Open-Market Policy and Totalitarian Control

Abstract

The reputation of a lady is seriously endangered if she ‘goes out’ to get a husband instead of waiting for one. Similarly, a bank is not supposed to run after the customers. During the nineteenth century when high standards of bank liquidity were generally accepted, and respectability was one of the essentials of banking success, waiting for the customer became a fundamental principle of banking practice, especially in Great Britain. Of course, ladies did not always live up to Victorian standards even in the Victorian Age; nor did banks, and since 1881 the Bank of England has gone out of its way on more than one occasion. But this was regarded as an irregular behavior, rarely acknowledged in public; the London market referred to the “hidden hand” whose transactions were not given statistical publicity. Since the War, many standards have changed; in 1922 the Federal Reserve System officially introduced the terms “open-market operations” and “open-market policy” which have since attained international circulation and the rank of major, if not fundamental, methods of monetary and credit management.