New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1922-06-22
n. Y. Bank Cuts
Discount Rate
To 4Per Cent
Reduction in Borrowing
Charge Attributed to
Change in London and
Easier Money in Market
Sixth i'm Series of Drops
Stimulation of Speculation
and Rising Prices in Invest
mcnts Expected to Follow

BENJAMIN Strong. governor OF the
New York Federal Reserve Bank. yes
terday announced that in this district
effective from the opening Of business
this morning. the banks rate for all
,ediscounts and advances would be !
nor cent. This restores the rate TO inc
lowest level in force since Oetooer'
1918. the comparison being based on
the commercial Wper rate ana DrlngS
:, down 10 within a point OF the mini
mum Of 3 per cent which ooiained III
1916. s....or.
IN reducing the rate Is understood 10
be predicated on two premises nts''
Inability 10 maintain "a per cen,
ate coneurrentlv with a 3is per cent
ratio a, the Bank Of England without
dctrimcnt to the opportunities ana
nrospccts Of New York's hnaneiai@ead-
ership. and. second. recognition that
the decline in open-markct quotations
s,nee November 3. 1921. when the last
rut was made. hardly justified longer
enforcement Of n Az per cent charge
for borrowings by member banks.
Until the Bank Of England brought
ne rate down from to 81 per cent
last week the financial district was
vol satisfied with the relation Of the
Reserve Banks rate 10 open market
quotations. but that reduction. which
was held responsible. in part at least
for the break in sterling and was felt
10 crystallizc money easement IN Lon
don. raised anew the agitation for n re-
duction here. Yesterdays action meets
this situation. while few bankers be-
lievc that in the present state Of trade
and industry il will lead 20 new iniia-
ton.
Above Open Market
The new per cent rate is still
above the opcn-market quotations for
Treasury certificates and bankers ac-
ccptances, which correspond 20 the
London opon-market rates, and is on a
parity with the prevailing rate for the
best names in the commercial paper
market. II does not. therefore. contro-
vert the opinion that has recently
gained acceptance that the Federal Re
serve authorities had determined to
follow a policy Of maintaining the
bank rate above open-market charges.
Comparison OF yesterdays quota
lions with open market rates obtain
INK on the date that the reduction 10
az per cent was announced shows that
bankers acceptances have declined from
81. per cent bid, Az per cent asked,
TO 3ik per cent bid 3 per cent asked.
and that commercial paper has fallen
from 5h per cent for tLe best names 10
4 per cent. This indicates a decline Of
IL per cent in open market rates.
while the bank rate has held unchanged
and contrasts with cut yesterday OF
only y Of per cent by the reserve
bank. II is to be noted that the No
vembcr reduction brought the bank
rate down to a parity with the asked
rate on bankers bills, while IN the
present instance il is held full point
above that rate.
Views in the financial district as 20
the effect Of the reduction were not
fully formulated. but the general ex-
pectation appeared 70 be that its in
fuence would be more important senti-
mentally than actually. Business re-
vivnl and consequent greater use Of
credit is felt 70 depend upon factors in
herent in business itself and n lower
bank rate is not counted upon immodi-
ately TO increase commercial demands
for credit accommodations Such in
crease in demand is looked for TO de-
yclop only gradually.
Effect on Market
A certain stimulation OF specus
ton in securities and emphasis OF IN
/ rising trend Of prices in the invest
mont market. with consequent lower.
,-. - 80 tr4orcs4 tho Trcasurv has q