Money Supply Up $800 Million

The nation’s basic money supply edged up $800 million in mid-March, the Federal Reserve Board reported Thursday.

The weekly report on M1, the narrowest measure of the money supply, went almost unnoticed in the credit markets, where a spectacular rally rolled on.

Euphoria over the outlook for inflation and interest rates has caused bonds to pile up some big price gains. Bond prices and interest rates move in opposite directions.

During this abbreviated trading week, long-term Treasury bonds climbed about 4 points, or $40 for each $1,000 in face amount. Financial markets will be closed today in observance of Good Friday.

The Fed said M1 rose to a seasonally adjusted $638.4 billion in the week ended March 17 from $637.6 billion in the previous week.

M1 represents funds readily available for spending and includes cash in circulation, deposits in checking accounts and non-bank travelers checks.

Typical of the reactions to the M1 report was that of Philip Braverman, chief economist for Irving Securities in New York.

“Who cares about M1?” he said.

For the latest 13 weeks, M1 averaged $630.4 billion, an 8.2% seasonally adjusted annual rate of gain from the previous 13 weeks.

In other reports:

- The Federal Reserve Bank of New York reported that commercial and industrial loans on the books of major New York City banks rose $92 million in the week ended March 19, compared to a decline of $649 million a week earlier.

- Commercial paper--corporate IOUs--outstanding nationally rose $928 million in the week ended March 19, bringing the total to $301.04 billion. In the prior week, commercial paper expanded by $2.7 billion.

- The Federal Reserve said bank borrowings from the Federal Reserve System averaged $234 million in the two weeks ended Wednesday.