146

WAR  BORROWING

These  preferential  rates  have  been  from  time  to
time  increased  with  the  progress  of  war  financing
and  the  increase  of  the  interest  rate  upon  war  obligations. ­
  But  the  general  principles  of  easy  rediscount ­
  and  preferential  rates  have  been  maintained.
It  has  throughout  been  possible  for  member  banks
to  obtain  without  net  cost  adequate  accommodations
for  themselves,  and  for  non-member  banks  acting
through  them,  by  the  discount  of  paper  collateralled
by  certificates  of  indebtedness  or  by  Liberty  bonds,
and  for  customers  to  obtain  similar  accommodations
from  member  banks  on  approximately  the  same
terms  as  those  granted  by  the  Reserve  Banks  to  the
member  banks.
This  stabilizing  effect  has  been  further  extended.
Since  the  entry  of  the  United  States  into  the  war
the  deliberate  policy  of  the  Federal  Reserve  Board
has  been  to  adjust  its  rates  of  discount  to  the  rates
of  interest  fixed  by  the  Treasury  for  certificates  of
indebtedness  and  Liberty  Loan  bonds,  and  thereby
“  to  keep  rates  of  rediscount  probably  considerably
lower  than  they  would  otherwise  have  been,  and
also  to  commit  the  system  to  the  maintenance  of
rates  which  would  otherwise  have  been  altered  from
time  to  time,  as  circumstances  seemed  to  require.”
In  order  to  attain  the  restrictive  effect  upon  credit
expansion  thus  partially  lost  by  reason  of  the
adoption  of  a  system  of  stable  rates  corresponding ­
  to  the  rates  borne  by  government  war  obligations, ­
  the  Federal  Reserve  Board  has  resorted  to
various  expedients  for  “  the  rationing  of  credit  ”—
refusal  of  credit  to  non-essential  industries,  restriction ­
  of  credit  to  enterprises  employing  it  for  capital