- tive dealings, and was reflected in -a general rise in stock market values. The business situation thus underwent a marked change. Money market.- In spite of the fact that bank deposits declined, the money market was easy during the greater part of the past year, partly because the credit requirements of business were smaller and partly because the uncertain outlook discouraged long-term lend- ing. Interest rates declined rapidly-in fact, each succeeding issue of treasury bills carried a lower rate of interest. The average discount rate at which allotments were made declined from 0.93 sen per diem per 100 yen (3.39 per cent per annum) on January 17 to 0.38 sen (1.39 per cent) on June 19, when day-to-day loans were quoted at 0.3 sen (1.10 per ernt). After April 1, the associated banks one after another throughout the country lowered their rates of interest on deposits. As a result of the low rates, funds were invested in Govern- ment bonds-which gradually rose in value- and in foreign markets. On the whole, how- Taken, with some textual revision and rearrangement, from the Eng- ish version published (in abridged form) by the Bank of Japan. In addition to the address o the governor, the report contains numerous tables showing the condition and oprations of the bank in detail. Far earlier reports, see BULLETIN for Ju y, 1931, May, 1930, April, 192q, etc. ever, the position continued to be easy until the last quarter of the year, when several gold shipments aggregating 354,000,000 yen were made to settle dollar obligations. The re- sources of the market gradually became ex- hgusted, and money tightened appreciably. The bank accordingly iaised its discount rate on October 6 and again on November 5, while the associated banks advanced their interest rates on deposits about the middle of December. The customary year-end requirements for currency and the special demand for funds in settlement of foreign exchange contracts brought about a renewal of adtivity. Borrow- ings at the bank increased subhtantially, and the volume of advances outstanding on Decem- ber 30 was greater than it had been since the financial panic of 1927. The rate for day-to- day loans on that day was 0.9 sen (3.29 per cent) higher than on December 31, 1930. Foreign exchange.--During the greater part of the year the rate on New York fluctuated within narrow limits around $0.49%. The easy position of the money market, however, led banks, insurance and trust companies, and others to seek employment for their idle funds in London and New York. This created an increasing demand for foreign exchange, in spite of the fact that our foreign trade balance was fairly satisfactory and that the Taiwan Electric Power Co. had floated a foreign loan. After Great Britain suspended the gold standard and it became necessary to acquire foreign balances in place of those formerly held in London, dollar exchange was in great demand. When the gold embargo was imposed in Decem- ber, the exchange value of the yen declined steadily and reached $0.34% at the end of the year. Discounts; deposits.-Loans and discoants were relatively stable at about 600,000,000 yen until September, but gradually increased during the last quarter as a result of stringency in the market and of the export of gold. On December 31 they amounted to 964,000,000 yen, of which 575,000,000 yen represented discounts under the indemnity act. Govern- ment deposits maintained a monthly average of 100,000,000 yen during the first half of the year, but in the second half rose to 200,000,000 yen, whereas private deposits stood at approxi- mately 200,000,000 yen during the first part of the year, rose to over 300,000,000 yen in May, and then gradually declined to about 100,000,000 yen toward the end of the year. FEDERAL RESERVE BULLETIN MAY, 1932

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