Speculation and Brokers’ Loans 23% 
expanding prosperity, while keeping the rate artifi- 
cially low served to stimulate speculation instead of 
checking it. People were borrowing at low rates in 
order to make high rates in expanding business. 
Even had business been hurt by the proposed higher 
rate, there would have been but a few months of 
business recession followed by easier money condi- 
tions, and the panic, with its untoward results involy- 
ing far greater damage, would have been averted. In 
his recent address before the Academy of Political 
Science in New York. Dr. Benjamin Haggott Beck- 
hart notes: 
“The management and direction of our banking 
system in the past few years leaves much to be 
desired. The Reserve Banks have failed to develop 
a philosophy of credit control, due in part no doubt 
to the division of counsel within the system. Com- 
mercial banks, largely by virtue of extraneous circum- 
stances over which they had no control, but partly 
volitionally, have greatly increased their holdings 
of bonds and security loans, whose ‘liquidity’ 
depends on a rising or at least stable security 
market.” 
In the same vein Mr. Benjamin M. Anderson, Jr., 
economist of the Chase National Bank of New York, 
characterized as unfortunate the “cheap money 
policy” of the Federal Reserve Board in his address 
December 30, 1929, before the American Eco- 
nomic Association in Washington. Mr. Anderson 
declared that the ideal situation would have been a 
rediscount rate above the market, buttressed bv the