Low Money Rates

Since the U. S. has always been a rapidly growing country in constant need of capital, the prevailing interest rates here have practically always been higher than those of the older and more static countries of Europe. Usually London, as the former financial centre of the world, has been able to maintain the lowest money rates, while New York rates have ruled far above.

The last cut of the New York Reserve rates to 3 1/2%, however, as well as the basic tendencies in the U. S. money market of which this cut is only an expression, have produced a novel result. New York, instead of being one of the dearest money markets in the world, is now cheapest of all.

The 3 1/2 rediscount rate of the New York Reserve Bank compares with the rates of the other leading central banks of the world as follows: Austria 12, Belgium 5 1/2, Bulgaria 7, Czecho-Slovakia 6, Denmark 7, England 4, France 6, Germany 10 (cen-tenmarks) and 90 (old paper marks), Greece 7 1/2, Hungary 18, India 7, Italy 5 1/2, Japan 8, Holland 5, Norway 7, Poland 12, Portugal 9, Rumania 6, South Africa 6, Spain 5, Sweden 5 1/2, Switzerland 4.

There has been agitation in London to drop the Bank of England's rate to 3 1/2 or under to meet New York's cut, and thereby avoid losing financial business to America. More experienced bankers, on the other band, declare this would simply inflate the pound sterling further, and that if the Bank rate is changed at all, it should be moved upwards rather than down.