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FEDERAL RESERVE POLICY 19U-1919 FTRST WORT.D DEPRESSION 0? 1920-21 PROSPERITY OF TWENTIES THE GREAT DEPRESSION, 1929-3* THE PTRIOD OF RECOVERY, 1933-1941 THE VAR PERIOD, POST First Phaae: From Opening in Hov. 1914-to US Efatry, April 1917 aflow of gold, 1915-1917 Ineffectiveness of discount rate in face of gold inflow Weaknesses due to failure of state banks and trust cos. to joint System Second Phase* April 1917-Araistice of Nov. 1918 Period of inflation and rising prices Embargo on gold export9 September, 1917Ujune 7,1919 Amendments to FR Act in 1917: reducing percentage of member banks9 legal reserve required while demanding henceforth their deposit entirely with F.IL B^nks* Enlargement of membership in Reserve System Extension of credit mainly by govt, finance THIRD PHASE: POSTWAR BOOM — Nov. 1910 - June, 19J?0 Delay In raising discount rate due to Board1s desire to aid Treasury In efforts to reduce floating debt Board's action in raising discount rate, Jan. 1920. FOURTH PHASE* DEFLATION — June, 1920-January, 1922 Extension of credit in f a l l of 1920 prevented financial panic Criticisms of persistent policy of deflation thru 1921 opposition from Comptroller of the Currency External and internal effects of US deflation Bankruptcies and stagnation of trade Resulting developments: amendment to FR Act - 6th member appointed especially representing agricultural interests Governor of Board not reappointed in 1922 Cheap Money, Credit Expansion, and Prosperity: Jun«, 1922-June, 1927
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