Word: rediscounted
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...chairman of the First National Bank of Chicago, who put a realistic finger on the trouble with Eccles' plan. Eccles, he said, need not go after such sweeping powers until he uses the powers that FRB now has. Why, for example, didn't FRB raise its rediscount rate (the cost of FRB loans to commercial banks) and thus raise the interest rates on all borrowed money...
Eccles flatly said that he "would not recommend" using this power. FRB was still frightened by the slumps of 1920 and 1929. A big boost in rediscount rates had preceded them, and many still blamed the credit curb for the slumps...
...Raise the rediscount rate to end cheap money...
...milestone in Federal Reserve history was passed last week. Following the example of the Reserve Banks of Chicago, Atlanta, Minneapolis and Richmond, which cut their rediscount rates from 2% to 1½% (TIME, Aug. 30), the Federal Reserve Bank of New York last week cut its rate from 1½% to 1%. This is the lowest fee for loans to member banks ever posted by any central bank in the world. Sample rates in Europe today: Bank of France and Reichsbank. 4%; Bank of England and Bank of The Netherlands. 2% ; Swiss National Bank, 1½%. Lowest previous rate...
...them in cold storage instead of letting them seep into the credit system (TIME, Jan. 4), the threat of a further expansion in excess reserves has been largely removed. And with the present total shaved to a figure within the reach of the standard tools of credit control-the rediscount rate and open market operations in government bonds-Chairman Eccles is now battened down for a boom blow...