Word: rediscount
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Dates: during 1920-1929
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With bullish feeling prevalent, selling of stocks slackened, ended abruptly as the significance of Constructive Factors became apparent. Helping to transform selling into buying was a further reduction ($710,000,000) in brokers' loans, reduction of the rediscount rate to 4½% announcement of a proposed $160,000,000 tax reduction...
...bearish factor was a speech by Philip Snowden, British Chancellor of the Exchequer, which attributed the rise in the Bank of England's rediscount rate to the U. S. "Orgy of speculation." Bulls asked, "How much have British capitalists contributed to the 'orgy'? Did not the Hatry collapse indicate a similar orgy...
...Even high-tariff Chairman Reed Smoot, incensed at his committee's inconsistency, ironically observed that the market value of U. S. Steel stock had increased "only a hundred million dollars" after the last fortnight's slump precipitated by an increase of the Federal Reserve's rediscount rate...
Speculators chewed ragged cigars last week, conferred past midnight, lost their sleep. Thursday's stock market had closed strong when the Bank of England did not raise its rediscount rate. Then, late in the afternoon, came announcement that the Federal Reserve Bank of New York had raised its rate from 5% to 6%. Wall Street was caught unprepared. Tycoons rushed to telephones, brokers called up bankers. Ten members of the Stock Exchange were seen leaving a Broad Street building in one nervous, gesticulating group. Long after the dinner hour two Rolls-Royces still waited outside the austere House of Morgan...
Federal Reserve. Last February the Federal Reserve Board harassed the market by convening every Thursday to discuss a raise in the rediscount rate, then reporting "no announcement.'' It formally announced that "when it [the board] finds that conditions . . . obstruct Fed eral Reserve Banks in . . . so managing credit facilities as to accommodate commerce and business, it is its duty . . . to take measures to correct them; which, in the immediate situation means to restrain the use of Federal Reserve credit facilities in aid of the growth of speculative credit." For months no more was heard. Brokers and speculators forgot. Last week when...