U.S. MONETARY POLICY.
But while Professor Cassel maintained that the great fall in commodity prices during the past eighteen months was largely the cause of the world crisis and that the fall in its turn was connected with monetary policy, he seems to have made scant recognition of the many years of acute trade depression in this country before the middle of 1929. He said, " In spite of difficulties the world enjoyed from the time of the restoration of the gold standard (1925) up to the middle of 1929 a period of prosperity and considerable progress." Such prosperity, however, was, I fancy, by no means a feature of the conditions in Great Britain, at all events so far as its staple industries were concerned. One of Professor Cassel's main contentions was the failure of the Federal Reserve system in the United States to deal skilfully with the situation in that country. In the spring of 1928, he says, the Federal Reserve system entered upon a policy of credit restriction in order to combat sp tion on the New York Stock Exchange, and t at, he maintains, is no function of a Central Bank. This, in itself, and especially in the light of what happened subsequently, seems to be an extraordinary declaration, for a backward glance at the conditions of 1928 to the middle of 1929 inclusive surely shows that the only fault committed by the Federal Reserve system was failure to apply the curb sufficiently strongly to Wall Street speculation in time to prevent that movement from getting out of hand. For, just as many years of excessive prosperity culminating in the gigantic Wall Street boom of 1928-29 had proved a strain upon many other centres, so when the collapse in the boom came other centres were affected by the repercussions.
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