Page images
PDF
EPUB

history, there has been no depreciation in the gold value of our currency, every form of which is on an absolute parity with gold. True, the purchasing power of money has declined, but this is due to the abnormal and urgent demands for goods and services and the accompanying expansion of credit and currency. The quality of our currency has been maintained; there is a single standard of prices which is based upon the dollar, and not a double standard, one based upon the gold dollar and the other upon the paper dollar, as was the case during and after the Civil War. The increased volume of Federal Reserve notes has been an incident or an effect of expansion of credits, rather than the cause of such expansion, and the conditions which resulted in additions to the country's gold stock of more than $1,000,000,000 during the years 1915 and 1916 have changed.

With the development of our foreign trade, with increased shipping facilities, and with the granting of credits to other nations to aid them in their work of reconstruction and to enable us to sell them goods, a new influence will be felt in due course, which will work toward the restoration of more normal levels. Banking credits, which are not extended beyond our power to sustain them, but which are at present concentrated in this country, will become more widely diffused throughout the world, and the elastic quality of our currency, the main constituent of which is now the Federal Reserve note, will soon be manifest, as indeed it has already been evidenced in some degree by the retirement of approximately $200,000,000 of notes since the close of the year.

An obligation rests upon the American people to assist the Government in the completion of its financial program and to absorb the securities which have been and are yet to be issued. This absorption can be accomplished by reasonable economies and by persistent saving for some time to come, and it will be the duty of the Federal Reserve Board and of the banks in the meanwhile to aid in the extension of credit facilities, necessary in the processes of production and distribution. Drastic contraction would be followed by results no less disastrous than those which would attend undue expansion, and the processes of deflation must therefore be permitted to work themselves out in a gradual and orderly manner. Discount rates, which for the past 18 months have been based upon the rates borne by Government issues, must for the time being continue to be fixed with regard to Treasury requirements, but when the war obligations of the Government have been digested, and the invested assets of the Federal Reserve Banks have been restored to a commercial basis, rates can be established with reference to the commercial requirements of the country.

The Board is profoundly conscious of the responsibilities imposed upon it by the Federal Reserve Act, and during the period of readjustment and afterwards as progress is made in the reestablishment of peace conditions, its purpose will be to exercise its control of our

, credit structure in such manner as best to promote the national welfare, the agricultural, industrial, and commercial interests of the country, and the development of our foreign trade. By direction of the Federal Reserve Board.

W. P. G. HARDING,

Governor The SPEAKER OF THE HOUSE OF REPRESENTATIVES.

EXHIBITS.

89

Exhibit A-DISCOUNT RATES.

No. 1.-Discount rates (high and low) in force during the period from Nov. 16, 1914, to Dec. 31, 1918,

MATURITIES.

Secured by
United States

Government
Agri-

war obligations.
cultural

Trade and Within

accept- Trade Com

ances
live- 15 days,

accept-modity
includ-

within ances paper ing

60 days 61 to 90 within

16 to 90 over 90 member

(see days. 90 days. days. note),

Within
15 days,
includ-
ing

16 to 30 31 to 60 61 to 90
member
days.
days.

days.

stock
paper

Within 11 to 30 10 days. days.

days. banks

collat

banks'
collat-

eral
notes.

eral

notes.

[blocks in formation]
[blocks in formation]
[merged small][ocr errors]

31 | 31 | 31 | 34 | 3

31 | 3 313 31 314

314

314 31 | 4 4

3 414 414 414

5

6

4

6

5

5

4

4

6

5

3

4
3)

4

6

5
5

5

4

313

4

415

[blocks in formation]

5

31 31 31 31

31 31 31 31 31 | 3 314

34 | 414

6

4

6

[ocr errors]

..

4

31 | 4

6

5

.

5

4

4

4

5

5

513
3

3

514

4

313

414 31 | 47 | 41 | 441 44 45

5

[blocks in formation]

4

Boston:

Nov. 16, 1914, to Dec. 31, 1915.
Jan. 1, 1916, to Dec. 31, 1916.
Jan. 1, 1917, to Dec. 31, 1917.

Jan. 1, 1918, to Dec. 31, 1918.
New York:

Nov. 16, 1914, to Dec. 31, 1915.
Jan. 1, 1916, to Dec. 31, 1916.
Jan. 1, 1917, to Dec. 31, 1917,

Jan. 1, 1918, to Dec. 31, 1918.
Philadelphia:

Nov. 16, 1914, to Dec. 31, 1915.
Jan. 1, 1916, to Dec. 31, 1916.
Jan. 1, 1917, to Dec. 31, 1917,
Jan. 1, 1918, to Dec. 31, 1918.

3 3

3
3

3
31 | 3
313

33
314 314

31 | 31
4

4 41 | 4

4

6

4

6

6
41 | 45
5

45 1 33 3
5

5 4

[blocks in formation]
[merged small][ocr errors][merged small]

Commodity rates were established during September and October, 1915, and merged with those for commercial paper of corresponding maturities in November and December

4

[blocks in formation]

16

1

« PreviousContinue »