Word: discountable
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Dates: during 1950-1959
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...what he does, few under stand how he does it. To most credit users the operations of the Fed are as incomprehensible as the Eleusinian mysteries. Basically, the Fed operates on three main fronts: ¶ One of the quickest and easiest ways of tightening credit is to hike the discount rate, the interest that the Federal Reserve charges member banks for short-term loans. This tends to raise commercial interest rates and discourage marginal borrowing. In the past 17 months the FRB has raised the discount rate six times, boosted it to the highest level (3%) since 1933 only last...
...door-35 years later," he has turned the Fed, after a ten-year interlude (1941-51) as a puppet of the Treasury, back into an independent and effective custodian of the nation's money. Republican officials sometimes question Democrat Martin's judgment, notably after he boosted the discount rate last spring, at a time when many experts thought that a slump in business was ahead. But no one ever questions his integrity. He is famed in Washington as a man of low pressure and high principle, the boy wonder who has continued to make good ever since...
...Bill Martin was handed the job of dissolving a shotgun marriage of the Treasury and the Federal Reserve. The Fed had been stripped of most money-regulating powers in 1941, when the U.S. entered World War II. Anxious to finance the war at low interest, the Government froze the discount rate at i%, suspended the FRB's right to alter reserve requirements, and harnessed it to an agreement to support, at par, Treasury securities, which supplied 60% of the cost of fighting the war. By 1950 the Fed, which had been created as an independent agency to guard...
...anticipated (TIME, Aug. 27), the Federal Reserve Board in midweek followed the commercial banks' lead by authorizing five district banks (New York, Chicago, Philadelphia, Richmond and Cleveland) to hike discount rates for the sixth time in 17 months. The discount rate-the basic charge to member banks for short-term loans-is expected to reach a uniform 3% (up from 2¼%) at all Federal Reserve Banks this week, raising the banker's cost of borrowing to a 23-year high...
Clear Road Ahead. The hike in discount rates was intended not only to cool off the demand for credit but to ease down on inflation. The FRB moved none too soon. The Government announced last week that the cost of living jumped 0.7% for the second straight month in July, setting a new record (17% above the 1947-49 level). Moreover, the upsurge, paced by bigger-than-seasonal rises in fruit and vegetable prices, promises to take another bite out of the dollar. As a result of the cost-of-living increase, 1,250,000 union workers will automatically receive...