The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1914-11-26
ZAPATA OCCUPIES.
MEXICAN CAPITAL AS
BLkNCO MOVES OUT
BANKS UNDERBID
RESERVE BANKS
PRIVATE INSTITUTIONS in NEW
YORK RED1sCoUNTs PAPER
AT LOWER RATE THAN
GOVERNMENT.

lities of the Federal reserve bank?
This question is one of the chic
topics of discussion among banker
and while they are by no mean
unanimous in their opinion, the mos
general view expressed is to the eff
fect that under the present condi
tions there is no reason why mem
Der banks should apply for redis
counts. This assertion is made not
withstanding the fact that there Ii
outstanding considerable quantit,
of emergency circulation and clear
ing house loan certificates. With the
New York city banks having owe,
100000 in excess of required
reserves, it is manifest that banks
are not in a position where they need
to borrow money from the Federal
reserve bank in the form of redis.
counts.
A few institutions in this Federal
reserve district, notably the Chem
teal National Board, applied for re-
discounts last week, and used the
credit thus established for paying
up the Clearing House loan certifi-
Gates.
Incidently. the deposit. Of COM
mercial paper for rediscoWf1t afforded
the reserve bank collateral upon
which it was enabled to take out an
issue of the Federal reserve notes.
1t is quite likely that the banks
which used the proceeds from the
rediscounting of commercial paper
FOR the retirement of loan certificates
would have settled up their Indebted
ness at the Clearing House even
though that had not borrowed mon
ey from the reserve bank. for the
reduction in the legal reserve re
fnuirement which became effectiHe
last Monday, made funds available
which heretofore had to be locked
IN in the vaults.
Requirement of Emergency Notes.
The emergency currency isued in
August, at time when there was a
a money stringency. is being retired
in large volume and about one-half
of the total ($133,O00, ,000) issued
| has already been redeemed. The
emergency notes. are being retired
! bcause banks have no longer any
use for them. practically all of the
national institutions in New York
now having large supply of idle
funds Furthermore, the tax on the
notes in circulation. originally 3 per
be increased to per cent on Decem-
her 1. 1t would be unprofitable for
banks to rediscount paper with the
Reserve Bank at 1-2 and 6 per
lcent and use the proceeds for which
they pay tax of only 8 12 or
per cent
New York Banks Rediscounting for
Country Institutions.
When the Federal Reserve Board
in Washington announced that until
further notice the New York redis-
count rate would be 1-2 per cent
7 for 3O-day paper and 6 per cent fo1
longer maturities. the big instftu
tions informed their out of town
;corresponden that they stood ready
to rediscount ait lower rate, and
that the commercial paper submit
ted as collateral would not have to
conform precisely to the rules laid
down by the Reserve Board. A
!, number of the prominent bankers
here have openly stated that they
proposed to uniformly underbid the
reserve banks rate. 1t has been stat
ed that during the past week New
York institutions with large out OF
town clientele had transacted con-
siderable business in rediscountins
/ the paper of their correspondents.
/ The country banker doesn't care
whether deals with the reserve
bank or his New York correspondent
all he looks for is the best rate. To
1.-THE country banker the establishment
of the reserve system will be a great
4 benefit as an agency for controlling
land adjusting the rates charged bJ
local institutions.
i OF course when money becomes
\ less easy and the demands for capita
increase, it is expected that even the
biggest banks in this city will deem
lit advisable to rediscount some oi
their commercial paper.
Should the banks of some othel
Federal reserve district be in need
lof more funds than can be supplied
locally, the Federal Reserve Board
A in Washington, may. by an affirma.
ltive vote of five members compel tht
New York Reserve Bank to redis.
lcount the discounted paper Of an
lother reserve bank.
Il