In a rear-guard pot shot at inflation, the Federal Reserve Board last week ordered its 6,600 member banks to up their reserves by one-seventh ($1,200,000,000), effective Nov. 1. This puts reserve requirements for demand deposits at the legal maximum, means that New York and Chicago banks must hold 26% of their deposits in reserve instead of 22¾%. For other city banks the rate is upped from 17½% to 20%, for country banks from 12% to 14%. All banks will thus have less money to lend.

But even after this reduction in lending power, U.S. banks will still have $4,000,000,000 in...

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