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During World War II, the Federal Reserve pledged to keep the interest rate on Treasury bills fixed at 0.375 percent. It continued to support government borrowing after the war ended, despite the fact that the Consumer Price Index rose 14% in 1947 and 8% in 1948, and the economy was in recession. President Harry S. Truman in 1948 replaced the then-Chairman of the Federal Reserve Marriner Eccles with Thomas B. McCabe for opposing this policy, although Eccles's term on the board continued for three more years. The reluctance of the Federal Reserve to continue monetizing the deficit became so great that, in 1951, President Truman invited the entire Federal Open Market Committee to the White House to resolve their differences. William McChesney Martin, then Assistant Secretary of the Treasury, was the principal mediator. Three weeks later, he was named Chairman of the Federal Reserve, replacing McCabe.
- History of the 1951 Accord from the Federal Reserve Bank of Richmond (Archived 14 August 2009)
- Federal Reserve Independence and the Accord of 1951
- Historical documents relating to the Accord
- Timeline of events of the Treasury-Federal Reserve Accord of 1951
- Joint Announcement by the Secretary of the Treasury and the Chairman of the Board of Governors, and of the Federal Open Market Committee of the Federal Reserve System, from the William McChesney Martin, Jr., Papers, Box 15, Folder 4