ABSTRACT
During the difficult years 1928–1931 Montagu Norman increasingly utilized other weapons, primarily open market operations, to protect the pound. He shielded British industry from the full effect of the return to gold but also changed the nature of Bank rate from an everyday tool to a relatively drastic measure, a development which would have ramifications during the 1931 crisis. Britain's problems in 1928 were largely a result of actions taken by two of her erstwhile allies. In New York the stock market boom drew money like a magnet from all over the world particularly after the Federal Reserve Bank of New York (FRBNY), partly in response to pressure from Washington, began to raise discount rates. Unfortunately at a time of growing crisis the Federal Reserve System needed leadership and Harrison, although of sufficient standing to fight to a deadlock with the Governors of the Federal Reserve Board with whom he came into conflict, did not have the strength to win.
