Credit Policies of the Federal Reserve System by Charles Hardy

Author:Charles Hardy [Hardy, Charles]
Language: eng
Format: epub
Published: 2012-08-21T20:37:40+00:00

CHAPTER IX

RESERVE CREDIT AND THE GOLD SUPPLY

Up to this point we have made only passing reference to the international movements of gold in their bearing on the problems of the Reserve system. This is not because the gold flow has been an unimportant factor in the problems with which the Reserve system has to deal, but because its control has not, save in one or two instances, been an objective of policy.

The large excess reserves which resulted from the gold imports of 1920-21 and the liquidation movement of 1921 made it possible to ignore the gold movements to an extent quite unparalleled in the history of central banking. While the movement of gold has at times interfered with the smooth working of Federal Reserve policy, and has made it impossible to make decisions on the basis of American credit conditions in detachment from those of the rest of the world, the necessity of protecting the gold reserve has not dominated the situation.1

In this chapter we shall trace through the decade 1922-31 the time relationship of changes in the gold stock and changes in Reserve Bank assets in the hope of uncovering the mutual influences which credit policy and gold movements have had upon one another.2

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