Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-05-03
MONEY CHEAPENED
| IN-WORLD CENTERS
Decline in Borrowing Rates
Revives Demand for High
{ Grade Securities.
BY CHARLES r. SPEARE.
Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, May 3.--Although the
odds were strongly in favor of q re-
duction In the Federal Reserve Bank of
New York rediscount rate, it was not
until after the official announcement
had actually been made Thursday that
dealers In investment securities were
willing to go ahead and make their
commitments in anticipation of a
prompt and vigorous response from the
lower money rates here and abroad.
The full effect of this rate reduction
began to be seen in the advance in
prices of bonds and preferred stocks
One of the most notable evidences OF
1t was in the new preferred per cent
stock of the General Motors Corpora
ton. which was admitted to trading. 1t
had an active market and. on the basis
OF the exchange proposed, brought
about a sharp rise in the outstanding
q and 6 per cent preferred issues. 1t
could not have been better timed, for
It conceded with the revival in demand
for high grade securities which has been
caused not only by the decline in in
terest rates but by the slump In specu-
lative stocks This has turned the at
tention of investors more to the class OF
issues that give good return and are
not subject to wide fluctuations.
Other Reductions Likely.
The rate reduction in New York to
n level below that In 1927, when cheap
money was created in order TO assist
Europe in Stabilizing her various cur
rencies, is expected to be followed by
similar moves in the other Federal
Reserve districts now / per cent higher
than New York. 1t would be quite
logical for Boston, for instance, to re-
Gluce its rate to ga per cent as the
drops in acceptances in that city have
been quite as notable as here. Chicago,
which has been at 4 per cent since
February 8, and was not affected by
The reduction in New York to 312 per
cent on March IA, Is not likely to per-
init a spread of l per cent between its
market and that Of this city.
Following the March IA cut here to
BY per cent, Philadelphia, Richmond,
Atlanta, Minneapolis, st. Louis, Dallas
and San Francisco all lowered their
rates AZ to 4 per cent. The last to
change was Minneapolis, which held !
per cent above New York for nearly
month before making the adjustment
to rates In other Federal Reserve dis
tricts. Aside from San Francisco,
which more nearly represents the same
conditions as New York, Boston and
Chicago, there is some question whether
& per cent will not be considered the
minimum rate for the Federal Reserve
banks to charge in territories that are
accustomed to comparatively high in
terest rates on private loans and are
not to any great extent affected by
security market influences.
Foreign Reductions.
The Az per cent rate OF the Bank
Of Denmark came down to 4 per cent
and it Is also probable the Az per cent
rate in Norway will be reduced to the
same figure. Sweden, which has led the
other Scandinavian countries in adjust
ing its rate to that of the leading
European money markets, will likely
cut its rate from 31a to per cent. The
Bank of Ireland reduced its rate from
AZ to per cent.
Copyright. 1890.