State of Business: Warning Sounds

Exercising a power it has not used for eight years, the Federal Reserve Board last week authorized its member banks to reduce their minimum reserves on savings deposits from 5% to 4%. The Fed's move—partly designed to make credit easier by adding about $4.6 billion to the funds that the nation's banks are free to lend—might not actually succeed in putting much more money to work; most banks are already having trouble finding enough borrowers. But it reflected the fact that William McChesney Martin, the Fed's calm, conservative chairman, is concerned that a recession might be on the way.

He...

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