# Treasury-Fed Accord **Status: stub — expand.** The joint statement of **March 4, 1951** in which the [[Department of the Treasury]] and the [[Federal Reserve]] announced they had "reached full accord with respect to debt management and monetary policies" — ending the peg under which, since 1942, the Fed had held Treasury bill rates at 3/8% and capped long-term yields at 2.5% to finance [[World War II]] cheaply. The break came during [[Korean War]] inflation. On January 31, 1951 [[Harry S. Truman]] summoned the entire FOMC to the White House; the next day the White House announced the committee had "pledged its support" to keep bond prices stable, which it had not. Marriner Eccles released the committee's own account of the meeting; on February 19 the Fed told the Treasury it would no longer "maintain the existing situation." Treasury negotiator [[William McChesney Martin]] became Fed chair weeks later. The Accord is the origin of the Fed's operational independence — and it is an agreement between two agencies, not a statute. The peg it ended is the historical model for [[Fiscal Dominance]]. ## See also - [[Interest Rate Policy Timeline]] · [[Central Bank Independence]] · [[Financial System Timeline]]