Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-04-16
RED|SCOUNT RATE
DEBATE PERSISTS
Durant and Ayres Contribute
Latest Arguments in
Controversy.
special pispateh to The Star.

special UtSpateh 10 Inc 6thT.
NEW YORK, April 16.-The con.
troversy between the high and the low
Federal Reserve discount advocates ard
those who believe In maintaining the
status quo of the money situation has
been intensified by the demand Of
w. c. Durant, on one hand, for rate
Of 8 per cent, and the recommendation
Of Col. Leonard p Ayres that the
discount rate be lifted above its present
level OF 5 per cent.
Col. Ayres has taken an attitude
similar to that outlined by the Ma
tional City Bank In its April circular,
which strongly advocated q discount
rate of per cent. He said; Our
reserve system is trying the experiment
of enabling member banks to re-
loan borrowed reserve funds at a
profit during period Of prolonged and
banks in the districts that have a
rate of per cent have been able to
use their Federal reserve facilities to
obtain funds which they could loan
as high as 20 per cent. with even q
greater spread in favor Of those In
the three districts where the Federal
Reserve discount rate Is still AZ per
cent.
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Col. Ayres further stated that many
other central banking systems have
tried the experiment charged against
the Federal Reserve. but that 1t was
doubtful II record can be found OF
its ever having been done without re-
sulting in ultimate disaster" He finds
credit imitation in the rapid increase
n the turnover Of bank deposits rather
than by expansion Of deposits and
loans, which is due, In his belief. to the
DEVELOPMENT of an invisible banking
system consisting of corporate and In
dividual lenders to brokers who are
outside the control of banking systems,
but are using banking facilities" In
the reduction IN brokers loans OF
1856 900 900 from the high Of March
20 all but 100000 has been for the
account of New York and interior
banks, with the loans by Others" not
considerably more than so per cent OF
the total amount.
While there has been imitation In
credit and in security prices, this weeks
index Of commodity prices shows an
opposite tendency, so the commodity
price average is now at the lowest since
last December. This drop has been
affected by the break in metals pri-
marily; although other commodities
have reacted considerably from the
high level made In the first week OF
March.
Export Trade.
One Of the objections on the part OF
the Federal Reserve Board to raising
its rediscount rate is the possible effect
of such action on this country's export
trade. Judging from the figures for
March, this trade continues to boom, for
the total value Of shipments Of COM
modities and manufactured products
was $4s6, 100000, compared with $500
TIL 900 in the same month IN 1928
This makes the March quarter o con-
spicuous One in the annals Of foreign
trade, as the total exports in this pc.
Rod exceed those of the same quarter
last wear by $213, 100000. Imports last
month were s103, 100000 less than ex.
ports. For the quarter the foreign
trade balance in favor OF the Uniteo
states amounted to Sass, 600. 900, against
$l33, 000, 900 last year.
It will be surprising to many to know