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BOAtfD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Statement for the Press For immediate release August 18, 195'0* At meetings today of the Board of Governors and the Federal Open Market Committee, the following statement was approved: "The Board of Governors of the Federal Reserve System todayapproved an increase in the discount rate of the Federal Reserve Bank of New York from 1-1/2 per cent to ltOA P e r cent effective at the opening of business Monday, August 21« "Within the past six weeks loans and holdings of corporate and municipal securities have expanded by $l-l/2 billion at banks in leading cities alone c Such an expansion under present conditions is clearly excessive* In view of this development and to support the Governments decision to rely in major degree for the immediate future upon fiscal and credit measures to curb inflation, the Board of Governors of the Federal Reserve System and the Federal Open Market Committee are prepared to use all the means at their command to restrain further expansion of bank credit consistent with the policy of maintaining orderly conditions in the Government securities market* "The Board is also prepared to request the Congress for additional authority should that prove necessary® "Effective restraint of inflation must depend ultimately on the willingness of the American people to tax themselves adequately to meet the Governments needs on a pay-as-you-go basis« Taxation alone, however, will not do the job* Parallel and prompt restraint in the area of monetary and credit policy is essential*"
@FedFRASER