Business: All Time Low

A 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 in the U. S.1½%. Highest rate (1920) in New York 7%.

Reasons for the New York Reserve Bank’s action were two—to forestall a rise in the current low open market money rates, and, more important, to persuade banks to borrow from the Federal Reserve rather than sell large holdings of Government bonds as they have been doing lately to meet increased demand for commercial loans. As a device to end bond selling the reduction of the discount rate was not immediately successful. Still under pressure, ”Governments” continued to slump as much as half a point a day.