234 The Stock Market Crash—dAnd After 
This statement had been preceded by a letter to 
the Reserve Banks, dated February 2, defining their 
obligations as to what credit should and should not 
be granted at that time. The statement noted the 
record of six years of remarkable economic activity, 
and their unprecedented volume of production and 
consumption of goods. It declared: 
“The economic system of the country has func- 
tioned efficiently and smoothly. Among the factors 
which have contributed to this result an important 
place must be assigned to our credit system, and, 
notably, to the steadying influence and moderating 
policies of the Federal Reserve System.” 
As the guardian of business, therefore, the Re- 
serve Board assumed responsibility for credit control 
in efficient and smooth functioning of the nation’s 
economic system. The New York Reserve Bank was 
reported as urging an advance in the rediscount 
rate to 6 per cent from its § per cent level. This the 
Federal Reserve Board declined to sanction. The 
measure would have brought the rediscount rate close 
to general market rates, thus making it effective. But 
the Board at Washington, torn by differing opinions, 
backed and filled during the Spring and Summer, try- 
ing to isolate one part of the money market by dis- 
criminatory measures against brokers’ loans. It was 
urged that a rise in the discount rate would “hurt 
business” and would deprive Europe of needed gold. 
But had this aggressive policy been pursued from the 
beginning it would have been found that business 
could have stood the higher rate during a period of