ARGUMENTS IN THE NEGATIVE 
ward over such periods that true trends are discernible so far as the general level is in- 
Auenced by the volume of credit. 
Studies which have been made by statisticians and economists suggest that the 
average growth in the physical volume of business in the United States is about 4%, 
and that since 1921 a tendency of bank credit to grow at a higher rate than 44% 
2 year has led to conditions recognized by the federal reserve system as requiring it to 
apply restraints, whereas growth in bank credit at a rate less than 414% has brought 
about a situation in which the federal reserve system has seen reason to make credit 
=asier. Discussions of these studies appear in the proceedings of the American Economic 
Association at its meeting of 1928. Those who argue that the federal reserve system 
should have an express duty with respect to the general price level see in the facts cor- 
-esponding changes in the price level. 
At one of the legislative stages the bill which became the Federal Reserve Act 
provided that rediscount rates should be made, not only “to accommodate commerce 
and business,” the existing language, but also to “promote a stable price level.” As the 
5ill became law, however, the latter phrase was omitted. Over a period of years bills 
have been introduced in Congress the effect of which would be to place in the law this 
smitted phrase. 
In 1926 and in 1928 hearings were held upon bills of this kind, in each instance 
‘he bill being known by the name of its author, Congressman Strong. The principal 
srovision in the bill which was introduced in March. 1928, read as follows: 
Experience 
Proposals for 
Legislation 
Strong Bill 
“The federal reserve system shall use all the powers and authority now or here- 
after’ possessed by it to maintain a stable gold standard; to promote the stability of 
-ommerce, industry, agriculture, and employment ; and a more stable purchasing power 
of the dollar, so far as such purposes may be accomplished by monetary and credit 
solicy. Relations and transactions with foreign banks shall not be inconsistent with 
the purposes expressed in this amendment.” 
In favor of the principle of such legislation there is support of a kind which 
cannot be ignored. For example, the executive officer of the Stable Money Association, 
testifying in 1926 at elaborate hearings held by the House Committee on Banking and 
Currency, said: “We are hoping to see the activities of the Reserve Board in the direc 
ion of preventing inflation and deflation extended, refined, perfected, legalized and 
nade mandatory on future boards, and made to operate ministerially and not left to 
discretion.” 
Stable Money 
4 ssociation 
This organization has a membership which includes distinguished names in bank- 
‘ng, business, and economics. It does not concern itself with methods but emphasizes the 
‘mportance of a stable general price level, A statement in its bulletin was: 
“There is probably no defect in the world’s economic organization more serious 
than the fact that our most common unit of value is a fixed weight of one commodity 
having a varying value. The resultant monetary instability brings in its train many 
serious economic and social results. The changing purchasing power of the dollar robs 
ane class of persons to the extent of billions of dollars within a few years only to give 
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