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(For release 3:00 p.m., Pacific Standard Time, April 7, I960) Remarks of G. H. King, Jr. Member of the Board of Governors of the Federal Reserve System before the Twenty-first Annual Pacific Northwest Conference on Banking State College of Washington Pullman, Washington April 7, I960 WHAT PURPOSE FOP. OUR COUNTRY? I am honored by the invitation to be with you today, Yesterday while in San Francisco I saw the Golden Gate Bridge again. In 19Í-IÍ? when I was returning from Navy duty in ’-.'orId l.’ar II, I had the thrill of seeing it loom up in front- of the ship - and I might add parenthetically - in the fog. strength. It was a symbol of America's VTnat ttfas more important to me at the time — it told me I was "back home" again. When I was a child I spent an entire summer in Longview, '•/ashington. That was the year the "Dixie Cup," an ice crean-sherbet combination, was popular. So I return to ’Washington with fond memories of "Dixie Cups" and cool summers. The Pacific Northwest has a natural freshness which beckons a Southerner, I suppose this is one of the reasons that many Southerners have become "deserters" and followed the lumber industry to the Northwest. When I say, "followed the lumber industry to the Northwest," I don't mean to suggest that there isn't still some lumbering in the South. There are still some of us around down there, and I hope that many of you will find occasion to enjoy our warm winters as much as I enjoy your cool summers. I imagine few of you are directly involved in lumbering, but you are certainly close enough to it to know that it is a gre garious business. One of the nice things about it is the free and - 2 - easy companionship which prevails among those engaged in it. I am sure that these warm personal relations have led many to continue in it be yond tho point of pure economic motivation. Unfortunately, all occupations do not provide this same attrac tion. Recently I read in a newspaper of the scarcity of people who are willing to be caretakers of lighthouses on the coasts pf our country, and I thought how much this is the same problem we have in trying to keep the lighthouses of our economy adequately staffed. There are many lonesome hours spent in lighthouses just as there is little glamour con nected with the advocacy of sound economic principles in trying to per petuate our form of government. Because our people as a whole are con firmed optimists, many keep looking for something for nothing, I think it is probably a good thing that youth spends some time in the search for the ttpot of gold" at the end of the rainbow, but those with experi ence knew there is no such thing. Americans are a restless and dynamic people who just don’t like to have anything stand in their way of achieving a better way of life, and in their zeal they frequently ignore or try to overrule simple laws of economics. of such experiments. History has proved many times the dangers As you know, most of the decisions our ceuntry makes as to which road to take are decisions whereby we cannot retrace our steps and try out the other path if the first one is too rr»ckyj but we must go on down the road making our decisions at each fork. In fact, we have very little time in which to even look back because world affairs - change so rapidly. beliefs. 3 - We should try to become better salesmen of our Let us not forget that we all travel down the same road, and there is no turning back to a new beginning. I remember a verse I learned when I was first learning to sail. It goes like this: Here lies the body of Michael O'Day Who died maintaining the right-of-way He was right - dead right - as he sailed along But he's just as dead as if he’d been dead wrong. It seems to me that we have had the right-of-way in the world for several decades, and a case can be made that we have, or have not, used it properly. But as we go ahead in the future we need to realize that we are now in competition with the rest of the world, and we should tell this to those who advocate policies that would place our freedom side by side with Michael O'Day. It seems to me that we are in uncharted economic waters. Neither our country nor any other country has ever been in exactly the same position with respect to condition of our domestic economy, our governmental trend of the last few decades, and our position in international economy. For this reason, old solutions to problems that sounded similar in earlier days do not necessarily apply with the desired effect. One thing that should make us pause and wonder is the fact that many of our most ardent patriots in the United States today are naturalized citizens. I know some of these people and I must admit that they show a greater love and fervor for our country than most of - h - our native sons. When they talk about the greatness of America, their eyes light up and they seem happy to say how wonderful this country has been to them. I suppose some of them really know how cruel the world can be without freedom. One of these folks that I know has said that the test between the two major ideologies in the world today will ulti mately be which group loves its country more. This contest cannot for ever be a stalemate. How tragic it would be There will be a winner. to have the best cause — and lose. Though we are only a flyspeck in time, we are the leaders of the forces for freedom in the world, and the I960's appear likely to be the time that our country will throw the switches that either preserve the hope of freedom for the future or throw down the bars to more regimentation. In my opinion, the challenge to all Americans is to reverse their present order of priority and place their personal interest second to that of our country. If we fail in this challenge, the ghosts of our early statesmen are likely to forever haunt our generation, even as it is written on the pages of history. Today I do not detect a strong current of thinking as to the purpose of our great country in the world. had their purposes clearly in mind. Our forebears seem to have They wanted the privilege - and I repeat, privilege - to conduct their own affairs as they saw fit, to have a voice in the government, and to rear a family that realized the blessings of freedom. While these sound like simple and noncontroversial things on which we could all agree, they come in conflict with other ob jectives which seem equally desirable at first glance. At the present - 5 - time, many seem to think that personal security is even more important. The thing that is frequently overlooked is that we have already bartered away portions of our heritage in the search for security. The "cradle to the grave" type of security which we are tempted to buy cannot even come near perfection without robbing us of the remainder of our freedom. The truth of the matter is that it will be very difficult to regain a single ounce of forfeited freedom. These people from whom we came be lieved there was honor in standing up for what they thought was right and just, regardless of who agreed or did not agree. True, they didn't have radio or television, but they were concerned with where the Ship of State was headed. Somehow they steered the Ship and kept it afloat until they could turn it over to the trusteeship of today's generation. What a great responsibility each of us has to do his own part in his own way to assure our Ship of State safe and honorable passage to the younger and unborn generations. We have improved many things in the world but I do not be lieve we have made much improvement in the purposes on which our nation was founded. We must subject all our beliefs to greater scrutiny, and ask ourselves if what we believe and do is really the right course in pre serving for our future generations a country of freedom. This involves the difficult task of locking for our own faults instead of looking for faults of others. It has always appeared to me that most of us have enough housekeeping problems without worrying about the dust in our neighbor's house. - 6 - We should place more of our thought on what type of government we are going to leave our children. I will confess that my children lead me to wonder what the younger generation really deserves. But, surely, the realization that many of us haven't discharged our responsi bility to our children as well as we might is no reason to desert them now. Our hope is our younger people; our faith must be in them. Heredity is a powerful influence, and I am convinced that the fine qualities of our forebears are in us and in our children. The mesmerizing effect of conforming to the crowd has put our finest genetic inheritance under anesthesia; but anesthetics are not fatal, and our people can be shaken out of their temporary sleep if we devote ourselves to the task. As if you bankers don't already have enough to do, here I am asking you to take on the additional roles of philosopher, educator, and missionary. I know you can because the American citizen virtually has no limit to his adaptability. Now the question arises as to how all of this ties in to the Federal Reserve System and monetary policy. At present there are many in our country, and this includes some learned people, who advocate that human beings are just not competent to manage the money supply of the nation and that it would be better to just grind out a flat percent age of new credit each year and let the chips fall where thejr will. This would, in effect, nullify the very basis on which the Federal Reserve System was founded. I cannot quickly cast aside the wisdom of those who have written our laws and created our public institutions - 7 - after having seen and suffered hardship which young Americans can scarcely imagine, I just do not believe that we can solve all our problems by encouraging the American people to get deeper in debt, I also do not believe that our failure to solve our own problems will prompt the Lord to send us a machine to solve them for us. Independence of our Federal Reserve System, in my opinion, must be maintained if we are to have any hope of preserving the purchas ing power of our money. This is not to deny the right - indeed, the responsibility - of cur Congress to oversee the Federal Reserve System or to make whatever changes it believes essential in the public interest. While the independence of the System should not be considered an end in itself, the atmosphere of independence is most conducive to the making of decisions which are necessary to the maintenance of our solvency and, ultimately, our freedom. Yes, our founding fathers were liberty-loving people. Let us pledge ourselves to pass on to those of tomorrow the privilege, which we have, to decide for themselves whether liberty is worth the price,
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