2. How are notes issued under the Federal Reserve Act?

3. If on a given date the surplus reserve (i.e., the reserve in excess of the legal minimum reserve required by law to be held against deposits) of the New York Associated Banks amounts to $11,000,000, and the deposits on the same date amount to $1,164,000,000, what is the total cash reserve held by the banks on said date? What would it have been in 1912?

4. The "New York Times" of December 8, 1916, said:

"The rediscounting of commercial paper at the Federal Reserve Bank of New York by some of the city's largest banks on Wednesday had the effect yesterday of improving general money market conditions. Call loans which were made at 15 per cent. on Monday, and as high as 10 per cent. on Tuesday, and touched seven per cent. Wednesday, were placed yesterday at from three to five per cent. Most of the loans were made at four and one-half per cent., the renewal rate, and the closing quotation was three per cent. Time money rates were easier."

Explain the process of rediscounting here referred to. In just what way did the rediscounting operations relieve the call money market? Do you consider that this use of the rediscounting facilities provided by the Federal Reserve System was in accord with sound banking principles? Was it the best possible use of the rediscounting mechanism? For suggestions see the "New York Times" of December 5, 1916, under the heading "Financial Markets."

[CHAPTER 10]
CRISES AND INDUSTRIAL DEPRESSIONS

References.

Dewey, D. R., Financial history of the United States, 4th ed., 1912. Ch. X.

England, Minnie T., Promotion as the cause of crises. Q. J. E., 29: 748-767. 1914-1915.

*Hamilton, Readings, 91-93, 93-95, 95-98.

Hobson, J. A., Evolution of modern capitalism. Ed., 1912. Ch. 7.

Jones, E. D., Economic crises. 1900.

Juglar, C., and Thom, C. W., A brief history of panics and their periodical recurrence in the United States. Ed., 1916.

*Materials, 391-396.

Mitchell, W. C., Business cycles. 1913.

Moore, H. L., Economic cycles: their law and cause. 1914.

Nelson, S. A., The A B C of Wall Street. 1900.

Patterson, E. M., The theories advanced in explanation of economic crises. A. A. A., 59: 133-147. 1915.

*Phillips, chs. XXVIII, XXIX.

*Source Book, 138-156.

Sprague, O. M. W., The crisis of 1914 in the United States. A. E. Rev., 5: 499-533. 1915.

United States Bureau of Labor, Annual report for 1886.

Questions.