Speculation and Brokers’ Loans 23%
expanding prosperity, while keeping the rate artificially
 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 conditions,
 and the panic, with its untoward results involying
 far greater damage, would have been averted. In
his recent address before the Academy of Political
Science in New York. Dr. Benjamin Haggott Beckhart
 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. Commercial
 banks, largely by virtue of extraneous circumstances
 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 Economic
 Association in Washington. Mr. Anderson
declared that the ideal situation would have been a
rediscount rate above the market, buttressed bv the