In loaning money on demand, when it is strictly understood between
bank and borrower that the money so advanced is positively minute
money--money returnable at any minute when the bank calls for
it--banks usually charge low rates of interest. When interest rates
are high bankers prefer to deal in long-time paper. This general rule
is reversed when the situation is reversed. Bankers aim also to
scatter and locate their maturities so that as the seasons roll around
they will not have very large amounts maturing at one time and very
small amounts at another. They plan also to be "in funds" at those
seasons when there is always a large and profitable demand for money.
For instance, in the centres of the cotton-manufacturing interest the
banks count on a large demand for money between October and January,
when the bulk of the purchases to supply the mills are made. Again,
among those who operate and deal in wool there is an active demand for
money in the wool-clip in the spring months. The wheat and corn crops
are autumn consumers of money. Midwinter and midsummer in the north
are usually periods of comparative stagnation in the money market. All
these things affect rates, and the successful banker is he who from
observation and large experience shows the most skill in timing his
money supply.