Director’s Preface
In the post-war period, and especially in the years just preceding the recession of 1929, increasing attention was given to the problem of effecting business and financial stability, and increasing confidence was expressed that the necessary agencies of stabilization were being developed. Among such agencies the Federal Reserve system was generally accorded a prominent place.
Author’s Acknowledgments
The author wishes to thank the many scholars and public officials both in America and Europe who have assisted him in the work of preparing this book. It would make too cumbersome a list to mention them all, and it would seem invidious to make mention only of certain ones. All have contributed generously to his knowledge of the facts and his understanding of the significance of those facts. He can only hope that in not too many cases will they be dissatisfied with the interpretations which he has placed upon the matters dealt with.
Charles O. Hardy
Part I: Organization and Practice
I: Standards of Credit Policy
CHAPTER I
STANDARDS OF CREDIT POLICY
The concept of credit policy is an old one in the history of European banking, but is comparatively new in the United States. Prior to the reorganization of our banking system by the Federal Reserve Act of 1913 there was, practically speaking, no such thing as a credit policy designed to protect the public interest, as distinct from the business policies of individual banks.
II: The Technique Of Credit Control
CHAPTER II
THE TECHNIQUE OF CREDIT CONTROL
In this chapter we sketch the technique used by the Federal Reserve system to influence the level of short-term money rates, the movement of gold into and out of the country, the volume of credit extended to the banks by the Reserve system, and the amount and form of credit operations of the member banks themselves.
III: Banking And Business, 1922-31
CHAPTER III
BANKING AND BUSINESS, 1922-31
In the year 1922 the Federal Reserve authorities for the first time found themselves faced with a definite problem of credit control and at the same time possessed of sufficient independence to make their decisions significant. The situation in which the System found itself may be summarized as follows:
Part II: The Major Standards
IV: Stabilization of The Money Market
CHAPTER IV
STABILIZATION OF THE MONEY MARKET
In Part I we have discussed the organization of the banking system which has grown up in the United States since the passage of the Federal Reserve Act in 1913, and have outlined the post-war history of the exercise by the Reserve Banks and the Reserve Board of the powers of credit control entrusted to them by that Act. In Parts II and III we shall consider topically the way in which various questions of policy have been handled in the years from 1922 through 1931.
V: Maintenance of Sound Credit Conditions
CHAPTER V
MAINTENANCE OF SOUND CREDIT CONDITIONS
The basic principle which the Federal Reserve system has enunciated as a guide is that Federal Reserve policy must be shaped toward the promotion of a “sound” credit situation. The meaning of “soundness” and its adequacy as a guiding formula we have to analyze in the present chapter.
VI: International Co-Operation
CHAPTER VI
INTERNATIONAL CO-OPERATION
The part played by the Federal Reserve system in the restoration and maintenance of currency stability in Europe has received comparatively little attention from the American public, not necessarily because it is less important than other issues or has played a smaller part in the decisions of Federal Reserve authorities, but because it is an issue too new, and from the standpoint of most Americans too remote and theoretical, to arouse widespread interest.
