DISCOUNT POLICY IN THE LIGHT OF RECENT EXPERIENCE.

The article discusses the discount policy in the light of recent experience. The accord of March 1951, U.S. Treasury and Federal Reserve officials agreed that the Federal Reserve would lower or stop purchases of short-term securities and allow the short-term market to adapt to a position at which banks would depend upon borrowing at the Federal Reserve to create necessary adjustments in their reserves. This contemplated a level of short-term interest rates which, in response to market situations, would fluctuate around the Federal Reserve discount rate.