1. Member, Board of Governors of the Federal Reserve System
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    • *The preparation of this paper required far more than the usual amount and quality of staff support, and the contributions of particular staff members should be identified fully.

      Mr. James Pierce had overall staff responsibility for the measurement of member bank borrowing from the Federal Reserve. Ms. Jacqueline McDaniel did the basic planning and coordinated the programming effort to integrate data from three different sources. Mr. Stephen A. Nelick undertook to examine on a daily basis each of roughly 5,800 member banks from January 1, 1969 through May 31, 1972, using primarily the “Short-Run Banking System Reports” (SBR) series. Mr. Thomas A. Orndorff did the programming to retrieve data concerning the portfolio structure of banks, using Call Reports for each member bank as of December 31,1969, 1970, and 1971. He and Mr. Nelick created the input data for the regression analysis in Section III, which was carried out by Mr. John Austin. Mr. Charles L. Monts matched weekly data from the reports submitted by 330 large banks with statistics from the SBR series and from the Call Report. Mr. James Wilbanks undertook a detailed examination of the Board's records over the last 20 years and also did the calculations to measure the propensity of Federal Reserve Banks to lead or lag with respect to changes in the discount rate.

      Several other members of the Board's staff assisted the project in various ways. Ms. Virginia Timenes supplied the statistics showing long-run trends in member banks' use of Federal Reserve Banks compared with other credit sources, and Ms. Donata Price sketched the chart based on these data. Ms. Dorothy Folsom prepared the chart showing money market interest rates and member bank borrowing. Ms. Harriett Harper, Ms. Tonsa Fuqua, and Ms. Linda Zuk worked on various statistical and other tasks during the preparation of the paper.

      I have benefited immeasurably from numerous discussions of discount rate policy with my colleagues–especially Governors J. L. Robertson and George W. Mitchell. Much of this discussion focused on the making of policy during the 1950's and early 1960's. Governor Mitchell chaired the Federal Reserve System study which in 1968 recommended a basic revamping of the discount mechanism. Mr. Robert C. Holland (now Executive Director at the Board) had overall staff responsibility for that study, and he has been especially helpful in connection with the present project.

      I have also found it helpful to discuss discount policy with Messrs. Howard H. Hackley and P. D. Ring. Mr. Hackley (formerly General Counsel and now Assistant to the Board) probably knows more about the evolution of Federal Reserve discount policy than anyone else currently in the System (as exemplified by his authorship of the comprehensive study, “A History of the Lending Functions of the Federal Reserve Banks,” mimeo., 1961). Mr. Ring is the Board's staff officer who maintains the closest continuing contact with the discount policy through his day-today surveillance of the discount function in Reserve Banks.

      Finally, while 1 am grateful for the staffs support in this project, the conclusions reached in this paper are my own. Nor should the views expressed be attributed to my colleagues on the Board.