ABSTRACT
The various legitimate objectives of debt management are bound to compete among themselves at various times and to compete also with other purposes of public policy. A different compromise may well be indicated at one time than at another. The immediate situation recently confronting the authorities richly illustrates some of these conflicts. The authorities had shown by their statements, their recommendations to Congress, and such actions as raising the required reserve percentages, that they feared further inflation and wished to restrain the expansion of bank credit. The case for continuing the support of the government bond market in the face of these conditions was impressively summarized by Allan Sproul, president of the Federal Reserve Bank of New York. The power to vary the supply and cost of credit is the heart of central banking. Occasionally this power is used with invaluable results to expand credit to meet emergency situations.
