thomas p. mccabe resigned under pressure from truman.was replaced by william mcchesney martin, a key negotiator of the accord and a treasury undersecretary. following the accord, the fed was free to conduct monetary policies unhampered by treasury constraints. the fed had flexed its muscle and won. using open-market operations in the fifties, it proved to be very effective in combating inflation. the relationship with the treasury became more equal and symbiotic. for more on open-market operations, we talked with richard gill. when the fed made open-market puhases of government securities as it did prior to 1951, it was effectively increasing the reserves available to the commercial banking system. and thus potentially making more money available to the economy in general. here's how it works. the fed purchases, say, $1 billion of government bonds from the treasury. it pays for these bonds by adding 1 billion to the treasury's account. the treasury uses this to write checks to people who are providing services to the government. these pr