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

Usage license:: Get license information via the feedback formular.

Forecasting Needs Adaptation of Credit Volume Administrative Problem Legislative Restrictions Dpposed Recommendation Recommendation COMMITTEE REPORT instead of the present requirement that the entire legal reserve be maintained with the regional reserve banks; (b) prohibition of the present right to issue federal reserve notes against gold or against acceptances purchased in the open market; (c) repeal of the pres- =nt provision that gold serving as collateral for federal reserve notes also may be counted by a reserve bank as part of its required reserve; ‘d) a drastic requirement that federal reserve notes be issued only against the collateral of paper obtained by rediscount. In general, these and similar suggestions seem to assume that it is possible to gauge in advance the exact amount of lending power that the reserve banks may require at any time. That is not the case. They overlook the fact that the need for reserve credit is subject to wide and unforeseeable variations. In our view it is not a matter of great consequence if the credit powers and resources of the reserve hanks are at times even materially in excess of immediate require- nents. Furthermore, the precise adaptation of the volume of reserve credit to the needs of business is of necessity a problem of adminis- ration rather than of law. In the exercise of such powers to regulate credit as the federal reserve system possesses, it is better for the country to rely positively upon experienced administration rather ‘han upon rigid statutory limitation. No automatically operative statute can be substituted in this particular for prudent judgment and discretion. The reserve administration is acquiring by experience an art and technique that will produce more definite and continuous progress than prescription by the legislative body. Successful man- agement of our federal reserve system should be sought through development of the administrative ability of its officers and govern- ‘ng board to meet changing conditions instead of through limitation »f power by legislation. We do not believe that the changes referred to above or other changes should be made in the provisions of the Federal Reserve Act relating to the issue of federal reserve notes or to reserve require- ments, pertaining either to reserve banks or to member banks, solely for the purpose of restricting the lending powers of the reserve banks. The Committee recommends that: (a) As the future need for reserve credit and currency cannot be definitely foretold, the reserve banks should possess powers of credit and currency expansion sufficient to insure the largest measure of serviceability in any periods of strain. (b) The precise adaptation of the volume of reserve credit in all its forms, including note issues, to the requirement of trade should be regarded as a problem of administrative instead of legislative rontrol. ‘Continued on paae AY

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