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About Medford mail tribune. (Medford, Or.) 1909-1989 | View Entire Issue (June 7, 1960)
o O O O TUESDAY, JUNE 7. I960 MEDFORD MAIL TRIBUNE. MEDFORD, OIE. Federal Reserve System's Method of Operation Explained recent By ELMER C. WALZER UPI Financial Editor New York-IUPll-We are en tering a period of easier money Judging from actions of ther,, F e d e ral Re serve System money m a r ket generally. And this brings up the intricacies the m o market which so few peopl unders t a n d. Elmer Waller iey-V5l cede a lower cost of credit as does the current one, ac cording to money experts. Reserve requirements are set by the Federal Reserve. They are a certain percent age of customers deposits that must be set aside for reserves. Say the reserve require ment Is 10 per cent. That means $100 must be in re serves for each $1,000 of de posit. Now if the bank has $250 in total reserves, it has $150 of excess reserves, the difference between its total reserves and the $100 set Market men look for a cut to at least 70 per cent and possibly to 50 per cent be cause use of credit In the mar ket currently is very low and a stimulant is thought to be In order. Hloney of nations always has aside. When the reserve re been a mystery and in the old quirement is 10 per cent, the days the rulers wanted it that excess reserves can be blown way to give them a free hand up 10 times. Thus $150 of in jiggling the coinage. excess reserves makes $1,500 in our aay, tne problem of of bank credit-ability, eiumiiaung economic inner- II Boosted acy in sucn tilings as money Now if the reserve require lias been hampered by the ments are boosted to 20 per inability of the experts to put cent, the required reserves on their vast knowledge into un- $1,000 of deposits becomes derstandable form for the lay- $200. If the bank's total re man to understand. serves are at $250 it has only Now, of all places, the $50 of excess reserves which down-to-earth story of our in this case can be blown up money comes from a top au- oniy live times to a mere thority, the Federal Reserve Bank of New York. In languarge that all can understand, and in a form embellished with pictures, cartoons, and simple charts, the New York bank's publi cation, "Keeping Your Mon ey Healthy" tells how the Federal Reserve System tight ens and eases the money mar ket with its three instruments. The Levers These instruments serve requirements of com mercial banks, buying and selling government securities, and the discount rate. If we seem to be heading Into inflation, the 16-page booket notes, the Fed would restrict credit by raising re serve requirements, selling government securities, and raising discount rates. $250 of credit-ability Nothing has been done as yet about reserve require ments. Editorially, the cur rent Business Week urges that the differential between central reserve city banks is 18 per cent and for reserve city banks it is 16V4 per cent. tor country banks the rate is 11 per cent. The Federal Reserve's op eration of buying and selling are re- government securities raises or lowers bank deposits and thus affects credit-ability. If the Fed sells government securities, the buyer with draws money from his bank to pay for them and thus de posits are reduced and credit ability of the bank is reduced, Check for Payment If it buys governments, it makes out a check for pay. If the economy is sliding ment. The check is deDOsited the Fed would increase cred- in a bank by the seller of the it by the reverse of these securities and thus increases processes. It would lower re- deposits and credit-ability, serve requirements, buy gov- Recently the Fed has been ernment securities ana lower buying governments and in- the discount rate. creasing the money supply. ii nas hciuu on me iabi wall Street expects one Item by reducing the discount more move by the Fed short- rate in some centers. All are y. And that is on stock mar- expected to lonow. Tne dis count rale is the rate the Fed eral Reserve charges member banks when they borrow from the Fed to keep their reserves at the legal limit. What Change Means By changing the discount rate, the Fed may signal its view on current policy to all money lenders, the booklet notes. A high discount rate may precede a higher cost of credit for all borrowers. A low discount rate may pre- ket margins which it has to control. The current margaln of 90 per cent has been in operation since Oct. 16, 1958, Small Worlds Around Us By Lynn M. Watkins from bread, o He got himself to the point where he tried to bite his own feet and legs, and later tore mouthfuls of hair from his own sides. And the little female in the other cage became cross, irri- OSC Bulletin Tells of Ponds Good news for Oregon trout fishermen - the more they fish, the better trout they'll catch. At least this holds true for farm trout ponds. This suggestion is one of many offered by Andrew S. Landforce, Oregon State col lege extension wildlife man agement specialist, in a new Oregon State College publica tion, "Managing Oregon Trout Ponds." Spring is the logical time to buy trout for stocking farm ponds, the bulletin suggests, since this is the season when fish are most likely available from private growers. Trout won't thrive In all farm ponds, Landforce points out. To grow trout year after year, a pond should have steep, deep sides, a depend able supply of controllable clean water, a screened over flow or outlet, a minimum depth of 10 feet, and an ade quate draining system. Best water temperatures for rain bow trout are 96 to 65 degrees. How large a pond? The bul letin notes that ponds as small as one-third acre and 6 feet deep have produced trout fishing in Oregon. However, one-acre ponds produce more satisfactory year-round family fishing. Ponds much larger than three acres can grow more trout than most families and friends can catch and use, The bulletin answers ques tions about how many trout to stock, pond fertilizer, drain ing the pond, and legal considerations. Copies of "Managing Ore gon Trout Ponds may be ob tained on request from county extension offices or from the OSC bulletin clerk, Corvallis Test With Rati Indicates Female Is Stronger I had always heard that Nature set up some sort of an arrangement, whereby the female of any animal species -bug, fish, bird, reptile or mammal, was inherently stronger, hardier and per haps more dangerous than the male. Females, of all animal ord ers, human as well as othor- Local Men Go To PCA Meeting Officers and directors of the So. Oregon Production Credit association attended a four state production credit con ference in Spokane, June 2-3, Irvin Patten, secretary-treas urer, said. Patten said the Spokane meeting attracted around 200 directors and secretaries from the 30 associations in Idaho, Montana, Oregon and Wash ington. Highlighting the agen da were addresses by Rob ert B. Tootell, governor of the Farm Credit administra tion, Washington, D.C., and John Knox, farm credit's fis cal agent in New York City. Special features of the 1960 conference, Patten said, were panel discussion on the gricultural outlook partici pated in by the heads of the departments of agricultural economics at the four state colleges. Two west coast bank ers were speakers and the presidents of the three dis trict farm credit banks in Spokane took part in panel discussion on functions and operations of their banks. Those attending from the So. Oregon association includ ed Lawrence Michaels of Days Creek, Lawrence Luy of Med- ford and Patten, secretary treasurer. The delegates were accompanied by their wives. PUBLISHER TO RETIRE Los Angeles -0IPB- Hugh A. (Bud) Lewis, publisher of the Los Angeles Mirror News, will retire July 15. AVCO DIRECTOR DIES New York -flJPII- Thomas A. O'Hara, 80, a member ot the executive committee and director of the Avco Corp., died Sunday. wise, seem to have a biologi cal superiority guaranteeing the survival of the individual species. But I wanted to "see for myself, so I selected rats; a male and a female. Each was placed in a separate cage, and for the first day all food was withheld. Tempting Ham Then I placed a piece of freshly cooked smoked ham, under a cheesecloth cover. outside each pen. To the healthy, sensitive nose of the animal it was a tantalizing odor. Both rats scurried around their separate cages in a mad frenzy to locate the food. I placed pieces of dry bread in each cage, but at first both rats refused to eat. Even when the pangs of hunger became acute they only nibbled daintily at the bread; all the time I kept the delicious smell of ham or bacon in the air. Their little noses twitched; the tiny tongues darted in and out. They became alert, eager and exceedingly active, dashing around the pen in a frenzy, searching for food that was smelling so good. The male broke first-sud- denly he went berserk. He dashed around the cage, fell over on his back, panted, gasped and finally fell over on his side and twitched like an agitated lump of jelly. Within a few hours he had worked himself to such a state that, even though a piece of ham was placed be fore him he failed to locate it. The poor little guy had be come a nervous wreck. His was not the proper tempera ment to stand continued frus tration. Flipped His Lid Another male rat was sub stituted. He too underwent the same perplexing prob lem, and he too reacted in the same way. He blew his top; he flipped his lid, and wallowed alone in a little sea of despondency. Number three took his place, and the experiment went on. He too became so hopelessly con fused and mixed up that he couldn't tell bacon or ham table, and highly exasperated, but never did she lose her emotional balance or her decorum. She, loo, desired to eat the ham and was appar ently just as unhappy because she couldn't, but she retained her mental balance. She be came irritable, but never un balanced. I revived them all later, but two of the males couldn't take it and died. The female re sponded b(iiitlful!y, and quickly. I'm not sure whether or not any of this proved a single thing, but the results were startling, and tended to bear out what I had so often heard, that "the fomale is more dangerous (and stronger) than the male." 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