ABSTRACT
The recession of 1924 was viewed by business writers that year as nearing its end. Business conditions did improve by the end of 1924. Meanwhile, the Federal Reserve was sterilizing gold inflows until they slowed in July, 1924. The Federal Reserve followed a policy of easy money, applauding the assistance that the United States was giving to the Europeans. Governor Strong of the Federal Reserve Bank of New York noted the appropriateness of open market operations in affecting credit policy. The Federal Reserve initially reacted to the situation by easing credit and they refused comment on the 1930 bank failures other than stating that they were not the Board's responsibility. The role that the Federal Reserve System played during the onset of the depression, and the maintenance of the tragedy, posits a lesson for history regarding the dangers of powerful, less than competent, politically motivated, and divided Systems.
