Finance: Effect on Money Market

Whatever the old international significance of a rise in the Bank rate, the motive for the recent advance in New York must be sought in this country alone.

In respect to the general money market, the raising of the New York rate has another and even deeper significance. The classical law of rediscount banking is to keep the rediscount rate above the open market rate, in order slightly to penalize rather than subsidize the bank applying for the rediscount.

The Federal Reserve system has followed this principle only occasionally. Now on Feb....

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