Word: tighteners
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With an eye on the statistics of recovery, the Federal Reserve continued to tighten credit by selling Treasury bills, brought net free reserves down to $306 million, lowest since February and almost $300 million under the $600 million of early July. The Fed also approved a discount rate boost from 1¾% to 2% for the Kansas City and Atlanta banks...
Following its philosophy of swimming against the business tides, the Federal Reserve Board moved to tighten credit slightly in two ways last week. First, it gave the Dallas Reserve Bank permission to follow San Francisco in upping its discount rate from 1¾% to 2%; the other ten districts are expected to come into line soon. Next, the Federal Reserve announced that it had reduced its holdings of short-term Treasury bills, bringing member banks' net free reserves, which had been around $500 million for five months, down to $403 million. Though the Fed's moves brought immediate...
Actually, the nation's banking system is in good shape for recovery without returning to tight money. Banks have plenty of credit available for businessmen. Despite the Fed's action, free reserves are well above $350 million, where bankers consider that credit begins to tighten. Though short-term interest rates have improved, most bankers expect the prime rate to hold at 3½% for some time because there is still no big jump in industry's demand for money. Business loans, which dropped $1.8 billion in the first half of 1958, show only slight signs of picking...
...year certificates to aid the Treasury's July refinancing operation. As the effect of this wore off and hopes for more substantial assistance faded, the shock of disappointment sent bonds down some more. Last week, in raising margin requirements on stocks, the Fed signaled possible new moves to tighten credit-and bond prices fell again...
...passed the House Commerce Committee. Both bills 1) provide for the U.S. to guarantee private loans to the rails (the Senate set a $700 million limit, but the House set no ceiling), 2) give greater power to the Interstate Commerce Commission to reduce service on money-losing routes. 3) tighten up on truckers now exempt from ICC rate regulations. Since chances seemed good that a relief bill would become law within a month, almost all major rail stocks advanced last week. The Dow-Jones rail index closed at the year's high of 119.21, up 19.32 points from...