Word: rediscounted
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Dates: during 1920-1929
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Finally, the Federal Reserve Bank of New York announced an advance of its rediscount rates from 4 to 4½%. This occurrence provided a live topic of conversation both in Wall and Lombard Streets. Certain features attending it, because of their fundamental connection with the future course of American business, deserve close attention...
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...
...certificates; drastic taxation will inevitably follow. Under such conditions the amortization of our national debt would be impossible. As an alternative the people may save. New assets would then be accumulated. The inflation of loans which the Federal Reserve Banks has been fighting to the extent of raising the rediscount rates to 7 percent would cease. Our national debt could then be genuinely paid for by savings...
...remedy such a situation, a sliding scale of rediscount rates was adopted, notes beyond a certain amount sent in by member banks for rediscount being charged an advancing rate of interest, reaching even nine and ten percent when the total ran exceptionally large. The banks were thus hindered from increasing unduly the regular lines of credit extended to their customers, and the business firms, in their turn, unable to borrow further except at exorbitant rates, were forced when in need of ready money to realize on their merchandise. A late season, tardy deliveries, a generally slow market, and the necessity...