but until about August or September, 1918, I think the call rate never got above 6 per cent; and I do not think the volume of loans increased in that period. On the other hand, we did not have any very sharp declines in the stock market. And what measures were taken, which I will later describe, and with which the Treasury Department was thoroughly familiar and approved of, were taken to accomplish those three objects, and they were successful. Representative TEN EYCK. Just one question there: What would happen if this particular branch of loans was stopped at any particular time in the call money market-I would like to hear what you believe would happen, not only in the market itself, but what effect it would have on the entire country, as regards discounts and loans, and so on? Gov. STRONG. We do not make loans on the stock exchange. Representative TEN EYCK. What effect would that have on the entire country, it would be felt by the reserve bank through the member banks? Gov. STRONG. In case loans on the stock exchange were discontinued? Representative TEN EYCK. Yes; call loans. Gov. STRONG. Under conditions where the demand existed and could not be satisfied? Representative TEN EYCK. Yes. Gov. STRONG. Well, we would have first, I suppose, a very sharp decline in the values of securities, and we would have a sharp ascent in interest rates; I could not prophesy how high they might go. I suppose a reflection from that a reaction from it--would be what always occurs under those conditions; people would see bargains in securities and come to buy them. That would afford some relief. It would also result in institutions loaning money on the stock exchange, and the Representative TEN EYCK (interposing). And it would reach the reserve bank through their member banks in putting up more collateral on discounts? Gov. STRONG. Oh, no; no. Representative TEN EYCK. No; I see. It would not have any effect on your banks, but on other banks who took that class of security? Gov. STRONG. If security values declined, the banks would call for more margin, but it would not affect us. Representative SUMNERS. Neither you nor your whole system has any direct connection with the call system at all? Gov. STRONG. Not at all. I have covered four types of loans with which the Federal reserve bank is concerned more or less in adopting a rate policy. Fifth, and a very important class, are the loans made by banks to their customers. That is a more difficult type of loan for us to keep track of in determining rate policies. But for a long time past now we have adopted the policy of asking the member banks to report to us at what rates they are making such loans; and I have brought with me, and submit for insertion into the record, if you care to have it there, a set of these reports for various weeks from August, 1918, October, 1919, October, 1920, January, 1921, and June, 1921, simply as exhibits. We get them every week, and we take typical banks-five or six banks and rotate; we do not require all the banks to report every week. This is more for the purpose of getting getting a good picture of what the going rate is to the customers of the banks in New York than it is to inquire into their particular affairs and loans, which we think is their business. If these would be of interest to the commission, I will submit them for the record. The CHAIRMAN. Without objection, they may be inserted in the record. (The reports referred to are here printed in full, as follows:) Report of discount and interest rates as shown by actual transactions of five banks of New York City. 1. Rates of discount charged to customers for prime commercial paper, such as is now eligible under the Federal reserve act: (a) Running 30, 60, or 90 days..... (b) Running 4 to 6 months. 2. Rates for prime commercial paper purchased in the open market: (a) Running 30 to 90 days.. (b) Running 4 to 6 months. 3. Rates charged on loans to other banks, bills payable. 4. Rates for bankers' acceptances of 60 to 90 days maturities: (a) Indorsed... (b) Unindorsed. 5. Rates for demand paper: (a) Secured by prime stock exchange collateral or other current collateral.. 6. Rates for time paper secured by collateral mentioned in 5 (a): (a) Running 3 months. (b) Running 3 to 6 months. 7. Rates for ordinary commercial loans running 30, 60, or 90 days, secured by Liberty bonds and certificates of indebtedness (not including loans to enable purchase of bonds)....... 666 THIRTY-DAY PERIOD ENDING OCT. 15, 1919. (b) Running 4 to 6 months. 3. Rates charged on loans to other banks, not including loans secured by Government collateral... 4. Rates for bankers' acceptances of 60 to 90 days maturities: (a) Indorsed.. (b) Unindorsed.. 5. Rates for demand paper: (a) Secured by prime stock exchange collateral or other current (b) Secured by prime bankers' acceptances. 6. Rates for time paper secured by collateral mentioned in 5 (a): (a) Running 3 months... (b) Running 3 to 6 months. 7. Rates for ordinary commercial loans running 30, 60, or 90 days secured by Liberty bonds and certificates of indebtedness (not including loans to enable purchase of bonds).. 66 6 41 6 43-5 Report of discount and interest rates as shown by actual transactions of five banks of New York City-Continued. THIRTY-DAY PERIOD ENDING OCT. 15, 1920. Gov. STRONG. Now, in connection with this statement, there are various documents which I have with me which should also be submitted for the record, Mr. Chairman, if you feel it should be burdened to that extent, because they give what I believe are accurate tables of rates and charts expressing rates. The CHAIRMAN. We can put them into the report, and would be very glad to have them. Gov. STRONG. Well, I will submit these tables and charts for such disposition as you care to make of them. The first is a chart giving LOANS AND DEPOSITS OF NEW YORK CITY REPORTING BANKS AND INTEREST RATES IN NEW YORK CITY. Prevailing selling rate each week of prime 4 to 6 months commercial paper, prime 60 to 90 day bankers' acceptances and United States certificates of indebtedness maturing 6 to 9 months, prevailing call loan renewal rate and prevailing rate on time loans on industrial collateral. Source of information: For interest rates, reports of dealers to Federal reserve bank of New York, Commercial and Financial Chronicle, and New York Times; for bank figures, weekly press statements. the bank loans and deposits of the New York City reporting banks, which comprise about 70 of the largest banks of the city for the years 1920 and 1921, which compare with the call-loan rate, the rate for commercial paper, the rate for acceptances, and the rate for certificates of indebtedness; a table showing the rates for certificates of indebtedness from the first issue down to the present time; a state |