ABSTRACT
A legislative rule directing the Reserve System to stabilize the general level of wholesale prices calls for no additional powers to be granted to the System—it already has all the power needed and its leaders have the ability needed. When the Federal Reserve act was in process of enactment the bill laid down two policies for guidance of the system. It was instructed to use its powers to “accommodate business and commerce” and to “stabilize the price level.” There is one custom, just the opposite of this, which has grown up with the Federal Reserve System—the custom of lending up to the legal limit of the member bank’s reserve credit at the Reserve Bank. Prior to the Federal Reserve System each bank had to keep its legal reserve in lawful money in its own vaults or in a credit at a Reserve City bank.
