Referendum on the report of the Special Federal Reserve Committee

Bibliographic data

Monograph

Identifikator:: 1827879114

URN:: urn:nbn:de:zbw-retromon-221388

Document type:: Monograph

Title:: Referendum on the report of the Special Federal Reserve Committee

Place of publication:: [Erscheinungsort nicht ermittelbar]

Publisher:: [Verlag nicht ermittelbar]

Year of publication:: 1930

Scope:: 53 S.; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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0 a It has been generally accepted that when a reserve bank applies to the Board for permission to raise or lower its rediscount rate, the Board can grant or refuse that permission—a power of veto. It has not been so generally accepted that the Act gives to the Board the authority to force a regional bank to change its rate. There have been occasions when it has appeared proper to the Board to initiate and insist upon a change in rate against the active and determined opposition of the reserve bank concerned. If the Board compels a reserve bank to lower its rate, the reserve bank may be deprived of its most effective method of discouraging ex- cessive local rediscount applications. As a corrective it might then be compelled to arbitrarily refuse applications for rediscount at the risk of threatening the good will of member banks, thus impairing the spirit of willing cooperation so essential to the operation of the federal reserve system. Similarly, if the Board orders a reserve. bank 0 maintain or increase a rate, it may result in special disadvantage ‘0 the commerce and industry of the particular district. It can be recognized that regional banks may be swayed in their judgment by the special problems of their districts and may not hold so impartial an attitude as would the Federal Reserve Board con- cerning the needs of the whole country. If given unrestricted free- dom in the matter of rediscount rates, it is conceivable that the re- serve banks could precipitate discrepancies and inequalities of a dis- turbing nature. As a rule, however, general financial developments would shortly indicate to any reserve bank whose rate is out of line ‘he necessity of correcting its rate. Even if it be admitted that the Federal Reserve Board should =xercise an authority to compel rate changes in a presumed national :mergency, the country has a right to expect that it adopt a con- sultative attitude toward the reserve banks and take action only after conference with regional bank directors and after full consideration of the resulting influence upon the commerce and industry of the districts especially affected. The persistent refusal of the Federal Reserve Board to permit a change in rate can be as violative of dis- trict autonomy as the actual forcing of a rate change. The Committee does not believe that the proper solution of this difficulty lies in legislative enactment. It should be left to the zoverning bodies of the svstem to agree upon mutually helpful safe- guards. COMMITTEE REPORT Josition Taken by Board Result tor Reserve Bank Considerations Affecting Reserve Banks National Emergencies Jniform Rate Nationally In this connection another question of general application which has emerged with respect to the rediscount rate is whether or not it should be uniform throughout the country. Because the Federal Reserve Board's jurisdiction is nation-wide, a determination to estab- ish the same rediscount rate in all the districts would operate to (Continued on page 12)

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