Atlanta semi-weekly journal. (Atlanta, Ga.) 1898-1920, 1920-01-27
No INCONVENIENCE
SEEN FOR PRESENT
IN DISCOUNT RATES
Bankers Declare That in
Spring Loans May Be
Some Higher but Cost of
Living Should Be Lowered

The advance in the discount rates
of the Atlanta Federal Reserve
bank to member banks. exclusive an
nouncement of which was made in
The Sunday Journal: is not likely
to cause any serious inconvenience
in the south for the immediate pres
ent, in the opinion of Atlanta bank
ers, among whom the advance is a
matter of lively interest.
If, however, the advance is main
tanned until the late spring, when
southern banks have\to borrow to
carry their customers, money will be
tighter and this tightness will be
reflected in increased interest
charges on loans.
Just now the south is flush" ex-
planned prominent banker, "and the
banks have adequate funds for &C
commodating their customers, so
that they are not discounting paper
with the Federal Reserve bank. But
along about May or June, the south
ern banks will require cash, and It
will be necessary to turn to the re-
serve bank for the advances. If the
advanced rates have not receded in
the meantime it follows that inter
est rates will be higher"
Advance Is General
The advance in the rates, which
is general throughout the country,
all reserve banks having acted in
concert, will have an immediate eff
feet in New York and the east, how
ever.
1t will, in the opinion of local
financiers, result in advanced rates
of interest to all classes of borrow
ers, and will operate to check specu-
lation in stocks and commodities,
which is believed to have contrib
uted UNNECESSARILY to the cost of
living.
The higher rates for money will
force on the market large stores of
supplies that have been boarded in
warehouse and carrier from month
to month on the cheap money ad-
vanced by the banks on the strength
of the A ga per cent discount rate
of the federal reserve l1anl2sss
The most noticeable Immediate af-
feet in the south of the advanced
rates will be reflected in a deprecia-
ton in the market and collatera!
value of Liberty and Victory bonds,
in the opinion of bankers. Of course
the real worth of these securities is
in no way impaired, but it is said
the advanced discount rate renders
them less attractive than they have
been as collateral securities, and
this fact obviously will operate to
depreciate their market value for the
time being.
1t is the belief of local bankers,
however, that the advanced rates
were anticipated in the bond market,
and that the depreciation recently
noted in Liberty and Victory bond
quotations was due to this anticipat
throughout the country.
The notice of the advanced rates
was received Monday morning by the
member banks throughout the Sixth
district. The notice indicates that
able generally to all classes of Sc
curities certain sort of paper is pref
erential consideration.
Substance of Order
The substance of the order advanc-
the rates from 4 "a per cent fol-
lows
Member banks notes, fifteen days
or less.
T
bonds, five and one-half per cent.
Secured by customers paper, eleg
ible for rediscount six per cent.
Secured by War Finance Corpora
ton bonds, ceven per cent.
Rediscounts:
Bank acceptances, when endorsed
by member banks other than the ac-
cepting bank, five per cent.
Commercial paper, including COM
modify paper, maturities within
ninety days, six per cent.
Agricultural and livestock paper,
maturities one day to six months,
6 per cent.
Trade acceptances, maturittes
within ninety days, 6 per cent.
Customers notes, secured by gov
eminent obligations, maturities
within ninety day. secured by Lib
erty or Victory bonds, 5 IL per
cent.
Open market purchases, previous
rates rescinded, new rates on appli-
cation.
Atlanta bankers generally share
the belief that the advance in dis
count rates unquestionably will OPP
crate to check speculation in securi-
ties and commodities and will tend
to reduce the cost of living by fore
ing on the market large stores of
supplies that have been boarded in