Word: rediscount
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Despite rumors of a further advance in the Reserve rediscount rate, money continued relatively easy. Call money fell below 5 per cent, while open market rates for paper and acceptances were unchanged. The ratio of the New York Reserve Bank rose from 80.6 per cent to 83.2 per cent, which fact, along with other related evidence, reveals a considerable flow to New York of funds from other American centers. Undoubtedly the recent activity on the speculative exchanges for cotton and securities in New York are largely responsible for this drawing of funds to the financial center. As a matter...
...Throughout the war period, the rates on these certificates by which the nation's floating debt has been financed, have proved a remarkably accurate index to prospective as well as present conditions in the money market. The rates on the present issue of certificates have, like the Reserve rediscount rates, recognized the increasing demand for money by an advance over the previous rate-on the other hand, it is reasonable to suppose that the Treasury foresees only a moderately increased expansion of loans during the coming year, and in consequence money rates only slightly above those now obtaining...
Money rates remain unchanged, even the variable call rate fluctuating closely around 5½%. The advance of the New York Federal Reserve rediscount rate last week to 4½% was reflected in the rise in the ratio of that bank from 79% to 80.6%. Bonds remained unsettled, and, though stable, seem to have reached a high level for their present movement. Public interest is plainly going over to stocks, and to appreciation in price rather than rate of interest return...
...respect to the general money market, the raising of the New York rate has another and even deeper significance. The classical law of rediscount banking is to keep the rediscount rate above the open market rate, in order slightly to penalize rather than subsidize the bank applying for the rediscount...
...followed this principle only occasionally. Now on Feb. 21, while the New York Bank rates still stood at 4, the market for acceptances had risen to 4-4⅛ and for commercial paper to 4¾. This situation was partially remedied by the end of the week; with the rediscount rates at 4½ acceptances stood at 4-4⅛ and commercial paper at 4¾-5. Thus the Bank rate is now slightly higher than the rate for acceptances, but slightly lower than that for paper...