Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1926-01-11
Boost in RediscOunt
Rate Federal Reserve
Due to Better Business

New York, Jan. 10. (By The As
ISOLATED Press)-Business expansion.
with its attendant demands for
greater credit accommodation, last
week reached the point where the
Federal Reserve Bank of-New York
felt justified in advancing it's redis-
count rate from 31a to percent.
This action was given added signifi-
canoe by the deliberate policy of the
bank, which delayed the change
through period of rising bank rates
elsewhere and tightening money con-
ditions until the increase in borrow
ings at this center threatened to i'm
pair its position. FL
Working on the supposition that a
well defined rate policy has been fol-
lowed by the Federal Reserve Banks,
the financial district is convinced
that considerable good has been &C
complished by the developments of
the past two months. The first up
ward revision inaugurated by the
Boston bank early in November, and
quickly followed by interior banks,
tempered stock speculation and di-
verified money from this channel in
to the country's trade. Greater bor-
rowing pressure as q results was
thrown on the New York bank, which
by bringing it's rate into alignment
with those of other banks, is expect
ed to stabilize general credit opera
lions at a higher level.
Actual developments last week fail
ed to give true picture of the real
business situation. In many lines the
lull resulting from holiday suspen-
sions and inventory taking still pre-
ilc xxrith NJ ~, ~, 20
outlin production and sales policies
for the new year. Simultaneous read
justments were underway in the finan-
cial markets, which were flooded with
returning money called into use at the
end of the year. This gave an appear
ance of ease which belied the broad de-
mand for credit and indicated that any
determination of the real trend would
have to await the natural processes of
correction.
Activities in the steel industry are
not expected to regain their normal
pace for several weeks. New business
began to taper off late in the year, but
mill operations have been maintained
at fairly high level and now are only
slightly below the pre-holiday mark.
The weekly trade reviews reported a
prevailing view that the maintenance
of production on the present scale
would meet all mid-winter demands of
the consuming Industries. Although
pig iron production failed to keep pace
with the record output of steel ingots
in 1925, more furnaces are being
blown in.
The potential demand for steel
from important consumers, such as
the automobile manufacturers and
the railroad equipment industry, re-
mains large, although blying has
been temporarily retarded by the
holiday curta 'lment Price readpust-
ments which took place in the mo-
tor field with the beginning of the
new year, gave promise of stimulat-
ing new sales.
So many records were established
by the railroads in 1925, that the car
fiers might conceivably find it diff
ficult to make favorable comparisons
during the current year. Yet an
suspicious stat has been made by
most roads with several executives
predicting that new levels of post
war prosperity would be attained.
The opening OF the year in the tex
tile industry found &c DDS moving RAJ
Their slowly, but til all signs point
in~ to Improvement in the seasoned
demand for all kinds of fabrics.