Evening star., 1923-02-28
FEDERAL RESERVE !
REP0RTsQN CREDIT.
Efforts to Obtain Cheaper
Rates for Farmers Are of
Little Avail.

produce an appreciable effect on the
interest rates charged by banks 'in
the small cities and towns of agri-
cultural sections Of the west and
SOUTH" according to observations Of
the Federal Reserve Board. in its
annual report made public to-day. The
board says that the interest rates of
those financial institutions remain
practically unchanged, despite the
lowering Of -rediscount rates by the
reserve banks In the past year and
other moves designed to be OF as
The board, after making survey
OF conditions. notes that there is a
much closer relationship between the
interest rates charged by banks in
Industrial centers and the reserve re-
discount rates g
"it is noteworthy" the report says.
that the rates charged by banks in
the small cities and towns of agri-
cultural districts of the west and
south are practically on the same
level as they were year ago. This
is doubtless due to the fact that in
those sections 1t is the custom for
banks to charge a given rate of In
terest, usually ranging from to 10
per cent the year around :
gard to interest rates obtaining in
or to discount rates in effect at the.
federal reserve banks.
Wide Margin In Rates.
"Inasmuch. therefore, as the reduce
ton Of the discount rate at the fed
eral reserve banks has not resulted
in a corresponding decline in the
rates paid by farmers and other bor-
rowers who deal with banks located
in the small cities and towns OF the
agricultural sections Of the west and
south, 1t Is apparent that in those
sections of the country where rela-
lively high interest rates prevail
and there is wide margin between
bank rates-the latter have but
slight, if any. effect upon rates
charged by reserve member banks.
In the financial centers. however,
where the money markets are more
sensitive to changes in credit de-
mand, there IL a closer relationship
between reserve bank discount rates
and rates charged to customers by
reserve member banks.
I'm December. 1921, member banks:
charged their customers rates of 5
per cent or less on eight-tenths Of
1 per cent Of the paper rediscounted
with the federal reserve banks,
whereas in December. 1922. this per-.
centage had increased to 81. 1t is
also interesting to note in this con-
nection that while 2S per cent ul ...l
paper rediscounted by banks in small
cities and towns in December. 1922,
bore rates of per cent or less, over
81 per cent Of the paper rediscourt-
ed by the banks in large cities bore
such rates.
Rates Lower In Cities, q
las matter of fact. banks in small
cities and towns charged 8 per cent
or more on So per cent OF the paper
rediscounted With the federal reserve
banks during December, 1929. 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 customers at rates
of per cent and under compared
wit with ,ssi less ;, than l per cent in Decem-
The year 1922 was a period Of al
most continuous recovery from dis-
organized markets and depressed
business conditions. the board says,
and adds that white 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.
!. Purpose to Help Farmers.
Some OF these results, the board be-
l1eves. were attributable to ease credit
conditions for the farmers. While it
desires to be of aid to the farmer and
has gone as far as present statutes
appear to allow in that direction.
some credits. the board says, claim
the broadened rulings of reserve reg
ulations to be contrary to sound re-
serve banking principles.
Extension of rediscount privileges
TO farm paper of nine mnoths ma
turity, as proposed In the farm credits
legislation pending in Congress, will
fail of the mark sought. in the opinion
paper can be used as collateral for
issues of federal reserve notes until
such paper comes within six months
of Its maturity. the board saws. and
as result it does not believe the
legislation would add greatly to the
average maturities of paper held by
the reserve banks or fully accomnIisb
the end sought
Touches Branch Banking,
In discussion of general credit at
tention is called by the board to the
unusual development in branch bank.
ing which marked 1922. While avoid
ing ing a direct statement on the subject
branches Of strong banks, the building
up OF group financial institutions and
the adoption of other methods OF com
oining resources and lending powers
appear to have been Of some direct
oeneht In efforts to better finance the
farmer. Lowered interest rates in some
sections where branch banking exists
TO great extent were seen as one
tangible result Of the new form of
oanhins.
B0liVIAN.CHILEAN BREAK