The New York herald., 1921-07-30
Reduction in Discount Rate
Chief Cause Of Revival
zff
in Industry.
AID IN MANY FIELDS
Agriculture and Live Stock
Have Promising Outlook,
es Says Statement.
LIBERTY BONDS IMPROVE
War Finance Corporation Pro-
notes Foreign Trade and
n Roads Will Spend More.

notes Foreign Trade and
!. Z Roads Will Spend More.
4 spscsay Despatch to THE NEW YolK HnAr.p.
\ .sl Now York Herald bureau
washington. ID. q, July -.
/. Government activities for ameliora-
* ton Of business and financial condi-
tions throughout the United States are
Z bringing about far reaching beneficial
!, results, according to an official state
I nent given out by the White House
to-day.
= The accomplishments In the last -four
months, it Is stated. in the direction OF
relieving financial conditions. in maxi
ing provision for the Governments
short dated debt, In assisting both in
austry and agriculture to better mar
kets and In providing for the financial
necessities Of the railroads are re-
garded as an achievement Of the larg-
Z est Importance to the country.
Perhaps the most important develop
rnsnt has been the action taken by tho
Federal Reserve banks in reducing dis
count rates." the statement says This
= action is calculated to relieve the stag
nation Of business, and at the same
time It gives authoritative recognition
s or the Improvement in credit conditions
just;fying the policy Of reduced rates.
svi-During the latter part Of 1919. and
from time to time In the year 1870. In
y creases Of rates of discount bad been
made by the Federal Reserve banks in
order to meet then existing conditions
There had also been introduced In sew
yeral reserve districts 90 called progress
. eive discount rates, under which. after
the member bank had discounted it,
paper with its Federal Reserve bank
..up to a certain point. 1t was then TO-
Quired to pay progressively higher rates
FOR further discounts In order to check
excessive borrowings These rates have
/. recently been entirely abolished. again
sipdicat,ng improved credit conditions.
~ Reductions in Many Cities.
N The first of the successive reductions
4 in discount rates came on April Is, when
Y the Boston Federal Reserve Bank re-
\ duced it's rate on commercial paper
& from to per cent and made Ike
" reduction on agricultural paper.
I'd "A reduction from per cent. to 81
n per cent on commercial paper was
X made by the New York bank on May s..
while that on agricultural paper was
lfkewia, reduced from to Gk per cent.
ION May the Atlanta bank reduced
W the commercial paper rate and also the
" rate on agricultural paper from Z to 8
X per cent.
y ION May the Chicago bank rsducsd
the commercial paper rate from to 6h
per cent. and tho rate OF agricultural
=. paper from to 81 per cent.
"On May 10 the Minneapolis bank re-
duced the commercial paper rate from
n Z to 81 per cent. and the rate on agri-
cultural paper from to 651 per cent.
"On May 16 the Dallas bank reduced
x the commercial paper rate and also the
b rate on agricultural paper from to ei5
per cent.
: on June is the New York bank again
< reduced the rate on commercial paper
!. from 6,x to 8 per cent and the rate on
4 agricultural paper from 63k to per cent.
"On June rs the Dallas hank made It's
!. second reduction, lowering the rate on
& both commercial paper ana agricultural
Z paper from s n to per cent.
.On July FL. or thereabouts, the Bos-
: ton. New York, Philadelphia and San
Francisco banks reduced the commercial
paper rate from to ~ per cent. At
the same time these banks made q like
reduction in the rate on agricultural pa
per.
Bank of England Also Acts.
1T Is unsafe to prophesy concerning
conditions In the future. but Il may be
expected that recognition will be given
accordance with the dictates of sound
banking practice.
1T viii not have escaped attention
that the rates OF discount OF the Bank of
England have also been successively re-
duced, and that these reductions have
been substantially coincident with the re-
duction in Federal Reserve rates in this
country. This would appear to be a
frank recognition Of the intimate relation
between the money markets In this coun-
try and OF Europe, and q recognition az
well OF the improvement In world credit
conditions. Tho importance Of coincident
reduction by these two leading banking
systems lies chiefly in the fact that II
indicates mutual desire to reopen inter-
national channels of credit, upon which
International trade depends.
Tho Treasury on its part has during
the last four months successfully inau-
guratcd Its new policy of refunding the
short dated debt of the Government and
utatttpubnk tuo early nRturltle9 over
the period between the maturity of the
Victory loan in 1923 and the third Lib
erty loan In 1898. The first offering OF
Treasury notes pursuant to this policy
met with a most enthusiastic response
and the further development OF the pro.
gramme should bring about better dis
tribution OF the public debt and much
improved market conditions for Govern.
rrent securities. There has already bear
q marked Improvement In the market
prices of Liberty bonds and Victor,
notes. and tho market for all outstand
Ing issues Of abort term Government Sc.
curities IL In Better shape than 1t any
time since the depression.
Assistance to Foreign Trade.
"Aions with these accomplishment,
must be mentioned the resumption o,
active operations By the War Financ,
Corporation, which had ceased opera
fions In May. 1920. Since its active 70
sumption Of operations this corporation
has now agreed to mako advances Il
finance large quantities OF cotton, agrre
eating nearly 100000 bales, while tn,