Money: An End to September

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To the relief of bankers and business men, the Federal Reserve Board last week moved to ease the money market and increase the supply of lendable funds. The board canceled the terms of its hotly debated letter to banks on Sept. 1, which had shut off the Federal Reserve's discount window as a source of money for any banker who hoped to increase an already high volume of commercial loans. "Credit conditions have changed," said last week's notice from the seven-man board of governors headed by William McChesney Martin.

"The expansion of business loans has been reduced to a more moderate rate, and banks are no longer unloading securities in unreceptive markets."

Until the Federal Reserve's September notice, loans to business had risen at an annual rate of 20%, thereby aggravating inflationary pressures. Since that time, the loans have dropped to a more sustainable increase of 7%, and the bond market, which had been disrupted because the banks were cashing in, is recovering. Money will remain very scarce despite the board's action last week, but it is a signal that the Federal Reserve's concern about the dangers of inflation is now balanced by its recognition of the downturn hazards for the economy if money is kept too tight.