Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1923-03-03
RESERVE BLANES
COUNTRY BANK FOR
HIGH MONEY RATE

WASHINGTON, Feb. 2S.-Eforts
to obtain cheaper credit Tor the
farmers thus far have failed to pro-
dl1ce an appreciable effect on the IN
terest rates charged by banks IN
the small cities and towns of agrl-
cultural sections : of the west ana
SOUTH" according to observations OF
the federal reserve board IN Its an
nual report made public today. Inc
board says the interest rates OF those
financial institutions remain prac-
tically unchanged despite the lower
ing of rediscount rates by the re-
serve banks in the last year, and
other moves designed to be of as
sistance to the agricultural indus
try.
The board notes that there is a
much closer relationship between
the interest rates charged by banks
in industrial centers and the reserve
rediscount rates.
1T is noteworthy" the report
says" that the rates charged by
banks in the small cities and towns
of agricultural districts of the west
and south are practically on the same
level as they were a year ago. This
is doubtless due to the fact that in
those sections it is the custom for
banks to charge a given rate of in
terest, usually ranging from to
10 per cent, the year around, with
out regard to interest rates obtain
ing in industrial sections or to dis
count rates in effect at the federal
reserve banks.
Little Effect Felt
"Inasmuch as the reduction Of the
discount rate at the federal reserve
banks has not resulted in a CORE
spending decline in the rates paid
by farmers and other borrowers who
deal with banks located in the small
cities and towns of the agricultural
sections of the west and south, it is
apparent that in those sections OF
the country where relatively high in
terest rates prevail, and there is a
wide margin between such rates and
the federal reserv bank rates, the
latter have but slight, if any effect
upon rates charged by reserve board
banks.
In the financial centers, where
the money markets are more sensi'
tive to changes in credit demand,
there is a closer relationship be.
tween reserve bank discount rates
and rates charged to customers by
reserve member banks.
In December, 1921, member banks
charged their customers rates Of
five per cent or less on eight-tenths
of one per cent of the paper reds
counted with the federal reserve
banks, whereas in December, 1922,
this percentage had Increased to 6.1.
1t is also interesting to note in this
connection that while &c per cent
of the paper rediscounted by banks
in small cities and towns in Deem
Der, 1922, bore rates of per cent
or less, over 81 per cent of the paper
rediscounted by the banks in large
cities bore such rates.
Farmers Pay Per Cent
"As a matter of fact banks in
small cities and towns charged
per cent or more on SO per cent of
the paper rediscounted with the
federal reserve banks during Deem
Der. 1922. AS stated previously
there has been little change in rates
charged by banks in small cities and
towns since 1921, while in the case
of banks in large cities over two
thirds of the paper rediscounted in
December, 1922, was taken from Gus
toners at rates of per cent and
under compared with less than !
per cent in December, 1921"
The year 1922 was period of al.
most continuous recovery from dis
organized markets and depressed
business conditions. the board says
and adds that while the revival was
primarily industrial in character
the farmers benefited greatly
through generally improved prices
for their commodities. Attention is
called to the price of cotton at the
end of the year, which, according to
the report, was two and one-half
times that of March and April, 1921
Snrale of these results. the board