The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
To* Files Subjects Conversation with Mr* Carpenter, Secretary of the Federal Reserve B$ard in Washington on January 26* 1954 Informal Memorandum From? Miss Adams . The development of the Federal Reserve Beard has included a tremendous evolution in the instnaments of credit policy* The important work of the Board up to 1933 was that of fixing discount rates* Then open market operations came to the fore* In 1930 what had been the infomal committee of five Qovernors was made larger and fomaiized. In 1935 the Board was reconstituted to include Governors and five presidents^ Up to that time* or perhaps it is up to 1933$ the Board1 s influence was mostly that of what is known as "moral suasion"* After 1935 the Board gave "instructions11 • In 1938 the Board was accused of having brought in a recession* A capital issues cemmittee existed as a pre-world war group for rationing capital* The purpose of this was to see that an undue amount of capital was not siphoned off into private industry when it was needed for buying Liberty Bonds (The national Archives contain the papers of the Capital jEssues &mraittee which would be important in any account of early days*) Since the beginning there has been a fight between central and regional loyalties* Senator Glass helped set up the system on a basis of regional centers with a high degree of autonomy and with the authority to fix discount rates in their regions after consultation with the Board* In substance, this set up a systan of individual money markets* Fortunately this systan did not stand in face of the increasing speed of caramunications * During those early days an extremely complicated schedule of discount rates in the various districts existed* It was necessary to set up an JSiter-district Settlement rund formerly called the gold settlement fund and before that the ^©ld pool* Adjustments began to be made as tern between the districts in that group. This process has of course beceme mostly a matter of bookkeeping now t with telegraphic transfer of funds^ fhe customary way of settling* Subject? Conversation with Mr# Carpenter* Informal Memorandum (Continued) Much more information can be gleaned from Mr* Carpenterf these were rambling observations at the end of a long discussion about personality*
@FedFRASER