Word: rates
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Dates: during 1920-1929
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This rise in the New York Reserve rates is the first since 1920, when the strained condition of American credit gradually forced the commercial paper rate to 7%. During the ensuing liquidation the rate fell step by step to 4% where it has hung for many months...
This increased demand for funds has at length been recognized by the higher New York rediscount rate, as it has by a similar advance on the part of the Boston Reserve Bank...
Before the war, gold exports could be avoided by raising the rediscount rate, and the swift rise of sterling exchange has caused discussion of the possibility of gold shipments to England lower than had generally been expected. Yet American bankers would be pleased rather than otherwise to witness such an export of gold, if conducted in an orderly manner. Moreover, all things considered, it is doubtful whether England can actually draw on our gold supply in the near future...
Obviously, the new rediscount rate has not been established for the reasons which prompted its advance from 4 to 4¾ in November, 1919. The gold position of the Reserve system was then seriously endangered; now it is tremendously strong, its ratio of gold to notes and deposits being at present 75.8% and 79% for the New York Bank. Yet we now have too much gold for our own good, and much of our present stock of the yellow metal should be re-exported as soon as circumstances will allow, lest either lack of financial foresight or uneconomic legislation bring...
...explanation of the increase in rate, the Bank authorities stated that its purpose was to get the New York rate in line with the rates of the other Reserve Banks, which have remained for some months at 4½%. Such a realignment of Reserve rates has recently become desirable, for since the beginning of the year Reserve loans in New York had increased $58,000,000, while loans of the other eleven Banks had decreased $180,000,000. Moreover, while the ratio of the whole system rose from 72.1 to 75.8%, the New York Bank ratio fell from...