Word: rediscounted
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Dates: during 1930-1939
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General was the agreement of witnesses that the Federal Reserve Board in Washington had followed a mistaken course of public warnings in trying to check the 1929 stock inflation instead of adopting the recommendation of the New York Federal Reserve Bank for tipping the rediscount rate. When this rate was belatedly advanced from 5% to 6% it was admittedly insufficient to turn the tide. Though witnesses were not rude enough to say so, they implied that the fault lay largely with the foggy-headed uncertainties of Roy A. Young, the Governor of the Board...
...Federal Reserve. Late transactions can turn proper reserves into surpluses or deficiencies. A surplus signifies a multiplied loss of profit owing to the fact that a dollar in reserve means many dollars in banking power; a deficit means the bank must pay 2% above the regular Federal Reserve rediscount rate. Often, suddenly afraid of late deposits which mean a larger reserve will be needed, banks call loans late Tuesday and Friday. The sensitive New York money market is frequently disturbed by this action...
Although not a practicing financier, Professor Sprague has served as a Federal Reserve Bank adviser. Last year he bitterly attacked the Federal Reserve system for its failure to make a more substantial raise in the rediscount rate. During the War he advocated direct taxation so that the inflation that follows wartime borrowing might be alleviated. In 1918 he went to Washington with the Council of National Defense to work out reconstruction problems...