MONEY IN CIRCULATION (In millions of dollars) B. Money outside Treasury and Federal Reserve Banks, by denomination Paper Currency Page 1 of Chart B Secretary SIMON. It goes from 1940 until now. The total amount of money in circulation is $73,833 million; $10 billion is held by commercial banks, and in actual circulation is $6312 billion. That is money outside the Treasury and the Federal Reserve bank. Mr. STEED. Could you furnish for the record a statement as to how the amount of it changes, when it goes up or down, and the factors that cause that? Secretary SIMON. Yes, sir. FEDERAL RESERVE REQUIREMENTS The Bureau of Engraving and Printing receives from the Federal Reserve Bank requirements for a fiscal year (July 1 through June 30 of each year). These orders are prepared in May of each year by the Division of Finance, Reserve Bank operations, and the Board of Governors of the Federal Reserve System. Each of the Federal Reserve agents at the 12 Federal Reserve banks review and make suggestions on the estimated requirements prepared for his bank. The total requirements are then coordinated by the Board of Governors and the order is based, on June 30, with the Bureau of Engraving and Printing through the Comptroller of the Currency, Department of the Treasury. These requirements are based on issues during the previous 12 months, any observable trends, and the amount or order needed to maintain inventories at a desired level. The Bureau of Engraving and Printing prints, and delivers the notes filling orders received. The Bureau does not make the determination as to what would constitute an adequate reserve of unissued bank notes. The Federal Reserve Board, in concert with the Mint, estimates demand by extrapolating historical demand growth rates. These estimates are adjusted to reflect velocity and nature of economic changes and sporadic fluctuations, such as the recent abnormal outflow of cents, that effect short-range needs. Other adjustment factors are the changes required to meet target inventory levels. A final objective is to preserve the seasonal fluctuations that coin demand normally fol lows. Secretary SIMON. Actually, this going back from 1940 to 1974 wil show you how it has grown each year. In 1940 we had $7,848 million outstanding. That has grown 10 times. Mr. STEED. I am trying to show that the amount of money in circu lation is an automatic sort of thing. It has nothing to do with some body starting up a printing press to turn out a lot of money just be cause we owe some. You know the old charge that is always mad about that. I would like to have the facts for the record so it could h used as a reference. Secretary SIMON. Surely. [The information follows:] The Treasury does not print money to pay the bills of the Government. Lik other organizations, the Treasury pays its bills by writing checks, which mu |