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9
•
^
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
Ststrtbutad
1955
TOi Ma»#r&« Allan Sproul,
V. Rtindoirii Burgaaa
Robert D.
mating vi« o&Ilad for X ^«a* i a th# Eirwtora* Sluing Rooa of
the Federal Reserve Bask of ! • * Xork. Ciudimn %roul» fftaera, Caiklna
Voodv^rd -war* prsaent, and Hiss AdfcJus «s 2oc«cutive Birector. Mr.
uiaeToid&bly d«taln«d» vfcb repr«eent«d by a written «xpr«selon of pr«f«r«no#
oa certain l t « i « prtviously annouaeod for
Minutes of the prtrvtoa* flatting of the
259 1955) for the open gea&loa vere ccc
for the executive session uere eeeeptta} vith one correction, no tad i n the
Minute Book*
Old Business
the purpose of ta<* »e«ting w « deeltred by the Ghkira&n to be
cota t l#tioii of a |>rogri« of notion to ba @ubsdtt$d to tkm f u l l 0cn»ltt*« a t a
to be ealltwi i n JgAUfcxy. Toverd tliat *ndt tha
23th* On th« b&ala of a BWBorandua then renuestad (r?ap^r#4 by
Pr* Calkins and Misa id$%3)» tha Corasitte© agreed on these polnta of the
proposed progreal
( l ) thet tliara should ba a aii^l« volume i#quantiaX history of tii«r Federal
Ee$#rr« System:. This vouid be f&etu&l, to be bated on the
that as tl^e Syatesi has contiaued to be an evolving mechanise
history i s th« storjr of l i t grovUi and change, to contain a alnlonai
of interpretation, and to be designed for d e e groom use or a s
(2) Thet a rolixae, or tvo, of selected rcadinge on the Fedenrl H#serra
., Slfstta should be pr®p%r*& ia «omiotloa *tth t&a MstDiyf this VOX
to consiet in the ®&in of publiahed KJ t-Briei?, key doo\E^nt«# »t£t«uante in hearingD or spe«che»# oostir^ at k«y points In the grovth of
th» %nt«&« Farticultr ettentlon i > to bn paid to material tsmmt&j
4 1 f C i i t of aeftftss but im^ort&nt to studeate.
> £ •
Bmmtiww %%
I t o t « grcmp #£ asaftgfepti irol^^t fe# prt^eswif i a general along
Maee of ffee §t«s^imgi#». prefuired by J3r« CfcXkiara end Hiss Mast but
idtli their mluR*# I H se*S If e.e flit «or« of this se«toi> end
tlidy witting their ^rnhmm f »ndl. ft* fh#s# Maegs*|3h*f
into episodes* period** functions, etc, than I t possible in th«* hisof lat^rpmtetlon &®A dltctst'tloai of
In th* f^ctu^i history*
e
«oll«etto]is f®w^ in tiui
t 4#sei*i|iMtii #f th« *^.rcb for
end to iacluti* a i i ^ t #f th« r«l»Tftnt
this
I t iw.® agwti tlMit the SeXeti'Uve
not be -pi&Llfihed, lm% thst Kiss Burnett be «alt#<!
v&ntot7 iri i t s ininao*:.;rt.i;.h0d fom. Ik®
then b# distrltmted %
of Carter
a timf&e Index for
voiisaes in binder*
tht-1 aeith«r Harold »o«Xs« mr
it
It
©f
&§ to hie
to pr®©«at 110 foawftl dieou9tio& of
tcm l i s t of
YeX
at Brooking ©
,
of
* It
»t
mm
& screed u, on) to tilt lieMt of
n
for aonogmfdi vritlog tbrougii
the. t Mr. Woodvi,rd lad @on##Et#d to l « t i Hie
firop®*®i eo&fereaee end iMMdwum itt Brookinge i f tSiie progreft Is eooepted*
t e t l l l teatetivet eells for joint epoaeorsblp W ^
of o&e neetiog i s the spring of 193^ to serve ^ie purpose of %#
feresee of e v e r t s described in tlie Frogre«» vnd Flams report, tad « seiiee of
©r eight for oereful^r seleoted weafea«S-w»«a to run oaoe • ssoath fro»
S#ptfftb«r on. thts# «utt»a #imis*r0 stimuli b« ft.rti
in tae ^,tt®r of espXariiif i^tsible monogrc;^ subj«ct^, Br*
the.t fovadfttioa lielp witld oe aeeded to ^ij trtmHng earpeases of pertleip»nts»
sd^ht ;;j^fit&bly be »&4# to the Merrill
Kr* W0o^w#«€ ftsi Nlss A4SBUI vere redoes ted to prepere e detailed state*
meat oft #«Binrr plans to be -ubsittad to th# full Gar^itte* in mdf»a@t of the
Comltta*
&t«cst»r 19, 1955
- 3 •
11
*»• W * that & Saturday rafting of tha full Gottsiltta* ba
a&llad for Jaimniy Hth or January 21st, prefambly l a Prlaeaton. The 1»~
portaaea of aalafttlag » data vhich veuld ettrret full «ttandajnee vae streasad.
toet the ExacutiYa Oossmltta* would racoitnand to tha
full CoasRlttaa tha proposal that tha Colmbla UnlTar©!^ Ubraiy ba plaead i a
* position to collaot, orgfenlie and pat into usable conditdoa a l l dasirabla
«olla«tiotis of papare not Qlmrlf daatlnad for aaothar institution, and that
a plan of action ba daviead v.i«r«by tha Co«<taa and the Golisabla Ubrriy
Jointlj saak & gjmut of taa ascoewiry #36,300 ttm a foundation, talking
im the Boekaf#llar FoundaUon,
Adaaa agr«e4 to contiuun o;>«retion of th« offlea oa tae p
until aftar aetioa on futura plhnB ht.& baan taken by tha vho&a 0omltta«*
In Tlaw of tha fact th&t Mis a Burst tin la nov the only fuil-tiaa
offica ftssiisUnt, i t va» ^graa<jl that her aalaty l>a r«laa4 fira 1^*23 p*r
to $
Dr. Galfcl&a will send tha RockefeJJLar Foundation a budgat for
on pr*«a&t cocLHawatfi but *dth a contiagancy f«nS l«rga
to cov^r tlio&a vhich a m l t action bf the full Committ«e.
Donaid B, Weodvard
LM
^Co-^j^"
^(p^^fc^
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
33 LIBERTY STREET, N E W YORK 45, N E W YORK
TELEPHONE: RECTOR 2-5700, EXTENSION 286
ALLAN SPROUL, Chairman
W. RANDOLPH BURGESS
ROBERT D. CALKINS
F. CYRIL JAMES
WILLIAM MCC. MARTIN, JR.
WALTER W. STEWART
JOSEPH H. WILLITS
With cooperation of
THE BROOKINGS INSTITUTION
722 JACKSON PLACE, N. W.
WASHINGTON 6, D. C.
DONALD B. WOODWARD, Secretary
MILDRED ADAMS, Executive Director
December 22, 1955
Dear Don:
Dr. Calkins phoned yesterday afternnon to say that, in
accord -with your suggestion, he called Mr. Riefler to find out
•whether there was any real feeling against Dr. Howard Ellis in
that quarter which might make itself felt at the January meeting.
The reply was that Ellis was a good man and would be | V
entirely acceptable as a monograph writer. Win is not interested
in the history, thinks it cannot be properly done until after the
monographs are written, is very much in favor of the monograph
program and thinks we should proceed with it as rapidly as possible.
Mr. Riefler also said that Bray Hammond's history ("American
Banks and Politics from the Revolution to the Givil War") had been
accepted by the Princeton University Press, that we should now move
quickly to commission Hammond to do a monograph on CLEARIiNU-S AflD
COLLECTIONS before he starts on the second part of his history
which will carry it from the Civil War to the start of the Federal
Reserve System.
Whether "quickly" means before January 28th I have no way
of knowing, but I thought you would be interested both in the
reaction and the suggestion.
Best as ever,
Mildred Adams
Mr. Donald B. Woodward
Vick Chemical Company
122 East 4.2nd Street
New York 17, N. I.
c.c- Mr. Sproul
DRAFT
(December 21, 1955)
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
Minutes
Executive Committee Meeting
Hew York, December 19, 1955
TO: Messrs• Allan Sproul, Chairman
W. Randolph Burgess
Robert D. Calkins
The meeting was called for 1 p.m. in the Directors1 Dining
Room of the Federal Reserve Bank of New York.
Chairman Sproul, Messrs,
^alkins and Woodward were present, and Miss Adams as Executive Director.
Mr. Burgess, unavoidably detained, was represented by written preference
on certain items previously announced for discussion.
Minutes of the previous meeting of the Executive Committee
(on November 25, 1955) for both open and executive sessions^ were accepted
as distributed.
Old Business
The purpose of the meeting was declared by the Chairman to be
the completion of a program of action to be submitted to the full Committee at a meeting to be called in January.
Toward that end, the Com-
mittee continued discussion of the revised program formulated tentatively
in executive session on November 25th. On the basis of a memorandum then
requested (prepared by Dr. Calkins and Miss Adams), the Committee agreed
on these points of the proposed program:
I. Publications Program
(l) That there should be a single volume sequential history of the
Federal Reserve System.
This would be factual, to be based on
the assumption that as the System has continued to be an evolving
mechanism its history is the story of its growth and change, to
DRAFT
(December 2 1 , 1955)
c
2
--
contain a minimum of interpretation, and to be designed for classroom use or as supplementary reading.
(2) That a volume, or two, of selected readings on the Federal Reserve
System should be prepared in connection with the history, this
volume to consist in the main of published materials, key documents, statements in hearings or speeches, coming at key points
in the growth of the System, Particular attention is to be paid
to material commonly difficult of access but important to students.
(3) That a group of monograph volumes be prepared, in general along
the lines of the memorandum prepared by Dr. Calkins and Miss
Adams but with their volumes III and IV as the core of this
sector, and possibly omitting their volumes V and VI. These
monographs, going deeper into episodes, periods, functions, etc.
than is possible in the history would admit of interpretation
and discussion of controversial points lacking in the factual
history.
(4.) That a volume of unpublished material be considered, to be based
on important items in the various collections found in the course
of this project, to be prefaced by a description of the search
for documents, and to include a list of the relevant collections
uncovered.
Authors
It was agreed that the Selective Inventory of Carter Glass Papers
not be published, but that Miss Burnett be asked to prepare a simple index
for the Inventory in its mimeographed form. The mimeographed volumes in
binders would then be distributed to interested libraries.
DRAFT
(December 2 1 , 1955)
- 3 Concerning possible authors of the one-volume history suggested
at the executive session, it was reported that neither Harold Roelse nor
Ralph Young would be available. It was agreed that, as Dr. Howard Ellis
seemed to combine the qualities of scholarship, experience and probable
availability, he be consulted as to his willingness to undertake the
history or a monograph, Dr. Calkins agreed to undertake this at the midyear economic meetings*
It was decided to present no formal discussion
of the work of this Committee at those meetings, but to use them informally
as occasion arose.
Respecting monograph authors, two courses were suggested: one,
that of sending alist of monographs (when agreed upon) to the heads of
economics departments in large universities and asking what scholars °» ^ "
might be interested; the other, the development of candidates for monograph writing through the proposed seminar at Brookings,
A
II. Seminar Program
Dr. Calkins announced that Mr. Woodward had consented to lead
the proposed conference and seminars at Brookings if this program is
accepted.
The plan, still tentative, calls for joint sponsorship by this
Committee and Brookings of one meeting in the spring of 1956 to serve
the purpose of the conference of experts described in the Progress and
Plans report, and a series of seven or eight for carefully selected
A
men to run once a month from perhaps September on.
These autumn
seminars should be fertile and valuable in the matter of exploring possible monograph subjects. Dr. Calkins stated that foundation help would
be needed to pay traveling expenses of participants, and suggested that
appeal might profitably be made to the Merrill Foundation.
Mr. Woodward and Miss Adams were requested to prepare a detailed
statement on seminar plans to be submitted to the full Committee in advance
of the January
meeting.
("•^^
DRAFT
(December 21, 1955)
It was agreed that a &&turday meeting of the full Committee
be called for January 14-th or January 21st, preferably in Princeton, The
importance of selecting a date which would attract full attendance was
stressed*
It was agreed that the Executive Committee would recommend to
the full Committee the proposal that the Columbia University Library be
placed in a position to collect, organize and put into usable condition
all desirable collections of papers not clearly destined for another
institution, and that a plan of action be devised whereby the Committee
and the Columbia Library jointly seek a grant of the necessary #36,000
from a foundation, talking first to the Rockefeller Foundation.
Housekeeping Details
Miss Adams agreed to continue operation of the office on the
present basis until after action on future plans had been taken by the
whole Committee.
In view of the fact that Miss Burstein is now the only fulltime office assistant, it was agreed that her salary be raised from
$69.23 per week to $75.00.
Dr. Calkins will send the Rockefeller Foundation a budget for
1955-56 based on present commitments but with a contingency fund large
enough to cover those which await action by the full Committee.
Respectfully submitted,
Donald B. Woodward
Secretary
DRAFT
(December 2. 1955)
COMMITTEE O N THE HISTORY OF THE FEDERAL RESERVE SYSTEM
Minutes of Executive Committee Meeting
Hev York. November 2?. 1955
To: Messrs. Allan Sproul, Chairman
W. Randolph Burgess
Robert D. Calkins
The meeting was called for 12:4.5 p.m. in the Directors1 Dining
Room of the Federal Reserve Bank of New York. All members of the Executive
Committee were present, and Miss Adams as Executive Director.
Minutes of the last meeting of the Executive Committee (on May 4,
1955) vere accepted as distributed May 15th.
Old Business
Mr. Woodward and Dr. Calkins reported on two meetings of the SubCommittee on Monographs (consisting of Dr. Calkins, Dr. Stewart and Mr.
Woodward, with Miss Adams present) held at Princeton on June 22nd and July
21st. Names of possible writers, and possible topics, vere discussed and some
exploration done. It was the reported concensus of opinion that the monograph
plan would be acceptable and successful only if individual monographs as commissioned would form a whole which represented the System1s history. To
interest younger men in the project, suggestions were made of a seminar to
be held at Brookings.
Dr. Calkins reported that Dr. Howard Ellis of the University of
California would be interested in undertaking a monograph. He also suggested
Alvin Marty of Northwestern and Marshall Robinson, formerly of Dartmouth but
now at Brookings, might be candidates for monographs. The former has been
interested in the theory of money and banking but now is turning to its
history. The latter would be interested in writing on the history of World
War I or World War II. Dr. Calkins proposed that monographs be gathered into
a planned and orderly symposium which would be in effect a history, and
DRAFT
( December 2. 1955)
^
o
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
- 2 that the Sub-Committee on Monographs gather its list of possible authors for
a conference at the December meetings of economists.
Mr. Woodward suggested that Mr. Sproul, who is scheduled to speak
to the American Finance Society in December, take that occasion to mention
the monograph plans of this Committee.
Report was made of two meetings with officials of the Columbia
University Library on June 30th and July 19th; the first attended by Mr.
Sproul, Mr. Woodward and Miss Adams, the second being a smaller meeting with
Dr. Logsdon, head of the Columbia libraries. Columbia officials are interested
in the project of establishing there a center for the deposit of papers
concerned with New York banking, but need $35,000 with which to set up such
a depository and arrange for its servicing.
Mr. Burgess suggested that Columbia University and this Committee
make a joint appeal to the Merrill Foundation for the needed funds. Dr.
Calkins and Mr. Woodward reported that they had discussed the matter with
the Rockefeller Foundation and found them not averse to the idea of entertaining such a request. The next move is to come from this Committee.
Progress Reports
Dr. Chandler was reported to have finished a chapter or so in his
biography of Benjamin Strong and to be continuing work on it.
Miss Adams reported that after visits to the 12 banks, and with the
assistance of interested officers and staff members of the Federal Reserve
Bank of New York, a list had been compiled of materiel of historical interest
which the Banks would be asked to save. Recommendation had been made to
the System1s Sub-Committee on Destruction of Records that they add the vrofd
"retention" to their title, and a minimum list of items was circulated and
DRAFT
(December 2 , 1955)
rv
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
- 3approved -which should be retained for historical purposes.
It was reported that the bibliography now contains some 17,000
cards. The Committee asked that further expansion be stopped, and references
be limited closely to the history of the Federal Reserve System.
Paper Hunt
The papers of Mr. Frank Vanderlip were reported to have been found
in a storeroom of the Vanderlip family garage at Scarborough, New York.
Suggestions that the collection be moved to the library at Columbia University were welcomed by the family, and negotiations for such a move are now
in the hands of Dr. Logsdon of Columbia.
The papers of Dr. Emanuel Goldenweiser are now deposited in the
Library of Congress. Restrictions have been placed on certain confidential
notebooks, but otherwise they are open for the use of scholars.
The papers of Mr. Howard Loeb, recently deceased member of the
Federal Advisory Council for the 2rd Federal Reserve District from 1930 to
1940, await inspection in the Tradesmen's National Bank of Philadelphia.
The family is reported to be probably friendly to suggestions by this Committee.
Dr. Calkins suggested, and the Committee approved, that the information concerning the whereabouts of papers which this Committee has discovered
be circulated to interested institutions such as university libraries.
New Business
The receipt was announced of a "Survey of Court Decisions and Opinions
of the Attorney General Affecting the Federal Reserve System" which has been
made for this Committee by the Legal Division of the Federal Reserve Board;
this was by the kindness of Mr. George Vest.
DRAFT
(December 2. 1955)
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
- 4- -
Housekeeping Details
The resignation of Mrs. Ellen Singer, research assistant to the
executive director, was announced as of October 1, 1955* No one has been
appointed to replace her. The New York Federal Reserve Bank loaned the office
the services of Miss McKinstry for one month• Mr. Sproul stated that it
may be possible to continue that loan.
Recommendation that Miss Irma Burstein, second to Mrs. Singer and
now acting as assistant to Miss Adams, be given that post with an increase in
salary was held for further action.
Expenditure and Budget Reports
These financial items were presented:
Expenditure reports, July 1, 1954 - June 30, 1955
Expenditure report for first quarter of 1955-56
Tentative budget for 1955-56, approved May 24th and presented
for revision in executive session
There being no further business, the meeting was adjourned for an
executive session.
Respectfully submitted,
Donald Woodward
Secretary
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
of Executive Coiafiitt&e Keating
few lark, fhrmbtr 2$
Distributed
Beoecber U$ W 5
TOi Messrs. AH&tt Sproul, GhalnNUl
¥« Randolph Burgos*
Bobert B» Calkliit
The «eeting v t s celled for 12i45 p«m* l a the Directors 1 Dining ROOM
of the Federal Reserve B*nk of lew lork. All eie&bers of the Kxeeative Coned tt«e
vtre present, and Hist Adapts as Executive Director.
Minute* of the l e s t meeting of the Executive Gossaittee (on Key 4 , 1955}
vere eocepted &a distributed Hey 16th*
Old
Mr* Woodward and Dr. Calkins reported on tvo aeetlagt of the SubCo»nilttee on Mooogr«i,h» (eon s i s ting of Dr. Caikiaa, Dr* ^tuvsrt and Mr*
vi'tii MUP Ade»» present) held s t Prineetoa on June 22ad and July 21st*
of pocsible vrltert* fend possible topies # vere discussed end soae explor*tloa done* I t ^a« this reported eonceneus of opinion that the wonogr*ph plea
be «cc«p^-ble and suceeeeful only i f individual monogrfephff as coaarissioned
form a vhoie whioh represemtet the a^stem's ai^.tor/. to interest younger
men in the project, inggection© v#re made of * tealn&r to be held at Breakings*
$r, CftHdLa# reported th«*t *)r. Homrd Ellis of the Univ^rsiV of California vould be interested in umdertekiag a monograph* He also ouggeete^ that
Alvla MarV of lsrtbvest«ni tuai Mexshftll ioMasoa, fomerly of Be^rteeutli but
not? at Brookiags, might be e*sdld«te« for monogrmptis« Hie fomer ha© been
interested in the theory of money ^nd bunking but now i« turning to i t s history,
the letter vould be interested in vritiii^ on the history of World Wer X or
World Ver I I , fir* C«lkia.«s pro:-osed that mono^repfas be gathered Into e planned
and orderly sy»po*iii& % l h vnuld be la effect B history, and thfet the Sub%o
ConKlttee on Monogrtphe gather i t s Hat of possible tuViors for % conference
&t the J)eo©rber meetiagi" of economists.
Mr, Woodward si^^ested that Mr. Sproui, vno i s scheduled to speak to
the Ar^riean Fiance Soeiety in December, teJke thet occasion to mention
^ i © f this O l
'
lUiport n«s Wkde of two meetings vith offieial* of the Ck>l«^bi«
sitgr idbrsry on Jua« 30th and July 19th} the first stteaded by Mr. Sproul, Mr.
Voodwrd k.nd Hiss Adams, the second bei^g & s e l l e r meeting vith Dr. U>gsdon,
he«d of the Coluabie llbrerles* Oolmbiik offleials are interu^ted ia ^ie project
of establishing there a ©enter for the dep©iii of papers eoneerned vith lew
fork biusktagf but need %359QQQ with *iil«a to set ^p ®ueh a depository end Arrange
for i t s servicing.
Executive Comlttee
JtoY«ab«r 25$ If55
• t «•
Mr, Burgesa suggested that ColusMn University end thic 6«satitte# make
• Joint fcpptnl to th« Merrill Foundation for the needed funds* Br. Calkins
Kr. Voodwuril rtported th*t they h&<! discuseed the natter vith the ibofcefeXler
Found*tioa and found then not averse to the idee, of etatertetoiiig sneh *
the next twm 1» to some, ita* this
fir* Chendler wa» reported to h^v« finished « chapter or so in hi*
of B^njssvin Strong «.«d. to b« »nntinuia& work on i t .
r«,-orted that aft«r rissite to t*i* 1^ Federal Botorpi 8«iiks#
of int«^*tod offi««re aad «teff E«»b«rs of th« f
lb«#rr« 8#nk of Sew Xork, JI l i s t h&dtemmc o a . l l ^ of m#t«riaX of historical
Interest which the BanksTOuldbe ««fk«d to **r«» R«corirendl&ti^n hfcd bt#n
to th« % i t m 9 t Sub-CowBlttoo cm Destruction of R^oorda that th«y *M 1^t
•retsntion^ to tiu&r t l t l o , *sd n ainlawB l i s t of iU»» n»t «irotaiUtod «ot approved whi<^i Aould b© r«t«iaod for !iietorl@«l
I t w s reported thst thi» bibliogrephy now contftirts «o«# I7f(XX)
The Coa-nitto* aek«d that further e^fensioa b« stopped, &ad reference* fee limited
to the history of the F«<5er«l R«serve
the papsra of Mr, Frenk Yanderiip were reported to here beea fouad in
6toruroots of the fenderiip femiiy gars^e at l^eerboroi^h, lew lork.
that the eoXieotioii be nored t® the Itore^r at €OX«BIMI? D
N
bj th«? fmail^, ami iwgotiationo for euch a nove are now in th* henda
of Pr« l-o^sdoa of Columbia*
the paper* of Dr. Smuxuel Ooldenvelser ere now deposited la the
Library of Con«rei«» Rettrictlowi have been ^X».««d on certain eoafi4«ati«l
but othervis« they *?re ©pea for the twe of aeholere,
ftte p«p**ns of Mr. Hovard Loeb9 recently deeeased fteaber of the FedereX
OaiiaislX for ^ie 3rd. Federel Reserve Mstriot firm 1930 to X940*
n la t^e Tradesmen** lettoa&X Besk of PhlX*deXpiiiii. the f ^ i l y In
to b# rrobebiy friettdljr to «ngse»Uonc hj thl» e
, e»d the Coecittee «pprore<Jf thet
the whereabouts of pepere vhic^i thi» CoKEittee has dl»eovegf4
circtalated to interested institution.; auch »i university
The y«*etpt mn smmmmA *t a •Surrey of Court Deeisions aad Opinion©
of the Attorney General Affeeting the FtdereX R&senre By^tes* vhleh h*-s been
for this Cor*«ittee by the I*eg&X Biileton of the Federel Eeserre Bo»rt3| thii
by the kludges* of Mr, deof^e f#st«
S&oeutiv* Meeting
5, 1955
~
- 3 •
Iho f*8lgR&tlo& of Mrs. EUtn Sla&or, r*s«erch *ssi*t&nt to the
Iteoutlvo Director, vats taneuaood *s of Ootob«r 1, 1955* *® out &** ^••n p
to r©:.;Ir-c4 bar. Hit i t v Tork F«d«r«l K»««rve Bwak loaned tho offlet
s«rric«e of Mise McKln^trj for »i» aonth. Kr. %roul st«tod that i t ««jr
bo posaibl* to continue th«tt loan.
E«coci :«ndft tlon thi t Kl«s Ime Burstein, second to Hr», Singer *aA wtm
«• esslataiit to Him Ad*ma# b« given that p&&% with an incrofca« la
m h«ld for fwrtfcor
tfeftso financial ltcne voro prowntedt
fxp««<!itur« roportsf July I, X954 *
tiqpoadlturo report for fir*t quarter of 1955*56
7«lUtiTe budget for 1955-56, approved Jfey 24th end
for r«viiloB la e*«eutlve ecssion
thoro being no further busiaets f th« seetistg w s ft(*joumod for
BtgpoctfuUy »uJ»itt«d,
ttoodwur*
Committee on the History of the
Federal Reserve System
_
12/14/55
Mr. Donald Woodward
Mildred Adams
REMARKS
These Minutes of the open
session of November 25th belong
with the Minutes of the executive
session of that same date which
you distributed earlier.
i mmmum sm&tm
oo*«fmss m tm Bmrmi or
TUB i^rno. HSSSBVC SSSTBM
AT FfiDERAL RKSKKVE BASK OF NEW TOfflt
• . ; ...
1.
...
' i K E D A X , HOV. 2 5 , lf$$
. ...
:
'.
"'
After exteneiv© dlaotianlon of alternative
the C<ww??itte0 decided to explore int«asiv€ay a »itis@d program to
of Ui«!^ partst
.«•
.
. -
...
• ;,
t si»gXe voliaw seoufjutiai history of tht
Factoral Kesei^e Syatem. Tfaia w:>x&L& be
to ije factual, t contain a KLMnsa of interpretation and would be dseigned for
' * use.
.
b.
I t ^ h t be prepared in a
A TOITMWI ©f 9«eleet«d reactlnrs mi the Federal Mmmmm
SyBtcea. this wuld mok^ available gignificait
»t«t«aent8 mt of print, or otherwise difficult
to obtain, or riot available heretofore.
c.
.
.
2.
A series of ?^iWf^pp;;^;provi<ic »or» cstonaive
discussion of *pi«od«a, periods, persocs or suojects.
Mias Ad«5a is requested to
'
,
'
«• D»r«lop a plan for a velun* on cel^otffd roadiogs
'
"«sd»«lt to tha iixpevttivG CoE»aitt«<i before the first
oT the year i f possible*
' b.
Prepar« a report to show a l l the accumulate
•
.. . " fsr w>ROip»a|*i suDJ©et9 aid suggestloa^ for «rit«rs for
.:
. ~
nonosraphs b«for« the firot of the year*
V
•
•
•
•
•
•
'
•
•
•
•
;
^
&st©e# C o s a a . m i n u t e *
;
•
.
'
'
•
:
•
.
'
" . • " • . V ••
.-,•.
•-.•'
Two
e* Give t i e Committ«« mm latitude, i f sh© can,
>
termination of of He® reaponoibllitis* 3mim 35*
' rtqpMt«d in her l^tt«r t® the C&atatra.
4.
Continue operation of the office on present
h Co.-.iaittee reac^Ma a condtision on
@
1*
f i » iacwutlve CoasoittcNs w i l l oon«id«r at an aarljr
before Jaru 1, l?§6t
a.
. ' ' ' .'• •...;• '•'. :•;•
_•
- •
•
. . . .--V • -•"• V- :.
Haate for authorship of th*> M.ngl« voliim
hiatory.
Umm® migg«»te4 at i&i,a»#fcii3g for furtliwr
w e Harold Reels*, Ralph Toong* i^oodlief
%• Trse report* fron HUn Misa» on « voluaw of
r&acHnge and on monographs (2a and. 2b above)
..'• • ' •'.•.•it A report to th# entire ( ^ ^ t t © «
4* PI ana to have a aeetii^ of tto entire Oomdttee very
earlj in 1^^«
km The C^jwBittee diecussed possibility aad desirability of discussion
at the annual nmatings of tht professional as^ocl^tlono i s late December* 4«
Mr. Sproul i s auirsBaiiv, a luncheon session which premi-^ably til 11
a l l those in attendance at the swetiags who are int*?res ed in eeotr?il
an opportunity exista.
$•
The propoaal that the Columbia Univeraity Library be put In a
fttiition to collect, organic $ml put into usable eonditioa a l l desirable
©oll#ctioa® o.f papers m*t olearly deatiiMMl for aoise' other institution
favored*
Ttm Bxeoutive C«wittt^ probaol
v i l l wisa to reco; ,^n i t
o
Exec. Com. Miiaato*
Thrm
«ntir« Cmnlttftft that i t and th» Colw&La Library j o i n t l y s«©k a
of th« $36fdQO« nscesisary r«>m a Foundation, talking f i r s t to the
6*
A aerie* of B®mi$mr® on i nificant features of the Fodaral
Syateia «Qd i t * history- wer« 4LtmmmA 4 ^ l a to i^ ^urthaar
conaidared at ^h# at^t Meeting*,, * i\Vi;i
'-
'.
v
'
a.
. " ,' ••.:
Th« ©«rl^a might b« organised by iirookii^s and
1wvv Y ' '' a onaored j o i n t l y i>y aiwAinga and tbt Camittoe.
, /
•
•
' b,... iaea seminar mil'-.ht deal uith a a biect to be covered by
•
•
<
-
•
a ssono^^rsph, and »l^fct therefore provide a »igtii£icar.t
aaouiit of matfeilal for each ao^rapte*
c.
Each seminar aigfet be pa? u ticlpated iti by
tot
Carrrdttee tn«anb r s and others s o s t familiar wlUi or
istoraatod in th» i#>J#^t of <saoh sasinar pJUia
d«
Invitatioria ^^uld Do issued far in advance, with th*
tmd«r»tikiidinj- ^kmt psa-ticipantti would
them«elv©G for the discussion} and their
w>nld b« paid*
##
•--..-.
Tha Comslttoa might b« raqwiated to sake m grant for
« and/01* fuadit isignt be ao%:ht from anotii^r
Donald B« Woodward, Secretary
DRAFT
(December 2. 1955)
£ <L £ I
COMMITTEE O N THE HISTORY OF THE FEDERAL RESERVE SYSTEM
Minutes of Executive Committee Meeting
New York* November 25, 1955
TO: Messrs. Allan Sproul, Chairman
W. Randolph Burgess
Robert D. Calkins
The meeting was called for 12:45 p.m. in the Directors' Dining
Room of the Federal Reserve Bank of New York. All members of the Executive
Committee were present, and Miss Adams as Executive Director,
Minutes of the last meeting of the Executive Committee (on May 4>
1955) were accepted as distributed May 15th,
Old Business
Mr. Woodward and Dr. Calkins reported on two meetings of the Subcommittee on Monographs (consisting of Dr. Calkins, Dr. Stewart and Mr.
Woodward, with Miss Adams present) held at Princeton on June 22nd and July
21st. Names of possible writers, and possible topics, were discussed and some
exploration done. It was the reported concensus of opinion that the monograph
plan would be acceptable and successful only if individual mon6graphs as commissioned would form a whole which represented the System's history. To
interest younger men in the project, suggestions were made of a seminar to
be held At Brookings.
Dr. Calkins reported that Dr. Howard Ellis of the University of
California would be interested in undertaking a monograph. He also suggested
Alvin Marty of Northwestern and Marshall Robinson, formerly of Dartmouth but
now at Brookings, might be candidates for monographs. The former has been
interested in the theory of money and banking but now is turning to its
history.
The latter would be interested in writing on the history of World
War I or World War II. Dr. Calkins proposed that monographs be gathered into
a planned and orderly symposium which would be in effect a history, and
DRAFT
(December 2 . 1955J
C
O
M
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
- 2 that the Sub-Committee on Monographs gather its list of possible authors for
a conference at the December meetings of economists,
Mr. Woodward suggested that Mr. Sproul, who is scheduled to speak
to the American Finance Society in December, take that occasion to mention
the monograph plans of this Committee.
Report was made of two meetings with officials of the Columbia
University Library on June 30th and July 19th; the first attended by Mr,
Sproul, Mr. Woodward and Miss Adams, the second being a smaller meeting with
Dr. Logsdon, head of the Columbia libraries. Columbia officials are interested
in the project of establishing there a center for the deposit of papers
concerned with New York banking, but need $35,000 with which to set up such
a depository and arrange for its servicing.
Mr. Burgess suggested that Columbia University and this Committee
make a joint appeal to the Merrill Foundation for the needed funds. Dr.
Calkins and Mr. Woodward reported that they had discussed the matter with
the RockefellerFoundation and found them not averse to the idea of entertaining such a request. The next move is to come from this Committee.
Progress Reports
Dr. Chandler was reported to have finished a chapter or so in his
biography of Benjamin Strong and to be continuing work on it.
Miss Adams reported that after visits to the 12 banks, and with the
assistance of interested officers and staff members of the Federal Reserve
Bank offlewYork, a list had been compiled of material of historical interest
which the Banks would be asked to save. Recommendation had been made to the System's
Sub-Committee on Destruction of Records that they add the word "retention"
to their title, and a minimum list of items was circulated and
DRAFT
(December 2. 1955)
C. 0. £ Y_
COMMITTEE O N THE HISTORY OF THE FEDERAL RESERVE SYSTEM
- 3 approved which should be retained for historical purposes.
It was reported that the bibliography now contains some 17,000
cards.
The Committee asked that further expansion be stopped, and references
be limited closely to the history of the Federal Reserve System.
Paper Hunt
The papers of Mr. Frank Vanderlip were reported to have been found
in a storeroom of the Vanderlip family garage at Scarborough,flewYork.
Suggestions that the collection be moved to the library at Columbia University were welcomed by the family, and negotiations for such a move are now
in the hands of Dr. Logsdon of Columbia.
The papers of Dr. Emanuel Cioldenweiser are now deposited in the
Library of Congress. Restrictions have been placed on certain confidential
notebooks, but otherwise they are open for the use of scholars.
The papers of Mr. Howqrd Loeb, recently deceased member of the
Federal Advisory Council for the 3rd Federal Reserve District from 1930 to
194.0, await inspection in the Tradesmen's National Bank of Philadelphia.
A
he family is reported to be probably friendly to suggestions by this Committee*
Dr. Calkins suggested, and the Committee approved, that the informa-
tion concerning the whereabouts of papers which this Committee has discovered
be circulated to interested institutions such as university libraries.
Mew business
The receipt was announced of a "Survey of Court Decisions and Opinions
of the Attorney General Affecting the Federal Reserve System" which has been made for
thie Committee by the Legal Division of the Federal Re-serve Boardj this was by
the kindness of Mr. tieorge Vest.
DRAFT
(December 2 , 1955)
£
£
£
I
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
- UHousekeeping Details
The resignation of Mrs. Ellen Singer, research assistant to the
executive director, was announced as of October 1, 1955*
Wo one has been
appointed to replacd her. TheflewYork Federal Reserve Bank loaned the office
the services of Miss McKinstiy for one month. Mr. Sproul stated that it
may be possible to continue that loan.
Recommendation that Miss Irma Burstein, second to Mrs. Singer and
now acting as assistant to Miss Adams, be given that post with an increase in
salary was held for further action.
Expenditure and budget Reports
These financial items were presented1
Expenditure reports, July 1, 1954 - June 90, 1955
Expenditure report for first quarter of 1955-56
Tentative budget for 1955-56, approved May 24-th and presented
for revision in executive session
There being no further business, the meeting was adjourned for an
executive session.
Respectfully submitted;
Donald Woodward
Secretary
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
Executive Committee Meeting
flew York, itovember 25, 1955
Budget Estimates, July 1, 1954. to June 30, 1959
Later Period (Three Years)
Earlier Period (Two Years)
Annual Salaries and Research
Contracts
146,000.
Annual Salaries and Research
Contracts
$61,000.
Annual Travel Costs
3,000.
Annual Travel Costs
2,000.
Annual Brookings Handling
and Overhead
3,000.
Annual Brookings Handling
and Overhead
3,000.
Annual Other Expenses
2,500.
Annual Other Expenses
1,000.
#67,000.
#54,500.*
Total for earlier period (2 years)
Total for later period (3 years)
Total for 5 years
Budget for 1954-55
Actual Expenditures
for 1954-55
Uhderrun
Budget for 1955-56 (orig.)
#53,325
Budget for 1955-56 (revised)
#67,032
40.793
12,532
54.500
#109,000.
201,000.
#310,000.
COMMITTEE ON THE HISTORY" OF THE FEDERAL RESERVE SYSTEM
November 25
Budget 1954-55
Estimated Expenditures
through 6/30/55 ,
Actual Expenditures
through 6/30/55
$21,388.00
$20,262.06
$21,232.90 (1)
Expenses (office and travel)
5,000,00
5,140.84
4,169.08 (2)
Brookings Overhead
3,000.00
3,000.00
3,000.00
Kincaid-Glas s
2,667.00
2,800.78
2,802.19 (3)
Chandler-Strong
4,4.50.00
4,45O.OG
3>000.00 a/
Burnett-Archive s
1,820.00
2,^60.02
2,554.08 (4)
Conferences
1,997.17
1,996.50 (5)
Overrun 1/1/54-6/30/54
2,038.64
2,038.64
Salaries and Misc. Services
15,000.00
Contingency
$53,325.00
TOTALS
(T) Consists of payments to:
Adams
Singer
Burstein
Bank employees.
Brookings pool.
B. Bulla
E. Abolin
Evelyn Cooley •
Dorothy Warden.
$42,149.51
,793.39 a/
(2) Excludes items fill oca ted to conferences, Glass papers, Burnett
project
(3) Kincaid, $2666.66; Cluett, 72.67; Cluett for supplies, 53.86;
other (paid through Bank), $9.00.
(4) Salary, $2,469.76; expenses, 84.32.
(5) Honoraria, $400.00; reporting and stenographic, 475.64;
other expenses, $1,120.86.
$21,232.90
a/ Does not include $1,500 due for payment 6/1/55 but dispersed
9/1/55 through oversight.
C M I T E O THE HISTOBX OF THE IMMML BESERVI BtBtM
O MT E H
Executive Committee Meeting, Hew lorkt November 25« 1955
Minute*
Of fee previous Sxeeutive €omaitte# meeting May 4-t 1955 (these Minutes were
distributed Mtxy 16th—the Secretary has a copy)
Beports on
Old Business
Meetings
^
Of th# Sub-Coamitt©« on MonogrR|:*h®, June 22nd m& July 21«t
^
fife officials of th© Columbia Idbr&ry, June 30th and July 19th
Progress reports
^
Chandlep-Strong projeet
Recotaoiencied changes l a Federal Reserve ^destruction sc^ieduies"
Proposed blbliogra^iy
p
hunt
v
¥®nd©rlip papers - survey and x*eoB£«adatio&
v
Goldenweiser papers a t l i b r a r y of Congress
v
l«oeb papers in Philadelphia
New Business
y
\/
Receipt of survey made for us by the Board's Legal Department on Court
decisions and Opinion© of the Attorney General Affecting -the Federal
Reserve System
Housekeeping d e t a i l s
Eesignation of Mrs. Singer as of October 1, 1955
Bank loan of Mies McKlnstry for one Ronth
Recomifiended appointment of Hiss Burstein &B assistant to the ExecuDirector, with salary increase as of November 1st
Expenditure and Budget Reports
!i|Mmditure reports, July l f 1954- - J^ae 30, 1955
Keport for f i r s t quarter of 1955
Tentative budget for 1955, *-» approved May 24th, and for remainder of
the project period (presented for revision in executive session)
CO;
I
tax wmmm&
en tfe« Hlstoigr of
vlth *J*«
i* 1H# Hi^toir of
IUF« Orate ftps (HO,3$Q
#54061
30* 1355
29, 1954
€ f 1954
! i^
(
1954/
••*••••••••••••*•*•*••«•*•••
•••*••••••••«**••••
ll!7f
742.23
«••••••••
•••••••«*••«•••
413l2?
t$»4?
•••••«•***»••
B.I
E
1955
§50.793.39
ft* p3r^pniQ $rtn%a)
X , 1<'55/
•*»«*••
3Xf
Totel
we
f
Hit
1955
figor* •
Institution
118*1a X«ar 1954-55
ff#,;ulfrT Office St&ff
Stager
Oth*r P«rqoii«X 6#rvi«,«i
^^^•47
Bumatt
&1Mft pool
7f^ia.63
$;?,016,10
copy
nmm
en
of th#
ffadtr E#?# Grast
this RUt«a»at i» pr»p»rtd on & basis coel«t«Rt vith «j:tlm*t#s
to th# l M t i f i l l f r Foundation,fe^r^r» <*#lklas» lont 1%
Jun« I S , 1154
Of f l a t
4,169.0*
fend tr»v«l • • • • • •
••••••#•••••••••••
•«•*•*••*•••«•••
X5»000«00
1,996,50
lor
•••••••
140,793.39
report of r»e*ipte
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
Ssv Tori., Jbvwter H, 1955
Hr»t
f*
)
for ^z^xyb
6/1/55
©f $if
•«
e
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
»1&5S~56
lEL
lev stiff
$*§*•!
(i
)
,23%
a.ooo
a •/
torn
for
1954-55
Bwitfet for
for 1955-56 (m«la«4}~
of $6,^)0 for
to
of i5#000 i a t his
ia 1955-56 through
o
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
Sub-Coiaiaittee on Monographs
Meeting a t Princeton. 1 p.m.. Thursday. July 21.
Present - Dr. Robert Calkins, Dr. Walter Stewart,
v Mr. Donald Voodvard, Miss Mildred Adams
Following decisions mad© a t the meeting of June 22nd, explorations w«re
made into the avtdlebility of four mem then approved as possible either for monographs or for wider tasks* Reports were made on these, end on an additional name,
as follows!
Dr. Calkins reported that he had talked a t length vita %. J« Saulnier
and v*.3 convinced (as was Dr. Stewart) that he had the a b i l i t i e s needed to take oa
either the job of historian or that of monograph writer* Dr. Saulnier vat interested,
would l i k e to have accepted i f free, but must stay with the Council of Economic
Advisers u n t i l 1956, and possibly longer i f the Republicans are re-elected. I f aot,
lie has commitments e t the Hetional Bureau of Economic Research,
Dr. Calkins has not been able to reach Dr. Howard Ellis*
Mr. Woodward repeated a report made by telephone between meetings that
George Roberts showed no i n t e r e s t whatever i n the project} h i s name should be r e moved from any l i s t of the possible. He had not talked directly idth ¥« V, Rostov*
but reports from mutual friends a t M.I.T. indicated that Dr. Rostov vae absorbed
i n an international project of considerable scope for which substantial grants had
been made? i t seemed unlikely that he would turn aside to write a monograph i n the
Federal Reserve Series*
these negative reports Inspired a discussion of possible courses of
action which might be recommended to the f u l l Committee for presentation to the
Rockefeller Foundation* these included
(X) * return of funds to the Foundation vith e report that the tsjfc
undertekan could not be carried out
(a) a holding operation in which interest will be stimulated and "the
historian11 s t i l l sought, with archival and documentary activities to
eoattaae
(3) a training operation of two possible types, both designed to interest
and educate younger men in Federal Reserve hi story *
(a) to pick two or three young men of top grade, give them
substantial grants and assign important sectors of the history
project, take them to Washington for full-time nork
-2-
(b) to organize a sta&nar at Brooking* for the purpose of
encouraging vritlng on Federal Reserve subjects| attendance to
be limited to those vho can shov vritten vork of raluej conference leaders to include Walter Stewart, Burgess, Saulnier,
Riefler, Xoungdahl, etc* Essays expected to result*
I t im* decided to recommend that tht Committee report to the Boekefeller
Foundation that oving to (a) Mr, Burgess* decision to continue in public service
and (b) the shortage of qualified economic historians free to take an assignment of
the kind proposed, the original concept of a definitive history has for the time
being had to be postponed.
that the Committee therefore proposes for the next year
,
(1) to continue archival and documentary projects now under vay (the
research files* reports on banks and personnel, etc*)
•
,;
(2) to undertake the coBadsaioning of further sonographs on various phases
of Federal Reserve history* The Chandler book on Benjamin Strong i s under
way, Ve hams half a do sen other prospects of equivalent interest, but not yet
la a state *aere they can be named except as examples,
(3) to use a portion of the funds to stimulate the interest of qualified
younger scholars i a a re-examination of the history of the federal Seserve,
perhaps through seminars and writing conferences at Brookings on the highest
level*
Matter of using funds for a subsidy of |35>OOO to Columbia tms brought
up in connection with plans for next year* Xt was the opinion of the sttb-cow&ttee
that the sum represented too large a fraction of Comrdttee funds to be allocated
for that purpose, and that other donorsf individuals or foundations, should b«
sought. The view also was expressed that Comittee funds in smaller amount might
be allotted i f they were aetched by the Rev Tork Federal Beserre Beak or the Feder&l Reserve Board to make up the sum needed*
Having in mind their assignment to lay out a pattern of monographs and
select authors vhosi they vould re com end, the sub-committee considered a considerable l i s t of suggestions* So vote vas taken, but the following received general
approval*
Bank Holiday of 1933; a stu&r of causes and effects fre» 1926 to 1933 i a
and on the System (no author)
Board-treasury Relationships (no author)
Brokers1 Loans, a Study of - Wood-Lief Thomas
•
Credit Controls, General &n& Selective - Carl Farry
Crises Under the Federal Reserve SysUm - Paul Samuelson
Failed Banks, their Cause, and the Fed's Handling - Oliver Fovell
federal Reserve and the Public Interest - Randolph Burgees
(tiiis lft the subject chosen by Mr* Burgess In 1954)
Gold Policy &nci Practice of the System - Kirosl&v Kris
Intelligence & d Research Functions of the Federal Reserve System * a. report
&
toy Mildred Adams
Legal Aspects of the Federal Reserve System - Howard Haokley
(this was qualified by a desire to know more about Mr* Haokley* s vork
end ability)
Monetary Controls in American Theory and Practice - Elmer Vood
(this Is a suggestion that a book under way be subsidised in order to
speed i t s writing)
Procedures and Policies of the federal Reserve, History of - Karl Bopp
(this was approved, but with the understanding that Mr* #o$$ might not
be free to do i t )
Regional Aspects of the System - Mildred Adams
(approved* but not given a high priority)
Reserve Requirements, Changes In ~ Bray Haamond (*)
Polities and the Federal Reserve System - Lucius Vilmerding
(this was approved as an idee, but Mr. Wilmerding has other cosssitsents)
Federal Reserve System, a Case History in Public Administration - Lenoard D,
wMte (Dr, Vhite i s retiring this year and thought to be available i f
desired)
In addition, a younger man, Philip Bell of Hitverford, was discussed as
a possibility* I t was further suggested that a search of the American BooaoAle
Review annual l i s t of Ph»D» theses might reveal other young possibilities*
Mildred Adaas
Executive Director
Committee on the History of the
Federal Reserve System
1) U/
REMARKS
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
33 LIBERTY STREET, N E W YORK 45, N E W YORK
TELEPHONE: RECTOR 2-5700, EXTENSION 286
ALLAN SPROUL, Chairman
W. RANDOLPH BURGESS
ROBERT D. CALKINS
F. CYRIL JAMES
WILLIAM MCC. MARTIN, JR.
WALTER W. STEWART
JOSEPH H. WILLITS
With cooperation of
THE BROOKINGS INSTITUTION
722 JACKSON PLACE, N. W.
WASHINGTON 6, D. C.
DONALD B. WOODWARD, Secretary
MILDRED ADAMS, Executive Director
July 22, 1955
Dear Don:
Looking back to the Minutes of the meeting of May 24-th at which the
sub-committee on monographs vas appointed, I find their assignment to nave been
as follows:
1
1
it vas suggested that ... a sub-committee be appointed vhicn, in
the course of meetings to be held in the near future, would block out areas of
interest, set the monograph pattern in order, nominate possible writers and report its findings and recommendations to the full Committee."
On June 22nd, at the first meeting which Bob could not attend, the
"Memorandum of Points Accepted" states, "In view of the fact that the Committee
has decided to go ahead with the monograph approach, the vital thing at this
juncture is to settle on the names of acceptable writers and the acceptable
titles of monographs... The need is for half a dozen, but if we cen secure two
or three now, with three more in prospect, ve can then go to the Rockefeller
Foundation..."
I thought you might like these terms of reference recalled in preparation for your report to Mr. Sproul. Re-reading them, it seems to me that ve did
s good deal of galloping in other pastures yesterday, but I have tried to vrite
the minutes in view of the recorded background.
B e s t feifc a l w a y s ,
Mildred Adams
Mr. Donald B. Woodward
Vick Chemical Company
122 East 4.2nd Street
New York 17, N. Y.
Committee on the History of the
Federal Reserve System
FROM.
REMARKS
, .* • - *
, 1
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
Sub-CociTiittee on Mono^n-phs
at
f Him Mildred
Vnlt«r 8%mmTt§ Mr.
2B Titw of the fact thM ih® Goradtte* fe** etalded to go f&Md vlfl* th«
tl*e * i t t l thing et this junctui^ i$ to *«ttl© d& the »«*« of
thifcoo«pt£.bl&11 tie e of ^Qttefin^i3« ("jto^ftpt&bi*11 In« fiUj* ocrtftlntgr of g^ttbaf ^b»% U; ;.rc«sifti*J
Th» »••<! Is for half ft dos#n# Init i f v* «aa fdcoro x«o or three nov,
thi*e« »tti« In ptoapeet, t« ^ia ^«m go to th« Ib«l»f«dXor Fo«»dAtloaf t a l l
©f tK« <i*!ift ftm tho rtngl^ lxt§torif-.n t« tfe« r*0apfjm|lt f^roadi* ditpiey
we rr& fiot$&9 dxvl^ip t:s,f t r-t thi# stt^ge I t le t\«lth«r ccjLpr^heaelT* nor exe«2iaot
to go iforfcard at this ti&«#)
of
L*tt«r of
for the
feticasi Cit^ Bo& etn be
also
p
alght result la si two-valum* vork, of vblch oa«
en« «i«fe histcnqri this to bt hnttBvi <uxSx i l
to
the
«t 4 will
diffletxlt.
•Ifox ta of
the
(1) i. atofr of flJjifi, Ilbr&rles «ad are^ilml &ttltude^ ia t&#
tha tv«XT* l»t«ikif to '^ -:u"%dtt»a to Kr» Sproul endf
Mr* Kftrtlnj th« purj:«ose b«lag to rttlv* Iat#r«fit la
the |i«rt of So^ra and
«f
to
-2-
(2) A st«$y of tlte age, length of service, education tnd carter pre* .
paratloa of the Board of Sovernors* the top officers of bank** the
directors In their ©lapsesj the purpose to examine the human caliber of
the System.
I t i s ©acpeoted that these "will be re®4y in time so thmt their eompletion can be reported to the Boekeftller Foundation l a l&te July or early August*
filters
. •,'••.,
• •.,
.
;
'•• • • -
i M t i ®f possible -writers were explored on the basis of a revised
;W
'
memorandum, pirns suggestion® recently given Miss Adams by Dr* Herbert Heaton. : \
fhes® Included*
;;;
..-..•: ^,/ :•,
•
• ^ ;.-.;:";
Malcolm Bryan to do & monograph on southern banking against the American banking
profile,
'
.
.-.-.
•
.
•. •-
• ,. • • •
Howard Hfeoklefy ~ a monogreph on the legal aspects of the Federal Reserve Act*
John Lan^unit recoiaciended by Dr» Heaton.
~
:
-
'
Ariiur Ifer^et to do a study of the international aepect and operations of
Oliver Powell, 'waose studies of closed banks, made for a S|yst« Gca^d.tte© and
might serve as the basis for a ne^i
» ,Saulal,^p» ^i©n free of th® Council of IcoiJomlcs A4vieers#
-
,.•: ;-
lobertf of the Rational 01%* iank»
¥. ¥. Io8to¥ of M,I,f,
Leonard White to do a stmsty of the Fed as a government entity•
Voodlicf Thom&s* vho®e collected mass of materials on brokers 1 loans in early
days would serve as base for a monograph on that subject*
These peoale were discussed, the notes specifically approved for exploration were George Roberts* R, J . S&ulnler, ¥• V, Rostovj1 idth Oliver Fomll f e
>rork && closed banks* Woodlief Thomas1 material on brokers loans to be explored*
and a "vhen and if* l i s t to be added on vhich would be Randolph Burgees* Dr.
John VUHsm*» Walter V. Stewart.
Mildred Adams
Executive Director
o
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
•-
lUnatea of Coiiyitt^e KeetlaR« Tae&to't Ifey %4,a 195)5
Brooking* Institution, Washington, B, (?„ _
;•
Jtme 7, i f * 5
Kit
Me«»rs« Allan Sproal, Ghalf®an
V.
f&mdolpt* B u r g e s s
Robert B, Calkins
?» Osnril Xiaea
William Mce# Martin, J r .
V a l t e r W. S t e m r t
.
•'.
'
• "
• • • • ' • • . • .•".
.
•
•
... •
• • •" .
; •
H. ViUXU
Trift Committee conventd for a luncheon meeting at X2<4-5 P*^» In &
pidvmt* dining room at Brookings. Mr. Allan Sproul, Chelnsan, Mr. Villla®
Jfetrtia, Mr» ¥ # Hftadolph Burg*ass» Br. Bobert Calkins, Hr. Vinfleld Rlefl«r aadl
Hr, Doneid Woodward ver« pree«nt. So v«,i Kiss Mildred Adtae, Exeoutiv* E r e c tor. Thm linftvoid&ble «b««no«s of Dr# J ^ e s , Gr, St«v&rt and Sr» ViXIlts v«r«
After w l l i n f the meeting to order, Mr. Sproul reported oa
aad action taken at tm meetings of th« laceentire Co^slttee (February
21st and Hey 4-tli) held since the l a t e s t f u l l CoBs&ittte meeting ©n fs&waj 29tn.
Iheee Includedt
(a) A report oa aeth©€» and east® of eolleetlng papers followed by
policy Buggestlons aad a recommendation that 1Sie Ccjasmittee consider appropriatiag $11^000 for estimated coats over tie remaiziing l i f e of the
pr®je©t# the €omttt«e aeeep^®^ the r®coais#iided policy and appi^ved tee
a^proprittlon,
(b) Mn aeeount of conversations vtVh Colmfeia d i v e r s i t y lot^dLqg
ton^rd the establl&lag there of a center for colle©tiona of papers COBK
cerning the Hew Tork banking vorld, Mr» Sproul reported th&t these conversations were e t i l l Inconcliisive,
(«) As. invitation to J5r. ^lep&rd Clough to join the Committee; Br»
i s in Europe and further action has been postponed until his return*
:
• (d) A reooamendatlon that in aceordanee vith Brookings practice the
'
6oisaitt«e adopt the policy of paying eonsultante 15^ a dap, nith suitable
allotted ae needed. Tlie Committee accepted t h i s recommendation.
(e) A ^Incupslon of the timing and possible content of the annual
report to the Rockefeller Foundation* I t vma fcareed that Di\ Calkins ami
Hr» Woodward ^touQLd make an o f f i c i a l e e l l OR Dr, Xonurn Buchanan,
head of the Foundation*s Bifislon of Social Sciences, at an appropriate
date i n Ju2y» I t vms requested that copies of the report in draft fom be
submitted to the Committee for their ?,uggestions5»
Reverting to this Coast t t e e ' s unfinished business, Hr* Sproul reported
that Br* Gyril Ja&eo regretted his inability to accept the Committee's invitation to write the history and direct the collateral studies. Thereupon the
Executive Coieffiittee, in i t s aeetiag of Mh& 4th# suggested Ui&t the Goiaajittee
shift i t s point of iismediete attack from the history to the monograph approach
end seek an executive editor who sight give the monograph ^lan proportion and
direction* Mr* Ibneld ¥oodvferd was asked if he might find i t possible to
undertake t h i s , but advised the Committee he cannot free himself from other
cosait&ents*
'
' '"•v :"".-.
As an alternative i t was suggested that, s t i l l holding to the
monograph approach, a $ub-caEasittee be appointed which, in the course of
meetings to be held in the near future, would block out areas of interest, set
tae monograph pattern in order, nominate possible writers end report i t s findings and recojsmendations to the full Committee,
This idea having been discussed end approved« Mr* Sproul suggested
that the editorial sub-cosatittee be co&posed of Br* Calkins, Mr. Woodward and
Br* Stewart, with Mr. Hiefler a reserve possibility in cage Dr. Stemrt found
himself unable to serve, t h i s was ar-proved. Mr* Sproul w»s asked * o get in
o
touch with Dr» Stevirt at once** I t v&& agreed that, a© speed i s desired, the
ffub-cossdttee "would try to have a plan ready for CdEadttee discussion by midJuly*
Suggestions vere made that -word of the monograph approach be sent to
learned journals as a way of discovering interested v r i t e r s , end that the subject be presented a t the December meeting of the iserican Economic Association*
Interest WAS general, but no action was taken.
.
A financial report vas presented in two parts - a report of expenditures for the current year, with actual figures for nine months and estimates
for the other t&ree, and a tentative budget for 1955-56* The budget, calling
for a totel expenditure of #65,675 for the year vas passed in principle? at tae
same time a measure of flexibility in detail v i l l be allowed in view of the
changing plans for 1955• Miss Adams* salary vas raised #5)0 per aanua H ia
ftdtpiition of services,"
Existing appointments to the office staff nere confirmed as foUovst
Miss Adams, Mrs* Singer, Miss Burstein were reappointed for the year July 1,
1955 - 3une 30, 1956* Miss Burnett vas reappointed for U months in 1955# dates
not specified* Dr. Calkins observed that i t sight become necessary to reconstruct the present office plan -when monographs were commissioned and monograph
writers needed service*
k preliminary report on possible publishing costs and arrangements,
requested l a s t autumn, -was presented by the executive director for idle information of the Committee when needed*
Mr* Sproul subsequently advised the Gossnittee that Dr* Stewart had accepted
the appointment*
-3*
The Annual Report to the Rockefeller Foundation* BOW in draft fora*
will be sent to all Coemittee members for their reading &xi& criticism before
i t s presentation to th© Foundation by Dr. CdkinE end Mr. V
In recognition o? the 70th saniversar/ of Dr. St^urt 1 * birth
2Uf 3J65), Mr. Riefler ims fesked to dreft e telegra^t of affectionate coivgr&tulation* This w s sent after the close of the meeting*
there being no further business* the meeting was adjourned at 2 p.a*
Donald Voodvard
Secretary
c
o
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
-
(ft*
1955-1956
*t *«*Uag, M&y ai* If55)
6,000
(4
)
HcKinstry (Mb, eat J
,3
2f700
Budget f@r
(*« of M«r If94)
UttUrron (eat.)
Budget for 1955-57
(origiml)
for 1955-56
}
11,175
54 f ^0
-65,675
A
Committee on the History of the
Federal Reserve System
n.TF
6/7/55
Mr. Woodward
FRnM
Miss Adams
REMARKS
Budget sheet enclosed with
these minutes has been modified
to show salary raise voted at
meeting.
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
TENTATIVE BUDGET, 1 9 5 5 - 5 6
(as approved at Committee meeting . May 24. 1955)
Salaries
Adams
Singer
Burstein
118,840
Expenses
Office
Travel
2,500
3.500
Brooking s Overhead Allowance
6,000
3,000
Projects (in uork)
Chandler
Burnett (4 mos.)
McKinstiy ( b i b . e s t j
5,000
1,237
2.700
8,937
Contingency
Conferences
2.000
26.898
Unallocated
TOTAL
a/ Budget for 1954-55
Estimated Expenditures
(as of May 1954)
Uhderrun (est.)
Budget for 1955-56 (original)
Budget for 1955-56 (revised)
138,777
,675 a/
#53,325
42.150
11,175
54.500
$65,675
Committee on the History of the
Federal Reserve System
DATE.
T
O
1) \ j
FROM
UA H.
REMARKS
9
C
A
T
"'fl
y
?
^
Q
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
Stork* Ffbi^prr 21« yfff
K*r«h U , 1V55
Itofcort $* C*xkla#
tsoomii*o ConsitU* «ot At 2*40 £*•»• i a th« office of the Ch&im»n,
Mr* Sproul, All itoBbor* (K«99r«« SprouX, Bargota* G
)
of th^ prrrlous Ex*cutiv<&
of t?i« I M U I ^ of Hi* fuU
•**«
«t the
On si*tho4i «id <KNiti( of
j
j;|jiamilMlali **»^» *« ^»« %*«it of OwMd»i»» «xp#rl«ii«* kad profiting by
til* jian«« of iWWfcl int5titutioii#f Hi* Oo»fi^tU« *dopt m policy tlwiUr to that
^pprorw! V tht Mbrtiy of C$ft$r**s end feas* future «i>propi*ifttloni #a the
of **ttlng •p*i'$rn la o^er ftnd e«tsloful«g ta^a| tol* woui4 not
of «tw|r or evfe^imtioa, %Tiioh snoui-: oo ro$«Moi a* tfco $a«por bu^ia#»^ of mm
tori*n* -Bio director further r>yw tndod th^t, oa a ro«fh •»tlu*i» of Id ssajor
on vtil^s iB«di#r m s mraid snaffle*, tHt €on%ltt@« ooitftidtr $*ttloe a«ido #U#UAl
i»s th* •%» probitbiy t« to ttooiid lor l a d l i n g OOUOOUOM oror tii« 5-f««r l i f e of
pv>»Joet« Both rooooMN^«tioii» voro | t o ^ fcgr tho foootiUTO Cora?itte» and
bo r©,. or ted to tho mx% nootiog of tho f*Oi Gowdttoo. (tHo full ropirt of
roooftrcfo 41 roc tor on thi» a»tt«r i» fiiod l a th# M!ntit« Book).
On Colta£biA Univ^raligr o« • fo««loXo putatinn,!!! roponltoxf for ©olloc>
» * draft of « lottor to tie*n Courtney irons mm yrosoato4# o^lto4 m& o$~
f ^aieh tli* ChairsuMi v l U sl^n ^dtii th« approTftl of th« Iac«eutiv» Geanittoo*
Oa th© l»%tor to IN» raUrod or r o t i r i ^ ^o h?v« b#«& &®ti?*£;jr conaottod vith Fodoral B*mrwm Mottor«# « dr©ft
O4lltojplal
tli« setter of
vft>llcity iatenied for
Oa the Princeton trensoript, &Ltdmxm editorial ehaages have been fted«*
and distribution i s expected this veek*
Hev Eos orta
as follows*
A revised finenci&l report from Brooking for the period July 1 «* •.
$*«ig&#r 31, 19H shoving slight ch&ages in *rrf>n£eaeat for greater conv»nl«iMH»
Ittit nose in expenditure or balance$ Coated itee Members v»re eeked to study
meat on this*
On ths uifetter of ^oseibl© conflict htivtvn th* c^BierTBtion of archives
the Sch»dul« for the D«»tractlon of Records in the Betiksf Mr* Sproul rei orted
thet he had e»ke^ the Bsnks to appoint an officer vith t«hos the staff of this Co»~
mittoe could »st*blish Hulioii. AfflrEfctlve repllta have filrwdy ooa# frons B of
th# 12 B^aks, end t&« rtst art expected to r©p-ly
Policy
Policy matters vtr« «4iseu«B«<! «nd decided at followsi
On t?i# invitation to Cr. Cyril J&mes to fcccept the po«t of nietorien, the
ittdden illnesa of Mrs* J«*e» h«s Implied th« postponement of a deeicion* Furtaer
will be held £3 soon &B ; o»sible. I t vfes the eon«ensu« th«t supple^ t s # n t s for Br* Ja^#@ be explored, and, provided th#.t ht i t s t i l l i o tere«t«d# the Coasaittae regard i t s e l f m viHitig to ^ait as long at two months
(to April 21st} for a final decision.
On the Invitation to 8h«pe«4 Clo«gh to jolii the Go®®itt#ef the Secrettiy
wii asked to vrite Dr. Clough that in view of his abaence fros the country until
the matter vould be held la afeeyeBoej i t night be raised later*
On a future polley on hojwrari* to oonfereooe eoasultantsy Dr. C&lkias
obserr^d th»t the Brooklnge fee «*• ordiiisrlly $50 a day. I t vaa agreed tht t
voul^ be eocci ted RC the €o»ittee*6 hizis, but vlth p$$@lhle veri^tlone vh«n
proved*
0a a policy of raising »t&ff salaries for Mrs. Singer and Hies Burst*in,
the reuearch director presented r*cowe©nd#tions vhioh, vith slight y«ri«tion*, were
approved. These are rrr«nged vith refereaee both to Brookings end Federal Reserve
Bank settles of pay* the desirability of keeping Miss Burnett for another six souths
to- complete the arohlvea project ws« %lm
At the last Coaaaittee m##tlng $500 m.® appropriated to p®y the cost of
grotip Interviews to be led by Dr* Stewert* the latter has recently expressed himself as villintf to talk In detail to Br* Chandler* The resetreh director was e*»
• ov»r*<5 to erraage for the recording of such eoftversatioas i f this met vith the
approval of Messrs* Stev»rt *nc Chandler*
0a tk* proposed v i s i t to th* Bock#ftiler Fo^mdntloa for r#portl»g
tor* Calkins adviMd th»t thi» be f ost;on©d until the historian w»# upHr* feproui fc«sk«d thi^t Pr« C^ikiag ».nd Mr* Woodward be prtgmred to
ft report t® the Foundation @t thftt tlm««
rese&roh director brought up the Eio.tt«r of a prop-osed European trip
tn the l&te p'osaaor, ^lenncd as a v&cation, but to includ* axpioratoiy v i a i t g to
Bank of England, the B&nk of France, inti posrjibi/ aii i n U r r i e v vith Hjaiaar
only feurvivin^ maib«r of the ^trong-fioreaa-Ritt-SchttCht qufert«tt« vhich
BO i^porteut in th« 1920'$* She v l l l pr«@«nt a Metalled pl»n c t n X«t#r
mating w»» adjourned at 4
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
OF
oof
cE vxtt twaac oogs^tfcs
I, 1955
ffoiinnu
Alltn SprottL* Ch*ltts«ii
F* Cyril J*m
» Martin,
Joseph I , Vllllt*
VIt^
Th#
I*&
t
at 10:00
Gold Kjox ot
Qmlmm Sproul,
(for
YUUlts* Mr*
In
eoaftrta***.., .-.;'
\feod «ttt&d«d th
In her ee^city Ǥ re$<**rch director.
for
the outf rovth of an
on MoY«nb#r 2i, 1954* Xt vt 3
to consider i
by tno»e conf.iut^nt.^ on the basis of
of t&«ir *grc*up ROV.# to
l
ptrlag th# history (of th*
*&&
conaul-
its
aad
ftr. BpKml prt««at«<i tilt »g#ttd«# calling attention to
s«ry Export wriici! «\aasari»#d i^i«t has b«#n ftecoar-'li^ed slnc
7, 1954
tii« Ce^aittee's ««*& foiWkUy btgmn* Four months of tinst y
p
th# pil»t-ff«at (of which fall report HM b«#a s*i#j# six
f£}***8 flnBnced by court*»y of t&e JiockefeU.er Foun 4 tion «a<i
Institution in a«kiag i t possible to oc«bia« th« pilot *ad tli» fiir#-/#&r
report of %h& first jmr*» vprnrmiiotk usdor tht ®»jor gr&at i4.ll
July 1* 1955*
Dr. Karl ^opp» r,e h«&d of
to ftr##*8t for diucnmion their KGBO-oatiine, vhioh h*d bwas tent to
Caieiaittee »«Kbers for their r#«.dia& « week la adv»cee of th» meetlag
je©t#d to further eoaeoltant discuission ©a Jam&ry 28th«
0r* Bopp* speaking for the Coig&itte©1^ three advisers* presented their
i a rough chronology of Federal B©a#rve history* intended to stir
rather than to biad the eventual Aistori&a in &» vey* lie then beJy
gan to read aloud the »e»o-»outliae paragraph fef p&r&graph vita pauses far Qanmlt**
t#e ooaoeeiitj a procedure which (with time out .for lunch hour and a business Ca«-»
sittee m.@«ting) la&ted throughout the day.
As at the ftovesiber conference* e atenoty^ist recorded the discussion*
this verbatim reeord ha«s been distributed to each m«ab«r of the Conaiittee as
v i U as to the consultants* Tsken with the s&aeo-outli&e* the two documents asp*
l i l y th®ae nlnutes; bot^j -will be inserted in the Kinute
hereJ
jx>lata w»m Made mhicii bear on Coataittee i^ork ©nd should be.
•
.
.
.
-.:
Or* James a.-sk#d I t the Federtl Re«terve Bo&rd or the n«>? 2ork
, as part of the project, eatabHah an archive* unit in their respective
teuI14ing.su Kr. Risfler, replying far ^a# Board, said, that voile they would be
to research* they might be hsjtpared by space lisdtatloAO* Mr* Sproul
that the ^ew York Bank had had in tsdnd for y#4r« the desirability of developing archives as distinct from filee anil reeordsf they ho.p« to get fro©
projeot the id#as and the impetus to go ahead ^dth it* .
."•
(bj 23r» James also %k d Aether the Federal Reserve
a@
that the historiaa-to-be could consult the directors* ftinute HookSf whicli miglit
hold crtaaial evidence* M H^fler replied for the Board that judgement as to
i
%
vh&t to disclose vould be on an ad hoe basis, nith the Board disposed to be
friendly* thsir position has bmn mmde clear at #ariier tteetinge* Kr* Sproul
added that the •friendly disposition" included tat ®m Xork Ba,nk, but the que&»
tic^a hai. not been put In preoise terms to the other banks* Hr* Burgees doubted
that such iubitan-oe of discussion vould be found recorded in minute books *
(e) Miss idams explained the potential peril to research, naterlal
posed by the t#ma of the Federal Heeemr© Schedule for destruction of Records*
Ur* Sfreul will aoe that r«iedi&l aotion i s taken on this point*
Mr* Burgers brought up the n®sd for wvlev of the hietory-to-be
tep a eampeteitt advisory group* i t "fee Chalisants requeeti &r* Calkiue explained
tfee BrooMngs procedure of ® advisory costltt@# and/or the circalatiojn of & m >
m
* *»
ieripts for coaitst* Mr* Sproul assured the group that the Coscittee vould have
the problem in sdnd Riad either aw the Urookings procedure or another procedure
to handle it*
Following luncheon* the Vowdttee convened at 1*30 p*»* la
Princeton Inn1a television sitting room for & business @#ision -under the
w is ship of Mr. Spttmi.
Xlautes of the previous session (held Bove«ber 22* 1934) had been dis
tributed by mall m& vere noted*
fir* Sproul reported the following decisions of the Executive
at i t s meeting on S«e®!pb#r 28, 1954J
011
collection* of papers uncovered in the vork of th© research director,
that an ©ver&li plan be prepared and a budget made which will give begls
for deolslon and appropriation| that the research director adopt as & policy
reeonsssending that relevant collections be deposited (ej in the Library of
Congress* (b) in & regional university vitfa vhieh the fasilly concerned aay
'••;.•• - have relations, or (e) in such «JEI institution ss Colimbia yalT©rslty#^ • ••"••.
On n^b^jci^f for Conmittee activities, "Uie re search director la to
©end n letter ad vising people vho sight have pt?per& useful for his tori c&l
reaeereh that tlte Cunlttee i s Interested} an ©nnounceiseiit of the
tlon of the tflass inTeatory by Dr* ICincaid i s to go to intereeted
On vmtm*& group intery^evf > th« appropriation of $500 to pejr the
e©@t of experiments in group interview^ under the lej&derfihip of tit* Valtejr
On ^ie najBlnit of en historian^ the cojspilatlon of i l i s t of nine pos*
eandld&t#$, tram euggestions made bjr Coismittc-e mm&er& whioh vere
then winnowed by s«mbera of the Exe-cutiYe
Mr. Sproui i^ien presented tfo% l i s t of posslbl® historians in order of
fbtesutive Comitte© preference* I t i s sppended to these stloutes* isiogmphlo
aod career data on ea^oh candidfita ves i*e#d| the nsses of Mr* Howard Kill© and Kr
Trmk Fetter vere eliminated; discussion of the remaining seven vas geaer©lf but
no concen&uss appeared*
Mr* Sproui then sugge©te«! thst i t might be possible to §eeur© the services of J)r* Cyril Janes for the post. Goassdttee approval we3 ism.ed.itt© and en^.usiastic* J ¥ jii^es expreased himself as eagtr to return to writing after
U»
fifteen years of ad»lai#trtJitive vork but not certain thst h oc^uld do i t at this
©
tise* If possible, he would prefer to undertake the t«sk la & university &t«08phare* For this, tae Institute of AdTaneed Studies, the Voodrov Vllson Soaooi
at ^riacetott, and the University of Pennsylvanis vert fill discussed*
Vr* James v t l l make his deeisioa and ooffiBunie&te "with the
within ten days, details of tipend, research aid. locus of operation, and so
forth autit bf» worked out*
«r* ft^roul appointed Dr* Cslkins, ttr* Ste^mrt and ftr. Voodvard to act
%dth him as a Co»»itt#e to discuss the matter in detail vdth tfr* Jeaes «hen the
latter i s
them p&ased to various facets of the -history a.nd the possible
ilr* Blefler suggested tkat Alexander Loveday sight do a sessorfoidiM on
the flaanelal and economic reconstruction of Europe efter World War I end the
activities of t&t Strong-Jiom&n-Schficht triangle in relation to it*
-*»..
Dr* St#v*rt9 doubtful of Mr* Lov-«dsyfs health, suggested fir* H* A* (of the Benk of Sngl&nd) us one vho could writ* veil find tram experience
In this area. This v&s approved by Mr* Kiefler*
Dr* Janes auggestert tnat #r, C»rl Xrersen (of CenaarkJ would be good oa
technical matters In t&e international sphere*
Jlr* Riefler said t^jat Mr* Srsj 3aBBo.tid i s one of the few Asterioaaa ..
'•n'thttiiftatioelly Interested in banking hl»toiy* Kr» H©.i©ondf nho has recently
eoapleted a book aenucerlpt an the history of fee Second Bank of the United
States* h&s at different ttsaee said he vented to write a sonogreph on (a) the
studies that led up to the Federal ftesarvt Aot and (b) the eheok collection
system*
Mi5a Adams reported Information that Mr. Hammond's SMtnuscrlpt had been
submitted to the ftecudll&n Conpany. applauded by th©a as a good job, but refused on the groaad that i t would attract too sea11 an audience to be profitable*
Hr* Burgess cofometited that ftr« Htiffiinond1 s book should be published and siaggestsd
that a subsidy of l5f*300 adght be provided by the H@rrill Foiandation,
Br« WiULits a«ke<l "whether the planning of aonographs wts to be done by
the historian or the Committee* Hr* Sproul responded th«t both vo\ild be active
in tills.
Br* Calkins suggested that i t sdgbi be veil to pick a few promising
youag historians as research agfists.nts and •break theia in* an the project*
The business meeting adjourned at 2t3O* fhe Committee then returned
to the Gold Boom to resuae i t s discussion vlth the three consultants*
01 s cue si on
At the mu& of the diGCugsioa Br* ¥iHit« expressed hi® feeling tfa&t in
atte»ptl,Eg to reeall and respprelse recent Mstory, the CoesBittee vte initietiag
& process important b®jonti th* eoftpass of the ftve-yes.r stuttr rmv imd^r vay.
of the ©onferenee-vith-oonsultantii method ves geaerftl, «.nd hope ims extaat further meetings of the kind vould be scheduled* Mr* Sproul exthe Coasiitt^e1^ gratitude to the
The meeting va@ adjourned at I
Mildred
(Acting Secretary)
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
igamw. «gv .xoitu .w>Rmgr a . im*
of th# pwrntom Executive Gonedtt** a*«tt*g ( d i s t r i b u t e litumigr ff If55)
of iti« €awstit** s»e«tlag Jmiaiixy 29th (dii5 t r i b u t e Februtiry XA, 1155) ~
©o#ts of hcndllng ooilectloa* (h«r«wlth)
Oa ColiEibift ee a possible repository ( l e t U r to B«an Courtatgr
On l e t t e r to r#tlr»d or retiring (sample h«r#wit&)
dm publicity l a l«*r&«d j o u r a d s - postponed wntdl hifitori&a i #
Pr1.nc»ton transcript (in | roe«M * v i l l go out
^ ort,
/
t
Mr, Sproul1 s rfrQu#gt th*<t B&nks appoint liaison of fleer to «ct
(
)
B&p\y of I)r. ^#&tj to
If irviyly i § affirastive, «o«» lit continue as Cosaaitt©*
f l t U to fc# girm hl»?
If aegetive, vh&t nest?
to a?iep«rd Clough to Join Com^itW©? (item ^stpemed from
on hoaorftri' for futur* coaf«r«n«ee with
oa ateff sEX^ri«fi (men I t e s hftfi
)
in y*g©rd to
D R A F T
w
O
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
AGENDA
EXECUTIVE COMMITTEE MEETING, MEW YORK, FEBRUARY 21, 1955
Mr. Allan Sproul, Chairman
Minutes
of the previous Executive Committee meeting (distributed January 5> 1955)
of the Committee meeting January 29th (distributed February 14, 1955)
Reports
1. Previously requested
On methods and costs of handling collections (herewith)
On Columbia as a possible repository (letter to JJean Courtney
brown)
On letter to retired or retiring (sample herewith)
On publicity in learned journals - postponed until historian
is named
Princeton transcript (herewith)
2. New
Provisional financial report, July 1 - December 31* 1954Mr. Sproul1s request that Banks appoint liaison officer
to act with Committee
Policy Questions
Reply of Dr. James
Subsequent action
If reply is affirmative, does he continue as Committee member?
Title to be given him?
If negative, what next? (Rated list enclosed)
Invitation to Shepard Clough to join Committee? (Item postponed from
December)
Policy on honoraria for future conference with consultants
Policy on staff salaries (Memo to Mr. Woodward)
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
l a ord#r of
Sigr
f•
f#
1*
fmtto V.
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
mwms or wmmtw omanu
S# 195f
tO$ Hg#snu Alias Sproul,
Hob#rt % GmXkim
the IxC'Cutiv* Corned H M »#t at i t 15 p.ou in t&* prlmrt* Rising
of th* Brooking a Institution t,lth *1I s^bere (HatOTg, Sprou!, Burgees, C«lkins, Wooitmr&J *nd trie Kasearch $i rector, Miss Hildreci Mi^s 9 pr»»*nt. AoUon *^fes t&ktta sit foliovs.*
! • Th© Coc33sitt«e expressed i t s grsiitud* to th© F»d«r»l IUi»«rT« Bawk et
Htm lork for eso*ln$ the str.ff frtwe the Sth floor to Xargor *ad nor* offleltnt
on ta© iith
2.
tht 4iat« and £l&&« (J&auaiy 2f^x 11 th« Priacctoa Inn) of th© atst
vitv: th* thrtt consulUnta (Misers. 3oj^pf Cn*«dl«r &n&
fht ; tt«ntloo of tha £ac»emtl7« Cefi^ltt** h*riiig b«#n o*ll#f! to the
Fnd eoit@ of hnrdiing %• meb«r of coiltctloas of
oa Systus! matters, i t ms decided
*•
t^f t thf» r«segroh director ehcai draft a ^l&a «nd *
v l l l giv* th» Sac«cutlT© CoaKJiitt«« soa* e^U^ ste of how ns«i^ eol
Xectiong hre beir^ uncovered and hov auch I t might cost to
b* th&t the r«search director adopt « * polloy
@
that collections be pi&ced either in (1} the Library of
(£} the iibrt-Ty of «a *duc*tioa«l insUtution chosen b/ the
or the f&rrdljr of the doewMtod o^wnor, or (3) the library of *
q\nlified institution vhldif ^iro^i task rtooKaoad^tioiiSf might
beooffi© a r#oogain#d e*nt#r for gtm^y in tbis fl*ld« I t %»» fa»^
th«r »ttgg««t«d tliat a conference be &#lct vith th« a%- her<? of tits
#>
QttnAifttt i#t©ol of Ittsla#i# at CtolmHft liiiT#riitjf t^r» 8oi*rta#y
Brovmj in aa attittpt ta find out vitttlMNr th«t initittitiom, lo»
«fttf»d f.r i t i s in th# flsati&lal oontor of the countr/, s:iglit bo
in being a«sign&t«d «i tli# one fr#f*rr$d In the
•*
that, in viov of th« roooat loft© by pres^.ture deBtruotion of certain proraitiag eoXlo«tioatf t^o r«&^rch director fnime & l«tt»r f
SJd*e**ed to a l l who sow msi potential sources of collections Important for this study, informing the® that the Committee i s interested la their p*p»ra and would like that interest considered
la any Rxrtmgemerits being made for their disposition*
2*
Considering the number of collections vhich may need to be Inventoried,
that the setter of an index for the Kiaoaid inventory of the
ter QI&&B papers be held inf abeyance until the question of including this inventory as part of the Coronittee K publication prog ran i s settled} that $112 be
appropriated to p®y the costs of 20 sore copies to b® nm from the ©use stencilsj
trie tfaole to be stored until th# entire publie&tion schedule be coses clearer.
3. It v&§ decided that the completion of the Kincaid-Giess inventory be
iEt.de the occneion for a letter de@eribiag the Co&sittte'e alias and some of i t s
steeosipllshK«nt», aad requesting information concerning other collections* Suoh
* letter vMild go to e seieot#d l i s t of interested, econoaista end to the ie&m#<!
journcilsj i t should stir fruitful interest*
4* After disoustfliig the purpose and value of individual interriev teeh~
ni<iu«9 and reaults, i t ms decided to feppropritte not more then #500 to pay the
coit« of fin ©xperirentul group of interviews to be held under the leadership of
Br» Walter Stemrt ©nd on t topic >*lch he jpreseribet, preferably one having to
do vith an important Incident in the «f riy &$&& of the Federal Reserve Systes*
Hie reseerch director Is to check on technique* found u»eful by Dr. Beads Id*
kert of the UniversiV of Hichigan*
the designation of & possible historian \m® discussed at length*
will be msde to the meeting of the full Cosedttee on Jenuery 29th*
Th# third a.gend& item* concerned vith the ab#enee of Shepard Clough
in lurope until September 1955# v&& postponed* It idll ippesx on the next «g end ii.
I t vas euggeeted by I T . Calkingt thet after Jenuery 1st the Cocaidttee
secretsry and perhaps the research director might find i t veil to c«ll upon the
new Executive Stcret&sy rff the Hookefeller Fomkiation in order to infoim hi® &»
to the progress of Connittee vork,
. "
"
Donald Voodvard
Secretary
MEETING OF THE
COMMITTEE ON THE HISTORY OF THE
FEDERAL RESERVE SYSTEM
SATURDAY, JANUARY 29, 1955
PRINCETON INN
PRINCETON
NEW JERSEY
PRESENT;
ALLAN SPROUL, Chairman
W. RANDOLPH BURGESS
WALTER W. STEWART
F. CYRIL JAMES
WINFIEED W. RIEFLER
JOSEPH H,_ WJLLITS
ROBERT D. CALKINS
ADVISORY SUBCOMMITTEE:
KARL R. BOPP
LESTER V. CHANDLER
ELMER WOOD
STAFF:
MILDRED ADAMS} Research Director
ELLEN C. SINGER, Research Assistant
CHAIRMAN SFROULs
Gentlemen, let us achieve such order as we can.
The schedule for today is "before you. We meet here with our consultants until
twelve, following which there will be a twenty-minute break while this meeting
room is converted into a dining room*
At one-thirty we are going to take
advantage of having most of our committee members together to hold a so-called
business meeting of the committee for about an hour in another room, and we
will reconvene here with the consultants at two-forty and plan to adjourn at
four-thirty,
A one-year progress report has been distributed by Miss Adams. It
covers the first four months of preparatory work, January to May, 1954, and
six months of work under our five-year grant beginning July 1, 1954*
It is
largely a record of the accomplishments of our indefatigable research director,
and I think it is noteworthy in terms of what has been done and almost unlimited in terms of what suggestions remain to be made. Unless Miss Adams
has something to say, I donTt think that we need do more than call it to your
attention,
MISS ADAMS: No, I thought this would save taking the time to
describe it here,
CHAIRMAN SPROULs
To get on to our job and to get on to the main
problem of the history of the Federal Reserve System, we asked the aid and
counsel of three eminent workers in the field, They met with us here
November 21st during the first day of our first three-day meeting.
They have
since been collaborating on an elaboration of the views developed at that
meeting, and they are meeting here again for three days to finish the job we
asked them to do. A memorandum outline of their suggestions was sent to you
a few days ago.
It is intended to be provocative of further discussion, and
that is what we are here for.
ask Dr. Bopp and his colleagues to make whatever oral comments
they wish to make on the memorandum outline they have prepared, and then the
meeting will "be open for general discussion,
DRO BOPP % I think I can make this very brief statement so we can get
to the hard core of the worko
Our assignment, as we saw it, was to prepare a
preliminary document which would serve first as a definition of what the committee means by a comprehensive history.
That is part A of the document»
Second, to prepare an outline for writing this history.
This outline
is not intended to restrict the historian, and it is not considered that he
will merely fill in the gaps to support the outline as we have presented it*
As a matter of fact, if you secured the writer and told him that, he wouldn't
accept the assignment under any condition.
What we hope would come out of the discussion today would be not a
revised outline —
if that were the objective it seems to me that the historian
would feel it was much too formal and established — but rather that there
would be comments on the outline, suggestions for additions to it, deletions
from it, modifications of it, and so on, so that the historian, in a sense,
would have two documents, the one which is before you and> second, the comments
of the group on it, which two documents would have in common, as we see it,
only the basic idea as to what the comprehensive history is to be like rather
than any detailed thing for him, and that there would be sufficient differences
in judgment as to emphasis, and so on, between the two documents, so that he
would feel perfectly free to go ahead*
In preparing part B, or the specific topics and events that might be
considered, if you have read this document, you may feel, and appropriately so,
that particularly in the period following 1929 we seem to have come up with a
lot of conclusions as to how this development actually took place, rather than
in asking questions* leaving it to the historian to actually develop the ideas.
I must confess that the reason for that is that this struck us as the quickest
way in which we could indicate clearly what we had in mind in the nature of a
history, and was easier in terms of time and effort than putting it in the form
of questions9
So we do not mean that this is the way ideas develop, "but we do
feel that the development of ideas is the important thing in the documentary
history.
With that brief statement I think we might proceed then to the document you have before you directly, and I would propose that I go through this
one step at a time and then open it for such comments and discussion as the
committee members may wish to make,
First, as to the general nature of the history, is point A:
f1
Some of the major objectives of the Comprehensive History:
1* To gather and preserve all relevant information about the
Federal Reserve System that could possibly bear on the evolution of
the structure and functioning of the System.
2. To present a comprehensive analysis from an evolutionary
point of view, tracing the development of ideas and showing the
interrelationships of social attitudes, social and economic events,
pressure groups, and personalities on the structure and functioning
of the System/1
We might stop at this point to consider 1 and 2 together,
DR. JAMES: I was going to ask a technical question.
Is it envisaged
as part of this that either the New York bank or the Federal Reserve Board might
in fact establish an archives unit in their building?
There will be a terrific
amount of material that will be thoroughly studied in connection with this.
CHAIRMAN SPROUL:
I can only speak for the New York bank*
We have had
in mind for a number of years the desirability of development of archives as
distinguished from files and records, but nothing except scattered work has been
done about it, and it was hoped and expected in connection with this project, of
the history of the Federal Reserve System that we would get the ideas and the
impetus to go forward with it.
Can you say anything about the Board, Win?
MR. RIEFLER:
I know nothing specific about this.
On the other hand,
the idea would be received in a spirit friendly to research.
I don't know
about space requirements*
MR, BURGESSs
Of course, you've got the Library of Congress and you've
got the regular governmental archives. I suppose both of them have sections
which could include this thing, but much less effectively, I should think, than
the Federal Reserve Board.
DR# JAMES: I was merely going to say that this committee might suggest
to the two institutions that they explore immediately the possibility of doing
this.
It would go forward par! passu with the study.
MISS ADAMS: May I make one statement, Mr. Chairman.
A propos of the work which we have done thus far in going into what
there was in the way of archives, we are constantly running into the difficulties imposed by the so-called Destruction Schedule, and I have been making
efforts to come up with a suggestion which could reconcile the two*
There is
not basically any necessary contradiction between the Destruction Schedule and
the archives that are needed for this, but in the process of work they sometimes get mixed.
If a reconciliation in the form of a phrase or a directive,
or something of that short, could be arrived at, I think it would be very
helpful*
DRo STEWART:
Is this Destruction Schedule common for the two
institutions?
MISS ADAMS:
It is something which evolved from the Presidents1
Conference, and it is solely, as I understand it, a means of getting rid of
unnecessary materials.
It is only in the definitions of necessary and unneces-
sary that you begin to trip.
There is a United States Government schedule too, isn!t
MR. BURGESS:
there?
CHAIRMAN SPROUL:
Yes, there is.
At least ours to a considerable ex-
tent is geared to the Treasury Destruction Schedule, and most of it relates to
records of various sorts which would not conflict with what we are trying to
dOo
But on the other hand there might be some overlap.
MISS ADAMS:
I have run across a couple of instances where correspond-
ence that seemed to be important was just saved at the last moment, and it is
that that one fears.
MR. BURGESS:
Federal Reserve.
I suspect the Treasury has an even worse system than the
They don't even have the central filing systemo
CHAIRMAN SPROULs
We will take account of that suggestiono
Are there any comments with respect to No. 2?
DR. STEJWARTs
No. 2, I like very much the breadth of that, from the
standpoint of an authoro
It seems to be a very large assignmento
Take the
American background of this, while I think it is important, I would think it
perhaps separable.
CHAIRMAN SPROUL;
I had the same reaction to it, that it includes the
main history plus the peripheral monographs we discussedo
As a general state-
ment concerning the whole field to be covered, I think it would be fine, but
not to be included in the one comprehensive history.
MR. RIEFLER:
development of ideas.
I don't quite understand the stress on the phrase,
It would seem to me that the basic orientation of the
history should be on facts and situations.
What happened to the factual
situation against which these ideas have to impringeo
We have 15^000 banks
7
"being chartered just after the System started, and then collapsing, there
is the whole postwar attempt in 1921 to get things on their feet againo
I think it is on those factual situations and the response to them that
the history ought to focus.
MR. BURGESSs
I have the same thought, Win, in some ways that if
you get at the reality of the history, the System only to a moderate extent
reflected the impact of the general thinking upon the System,
It was much
more a curious chain of events, out of which ideas developed.
Of course,
the ideas are still the important part.
I was struck with that phrase. I think it is right that you have
got to have some center, and the center of what ideology it represents as
you go alongo
But you will have to recognize that a lot of that was from
accident, from personalities, from the grinding of the wheels of operationso
Then you try to find an idea in thereo
DR. BOPP:
I think we may not be too far apart.
to correction from Les* and Elmer*. Our concern was this.
I will be subject
If one looks at
what we term the facts, let us take a specific illustration, say the stock
market, this dramatic development in October of 19^9 would tend to be the
focus —
if one looks at the facts. It seems to us, however, that in terms
of history, the focus should be on how the stock market became a matter of
concern for the System, so that it felt it has some responsibility with respect to it.
It is this development of ideas toward and reactions to these facts
that struck us as being the more important thingo
The facts tend to be dra-
matic, and we felt that greater attention should be given to this gradual
development, from the germ of an idea to its fruition.
*
To identify see Appendix0
8
Was that it, Les?
DR* CHAKDIiER: Yes. And also it seems to me that there is a basic
philosophy which does get modified " y events, But take the early twenties,
b
I
am sure there were scaae people in the System who were thinMng purely in ddmestic terms0
There were others, however, who were internationalists at heart and
allowed their actions and their responsibilities to events to " e very much inb
fluenced " y their concern about what was going on. abroad, which as a Batter of
b
fact was somewhat out of the spirit that was being evidenced in the Government
at that time.
MR. BURGESS: Yes.
DRO CHMDLERs
The Federal Reserve policy was hardly in step with the
Government of the twenties.
BR* JAMBS; American banking and monetary history, down to the
Aldrich Committee, was very much dominated by the currency theory as it was
described tn the early 19th century, and then you had this work of genius on
the part of Carter Glass and the committee and his advisers, which wrote the
Federal Reserve Act as I think the best legal document anywhere in the world
expressing banking theory in terms of automatic gold standard*
It was the
last definitive statement of policy in a world that was believed to be semiautomatic in its monetary system, and it was believed to be completely integrated into a world economy*
Those ideas I think axe tremendously important. Then you come at
the end to a situation in..which the gold standard has completely disappeared;
where any idea of automaticity is completely lacking in the concept not only
of the United States but every other country, and in which the United States
has moved from an active peripheral point in the world economy to a nuclear
position.
The history of the Federal Reserve is the history of the most significant institution in terms of the whole economic concept, from one that was devised to function, at the periphery of an automatic monetary system, the tune of
which was called from London, as Sir Henry Strakoecl# put it, to the central
institution in the determination of very largely, one can say, the extent to
which the United States is able to call the tune in international affairs,,
How ideas in that sense, I think, have a very effective theme and
make this one of the most Important studies. But it isn't ideas just in picking up William Jennings Bryan and a host of other people.
It is from a given
point, the end of the old world, to another point, the "beginning of the new
world*
There isn't any other institution which is more important to the
determination of the new pattern of ideas and theories in. the political economy0
In that sense, I think the ideas, are virtually important, and that is the string
or harp, if I can continue a musical simile, on which everyone of these little
pressures "begins to shape the tune. And I am firmly convinced that nobody
thought all these things out, that they simply resulted from spontaneous reaction of these various pressures and problems and personalities that aroseo
MRo BURGESS: Has somebody got all that down?
CHAIRMAN SJKOUL:
wording?
Is thete any real conflict here except perhaps in
If we thought solely in tei*ms of ideas, perhaps we*d get an ideal
ruining accot&rt which was not in accord with the facts and the situations as
they developed.
On the other hand, if we dealt solely with facts and situa-
tions, we might lose track: of these ma^Jor themes and ideas.
*
To identify, see Appendix.
10
It seems to me if you put in. facts and situations as well as ideas
in your general outline of things to " e included, there is no
b
real difference
of opinion here*
DRa 8TEWART2
There is not in the usage of words, "but there is in the
size of the canvas. As Dr. James has just said, there is a different size
canvas * I think this is worth keeping in mind, that the agreement doesn*t go
so far but what there is a difference of :emphasis between the two approaches,
CHAIRMAN SPROUL: Yes, that's right.
MRO BURGESS: Somebody should put up a little flag and say we not
only did not want complete abolition of automaticity, (Laughter) but we want
to make sure that same measure of it continues and that there is still room
for it in the operations of a semi-free market.
CHAIRMAH SPROUL:
Is there anything further to be said on these first
two general statements?
Go on, Karl.
DR» BOPP: Then we go to points 3 and 4, things to be given special
consideration and things to be avoided. To be given special considerations
lf
aa One of the central interests of the entire study should
be the methods and terms on which money has been made available
to, the banking system and the economy as a whole. This would include, of course, all major changes in the methods used, such as
discounting and open market operations. But it would also give
adequate attention to changes of policy represented by changes
in methods of administration £ven though there was no change in
the broad method of providing or extracting funds. (We had in
ndLnd there, for example, the administration of discounting rules,
and so on*) This would require adequate attention to the whole
question of location of control, the methods of administration,
and the development of ideas by those who make policy,"
Things to be avoided:
w
a, This should not i& any sense be considered an official
history and the writer should feel perfectly free to criticize,
evaluate, and interpret„
11
"b. It should not be financial history in the narrow sense
"but should " e a social history, giving due emphasis to intellectual
b
and political, as well as the narrower economic and financial,
philosophies and events.11
MR, BURGESS: That 4a raises one question we are going to have to
face all'through this. You are quite right, I perfectly agree that the writer
of this ought to interpret and express opinion.
If it is to be usefully done,
that needs to be reviewed by some group of his peers, who give their reaction
on it, so that you have a Judgment that isn!t just an individual Judgment, but
is a judgment measured against what some of his peers may say ~~ that is an
advisory group. You had it in the National Bureau.*
CHAIRMAH SEROOLJ
Perhaps Dr. Calkins could say something about the
general idea of procedure.
BR» CALKIKS: The ordinary procedure that we follow at Brookings is
to appoint an advisory committee of recognized scholars in the field, and our
own procedure with the.Brookings publications is that that committee becomes
a consulting committee to the author in the progress of the work, and at the
end they become an advisory carmuittee to me, where Brookings has the final
determination on publication. That determination is in the hands of the
president, and the cooamittee becomes an advisory committee to him, making
their recommendation as to whether the thing is a suitable study for
publication.
If that same procedure, which is a matter we have not really fully
settled here as the course we want to pursue, if that were pursued in this instance, I would assume that the procedure we would follow would be one of
setting up at the time this study gets organized an advisory committee chosen
*
To identify, see Appendix,
12
to consult with the author in the progress of his work, and probably use the
same committee as the advisory committee on publication at the end.
But in addition there is no reason why we could not use another procedure as we do at Brookings, and which is used by the national Bureau, I believe, C» E. D* and others, namely, to circulate manuscripts, either in outline
form or in first draft, or early draft, for criticisms of any group whose judgment and views they wish to get.
The one rule that we follow on that is that the author is not himself
obliged to take any of these criticisms or to make adjustments in accordance
with them, unless in his judgment they are warranted.
On matters in dispute,
he may want to get the views of his advisory committee as well as his own
judgment,
DR# WILLIT3: How about footnotes of dissent?
DR. CALKIN'S: We do not employ them at Brcokings. We have provisions
whereby they may be employed.
The procedure at Brcokings has shifted a little
in recent years. Some years ago we provided that the advisory committee was
listed in the foreword to the study, indicating who they were, and this, tended
to place them in a position of personal responsibility, and as long as their
names were listed, we gave them freedom to write footnotes of dissent if they
wished and these were published in the study. Actually I think there are very,
very few footnotes of dissent in our publications. There have been really very
few in C. E, B., though some* More recently we have not published the names of
the advisory committee members. Consequently they have not felt obliged to
record their own dissents. But there again it is a procedure which we need to
work out and agree upon for this series of studies.
DR0 WILLITS:
Thinking perhaps chiefly of the Bureau, I always re-
spected very much the means of escape from a false intellectual unity that the
13
absence of footnotes connoted.
When they come in, when there are issues of
real difference, and when people who are entitled to authority, as are the
members of this committee or an advisory committee, feel there are important
differences they want to express, I think there is a lot of sense in letting
them come out.
That doesn ! t interfere at all with the freedom of the authoro
He is completely freeo
He writes what he accepted responsibility for.
But
the fact that a flag was up here or there, I always thought was a very good
thing,
DR. CALKINS:
I do too.
As a matter of fact I was one of the people
who urged this in the establishment of the G. E. D o
well there, as in the Bureau.
DR O WILLITSs
I think it worked very
It has in our own case.
Particularly in an area such as this, where you have
a straight history, you have the documentation, put it in order, and find
there are a number of issues that are going to be moot.
If you assume that
there is only one point of view, the point of view of the author, to me it
seems to be an injusticeo
CHAIRMAN SPROUL^
I think you can be sure, having raised the question,,
that the Committee on the History will have that in mind as one of the things
to be decided by that committee, and some procedure devised.
MR. RIEFLER;
Is it really implicit rather than explicit in these
words under special attention; how money was made availableo
Not how much
was made available^ not how the Federal Reserve actually reacted to a series
of economic and financial developments, but simply the methods.
And under
things to be avoided, it says this shouldnft be a financial history,.
finish, where is the stress on the actual facts and developments"
to be the outline lacks a concept of history.
When you
It seems
It may be implicit in the
thinking of the outline, but at some place in the outline there should be an
14
explicit recognition that we are writing a history, and not an interpretation of ideas. I don't see any place here for such a fundamental fact as
the change of the United States from a debtor to a creditor nation,
DR. CHAHDLERs
As a matter of fact, Win, I think that specific .
example indicates why we used this kind of languageo
That is, In a very
narrow financial history, one might simply deal with what the Federal
Reserve did this month and what it did next month, leaving out the whole
question of what kind of an environment It happened in.
MR. RIEFLERs
cial developments.
There was a terrific impact arising out of finan-
It Is the job of a historian to build that whole pictureo
CHAIRMAN SPROUL; I had a somewhat similar question, not just how
the money was made available, but why it was made available in terms of the
economy and the relations of the banking system in general, and the Federal
Reserve System in particular to the economy, and its development at that time.
DR. JAMESs
And whether it was too much or too little In the judg-
ment of the author.
DR. CHAITOLERs
I think we were probably guilty of just taking for
granted these things.
MR, RIEFLSRs
Ies0
CHAIRMAN SPROULs
I think it Is implicit.
Is there anything more on 3 and 4?
Go ahead, Karlo
DR. BOPPs
Then we come to the substance of the history itself in
terms of history, and here I think you should feel free to suggest deletions
and additions and amendments. First the background of the System, which really
means the period prior to the establishment of the System itself.
15
M
a. This should include a detailed analysis of all the
conditions and thinking that led to the movement for financial
reform and that influenced the form of the legislation finally
enacted. This would include not only the legislative history
and the conflicts in the Government accompanying the consideration of the legislation but should also include a consideration
of the existing international monetary and financial relationships , the nature and structure of our own economy, the conflicts
over broad economic policies, the structure and functioning of
our banking system, the economic theories underlying the various
proposals, and the personalities that were involved in the whole
movement."
Cyril, on your point about the role of the United States, Beckhart**
told me on Tuesday that in 1914, if an American ship or a Uo So Haval vessel
were to call, let us say, at a South American port, and payday for the sailors
came while they were in port, that they would be paid in sterling banknotes,
Bank of England notes, not in Uo S« dollars.
It is just a dramatic little in-
cident that gives reality to the changing role*
DPL JAMES:
This whole section I agree with, because as 1 said a few
minutes ago, 1 think this really Is the picture of the world before all these
revolutionary changes. This is where the difference between the Aldrich Plan
and the Federal Reserve System fits into it. Actually, I donft know that anybody in any history of the United States, financial or otherwise, has really
written that yet,, This book breaks entirely new ground*
CHAIRMAU SPROUL;
It does, I think, raise again the question which was
mentioned in the beginning and may be implicit all the way through, as to how
much of a particular subject and era, time period, can be gotten into the comprehensive history, in what detail, and how much will have to be in a separate
study or monograph*
DR. JAMES;
I do feel, Mr. Chairman, that this is the thing that has
to get into the comprehensive history.
To identify, see Appendixe
I feel fairly strongly about that,
16
"because in my judgment, very, very few people are going to read deeply in all
of the technical points that come up. There will " e a small limited interested
b
audience. But from the "beginning 1 have looked on the comprehensive history
here as, if it is effectively done, one of the most important books dealing
with the history of the world in the last thirty years, and putting into focus
all these technical things, "but writing about them as factors that are influencing the stream, and writing about them in. a fashion that will make them
clear to people that didn't know about them before * I grant you this is an
extraordinarily difficult job, but I think it is one that can be done,
I would raise one point there that I am sure was in Karl Bopp's mind.
The creation, of the gold pool chiefly under the influence of the bankers in
Chicago in August of 1914, and in the sending of it up to Ottawa, as you all
know, is a magnificant demonstration, exactly like the payments in pound notes
as he mentioned awhile ago.
In fact the thinking as of that moment wa,s still
entirely along the lines of an earlier philosophy a
CHAIRMAN SPROULs
I am not &ure but that if they had any gold in
Chicago now they wouldn't send it to Ottawa again*
(Laughter)
BE. CHAlDtERs
There is another incident in history that has never
been written out, and that is the gold pool that the Chicago bankers threatened
to accumulate out of the System in March, 1933«
I ^
not sure that is generally
known,
DRo JAMES % On that particular point, there is a very dramatic letter
that old James Forgan* wrote to his brother,, because on Saturday, August 1, 1914,
he received a telegram from Mr* McAdoo, Secretary of the Treasury, asking that a
To identify, see Appendix.
17
committee of the Chicago Clearing House meet with him in Washington the following Monday, Mr. Forgan promptly arranged to gp to Hew York the next day and
seme bankers in the president's clearing house went with him. They met at the
station a few minutes "before train time. They got on the train and carried on
their discussions, and by the time they reached Inglewood, which as you know
isnft a very long journey, they all got off the train and went back to Chicago,
because they felt they would get very much farther by forming their own gold
pool and going on this basis than going down to New York. An extraordinarily
interesting letter that almost marks a crisis in Chicago banking.
DR* CHAEDLER;
It begins to sound as though we ought to have two
histories, one of the Federal Reserve System and one of Chicago.
MR. BURGESS:
I donft know how many of you people knew that on the
Friday night when the banks were closing, as they were closing, the lew York
Reserve Bank had reserves of about nineteen per cent against its note deposit
liabilities because the outflow of money from, Chicago had been very heavy*
We
attempted to get Chicago, as had been customary, to take its share of Government
securities in the pool so that the reserves would be leveled out for the System
and we would all close with a gold reserve above the legal minima. The Chicago
bankers said that if any attempt were made to do. that, they would next morning
withdraw their reserves from the Chicago Bank in gold. So the System closed
with the lew York reserve ratio of seventeen or nineteen, and Chicago's fifty
or sixty. Had you heard that?
DR. JAMES: No.
MR. BURGESS:
I happened to be one of the fellows that tried to do
some of the negotiating. We tried to get the Board to order the Chicago Federal
to discount, which the Board refused to d >
x«
18
DR* WHiLITS:
This is very distressing to an outsider, who always
assimed that eTerything went on in the Federal Reserve System from the point
of view of high and farseeing statesmanship.
CHAIRMM SPROUL: Maybe you shouldnrt be on this committee,
(Laughter)
DR* STEWART:
I think it is one of the functions of all history to
prove that what you are talking about is not monolithic,
DR* WILLITS: That may "become harder and harder to do0
DR. CHANDLER:
MR. RIEFLER:
here,
I suspect this ought to be interred with their bones,
That is the kind of thing I think we ought to have in
I think that is what this history iso
~DR9 WILLITS: You are not limiting your historian with that, are you?
DR. CHA1DLER:
DR. JAMES:
Ho. We leave that to h±mo
I think it should go in, because the very significant
thing in any history, and in this one, is how the impact of individual human
beings, and individual motives, as of this 24 hours, do shape the whole
development.
DRO CHAJTOLERs
Some of those individual reactions in that period of
about two weeks made extraordinary history.
The group of bankers that went
down after the bank closing, and the terms of the reopening, in my judgment,
were tragic.
CHAIRMAN SPROUL:
The next point.
DR« BOEP: -lfb. A sijailar study relating to the organization
of the Federal Reserve Districts, of the Federal Reserve Board,
and of the Federal Reserve Banks before the banks were actually
opened for business,11
There was a Congressional Committee on the question of the number of
districts.
19
CHAIRMAN SPROUL:
Any quest ions or comments on "13"?
DR. CALKTH5; The only one I have Is that it seems this presents one
of the problems that we will encounter from time to time of trying to cover the
12 districts. This thing fans out in space so much that you face a very serious
problem of selection; or possibly you ought to make a summary treatment of this
thing here in the main volume and then let this kind of treatment go into a
special monographic study, where you can do it greater justice than you can
with the space that will be available in the main study,
DR. CHANDLER:
I think that what we had in mind here. Bob, was not
necessarily a detailed study of each of the 12 Federal Reserve Districts, but
rather a description of the political process, and the decision-making process,
even after the bill got through Congress and was signed by the President, when
you had this tremendous controversy, not only in the original organization committee, but then in the Federal Reserve Board, as to whether the Board had
power to change the ntmber of districts, and so on, and whether it would be a
good idea even if they did have power.
It was quite a period of controversy,
and had a tremendous effect•
DR. JAMES:
volumes?
Isn't that covered very largely in Paul Warburg's two
I think one thing we have to remember in writing this is that we
shouldn't duplicate something that has already been done.
MR. BURGESS: That whole period has very well been covered, more BO
than afterwards•
DR. CHMDLER:
I think that's right, Cyril, but so much of those
early volume were special pleading volumes, so that the emphasis needs to be
changed in some of them.
DR, JAMES: Yes, but I was simply emphasizing the fact that 1 don*t
think it all ought to go in in detail.
20
CHAIRMAN SPROUL:
There is perhaps one thread In. one of the under-
lying themes, and that is the regional system and the relation of the New
York District and the New York Bank to the rest of the country, to the
Middle West,, the Far West, the attempts to bring down the New York district
to the smallest possible size,, beginning with the financial district, going
up to Canal Street., and stopping there, and then to the City, and then to
the State, and then finally what it is nowo
But I think that has lost significance in terms of the general
development of the System, and of banking and banking thinking in this country, just the contest about the size of the New York District*
DR. CHANDLERS
No doubt Garter Glass thought he was putting New
York in its place. He thought he was going to do away with this business of
huge bank balances in New York, and the financial power that that represented.
CHAIRMAN SPROXJL:
Of course some aspects of that conflict persist
and exist right down to the present day. We are in conflict, that is, the
System, with the Reserve City bankers on a variety of questions because of
their feeling that the System is still trying to take over the functions of
the correspondent banking system,,
MR. RIEFLEE:
What place is there here for that area?
I always
find myself in a fog about it* What is the role of the Reserve City Bankers
Association?
You do run into its impingement on the System all the time. It
would seem to me it ought to be treated somewhere in this history.
DR. JAMES: In fact it was Carter Glasses impression that he abolished the correspondent system.
He thought he had done it effectively, and I
think the persistence of the correspondent system is really one of important
problems.
MR. BURGESS:
of the Act of 1934.
That is the emotional impetus, In large measure, back
21
DR. CHANDLER:
I thought this ought to be a theme that would have to
run through all the periods, Win. For example, in the discussion of the structure and function of the System, pre-Federal Reserve, this would be a very important aspect. And the whole question of the composition of Reserve "banks in
the original Federal Reserve Act, and the fighting over the changing of those
in 1916, 1917> a&cL then the attempt to revert to something like the original
scheme in about 1921 or ! 22, Then the check clearing controversy was involved,
too.
I should think it would " e a theme that would have to he developed in
b
various stages,
MR* RXEFLER:
Yes. It might have a separate monograph also.
DR* STEWART:
I think there is a myth and a reality about this which,
when you watch just the operations, tends to obscure the myth. The operations,
of course, are New York. But there is the political reality of the amount of
protection and insulation that it has given the System*
1 think there have
been several occasions when it would have been a question whether the System
could survive if it had been centered in New York. So I am inclined to consider it as more than an illusion, like all myths. It has great value.
CHAIRMAN SPRGUL:
It is a myth that has an effect on the economy of
this country, not only on the Federal Reserve System,
DRO STEWART: This country just doesn't like concentration of power,
whether it is New York, Washington or somewhere else.
DR. CHANDLER:
And you also have the nice paradox, Walter, the more
you try to sectionalize, the more you may concentrate.
CHAIRMAN SPROUL:
Go ahead with No. 2.
DR» BOPP: The next is the period of organization, from the opening of
the banks, until the entry of the United States in the First World War,
22
"a. The whole process of determining the structure and
organization of the Federal Reserve Banks, the selection of personnel for the Federal Reserve Banks, the division of control
"between the Federal Reserve Board and the Federal Reserve Banks,
the location of control within the Federal Reserve Banks, the
process of arriving at decisions as to the appropriate objectives
of the Federal Reserve Banks for the longer run and for the
existing situation, and the relationship between Federal Reserve
operations and American foreign policy* Worthy of special consideration are not only longer term growth considerations, such
as building of the prestige of the System, but the desirability
of making-earnings in order both to build prestige and to attract
members of>
DRW JAMES: May I ask another question of fact there, Mr0 Chairman?
Have we received from the various Federal Reserve Banks any undertaking that
the author of this will be able to use the directors * minute books?
If you
don!t have that, then it will be extraordinarily difficult to deal with this
section, which is quite criticalo
MRo RHSFLER:
The authorization, from what I put up to the Boards
was that there would be pretty frank disclosure of developments "before 1933^
and that it should Stop there»
I think the final letter we wrote was that
we would have to. judge on an ad hoc basis what was to be.made available,,
CHAIRMAN SPROIXL:
MR. R3CEFLER:
I think thatss right.
It is a friendly disposition to make things available,
but there is no commitment,
DR. JAMESs
But that friendly disposition does cover all the banks?
CHAIRMAN SEROUL:
It covers the Board and the New York Bank, and it
hasnft been put up to the other banks in that way, although it had been put to
the other banks to make available what they had in their records and files,
but not going to the minute books •
DR« JAMES: You can't make this hard and fast, but I do think it is
tremendously important to choose your person, someone who has discretion, and
23
you don*t bring out current personalities. But I don't think really you can
"write this sort of a thing unless the individual is going to have that access*
MRO BURGESS:
I don't believe your minute books are going to reveal
this particular thing as much as one might think. They are pretty cautious of
what goes into the minutes, I am thinking of the records of the Open Market
Committee.
I remember very distinctly in the middle twenties arguments in the
Committee about the necessity for buying Government securities to keep up earnings. They didn't get into the minutes of the Open Market Committee. They
didnst get into any of the records. The final thing was authorization to buy
or sell, or something or othero
DRa STEWART%
Chicago again too.
MR, BURGESS: Now, if you had the memoranda that McDougal* brought
to those meetings, they would be very revealingo
But they said, "To hell with
all this fancy stuff that Strong is talking about, We have got to earn a
livingo" You get some in the correspondence between Parker Gilbert** and the
Board at that time, when the Treasury practically ordered the Federal to sell
their Government securities.
DR* WXLLXTSs
Perhaps you can guarantee access to this historian to
the things that were carefully deleted from the minutes.
MRo BURGESS: We never even thought of putting them in.
BR» WILLITSs
It would be well if the Board and the banks would go
just as far as they could toward complete accessibility, because, "Yes, we will
be sympathetic provided you don!t go too far,*1 is after all an extremely important limitation,
I donTt know the nuances and customs and the things that
determine, but it seems to me that if this is going to be a history, you pick a
To identify, see Appendix*
24
man whom you trust, and a man whom you trust is entitled to access to a -very
high degree. On that, I can't Judge the considerations that limit that access,
OHAIRMAI SPROUL:
I think if it were put up formally to the Federal
Reserve Banks, at least at this stage, to make their minute "books available to
the Committee or the historian selected " y the Committee, we would cool off the
b
sympathetic attitude toward access" to all other available information, in terms
of memoranda, comments and discussions outside of the minutes. It may be that
as we go along we will find some things that have to be gotten from the minutes
that we might then ask for,
MR* RIEFLERs
I think the attitude is extremely sympathetic, but a
guarantee just canft be made*
DR. ¥XLLITS:
It has to grow in use.
DR* BQPF: Minutes of the Governors8 Conferences, though, would be
more revealing,
MR. BURGESS: Yes.
DR, BOPP: At one time they had stenographic minutes in the early
twenties.
CHAIRMM SPROUL:
The Chairmen!s Conference?
MR* BURGESS: The Chairmen's Conference doesn!t appear until a good
many years later than that.
CBMRMAW SPROUL:
In the twenties they had conferences and steno-
graphic transcripts.
DR. BOPP: At one time they had conferences of the members of the
Board, the Governors of the banks, and the chairmen*
This fajnous May 1920 con-
ference, which became a Government document, that is complete.
25
Then No. 3, War and. inflations
"a, A comprehensive analysis of the entire war financing
program and of ideas relating to it and the relationship of the
Federal Reserve to the whole process. The effect of the prevailing economic theory on the types of assistance given by the
Federal Reserve to "both public and private financing.
"b« In addition, adequate attention should be paid to such
things as the effect of the war period on membership in the
Federal Reserve System, the prestige of the Federal Reserve System,
the relationship between the Treasury and the Federal Reserve,, the
tendency to concentrate power in the Federal Reserve Bank of New
York,, the subordination of the Federal Reserve Board in dealing
with monetary problems, the growth of relations with foreign cen°
tral banks and governments, the impact of this experience on the
earlier philosophy of the Federal Reserve Act and of Federal
Reserve policy,, and contemporary ideas as to later developments«lf
DR. JAMESs
I think there it is important to mention the position
of J. P. Morgan and Company in that whole picture.
They were the fiscal
agent of the United Kingdom Government, playing a part that seems completely
incredible in terms of the Second World War*
MRa RIEFLERs
1917-1919.
The periods seem to be wrong here o
1918-1920 had a special character*
MR. BURGESS*
The inflation broke in the middle of f20«
MR. RIEFLERs
The problem of the shift to fighting inflation started
in 1919> didn't it?
The shift from war financing to fighting the inflation
really occurred during 1919*
DR. CHANDLERS
In some ways, this period we can say was November
1919> when they got their complete freedomo
MR* RIEFLER:
I would think the break would come somewhere in the
first half of 1919.
DR. JAMES5
You really have a separate period, 1918 and 1920•
DR. CHANDLER^
This could well be, 1917-18, and then another period,
November 1918 to the break of the inflation in 1920o
better to split it up o
It might have been much
26
MR* BURGESS: In terms of economic swing, you can swing it through
to f2G,
DEO STEWARTs
I have always felt that the freeing of sterling was
greatly underestimated. As a force, it has: been obscured by the magnitude of
domestic events. In looking back now, I donJt think many people realized then
the Implications*
MR. EIEFLER: The content here is correctly doneo The content of
No, 3 relates to the structure and organization of the Federal Reserve System,
in relation to financing the war and the huge war debt that resulted* From
the end of 1918, xms we "began-'to face an economic problem,,
DR. STEWART: I think that's right, shift of emphasis.
DR. JAMES2 During this period too, to take the terrific increase in
bond portfolio of the Reserve System, which was one of the basic policies that
made possible the open market development,
DR. CHAHDIER: As I look back on this, Karl, I think we left out one
very important series of things, and that is the whole change in the structure
of debt, and of bank portfolios, and the financial positions of the public,
of the banks and the Federal Reserve banks,,
MR, RIBFLERs las,
DRO BQPFs
I personally inferred that in the entire war financing pro-
gram and ideas relating to it, as contrasted with the Second World War where
the financing was public financing* The First World War was private financing.
But it could be spelled out,,
MR. BURGESS'S
In n b lf , I think if one were revising this, the wording
''the tendency to concentrate power in the Hew lork Federal11 sounds as though
people were trying to concentrate. It was a growth in power, which was done
against resistance.
27
MR, RIEFLERs
Its scope, its prestige.
CHAIRMAN SPRQUL:
Influence.
MRo BURGESS: The growth of influence of the Federal Reserve Bank of
Hew York. Then it isn!t the subordination of the Federal Reserve, Nobody said
"we will subordinate the Federal Reserve"*
DRa STEWART: Hobody?
(Laughter)
MR. BURGESS:
I don't think they ever said that. They did it. But
the choice of language suggests something a little different from what happened.
DR. CHAHDLERs
It makes it sound too conscious and deliberate,
MRO BURGESS: Yes.
DR» BOPP:
This grew out of the circumstances. Hew York was the area
in which the funds were raised, and with which the Secretary had the direct
dealings„
DR# CHANDLER:
I had never realized until I went "back to this period
the extent to which it was difficult to separate the role of say the Governor
of the Federal Reserve Bank of Hew York as manager of monetary policy on the
one hand, and as fiscal agent on the other• He just didn?t know when he was
acting as fiscal agent and when he was acting as Governor.
MR* RIEFLER:
How do you plan to "bring that into the outline, the
whole fiscal agency function?
MRo BURGESS:
It is the development of the triangular role of the
Board, the New York Bank worked so closely with the Treasury day "by day, that
it built that up. The Board functioned in approving the discount rates and
sat there. If they had had any ideas about what should be done, they might have
been a little more forceful* But it was a thing that grew out of the situation
28
rather than anything deliberate. The New York Bank I think went ahead and did
things and pushed ahead and didnft want to " e bothered,
b
DR* JAMESs
I don!t know the date at which J, P« Morgan ceased to be
the fiscal agent of England and France, and their actions were taken up directly
with the Hew York Bank.
DRO STEWART: Have they ever ceased?
MR* BURGESS; They still are the fiscal agents*
I don't think there
ever was any date,, But when they ceased doing their financing, the fiscal agency
didn?t mean so much, when it. came to the handling of assets in World War II*
DR. JAMES:
I was thinking rather of the change between 191.8, for in-
stance, and the period of 1923-24, when Norman and Strong were just shortcircuiting Morgan entirely, and the fiscal agency had become a formal trust
company business,
CHAIRMAN SPROUL:
MRO BURGESS:
I donft think they short circuited them entirely,,
No, the kind of activity changed,
CHAIRMAN SPROUL:
Change in emphasis of arrangements, but no date when
one was cut off and the other took over.
DR. STEWART:
I "believe the real crevice between past and present
practice -- the real break -- comes when the United States Treasury established
direct contact with the British Treasury, Both in practice and tradition, the
two Treasuries had had very little contact. The Federal Reserve Bank of New
York and the Bank of England dealt directly with each other, and the British
Treasury used Morganfs as its fiscal agent in the United States*
During New
Deal days, however, the House of Morgan ceased to be welcome in Washington, and
the Federal Reserve Board increasingly took over from the New York Bank its
foreign activities. After the arrival of war, the activities of the United
States Treasury in monetary and credit matters reached such a magnitude that the
Treasury "became a center of decisions, and the Federal Reserve merely part of an
29
operating mechanism,, Soon the relations "between the two Treasuries "became so
continuous and unquestioned that our Secretary of the Treasury hardly knew that
any other System had ever existed.
MR. BURGESSs
The Banking Act of 1933 had to do with that. I think
when the Treasury walked in and took the gold from the New York Bank, that was
kind of a punctuation of ito
That is a very interesting little incident that
could be described in very dramatic terms, when the Assistant Secretary of the
Treasury, a long-haired foreigner, came in and told us what was going to be done*
DRO CHANDLERi
Bank.
I would like a record of what was said at the Chicago
(Laughter)
CHAIRMAN SPROULs
You don't want whatever comes out of the final work
of the consultants to give a vicious slant to the New York Bank?s assumption of
power and influence?
(Laughter)
MR. BURGESS; No, it wasn!t just that.
This was really going back to
Win's point, that nobody, and I say literally nobody, looked all over there and
decided, tfNow we are going to do this this wayj 1
DR. STEWART:
The things happened step by step.
I think I should comment on that. There is a difference
of emphasis. 1 think Ben Strong deliberately built himself a political machine,
consisting in part of the Governors of all the banks. He was perfectly aware of
what the issues between the banking system and the Board were.
ceeded with intent to do this.
CHAIRMAN SPROUL;
DR« STEWART:
I think he pro-
I think he believed it was the right way to do it.
He was the man to do it.
He was the man to do it. So I donft know how much a
matter of the conscious you want this whole thing to be.
CHAIRMAN SPROUL:
(Laughter)
He spent a good deal of time in Washington, living
there. He had living quarters there,
DR. STEWART: And made a great point of cultivating Mr. Mellon, and not
cultivating Mr. Crissinger,
30
DR* CHAJDLER:
I think also to go back to a point that Cyril James
made earlier, there were at least some instances in which these things were
planned out deliberately far in advance, and where the decisions weren't just
sort of forced on by events. For example, on many of these things Strong was
looking years and years into the future, and talking step after step to achieve
this objective, such as, for example, the one of getting the rest of the world
in debt to Hew York so that they could then run their monetary policy by regulating the inflow and outflow of short term credit to New York. This wa6.n *t
by any means unplanned, as far as he was concerned,
It didn't occur as rapidly
as he wanted,
CHAIRMAN SPROIXL: We are still working on it,
(Laughter)
DR« BOPP:
The next period is the Federal Reserve and deflation.
"Analysis of events during the period and of Federal Reserve
policies. A satisfactory treatment would include not only actual
Federal Reserve actions but a close scrutiny of the changing role
of Treasury financing, of basic philosophy and theory of the public
at that time, and of the Federal Reserve officials. It would also
include a detailed analysis of the process of decision-making and
of the theories and objectives, explicit and implicit, of those
who engage in the process•*
GBAIRMAH SFROUL: Any coias&ents t r questions on that?
i
MR. RIEFLER:
That ought to be pretty broad.
That could include the
War Finance Corporation.
CHAIRMAN SPR0UL: That whole Congressional inquiry?
MR. RIEFLER: Yes.
That is the experience that Gene Meyer* comes
over to tell me abaut twice a year*
CHAIRMAN SFROUL:
MR. RIEFLER:
Federal*
*
And he was always right.
How he bailed out the bankp that1 were in debt to the
I suspect it is true,,
To identify, see Appendix,
31
DR. BOPP:
Then No, 5:
"The search for appropriate peacetime organizations and
policies - 1921 to 1929. This period will have a number of themes
and subthemes which are sometimes woven together and sometimes not*
Among the major problems were the following;
"aa The struggle toward a basic philosophy of central banking: the conflict between the old commercial loan theory which
would have prescribed a passive approach and the theory of"positive
control which would often require actions directly in conflict with
those appropriate to the commercial loan theory.
M
b. Changes in the methods of business financing and their
impact upon the character of comaker cial-bank earning assets and
upon the volume of brokers* loans. The need for secondary reserve
assets as a factor in the growth of loans from non-banking lenders
to the market*
11
c* The role of gold in the System: the continued allegiance
to the international gold standard as an ultimate ideal, coupled
with actions that were, at least in the short tun* in direct violation of the rules of the gold standard game but sometimes with the
intent to reestablish the gold standard internationally.
tf
d. The frequent conflict of moretasiediateguides or objectives: the objective of reestablishing an international gold
standard and of promoting recovery abrd&d, the accommodation of
commerce, industry and agriculture at reasonable interest rates,
a positive policy of stabilizing business conditions, price stabilization, the development of New York as an International
financial center, the control of speculation on the stock exchange."
DR* STEWART:
I am not quite certain that I know what the function of
the outline is here. I recognize the peg on which this is hung:
guidance to the
Committee and thinking about the nature of the history, I take it, more than
guidance to the author*
And therefore the things listed are not intended to be
inclusive of everything, but suggestive of the range of things.
DR, BOPPt Yes.
MR, RXEFLER:
The heading, "Search for appropriate peacetime organiza-
tions," I donTt think that is really quite the true emphasise
1 think what
really happened in that period was the discovery of effective operating techniques
32
On the bstsis of actual-experience.
The role of open market in relation to
discount operations^ was worked but. We"found out in this period relationships we hadnft known existed during the war,
DR* JAMES: It isn't really peacetime organizations and practices, it
is the assumption of the responsibility for conducting the entire national monetary orchestra. Really the impact in this period partly resulted in changing
domestic finance , but it is continuously to be comprehended by the fact that
the Federal Reserve System finds itself suddenly, partly from Strongfs desire,
and partly from deterministic forces, at the center of the whole international
pattern,
DR, STEWART:
That ideologically is true, and in terms of operating
technique it is true for I should think part of the period. But you see it is *
that period that you break more or less in the middle, before you get EnglandTs
return to the gold standard, and you don't deal with the French until later*
And while discussion was taking place, and preparations perhaps being made in
that sense, the actual operating function of the System as an international
monetary machine was only something envisaged.
DRo JAMESs
It was not in operation.
I am thinking rather of short term balances before the —
DR, STEWART: Short term balances in London.
MR, BURGESSt
There was a lot said about the acceptance market, a lot
of boloney, and a strong effort to develop that. There was certainly beginning
in S23 or l 24, I think f24 really, a desire to lean to easy money here to
facilitate the recovery abroad. But aside from those, the major determinants
were the discovery that open market operations didnft directly raise or lower
the total volume of credit but affected the discounts. This is a whole mass of
development of domestic monetary policy,
33
MR« RIEFLER:
Doesn't it take in two or three things?
this would be the coming of age of the Federal Reserveo
First,
There is one theme
that runs through, namely the appropriate role of the Federal Reserve in
relation to domestic stabilizationo
Then there is the theme of promoting
the reconstruction of the world economy.
participant in that.
The Federal Reserve was a key
It is comparable to the role of the Marshall Plan in
the postwar world this timeo
DR. JAMES:
Isn't there a third thing, the concept of monetary sta-
bilization in the technological age?
MR« RIEFLER:
It is hard to get all the threads together*
It has
always seemed to me that one of the developments that happened during that
period, the obsolescence of intellectual respect for the commercial loan theory,
was a deterioration of the quality of bank assets*
The surprising or shocking
event of 1930 was to find that as small a contraction in the economy as was
experienced by 1930 was accompanied by a sharp rise in bank failures all over
the country.
Something happened to bank assets in that time that ought to be
noted if you are going to lay any base for understanding the troubles of the
thirtieso
DR O STEWART:
I think that may be the key.
The nature of the think-
ing that was taking place, in contrast with the events that were occurring, was
developing a gap*
The thinking officially about the acceptance money.
There
was an isolationist attitude politically, but actually New York, from the
standpoint of its financial activity, was about as far from being isolationist
as you can think of:
the advent of the Dawes Plan, the Young Plan, the partners
of Morgan being represented in it, and then the Federal Reserve not being able
to take membership in the institution that was created.,
So that underneath some
kind of thinking, and therefore somewhat obscure, was the great major fact of
34
the capitalization of the corporate securities at higher levels and larger
amounts of credit.
So that the very thought of stabilization of business was itself a
deterrent for exercising control over the securities market. There were two or
three years there where people said, Jt0h, My God, you mustn't do this because
you will hurt business*" Somewhere in there lies an extremely interesting set
of conflicting intellectual ideological notions and ideas.
DR. CHAHDLER: Right along with that too, as you develop the stabilization practices in the Federal Reserve System^ and they were thinking more and
more in terms of national control, there was still this hope, at least on the
part of some people, that before long you would get back to: an international
gold standard where you could rely on automatic factors. So there is definitely
a conflict there.
DR* STEWART: A wonderful period.
DR. BQPP: Meanwhile, that led into such activities as paying off gold
certificates in order to reduce the reserve rates so the public wouldnft press
too hard for inflation,
CHAIRMAI SPROUL:
I think this discussion has indicated that in the
main heading under 5> the search should be about the development, not the development for appropriate peacetime organizations and policies, but taking into account
these broader questions of domestic and international import,,
DRO CHAHDLER:
I think the reason that we put that word "search* in
there was because we had a feeling that although much was accomplished, that they
were still searching in 1929 for some sort of an ultimate method of operation.
CHAIRMAN SFRQUL:
(Laughter)
Still are,
35
MR. RIEFLER:
When you take this up in relation to the "broader
setting of international stabilization, the broad idea, as I understand it,
was that central banks and investment bankers like Morgan and Company could
get finance in shape (l) by getting budgets balanced, and (2) by getting
the Treasuries out of the central banks by refinancing their loans, at the
central banks in the market, both at home and in N.Y.
These maneuvers could
get the currency stable, and eliminate part of the chaos in the international
economy,,
Then the other part of the program was -~ I think it was the general
concensus--that with financial stability, the government could move, pari
passu, toward reduction of trade barriers, reduction of tariffs.
That was the
ideology back of that whole program.
Just from memory, I remember how sick I felt in 19^7 * when Norman
gave out a statement about it being the time to drop tariffs, and Coolidge
immediately went out and met the press and said, "The United States is not
going to touch the tariff•"
I think you have to get those threads into this to paint the whole
picture.
That is a much broader concept than just the concept of the restora-
tion of a gold standard.
CHAIRMAN SPRGULs
It is a much more basic concept,
As between search and development, it had always
seemed to me that there was a signal post in the development of ideas in the
1923 annual report -of the Federal Reserve Board, which went beyond search and
was development,
MR. RIEFLER:
DR. JAMES:
Yes.
In fact there wasn't too much searching, because in each
stage through this there was a confidence that it had been found.
(Laughter)
DR. STEWART:
A perfect rationalizationo
CHAIRMAN" SPROUL:
Do you want to take up "e u and "ft!, Karl?
36
DR. BOPP: "e. The evolution of instruments of Federal
Reserve policy: changes in both the techniques and relative
importance of instruments such as the discount rate, moral
suasion of various types, open market operations, international
stabilization credits, development of the "factor analysis" of
the money market - member bank reserves and related items.
This investigation will necessarily involve the procedures for
arriving at decisions and the location of controlo
"f. The process of decision-making and the location of
control: this analysis will highlight the fact that the original
theory of the Act - that there would be at least the possibility
of separate credit policies for the various regions -- came under
closer scrutiny and was accompanied by many conflicts between
the Federal Reserve Board and the regional Banks, but also the
question as to whether and to what extent a centralized control
should be exercised by the Federal Reserve Board or by centralized associations formed by the regional Banks. The weakening of the influence of the Federal Reserve Bank of New York and
the increase of the influence of the Federal Reserve Board following the death of Strong,"
CHAIRMAN SPROUL:
Any comments or questions on that?
Go ahead with 6, Karl.
DRO BOPP:
It is from here on that some of this may seem more in the
form of conclusions than in the form of questions.
"Federal Reserve actions in a period of deflation and
breakdown - 1929 to 1933.
"In analyzing this period the following important things
should be stressed and interrelated%
"a. The prevailing philosophy of the public at large,
the Government, and Federal Reserve officials as to the responsibility of the central bank and of the Government in
dealing with conditions in such a period,
"bo fSound money* beliefs carried over from the pre-1914
days that 'currency manipulation1 should not be used in an
attempt to bring about revival, overlooking the fact that a
currency must necessarily be managed with respect to some
criteria of stability when it is no longer managed with respect to the gold reserves,
"c, Lack of grasp of America's place in the world financial structure. Belief that the United States must adjust to
world monetary conditions and could do little to determine
them.
37
lf
d. The persistence of the belief that the United States
could take no positive action to halt deflation even after the
international gold standard had ceased to exist and most countries of the world had adopted national currency policies.
International developments such as the cessation of foreign
loans, international financial panics, breakdown of gold standards, wide changes in exchange rates, etc
lf
e. Business cycle indoctrination which stressed the idea
that the forces of depression were fundamentally non-monetary
and that monetary measures could play little part in bringing
about recovery.
M
f. On the other hand, there was a latent tradition, sometimes referred to as Bryanism, that monetary action was vital
in restoring prosperity. But the monetary procedure contemplated was not primarily central banking procedure.
!t
g. The tradition of business cycle theory that depression was healing and beneficent and not degenerative and leading
to crack-up„ This tradition regarded deliberate monetary expansion to shorten the RecuperativeJ period as harmful0
"h. But with the deepening of the depression, the growing
popularity of the belief that there were inherent forces in a
capitalistic society making for stagnation and blocking the
technical possibilities for much higher living standards. This
point of view looked toward fundamental changes in the rules in
the economic organization for the most part rather than monetary
procedures.
"i» The decline in availability of bankable assets as the
depression deepened, indicating the vulnerability to contraction
of a monetary system that issues money against debts. The vicious
circle of monetary contraction and the decline in the safety of
debts and the willingness to go into debt except by distress
borrowers, proneness of American banking structure to failure,
role of restrictive legislation, such as the collateral requirements behind Federal Reserve notes and restrictions of eligibility of paper for discount. The resulting lack of responsiveness
of the economy to central banking measures for expansion.
" j . The diminishing tolerance of the economy for severe
liquidation."
DR. STEWART:
It would like to say for my part I think that is less
satisfactory than the preceding sections. I donft believe it is just because
you have stated them as conclusions. I find it difficult in some of these to
attach datelines. They seem to be true, but I don't see why they should fall
38
particularly in this period. There are so many things in ! 29, r30 &&d '31,
even before you get to H h n , deep in the depression, which seem to me not to be
things' that were learned, observed, experienced, that we felt the impact of,
which I don't see described in "a11 to "g". "a" to "g", I agree with, I don!t
quite see the timing factor in it.
MR. RIEFLER:
"B-l" is much more appropriate in reference: to 1921.-
That is just what Strong expressed in Congress.
MR. BURGESSs
This whole series is not the way we were thinking in-
side the Reserve System.
There was an enormous struggle going on to resist
these things and do the right thing.
MRO RIEFLER:
that.
Letter "c", I think Mr. Hoover had something to do with
It wasn't at all prevalent within the System*
DR. STEWART:
I think there needs to be more sense of struggle there.
I think inside the System there wasn't this lack of recognition of these problems.
It was a constant struggle to try to perfect them,
DR. JAMES:
Isn't the watershed of '33 really as you say, within the
System, and to a certain extent within the White House?
Up to 1933, there was
a real struggle to meet this deepening depression by traditional central banking means, and after f33, the balance swung over to meeting it by political
means.
MRo RIEFLERs
Well, the Reconstruction Finance Corporation was or-
ganized in October, f31, and it was put up to Hoover long before then.
MR. BURGESS:
I think the failure of the R, P. C. to appreciate the
size of the job had its impact.
MR. RIEFLERs
I was awfully excited about that; I remember going over
it in a closed meeting of the Senate, when Meyer presented the legislation.
39
to set up the R. R. C .
Senator Couzens* immediately said, "You don't
propose to lend on "bad assets, do you, Mr, Meyer?" He responded, "Of course
not, everything has to be sound." And I remember registering ito
It came
to me through a remark that Walter once made that commitments made at Committee
hearings seriously impair effective action later, I had a sneaking feeling at
the time that he couldn't take that commitment, "but he had to get that bill
through. Certainly one "basic reason for the inability of the R. P. C# subsequently was the fact that they were sucking the sound assets out of the banks
and leaving the remaining deposits with no sound assets back of them. That
came right out of those hearings.
BR» STEWART;
I don't believe we have anywhere a proper appraisal of
this period in terms of the effort or the growth of ideas. That is why it is
so important to grow something up out of this, so that you have a sense of its
coming right up*
DR. JAMES;
I have always had a feeling too that by the summer of
1932 the effort had very largely succeeded, and if it hadn't been for the admixture of political things in the election campaign at the end of that year,
the result might have been different.
MR. RIEFLERs
You have got to trace the development of ideas running
parallel with those of the Federal Reserve with respect to its monetary policies, ideal as to the role of the examination system and to its procedures.
The theory at the time was that the examiners examined banks, and if they were
\
in difficulty, closed them to protect depositors before the capital was eroded.
MR. BURGESSs
the bottom.
MR. RIEFLER:
Ordered them to sell out their security portfolios at
And what happened was that that very fixed and rigid
procedure kept clumping the money market to pieces. You should trace the
evolution of the idea that the proper procedure was to keep the bank open and
in being, not to close it and sell it out, either by putting in money through
To identify, see Appendix.
40
the F # R. C. loans, or through purchases of preferred stock or something
else.
The authorities had to th^.nk through, carefully, a new idea.
DR. WOODs
I am the one who wrote a good deal of this material,
here. Since I "believe, that the crisis of 1931-33 was essentially due to
a progressive decline of liquidity (whatever other objectionable features
may have been present), the leading question in my mind in studying the
period is "why should a country permit itself to suffer such devestating
effects from monetary contraction?*1
The answer seems to be that some of
the basic ideas then dominant were at fault. A. C. Miller, for instance,
testified that the Federal Reserve should not buy securities to stop a decline in business. There was quite a little testimony given by various
people to the effect that an expansion of credit, or an expansion of money,
in an unsound and declining business situation would cause further unsoundness and further decline. Beginning in 1933 there was quite a revolution
in ideas, and the change in ideas that were dominant seems to be related to
the change in the kind of action that was takeno
MR. BURGESS:
Of course, Miller at that time was fighting his old
battle against the New York Bank, because the New York Bank was partly in the
lead in getting the new legislation in February, 1932, to change the status
of the Government securities as collateral. That opened the way for the buying
of a billion dollars of Government securities from March to June, a very vigorous operation. Miller didn't like that because it was done over his protest,
in a senseo
But the System was solidly behind the use of open market operations
to meet a crisis of that sort.
DR. CHANDLER^
Only last week I saw a memorandum written in the New
York Bank in early 1930 to the effect that the System ought to engage in the
purchase of approximately $50,000,000 worth of Government securities every week
until all the banks were out of debt and £ven had some excess reserves. And it
was
approximately two years later that the policy was adopted. So that I think
To identify, see Appendix.
41
this kind of thing would " e a useful addition to the outline, indicating
b
that there was differences of opinion in the System and some were moving
in that direction more rapidly than others.
MR, BURGESS0. Who wrote it?
I donft know who wrote it, but it was signed " y the
b
DR. CBMDLER:
Governor of the bank and sent to the Board.
DR. BOEPs
Then there was an attempt during this period to in a
sense keep the Federal Reserve pure and clean. For example, the early Hoover
proposals which were to organize other institutions to take over sound assets
of banks, etc., but not have them eligible for collateral loans at the Federal
Reserve Banks, and so onD
The suggestion of some slight modification in eli-
gibility requirements,
MR. RIEFLER*
that theory quite well.
No, that isn't the right interpretation.
I remember
It was that if your problem involved losses in bail-
ing out risk situations, then those losses should fall on the Treasury with
its taxing power and not on the central bank. And so the Ro F. C. was organized and operated in coordination with the central bank. It is a quite
different theory.
DRO WOODs
Was there not a general idea in the business and financial
world at that time that you did not deal with business depression by monetary
expansion -- or, as it was often expressed^ by tinkering with the currency?
MRO BURGESS:
I don't think so. There was a strong feeling that the
budget should be balanced, the argument that even at the bottom you should try
to balance your budgeto
MR. RIEFLERs
Yes, but they took the R. F. C. out of the budget.
CHAIRMAN SPROUL:
I think there was some idea in business and banking
circles of the healthy characteristic of a depression, but I don't think that
should be pinned, on the Federal Reserve System as an idea to which it had adhered in considering its responsibilities during that period.
A2
MR. RIEFLER:
There was the idea that the central "bank needed
utmost public confidence in the soundness of its assets, and that the
Treasury should carry the riskso
CHAIRMAN SPROULs
That would be consistent with our holding more
Government securities and the Treasury taking risko
MR. BURGESS:
Of course that whole question came up after the open-
ing of the "banks in March, '33* as to how you filled that capital gap, and
the mechanism of doing ito
The "battle was to get that done. Finally it was
the R o Fo C. with its capital notes and so on. The Federal Reserve after all
at that time had $400,000,000 worth of capital.
MR. RIEFLER;
I remember very well in 1931 When the Anschluss came,
and Luther was flying around Europe to borrow $500,000,000. This was a much
bigger credit than the capital of the Federal Reserve Banks, and there was the
idea that therefore it was not proper for the reserve banks to underwrite the
credito
I think it was an erroneous idea but there was that kind of an idea
with respect to the capital.structure of the reserve banks,
DR# STEWARTs
I think some period comes there between September, 1931
and March, r33, and by covering the whole thing we make the stock market break
sound as if it were the persistent fact. The main characteristic of the period
is that we were always behind the event. The event was moving faster than men
were able to move, and that in part was because they underrated the basic illness of the community.
They thought it was the stock market break, and there-
fore it ought to be able to readjust itself, and the over-extensions had worked
their way down much more seriously. So the tragedy is the f31to f33 period.
MR. BURGESS:
The one interesting point to hinge that on was the in-
crease in discount rate at the end of September, 1931, where the debate was,
now should we at this stage of terrific deflation and loss of gold take the
traditional action of raising the discount rate, or should we discount freely
To identify, see Appendix.
43
and pour out money and offset it?
The limiting factor there was the fact
that you couldn't "buy government securities "because you were right up
against the security of the margin of collateral of the Federal Reserve
notes 0
But the decision as to whether to raise that discount rate had to
be made and the dominating idea there was, well, England went off the gold
standard with a discount rate of 2 per cento
Now should we be forced off
here, with a low discount rate, when tradition calls for a higher rate?
DR. STEWART:
With the French taking goldo
MR* RIEFIER:
I have always thought that if the authorities had
known how to handle the failure of the Bank of Kentucky and the Bank of the
United States, there would have been a turning point in the fall of 1930.
I wouldn't put it in '32O
The failure to handle those two situations set
the pattern of the credit liquidation that went on subsequently and eventually brought down everything.
MR* BURGESS:
There again there certainly was the feeling in the
New York Banking community that it would be a very helpful thing if these
two banks could be liquidated out and "draw a circle around them and save
the soundness of the structure" a thing that many of us fought as hard as
we could.
Now that isnrt an instance of the theory about moneyo
That was
that these banks were bad banks and this is an apportunity to cut them out
of the structure.
And they were bad banks.
DR. CHAM)LERs
Maybe the language here isn't exactly appropriate,
but when I tried to imagine what we would do today if we had a repetition
of 1929$ 1920 and !31<> the contrast between what was done then and what we
would do today makes it seem like another age completelyo
MR. BURGESS:
DR. CHANDLER:
and policy.
That's righto
Something has happened that has revolutionized ideas
44
DR» STEWART: We could handle 1929 and f31 most effectively today.
I am not sure we could handle 1956 as effectively.
DR, JAMES: You have put your finger on the point I have been thinking about.
1931 is a stronger division of these two periods than 1929. That
is really the time, as Walter said, when events started racing ahead as we
never quite caught up.
MRO BURGESS; Remember that Herbert Hoover got together the utility
companies in 1930 a&d urged upon them a big expansion program, which they to
some degree adopted,
DRo JAMES:
I would go along with T30, but it isn't !29-
DR. STEWART.0
This is more Ijnportant than the period we spoke of, of
the Federal Reserve coming of age. This we need to know.
DRo CHANDLER:
In a list of incidents and controversies and that kind
of thing in this period that might be dealt with*
MR. RTEFLER: Exactly what were the incidents, what were the propositions made? Meyer tells the story about how he went to Hoover in 1930 and said,
"You have got to cancel the Allied war debts*" And Hoover refused.
Then he
went back and put a motion that if th& proposal came later to bail them,,'outj he
Would refuse*
He tells that storyo
MR. BURGESS: What about Mr. Mellon going around the country telling
the people, TtThere is a hell of a storm coming, you*d better get liquid,t1
(Laughter)
I know a specific instance of that. We got in the bank and said,
"By God, there is a storm coming and you better get yourself liquid."
DRo CHAHDLER:
That indicates that there was at least one man who
might be tagged with the attitudes described here,
(Laughter)
45
MR, RIEFLERs
Meyer had a "broader view. He was the one that was
desperately trying to adjust the debtso
MRO BURGESSt
Of course, the one turning point there was what would
" e the character of the approach of the R. F. C. to its problem. You find a
b
memorandum that says the R. Fo Co should practically draw a line, we are not
going to let the R. F. C, go beyond this. At the time they were lending a
dollar for every two dollars of assets9
MR. RIEFLERs
earliero
That was the commitment to Couzens* I mentioned
That is where they got committed to that conservative banking com-
mittee.
DR. CHAM)LERs
Were there other things of that sort that ought to
be noted here?
MR. RIEFLERs
It .is full of them if you would study that period,
and really cull it for factual historyo
Miller* attempted to change the
R, F, G. procedure from a lending operation on sound assets to a preferred .,
.
stock subscription operation,Pbut Ogden Mills* turned it down. That seems ' o
t
me one of the crucial wrong decisions.
DR# CHAHDLERs
As I look at this period, it seems to me there was
also a failure to see that assistance to banks was really assistance to the
whole economy too. Today I think there would be an attitude that we don't
save banks as banks^ but you save them because the whole economy will go to
pieces if you don'to
MR# RIEFLERs
There wasn!t a failure to see that. The problem was
a moral problem, how much do you bail out stockholders and take losses for
bad loans they should not have made. That was the moral problem that the
authorities were trying to see their way througho
And that is why Traylor*
and Miller* came up with the idea that if the Ro Fo Co subscribed to preferred
*' To identify, see Appendix.
46
stock in a weak bank., it would keep the bank in operation as a going concern, keep the money supply available to the economy, and still let the
losses from bad lending whatever they were, fall on the stockholders who
were really responsibleo
MR, BURGESS:
Then there was a terrific argument just after the
bank closing in connection with the bank opening., of the formula to be used
in opening, whether you open them all, or 50 per cent, immediately have deposits to work on, and then determine as you go along how much of the deposits
have good assets back of them, or whether you open up just the good banks.
And the thought was, we will just open the good bankso
That meant three or
four thousand banks closedj the effect on the community was terrific*
just cut off that much volume of credito
You
I don't know what it was, whether
it was 15 or 20 per cent of the country*s total volume of available credit*
That accounted, in my mind, for the slowness of the recovery.
DR# CBMDLERs
It is this kind of thing that I have in mind, be-
cause my guess is that faced with the same kind of thing today, there would
be a tendency to open all the banks, not because of consideration for the
bankers, but because of consideration for the public as a whole0
MR, RIEFLERs
a gap in the thinking*
It was really the absence of a technique, it was not
Take the situation in October, 1930, when the Bank
of Kentucky and the Bank of the United States began to go undero
They were
rotten banks, rife with dirt, indulging in security manipulations and real
estate manipulations.
In those situations there was a direct moral reaction:
that we ought not to bail out all those lousy stockholders; that they ought
to bear the losses.
CHAIRMAN SPROULs
Combined with the theory of banking supervision>
which persists somewhat to the present day, that if a bank becomes insolvent
on the basis of quotations of various boards and markets, you close it.
47
It seems to me two thoughts or ideas have come out of this discussion
of this particular section from this group. One is that the period ought to be
divided into one that would take account move clearly of the development of
events»
And second that "both were periods of struggle of ideas as between old
methods, orthodox methods, and new methods of dealing with inflation and depression, and that it was not all what might be implied here, what Major Angas*
referred to as paralysis in a blizzard*
MR. RIEPIER:
You certainly want to know the whole history of the war
debt controversies, and who put up what propositions *
CHAIRMAN SPROUL:
That is the conflict of ideas of various things.
It wasn't all one way*
MRO RZEFLERs
Don't you need a detailed search for facts?
The credit
Anstalt, and the Anschluss, and the Luther storyQ
DRO STEWART:
I was wondering whether this period might not lend
itself to canm&ssions and studies which would be of help to the author, because
it is so inadequately studied that it would be conceivable that somebody could
lay out maybe half a dozen studies here, where under some editorial guidance,
it could deal with this period, A single man taking on this, and then having
to work with the basic job, would have a large assignment.
MR* RIEPLER:
There can be a number of participants, with someone
becoming the key participante
DRO STEWART:
One of the preliminaries of the development of a scandal
nearly always is the ominous character of the scandal, something that is first
heard of, then is quiet for awhile, then grows*
that happens at the end.
not part of the story•
It is a common mistake to treat these as if they were
I think they are perfectly genuine parts.
To identify, see Appendix,
The other is a political change
48
If you find a major scandal in the field of finance, you ought to " e
b
put on notice that maybe underneath this there are a lot of other things that
you ought to -give^'attention to. Then you won't ride off on a moral high horse.
CHAIRMAN SPROULc
Maybe like the crash in silk in Japan in 1920 and
the Credit Aostalt in Austria?
DRO STEWART: Yes, The financial crisis in London.
DRo WXLLITSs
Walter, I have no right to speak on a subject about
which I am not only "behind the events "but the events are so far "beyond me, outside of my sphere * But sitting here, tfye sense of your statement that it would
be almost an Impossible task for one individual, especially if he be an individual who hasn't lived through it, to try to grasp it all, is just beyond
question*
He canft do it. 1 remember sitting with Henry Clay just about a
year ago. He had the diary of Montagu Norman, and Henry would turn over a
page, during this same period, 1929-33*and he would give me a lecture on all
the things back of it, all based on a little:note in Norman's handwriting. But
Henry knew it all. To do it all with that kind of intimacy and knowledge is
necessary>
It seems to me it has to be broken down somewhere, at least look-
ing at it as an outsider, and then that breakdown needs to be reviewed by the
kind of awareness of events and the meaning of things that is here in this
Committee„
That is purely an outside reaction, and a uninformed reaction*
CHAIRMAN SPROUL;
1 think you will have to quit taking cover under
that "outside and uninformed„n
DR9 WHLITSs
You are inside and informed.
Pretty soon you will call me a banker „ I think I need
a little more input before I engage in any more output,
CHAIRMAN SPROULs
1 think this is a convenient point to break up
while they rearrange this room for luncheon,
(Luncheon recess at 12:00 noon*)
(Afternoon sesssion to commence at 2%40 P«M»)
49
AFTERNOON SESSION
CRAIRM&H SFROUL: Resuming our discussion with our consultants,
I think we had gotten down to 7> on page 5, Karl3
DR* BOEP:
That9s correct.
I might say that although we were in a
sense a bit apologetic about No, 6, I think in retrospect I wouldn't apologize
at all.
CHAIRMAN SPROUL:
Did it take you two hours to think up that rebuttal?
(Laughter)
DR« BQFPs
I am rather hopeful that we will be able to continue in
that fashion on No, 7> which concerns Federal Reserve policy from the banking
crisis of ?33,to our entry into World War IIo
"Federal Reserve policy from the banking crisis of 1933 to
our entry into World War II - 1933 to 19410
"The treatment of this period should trace the disillusion
of the public and the despair that existing thinking and institutions could provide an adequate solution. It would combine a
discussion of actual Federal Reserve policies with a description
and analysis of the very important changes in the legislation
relating to the Federal Reserve System., It would try to trace
out all the lines of development that culminated in actual or
proposed changes in the basic law and in the actual structure
and operation of the System,
"Early Recovery Period"
"ao Belief that monetary measures must be mainly outside
central banking procedureso (Preparation for the issue of script
an extreme instance of blindness to central banking possibilities,.)
Due partly to lack of -understanding of central banking! partly to
the loss of prestige of the Federal Reserve during the crisis; and
to the historical traditions regarding money or leading groups
sponsoring monetary expansion. (For instance, looking back to
bimetallism and to greenbacks in the Thomas Amendment^) Establishment of new institutions and procedures, such as. deposit insurance,
R. F. C , and so on»
*b. The loss of confidence in business leaders which came
with the collapse resulted in greater receptiveness to reform
legislation. The popular attitude that greed and dishonesty were
in great part responsible for the collapse emphasized the necessity of "driving the money changers from the temples" and diverted
attention from the monetary aspects of the collapse9
50
"eo Closely related was the idea that the failure to curb
speculation by denying credit to speculators specifically was
an Important cause of the collapse* This belief led not only
to reform legislation, but to the search for selective monetary
controls; and it made central banking policy very sensitive to
a rise of stock prices down to the present day,
n
d. The continued misunderstanding of the place of the
United States in the world financial structure was evidenced
by some attempt at competitive devaluation. The problem of
providing dollars was complicated by the protectionism of
strong pressure groups."
CHAIRMAN SPKOUL: Any comments, suggestions or questions? We have the
word of our consultants that we are a very stimulating group, and we all expect
some more stimulation*
MRo BURGESS:
I wonder how much of this was really due to this change
in public thinking, and how much of it was politics, which rationalized itself
by the first of the very important changes in the Reserve System,
they were as important as they seemed.
1 wonder if
The big change, it seems to me, was one
of thinking; that is, the Banking Acts of '33 and r35 actually made less difference in the operation of the System than they are given credit for.
It already
had changed in 1932, which freed open market operations by limitations of
collateral on notes, which made Lombards* possible*
Fo D* I. C,
There was, of course, the
and the Securities and Exchange Act, and the control of margin
requirements* Politics exaggerated all those things.
DR» JAMES;
Isn't this really a period in which the old idea of
economics and business was something separate from government, and about to
give place to the modern world where the government is completely intermingled
with business?
So there is really a change in philosophy, which as you say
is partially politics.
*
To identify, see Appendix0.
51
MR* RIEFLERs
Actually we are making a terrible mistake^ to put
the main stress on the early recovery period in terms of ideas*
period of milling actiono
things in shapeo
It was a
You had all the banks to open, you had to get
You had to get those deposits in the closed banks freed
again so that they could perform their money functiono
I would think that
that period ought to be dealt with in terms of feverish activity, not in
terms of shifts of ideas about the Government staying out,, or the Government
getting in; that is almost peripherals
ing all over the place o
It was a busy period^ people work-
There wasn 8 t any question about the Government
being in, it was in to the hilt*
It was the problem of deciding what was
going to be done,
CHAIRMAN SPRQUL*
We have to remember we are talking here primarily
about a history of the Federal Reserve System., then think of treating some of
the other things as collateral*
MR. RIEFLERs
Getting the banks opened, getting the deposits freedo
CHAIRMAN SPRGULs
MR. RIEFLERs
Getting the banking system to working again.
You had that weird period of changing the price of
goldo
DR. JAMESi
Yes^ and you had the gold "block coming out of the London
Economic Conference.
CHAIRMAN SPROULs
The most important underlying theme here is the
growing acceptance of the idea of Government participation in the economic
sphere,, and I think that ties in quite closely with any history of the Federal
Reserve System, because I look on it as a successful example of Government and
private collaboration in a primarily Government function., with the Government
having the dominant voice., but with some private influence and interest being
heard and giving counsel and making their contribution„ I think the underly~
(
ing idea' is the acceptance of Government as the prime mover in economic affairs,
52
DR« JAMESs
And Isn't this the period when a lot of emphasis shifts
back from the "banks to the Board?
CHAIRMAN SPROULs
I think both growing out of legislation and changes
in personalities, there was a shift of influence from the banks to the Board.
There was also a shift of influence from the banks and the Board beginning then
to
the Federal Open Market Committee.
MR. RIEFLERs
And also the Treasury*
DRO STEWART:
The period that Bob Warren*used to refer to as the time
when there were no involuntary muscles.
(Laughter)
The sense of emergency was so dominant, something had to be done
always — action.
It does fall on action, emergency.
This was the period when
the Treasury took over foreign exchange, isn't it?
CHAIRMAN SPROUL;
MR, RIEFLERs
This is when they began to, yes*
I would think that with the jigglings of the price of
gold ~~
CHAIRMAN SFRQUL: Beginning in ! 33.
MRO RIEFLERs
The Treasury moved in.
MR* BURGESS:
The Government moving in, in an area that had been more
private, and acting without too much thought, seizing the gold thing, one thing
after another.
It wasn't a change in public thinking so much as. an emergency
rushing in, taking over the gold from the Federal Reserve,»
I think the amazing
thing really is that we were able to survive that period in the System with as
modest changes in the structure as there were0
It could well have been a com-
plete change in the Reserve System,, or a taking over of private banking.
The
number of changes made in the banking system were pretty modest. There were
few actual changes made. There was tremendous sound and fury about bringing
*
To identify, see Appendix«
53
to the bar of justice, and we are fortunate that there were as few structural
changes as there were*
But the specific things that were done, again I agree,
were a good deal a matter of seizing on the immediate things that turned up.
Some pressure group gets hold of an idea.
DRO JAMES: You really need to divide the period at about T36, This
terrific rush to f36, then it begins to settle down,
MR. BURGESS:
Yes. Of course, there is the episode in which
President Roosevelt threatened the Reserve System that if they didn?t buy in
the open market in '33 he would use the power of the Thomas Amendment to dissolve them. That was symptomatic. They regarded it, of course, as revolutionary change»
DRe STEWART:
I saw something of the Treasury during those days, and
I became convinced that they were literally frightened of the banksa
wasn't something they were working up*
was, has it any connection with Morgan?
This
The first question they always asked
And I thought it was exclusively
politics*
I think it is going to be hard to write this and give a proper allowance for Treasury view, or for Federal Reserve history.
MR* RXEFLER:
Jack Yiner* would be able to cover that.
DR. STEWART: Yes, indeed. And certainly there is the Treasury and
the Federal Reserve in that period, I think,rather than primarily the lew York
Bank and the Board.
MRO RXEFLER:
The tripartite activity was almost entirely Treasury;
Merle Cochran* -ean tell about those operations.
*
To identify, see Appendix.
54
DR» STEWART: Merle is someone who would have some correspondence and
notes on this,
MRO R3EFLER:
.»*** the avalanche of gold.
DR. STEWART: When was the avalanche of gold? When does the big
movement set in?
MRO RIEFLER;
!
36,
DR. STEWART: And it runs all through?
MR, RIEFLERs
Then you have the Treasury starting to sterilize,,
CHAIRMAN SPROULs
Treasury,
I think you are right about your timing on the
I think you are quite right, Mr. Stewart, about it being as much
personalities as politics, and it being the Treasury versus the System rather
than versus the New York Bank or the Board separately*
An attempt was made to
establish relationships with the new Secretary of the Treasury, Mr, Morgenthau,
up in New York, which he interpreted as holding a gun to his head to try to
subordinate the Treasury to the System in general, and the New York Bank in
particular, and he never forgot it and referred to it from time to time, and
always had questions in his mind about anything connected with banks.
MRa BURGESS:
The symbol of this moving in of Treasury on the Federal
was the taking over of the gold by the Treasury.
MR« RXEFLERs
But the jiggling of the price of gold was much earlier
without notification to the System,
CHAIRMAN SPROUL:
MRO RIEFLER:
do to stop them?
But just notification, that was all.
I remember Gene Black,* and others, saying what can we
I came up with the idea to try to divert it by concentrating
on getting, the deposits in closed banks f^eed* Everybody had been neglecting
*
To identify, see Appendix.
55
that, so we thought that was a fine idea.
organized the operationo
We got Mort Buckner* down and
When it was taken to the Presidident for approval,
he said in effect, that's fine, "but we are still going to jiggle the price
of gold.
(Laughter)
CHAIRMAN SFROUL:
We have had perhaps three general ideas with re-
spect to this section 1, that an earlier section might "be split between
1923-26; second, 1931* the merging of the Government and business in economic
terms; and third, most important from the standpoint of our specific subject,
this shift of responsibility and authority as between the System and the
Treasury, and the emphasis on actions which resulted in some of these developments .
DR. BOPP:
Then the later recovery periods
fl
a. Abandonment by the Administration of monetary action as
an important means of increasing general demand, and greater emphasis
upon fiscal policy, increase of farm income, and upon raising wages
and other labor income by nonmonetary means."
MR« RIEFLERs
It wasn f t abandoned.
What does that mean, abandonment of monetary action?
Easy money didn f t take hold partly because of lack of
confidence.
DR. WOODs
about 1936 —
I was thinking of a conversation with James Harvey Rogers
I am not certain of the exact year,
Rogers told me the
Administration had given up attempting to expand general demand by means of
monetary measures but was going to depend more on government spending.
MR. RIEFLERs
If you have excess reserves equal to required reserves,
you can't call that abandonment of monetary action.
there in super-abundant quantity.
There was a set of circumstances which re-
quired that other forms be brought into play.
To identify, see Appendix.
The monetary action is
56
DR. WOOD:
But in this period (about 1936) there was a less active
effort at monetary expansion than in the period when the Thomas Amendment
was passed.
CHAIRMAN SPROUL:
conscious policy.
The piling up of those reserves was not an act of
It was a result of the gold inflow which the Government and
the monetary authorities accepted "but didn ? t do anything to control or effecto
MR. RIEFLERs
But if they were going to use monetary action, what
they would do would "be to create excess reserves.
CHAIRMAN SPROUL:
MR. RIEFLERs
theory of abandonment.
It was there.
They were there.
So it seems to me there wasn't a
There was a loss of faith in the effectiveness of excess
reserves because such reserves were present in a very high degree, and they
weren f t doing the job.
DR. CHAM3LERs
1 wonder, Win., if your point would be partially that
if "c" came first, and the word *fabandonment" under "a" had substituted for it
1
1
supplementation" ?
MR. RIEFIERs
DR. BOH?:
Supplementation, that!s the point.
I might read
V .
"c. Drop in interest rates to low level as the result of
historical accident rather than deliberate action. The drop in
long-term rates welcomed by the Federal Reserve. But the large
excess reserves, which were mainly responsible for the drop, regarded as a potential danger of inflation« This fear of inflation in the midst of semidepression characterized the attitude
of the Federal Reserve until Pearl Harbor."
MR. RIEFL£R;
Well, the drop in interest rate from 1929 to 1930 was
deliberate.
MR 9 BOPPs
This was the later recovery period.
MR. RIEFLERs
Yes.
MR. BURGESS :
I don*t know about that last sentence.
They thought
that having all those reserves kicking around was going to get undesirable
usage -~ I guess six billion dollars of excess reserves and the money rate down
to one tenth of one per cent.
57
DR. BOPP°.
Then this drop in rates at that time was a significant
drop, but in terms of more recent experience ~» well, oo O 0 . that height is a
relative matter.
MR* BURGESSs
I think you would say that the focus of administration
recovery instruments was on other policies than monetary, partly "because the
monetary thing wasn't working.
didn't go to work.
You could throw any amount of money out, and it
Partly because the bank credit had been destroyed by the
method of reopening the banks, in which billions of dollars of deposits had been
destroyed, and partially because there were so many other aspects of the economy
which were prostrate that had to be dealt with directly «- the housing, the farm
situation, the Federal Farm Mortgage job.
The emphasis had to be elsewhere be-
cause the situation wasn't in that balance where the monetary policy proved
stimulating.
MR. RXEFLERs
The only effectiveness, it seems to me, was creating a
market for U. S. securities which made it easier to finance the deficito
Those
deficit expenditures were stimulating.
MR. BURGESSt
Part of that was due to the contradictory policies, the
combination of reform and recovery*
They rushed in and scared every businessman
so that he didn't want to go to work on anything, and put these regulations on
the security market and the stock market.
All these reform measures combined to
hold back recovery, along with extinguishment of bank credit.
But I think that wasn't a deliberate policy; it was events again, a
whole wave of eventso
DR. JAMESs
Isn't it probably the influx of Keynes' theory too, which
at the time was a lot talked about, that once you got easy money conditions,
then you begin using your money in these various policies?
I don't mean in the
sense of spending it, but your wage policy, price policy, was an attempt to get
it in circulation.
58
DR. BOPPs
You have to put in active money in a senseo
DR. JAMES:
Yes«
MR. BURGESS%
It was activating the fund which was thereo
But it was true that the things which the right hand
was doing were checkmated by the things which the left hand was doing. Business
confidence was thoroughly destroyed, so that no matter how easy you made money,
business didn't pick up*
It had been destroyed by nature, but they helped
nature by giving it another blow under the jaw.
DR. JAMES%
I think psychologically you could almost believe in that
period that you didn't need business confidence.
Government would just press
the button and business would respond.
MR. BURGESS;
And it was a favorite sport to make fun of businessmen.
CHAIRMM SPROULs
By increasing consumer purchasing power of govern-
mental action, business would soon get confidence because they would have markets.
DR. STEWARTs
I think the trick here was to keep the Federal Reserve
from going into cold storage.
There was this large reserve.
The Treasury moves
in, and yet it can't really be said to take over the functions of central banking, .and it looks a little to me as if Federal Reserve functions were not very
active in the period.
Just how does one, then, tell the story from Federal
Reserve activity to a period in which Treasury is so dominant and influential,
and sketch in the outline of a business period?
The whole relation of credit and
banking in that period is not self-evidento
MR. RIEFLERs
If you are going into this on the basis of a history of
ideas, it would seem to me the most important idea was the general loss of feeling that interest rates mattered.
That was the big thing.
The community gradu-
ally got to the point where it felt that interest rates didn't matter.
to Les about that in '48*
It was just baffling.
I talked
Good people would get up and
even if they didn't want to peg rates, they always would say that interest rates
didn't matter.
59
MR* BURGESS: The discount rates ceased to be of value,
DPL WXLLITSs
I remember in ?35> & group of large retailers, sparked
"by Beardsley Buml, came to the ^Social Science Research Council" and wanted to
have financed a commission that was to inquire into the then incipient recovery,
and really to pronounce on the fact that a new system of going out of depressions had now been proven• Later, in *37> 1 *B£^ with the chief person and asked
him, wouldn't it be nice to have the record come out Just at this point?
(Laughter)
DR. BOPPs ffdo The shift in influence over monetary policy
toward the Treasuryo In part this was due to the new powers of the
Treasury over reserves directly, but mainly it was due to the influence acquired by the Administration during ther<crisis and to the
loss of prestige by the Federal Reserve during the depression and
crisis,
"e. The policy of maintaining sorderly markets7 in government
securities materialized during the restriction of 1937• Though
this did not imply pegging of rates, it marked a definite change
from the ideas of the twenties, when short rates were supposed to
be varied with respect to business conditions. After 1937 the
Federal Reserve realized they would allow rates to drift within
wide limits and would intervene only to prevent sudden changes.
The Federal Reserve seemed by many to have become merely a check
collection agency. This policy of drift was partly the consequence
of the unfortunate events following the experiment in tightening in
1936-37.
n
f• Pegging the Market: The policy of maintaining forderly
markets', though not at all contemplating the pegging of rates,
prepared the way psychologically and developed a procedure for
pegging. (The market became accustomed to the Federal Reserve's
interventions for the purpose of affecting security prices as
such.) The Treasury had decided on pegging many months before
Pearl Harbor. The Federal Reserve did not object to the 2 1/2 per
cent ceiling on the long-term rate, but objected to the rigidity
of the pattern. The Federal Reserve Bank of lew York would have
preferred a higher long-term rate, but did not advocate raising
the ceiling in the situation existing when the rate was pegged/"
MR, BURGESS: What do you mean by new .powers of the Treasury over reserves?
The Thomas Amendment, and the Agricultural Bill?
MR, RXEFLER:
The gold devaluation.
60
MR O BURGESS•
DR O WOODs
The changing of the price of gold?
Following some of the meetings of the two agencies where
credit policy decisions were made, there was a public announcement that the
decision was arrived at jointly by the Treasury and the Federal Reserve.
I
think there were two such occasionso
CHAIRMAN SEROUL;
It was a question of sterilization of gold, and
desterilization of goldo
DR. GHANDlERs
They had the Thomas Amendment powers, sterilization
and desterilization, and then the operations of the exchange stabilization fund,
DRO BOPP^
Was it earlier where the President was given authority, on
recommendation of the Treasury, to change reserve requirements?
MRO RIEFLERs
DR. CHANDLERS
That was the first Thomas Amendment .
May 1 ask about this last point here?
I must have
been guilty of writing of the pegging of rates during the war as just a sort of
evolutionary result of the policy from 1937? on^ but 1 am not at all sure of
that interpretationo
The next question is, would you have had probably a peg-
ging of rates during the war, inflexibly, even if you hadn't had this background
of 1937 to
f
41 orderly markets?
CHAIRMAN SEROULs
I think we might have had and probably would have
had without the background, although the background eased us into it o
DR. BOPPo
Of course the basic issue was, are you going to finance
it on rising rates as in the First World War?
CHAIRMAN SPROULs
I remember a conversation with the Secretary in
which I used the phrase, "We can't finance this war by throwing dice with the
market as to what the interest rate is going to be o "
It can't be financed
with rising rates of interest in the market, which is continuously assuming
61
that the next issue will "be at a higher rate so we will subscribe to this,
sell out when we can, and wait for the next one*
MR. BURGESS:
war*
That really happened just after the outbreak of the
That is, there had been plenty of manipulating the market, but not a peg.
CHAIRMAN SPRQUL; Ho, that had not been, and the range of aupport was
determined in large part by the existing rates at the time they went into the
wax. The short rate was brought up a little from zero, or one-tenth of one per
cent, to three-eighths of one per cent, and the latest issue, the last previous
issue of relatively long-term bonds, had been at two-and-a-half per cent,
MR. BURGESS:
I wonder if you should say that after !37 the Federal
Reserve realized that they would allow rates to drift within wide limits?
seemed to me we were in there„
It
There was a fluctuation of rates at the out-
break of war abroad in J39^ in. which they held back from intervening. Finally,
1 was at the Treasury then, the Federal Reserve Board went in to peg rates
before the Treasury was prepared to do it0
It was a curious twist. But 1 donft
think the Federal ever said they were going to allow them to drift within wide
limits.
DR. BOEP:
I think these discussions at the time of the 1937 opera-
tions were that the System does not undertake to determine what the level of
rates should be, but that the movement should not be disorderly, to get from
one general level to another level* As 1 recall, there was no notion pf any
limit to the level of change.
MR, BURGESS:
I think that was an interpretation of what had been
done for some months. I don't think there was a change in !37«
DR. JAMES: Isn't the theme of thia period realty developing out of
what Walter Stewart Bald a minute ago, that Government having decided to dominate
monetary policy, using the Treasury, threatening these various things that this
62
is the period in which monetary policy is temporarily lost to the System and in
which the System gradually becomes the instrument for working it out again in
collaboration with Government, instead of seeming to be fighting with Government,
CHAIEMM 8PRQUL:
I like Walter Stewartfs phrase. This was the period
when the System had to fight to stay out of cold storage. Monetary policy had
been put in abeyance, not only through the emerging Treasury, but by the fact
that the gold inflow had created the monetary policy for the period.
There it
was. lobody had to do anything about it.
DR» JAMES: But the Treasury decided how much of that gold was going
to be monetized,
CHAIRMAN SPROUL:
There they did it very gingerly, &n& in consultation,
until the '36-'37 period when Morganthau said, "You will support Government
securities, or else."
DR. BOPP: During this period, I remember something Marriner Eccles*
once said. He said, "They consider me a controversial figure.
I am the only
person who is able to keep the Federal Reserve System*s name in the newspapers."
CHAIRMAN SPROUL:
I think carrying out this idea that has just been
mentioned, that your key should be continued shift of influence toward monetary
policy of the Treasury, then bringing out this idea of the Systemrs struggle to
stay in the picture at all*
DR. STEWART:
I think a new theme is beginning to be reflected before
you enter the war period.
The question Les asked about whether there would have
been experience with the government's pegging of rates if you had not had this
preliminary is part of it. But quite apart from that, the focus of attention
begins to be the government market*
So the Federal Reserve is beginning to
address itself to that question, and this continues until it reaches full drama
and then it continues to grow. So that you want to catch it in transition, to
*
To identify, see Appendix.
63
catch that as early as you can. Then it lasts a good, long time,, and is, I
think, evidence that it is the relation between the Treasury and the "bank and
the Government, and the whole growth of this Government marketo
MR, RIEFLERs
Starting with the Thomas Amendment and going through
the Accord, there was a gradual acceptance everywhere that raising reserve requirements was a way to stop inflationo
DEO STEWARD
Thatfs right.
MR. RIEFLERs
In f48 and r4<?, when I came back, everybody was talk-
ing about reserve requirements as a way of escaping from inflation.
CHAIRMAN SPROUL; Not everybodyo
(Laughter)
M o RIEFLERs
I mean it was general throughout the country, and in
international community0
Yet Australia, with 100 per cent reserves, had the
biggest inflation of all.
DR. BOPPo
I was just going to say that one of the most interesting
aspects was the academicians, the people in academic life, who failed to see
this.
DR. WQODs
I wonder whether anyone here could help me to establish
a little closer the date when the Treasury decided «- and to what extent it
decided independently »« that the two-and-a-half per cent rate would be the
maximum?
The first point in time I can be sure about is the summer of 1941.
MR. BURGESSt
1 think It came very close on Pearl Harbor. I donft
think it had been decided before Pearl Harboro
that time.
I remember a conversation about
64
DR. BOPPs
Hadn't there been earlier consideration of possible
announcements in the event of America's entry into the war?
MRO BURGESS s No, I don!t think we talked about that in ' 9 >
3<
MR. RIEFLERs
I don't remember it at all in "39.
DR. STEWARTS
Isn't there a memory of Governments at par?
that is the dateo
I think
I don't think it is the two-and-a-half per cent0
MR. RIEFLER*
He is merely saying why didn't they go lowero
CHAIRMAN SPROULs
Governments at par was the two-and-a-half per cent
rate.
DR. STEWART0.
I think that is what sets the periodo
MR. RIEFLERs
Can't you date it from the time of the discussion with
the insurance companies, when they said that they needed a living rate?
Wasn't
it about that time that the idea of tailoring securities became prevalent?
MR. BURGESS%
The first 67-72!s, the first loan drive was May, '42,
wasn't it? Didn't they try to make it 2 3/4's?
MRO RIEFLERs
I think I remember a discussion earlier than that of
paying a higher rate than necessary, because you had to allow the insurance
companies a living rateo
DR. CHANDLER:
Wasn't there; some discussion along that line?
Probably another element that should be put into this
period as a continuation from the earlier one is the rise of various kinds of
Government credit institutions, which would act as retailers of credit or insurers of credito
MR, BURGESS%
Of course, you had in the immediate post-depression
period the Home Loan Banks, the Federal Farm Mortgage Banks, Commodity Credit
Corporation, the Ro Fo Co and Fo H. A o developed further, that whole battery
of things that goes into the immediate post-depression periodo
1 think this
period first is the revolution which in effect takes over the Reserve System
65
and everything else under Government direction.
Then there is the gradual
recovery Toy the System of some of its functions,, First it "begins to operate
again with reserve requirements, and with open market operations, and so forth.
Then it gets frozen in position, "but nevertheless it is a great service in~
stitution by the Government, in which it only emerges, at the conclusion of the
war. But it is a gradual regaining of an operating position.
CHAIRMAN SPROULe
You have also that theme with the great growth in
the Government debt, the great growth in the Government securities market, the
Government securities market coming to " e the market through ^hich all elements
b
of the short money market make their adjustments, and the Federal Reserve System
moving from orderly markets to. war finance, and pegging, and then back out of
pegging, to the final course., You have those two things going on together
really conditioning the whole experience of the Federal Reserve System during
that period.
Anything more on 7?
Will you take up 8, Karl.
DR. BOPP:
1941 to 1945,
"Federal Reserve policy during World War 11 -
1l
a, A thorough description and analysis of the role of the
Federal Reserve in World War II finance should stress the contrast
With World War I. The contrast should include differences in
basic philosophies as to the function of the Federal Reserve,
differing techniques of supplying necessary money, differing
philosophies as to the proper behavior of interest rates, differing reliances on monetary policy, fiscal policy, and direct controls, and differing estimates as to the nature of the problems
which would have to be faced after the culmination of waro
"b. Some important changes arising out of this periods
the tremendous increase in the national debt, the practice of
pegging the price of Government securities, the shift of policymaking to the Treasury, the proof that a central bank can control
interest rates, changes in, the law to facilitate Treasury
financing.
66
rt
c* The Federal Reserve position was that credit expansion
was inevitable during the War and that it was inflationary, but
that raising rates would do little to prevent the expansion*11
DR# JAMES: There should be emphasis there also on the difference in
financing Allies and Associated Powers, which is very significant.
DR. BOPP:
That is quite right, particularly in view of the war debt.
MR. BURGESSs
I think also you ought to point out the influence of
the federal Reserve in trying to get the financing done, as far as possible,
outside the banks, in as little as inflationary manner as possible. War loan
drives included these long-term bonds, and the tremendous effort to sell bonds
outside of banks.
DR. JAMES:
I think even the pay-as~you-earn income tax changes is
significant in this.
MR# BURGESS:
I think the shift in policy making of the Treaswy
happened before that, and the Federal Reserve in this period was regaining
gradually some of its individuality, largely because of its extreme utility as
a service organization In the whole war effort. It had demonstrated its capacity
for doing a lot of things that had to be done, like exchange controls, and handling the inter«war loan drives, and so on.
CHAIRMAN SPROLJL,: We had a nice row about that too.
(Laughter)
I missed in here the continuance of the theme of the Treasury's becoming more and more dominant in international affairs. This was the period when
that was institutionalized in the form of the International Monetary Fund, and
the World Bank, with the Treasury having the final say, and representatives
abroad.
The inter-war idea of central bank cooperation was out the window, and
these new international institutions were now set up as institutions with the
treasuries dominant in them.
67
DR» BOPP:
In a s£nse the discussion of the differing reliances on
monetary policy, fiscal policy, and direct controls, World War I versus World
War II, summarize how almost complete the shift waso
MR, BURGESSs
Of course the war lasted longer this time and gave you
a chance. You take the actual taming, Wouldnft you find the direct controls
in terms of months come in as soon in World War I as in World War II? They
had them in 1918, It took a little while to do It In this war*
MR* RXEFLERs
My feeling about this war Is that In this country we
never did come to the theory of direct control«
in the end did notQ
England dldo
But this country
We accepted Inflation Instead. We had not started with
allocation of manpower, and control of production„
We had those machineries
going along, "but they weren't In control*
MRa BURGESS: We financed a larger percentage through taxes than we
did in World War I.
Second, we did make a tremendous effort to do our war
financing in as non-inflationary a way as possible. The banks and everybody
cooperated in a very great drive to do that. The Federal Reserve was leading
the way in that, which certainly has a very important place here. But we did
tie the rates down as we didn't in World War 1, and we did finance by direct
purchases of Government securities, and this Is an important point, rather than
by borrowing. Unwinding it afterwards was much more arduous, and much less
automatic
Maybe that is one of the reasons why we had a sharper deflation
after World War I.
It wound up with the banks holding three billion dollars
In the Federal Reserve which they proceeded to repay0
This time there was no
such mechanism, and we went on to inflate after the war,
Of course as to foreign aid, the major factor In there was that after
World War I we cut off foreign aid within about six months, and this time we
kept on in one way or another.
68
CHAIRMAN SPEOUL: Before we go on, I might say perhaps we ought to
get it decided just how far in terms of periods we will " e able to carry these
b
studies in detail, but I think for purposes of your work and your advice and
counsel to us, we might as well go right on through,
DRa BOPPs
This is very short, as you notice, in No. 9 >
<
"The search for appropriate peacetime organizations and
policies - 1945 to 1954.
fl
This should include a contrast between the search which grew
out of depression and the search which grew out of inflation. Very
important background materials for a consideration of this period
would include the continued fear of depression in the midst of inflation, the general demand that all the powers of Government be
employed to prevent the recurrence of serious depression, the emerging popularity of fiscal policy as an instrument of economic stabilization, the widespread disillusionment as to the power of monetary
policy to deal with unemployment and inflation, the greater tolerance
of the public for direct controls as a means of obtaining objectives
and its equal willingness to see their abolition at the earliest
possible moment, a search for extension of powers to reconcile expanding money supply with control of inflation, support of the
securities market with control of inflation, development of the
concepts of rigidly controlled markets, free markets, and flexibly
controlled markets P!t
MR* RXEFLERs
It seems to me this raises again the problem of shift-
ing prestige. By the time of the Accord, the System was taking a very strong
position on one side, while the White House was taking opposing positions,
partly through the Treasury, and partly through the Council of Economic Advisers,
The Council of Economic Advisers advocated a complete theory of pegged rates,
plus a bureaucrat sitting in each bank governing every loan at the loan window.
The Treasury rejected that but insisted on a pegged rate. In each case, the
Administration was insisting on giving up monetary policy.
CHAIRMAN SPROULs
There was one stage there where I was afraid that
the Council of Economic Advisers was going to take over both from the Treasury
and the Federal Reserve System, which I thought was about the worst possible
thing that could happen. Of course that was a different Council.
DRa JAMES:
Isn't there one significant thing left out of this aim,
and that is the effort to establish an international economy?
First the inter-
national institutions and the whole policy of supplying credits abroad,,
CHAIRMAN SPROIXL; Yes, 1 think so*
Then 1 think there is also left
out, which would come in certainly in 1953 and 1954, the international reemergence of monetary policy0
MRO BURGESSs
The whole period !45~!54 was a gradual regaining of
the freedom and dignity of the central banking systemD
It started right in in
'45, in an effort to get a little more freedom of rates in the market graduallyo
The first thing was the bill rateo
It was pegged at three-eighths until it
worked up to seven-eighths, and so on* Then a little more freedom was gained
inch after inch. All the time the Council of Economic Advisers battling on the
one side, and the Federal Reserve on the other, and all those episodes, with
the President trying to intervene, and the Douglas Sub-Committea*
I think
that is a great chapter,,
paralleling that is the international effort to re-establishment of
monetary sanity, and as Allan said, the monetary policy was amazingly successful after that.
DRO STEWART^
Two terms used in this paragraph which recur in other
places in the document, that is, fiscal policy and its increasing popularity and
monetary policy and disillusionment with it. I would like those to be very
carefully inspected as terms, before they get widely used*
1 take it fiscal
policy means deficit financing, and monetary policy means credit controls, and
excess reserves and so on.
I am extremely doubtful whether these are separable
as logical intimates, You can have a Treasury pursuing a fiscal policy which
is dependent upon either the collaboration or the domination over central banking, but it doesnft cease to be monetary policy, it doesri8t cease to be a credit
TO
factor. Even if it is known as fiscal financing, it has to have credit conditions.
I think that "because there were differences of approach emotionally
"between those people who felt that the way you dealt with a depression was to
have a "budgetary deficit, and those who believed that you should have monetary
controls. We have made it appear that the two are separate to a greater extent than they are through experience. So I am not persuaded that history can
make as much of a separation as logic is. inclined to suggest.
BE* BOPP: Would it be fair to say that in a sense fiscal policy grew
out of an attempt to extend open market operations to, in a sense, put active
money into the market, and so on, so that the dividing line becomes really very
thin,
MR, BURGESS:
Isnft there a distinction here between what the econo-
mists were debating about in their meetings, in which the contrast between
fiscal and monetary policy was prominent, that the discount rate no longer
mattered, and you can't have monetary policy, and so, and what the Council of
Economic Advisers was talking about. But as far as Treasury and Federal Reserve
and actual action, I donst believe this was a real issue. The Treasury under
Snyder^was Just as eager to get the budget balanced.
The fiscal policy was
never really used by any administration in this country as an instrument of
policy.
I say that with a little hesitation, but I don't think it really was0
But this issue as stated here is what economists were talking about in their
annual meetings and not what was really happening in the country*
DR. CHANDLER:
I think you could be made formally right, when you
include Keyserling as an adviser, but certainly Keyserling made a distinction•
DR, STEWART: He believed that the Federal Reserve had no influence
of any kind anyway.
*
To identify, see Appendix,
71
MR, RIEFLERs
Marriner Eccles certainly was. escplicit in those, things,
MRO BURGESS: Nevertheless, at the same time he was talking about it,
he was trying to get the bill rate up. He was trying to make monetary policy
work in a limited way*
DR* JAMES:
Isn't it a matter of semantics, with fiscal policy "by the
Treasury and monetary by the Federal Reserve?
DR* CHABDLER:
I seem to remember Mr. Snyder, while saying that a rise
of interest rates would do no good in fighting inflation, said that we will take
care of this by taxation0
MR, RIEFLERs
Yes, all the time.
MR. BURGESSs
I think it would be hard to find a clean-cut statement*
It is fair to say that they did, on the outbreak of Korea, go out for a heavy
tax program•
DR# STEWART: Well, a taxing program is an attempt to recover back
into the Treasury a liquidity that has been created by monetary means„
I don!t
think they are as inseparable as we like to make them appear• Anyway, all I
am doing is to give a warning that words don't always convey the full meaning.
DR9 CHAlDLERs
I think generally speaking, the comments that" have
been made here about the academic economists being the ones that use those
distinctions are quite right. For example, many of the so-called fiscal
theorists would simply talk about the income effects of taxation and expenditures by the Government, losing sight completely of the liquidity effects,
MR. BURGESS: We have had built up a whole religion, a whole theology,
by the economists of fiscal policy, so-called, which was far, far away from any
active practice. It was not practicable.
bill.
Congress would have had to pass a
72
DR» BOPP: And even when it was, when we ran with very large cash
surpluses, inflation went merrily on its way, because we smply shifted from
an increase in public debt to an increase in private debt. Certainly the rediscovery of monetary policy in its various aspects, and the inadequacies of
fiscal policy alone should be developed,
CHAIRMAN SPROUL: Remembering Walterfs warning that you can*t separate
the two.
How we have completed the section of the outline memorandum prepared
by our consultants. What do we now wish them to dot
In the light of this dis-
cussion, if they are willing, to prepare a new revised draft of their outlined
memoranda and their discussion memoranda, which will be for our use and the
use of whoever is selected as the historian in terms of carrying out this
project?
DR, JAMES;
I think that would be very useful, to bring together all
the things that have been said here.
DR« WOODs
Karl made a suggestion earlier that you might just take the
transcript of comments that were made today*
That would give the future histo-
rian a pretty good picture ^of the Committee's ideas,.
DR. BOPP:
of this.
1 think there is an runportant danger in having a revision
The danger is that the historian would feel more constrained by a docu-
ment that had been developed as that revision would beo
It would carry the
impression of being official and definitive. Whereas this clearly is something
just for discussion.
The transcript would show that there are differences of
opinion.
MR, RXEFLER:
You "don't see much sense in trying to winnow the dis-
cussion down and incorporating it?
DR. BOPP: No.
73
DR# CHANDLER:
I think if I were the person who might he considering
writing the comprehensive history I would find the mpst valuable combination
would be the document from which the discussion started, plus the verbatim
transcript of the comments that have been made about it. Even a condensation
of the comments made today might in a sense be misleading, because they wouldn!t
show the richness of the suggestions that have been madej in fact, the fairly
wide difference of opinions among some of the commentators.
MR. BURGESS:
this.
I think it is probably unfair to ask people to re-write
I think it has been enormously useful and helpful and very interesting.
DR* JAMES:
I think it might be useful if we could all get a copy of
the transcript to stir our thinking. I think that would help a lot.
DR. STEWART:
One rather odd thing about this strikes me.
If you look
at the periods that have been set up, they look like relatively short periods.
Hearly every time we have discussed it, we have said every period ought to be
broken down. This is undoubtedly true, but the question is, could they also be
combined Into larger periods., which would be the other question.
I haven't
any doubt that analysis does require the breaking of it down, but are there
any segments of larger experience overlaying the whole thing, which would make
combinations> perhaps not of these datelines, but of other datelines?
I would
rather like to see the history contemplated as a longer sequence of time, with
things moving in a slower arc, and not each one a series of separate experiences,
I dpa't know what would happen, but it is conceivable, don't you think?
DR. CHA1DLER:
A fascinating way to do this would be to write say the
description of the Federal Reserve System, thinking; and operations, in 1915;
and then jump to 1954, and say how did we get there,
DR. STEWART:
I am so poor a historian that I know no other way in
my thinking except to think backwards, William James once said that all
74
philosophies beg the question at some point.
feel that way about history.
I beg it at the beginning.
I
The things that interest me are the things of
the going present, and I would therefore like to back into the past, instead
of starting with this very early period, and sources, and so on.
You might take some of these things and say, what is the long arc
that reaches from some past into some present?
That makes it all relative and
interesting and probably as ultimate as we can get.
MR* BURGESS: There is one very interesting cross-section that could
be taken here, after doing this whole thing jand going back.
Say let!s compare
the domestic recovery after World War I and after World War II, and then the
international situation and how that was dealt with after World War 1, and this
period, and contrast it. In a sense that is doing what you are saying. You
take the present and say, now letfs reach into the past.
DR. JAMES: The only thing that you miss if you do that is all the
things which were very seriously tried and which didn't dominate mengs minds
at a certain point9
DR. WILLITS: Mr, Chairman, may I express a reflection on this task
in which you--sore engaged?
I don't know whether I stated when I was here at
your last meeting an incident that I often used*
I Just mentioned it to Walter
a bit ago.
Fred Keppel^was conducting a session in the early stages of the last
war at the American Philosophical Society on the American Future, and
Alfred Kidder*, an archaeologist of the Carnegie Institution, was discussing
the question of, as he looked back, a grave digger by profession, as he called
himself, trying to find soine comon key on some simpler basis than Mr. Toynbee,
He said, TII find it in this.
*
Whenever a culture, whatever degree of culture it
To identify, see Appendix.
75
acquires, has reached a point where it has grown too complex for itself to
comprehend, guide -and control, it devolves out of the lavs of its own inner
being, and it winds up in a ditch,"
He was in a sense describing our present culture. Your statements
do not diminish that thought when you talk about the fact that events are far
ahead of the human mind.
Of course, that is true not merely in the field in
which you are concerned, it is true to so many fields. The thing that this
drives home to me more and more is the degree to which it is impossible within
Government to perform any adequate and systematic appraisal, or digesting of
experience, and what an immensely difficult and complicated task it iso
It
seems to me that in this attempt to go back and to re-apparise what was done,
and learn from that experience, you aren!t merely doing it in this field, you
are giving a demonstration of what might be done, and how it might be done far
outside, in many other places, to the very great advantage of understanding
ourselves and our problems.
This would make me incline at this moment toward this conclusion,
that you aren!t making a five-year study, you are initiating a process, that
ought ta go on, and to continue to go oft, perhaps.
The other point that bears on the meaningfulness of what you are doing
is what this means to all the people who are teaching economics, not merely
central banking theory and international economics, but all the rest, and how
impossible their task is, $n& how difficult it is to get their reality in the
cctepass' of their experience, and how much a thing like this assists the process*
You might even be influencing Seymout Harris.*
(Laughter)
But I think those two things make the venture enormously important
and significant.
*
To identify, see Appendix.
76
CHAIRMAN SPROUL:
to what you said, Walter*
At our last meeting there was something relating
It was the consensus that in the choice of the two
ways to squeeze what is relevant out of the historical data, the Committee
proposes to use both a chronological approach geared carefully to time and a
problem approach which demands exploration of topic and problems through time.
That might also relate to the division of responsibility between the historian
and the separate monographs relating to separate periods and timeso
DRo STEWART:
That is exactly what I mean,
CHAIRMAN SPROUL:
Is it the general agreement of the Committee here
that we discharge our group of consultants with many thanks for their labor in
our behalf, and in behalf of this great undertaking which Mr* Willits has put
in its proper frame, and use this document, plus the transcript, as the basis
for our further consideration?
MR* BURGESS:
May I amend by putting in the words, for the time bein^;.
(Laughter)
CHAIRMAN SPROUL:
MR« BURGESS^
We always may call them backo
I think they have done some extraordinarily useful work,
and I think that we ought to in some way and at some time reassociate them with
this project.
DRo STEWART^
I think the Committee ought to write the next outline
and invite the consultants to come and criticize it.
CHAIRMAN SPROUL:
MR. BURGESS;?
A sadistic proposal,
I never knew there was as much In this topic until they
got into it and laid It out.
DR. BOPP:
May I say, Mr. Chairman, on behalf of the three of us that
it has been a terrifically stimulating experience for us 0
We have enjoyed every
77
minute we have put in on it. This is a grand session today, and it makes us
feel good to see that you tore into it, as we fully intended that you should.
CHAIRMAN SPRGULs
Is there anything else that anyone wants to bring
up today?
We will adjourn a little ahead of schedule,.
(Adjournment at 4:00 Po M.)
APPENDIX
ANGAS, Lawrence Lee Bazley (p. 47) - Investment economist. Born in Australia
in 1893. Author: THE COMIHG AMERICAN BOOM (I934)j THE PROBLEMS OF FOREIGN
EXCHANGES (1935); INVESTMENT FOR APPRECIATION (1936), Radio speaker and
lecturer.
BECKHART, B. Haggott (po 15) - Professor of Banking, Columbia University.
in Colorado in 1897. Author: BAJKFKING SYSTEMS (1954); and numerous
articles and "books on banking.
Born
BLACK, Eugene R. (p. 54) - Banker, Born in Georgia, Governor, Federal Reserve
Bank of Atlanta, January 13, 1938 to May 19, 1933* Governor, Federal
Reserve Board, 1933 to August 15, 1934* Reappointed Governor of Atlanta
Federal Reserve Bank until death. Died 1934.
BUCENER, Mortimer N. (p. 55) - President, New York Trust Company, 1916 to 1921;
Chairman of the Board, 1921 to death. Died 1942,
CHANDLER, Lester V* (p. 7) - Consultant to this Committeee
COCHRAN, H. Merle (pa 53) - Deputy Managing Director, International Monetary Fund,
Born in Indiana in l8929
COUZENS, James (pp, 39, 45) - Republican Senator from Michigan. Born in Ontario,
Canada in 1872, On Senate Banking and Currency Committee, 1932-36. Died
1936 while in office,,
ECCLES, Marriner (p, 62) - Chairman, Board of Governors of the Federal Reserve
System, November 15, 1938 to January 31* 1948; Yice Chairman, January 31>
1948 to July 14, 1951. Born in Utah in 1890*
FORGAN, James B o (p. 16) - President, First National Bank of Chicago, 1900 to
1916; Chairman of the Board, 1916 to 1924* President, Federal Advisory
Council, Federal Reserve Board, 1914 to 1920* Born in Scotland in 1852,
Died 1924.
GILBERT, Seymour Parker (p. 23) - Assistant Secretary of the Treasury, in charge
of fiscal affairs, June 1920 to June 1921• Under Secretary of the Treasury,
in charge of fiscal affairs, July 1921 to November 1923* Born in New Jersey,
1892, Died 1938.
HARRIS, Seymour E. (p. 75) - Professor of Economics, Harvard. Born in New York
in 1897- Author: ECONOMICS OF MOBILIZATION AND INFLATION (1951) i ECONOMICS
OF NEW ENGLAND (1952)j and others,
KEPPEL, Frederick (po 74) - Senior member of Frederick Keppel & Company, dealers
in and importers of pictures. Born in Ireland in 1845* Lecturer on art
subjects, Yale, Columbia, Johns HopkinsQ Died 1912.
KEYNES, John Maynard (p. 57) - Economist. Born in Cambridge, England in 1883»
Author; THE GENERAL THEORY OF EMPLOYMENT$ INTEREST, AID MONEY (1936)>
MONETARY REFORM (1924)) and others. Died April 21, 1946.
KIDDER, Alfred V, (p* 74) - Archeologist. Born in Michigan in 1885. On faculty,
Peabody Museum, Harvard«
LOMBARDS (p, 50) - Loans on Government securities,
LUTHER, Hans (p. 42) - Minister of Finance, Chancellor of Reich. Later succeeded
Dr. Schacht as Governor of Reichsbank, resigned in March, 1933• German
ambassador to Washington, 1933 to 1937.
McDOUGAL, James Barton (p0 23) - Governor, Federal Reserve Bank of Chicago, 19141934. Born in Illinois in 1866. Organized department of examination of
Chicago Clearing House and was its official head until 1914, Died c. 1935•
MELLON, Andrew W. (p. 38) - Secretary of the United States Treasury, 1931 to 1932o
B o m in Pittsburgh in 1855 • Died 1937.
MEIER, Eugene (p. 3p) - Governor, Federal Reserve Board, September 16, 1930 to
May 10, 1933. Born in California, 1875. Chairman of the Board,
The Washington Post.
MILLER, Adb.lph Caspar (pp. 40, 45) - Member, Federal Reserve Board, August 10,
1914 to February 3, 1936* Born in California in 1866. Author of papers on
finance and banking published in economic and financial journals. Died 1953*
MILLS, Ogden (p. 45) - Secretary of the Treasury and Chairman of the Federal
Reserve Board, 1932 to 1935. Born in California in 1856. Died 1929.
NATIONAL BUREAU OF ECONOMIC RESEARCH, INC. (p. 11) - 261 Madison Avenue,
New York 16, New York.
ROGERS, James Harvey (p*
to 1930; Yale, 1930
SPECULATION AND THE
1914 - 1927 (1929).
55) - Professor of Economics, University of Missouri, 1923
to death. Born in South Carolina in 1886, Authors STOCK
MONEY MARKET (1927); THE PROCESS OF INFLATION IN FRANCE,
Died 1939-
SNYDER, John Wesley (p. 70) - Secretary of the United States Treasury, 1946 - 1953.
Born in Arkansas in 1895«
STRAKOSCH,' Sir Henry (p. 9) - Born 1871* Authors ROAD TO RECOVER*"* WITH SPECIAL
REFERENCE TO THE PROBLEM OF EXCHANGE STABILITY AND THE RESTORATION OF THE
INTERNATIONAL GOLD STANDARD (1935).
TRAYLOR, Melvin Alvah (p. 45) - Member and Vice President, Federal Advisory
Council, September 1930 to 1933j Member, 1933 to 1934. Born in Kentucky in
I878. President, First Trust and Savings Bank, Chicago, 1919 to 1925*
President, First National Bank, Chicago, 1925 to death. Died 1934.
VTNER, Jacob (p, 53) - Professor of Economics, Princeton. Born in Montreal in
1892. Special assistant to the Secretary of the Treasury, parts of 1934,
1939/ 1942. Consultant to U. S* Treasury, 1935 - 1939. Consultant, U. S.
Department of State, 1943-52. Author: TRADE RELATIONS BETWEEN-FREE MARKET
AND CONTROLLED ECONOMIES (1943)> and others.
WARREN, Robert Beach (p. 52) - Professor of Economics, Institute for Advanced
Study, Princeton, 1939 - death. Born in New York in 1891. Economist,
Division of Research, Federal Reserve Board, Washington, Do C , 1922 - 1926.
.
Economist, Foreign Department, Federal Reserve Bank of New York, 1926 - 1927.Author: THE STATE IN SOCIETY (with Henry Clay of U. K. and Leo Wollman,
1939); THE SEARCH FOR FINANCIAL SECURITY (1940), Died c, 1951.
WOOD, Elmer (p» 7) - Consultant to this Committeeo
o
D R A F T
o
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
MINUTES
EXECUTIVE COMMITTEE MEETING
December 31,
TO: Messrs. Allan Sproul, Chairman
W. Randolph Burgess
Robert D. Calkins
ftjtce^Lo
Pf ^
-f
The Executive Committee met at 1:15 p.m. .in the private dining room
of the Brookings Institution with all members (Messrs. Sproul, Burgess,
Calkins, Woodward) and the Research Director, Miss Mildred Adams, present.
Action was taken as follows:
Housekeeping details
1. The Committee expressed its gratitude to the Federal Reserve
Bank of New York for moving the staff from the 8th floor to larger and
more efficient quarters on the 11th floor.
2.
The date and place (January 29th \at the Princeton Inn) of the
M
next Committee meeting with the three consultants (Messrs. Bopp, Chandler
and Wood) were confirmed.
Pro.iect matters
1. The attention of the Executive Committee having been called to
the problems and costs of handling the number of collections of private
papers bearing on System matters, it was decided
a.
that the research director shall draft a plan and a budget
which will give the Executive Committee some estimate of
how many collections ere being uncovered and how much it
might cost to catalogue them.
b.
that the research director adopt as a policy the recommending
that collections be placed either in (l) the Library of
Congress, (2) the library of an educational institution
chosen by the family of the deceased (or by the retired
himself), or (3) the library of a qualified institution
which, through such recommendations, might become a
recognized center for study in this field. It was
further suggested that a conference be held with the new
head of the Graduate School of Business at Columbia
University (Mr. Courtney Brown) in an attempt to find out
whether that institution, located as it is in the financial
center of the country, might be interested in being
designated as the one preferred in the third category.
c.
that, in view of the recent loss by premature destruction
of certain promising collections, the research director
frame a letter, addressed to all who now seem potential
sources of collections important for this study, informing
them that the Committee is interested in their papers and
would like that interest considered in any arrangements
made for their disposition.
2.
Considering the number of collections which may need to be
inventoried, it was decided that the matter of an index for the Kincaid
inventory of the Carter Glass papers be held in abeyance until the
question of including this inventory as part of the Committee^ publication program is settled; that $112 be appropriated to pay the costs of
20 more copies to be run from the same stencils; the whole to be stored
until the entire publication schedule becomes clearer.
3.
It was decided that the completion of the Kincaid-Glass inventory
be made the occasion for a letter describing the Committee1s aims and some
of its accomplishments, and requesting information concerning other
collections. Such a letter would go to a selected list of interested
economists and to the learned journals; it should stir fruitful interest.
!+• After discussing the purpose and value of individual interview
techniques and results, it was decided to appropriate not more than $500
to pay the costs of an experimental group of interviews to be held under
the leadership of Dr. Walter Stewart and on a topic which he prescribes,
preferably one having to do with an important incident in the early days
of the Federal Reserve System. The research director is to check on
techniques found useful by Dr. Rensis Likert of the University of Michigan.
5. In preparation for recommendations to be made to the full
Committee as to possible historians, the Executive Committee had before it
two lists, one compiled by the research director and one by associates of
Mr. Sproul. It was decided that Executive Committee members would each
choose ten preferred names from the two lists and send them to the
research director; from these four lists of ten names, agreement would
be hoped on five which would then be presented to the full Committee on
January 29th. Out of this discussion emerged a preference on the part of
the Executive Committee that Lester Chandler be the one to undertake the
history as well as the life of Benjamin Strong on which he is now working.
The third agenda item, concerned with the absence of Shepartj Clough
in Europe until September 1955* was postponed. It will appear on the
next agenda.
It was suggested by Dr. Calkins that after January 1st the Committee
secretary and perhaps the research director might find it well to call upon
the new Executive Secretary of the Rockefeller Foundation in order to
inform him as to the progress of Committee work.
Donald Woodward
Secretary.
ft
COMMITTEE O N THE HISTORY OF THE FEDERAL RESERVE SYSTEM
-
HXTOBS OF COMMITTEE MEKglMG QH SENSA!* K0V5MBER 2 1 . 195A
CQftFSpiCE WITH TKBE35 EXPERTS
December 2, 1954
TO: Messrs* Allan Sproul, Chairman
.-, .
;..
W» Randolph Burgess
~,:'r' ,' ; '
'
•
Eobert B . Calkins
•••'.
" ..,
•
•
'
F. Cyril James
Vllliam McC. Martin, Jr.
•••,•;•
••
;
; ' .
•
Walter ¥ . Stewart
Joseph H. Willits
.
.
Donald B. Woodward, Secretary \r
The Coaanittee wet at IQtOG a.m. in the Conference Boom of the
Friuceton Inn at Princeton, New Jersey. Members present were Chairman
Sproul^ Messrs* Burgess, JBm&s, Eeifler (for Mr, M rtin), Stewart, and ^oodvard, J)r» Calkins was ill; Dr» Joseph Hillits, newly elected, appeared for
lunch encl ;art of th* afternoon session. Messrs. K::.rl Bopp, Lester Chandler
and Elmer Wood were there sa experts; Miss &&sms in her capacity as research
director.
,:
. •
The meeting -JR.* called to consider the conclusions reached in thfe
course of a day-long conference held by Messrs, Botfp, Chandler and Wood on
Saturday, November 2Gth, at the Conuaittee1s request,,in. their "group move to
give clearer definition to the job of preparing the history (of the federal
Eeserve System) and outlining its scope and dimensions**
Mr. Sproul presented, the agenda, calling attention to Profiles Beport $o» 7 and the report on the completion of the Klac^id project which
vere Inid before the members, Imt without asking discussion. H© then introduced Dr. Karl Bopp, a© head of the group of &dviserB, and asked him to present the substance of the previous day*s discussion.
Pi9CUS3J0B
Br» B^pp, speaking for the Coujmittee*s three advisers, presented
for committee discussion a tentative design of the entire project which would
include (A) a comprehensive history in three or four volumes, (B) the publication of source material, including an annotated bibliography and at least
one volume of selected unpublished documents, (C) a history for the general
reader, and (D) a series of monographs which would constitute research in**
depth into certain aspects of the history which could not be sufficiently
developed in the comprehensive history.
On the basi* of that recommendation, Dr. Bopp then diacussed alternative approaches to the comprehensive history (if topical, how to integrate? if chronological, which time periods?); the desired extent of
eov@ra.gei and the question of organization * given the .u&ss of material whieh
has been uncovered, could the comprehensive history "be written by one person
workln? with assistants, or was the documentation so extensive (and in the
main -oos^xgested) that several writers would be needed.
The presentation was interspersed and followed by extensive discussion, during which the Committee developed trends in ita own thinking. No
f o r m l resolutions were presented nor discussions taken, but a concensus of
©pinion among Cosuaittee members seemed to develop on the following points;
(l) that the Committee preferred as a goal a work ^ i o h would
[;'•' • •. •• .
" :. •
not fall in the category of an official history)
r
•
•-•; : .'•
",•' -•
••'
..
.•; • ' '
";•
•
•.''
;•••
;
. •
•
{2) that, so far as organization of the writing was concerned,
the Coaasittee would prefer to designate one man full-time
who would, be working with research assistants on the comprehensive history, a.nd another group of men, each working for a year or two as needed, on the various monographs*
•
this group to be associated with the writer of the comprehensive history in the general project;
(3) that the outline of the monographs as presented by Dr*
Bopp's group be re-shaped into tw© groups, one concerned
with various aspects of the broad stream of the comprehensive history (economic, constitutional, international,
a study of personalities, a gener&l study yfoich should in~
elude the changing ciinate ;ind pressures under which the
System functions), and the other to consist of what sight
be called peripheral monographs having to do with such
things as relations of System &nd Treasury, System and
commercial banks, and so on;
that, of the two ways to "squeeze what is relevant* out
of historical data, the Comittee proposes to use both a chronological approach geared carefully to tii;e, and a
problem approach which demands exploration of topic and
problems through time;
(5) that if the choice had to be made between en economist
unfamiliar with historical methods or an historian unlearned in economic and monetary affairs, the die would
probably be east for the first?
(6) that the aim be to complete the comprehensive history in
the 5 year period for which funds ar© provided, but with
a fair prospect that further help and a longer space of
time can be had if needed#
The entire discussion was taken down by e stenotype operator and
will serve to guide the three experts in the next stage of their task.
The problem of naming men to vriting posts in the project was most**
ly postponed until the Executive Consmittee had an opportunity to review suggestions, but several names were mentionedf including Thomas Coohran* Shepard C?ough* Gorman Gras, McGeorge Bundy, Brooke Willis, Frank W. Fetter,
Lewis Galantiere and Woodlief Thomas as a beam, and Br« Earl Hamilton as an
nistorian working in the field of finance. It was requested that Committee
aethers survey current periodical writings and on that basis, send in nf-joesto b© conaidered - these names to be circularised, for comment before the
next meeting ©f the Executive Goi®!itt©e*
After deciding that a second conference with the three experts
should be scheduled at Princeton for Saturday* January 8th (the experts to
meet Thursday* January 6th m& Sunday, January 9th), the meeting adjourned
at 3*40 p«».
:
Woodward
Secretary
May 10, 1954
Messrs.
Allan SprotiL, Chaiman
¥ . Bandolph Burgess
Bobert £• Calkin*
William McC, Martin, * r .
Walter ¥ . Stewart
^ Donald B. Woodward, Secretary
Herewith tiie ageada for tiie Itaiefeeon meeting of
Coradttee on Tuesday, May U t h , a t It00 P, M. i n the
private dining rooa (the ¥ e s t Alcove) at Brookings Inctitiit i o n , 722 Jackson Place, M, ¥ • , Washington, D* C,
Ther« i n
also enclosed $ie proidtsecf »e»orastt» froa Kr» fbo^Nmri,
giving background material for disciossion on points 1, 3,
mod A.
T©m w i l l alreaoy have received a meaorandi® by Dr.
Calkins on point $*
Mildred Adams,
Research Director
Committee on the History of the Federal Reserve
Agenda for Luncheon Meeting at the
Brookings Institution, Washington. May 11.
!•
Finding a major staff man (or woman) to act as administrative assistant
to Miss Adams, and later as project director. (See Secretary's memo)
Committee preference is asked as to type to be soughtj suggestions are
'
- .
•
••
needed as to names within those typest
-,
,•
v
-
(a) Betired expert who would like to be drafted back*
(b) Active person of proven ability who can be attracted from
bank or college by value of experience for future post*
(c) Xoung and promising person with proper academic background
and a few years experience in banking, teaching or journalism*
2. Clarifying the relationship which is to exist between Brookings and the
Committee*
.>
.
Committee decision is asked on basis of a memo circulated to members by
Dr. Bobert Calkins* Choices presented are:
(a) Plan I - Committee to assume direct responsibility for project
and expenditure of grant> with Brookings acting only as fiscal
agent*
(b) Flan II - Committee and Brookings to assume joint responsibility
for project and expenditures*
(c) Plan III - Brookingt to assume responsibility for project and
the administration of funds in agreement with the Committee$
latter taking on advisory capacity only*
3» Assuring breadth of viewpoint on major subjects of inquiry. (See
Secretary's memo).
:
^;
Committee preference is asked on two proposed methods*
vv
(a) Asking individual statements on puzzling problems.
(b) Arranging an ad hoc conference in October with fifteen or
twenty persons expert in banking, history and political
science. Suggestions are asked as to time, place, con**
sultants to be invited.
/
1
k» Possible projects - Dr« Kinkaid and Lester Chandler. {See Secretary1!
Provisional approval is asked on the followingf
(a) Proposal of Dr. filbert Kinkaid to spend the summer classifying
and indexing the Carter Glass papers with the aid of a graduate
student whom he will train5 name of student and proposed cost
to follow.
(b) Proposal of Dr. Lester Chandler to embark in February 1955 ©a
a study of *Ben Strong, Central Banker". Time and cost budgets
to follow.
;
Httt&TMjadt» sa fPlate X. 3 and i of
jq
^ff ^ | ^ ^ f f
• Oar prep***! ttettti (P*f* I f ) *%tom
«lm l i to find a veil oqulppoit (tad •xe«ptlon*lly able $ooa&**1t
f
with th* u«c«ie«wiry ^o#^"*mla traisliij| in 7
In e.da.iriistr6tion vho has th© cfipucity to
DI&J
« smjor rolt in th«
Such & p«r»OD vould, sftar % y#ar or 09 a*
U&* charge «a4 «*rry tonmrd.
Hiti A<S*a« vould th#a b« in
t» *abark upon * mj©r vfitta« §i*rt <if th# project*.
flii# imSiyidttal irUl fe»
* highly Eignlflc^nt lector ir, ih* work ®f th* Co»altt««.
Th«refor« h« (or
»k«) w i l l a«#H to i>« s@»t c*ir« fully eho««n.
I shoulc ^ialc ih«r* sr© s#^#rml po**tbl* mwm»$ of /6^proach. One
vculd b«! to *«^« ?IG in iTidvifel sufriciantly olo*« to r*tir*-ja«Tit &&£ with auf»
flci«fit qu«lificatto«a as to b# intere»ttid in moving to thi© job I s th«
future.
S H T
MM
Such a person islgfet fe» G*or?:# B« Jtol»rii of th« Hfetl'^el City S«flfe#
r
f
»ff «iid •#!<! to *• rtturfiing ilil» Mtt»
It*ly (vh«r» he has bmm working QU t hietory of tYm $*mm& Wmk of
th# %ilt«d 5Ut«») or J , H. Piddl« recently r«tlr#d fros^ th# B«nk#rw Trust
*ft«r mm tlm
«t th# F«*l«rml f?*t©rv« Board*
bo to »«*k K pt^^fsntly t*j?isblished p*rawm
to dc tit* job Ai«l might % % ! to g«t % l#fnr« of ab««i««,
o %«
or vho ®tfht «oo tfei» 1 1 1 bt§ «aem«h opporttmtty to vlrti t» t»k* I t
l ^ o t© find ftnothor po#t *t i t n t#r>sis«tion.
RH<I
( I f tlitr* noro th# m>#»ibilitj
o f an oppoistaont s t Brooking» following oicporl^fie# with thi* p2ro)ooi# ttd*
might bo ^ factor.
I t would &X00 000m p o « i b l « that & bank
oo&sldor tills »• mn oxeoptio&fcl irmijitsg o p ^ r l u a i t y for m esfclo #i&ff
*•»«*? vbo would, * t tbt «MJ of th« p*ri«» # go ba«k to th*
)
X
Tou»f of th« H*##rr# &»**£ ttftfT fe*« excellent <g«tnfl«*ttft«§
vtanil<£ think 4oos Dotisld Thompson of ttw» Cl#^#ltai f#«l«r»l B#»«rf»
f Hria««tM f or
m fov, Oth«r« i
In g&tting l*&v# fro« th«tr j>r«*«nt po»t If
to thvtr ?r«;s^t l»v*l end
f « r l i . Stp^ of ?hll*dolplil* f t« I* H i l t of tho 0nlv#rsily of Califoruin,
#f iho HniT«rsit^ of Missouri* Harold t« l«oi of CovsoXl*
approach woula be to s#sk ^> sible
r
JCUBI;
pornom vki h«»
*d sapAelt^ a»4 wlw sal^ht hop« to siak* tills post
th* »priagb©«r^ for BRAjor
in moB«tary
or so
v r l t i n * world,
A l i s t (b?»nV.i«^ and/or ®m$mmi*$) e o ^ i l o i by Hiss
tmm her ^>p«ri«Bce vith t)T*, John V.11 l i s a s lnclu^«3j
Paul i « KcCi^cc«^, fam#r Dirostor of B*3**r*h for ife« Feuer^I Bosons
of i4iiunMipoll», nov s i the f&lr*r#liy of ^ichigsn.
John Llnt^er, L*vr«nc* K. Tbc^^json or Hugh Jvltken of th# H^rvf.rvi 8u?ilaoss
Lonf»tr««t f o v e r l y of tho l ^ o r s l I n v n t Bo^rd*
0. «f«kst»om of CiasferiAfs fniT«r»ity ®!^ tfe« tlttiT#r»ity ©f Toronto*
Jsatos M* ?$*€ ©f TsndorblXt Qnlvortlty*
Froutsl of th$ Fodsr^l INiiefro Baaic of e t .
, C* l^ndfoid of H$rtt»***%*«i
#. imitl* of tbs ialir#rsit^ of
Storre of the Federal Eeserve Bank of Blchaoad.
Boaald C* Miller of the Federal Reserve Board.
J*a*& Tobln of Yale University.
E* Victor Morgan of Cambridge University, author of gjiadloa *n British
yjntsncl&l Policy. 1914-2«> and of a smoh praised essay on Central Banking*
Tls« Consul tte* will doubtless have other eugg*siloes. Thug far
mo inquiries heve b«»n maie 1m the field of Journal!•*, Tour &ref#*#&$••
on these possiMlities snd yowr suggestion of names -would be most helpful*
\
2« Relationship vith Brookln^g - see -neaorajodwa dtreulated 1^ Cr. Calkins *
•
3* Assarinsr breadth of viewpoint on acjor smbjects of incmiry One of the first problem* for the research director, in passing
from the exploratory phase to the main projeet, vlll be that of knoving, in
so vide m field, vhioh subject® and which points of discussion are in need
of the add«d light that further research wmy bring* Vhut do the experts
mnt
to knew? What moet pussies the historians? What Is It about the Sys-
tem that informed men have nevar reslly understoodif To obtain focus on key
points it of the first iasportaace. It should be the kind of focue thst
from eoordijiatiiig irariotse pointi of view » fron mm
mm*
In and out of Board
Banks, fro» teachers and attadents of finunc© «od buaiiMM* from economic h
political scientists*
methods of securing this vide point of rimr suggest
both of th»a include the use of tboughtfal sttidents of banking, history sad
political scieace in a consultative capedtyi
First, the Committee might care to ask & dozen or so persons, particularly intere«t©cl and qualified, for s thoughtful statement on the questions concerning the history, development mad functioning of the Federal Beserre Systea
• « « t* them m»%
tmp&tfam% m& «©#t pnutliag* This sMrttood of
rlehing the research eontent of a project hue been tried elsevhere vith
•uecess; it aeeraa to prove the sore su@$e#$f&X wh©n an honorarium of #100
©r 1^00 for thoughtful suggestions 1 B offers vith the repeat.
Th© second suggeatloa is the eonferemee method, with sn id hoe
group chosen fro» studeats and pjraetiticmers of banking, political
such as Dr» ?» 0. 5©3r of Harvard or Arthur MeMahon of Gol«ahi&» hl»t©riaa»
such &« ?r«d taae of Johns Ropklae or Arthur Col# of Harvard. Such a group
COILLI
veil include Dr, John Villiaa*, Dr. Charles C. Abbott, new Dean of
the Graduate Sohool of Basin®®® at the Bnivwsity of ?irgiEi«f P. Cyril
Jam«s of HcGill, Jacob Vin©r of Priaeeton, F. ¥• F«tt«r of Northv©»t«ra
8jad oth«r» that will ooa# to wind. A ^#etinf of flft#*& or twmty «©n in
early October, f>©rh&ps at Ardtn iouse or in Sew Tork, conferring on th«
Imslt of a ©arefully prepared ©geuda, ihould h#.l^ greatly to «nrieh the
research eoat^at of this project*
Possible ^ro^eotg » Pr» Klnkald and tester Chandler>
Aa ^bte reeeareh director has reported, ose of th« collections
Iwportant to this project, the Carter 6 U i i papers, is at the University
of Yirginis and a distinguished scholar la eager to vork on the*. Dr. Elbert
Klnkaid, for years consultant to the Federal Reserve Bank of PdcKcionc aiid mom
retiring as Associate Director of the School of Business Administration &t the
University ©f Virginia^ ©an &pm& the ®uwier sorting, elassiiyimg and ladexiaf
them. Be vould want & graduate student working with hla, vbom. he would train*
Dr. Klakald first propoaetl to spesd a year or two in aa intensive
study of the papers, but he nov expects to go to the University of Arizona
for the fall term* This shorter survey project ha* definite advantage-** It
vomld provide us vith » catalogue of the papers, aud If Dr. Kiakald* s graduete
o
•5-
ttodtmt prows competent, it my lay the basts for a later fttu^F of
iagjortanee*
The name of the ehestn graduate student, and the proposed cost
of the wneaary work, vlll be furnished us la a veek or so* No cosssitseni
has bees nade. or ©an be made until tb® major project is «.|jproT®4 by the
B0Ok#£ell«r Foticdatiois, but th« Secretary voul«l like to know if th© Co«f»
igittee provlBiooally approves this suggestion so that v© may set quickly
vhen the Foundation decision It announced,
f&# desire of Lester Chandler to embark on m «tttdy of *Ben Strong,
Ceatral Banker11 has also been report®^ to th® Committee. Mr. (handler expects
to free himself from teaching in the spring term vhich begins la February 1955*
He would like to spend th© following six months in preliminary study of material^
asd plftimiuf of the book} once that research and creative ph&m is finished, ha
vonld «Kpe#t to vrlte *rtiile teaohlng In
This project also is provisional - no budget has been submitted either
of isoaey or time. But Professor Chandler goes to Europe In June, and would like
to k»ov before he leave* whether or not the Committee would think favorable of
thl* idea of its oun funds for the longer term mre granted*
A wore deflnlt*
ooaoltaamt could, of course, be made only after the submission of (pmre aetailed plan of work and costs* Rere, too, provisional approval or disapproval
Is asked because of the time element.
Hi&utes of the Meeting of th®
Coaalttea on the History of the Federal Reserve System
May 11, 1954
The mating opened at 1 ?*M# la & private dining room at the
Brooking© Institution under the ohsira&nship of Mr, Allen Sproul*
prtftcmt ver* Hfttsrs* Sproul, Barges®, Calklas, ftltfler representing Mr»
Martin, Stevart and Woodward.
Absent, Mr. M«rtim
Miss Adams, research
director, siso attended.
Mr. Celkina reported that the Rockefeller Foundation h&d extended
until September ?Oth the tirae period during which the 110,OCX) fund allowed
for the pilot project could be used*
Brooking® thereupon •xtmid«d the joist
appointment of Miss Adatat to their gt&ff to the end of June} subsequent plena
will be ^ide by thea before that date arrives.
At the Ch«lraanfs request, the Secretary prtttftttd m
agenda con-
taining four it#m*. fh^te in the order presented, a&d with the action taken
O R them, follows
1.
•
• • • , - .
*CXg-rlfyliijg the relation ship vhioh i« to exist between Brooking* *mi th«
decision i® msked on basis of t ^@mo circulated to members by
.
Dr. Robert Calkins. Choices presented arei
(a) flm 1 - Goramittee to assume direct responsibility for project
snd expenditure of grant, vlth Srookiogs acting only R« fiscal
•••: (b) FIRK II - Co-^aittee » n Brooklngt to ASSURM joint responsibility
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for project and @x|.)eisditures,
(e) Plan III - Brookings to assume responsibility for project ©nd
the administration of funds in agreement with the Committee;
Imtter taking nn aidvitory e&paeity only,11
After » statement of the COSES!ttee»s vish that Broofcings continue
la the close relationship which prevailed under the pilot atudy and v®a assumed 1» the proposal for a further graat, diacustioii followed on the degree
of responsibility which the Coua&ttee should, could and/or would like
to assme*
The process by which Brookings customarily supervises and
approves manuscripts was explained, and so also was the analogous pro-*
cedure of the CED. It was assumed that the Corasaittee would face similar
problems, particularly In regard to ths history and to the work of scholars
accepting subventions.
the discussion of various possible degrees of Coaaittee responsibility revealed r, trend of thinking In favor of & revised Coisssitte© organization whereby the entire Coamittee (with souse additions a$ considered
under point 3) would act mostly in an advisory capacity and on policy la&tters,
while & s-iaHer segment would be designated as the Executive Committee*
It wag decided that given the degree of responsibility assumed by
the Coassltte* when it asked the rockefeller Foundation for the major grant,
Flan II with some nodlfie&tions best sets forth the Comittee 1 a desired relationship with the Brookings Institution in the handling of that grant* It was
suggested that modifications in detail be in the direction of flexibility, &d
hoc decisions on individual projects, a clearer drawing of lines of responsibility as between Brookinga and the Cosaaittee in the making of contract* with
authors and the supervision of their fulfillment*
Mr. Woodward, representing
the Coasaittee, was asked to work out with Mr. Calkins for Brooking* further
details of Plan XI and to circulate & second draft for Comities approval*
2*
"Finding & asjor staff man .(or voawtt) to act as ndninlstratiTe assistant
to Miss Adams, and lr>ter aa project director* (Ixplsnatory memo had been
circulated by the Secretary in advance of the meeting.)
Com^ttee preference is asked as to type to be sought; suggestions are
nestled as to naaes within those typest
(a) Retired expert who would like to be drafted back*
(b) Active person of proves ability who can be attracted from
banK or college by value of experience for future post.
(e) Young and promising person with proper &cad*mie baekground
and a few years experience in banking, teaching nnd journalism."
After mu® discussion as to vhether the d#sir@i administrative assistant ahbuld or should not be the p®rmn expected to vrite the definitive
history, it v«» agreed that It would be difficult to find both skills in one
parson and that what n&$ needed vee an a##ist^at who oould b#eome project
emeutive «ad«r Mr. Burg*'**, The d#ilr#d ttaff wm« t N m a«»@d as to l&eluito
Mr* Burgess (t<» b® eveataslly in ehsrge)* Mr* G©org© Hoberts (to writ® th«
fei»tory or in whatever eapaaity fee cfeo^e), Mi§® M a s s (to contiiiu© as is tor
perhaps & year), sa «»dersttadj of suoh oallber that h® or aha couldf after
training, eventually taka Miss idias1 place. Mr. Bur^ass vas empowered to
explore tbe availability of Mr, B.ob#rt©| Miss Adams was empowered to explore
possible undarstudy choices* oa the basis of suggestions made by
members, and to report.
'Assuring breadth of viewpoint on major subjects of inquiry* (A
taryls mmm on this point was circulated in advanee of th® maati&g*}
Cowilttae preference, is asked on tv© proposed methods $
(a) Asking individual statements on puzzling problems,
(b) Arranging an ad hoe conference in October with fifteen or
twenty persons ©Xpert in banking, history and political
science* Bugg^tio&a are asked as to tiie, place# consultants to b
the Committee approved the desire for breadth of vi@vpoint, but
no Interest in either (a) or (b) as presented is. the Secretary's
memo* They vmrm a^r#ed that the Cor«sitte« would benefit by a
range of interests vfeich went outside Federal Reserve experience*
that the addition of p#rhaps thra# a«abers chos©a preferably fro® msong
historians ®nd economiats vould b® d#sirs,bl©. Dr. Johu Villisms, Br. Jacob
finer, Mr* Cyril James, Mr. Vllliasi Myers v©r« suggested*
It was dste4<tad
that a list of iadividuali proposed be circularised so as to datormina
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4*
^ g i l b l t ^projects - Br« Kinkald m& fester Chandler*, (S@e Secretary1S
provisional approval is asked on the folloidJigi
(&) Proposal of I)r. Klbert fi&kaid to tp«nd the sumer classifying
a.nd Indexing tb« Carter Glass papers with the aid of a grmtaat*
student vtat he will trtlaf n«m« of student and proposed eost
to follow*
(b) Proposal of Dr# X*«*t«r ChiuidXar to ®«bnrk in February 1955 oa
& study of "Ben Strong, Csntrsl Banker*. Tim* &M cost budgets
to follow.*
approval was given both the Kinkaid and the
project, but m&re facts would be n##<i©ci b#fore formal eoanitment oould be
ststdn on #itfe»r# The Kinkaid project le sees as a summer's work of arrange*
sent and inventory by a graduate ttudent t2»d®r the supervision and with the
advlee of 0r% Ilnksid, The Cbajicller project w&s ©mpXaiia^d as inoludlng a
possible subv#»tloii of $12,000 to |15,C^0 plus typing oosts m&
pubXlshing
aid| it moold begin is February 1955 and continue for at least a year. Opinion was general that this latter project should take the fora of a aaajor
the Research Director was Hiked to g«t w>re detail ©a both projects for Co»*
aitt## consideration after May 20th*
There being uo further business the aeetiag wms adjourned at
2*20 P.M.
Donald Woodward
0
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
oonmrsfm
y
y y February 21» 1955
Heroh U* 1955
Messrs* Allan Sproul, Qiairaan.
V. Randolph Burgess
Bobert B. Calkins
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The Xxeoutive Committee met &t 2:4.0 p.a. In the office of the Chairman,
Mr. Sproul, All member* (Messrs. Sproul, Burgess* Calkins and Woodward) attended.
Kiss ideas n»s present in her caps city as rese&rch director •
Minutes of the previous ExeeutiYe Comaitt** •••ting were noted as having
been distributed January 5th* Minutes of the meeting of the fuU Gossdtttt at
Princeton were distributed February 34thf but some textual changes vere asked, ami
oorreotloas hare been n»d««
Re^orU
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teports requested at the previous meeting of the ltateutive Coamittee
vere presented and action taken as follovst
Qn methods and coste of handling collections of papers, the research
director reocaaiaended teat, on the b&ele of Coaardttee experience and profiting by
the adrice of sereral inatitutiong, the Cos&ittee adopt a poH^y similar to that
approved, by the library of Congress and base future appropriations on the proeesses
of setting papers In order and cataloguing themf this voulfl not include elesents
of Etu^r or evaluation, which should be regarded AS the proper business of an historian, the director further reooEEnended that, on a rough estimate of 10 major
collections vhich might need a substantial subsidy for handling and 10 mailer ones
on which smaller suns vould suffice, the Committee consider setting aside $11,UUU
as the mm probably to be needed for handling oollecUoae over the 5-year l i f e of
this project. Both recoaaeadations vere adopted by the Ixecutive Coradttee and
be reported to the next meeting of the fuU Committee* (the full report of
research director on this matter i s filed in the Minute Book) •
On Colufflbia University as a possible reooasaended repository for collections, a draft of a letter to &e*& Courtney Brovn vac presented, edited and epprored, 'which the Chairman will sign with the approval of the Exeoutire Committee.
On the letter to Men retired or retiring T&O hare been actirely eon*
nected idth Federal BeseiTe «atters # a draft w»s presented, tag approved with
!
editorial chaagest
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The matter of publicity Intended for learned journals im» postponed
later action*
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On the Princeton transcript, minimum editorial changes have been made,
and distribution Is expected this week.
Hew Reports
Sew reports vere presented as follows:
A revised financial report from Brookings for the period July 1 December 31 f 1954. shoving slight changes in arrangement for greater convenience
but none in expenditure or balance| Committee members were asked to study and comment on this*
On the matter of possible conflict between the conservation of archives
and the Schedule for the Destruction of Records in the Banks, Mr. Sproul reported
that he had asked the Banks to appoint an officer with -whoa the staff of this Cos*
mittee could establish liaison, iffiimative replies have already soate from 8 of
the 12 Banks, and the rest are expected to reply shortly*
Policy Matters
Policy matters vere discussed and decided as follows»
On the invitation to Dr. Qyril Jases to aeeept the post of historian, tfee
sudden illness of Mrs. James has impelled the postponement of a decision* Further
discussions will be held as soon as possible. It was the consensus that supplementary arrangements for Dr. J&mes be explored, and, provided that he is still interested, the Coaistittee regard itaelf as willing to -vmit as long as tuo months
(to April 21st) for a final decision.
On t&e invitation to Shepard Clough to join the Coieslttee, the Secretary
was asked to write Dr. Clough that in view of his absence from the country until
September, the matter would be held in abeyancej it might be raised later.
On a future policy on honoraria to conference consultants, Dr. Calkins
observed that the Brookings fee vas ordinarily $$Q & day* It m a ^zreeA that this
would be accepted as the Committee1e basis, but vita possible variations vhen approved.
On a policy of raising staff salaries for Mrs. Singer and Miss Burstein,
the research director presented reeoamend&tions ^hieh, -with slight variations, vere
approved. These are arranged vita reference both to Brooklngs and Federal Reserve
Bank scales of pay. The desirability of keeping Mies Burnett for another six months
to complete the archives project was also approved.
Miscellaneous
At the last Committee meeting #500 was appropriated to pay the cost of
group interviews to be led by Dr. Stemrt* The latter has recently expressed himself as villing to talk in detail to Dr. Chandler. The research director vas «*»
powered to arrange for the recording of such conversations if this met vith the
approval of Messrs. Stev&rt and Chandler*
On t&e proposed v i s i t to the Rockefeller Foundation for reporting
purposes* Dr. Calkins advised that this be postponed until the historian w s appointed • Mr* Sproul asked thct Dr. Calkins and Mr* Woodward be prepared to make
a report to th© Foundation at that ti&e*
Jhe research director brought up the matter of a proposed European trip
in the late summer, planned as a vacation, but to include exploratory v i s i t s to
the Bank of England, the Bank of France, ®n& possibly an interview vith HJalmar
Schaehtj only surviving menber of the Strong-Horman-Eigt-Schacht quartette -which
vas BO important in the 1920fs* She v i l l present a detailed plan at a later
meeting*
The meeting was adjourned at 4 p«m«
Donald Woodward
Secretary
@FedFRASER