Trace through the effects of a squeeze on the monetary base from an initial reduction in cash to banks' liquidity being restored by the rediscounting of bills.

Hoover was also instrumental in passing the Glass-Steagall Act of 1932, allowing for prime rediscounting at the Federal Reserve, allowing further inflation of credit and bank reserves.

In its rediscounting actions the BNA was not engaged in pure lender of last resort actions, following Bagehot's principle of lending freely at a penalty rate.