That the present business expansion as measured in physical volume of trade cannot go much further is the opinion of Professor Oliver M. W. Sprague '94, Edmund Cogswell Converse Professor of Banking and Finance, in the Graduate School of Business Administration, expressed in a recent interview with a CRIMSON reporter. "No great increase in the volume of trade is possible because both labor and plant are already fully occupied throughout the country," he said, "while an increase in the volume of credit would lead to an increase in prices and a generally unsound state of affairs."

Status of Reserve Bank

When asked whether he thought that member banks were going to rediscount regularly with the Federal Reserve Bank or were doing it merely as an emergency measure, Professor Sprague replied that that could not be definitely said. "At present the Federal Reserve Banks are ready to meet variation in the reserves of the member banks due to changes day by day in their positions, as shown by settlements made with the other member banks in the clearing house. The aggregate of New York banks may be doing it steadily, but it usually fluctuates between different banks. It cannot be said, therefore, that they are either emergency or steady.

Raise in Price Wise

"It was a wise thing for the New York and Boston banks to raise their rates recently," continued Professor Sprague. "I am inclined to think that there may be another advance because the present rates are still below market rates. The rate of the Federal Reserve Bank of New York should be as high as the minimum rate on loans in the New York market. Such an advance would not check business activity but would restrain somewhat undue expansion of an inflated nature."