Public Policy: New Face at the Fed

The men who manage the nation's monetary policy are divided on interest rates. Among the seven governors of the Federal Reserve Board, three have generally favored loose money and low interest rates on loans to stimulate the domestic economy, while four have argued for slightly higher short-term lending rates as a way to stop U.S. gold from flowing into the hands of foreign borrowers who find the U.S. a cheap money market. The tighter majority, led by Chairman William McChesney Martin Jr., prevailed last July, when the Fed hiked its lending rate to member banks from 3% to 3½%.

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