Full text: Referendum on the report of the Special Federal Reserve Committee

nearly nine thousand member banks. It can take action within the 
district only on important matters of an inter-district or national 
Board’s Task 
Board Membership 
Strong Board 
No matter how judiciously the Board functions, however, effi- 
sient administration of the reserve system depends to an important 
extent upon the activities of the district directorates and their offi- 
cers. Their functions as regards the determination of rediscount rates 
and open-market operations are of the greatest importance, and the 
large degree of autonomy wisely permitted them must be zealously 
guarded in the interest of proper servicing of district situations. It 
is encouraging that the district directors, representative of industry 
and commerce, as well as of banking, are developing special knowl- 
edge and experience in these and other system matters. 
Emphasis upon the necessity of an efficient district administra- 
tion does not mean that an able Federal Reserve Board is not of 
the highest importance. Although the Board’s executive powers are 
exercised chiefly in emergency situations, its very detachment from 
daily district administration and its sources of general information, 
both domestic and foreign, furnish a background which should 
prove of great value in judging financial trends and in exercising 
‘ts persuasive, interpretative and harmonizing influences which are 
always imperative in the continuous task of adapting the total volume 
of reserve credit to the requirements of the country as a whole. 
Some objection is encountered to increasing the attractiveness 
of Board membership on the ground that in the interest of district 
dank autonomy a weak Board is actually to be preferred. There is 
also another view that it is impracticable to develop the conditions 
‘hat are conducive to the existence of a strong Board and that the 
nevitable had better be expected. This committee, however, does 
aot accept the opinion that even with the most competent district 
management the system can be properly administered without the 
assistance of a strong and able Board. Even a cursory review of 
the broad powers of the Board indicates that membership upon it 
offers the opportunity for public service of the greatest importance 
‘0 the whole country and that relatively simple adjustments will 
‘ncrease its attractiveness to able men. It must not be overlooked that 
a weak Board would be more inclined to interfere with the autonomy 
of the reserve banks than a strong Board, and that the policies it 
would favor would be more likely to work injury to the country 
than those sponsored by a capable Board. The specific recommenda- 
tions listed below are intended to assist in developing the dignity 
and independence of the Board and to improve its working con- 
Continued on page 44)

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