THROUGHOUT THE FIRST YEAR of his administration Roosevelt clung to his policy of a balanced budget and fiscal integrity, but it became increasingly apparent that the condition was stronger than the theory. The condition was the political demand that government powers be used to restore the economy and get more people back to work.

THE REVERSAL in German-Russian relations from entente to hostility in 1941 was more world-shaking in its effects than that which occurred about the same time in the Eccles-Morgenthau relations; but in our account of the Federal Reserve System the latter is of interest and significance.

The nature of this “revolution,” it appeared, went beyond routine questions of the techniques to be employed in easing or tightening credit. It “involved a basic shift in the concept of monetary management.”

THE HISTORIAN OF THE ROMAN EMPIRE, TheodoreMommsen, characterizes inflationary progress in the third century as a “chute.” Something like that nowbegan in the U. S.—an accelerating drop in the purchasing power of the irredeemable currency on which the economy had subsisted since 1934.

THE QUESTION may now be raised as to what specific reforms are required to restore integrity to the monetary system. It is a question which we have avoided, preferring to leave the answer to monetary technicians, on the principle succinctly stated by the British poet Alexander Pope: “For forms of government let fools contest; / That which is best administered is best.”