BPEA | 1971 No. 1

An Analysis of Quantitative Credit Controls and Related Devices

Richard G. Davis
Richard G. Davis Federal Reserve Bank of New York

1971, No. 1

QUANTITATIVE CONTROLS ON SUPPLIERS AND USERS of credit have for some time been a notable feature of policies designed to moderate aggregate demand and, at times, to influence its distribution in a number of developed countries. In the United States, a fairly comprehensive system of voluntary credit controls was in effect for a time during the Korean war, and quantitative controls were again advocated by some to alleviate the tight financial markets of the late 1960s. Indeed,a law passed by Congress in 1969 included a provision, opposed by both the administration and the Federal Reserve, permitting the President to authorize the Federal Reserve Board “to regulate and control any or all extensions of credit” whenever he determines that such action is “necessary or appropriate for the purpose of preventing or controlling inflation….”