For several years the Federal Reserve Board and the Federal Reserve banks have employed a method of presenting figures derived from Federal Reserve bank condition statements and from Treasury circulation statements organized in such a manner as to define the channels connecting banking and monetary conditions of the country with the Federal Reserve banks. These figures are presented in the form of a balanced statement, which shows the various currency and credit elements that correspond to increases or decreases in the supply of and in the demand for reserves of member banks. The importance of factors of supply and use of member bank reserves lies in the fact that the ability of member banks to make loans or investments and their attitude in the matter are influenced by the availability to them of reserves and by the method through which these reserves are obtained. There is an important difference in cost, in liability, and in attitude of the banks between reserves obtained at the banks' initiative through discounting paper and reserves obtained either through open-market operations by the Reserve baniks or through the inflow of gold from abroad or of currency from circulation.

DESCRIPTIONS of the shifting of demand and supply curves frequently are confusing. Some authors use the words up and down, others vertical and horizontal, while still a third group prefers right and left. Recently one writer' attempted to prove that a shift of the demand curve to the right graphically is the same as a shift upward, but he apparently failed to perceive that the demonstration was necessarily limited to the special case of a negatively sloping straight line.2 Under this particular restriction, clearly a shift upward a shift to the right, a shift downward-=a shift to the left.