New-York tribune., 1920-01-23
Reserve Bank
Puts Up Rates
On Redisco1a,,ts
fakes Drastic Action to
Bring About Reduction
i'll the Credit Structure:
May Reduce Living Costs
Commercial Loans High
Advance in Rates ON Lib
erty and Victory Issues
ID j s turbs Bankers

H'aue oV the Federal Reserve Bank Of
New York TO bring about reduction
IN the credit structure Of the I'd
FEDERAL Reserve District was announced
yesterday when the bank departed from
its recently inaugurated policy of
uniform rediscount rate Of 4S4 per
cent and put into effect drastic IN
creases ranging from 5 per cent for
bankers acceptances to per ccnt'for
commercial paper.
The rate on Liberty Loan bonds and
victory notes was raised to 5ia per
cent. AS result OF the apparent in
tention of the Treasury Department
TO finance further tho needs OF the
government by the issuance OF Treasury
certificates Of indebtedness the rate
on the outstanding issues vas left un-
changed ct ~. per cent. The rate on
agricultural paper was raised from 5
TO per cent. The new rates as an
nounccd by the Reserve Bank yester-
day follow:
New Rates
Commercial Psper-For advances Sc
cured by al classes of eligible com
merclal paper, excepting bankers ac-
" NPtcI\tO itVt CSCtSUlU& III cCi GAYS
and for rediscounts Of such paper, 6
per cent.
Notes-For advances not exceeding
fifteen days on Liberty loan bonds Vic
tory notes and customers' notes Sc
cured by either OF the foregoing, or
for the 1edlscount OF customers notes
so secured FOR periods not exceeding
ninety days, ola per cent.
IA Arr ,4s,tf> i
nos exceeding fifteen days secured by
bankers acceptancos and for redis-
counts Of salna not exceeding ninety
da s, ) per cent
United States Treasury Cer:ifcates
Of lndebte edness-F For advances rot ex-
ceeding ii teen days secured BY United
states Treasury certificates ol indebt-
edncSs and for sediscounts Of custom
ers' notes 50 secured not exceeding
ninety days, "a per cent
IN local banking circles The rcdis-
count rates lust established hy the
Fedcral Reserve Ean! we're ii gher than
was generally expected. despite nu-
merous reports tnat substantial in
cregses Ncro contemplated in pursu-
ancc Of the Federal Reserve boards
drive :. excessive credit expansion
throughout the country. Particular
surprise was expressed at the * per
cent rate on Liberty Loan bonds and
Victory notes.
'Ingratitsde." says Banker
',ne banker of national prominence
characterized such 81 drastic jump as
rank lngratjtude' ON tho part of the
Treasury Department toward the mil
ions OF subscri bcrs who purchased on
TIC partial payment plan. lie made
che prediction that many ~ho have
,t,,j j,- 81.
prlcc Of their holdings would have ad.
ditional hardship placed UPON them by
the banks increasing their carrying
charges, because they in turn would
be forced to pay more on their loans
at the Reserve Bank.
One important bank, 1t vas learned,
will suffer loss Of one halt of ] per
cent in It's rediscountlng operations in
View of the fact that early this week
II i, entered into sn agreement with its
clients who ars holders Of government
war bonds not to increase It's carry
ing charge over the next three months
above per cent This institution has
unpaid subscriptions of approximately
S35,o00,00O, onc-third Of which are
from railroads that have not been able
to pay & dollar on their original sub
scriptions.
Little criticism was directed against
the hign ra1c on commercial paper, as
il is felt that it viii haze an important
influence in reducing the high cost of
living through the liquidation of loans
that aie ,ascd on present comm modity
prices. h Vas thought however, that
the nose severe effect Of + per cent
commercial paper redisconnt rate
would be felt most il the Middle West
aud the Sou0
Effc,t on Call Loans.
Banking authorities were moro or
less cautious in predicting how the
Stock Exchange call money ratio would
be affected The vice president OF an
important lending institution belived
that the stock market situation was iii
q state where further liquidation Of
loans would not be greatly important
factor lie thought. however that it
would be difficult FOR brokers to Obtain
new loans in large amounts, as he felt
that the banks as the result Of ex-
would take advantage Of every oppor-
tunty to reduce their borrowings at
the Federal Reserve Bank
1oial bills held by tho Reserve Bank
st the close of the weeh ended Jan
uary II amounted to 1920. .604 0l3, Of
which SO ,303,G5G WIS repre- scnted by
borrowings on Government war paper,
1888 ,50J8 by loans on commcrcia!
paper end S2l2,295, 1876 on acccptanccs.
WASHINGTON, Jan. % Advances
In discount rates OF commercial paper,
Liberty bonds, Victory notes and bank
acceptances, announced to-day b. the
New York Federal Reserve Bank, are
aDplicablc also 10 The Boston and
Philad eShia banks. the Federal Re
serve Board hnving approved the pro