The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
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
With cooperation of
W. RANDOLPH BURGESS
DR. ROBERT D. CALKINS
WILLIAM MCC. MARTIN, JR.
WALTER W. STEWART
DONALD B. WOODWARD, Secretary
MILDRED ADAMS, Research Director
THE BROOKINGS INSTITUTION
722 JACKSON PLACE, N. W.
WASHINGTON 6, D. C.
April 20,
Messrs Allan Sproul, Chairman
W. Randolph Burgess
Dr. Robert V^# Calkins
VWilliam Me M. Martin Jr.
Walter W. Stewart
Donald B. Woodward, Secretary
/
Enclosed is the document, revised in accordance with suggestions
from Cosnittea members, which went today to Dr. Aillits of the Rockefeller
Foundation, asking a grant of $300,000 for the major project proposed by
this Cona&ttee. A report of the pilot project, sent to Comittee members
earlier, is included. I am also appending the letter of transraittal which
was signed by Donald Woodward, secretary of this Committee, and which notes
that a supporting letter written by Dr. Robert Calkins as President of the
Brookings Institution is to follow*
If, despite everyone *s care, you find corrections which must be
made will you let us know so that we may phone them to Dr. limits* offlee •
Mildred Adams
»5" C Ct^t Lc
A tiL
Lu*JL
April 20,
Dear Mr. Sprouls
Thanks so much for your great kindness in reading the Proposal
so quickly and with such
care, and for your confidence as expressed in
the granted right to ttuse or remodel" your editorial comments, The
rearrangement of material on pages 13, lit, and 15 has been made as you
asked, and almost all your editorial preferences have gone in* I wish
all editors I have known were as kind and constructive*
As for the part of the precious week-end which the job took,
I can only hope it was Saturday in the rain, not Sunday in the sunshine*
Other members of the Committee asked for small textural changes,
which have been embodied* Hone of them changed the content, and I have
therefore not bothered you with them*
The revised text of the Proposal, together with the Report of
the pilot project, is due to go to Dr« Willits today and we are hoping
to be able to send copies to the Committee at the same tine* If you
find anything in the whole which must be changed I will telephone the
correction to Dr. WHlets* office*
Sincerely yours,
Mildred Adams
Mr. Allan Sproul, President
Federal Reserve Bank of Hew York
New York 1£, Hew York
FEDERAL RESERVE BANK
OF N E W YORK
New YORK 4 5 , N. Y.
April 19, 1954
Miss Mildred Adams,
Research Director,
Committee on the History of the
Federal Reserve System,
33 Liberty Street, New York 45.
Dear Miss Adams:
As you requested, in your letter of April 15th, I have
spent part of a precious weekend going over the proposal to the
Rockefeller Foundation, which Don Woodward and you have prepared
for the Committee on the History of the Federal Reserve System.
I consider it time well spent and you have my general approval of
the proposal. The editorial comments, on the copy which I now
return, you may use or remodel as you see fit, except for the
rearrangement of material on pages 13, 14 and 15 which I think is
necessary.
Sincerely,
ident
Enclosure
PROPOSAL
Introduction
In January 195U the Rockefeller Foundation made a grant for a pilot
project leading toward a history of the Federal Reserve System. The immediate
end was to find out what materials were available for such an undertaking, materials not only in the sense of papers, but also of the living memories of men
active in the early days of the System.
That task has been carried on since January 15>th. It has yielded
extraordinarily good results (a report of its findings to April is appended),
and there is every reason to believe that an even greater harvest of papers
and memories lies waiting to be gathered. The Committee feels that this has
proved to be in the best sense of the word a pilot project. In addition to
exploring papers and memories, it uncovered that sense of personal struggle
and accomplishment which is the living core of any institution. It enlisted
interest and it ensured cooperation for the future. It points the way very
surely to the next and much bigger task which lies ahead, and for which the
Committee now asks the consideration of the Foundation.
I The Task
In calling itself the Committee on the History of the Federal Reserve System, the group presenting this proposal defined its primary purpose.
But the discoveries, contacts and discussions -Hja<ete during the pilot project
have deepened the content and widened the scope of that purpose. The Committee now knows that what needs to be done is much more than a single history
of the Reserve System - it is an appraisal of one of the most extraordinary
invention/ in this democracy, a review of experience in its functioning, an
analysis in terms of the memories of men who helped develop it and who took
part in its operation. The episodes around which conflicts swarmed, and out
-2of which change came, the process by which decisions were made, the importance of personalities, the interplay between public policy and private needs these various angles of approach and many more which have been suggested from
time to time by Committee members testify to the vitality of the subject and
to the lessons which can be learned for other democratic institutions by a
detailed study of its experienced 7 W Ffc Aj ±f$*v> .
II
Why important?
The importance of the subject is, however, greater than
the material dealt with or the people dealing with it. It goes much farther than the task of history writing, vital as that is, and farther than what
are commonly considered the somewhat narrow confines of the banking world*
(a) ®£^a&¥ the innovations in government mechanisms which Americans
have brought about during the twentieth century the Federal Reserve System
stands fi*st, and not only because of thettSp#e©®§©R%edfunctions which it is
called on to perform. It operates with a high degree of autonomy linked with
a fine sense of public purpose. To an extraordinary extent it has managed to
preserve its freedom from both Congressional andtExecutive pressures^ , In periods when it has been forced to yield the public protests against such yielding
have been continuous until the pressures have softened and the balance has been
restored.
(b) Writing in 19U6 about twentieth century monetary controls, Professor
Robert Warren of the Institute for Advanced Study observed that in the nineteenth century there developed a new type of society, the money economy,
which made new demands on those who administer Government control over the
supply of money. "High and low, rich and poor, bond and free there had always
been, but never before had there been an economy that expected the majority of
its people to be totally dependent upon the continuty of a stream of money
-3incomeM • Along with other observers Professor Warren interpreted the
primary task of the Federal Reserve System as one of seeing that this
continuity of the stream is not interrupted by monetary failures. To
do this it bridges ttfi? gap between public and private efforts to influence the economy. The goal toward which it has been directed in these
later stages is the stability of the economy for the public good; in that
pursuit it has developed, tried and discarded one method after another,
only to reach for a new one which promised better results. Analysis of
these experiences form important chapters in both monetary and economic
historyj Qttd )# t>ur <t/firt*tf f& </*'*/*/$ *« ££&$****# tf/A***
'* *4*d<
(c) In'the practise of the functions laid upon it, the System
has enlisted and trained staffs whose skill and devotion to the System's
work stands in notable contrast to that of o«gfea4flrother governmental institutions*. Not only have they weathered forty years of political storms
A
with-aminimum of vulnerability; the System as a whole, by some curious
magic, has withstood political attack from both parties. Tensions which
in theory should have split it apart seem somehow to have been important
factors in holding it together,
(d) An analysis of the changing experience in design and in operation of this unique governmental mechanism would have great value. It
is important for the future performance of the System and of the American
economy. There is reason to believe that such analysis may hold lessons
of great value which can be applied to problems of organization in both
governmental and private life, $e&~Temoved from the process of monetary
management•
III
The questions which this study would illumine fall into two categories • There are in the first place what might be called the techanical
issues, some theoretical and some matters of operating policy, which have
absorbed the Systemfs attention at one time or another in its life. These
appear in annual reports, they are high-lighted in gesteesieRt hearings, but
A
ift-^oth: instances the questions which an informed and impartial student might
ask are diverted by the exigencies of the moment. Enough time has elapsed,
for instance,since control of the discount rate was first used by the System
as a tool of monetary policy so that its importance under varying conditions
can be weighed and studied. The same thing is true of changes in reserve requirements, and oftoetoul'*#f open market operations. Yet a~vast amount 6f /
t**\ ^He#M *"v*#** *v»»»^«j AH th'St^rne™
h*&/**> j ant')
controversy s t i l l surrounds them,
£fome of whi^h could be resolved by competent
\'JJ
studies.
*
JJ
j
y
V
77
• .
*v>m**i 7/u *
Beyond the technical points at issue (of which these are merely
instances that come first to hand) lie broader issues both within and withfVff
out the banking system. For example, how did it come about that ee^«n&qu.e
itmCncUi t>ja.
/tr&u*
rife
a mechanism of monetary control was established? By what methods and devices
'A
has it endured and thrived? How are the skill5, competence and individual
freedom of its staff, unusually high 5s* government or ^ private bodies, maintained and encouraged? How has the relationship between srfc®££* and; BoarcHnem**
T3ca?s been worked out? How can the System's role in the world of government
and in trie economic world be best defined and understood? What are the lessons
of this role
fortneir
otherhi^i
organizations,
in or out in
of American
government?
are at?
decisionswith
degree of importance
life,Howarrived
^
flu J,JA
How does the System influence the operations of monetary mechanism at moments
of crisis? What lessons are there in the relations which prevail between ooard,
Baraks and Member Banks, and how are those relationships evolving?
IV Scope and Method of Inquiry
The study which we propose would cover the entire Federal Reserve
-5System, including the Board and the twelve regional banks, from their inception. Much has been written on the events, crises and personalities
which led up to the founding of the System, but even this needs re-studying in the light of newly discovered material: 4*J ffefif / / * W /
fa
4I
We would therefore set out to make* a complete search for the material and the people concerned in Federal Reserve legislation, theory and
operation, going back at least to 1907 when the Aldrich Commission functioned.
k?r»«/ ft,t+s& / / o lit iff
From 1913 forward we would undertake to discover the cast of influential char1
acters in the System's growth, change and operation, including governmental
figures in Congress and the executive branch; Members of the Board and influential men on the Board staff; Governors, Presidents and sani&r officers
of Reserve Banks; Members of the Federal Advisory Council, the Open Market
Committee and allied bodies; men in academic life (as for example, Oliver
W. M. Sprague and John H. Williams) who have been in close and influential
contact with the System during its years of growth*
The method to be used is that which has successfully been developed
during the pilot project phase of this study. It includes visiting Board and
Banks, both to search out men who remember early days, and to ascertain how
records are kept and what local records are available; the establishing of
the names of the dramatis personae, the recording of brief biographic data
concerning them, the request for interviews if they are still alive, the
search for their papers if they are deceased.
Experience in the pilot project, and consultation with those engaged in other attempts to chart and record the course of living institutions,
have taught us that the comprehensive study of t he Federal Reserve System
which is the core of our endeavor divides itself into three steps; these for
convenience may be called, the archival process, the interview process and
the writing process.
Logically, these three appear to be separate, just
as in the pilot project the process of discovery of papers, gathering of
memories and building of card f i l e s appeared to be separate. Actually,
each process in the pilot project fed and profited from efiwih other. The
success of that project was in no small part due to what seemed at times
a handicap - namely, that a l l three processes were necessarily going on at
once.
Were i t advisable, in view of that experience, to t r y to carry on
the archival, the interview and the history-writing processes of the main
project one at a time, in series, we might propose that the grand design
move forward in two phases. A reading of the report on the pilot project
shows how much has been started, and how much remains to be done. For example, the research director hoped to v i s i t a l l twelve Reserve Banks during
the pilot phase, but the volume and variety of work under way forced postponement; most of those Banks distant from the Atlantic seaboard remain to
be explored.
memories.
The mapping and survey stage uncovered not only papers and
It also s e t the pattern for the study of those papers and those
memoirs. A great deal more must be done along these lines before the master
files of papers and other materials are ready for the student's use.
Not only must the master files be completed, but the papers which
have been uncovered during the pilot project, and the collections s t i l l to be
found, must be analyzed for pertinent material.
The Hamlin diaries, recently
released from a ten-year seal, stand alone in terms of the preparation and
indexing lavished on them, but even the Hamlin diaries are new ground for the
student.
Someone must read those 26 volumes and evaluate them for the pur-
poses of any comprehensive history of the System.
-7The work to be done on other collections, not yet sorted or classified, is more extensive. The National Records Management group stands ready
to start a pilot study of a similar group of papers in order to chart costs
and work out efficient methods of handling • ¥«ang Parker Willis *would take
time from his work at the Federal Reserve Bank in Boston to survey his
father!s papers if this were arranged. The Goldenweiser papers, the Adolph
C• Miller papers are destined for this Committee fs use« These and many
more must be classified and set in order.
But even while setting down these small examples of the large
amount of work which remains to be done in the first two processes we recognize how inextricably linked with them is the third process. During the
pilot phase we became aware of writings under way and needing encouragement
which would be valuable for our purposes and which would be finished the
sooner if they could profit from the work we were doing, Research into the
past is not well done in a vaccuum or without the added spur of a person
who wants to use its results. The historian who can work with researchers,
using their data, stimulating and broadening their search by his questions,
has a richer content to draw from than the one who starts after the research
process is finished and filed away.
Proposal
We therefore propose to move forward with three groups of activities,
all of them vital to the comprehensive study which is the core of this
endeavor:
1. Archival
(l) To continue and complete the visits to Board and/{banks,
the search for records, the interviewing, the hunt for
papers and the recording of discovered material which was
-8started during the pilot phase*
(2) to continue and complete the biographic, bibliographic
and chronological master files which were started during
the pilot phase,
(3) to make available to qualified students that part of
the Committee!s research material which is pertinent to
their inquiries.
(h) to work out problems of handling related collections of
papers and putting them in usable shape for students*
This may include financial aid in certain instances. (For
example, the Carter Glass papers are at the University of
Virginia as described in the report on the pilot phase.
Their classification and study is essential, but funds
would have to be provided).
2. Interview
To continue the interview process which has yielded such
good results under the pilot project, and to enter on a
series of further interviews with chosen individuals in
the older group who have already shown themselves to have
good memories and an interest in contributing all they can
f\u$ 4t,l{ kif rt**l*r e-// cl flu T+K$t\t#M
to this project. Such men as Roy loung and Walter tHyatt
of the Board, George Harrison, J. Herbert Case and Leslie
Bounds of the New York Bank, John Sinclair and Casljnir Sienkeiwicz of, Philadelphia, are of this type, and there are
many more. Just as the Harvard Business Studies group finds
a tape recorder valuable for catching the living word in key
terviews, so might we profitably avail ourselves of this
technique in selected instances.
-93» Writing
The writing and editing falls into three parts (l) The monographs - in a study as extensive and important as
this the monograph plays a key part* In some instances it
stands by itself, as a definitive study of one part of a
related whole. In others it acts as an introductory study
and may later be incorporated into the whole• The pilot
phase uncovered certain monograph ideas, some of them
already started, others only in the planning stage. For
example, Carl Parry, now retired from the Board staff,
should be encouraged to complete his half-done monograph
on Selective Credit Controls, a subject in which he has
had active as well as theoretical interest* Gardner
Patterson of the International Finance Section at Princeton University would like aid to write a study of Reserve
Inaternational Financial Operations in the 1920s5 Lester
Chandler, also of Princeton, would like aid to write a
long monograph or a short book on "Ben Strong, Central
Banker115 two able men, Dr. Karl Bopp of the Philadelphia
Federal Reserve Bank and Professor Edward Shaw of Stanford
University are each interested in a study which might be
called M The Art and Politics of Central Banking *" No
commitments have been made in regard to such work* These
examples are, however, listed as showing the -oali&er of
tH<i The C4ti9t>* or vwim
\+iHt
work which this Committee would like to encourage, -ancL
sueu fa #i&rtr\n&h sfor which it would use funds*
-10(2) Ma.ior Works
Of these the definitive history is the core of the
project and the one toward which we continue to point
our endeavors • We believe that its writing will take
a good three years on the part of a distinguished scholar
who has already shown the skill and judgment which the
creation of such a history demands. The task of exploration and recording of materials will be carried further
and the field of possible scholars will continue to be
canvassed.
Considering the high cost of subsidies for major
works we would hesitate to name other volumes for which
we are ambitious were it not for hopes that at least
some of thess might find publication through commercial
channels and would need from this Committee little more
help than can be provided through consultation, use of
materials, perhaps a small subsidy for stenographic aid.
We have from the beginning believed that the play of
U
personalities woul^Ube an important factor in any governmental operation and that a volume of biographic
essays on key figures could be written so as to illumine various facets of the System* We also think that
a volume of essays on crises in the banking world, following the volume by Oliver M. W. Sprague on History of Crises
Undsr the National Banking System, would be an important
contribution which might find publication through regular
channels* There would be others as the project develops.
-11(3) Editing and Publishing of Documents
The Committeefs staff has noted with interest the
British example whereb:/- documents basic to central
banking in England, including key speeches and memoranda as well as legislation, were edited and published
under the title Gregory's Select Statutes, Documents and
Reports Belating to British Bank, I832-38. Comparable
material in American banking ^raatiss is scattered, and
might well be gathered in some such volume. It has also
been suggested that a comprehensive annotated bibliographycovering both published and unpublished works bearing on
the System would be a most useful contribution to research
activities. In addition it is not improbable that selected
papers from the various collections under survey may prove
so valuable as to deserve publication. No decisions have
been made in this field, but we list this activity as one
in which the Committee may engage •
Use Of Materials
The Board and the Heserve Bank of New York have been particularly
interested in the work of this Committee; individuals from these institutions,
both officers and staff have been actively participating in it. Both Board and
Bank may face problems of participation when mora recent events come to be discussed^ the availability of confidential materials covering recent events may
also present a problem.
The existence of this problem must be recognized, but the Committee
is confident that a solution will be found which will neither hamper the project
nor strain either the willingness or the ability of individuals or institutions
to continue their co-operation.
-12VI Organization, Personnel and Budget
(a) Organization
The grant for the pilot project was made to the Brookings
Institution; an informal working arrangement was established whereby the
President of Brookings became a member of the Committee, work was done under
Committee supervision, and Brookings acted as disbursing and bookkeeping agent.
That institution also furnished office space in Washington for the Research
Director, as did the Federal Reserve Board.
f
Because the Committee was composed of busy men, the supervisory function fell most frequently to its secretary, Donald Woodward, at
one time on the Board's staff, nov* Chairman of the Finance Committee of Vick
Chemical. The other members of the Committee have also shown steady and
vigorous interest in the pilot project and have been generous with time and
advice when called on for consultation.
The daily work was carried on by a small staff headed by
Mildred Adams as Research Director, assisted by Katherine McKinstry (who
shared her skill as research assistant and her time between the work of
this Committee and that of Dr. John H. Williams, consultant to the Federal
Reserve Bank of New York) and two young typists. All these assistants were
assigned by the Bank from its own staff, their salaries paid by the Committee.
The Bank also supplied working space and furniture.
This same plan of organization, with some modifications, is the
one we would recommend for the comprehensive study. The association between
an ad hoc committee and Brookings Institution is unusual, it has values for
both groups and we recommend that it continue. Certain problems in that
relationship will arise when the publishing stage is reached. These problems
do not, however, call for immediate solution and their resolving will not
disturb the work of this Committee*
-13The Committee's functioning, and its relation to the small
staff, would continue along established lines. Thus far the Committee has
been kept informed of work accomplished through progress reports put out by
the research director, through personal consultation; and by discussion in
meetings. Meetings will be held when needed, they will be called by the
Secretary with the consent of the Chairman. The identification of interests
between the Committee members and the work being done will make for continuing
oversight on the part of members.
Personnel
i, The? major project waaXJ3e.^)ttt-ifrH3feai*ee, of a scholar of wide
experience and attainments who will have general supervision over its various
parts and who will himself undertake some of the writing assignments which the
Committee contemplates• Mr. W. Randolph Burgess, presently Deputy to the Secretary of the Treasury, will occupy this part when his present work at the
Treasury is completed. An active member of this Committee, he brings to the
post an extraordinary combination of practical experience in monetary affairs
and scholarly accomplishment. A graduate of Brown University, he got his
doctorate at Columbia in 1920 and went at once to the Federal fleserve Bank
of New York. He became Deputy Governor of that Bank in 1930, and Vice President in 193&* To this experience in central banking he added fifteen years'
experience in commercial banking as Vice Chairman of the National City Bank
and then Chairman of its executive committee. In 1953 *» returned to the
Federal Reserve Bank, OBly-W^go to the Treasury as Deputy to the Secretary*
The breadth of his scholarly interests is indicated by the fact that he has
been at various times President of the American Statistical Association and
the Academy of Political Science, as well as of the American Bankers Association. Mr. Burgess is editor of a volume of papers by Benjamin Strong, "Interpretations of Federal Heserve Policy", and author of "The Reserve Banks and the
-lli"
Money flyslwn", a classic in this field of literature.
For obvious reasons this cannot yet be publicly announced,
but the commitment is firm. Mr. Burgess will give full-time to this project.
He has from the beginning of the pilot phase been an active participant in
Committee discussion and will so continue during the remainder of his service
at the Treasury. During that interim4»^awill-continue to be assisted in Com• ;
, ¥
<U
ijgr Mr. Donald Woodward, Secretary of the Committee. Mr. Woodw a r d ^ experience with monetary material includes work on the Board staff and
writing about System affairs for the Wall Street Journal, Business Week and The
Economist (of London). He developed the research division of the Mutual Life
Insurance Company and became First Vice President of that institution. He is
now Chairman of the Finance Committee of the Vick Chemical Corporation.
The other four members offcteteCommittee are, of course, experts
in the monetary field. The Chairman, Mr. Allan Sproul, has spent his working
life within the Federal Reserve SJystem. Starting in 1920 in the Federal Reserve
Bank of San Francisco he served there ten years and then moved to the Federal
Reserve Bank of New York. He has been President of the New York Bank since 19ljl«
Mr. William McChesney Martin Jr. comes from a St. Louis family
%
famous in ^nfrrol banking. To experience in the Federal Reserve Bank of St.
Louis he added ten years of activity in the investment business. He was President
of the New York Stock Exchange from 1938 to 19l&$ Chairman and President of
the Export-inport Bank in 19i*6$ U. S. Director of the Bank for Reconstruction
and Development; Assistant Secretary of the Treasury in 19h9» He is now Chairman of the Board of Governors of the Federal Reserve System.
Dr. Robert Calkins is now President of the Brookings Institution.
He got his doctorate in 1933 with a thesis on banking, went at once into academic
work, lecturing on economics both at Stanford and at the University of California
-35where he became Chairman of the Economics Department and then Dean of the
College of Commerce • Between I9I4I and 19l*7 he was Dean of the School of
Business at Columbia University, and from 19li7 on he was Vice President
and Director of the General Education Board. Dr. Calkins served for five
years as Director of the Federal Reserve Bank of New York*
Dr. Walter W. Stewart also has combined academic with banking
and investment experience. Professor of Economics at Amherst College from
1916 to 1922, he then went to the Federal Reserve Board as Director of the
Division of Research and Statistics. In 1928 he became Economic Adviser to
the Bank of England; in 1931 he was appointed American Member of a special
committee of the Bank of International Settlements to look into German reparation obligations under the Young Plan. He was for some time President of
Case Pomeroy and Company, an investment house. Trustee of the Rockefeller
Foundation, Chairman of the General Education Board, Professor at the Institute for Advanced Studies, he was in 19f>3 called to Washington to become a
member of the Council of Economic Advisers*
2 . As Research Director, Mildred Adams who initiated and carried
through the work of the pilot phase, will continue during at least the early
period of the main study. Miss Adams (in private life Mrs.W. Houston Kenyon,
wife of a New York attorney) is an economist by education and a journalist by
training. To experience in feature writing for the New York Sunday Times,
Barrons Weekly and various other magazines she added editorial writing for
Busines s Week, and for The Economist(of London). She has recently been United
Nations correspondent for the latter publication.
3t
In order to do the amount of visiting of Reserve Banks which
the study needs, Miss Adams must have an assistant capable of accepting more
responsibility for administrative detail than can be delegated to Miss McKinstry
-16if the part-time arrangement for the latter's services prevailing under the
pilot project is to continue* The Committee's aim is to find a well-equipped
and exceptionally able research assistant, with the necessary academic
training in monetary matters and some experience in administration, who
has the capacity to play a major role in the project. Such a person would,
after a year or so as administrative assistant, take charge and carry for—
ward. Miss Adams wiilr then be in a unique position to embark on a major
writing part of the project.
4,
In addition we would need a secretary with research experi-
ence, (Miss McKinstry is so exceptional that we would like to keep her,
even with the handicap of part-time service)* It may be necessary to add
secretarial help in Washington, and provision for this contingency will
be made in the budget.
(c) Quarters
There is reason to believe that offices and equipment assigned
for the pilot project by the Federal Reserve Board in Washington, the Brookings
Institution and the Federal Reserve Bank in New York will continue to be available.
This provision of rent-free quarters and equipment (the Federal
Reserve Bank imposes a very nominal fee for furniture rental which is more than
counterbalanced by its many operating services) is a concrete instance of the
interest which the System is taking in the entire project. Board and Banks are
also making important contributions in the form of material and of research
assistance.
Their continued co-operation is of course a vital factor in the
process.
(d) Budget
In the exploratory phase, personnel of Board and Banks have
been helpful and co-operative with specialized knowledge and time for discussion.
-17The Committee's debt to librarians, heads of research departments, purchasing
agents, secretaries who helped out is very real, and financially substantial•
Significant parts of the cost of this project will be provided
by contributions from the System in the form of rent-free quarters, use of
equipment, consultations with officers, hours of work on the part of librarians,
research aides, purchasing agents, secretaries, and other staff members. The
Board and the twelve Beserve Banks have evidenced continuing interest. The
Treasury files are open to us, the manuscript division of the Library of Congress and interested people in the University libraries are rendering us all
possible aid. The Committee members themselves are serving without compensation, and with no allowances except for occasional travel expense.
In addition to these large contributions from the System and
other groups, contributions which in themselves attest to the importance of
this project, further funds will be needed to carry on this study.
The costs which can be estimated are preponderantly for staff
salaries, travel expenses, supplies (limited mostly to stationery and archival
materials) and subventions to be used in three ways - to be paid for the study
and evaluation of collections of papers, to assist the writers of monographs,
to defray the cost of major works.
Based on experience in the pilot project, we have made estimates
in two groups, one for an early period when research expenses and travel costs
will be relatively high, the other for a period when the heavy costs will
take the form of subventions and other aids to writing and publishing which are
the goals of this study. These budgets should be taken as estimates only, and
we would ask that a high degree of flexibility be allowed the Committee in allocating the funds for which it asks.
There may be instances in which provision
for salaries will be transferred to grants-in-aid, and vice versa, depending on
the situation.
-18Budget E s t i m a t e s June 1 , 195U t o May 31« 1959
Earlier Period
Later Period
Salaries
$30,000
to provide a research director
administrative assistant,
research secretary, secretary
for the project head, typist
Salaries
Travel Costs
3,000
Travel Costs
2,000
Other expenses
1,500
Other expenses
1,000
Funds for writing
l5»000
Annual T o t a l
$1*0,000
Funds for writing
$1*9,500
2 1*, POO
Annual T o t a l
$67,000
Totals for earlier period (ly*& $ 99,000
2&lf**>
Totals for l a t e r period&W yc**) 211,000 :
Total for five years
1310,000
The antnmetic in this table is worked out e « ^ £wo and- a
•
*
•
-
t3ag80-yoar--peraod-> Actually we cannot tell at this moment exactly
people, .ivill be available or just how fast some <steps can gov- Therefore-,
Sre would ask that the expenditure curve be left flexible*
VII
Request
In view of these estimates the Committee respectfully requests that
for the purpose described in this proposal the Rockefeller Foundation grant
$310,000 to be expended in the five years between June 1, 1951* and May 31, 1959•
The grant should go to the Brookings Institution with the understanding that its responsibilities and those of the Committee toward the projeci are
mutual, and that an informal relationship between the two bodies comparable to
that which proved so satisfactory during the pilot phase is to continue.
The report of the pilot project, which reveals the wealth of materials
found and ***«&&«**s the richness yet uncovered, is appended.
f
.
.
,
.
.
,
.
•
•
-
••
"
MS fa
-19-
J
Walter Bagehot said "Money will not manage itself11 . To which
the late Emanuel Goldenweiser added his plea for "an understanding of this
major force, of its causation and consequences"• We are convinced that the
role which central banking plays in the management of money will be even
greater in the future than it is now* It is the hope of this Committee
that the s*%*ely proposed will contribute to its better understanding.
€
April 20,
Dear Mr» Burgess:
Thanks so much for jour quick response in the natter
of the draft proposal. The textual changes you suggest have
been embodied in the final copy, and we are expecting to send
the entire document to Dr« ^illits this afternoon. We hope
to be able to sail it to committee members at the saise time.
Very sincerely yours,
Mildred Adams
Hr. W # Randolph Burgess
Deputy to the Secretary
Treasury Department
Washington, D. C.
TREASURY DEPARTMENT
WASHINGTON
April 16, 1954
Dear Miss Adams:
The revised draft for the proposal to the Foundation
arrived a few minutes ago and I have read it* In general
it seems to me in fine shape.
In the paragraph of the document which relates to me,
I should like to suggest some changes, and I attach a
revised sheet for that purpose which I think is definite
enough to do the Job without putting all the nails in the
coffin.
You will notice that I have taken out the sentence
about its being a fulltime Job, which I don't really
believe it is, but I suggest wording it in a way that
avoids a commitment on that matter.
Also, I am suggesting a revision of the paragraph
relating to William Martin.
Otherwise, I have no suggestions to offer.
I am sending this along now since I shall be in
White Sulphur on Monday.
Sincerely yours,
W. Randolph Burgess
Miss Mildred Adams
Research Director, Committee on the
History of the Federal Reserve System
33 Liberty Street
New York 45, New York
Enclosures
http://fraser.stlouisfed.org/
to Donald
Federal Reserve Bankc.c.
of St. Louis
B. Woodward
- 13-A (b)
Personnel
The major project will be put in charge of a scholar
of wide experience and attainments who will have general
supervision over its various parts and who will himself
undertake some of the writing assignments which the Committee
contemplates.
Mr. W. Randolph Burgess, presently Deputy to
the Secretary of the Treasury, has indicated his willingness
to occupy this post when his present work at the Treasury is
completed.
An active member of this Committee, he can bring
to the post an extraordinary combination of practical experience
in monetary affairs and scholarly accomplishment.
A graduate
of Brown University, he earned his doctorate at Columbia in
1920 and went at once to the Federal Reserve Bank of New York.
He became Deputy Governor of that Bank in 1930.
To this experi-
ence in central banking he added fourteen yearsf experience
in commercial banking as Vice Chairman of the National City Bank
and then Chairman of its executive committee.
In January 1953
he retired from the Bank to go to the Treasury as Deputy to
the Secretary.
The breadth of his scholarly interests is in-
dicated by the fact that he has served as President of the
American Statistical Association and the Academy of Political
Science, as well as of the American Bankers Association.
Mr. Burgess is editor of a volume of papers by Benjamin Strong,
"Interpretations of Federal Reserve Policy", and author of "The
Reserve Banks and the Money System", which has for years held
an outstanding position as a text book and reference book in
this field.
13-A (Continued)
He is a fellow of Brown University, a Trustee of
Teachers College (Columbia), of Robert College (Istanbul),
and of The Carnegie Corporation*
For obvious reasons this cannot yet be publicly
announced*
Mr. Burgess has from the beginning of the pilot
phase been an active participant in Committee discussion and
will so continue during the remainder of his service at the
Treasury* * * * * *
Revision on Page 14
• . . . Mr. William McChesney Martin, Jr., comes from
St. Louis, where his father was the head of the Federal Reserve
Bank of St. Louis. To a brief experience in the Federal Reserve
Bank of St. Louis he added ten years of activity in the investment business. He was President of the New York Stock Exchange
from 1938 to 1941; Chairman and President of the Export-Import
Bank in 1946; U. S. Director of the Bank for Reconstruction and
Development; Assistant Secretary of the Treasury in 1949. Since
1951 he has been Chairman of the Board of Governors of the
Federal Reserve System
Revision on Page lU
•
•
.
Mr, William McChesney Martin, Jr., comes from
St. Louis, where his father was the head of the Federal Reserve
Bank of St. Louis. To a brief experience in theFederal Reserve
Bank of St. Louis he added ten years of activity in the investment business. He was President of the New York Stock Exchange
from 1938 to 19 1; Chairman and President of the Export-Import
Development; Assistant Secretary of the Treasury in 19h9. Since
1951 he has been Chairman of the Board of Governors of the
Federal Reserve System
f
•»,
PROPOSAL
Introduction
In January 195>1* the Rockefeller Foundation made a grant for a pilot
project leading toward a history of the Federal Reserve System* The immediate
end was to find out what materials were available for such an undertaking, materials not only in the sense of papers, but also of the living memories of men
active in the early days of the %"stem.
That task has been carried on since January 13>th. It has yielded
extraordinarily good results (a report of its findings to April is appended),
and there is every reason to believe that an even greater harvest of papers
and memories lies waiting to be gathered. The Committee feels that this has
proved to be in the best sense of the word a pilot project• In addition to
exploring papers and memories, it uncovered that sense of personal struggle
and accomplishment which is the living core of any institution. It e :listed
interest and it ensured cooperation for the future. It points the way very
surely to the next and much bigger task which lies ahead, and for which the
Committee now asks the consideration of the Foundation.
I The Task
In calling itself the Committee on the History of the Federal Reserve System, the group presenting this proposal definedits primary purpose.
But the discoveries, contacts and discussions made during the pilot project
have deepened the content and widened the scope of that purpose. The Committee now knows that what needs to be done is much more than a single history
of the Reserve System - it is an appraisal of one of the most extraordinary
inventions in this democracy, a review of experience in its functioning, an
analysis in terms of the memories of men who helped develop it and who took
part in its operation. The episodes around which conflicts swarmed, and out
-2o£ which change came, the process by which decisions were made, the importance of personalities, the interplay between public policy and private needs these various angles of approach and many more which have been suggested from
time to time by Committee members testify to the vitality of the subject and
to the lessons which can be learned for other democratic institutions by a
detailed study of its experience.
II
Why Important?
the importance of the subject is, however, greater than a matter
of the material dealt with or the people dealing with it* It goes much farther than the task of history writing, vital as that is, and farther than what
are commonly considered the somewhat narrow confines of the banking world*
(a) Of all the innovations in government mechanisms which Americans
have brought about during the twentieth century the Federal Be serve System
stands first, and not only because of the unprecedented functions which it is
called on to perform. It operates with a high degree of autonomy linked with
a fine sense of public purpose. To an extraordinary extent it has managed to
preserve its freedom from both Congressional and Executive pressures. 3h periods when it has been forced to yield the public protests against such yielding
have been continuous until the pressures have softened and the balance has been
restored*
(b) Writing in 19^6 about twentieth century monetary controls, Professor
Robert Warren of the Institute for Advanced Study observed that in the nineteenth century there developed a new type of society, the money economy,
which made new demands on those who administer Government control over the
supply of money* "High and low, rich and poor, bond and free there had always
been, but never before had there been an economy that expected the majority of
its people to be totally dependent upon the continuty of a stream of money
•3income" • Along with other observers Professor Warren interpreted the
primary task of the Federal Reserve System as on© of seeing that this
continuity of the stream is not interrupted by monetary failures* to
do this it bridges the gap between public and private efforts to influence the economy* The goal toward which it has been directed in these
later stages is the stability of the economy for th® public good} in that
pursuit it has developed, tried and discarded one mthod after another,
only to reach for a new one which promised better results* Analysis cf
these experiences form important chapters in both monetary and economic
history*
(e) la the practise of the functions laid upon itf the System
has enlisted and trained staffs whose skill and devotion to the System's
work stands in notable contrast to that of certain other governsiental institutions* Mot only have they weathered forty years of political storms
with a minimum of vulnerability) the System as a whole, by some curious
magic, has withstood political attack from both parties* tensions which
in theory should have split It apart seen somehow to have been Important
factors in holding it together*
Id) An analysis of the changing experience In design and in operation of this unique governmental mechanism would have great value* It
is Important for the future performance of the System and of the American
economy* There is reason to believe that such analysis may hold lessons
of great value which can be applied to problems of organisation in both
governmental and private lift, far removed from the process of monetary
III
The questions which this study would Illumine fall into two cat*
egories* there are in the first place what might be called the techanical
issues, some theoretical and some matters of operating policy, which have
absorbed the System's attention at one time or another in its life. These
appear in annual reports, they are high-lighted in government hearings, but
in both instances the questions which an informed and impartial student might
ask are diverted by the exigencies of the moment• Enough time has elapsed,
for instance, since control of the discount rate was first used by the System
as a tool of monetary policy so that its importance under varying conditions
can be weighed and studied* The same thing is true of changes in reserve requirements, and of the tool of open market operations* let a vast amount of
controversy still surrounds them, some of which could be resolved by competent
studies*
Beyond the technical points at issue (of which these are merely
instances that come first to hand) lie broader issues both within and without the banking system* For example, how did it come about that so unique
a mechanism of monetary control was established? By what methods and devices
has it endured and thrived? How are the skill, competence and individual
freedom of its staff, unusually high in government or in private bodies, maintained and encouraged? How has the relationship between staff and Board members been worked out? How can the System's role in the world of government
and in the economic world be best defined and understood? What are the lessons
of this role for other organizations, in or out of government? How are Board
decisions, with their high, degree of importance in American life, arrived at?
How does the System influence the operations of monetary mechanism at moments
of crisis? What lessons are there in the relations which prevail between Board,
Reserve Banks and Member Banks, and how are those relationships evolving?
Scope and Method of Inquiry
The study which we propose would cover the entire Federal Reserve
System, including the Board and the twelve regional banks, from their inception. Much has been written on the events, crises and personalities
which led up to the founding of the System, but even this needs re-studying in the light of newly discovered material.
We would therefore set out to make a complete search for the material and the people concerned in Federal Reserve legislation, theory and
operation, going back at least to 190? when the Aldrich Commission functioned.
From 1913 forward we would undertake to discover the cast of influential characters in the System ! s growth, change and operation, including governmental
figures in Congress and the executive branch; Members of the Board and influential men on the Board staff5 Governors, Presidents and senior officers
of Reserve Banksj Members of the Federal Advisory Council, the Open Market
Committee and allied bodies; men in academic life (as for example, Oliver
W. M. Sprague and John H. Williams) who have been in close and influential
contact with the System during its years of growth*
The laethod to be used is that which has successfully been developed
during the pilot project phase of this study. It includes visiting Board and
Banks, both to search out men who remember early days, and to ascertain how
records are kept and what local records are available; the establishing of
the names of the dramatis personae, the recording of brief biographic data
concerning them, the request for interviews if they are still alive, the
search for their papers if they are deceased.
Experience in the pilot project, and consultation with those engaged in other attempts to chart and record the course of living institutions,
have taught us that the comprehensive study of the Federal Heserve System
which is the core of our endeavor divides itself into three steps; these for
convenience may be called, the archival process, the interview process and
-6the writing process. Logically, these three appear to be separate, just
as in the pilot project the process of discovery of papers, gathering of
memories and building of card files appeared to be separate* Actually,
each process in the pilot project fed and profited from each other* The
success of that project was in no small part due to what seemed at times
a handicap - namely, that all three processes were necessarily going on at
once*
Were it advisable, in view of that experience, to try to carry on
the archival, the interview and the history-writing processes of the main
project one at a time, in series, we might propose that the grand design
move forward in two phases. A reading of the report on the pilot project
shows how much has been started, and how much remains to be done. For example, the research director hoped to visit all twelve He serve Banks during
the pilot phase, but the volume and variety of work under way forced post*
ponementj most of those Banks distant from the Atlantic seaboard remain to
be explored*
The mapping and survey stage uncovered not only papers and
memories. It also set the pattern for the study of those papers and those
memoirs* A great deal more must be done along these lines before the master
files of paper8 and other materials are ready for the student's use.
Not only must the master files be completed, but the papers which
have been uncovered during the pilot project, and the collections still to be
found, must be analysed for pertinent material. The Hamlin diaries, recently
released from a ten-year seal, stand alone in terms of the preparation and
indexing lavished on them, but even the Hamlin diaries are new ground for the
student. Someone must read those 26 volumes and evaluate them for the purposes of any comprehensive history of the System.
-7The work to be done on other collections, not yet sorted or class*
ifled, is more extensive* The National Records Management group stands readyto start a pilot study of a similar group of papers in order to chart costs
and work out efficient methods of handling* Toung Parker Willis would take
time from his work at the Federal Heserve Bank in Boston to survey his
father's papers if this were arranged* The Goldenweiser papers, the Adolph
C, Miller papers are destined for this Committee fs use • These and many
more must be classified and set in order.
But even while setting down these small examples of the large
amount of work which remains to be done in the first two processes we recognize how inextricably linked with them is the third process. During the
pilot phase we became aware of writings under way and needing encouragement
which would be valuable for our purposes and which would be finished the
sooner if they could profit from the work we were doing, Research into the
past is not well done in a vaccuum or without the added spur of a person
who wants to use its results. The historian who can work with researchers,
using their data, stimulating and broadening their search by his questions,
has a richer content to draw from than the one who starts after the research
process is finished and filed away.
Proposal
We therefore propose to move forward with three groups of activities,
a H of them vital to the comprehensive study which i« the core of this
endeavors
1. Archival
(l) To continue and complete the visits to Board and banks,
the search for records, the interviewing, the hunt for
papers and the recording of discovered material which was
started during the pilot phase*
(2) to continue and complete the biographic, bibliographic
and chronological master files which were started during
the pilot phase*
(3) to make available to qualified students that part of
the Committee *s research material which is pertinent to
their inquiries*
(It) to work out problems of handling related collections of
papers and putting them in usable shape for students*
This may include financial aid in certain instances*
(For
example, the Carter Glass papers are at the University of
Virginia as described in the report on the pilot phase*
Their classification and study is essential, but funds
would have to be provided)*
2* Interview
To continue the interview process which has yielded such
good results under the pilot project, and to enter on a
series of further interviews with chosen individuals in
the older group who have already shown themselves to have
good memories and an interest in contributing all they can
to this project* Such men as Boy loung and Walter Wyatt
of the Board, George Harrison, J* Herbert Case and Leslie
Bounds of the Hew Xork Bank, John Sinclair and Casimir Sienkeiwics of Philadelphia, are of this type, and there are
many more• Just as the Harvard Business Studies group finds
a tape recorder valuable for catching the living word in key interviews, so sight we profitably avail ourselves of this
technique in selected instances*
3« Writing
The inciting and editing falls into three parts (l) The monographs - in a study as extensive and important as
this the monograph plays a key part* In some instances it
stands by itself, as a definitive study of one part of a
related whole* In others it acts as an introductory study
and may later be incorporated into the whole. The pilot
phase uncovered certain monograph ideas, some of them
already started, others only in the planning stage. For
example, Carl Parry, now retired from the Board staff,
should be encouraged to complete his half-done monograph
on Selective Credit Controls, a subject in which he has
had active as well as theoretical interest*
Gardner
Patterson of the International Finance Section at Princeton University would like aid to write a study of Reserve
International Financial Operations in the 1920s; Lester
Chandler, also of Princeton, would like aid to write a
long monograph or a short book on "Ben Strong, Central
3ankerN j two able men, Dr* Karl Bopp of the Philadelphia
Federal Reserve Bank and Professor Edward Shaw of Stanford
University are each interested in a study which might be
called "The Art and Polities of Cential Banking."
No
commitments have been made in regard to such work* These
examples are, however, listed as showing the caliber of
work which this Committee would like to encourage, and
for which it would use funds*
-10(2) Major Works
Of these the definitive history is the core of the
project and the one toward which we continue to point
our endeavors. We believe that its writing will take
a good three years on the part of a distinguished scholar
who has already shown the skill and judgment which the
creation of such a history demands. The task of exploration and recording of materials will be carried further
and the field of possible scholars will continue to be
canvassed*
Considering the high cost of subsidies for major
works we would hesitate to name other volumes for which
we are ambitious were it not for hopes that at least
some of these might find publication through commercial
channels and would need from this Committee little more
help than can be provided through consultation, use of
materials, perhaps a small subsidy for stenographic aid*
We have from the beginning believed that the play of
personalities would be an important factor in any governmental operation and that a volume of biographic
essays on key figures could be written so as to illumine various facets of the System. We also think that
a volume of essays on crises in the banking world, following the volume by Oliver M, W. Sprague on History of Crises
Under the National Banking System, would be an important
contribution which miglt find publication through regular
channels* There would be others as the project develops*
(3) Editing and Publishing of Documents
The Committee's staff has noted with interest the
British example whereby documents basic to central
banking in England, including key speeches and memoranda as well as legislation, were edited and published
under the title Gregory's Select Statutes* Documents and
Reports delating to British Bank, 1832-38, Comparable
material in American banking practise is scattered, and
might well be gathered in some such volume. It has also
been suggested that a comprehensive annotated bibliography
covering both published and unpublished works bearing on
the System would be a most useful contribution to research
activities* In addition it is not Improbable that selected
papers from the various collections under survey may prove
so valuable as to deserve publication* No decisions have
been made in this field, but we list this activity as one
in which the Committee may engage.
Use Of Materials
The Board and the Beserve Bank of New York have been particularly
interested in the work of this Committee; individuals from these institutions,
both officers and staff have been actively participating in it. Both Board and
Bank may face problems of participation when more recent events come to be discussed j the availability of confidential materials covering recent events may
also present a problem.
The existence of this problem must be recognized, but the Committee
is confident that a solution will be found which will neither hamper the project
nor strain either the willingness or the ability of individuals or institutions
to continue their co-operation.
-12Organization^ Personnel and Budget
(a) Organization
The grant for the pilot project was made to the Brookings
Institution; an informal working arrangement was established whereby the
President of Brookings became a member of the Committee, work was done under
Committee supervision, and Brookings acted as disbursing and bookkeeping agent.
That institution also furnished office space in Washington for the Research
Director, as did the Federal Reserve Board*
Because the Committee was composed of busy men, the superevisory function fell most frequently to its secretary, Donald Woodward, at
one time on the Board's staff, now Chairman of the Finance Committee of Vick
Chemical* The other members of the Committee have also shown steady and
vigorous interest in the pilot project and have been generous with time and
advice when called on for consultation*
The daily work was carried on by a small staff headed by
Mildred Adams as Research Director, assisted by Katherine McKinstry (who
shared her skill as research assistant and her time between the work of
this Committee and that of Dr. John H* Williams, consultant to the Federal
Reserve Bank of New Tork) and two young typists. All these assistants were
assigned fcy the Bank from its own staff, their salaries paid by the Committee.
The Bank also supplied working space and furniture.
This same plan of organization, with some modifications, is the
one we would recommend for the comprehensive study. The association between
an ad hoc committee and Brookings Institution is unusual, it has values for
both groups and we recommend that it continue. Certain problems in that
relationship w i n arise when the publishing stage is reached. These problems
do not, however, call for immediate solution and their resolving will not
disturb the work of this Committee.
-13The Committee's functioning, and its relation to the small
staff, would continue along established lines• Thus far the Committee has
been kept informed of work accomplished through progress reports put out by
the research director, through personal consultation; and by discussion in
meetings* Meetings will be held when needed, they will be called by the
Secretary with the consent of the Chairman. The identification of interests
between the Committee members and the work being done will make for continuing
oversight on the part of members*
(b) Personnel
The major project will be put in charge of a scholar of wide
experience and attainments who will have general supervision over its various
parts and who will himself undertake some of the writing assignments which the
Committee contemplates* Mr* W« Randolph Burgess* presently Deputy to the Secretary of the Treasury, will occupy this part when his present work at the
Treasury is completed. An active member of this Committee, he brings to the
post an extraordinary combination of practical experience in monetary affairs
and scholarly accomplishment* A graduate of Brown University, he got his
doctorate at Columbia in 1920 and went at once to the Federal .Beserve Bank
of New York* He became Deputy Governor of that Bank in 1930* and /ice President in 1936* To this experience in central banking he added fifteen years 1
experience in commercial banking as Vice Chairman of the National City Bank
and then Chairman of its executive committee*
In 1953 be returned to the
Federal Beserve Bank, only to go to the Treasury as Deputy to the Secretary*
The breadth of his scholarly interests is indicated by the fact that he has
been at various times President of the American Statistical Association and
the Academy of Political Science, as well as of the American Bankers Association. Mr. Burgess is editor of a volume of papers \jy Benjamin Strong, "Interpretations of Federal He serve Policy11, and author of n The Beserve Banks and the
-liiMoney Sgrstem11, a classic in this field of literature.
For obvious reasons this cannot yet be publicly announced,
but the commitment is firm* Mr. Burgess will give full-time to this project*
He has from the beginning of the pilot phase been an active participant in
Committee discussion and will so continue during the remainder of his service
at the Treasury. During that interim he will continue to be assisted in Committee matters by Mr. Donald Woodward, Secretary of the Committee. Mr. Woodward's experience with monetary material includes work on the Board staff and
writing about System affairs for the Wall Street Journal, Business leek and The
Economist (of London)* He developed the research division of the Mutual Life
Insurance Company and became First Vice President of that institution. He is
now Chairman of the Finance Committee of the Vick Chemical Corporation*
The other four members of the Committee are, of course, experts
in the monetary field. The Chairman, Mr. Allan Sproul, has spent his working
life within the Federal Reserve System. Starting in 1920 in the Federal Reserve
Bank of San Francisco he served there ten years and then moved to the Federal
Reserve Bank of New York* He has been President of the Mew York Bank since 19bl*
Mr. William McChesney Martin Jr. comes from a St. Louis family
famous in central banking. To experience in the Federal Reserve Bank of St.
Louis he added ten years of activity in the investment business* He was President
of the New York Stock Exchange from 1938 to I9UI5 Chairman and President of
the Export-inport Bank in 191*6$ U . S . Director of the Bank for Reconstruction
and Development} Assistant Secretary of the Treasury in 19^9 • He is now Chairman of the Board of Governors of the Federal Reserve System.
Dr. Robert Calkins is now President of the Brookings Institution.
He got his doctorate in 1933 with a thesis on banking, went at once into academic
work, lecturing on economics both at Stanford and at the University of California
-15where he became Chairman of the Economics Department and then Dean of the
College of Commerce* Between 19l*l and 19b? he was Dean of the School of
Business at Columbia University, and from 19^7 on he was Vice President
and Director of the General Education Board. Dr. Calkins served for five
years as Director of the Federal Reserve Bank of New Xork,
Dr. Walter f« Stewart also has combined academic with banking
and investment experience. Professor of Economics at Amherst College from
1916 to 1922, he then went to the Federal Reserve Board as Director of the
Division of l^search and Statistics* In 1928 he becaiae Economic Adviser to
the Bank of England; in 1931 ks was appointed American Member of a special
committee of the Bank of International Settlements to look into German reparation obligations under the Xoung Plan. He was for some time President of
Case Pomeroy and Company, an investment house. Trustee of the Rockefeller
Foundation, Chairman of the General Education Board, Professor at the Institute for Advanced Studies, he was in 19f>3 called to Washington to become a
member of the Council of Economic Advisers*
As Research Director, Mildred Adams who initiated and carried
through the work of the pilot phase, will continue during at least the early
period of the main study. Miss Adams (in private life Mrs.W. Houston Kenyon.
wife of a New Xork attorney) is an economist by education and a journalist by
training. To experience in feature writing for the New York Sunday Times,
Barrons weekly and various other magazines she added editorial writing for
Business Week, and for Toe Economist (of London^. She has recently been United
Nations correspondent for the latter publication.
In order to do the amount of visiting of Reserve Banks which
the study needs, Miss Adams must have an assistant capable of accepting more
responsibility for administrative detail than can be delegated to Miss McRLnstry
-16if the part-time arrangement for the latterfs services prevailing under the
pilot project is to continue* The Committee's aim is to find a well-equipped
and exceptionally able research assistant, with the necessary academic
training in monetary matters and some experience in administration, who
has the capacity to play a major role in the project* Such a person would*
after a year or so as administrative assistant, take charge and carry forward* Miss Adams will then be in a unique position to embark on a major
writing part of the project*
In addition we would need a secretary with research experience* (Miss McKinstry is so exceptional that we would like to keep her*
even with the handicap of part-time service)* It may be necessary to add
secretarial help in Washington* and provision for this contingency will
be made in the budget*
(c) Quarters
There is reason to believe that offices and equipment assigned
for the pilot project py the Federal Reserve Board in Washington* the Brooking*
Institution and the Federal Reserve Bank in New York will continue to be available*
This provision of rent-free quarters and equipment (the Federal
Reserve Bank Imposes a very nominal fee for furniture rental which is more than
counterbalanced by its many operating services) is a concrete instance of the
interest which the System is taking in the entire project* Board and Banks are
also making important contributions in the form of material and of research
assistance.
Their continued co-operation is of course a vital factor in the
process*
(d) Budget
In the exploratory phase* personnel of Board and Banks have
been helpful and co-operative with specialized knowledge and time for discussion*
-17The Committeefs debt to librarians, heads of research departments, purchasing
agents, secretaries who helped out is very real, and financially substantial.
Significant parts of the cost of this project will be provided
by contributions from the System in the form of rent-free quarters, use of
equipment, consultations with officers, hours of work on the part of librarians,
research aides, purchasing agents, secretaries, and other staff members. The
Board and the twelve Reserve Banks have evidenced continuing interest* The
Treasury files are open to us, the manuscript division of the Library of Congress and interested people in the University libraries are rendering us all
possible aid. The Committee members themselves are serving without compensation, and with no allowances except for occasional travel expense.
In addition to these large contributions from the System and
other groups, contributions which in themselves attest to the importance of
this project, further funds will be needed to carry on this study.
The costs which can be estimated are preponderantly for staff
salaries, travel expenses, supplies (limited mostly to stationery and archival
materials) and subventions to be used in three ways - to be paid for the study
and evaluation of collections of papers, to assist the writers of monographs,
to defray the cost of major works.
Based on experience in the pilot project, we have made estimates
in two groups, one for an early period when research expenses and travel costs
will be relatively high, the other for a period when the heavy costs will
take the form of subventions and other aids to writing and publishing which are
the goals of this study. These budgets should be taken as estimates only, and
we would ask that a high degree of flexibility be allowed the Committee in allocating the funds for which it asks. There may be instances in which provision
for salaries will be transferred to grants-in-aid, and vice versa, depending on
the situation*
-18Badget Estimates June 1. 1951 to May 11. 19^9
Earlier Period
Later Period
Salaries
#30,000
to provide a research director
administrative assistant,
research secretary, secretary
for the project head, typist
Salaries
Travel Costs
3,000
Travel Costs
2,000
Other expenses
1,500
Other expenses
1,000
Funds for writing
15.000
Rinds for writing
$i#,S00
Annual Total
•
.
$Jj0,000
Annual Total
2lu.000
$6?,000
. - .
Totals for earlier period
Totals for later period
Total for five years
$ 99,000
211,000
1310,000
The arithmetic in this table is worked out on a two and a
three-year period. Actually we cannot tell at this moment exactly when
people will be available or just how fast some steps can go* Therefore,
we would ask that the expenditure curve be left flexible*
VII
Bequest
In view of these estimates the Conmittee respectfully requests that
for the purpose described in this proposal the Rockefeller Foundation grant
$310,000 to be expended in the five years between June 1, 193>U and May 31, 1959*
The grant should go to the Brookings Institution with the understand*
ing that its responsibilities and those of the Committee toward the project are
mutual, and that an informal relationship between the two bodies comparable to
that which proved so satisfactory during the pilot phase is to continue*
The report of the pilot project, which reveals the wealth of materials
found and indicates the richness yet uncovered, is appended*
-19Walter Bagehot said "Money will not manage itself" • To which
the late Eroanuel Goldenweiser added his plea for "an understanding of this
major force, of its causation and consequences"• We are convinced that the
role which central banking plays in the management of money will be even
greater in the future than it is now* It is the hope of this Committee
that the study proposed will contribute to its better understanding*
o
Introduction
In January 1954 the Rockefeller Foundation made a grant for a pilot
project leading toward a history of the Federal Reserve System. The immediate
end was to find out what materials were available for such an undertaking, materials not only in the sense of papers, but also of the living memories of men
active in the early days of the System.
That task has been carried on since January 15th. It has yielded
extraordinarily good results (a report of its findings to April is appended),
and there is every reason to believe that an even greater harvest of papers
and .aagMiaMi lies waiting to be gathered. The Committee feels that this has
proved to be in the best sense of the word a pilot project. In addition to
exploring papers and memories, it uncovered that sense of personal struggle
and accomplishment which is the living core of any institution. It enlisted
interest and it ensured cooperation for the future. It points the way very
surely to the next and much bigger task which lies ahead, and for which the
Committee now asks the consideration of the Foundation.
I
The Task
In calling itself the Committee to CMiay >the History of the Federal
Reserve System, the group presenting this proposal define its primary purpose.
But the discoveries, contacts and discussions made during the pilot project
have deepened the content and widened the scope of that purpose. The Consul tOiltu
tee now knows that what needs to be done is much more than a single history *
it is an appraisal of one of the most extraordinary inventions in this democracy, a review of experience in its functioning, an analysis in terms of the
memories of men who helped develop it and who took part in its operation. The
episodes around which conflicts swarmed, and outiof which change came, the
)
-2process by which decisions were made, the importance of personalities, the
interplay between public policy and private needs - these various angles of
approach and many more which have been suggested from time to time by Committee members testify to the vitality of the subject and to the lessons which
j
can be learned for other democratic institutions by a detail* study of its
experience•
II Why Important?
The importance of the subject is, however, greater than a matter
of the material dealt with or the proper dealing with it. It goes much farther than the task of history writing, vital as that is, and farther than what
are commonly considered the somewhat narrow confines of the banking world,
(a) Of all the innovations in government mechanisms which Americans
have brought about during the twentieth century the Federal Reserve System
stands first, and not only because of the unprecedented functions which it is
called on to perform. It operates with a high degree of autonomy linked with
a fine sense of public purpose. To an extraordinary extent it has managed to
preserve its freedom from both Congressional and executive pressures. In period8 when it has been forced to yield the public protests against such yielding
have been continuous until the pressures have softened and the rin-prln1ng ringi-o
of piibllo »t*lon been restored.
(b) Writing in 1946 about twentieth century monetary controls, Pro]/
fessor Robert Warren of 1*i 11111 n \ an TTnl TflrfllVr observed that in the nineteenth
century there developed a new type of society, the money economy, which made
new demands on those who administer Government control over the f» i t r of
money.
"High and low, rich and poor, bond and free there had always been,
but never before had there been an economy that expected the majority of its
S
people to be totally Independent upon the continuity of a stream of money
-3ineome". Along with other observers Professor Warren interpreted the
primary task of the Federal Reserve System as one of seeing that this
continuity of the stream is not interrupted by monetary failures. To
yj
do this it bridges the gap between public and private efforts to Tntjnngn
the economy. The goal toward which it has .coma to reach-in these later
A
stages is the stability of the economy for the public goodj in that pursuit
it has developed, tried and discarded one method after another, only to
reach for a new one which promised better results. Analysis of these experiences form important chapters in both monetary and economic history,
(c) In the practise of the functions laid upon it, the System
has enlisted and trained staffs whose skill and devotion to the System's
work stands in notable contrast to that of certain other governmental institutions. Not only have they weathered forty years of political storms
with a minimum of vulnerability! the System as a whole, by some curious
magic, has withstood political attack from both partleju JUJtu 11I1U life
with a .^wenty-year Charter. J.t-yfflf'printer! t»
H
|ii
I IIIIIIII
ill -fHmrtnr in 19331
a year in which th«^mexeXad of its survive goae%ldies ' awmedfriiigedwlttr
11
tilie laAieLUftLuas. Tensions which in theory should have spilt it apart seem
somehow to have been important factors in holding it together.
(d) An analysis of the changing experience in design and in operation of this unique governmental mechanism would have great value. It
is important for the future performance of the System and of the American
economy. There is reason to believe that such analysis may hold lessons
of great value which can be applied to problems 4 ^ government far removed
from the process of monetary management,
III
Ty«*
The questions which this study would illumine fall into two categories. There are in the first place what migfct be called the technical
,£
issues, some theoretical and some matters of operating policy, vhich have
absorbed the System's attention at one time or another in its life. These
appear in annual reports, they are high-lighted in government hearings, but
in both instances the questions vhich an informed and impartial student night
ask are diverted by the exigencies of the moment. Enough time has elapsed,
for instance since control of the discount rate was first used by the System
as a tool of monetary policy so that its importance under varying conditions
can be weighed and studied. The same thing is true of changes in reserve requirements, and of the tool of open market operations. Yet a vast amount of
controversy still surrounds them, some of vhich «*ould be resolved by competent studies.
Beyond the technical points at issue (of vhich these are merely
instances that come first to hand) lie broader issues both within and without the banking system. For example, hov did it come about that so unique
a mechanism of monetary control was established?
By what methods and devices
has it endured and thrived? How are the skill, competence and individual
freedom of its staff, unusually high in government bodies, maintained and
A
_
encouraged? How has the relationship between staff and Board members been
worked out? How can the System's role in the world of government and in the
economic world be best defined and understood? Vhat are the lessons of this
role for other gofropamfen^ftl di^tolene? How are Board decisions, with their
A
high degree of importance in American life, arrived at? How does the System
influence the operations of monetary mechanisms at moments of crisis? Vhat
lessons are there in the relations vhich prevail between Board, Reserve Banks
and Member Banks, and how are those relationships evolving?
IV
Scope and Method of Inquiry
The study which we propose would cover the entire Federal Reserve
System, including the Board and the twelve regional banks, from their inception
fUi»-~«bJLc^-a4gqttttte material-
vail-
Much has been written on the events, crises and. personalities which
led up to the founding of the System, but/ even this needs re-studying in
the light of newly discovered material.
Ve would therefore set out to make a complete search for the material and the people concerned in Federal Reserve legislation, theory and
operation, going back at least to 1907 when the Aldrich Commission functioned.
From 1913 forward we would undertake to discover the cast of influential characters in the System's growth, change and operation, including governmental
figures in Congress and the executive branch) Members of the Board and influential men on the Board staff; Governors, Presidents and senior officers
of Reserve Banks} Members of the Federal Advisory Council, the Open Market
Committee and allied bodies; men in academic life (as for example, Oliver
V. M. Sprague and John Williams) who have been in close and influential contact with the System during its years of growth.
The method to be used is that which has successfully been developed
during the pilot project phase of this study. It includes visiting Board and
Banks, both to search out men who remember early days, and to ascertain how
records are kept and what local records are available) the establishing of
the names of the dramatis personae, the recording of brief biographic data
concerning them, the request for interviews if they are still alive, the
search for their papers if they are deceased.
Experience in the pilot project, and consultation with those engaged in other attempts to chart and record the course of living institutions,
hare taught us that the comprehensive study of the Federal Reserve System
which is the core of our endeavor divides itself into three steps) these for
convenience may be called, the archival process, the interview process and
-6the writing process. Logically, these three appear to be separate, just
as in the pilot project the process of discovery of papers, gathering of
memories and building of card files appeared to be separate. Actually,
each process in the pilot project fed and profited from each other. The
success of that project was in no small part due to what seemed at times
a handicap - namely, that all three processes were necessarily going on at
once.
Vere it advisable, in view of that experience, to try to carry on
the archival, the interview and the history-writing processes of the main
project one at a time, in series, we might propose that the grand design
move forward in two phases, A reading of the report on the pilot project
shows how much has been started, and how much remains to be done. For example, the research director hoped to visit all twelve Reserve Banks during
the pilot phase, but the volume and variety of work under way forced postponement; most of those Banks distant from the Atlantic seaboard remain to
be explored. The mapping and survey stage uncovered not only papers and
memories. It also set the pattern for the study of those papers and those
memoirs. A great deal more must be done along these lines before the master
files of papers and other materials are ready for the student's use.
Not only must the master files be completed, but the papers which
have been uncovered during the pilot project, and the collections still to be
found, must be analyzed for pertinent material. The Hamlin diaries, recently
released from a ten-year seal, stand alone in term* of the preparation and
indexing lavished on them, but even the Hamlin diaries are new ground for the
student. Someone must read those 26 volumes and evaluate them for the purposes of any comprehensive history of the System.
The work to be done on other collections^a •till aims
The National Records Management group stands ready to start a pilot study
of a similar croup of papers in order to chart costs and work out efficient
methods of handling. Young Parker Willis would take time from his work at
the Federal Reserve Bank in Boston to survey his father's papers if this
were arranged*
The Ooldenweiser papers, the Adolph Miller papers are des-
tined for this Committee's use. These and many more must be classified and
set in order.
But even while setting down these small examples of the large
amount of work which remains to be done in the first two processes we
recognize how inextricably linked with them is the third process* During
the pilot phase we became aware of writings under way and needing encouragement which would be valuable for our purposes and which would be finished
the sooner if they could profit from the work we were doing*
Research into
the past is not well done in a vaccuum or without the added
pur of a person
who wants to use its results* The historian who can work with researchers,
using their data, stimulating and broadening their search by his questions,
has a richer content to draw from than the one who starts after the research
process is finished and filed away.
We therefore propose to move forward with three groups of activities,
all of them vital to the comprehensive study which is the core of this
endeavor:
!• Archival
(l) To continue and complete the visits to Board and banks,
the search for records, the interviewing, the hunt for
papers and the recording of discovered material which
was started during the pilot phase•
(2) to continue and complete the biographic, bibliographic
and chronological master files which were started during
the pilot phase.
(3) to make available to qualified students that part of
the Committee fs research material which is pertinent to
their inquiries.
(k) to work out problems of handling related collections of
papers and putting them in useable shape for students.
This may include financial aid in certain instances, (For
example, the Carter Glass papers are at the University of
Virginia as described in the report on the pilot phase.
Their classification and study is essential, but funds would
have to be provided).
2 S Interview
To continue the interview process which has yielded such
good results under the pilot project, and to enter on a
series of further interviews with chosen individuals in
the older group who have already shown themselves to
have good memories and an interest in contributing all
they can to this project. Such men as Roy Young and
Walter Wyatt of the Board, George Harrison, J. Herbert
Case and Leslie Rounds of the New York Bank, John Sinclair
and Casimir Sienkeiwicz of Philadelphia, are of this type,
and there are many more. Just as the Harvard Business
Studies group finds a tape recorder valuable for catching
the living word in key interviews, so we might profitably
avail ourselves of this technique in selected instances*
-93. Writing
The writing and editing falls into three parts (l) The monographs - in a study as extensive and important as
this the monograph plays a key part. In some instances it
stands by itself, as a definitive study of one part a
related whole. In others it acts as an introductory study
and may later be incorporated into the whole. The pilot
phase uncovered certain monograph ideas, some of them
already started, others only in the planning stage. For
example, Carl Parry, now retired from the Board staff,
should be encouraged to complete his half-done monograph
on Selective Credit Controls, <3t subject in which he has
had active as well as theoretical interest. Gardner
Patterson of the International Finance Section at Princeton
University would like aid to write a study of Reserve
International Financial Operations in the 1920s; Lester
Chandler, also of Princeton, would like aid to write a
long monograph or a short book on "Ben Strong, Central
Banker"; two able men, Dr. Karl Bopp of the Philadelphia
Federal Reserve Bank and Professor Edward Shaw of Stanford
University are each interested in a study which mi^ht be
called "The Art and Politics of Central Banking."
No
commitments have been made in regard to such work* These
examples are, however, listed as showing the caliber of
work which this Committee would like to encourage, and
for which it would use funds•
-10(2) Major Works
Of these the definitive history i s the core of the
project and the one toward which we continue to point
our endeavors.
We believe that i t s writing will take a
good three years on the part of a distinguished scholar who
has already shown the s k i l l and judgment which the
creation of such a history demands* Heweyerj we do net
lflfl In naming imrh w poriinn fit .
the pi u••in* •IUBBWV. The task of exploration and recording
of materials will annntiaw be carried further and the
field of possible scholars will continue to be canvassed.
Considering the high cost of subsidies for major
works we would hesitate to name other volumes for which we are
ambitious were it not for hopes that at least some of these
might find publication through commercial channels and
would need from this Committee little more help than can be
provided through consultation, use of materials, perhap*
a small subsidy for stenographic aid* We have from the
beginning believed that the play of personalities would be
an important factor in any governmental operation and that
a volume of biographic essays on key fibres could be
written so as to illumine various facets of the system*
We also think that a volume of essays on crises in the
banking world, following the volume by Oliver M. W .
Sprague on History of Crises Under the National Banking
System would be an important contribution which might find
publication through regular channels. There would be others
as the project develops*
(3) Editing and Publishing of
The Committee's staff has noted with interest the
British example whereby documents basic to central banking in
England, including key speeches and memoranda as well as legislation, were edited and published under the title Gregory's
Select Statutes* Documents and £e»jortt Elating to British
Banking. 18^2-38• Jtelconiparable mniili rwmsU in American
banking practise. It has also been suggested that a
comprehensive annotated bibliography covering both published
and unpublished works bearing on the System would be a most
useful contribution to research activities* In addition it
is not Improbable that selected papers from the various
collections under survey may prove so valuable as to deserve
publication* No decisions have been made in this field*
but we list this activity as one In which the Committee
may engage*
-n Use of Materials
The Brcmoh and the Reserve Bank of New York have been particularly interested in the work of this Committee>am& individuals from these institutions,
both officers and staffT have been actively participating in it. Both Board and
Bank may face problems of participation when more recent events come to be discussed; the availability of confidential materials covering recent events may
also present a problem.
The existence of this problem must be recognized, but the Committee is
confident that a solution will be found which will neither hamper the project
nor strain either the willingness or the ability of individuals or institutions
to continue their co-operation.
VI Qrganlgation, Personnel snd Budget
M
Orgenizatlon
The grant for the pilot project was made to the Brooklngs
Institution! an informal working arrangement vas established whereby the
President of Brookings beenae a member of the Committee, work was done under
Committee supervision, end Brooking* acted as disbursing and bookkeeping agent.
That institution also furnished office space in Washington for the Fesearch
Director, as did the Federal Reserve Board,
Because the Committee v*s composed of busy raen, the supervisory function fell uiost frequently to it3 secretary, Donald Woodward, '
fewtertinon the Board's staff, now Chairman of the Finance Committee of
Viek Chemical. The other members of the Committee have also shovn steady
snd vigorous interest in the pilot project and have been generous with time
and advice when called on for consultation.
The daily vork was carried on by • small staff headed by
Mildred Adaas as Research Director, assisted by Catherine McXinstry (vho
shared her skill as research assistant and her time between the work of
this Committee and that of Dr. John Villiams, consultant to the Federal
A
Reserve Bank of Sew York) and two young typists. All these assistant!
were assigned by the Bank from its own staff, their salaries paid by the
Cosaaittee. The Bask alto supplied working space and furniture.
This same plan of organisation, with some modifications, is
the one we would recofflsend for the comprehensive study. The association
between an ad hoc committee and Brookings Institution is unusual, it has
values for both groups and we recoaraend that it continue. Certain probleaa
in that relationship will arise when the publishing stage is reached* it «uat
tor example, h* decided
•j0^«ry in riftiT1 *•** tr^fm It irrraims lUimrir
These problems do not,
however, call for i»ediate solution and their resolving vill not disturb
the vork of this Committee \
The CowBitteefe functioning, and ita relation to the s»all staff, would
JjiBtlnue alone: eatabliali llnee # Thua far the Conadttee has been kept inforaad
of work accomplished through j-rorTosa reports iUt out by the reaeareh director,
through personal consultation | and by diacusaion in »eetinge,
/sUetinga will be held when
1n1 1ml si nrtJUHI) *t"rt they
called by the Secretary with the consent of the Chairman, •"" •*•**
idantifieation of interest* between the Cos»ittee members and the work being
done w i l l make for eentlnuinj; overaight on the part of aestoere.
The major project will be put in charge of a scholar of wide experience
and attainments who will have general supervision over its various parts and who
will himself undertake some of the writing assignments which the Committee contemplates. Mr. W. Randolph Burgess, presently Deputy to the Secretary of the Treasury, will occupy this part when his present work at the Treasury is completed.
r""" For obvious reasons this cannot yet be publicly announced, but the commitment is
firmj Mri Fhargnyfr P& active member of this Committee, .brings to the post an extraordinary combination of practical experience in monetary affairs and scholarly
accomplishment. A graduate of Brown University, he got his doctorate at Columbia
in 1920 and went at once to the Federal Reserve Bank of New York. He became
Deputy Governor of that Bank in 1930, and Vice President in 1936. To this experience in central banking he added fifteen years' experience in commercial banking
as Vice Chairman of the National City Bank and then chairman of its executive
*
.I
committee. In 1953\hft\rplanar! that peet to go to the Treasury as Deputy to the
Secretary. The breadth of his scholarly interests is indicated by the fact that
he has been at various times President of the American Statistical Association
and the Academy of Political Science, as well as of the American Bankers Association. Mr. Burgess is editor of a volume of papers by Benjamin Strong, "Interpretations of Federal Reserve Policy", and author of "The Reserve Banks and the Money
System", a classic in this field of literature.
ir. Burgess will give full-time to this project. He has from the beginning of the pilot phase been an active participant in committee discussion and
will so continue during the remainder of his service at the Treasury. During
that interim he will continue to be assisted in Committee matters by Mr. Donald
Woodward, Secretary of the Committee. Mr. Woodward's experience with monetary
\
**us. ft
material includes\writing about System affairs for the Wall Street Journal,
Business Week and The Economist (of London). He developed the research division
of the Mutual Life Insurance Company and became First Vice President of that institution. He is now Chairman of the Finance Committee of the Vick Chemical
Corporation,
The other four members of the Committee are experts in the monetary
field. The chairman, Mr. Allan Sproul, has spent his working life within the
Federal Reserve System. Starting in 1920 in the Federal Reserve Bank of San
Francisco he served there ten years and then moved to the Federal Reserve Bank of
New York. He has been President of the New York bank since 1941*
Mr. William McChesney Martin Jr. comes from a St. Louis family famous
in central banking. To experience in the Federal Reserve Bank of St. Louis he
added ten years of activity in the investment business. He was President of the
New York Stock Exchange from 1938 to 19-41. Chairman and President of the ExportImport Bank in 194-6, U. S. Director of the Bank for Reconstruction and Development,
Assistant Secretary of the Treasury in 1949. He is now Chairman of the Board of
Governors of the Federal Reserve System.
Dr. Robert Calkins is now President of the Brookings Institution. He
got his doctorate in 1933 with a thesis on banking, went at once into academic
work, lecturing on economics both at Stanford and at the University of California
where he became Chairman of the Economics Department and then Dean of the College
of Commerce. Between 1941 and 194-7 he was Dean of the School of Business at
Columbia University, and from 194-7 on he was Vice President and Director of the
General Education Board. Dr. Calkins served for five years as Director of the
Federal Reserve Bank of New York.
Dr. Walter W. Stewart also has combined academic with banking and
investment experience. Professor of Economics at Amherst College from 1916 to
1922, he then vent to the Federal Reserve Board as Director of the Division of
Research and Statistics. In 1928 he became Economic Adviser to the Bank of
England$ in 1931 he was appointed American Member of a special committee of the
Bank of International Settlements to look into German reparation obligations under
the Young Plan. \ Trustee of the Rockefeller Foundation, Chairman of the General
Education Board, Professor at the Institute for Advanced Studies, he was in 1953
called to Washington to become a member of the Council of Economic Advisers.
As Research Directorj Mildred Adams who initiated and carried through
the work of the pilot phase, will continue during at least the early period of the
main study. Miss Adams (in private life Mrs. W. Houston Kenyon, wife of a New
York attorney) is an economist by education and a journalist by training. To experience in feature writing for the New York Sunday Times, BarroVs* Weekly and
various ^magazines she added editorial writing for Business Week, and for The
Economist of London. She has recently been United Nations correspondent for the
latter publication.
In order to do the amount of visiting of Reserve Banks which the study
needs, Miss Adams iiil! need1 an assistant capable of accepting more responsibility
K
for administrative detail than can be delegated to Miss McKinstry if the part-time
pilot
arrangement for her services prevailing under the.pa*ile4 project is to continue.
The Committee's aim is to find a well-equipped and exceptionally able research
assistant, with the necessary academic training in monetary matters and some experience in administration, who has the capacity to play a major role in the project.
Such a person would, after a year or so as administrative assistant, take charge
rrffrhftjtrrfr*** and carry Vte forward. Miss Adams will then be in a unique position
to embark on a major writing part of the project.
In addition We would n-Ud a secretary with research experience, L&rJN+x*rtt
(Miss McKinstry i s so exceptional that we would like to keep her, even with the
handicap of part-time service, *uM*«*H^sjgtaai.) It may be necessary to add
secretarial help in Washington, and provision for this contingency will bo made
in the budget*
(c) Quarters
There i s reason to believe that offices and equipment assigned
for the pilot project by the Federal Hoserve Board in Washington, the Brooking*
Institution and the Federal Reserve Bank in Mew Xork w i l l continue to be
available,
ftok can be sapertes te •••*•» «a»llj» in tito lmkfu humum Staff—
This provision of rent-free quarters and equipment (the Federal
Reserve Bank imposes a very nominal fee for furniture rental which i s more than
counter balanced bft i t s many operating services) i s a concrete instance of
the interest which the Sjystem i s talcing in the entire project*
Board and Banks
are also making important contributions in the fora of material and of research
assistance,nklih-uuO iluwn tlm UUSt UfUi
uu»4pe ynjee»»
Their continued
cooperation i s of course a v i t a l factor in th: process*
*
-.i-
•
./
) Budget
In the exploratory phase, personnel of Board and Banks have been helpful and co-operative -with specialized knowledge and time for discussion. The
Committee1s debt to librarians, heads of research departments, purchasing agents,
secretaries who helped out is very real, and financially substantial.
Significant parts of the cost of this project will be provided by contributions from the System in the form of rent-free quarters, use of equipment,
consultations with officers, hours of work on the part of librarians, research
^-^
aides, purchasing agents, secretaries, and other staff members. The Board and the
twelve Reserve Banks have evidenced continuing interest. The Treasury files are
open to us, the manuscript division of the Library of Congress and interested
people in the University libraries are rendering us all possible aid. The Committee members themselves are serving without compensation, and with no
allowances except for occasional travel expense.
In addition to these large contributions from the System and other
groups, contributions which in themselves attest to the importance of this project,
further funds will be needed to cany on this study.
The costs which can be estimated are preponderantly for staff salaries,
travel expenses, supplies (limited mostly to stationery and archival materials)
and subventions to be used in three ways - to be paid for the study and evaluation
of collections of papers, to assist the writers of monographs, to defray the cost
of major works.
Based on experience in the pilot project, we have made estimates in
two groups, one for an early period -when research expenses and travel costs will
be relatively high, the other for a later period when the heavy costs will take
the form of subventions and other aids to writing and publishing which are the
goals of this study. These budgets should be taken as estimates only, and we
would ask that a high degree of flexibility be allowed the Committee in allocating
Budget Estimates June 1, 1954 to May 30« 1959
Earlier Period
Later Period
Salaries
$30,000
to provide a research director,
administrative assistant, research
secretary, secretary for the
project head, typist
Salaries
Travel costs
3 ,000
Travel costs
2,500
Other expenses
1 ,500
Other expenses
1,000
1? ,000
Funds for writing
Annual Total
Funds for writing
$49 .500
Totals for earlier period
"^
$40,000
Totals for later period
Total for five years
Annual Total
24*500
$6^,000
$ 99,000
211.000
$310,000
The arithmetic in this table is worked ouLon a two and a three-year period.
Actually we cannot tell at this moment exactly when people will be available or just
how fast some steps can go. Therefore, we would ask that the expenditure curve be
left flexible.
VII Request
In view of these estimates the Committee respectfully requests that
for the purpose described in this proposal the Rockefeller Foundation grant
$310,000 to be expended in the five years between June 1, 1954 and May 30, 1959.
T
The grant should go to the Brookings Institution with the understanding
that its responsibilities and those of the Committee toward the project are
mutual, and that an informal relationship between the two bodies comparable to
that which proved so satisfactory during the pilot phase is to continue.
The report of the pilot project, which reveals the wealth of materials
found and indicates the richness yet uncovered, is appended.
W,ot
Walter BageM»t said "Money will not manage itself". To which the late
A
Emanuel Goldenweiser added his plea for "an understanding of this major force, of
I
its causation and consequences". /It is the hope of this Committee that the
study proposed will contribute to tJhi s-understanding.
JJ
M
j 14-
1+
m
tr, t. '
dfu. CL^w^wwUr*/ \JU.**-\r
\
Introduction
In January 1954 the Rockefeller Foundation wade a grant for a pilot
project leading toward a history of the Federal Reserve Systea. The lanedinte
end wae to find out what materials were available for such an undertaking, materials not only in the sense of papers, but also of the living memories of men
active in the early days of the System.
That task has been carried on since January 15th. It has yielded
extraordinarily good results (a report of its findings to April is appended),
and there is every reason to believe that an even greater harvest of papers
and ateaoirs lies waiting to be gathered. The Coamlttee feels that this has
proved to be in the best sense of the word a pilot project. In addition to
exploring papers and memories, it uncovered that sense of personal struggle
and accomplishment which is the living core of any institution. It enlisted
interest and It ensured cooperation for the future. It points the way very
surely to the next and <nuoh bigger task which lies ahead, and for which the
Coaaittee now asks the consideration of the Foundation.
I
The Task
In calling itself the rmiinilt 1 sn m fTlwij H m History of the Federal
A
Reserve Systea, the group presenting this proposal defined its primary
But the discoveries, contacts, and discussions made during the pilot project
have deepened the content and widened the scope of that purpose. The Coral t~
tee now knows that what needs to be done is ouch nore than a single history it is an appraisal of one of the aost extraordinary Inventions in this democracy, a review of experience in its functioning, an analysis in terns of the
Memories of men who helped develop it and who took part in its operation. The
episodes around which conflicts sv&raed, and out of which change case, the
-2process by vbich deciaiona were aade, the importance of personalities, the
interplay between public policy and private needa - theae various angles of
approach and many more which hare been suggested from tlrae to tiae by Coauaittee members testify to the vitality of the subject and to the lessons which
can be learned for other democratic institutions by a detail study of its
experience.
II Vhy Important?
The Importance of the subject is, however, greater than a statter
of the aaterial dealt with or the proper dealing with it. It goes much farther than the task of history writing, vital as that is, and farther than what
are commonly considered the somewhat narrow confines of the banking world.
(a) Of all the innovations in government aechanieas which Americans
have brought about during the twentieth century the Federal Reserve System
stands first, and not only because of the unprecedented functions which it is
cftlled on to perform. It operates with a high degree of autonomy linked with
a fine sense of public purpose. To an extraordinary extent it has managed to
preserve its freedom from both Congressional cmd executive pressures. In peri^^
ods when it has been forced to yield, the public protests against such yielding
have been continuous until the pressures have softened and the surprising degree
of public aetiott been restored.
(b) Writing in 1946 about twentieth century sjonetary controls, Professor Robert Varren of Princeton University observed that in the nineteenth
century there developed a new type of society, the money economy, which raade
i *
new demands on those who administer Government control over the factor of
money. "High and low, rich and poor, bond and free there had always been,
but never before had there been an economy that expected the majority of its
people to be totally independent upon the continuity of a stream of money
-3lncome". Along with other observers Professor Warren interpreted the
primary task of the Federal Reserve System as one of seeing the.t this
continuity of the stream is not interrupted by monetary failures. To
do this it bridges the gap between public and private efforts to manage
I
• I
the economy. The goal toward which it has come to reach in these later
stages is the stability of the econoay for the public good; in that pursuit
it h&a developed, tried and discarded one method after another, only to
reach for a new one which promised better results. Analysis of these experiences fora important chapters in both monetary and economic history*
(c) In the practise of the functions laid upon it, the System
has enlisted and trained staffs whose skill and devotion to the System1s
work stands in notable contrast to that of certain other governmental institutions. Not only have they weathored forty years of political storms
with a minimum of vulnerability* the System as a whole, by some curious
magic, has withstood political attack from both parties* Starting life
with a twenty-year Charter, it was promoted to a permanent Charter in 1933*
a year in which the siere Tact of its survival sometimes seemed tinged with
the miraculous. Tensions which in theory should have spilt it apart seen
somehow to have been important factors in holding it together.
(d) An analysis of the changing experience in design and in operation of this unique governmental mechanism would have great value*
It
is important for the future performance of the System and of the American
economy*
There is reason to believe that such analysis may hold lessons
of great value which can be applied to problems of government far removed
from the process of monetary management*
III
The questions which this study would illumine fall into two categories* There are in the first place what might be called the technical
•4*
, some theoretical And sose matters of operating policy, which have
absorbed tJie System's attention at on© tliae or smother in Ita life. These
:>ear in annual reports, they are high-lighted in government hearings, but
in both instances the questions vhieh an informed find liap&rtial student »ight
ask are diverted by the exigencies of the moment. Enough tine hat elapsed,
for Instance? since control of the discount w t e va» first used by the System
aa & tool of asonatary policy so that its importance under varying conditions
can be weighed and studied. The same thing la true of changes in reserve requirements , and of the tool of open market operations. Tet a vast amount of
controversy 3till surrounds them, some of which should be resolved by competent studies.
Beyond the technical points at issue (of vhich these are aerely
instances that come first to hand) lie broader issues both within and without the banking systea. For example, how did It come about that so unique
a aech&niass of taonetary control vas established?
3y what aaethods and devices
has it endured and thrived? How are the skill, competence and individual
freedom of its staff, unusually high in government bodies, maintained and
encouraged? How has the relationship between staff and Board members been
worked out? How can tha System1 s role in the world of government and in the
economic world be best defined and understood?
Vhat are the lessons of this
role for other governmental divisions? How are Board decisions, with their
high degree of importance in American life, arrived at? How does the System
influence the operations of ssonetary meohanisas at soments of crisis? Vhat
lessons are there in the relations which prevail between Board, Reserve Banks
and Moaher Banks, and how are those relationships evolving?
IV
Scope and Method of Inquiry
The study which we propose would cover the entire Federal Reserve
System, including the Board and the twelve regional banks, from their inception
until the aott recent data for which adequ&te aaterial could be made available. Much has been written on the events, crises and personalities which
led up to the founding of the System, but, even this needs re-studying in
the light of newly discovered material*
Vte would therefore set out to make & complete search for the material and the people concerned in Federal Reserve legislation, theory and
operation, going back at least to 1907 when the JULdrich Commission functioned.
From 1913 forward we would undertake to discover the cast of influential characters in the System'a growth, change and operation, including governmental
figures in Congress and the executive branch) Members of the Board and influential men on the Board stafff Governors, Presidents and senior officers
of Reserve Banks) Members of the Federal Advisory Council, the Open Market
Committee and allied bodies) men in academic life (as for example, Oliver
V. M. Sprague and John Williams) who have been in close &nd Influential contact with the System during its years of growth.
The method to be used la that which has successfully been developed
during the pilot project phase of ihis study. It includes visiting boaro and
Banks, both to search out men who remember early days, and to ascertain how
records are kept and what local records are available) the establishing of
the names of the dramatis personae, the recording of brief biographic data
concerning them, the request for interviews if they are still alive, the
search for their papers if they are deceased.
Experience in the pilot project, and consultation with those engaged in other attempts to chart and record the course of living institutions,
have taught us that the comprehensive study of the Federal Reserve System
which is the core of our endeavor divides itself into three steps) these for
convenience may be called, the archival process, the interview process and
-6the writing process. Logically, these three appear to be separate, just
as in the pilot project the process of discovery of papers, gathering of
memories and building of card files appeared to be separate. Actually,
each process in the pilot project fed and profited fro® each other. The
success of that project v&s in no small part due to vhat seeaed at tisep
a handicap ~ naaely, that all three processes were necessarily going on at
once*
Vere it advisable, in view of that experience, to try to carry on
the archival, the interview end the history-writing processes of the raain
project one at a time, In series, we might propose that the grand design
sove forward in two phases. A reading of th© report on the pilot project
shows how 33uch has been started, and how much remains to be done. For example, the research director hoped to visit all twelve Reserve Banks during
the pilot phase, but the voluae and variety of work under way forced postponement! most of those Banks distant from the Atlantic seaboard remain to
be explored. The mapping and survey stage uncovered not only papers and
memories. It also set the pattern for the study of those papers and those
memoirs. A great deal more oust be done along these lines before the toaster
files of papers and other materials are ready for the student's use.
Not only must the master files be completed, but the papers which
have been uncovered during the pilot project, and the collections still to be
found, oust be analyted for pertinent material. The Haalin diaries, recently
released from a ten-year seal, stand alone in terms of the preparation and
indexing lavished on then, but even the Haalin diaries are new ground for the
student. Someone oust read those 26 volumes and evaluate them for the purposes of any comprehensive history of the System.
-7The work to be done on other collections is still more elementary.
The National Keeords Management group stands ready to start a pilot study
of a similar group of papers in order to chart costs and work out efficient
methods of handling* ?ouag Parker Willis would take time from his work at
the Federal Reserve Bank in Boston to survey his father's papers if this
cwere arranged* The Goldanweiser papers, the Adolph^Miller papers are destined for this Committee's use. These and many more must be classified and
set in order*
But even while setting down these small examples of the large
amount of work which remains to be done in the first two processes we
recognise how inextricably linked with them is the third process* During
the pilot phase we became aware of writings under way and needing encourage*
ment which would be valuable for our purposes and which would be finished
the sooner if they could profit from the work we were doing* Research into
the past is not well done in a vacuum or without the added pur of a person
who wants to use its results* The historian who can work with researchers,
using their data, stimulating and broadening their search by his questions,
has a richer content to draw from than the one who starts after the research
process is finished and filed away,
» ™
We therefore propose to move forward with three groups of activities,
all of them vital to the comprehensive study which is the core of this
endeavor!
1* Archival
(1) To continue and complete the visits to Board and banks,
the search for records, the interviewing, the hunt for
papers and the recording of discovered material which
started during the pilot phase*
(2) to continue and complete the biographic, bibliographic
and chronological master files which wars started during
the pilot phase*
(3) to sake available to qualified atudenta that part of
the CoaBittee's research material which la pertinent to
their inquiries.
(k) to work out problena of handllnr related collections of
papers and puttinr them in us^able ahape for atudenta.
This say Include financial aid In certain instances* (For
exaapls, the Carter Glass papere are at the University of
Virginia, as described in the report on the pilot phase*
Their classification and study la essential, but funds would
have to be provided)*
2* Interview
To continue the Interview process which has yielded such
good results under the pilot project, and to enter on a
series of further interviews with chosen individuals in
the older group who have already shown themselves to
have good memories and an Interest In contributing all
they can to this project* Such nan as Roy Young and
Walter tyatt of the Board, George Harrison, J* Herbert
Case and Leslie Hounds of the New York Bank, John Sinclair
and Casialr Sienkeiwica of Philadelphia, are of this type,
and there are aany aore* Just as the Harvard Business
Studies group finds a tape recorder valuable for catching
the living word In key interviews, so we sight profitably
avail ourselves of this technique In selected instances*
The writing and editing falls into three parts •
(1) The monographs - in a study as extensive and important as
this the monorra, h plays a toy part* In sons instances it
stands by itself, as a definitive study of ona part a
related whole* In others it acts as an introductory study
and say later be incorporated into the whole* The pilot
phase uncovered certain monograph ideas, sons of them
already started, others only In the planning stage* For
example, Carl Parry, now retired from the Board staff,
should be encouraged to complete hla half-done monograph
on Selective Credit Controls, A subject in which he has
had active as well as theoretical interest* Gardner
Patterson of the International Finance Section at Princeton
University would like aid to write a study cf Reserve
International Financial Operations in the 1920s} Lester
Chandler, also of Princeton, would like aid to write a
long aonorraph or a short book on "Ben Strong, Central
Banker* j two able men, Dr. Karl Bopp of the Philadelphia
Federal Reserve Bank and Professor Edward Shaw of Stanford
University are each interested in a study which sd-ht be
called "The Art and Politics of Central Banking/
So
cosmitasnts have been nade in regard to such work* These
exaaples are, however, listed as showing the caliber of
work which this Ccsmittee would like to oncourage, and
for which it would use funds*
-10-
Of these the definitive history is the core of ths
project and the one toward which we continue to point
our endeavors, §j believe that its writing will take a
food three years on the part of a distinguished scholar who
has already shown the skill and jud merit which ths
creation of such a history demands. However, we do not
believe ourselves justified in naming such a person at
the present moment* The task of exploration and recording
of Materials will meantime be carried further and ths
field of possible scholars will continue to be canvassed.
Considering the hi*h cost of subsidies for major
works we would hesitate to name other volumes for which we are
ambitious were it not for hopss that at least some of these
might find publication through commercial channels and
would need from this Committee little more help than can be
provided through consultation, use of materials, perhaps
a small subsidy for stenographic aid* ** have from ths
beginning believed that the play of personalities would be
an Important factor in any governmental operation and that
a volume of biographic essays on key figures could be
written so as to illumine various facets of the system*
We also think that a volume of essays on crises in ths
banking world, following the volume by diver M* 1.
on History of Crises Under the National Banking
would be an important contribution which might find
publication through regular channels* There would be others
as the project develops*
\
\
(3) Editing *ftd Publishing; of
The Committee's staff has noted with interest the
British example whereby documents basic to central banking in
England, including key speeches and memoranda as well as legislation, were edited and published under the title Gregory's
Statutes* Documents and Hearts Hslatlng to British
1E32-38* Mo comparable work exists in American
banking practise* It has also been suggested that a
comprehensive annotated bibliography covering both published
and unpublished works bearing on ths 5r*tem would be a most
useful contribution to research activities. In addition it
is not improbable that selected papers from the various
collections under survey may prove so valuable as to deserve
publication* Ho decisions have been made in this field,
but we list this activity as o m in which the Committee
-11Use of Materials
When the pilot project vas started it was vith the understanding
that the Board was iauch interested in helping along an independent and impartial history project, did not wish to impose restrictions on the Committee's research, but would prefer that no explorations be made into events
taking place after 1935. Because the research director was during the pilot
project primarily eager to search out the papers and people of the older stages
of the System this cut-off date created no difficulties. It will, however, pose
problems as the work of history-writing takes shape. A forty-year life, whether
of man or of institution, can hardly be adequately recorded if biographers and
historians are allowed to examine only its first half. On the other hand in
operations as pregnant with differences of opinion as those which take place
in the monetary world, certain material is highly confidential, certain reticences must obviously be respected.
Two ways of handling the problem have been proposed, one that the
question of a cut-off date be taken back to the Board in the hope of another
ruling when and if the question becomes acute, the other that perhaps it i»
unfair to ask men now active in the Reserve System to stay on the Committee
and thus lend their tacit approval to explorations which in their official
roles they might feel unable to encourage. The Committee would hate to lose
them as members, but neither does any one want them to be subjected to unnecessary dilemmas. A third solution might be to postpone action on the problem in
view of the fact that the work thus far proposed is mostly concerned with matters prior to 1935 and that therefore the difficulties are all in the future.
Vhen they arise they can be dealt with individually*
As for the future commissioning of authors, and the problems which
this may create, the Committee would in this follow the rules laid down by
-12Brookings Institution after long experience and found satisfactory.
VI Organization, Personnel and Budget
(a) Organization
The grant for the pilot project was made to the Brookings
Institution; an informal working arrangement was established vhereby the
President of Brookings became a member of the Committee, work was done under
Committee supervision, and Brookings acted as disbursing and bookkeeping agent.
That institution also furnished office space in Washington for the Research
Director, as did the Federal Reserve Board.
Because the Committee was composed of busy ^en, the supervisory function fell Taost frequently to its secretary, Donald Woodward,
formerly on the Board1 s staff, now Chairman of the Finance Committee of
Vick Chemical. The other members of the Committee have also shown steady
and vigorous interest in the pilot project and have been generous with time
and advice when called on for consultation.
The daily work was carried on by s small staff headed by
MildreJ Adams as Research Director, assisted by Katherine McKinstry (who
shared her skill as research assistant and her time between the work of
this Committee and that of Dr. John Williams, consultant to the Federal
Reserve Bank of New York) and two young typists. All these assistants
were assigned by the Bank from its own staff, their salaries paid by the
Committee. The Bank also supplied working space and furniture.
This same plan of organisation, with some modifications, it
the one we would recommend for the comprehensive study. The association
between an ad hoc committee and Brookings Institution is unusual, it has
values for both groups and we recommend that it continue. Certain problems
in that relationship will arise when the publishing stage is reached; it must
for example, be decided whether Brookings is to exert the same critical function
in regard to publications prepared under the terms of this Committee as is cus
tomary in regard to those it sponsors directly. These problems do not,
however, call for immediate solution and their resolving vill not disturb
the work of this Committee
The Committee't functioning, and its relation to the small staff, would
xontinue along establish lines* Thus far the Committee has been kept informed
of work accomplished through prepress reports put out by the research director,
through personal consultation) and by discussion in meetings• It is assumed
that meetings will be held when needed but no oftener, that they will be
called by the Secretary with the consent of the Chairman, and that the
identification of interests between the Committee members and the work being
done will make for continuing oversight on the part of members*
(b) Personnel
It is proposed that the major study be put in charge of a scholar
of wide experience and attainments who will have general supervision over its
various parts and who wishes himself to undertake some one of the writing
assignments which the Committee contemplates. We take pleasure in suggesting
for this post the name of Mr* *• Randolph Burress, presently under-Secretary
of the Treasury, with the Federal Heserve Bank of New York from 1920 to 1938
during which time he served six years as Deputy Governor and two as Vice
President, author of two books on phases of the Federal Deserve which are
classics* Mr* Burgess has shown himself deeply interested in the work of this
Committee has been an active participant in discussion, and he has BrBtj intention
of writing on Federal
HBBQTTB
Subjects when his work at the Treasury is over*
Until Mr, Burgess Is free the present arrangement by which matters
requiring Committee supervision are customarily referred to Mr* Donald woodward
will continue* Mr* Woodward is worked on Reserve Board papers in earlier days,
is in close touch with all the members of the Committee, and has an informed
and enthusiastic interest in this project*
For research director we recommend that Mildred Adams who initated
and carried through the work oi the pilot phase be continued in the work of
the main study*
& e will need an assistant able to give full time and capable
of accepting more responsibility for administrative detail than could be
delegated to Miss McKinstry under the part-time arrangement prevailing during
the pilot project. Her aim is to fin a young, well-squipped and able research
assistant with the proper academic training and some experience in administative
work of a related nature, who would after a year or so be capable to take
entire charge of the project and carrying it forward, leaving Miss Adams then
free to undertake the writing of one of its parts.
In addition we would need a secretary with research experience,
(Miss McKinstry is so exceptional that we would like to keep her, even with the
handicap of part-time service and a typist. It may be necessary to add
secretarial help in Washington, and provision for this contingency will be made
in the budget.
(c) Quarters
There is reason to believe that offices and equipment assigned
for the pilot project fay the Federal Beserve Board in Washington, the Brookings
Institution and the Federal Reserve Bank in New York will continue to be
available* Work can be expected to center mostly in the latter because staff
is provided there and the research director will be resident in New York.
This provision of rent free quarters and equipment (the Federal
Reserve Bank imposes a very nominal fee for furniture rental which is more than
counter balanced by. its many operating services) is a concrete instance of
the interest which the System is taking in the entire project. Board and Banks
are also making important contributions in the form of material and of research
assistance which cut down the cost of the entire project. Their continued
cooperation is of course a vital factor in th; process.
(d) Budget
It is assumed that the general director of the study will
vork without salary, but that secretarial help should be provided for bia
as n««d«d. The it«a of r«nt is also furnished without charge. This aeans
that the costs which can be estimated go for staff salaries, travel expenses
of th« director and th« research director, supplies (limited mostly to stationary and archival materials) and subventions to be used ia three way* to be paid for the study and evaluation of collections of papers, to assist
the writers of monographs, to subsidise or assist in th« writing of aajor
http://fraser.stlouisfed.org/
works.
Federal Reserve Bank of St. Louis
Based on experience in the pilot project, we hare made estimates
in two groups, one for the first two years when research expenses and travel
coots will be relatively high, the other for the remaining three years when
the heavy costs will take the fora of subventions and other aids to writing
and publishing which are the goals of this study* These budgets should be
taken as estimates only, and we would ask that a night degree of flexibility be
allowed the Cotamitteo in allocating the funds it hopes say be .^ranted.
Budget Estimates June 1, 1951* to May 30, 1959
YSARS I & II
YEARS III, IV» V
Salaries
Salaries
Research Director
$10,000
Administrative Secretary
7,500
Research Secretary
6,000
110,000
Besearch Director
Secretary for Project Head3,5OO
3.000
Research Secretary
6,000
Secretary for Project Head
3,500
typist
3.000
Salary Total . • • . $30,000
SaUry Total
*33,5OO
Travel costs
3*000 Travel costs
2,500
Other expenses
1,500 Other expenses
1,000
Subventions
1S«OQO Subventions
Annual Total
TEARS a n
YEARS tlh
$ 1*9,500
Annual Total I 67fOOO
Total for 2 years
$ 99,000
**> v# Total for 3 years
211.000
Total for 5 y«ars
Bsquest
UO.000
$310,000
2a view of these estimates the Conmlttee respectfully reouests that
for the purpose described in this proposal the Rockefeller Foundation grant
¥310,000 to be expended in the five years between June 1st, 195U and May 30, 1959
-/£The grant should go to the Brookin s Institution with th9 understan Urv? that
it8 responsibilities and those of the Casaittee toward the project are mutual,
and that an Informal relationship between the two bodies oaaparable to that
which prored so satisfactory durin^ the pilot phase is to continue*
Introduction
In January 1954- the Rockefeller Foundation made a grant for a pilot
project leading toward a history of the Federal Reserve System. The immediate
end was to find out what materials were available for such an undertaking, materials not only in the sense of papers, but also of the living memories of men
active in the early days of the System.
That task has been carried on since January 15th. It has yielded
extraordinarily good results (a report of its findings to April is appended),
and there is every reason to believe that an even greater harvest of papers
and memoirs lies waiting to be gathered. The Committee feels that this has
proved to be in the best sense of the word a pilot project. In addition to
exploring papers and memories, it uncovered that sense of personal struggle
and accomplishment which is the living core of any institution. It enlisted
interest and it ensured cooperation for the future. It points the way very
surely to the next and much bigger task which lies ahead, and for which the
Committee now asks the consideration of the Foundation.
I
The Task
In calling itself the Committee to Study the History of the Federal
Reserve System, the group presenting this proposal define its primary purpose.
But the discoveries, contacts and discussions made during the pilot project
have deepened the content and widened the scope of that purpose. The Coimnittee now knows that what needs to be done is much more than a single history —
it is an appraisal of one of the most extraordinary inventions in this democracy, a review of experience in its functioning, an analysis in terms of the
memories of men who helped develop it and who took part in its operation. The
episodes around which conflicts swarmed, and out of which change came, the
-2-
process by which decisions were made, the importance of personalities, the
interplay between public policy and private needs - these various angles of
approach and many more which have been suggested from time to time by Committee members testify to the vitality of the subject and to the lessons which
can be learned for other democratic institutions by a detail study of its
experience.
II
Why Important?
The importance of the subject is, however, greater than a matter
of the material dealt with or the proper dealing with it.
It goes much far-
ther than the task of history writing, vital as that is, and farther than what
are commonly considered the somewhat narrow confines of the banking world.
(a)
Of all the innovations in government mechanisms which Americans
have brought about during the twentieth century the Federal Reserve System
stands first, and not only because of the unprecedented functions which it is
called on to perform.
It operates with a high degree of autonomy linked with
a fine sense of public purpose.
To an extraordinary extent it has managed to
preserve its freedom from both Congressional and executive pressures.
In peri-
ods when it has been forced to yield the public protests against such yielding
have been continuous until the pressures have softened and the surprising degree
of public action been restored.
(b)
Writing in 194-6 about twentieth century monetary controls, Pro-
fessor Robert Warren of Princeton University observed that in the nineteenth
century there developed a new type of society, the money economy, which made
new demands on those who administer Government control over the factor of
money.
"High and low, rich and poor, bond and free there had always been,
but never before had there been an economy that expected the majority of its
people to be totally independent upon the continuity of a stream of money
-3income". Along with other observers Professor Warren interpreted the
primary task of the Federal Reserve System as one of seeing that this
continuity of the stream is not interrupted by monetary failures. To
do this it bridges the gap between public and private efforts to manage
the economy. The goal toward which it has come to reach in these later
stages is the stability of the economy for the public good; in that pursuit
it has developed, tried and discarded one method after another, only to
reach for a new one which promised better results. Analysis of these experiences form important chapters in both monetary and economic history.
(c) In the practise of the functions laid upon it, the System
has enlisted and trained staffs whose skill and devotion to the System1s
work stands in notable contrast to that of certain other governmental institutions. Not only have they weathered forty years of political storms
with a minimum of vulnerability; the System as a whole, by some curious
magic, has withstood political attack from both parties. Starting life
with a twenty-year Charter, it was promoted to a permanent Charter in 1933>
a year in which the mere fact of its survival sometimes seemed tinged with
the miraculous. Tensions which in theory should have spilt it apart seem
somehow to have been important factors in holding it together.
(d) An analysis of the changing experience in design and in operation of this unique governmental mechanism would have great value. It
is important for the future performance of the System and of the American
economy. There is reason to believe that such analysis may hold lessons
of great value which can be applied to problems of government far removed
from the process of monetary management.
Ill
The questions which this study would illumine fall into two categories. There are in the first place what might be called the technical
issues, some theoretical and some matters of operating policy, which have
absorbed the System's attention at one time or another in its life. These
appear in annual reports, they are high-lighted in government hearings, but
in both instances the questions which an informed and impartial student might
ask are diverted by the exigencies of the moment. Enough time has elapsed,
for instance since control of the discount rate was first used by the System
as a tool of monetary policy so that its importance under varying conditions
can be weighed and studied. The same thing is true of changes in reserve requirements, and of the tool of open market operations. Yet a vast amount of
controversy still surrounds them, some of which should be resolved by competent studies.
Beyond the technical points at issue (of which these are merely
instances that come first to hand) lie broader issues both within and without the banking system. For example, how did it come about that so unique
a mechanism of monetary control was established?
By what methods and devices
has it endured and thrived? How are the skill, competence and individual
freedom of its staff, unusually high in government bodies, maintained and
encouraged? How has the relationship between staff and Board members been
worked out? How can the System1 s role in the world of government and in the
economic world be best defined and understood? What are the lessons of this
role for other governmental divisions? How are Board decisions, with their
high degree of importance in American life, arrived at? How does the System
influence the operations of monetary mechanisms at moments of crisis? Vhat
lessons are there in the relations which prevail between Board, Reserve Banks
and Member Banks, and how are those relationships evolving?
IV Scope and Method of Inquiry
The study which we propose would cover the entire Federal Reserve
System, including the Board and the twelve regional banks, from their inception
-5until the most recent date for which adequate material could be made available. Much has been written on the events, crises and personalities which
led up to the founding of the System, but, even this needs re-studying in
the light of newly discovered material.
We would therefore set out to make a complete search for the material and the people concerned in Federal Reserve legislation, theory and
operation, going back at least to 1907 when the Aldrich Commission functioned.
From 1913 forward we would undertake to discover the cast of influential characters in the System's growth, change and operation, including governmental
figures in Congress and the executive branch; Members of the Board and influential men on the Board staff; Governors, Presidents and senior officers
of Reserve Banks; Members of the Federal Advisory Council, the Open Market
Committee and allied bodies; men in academic life (as for example, Oliver
V. M. Sprague and John Williams) who have been in close and influential contact with the System during its years of growth.
The method to be used is that which has successfully been developed
during the pilot project phase of this study. It includes visiting Board and
Banks, both to search out men who remember early days, and to ascertain how
records are kept and what local records are available; the establishing of
the names of the dramatis personae, the recording of brief biographic data
concerning them, the request for interviews if they are still alive, the
search for their papers if they are deceased.
Experience in the pilot project, and consultation with those engaged in other attempts to chart and record the course of living institutions,
have taught us that the comprehensive study of the Federal Reserve System
which is the core of our endeavor divides itself into three steps; these for
convenience may be called, the archival process, the interview process and
-6the writing process. Logically, these three appear to be separate, just
as in the pilot project the process of discovery of papers, gathering of
memories and building of card files appeared to be separate.
Actually,
each process in the pilot project fed and profited from each other.
The
success of that project was in no small part due to what seemed at times
a handicap - namely, that all three processes were necessarily going on at
once.
Were it advisable, in view of that experience, to try to carry on
the archival, the interview and the history-writing processes of the main
project one at a time, in series, we might propose that the grand design
move forward in two phases.
A reading of the report on the pilot project
shows how much has been started, and how much remains to be done.
For ex-
ample, the research director hoped to visit all twelve Reserve Banks during
the pilot phase, but the volume and variety of work under way forced postponement; most of those Banks distant from the Atlantic seaboard remain to
be explored.
The mapping and survey stage uncovered not only papers and
memories.
It also set the pattern for the study of those papers and those
memoirs.
A great deal more must be done along these lines before the master
files of papers and other materials are ready for the student's use.
Not only must the master files be completed, but the papers which
have been uncovered during the pilot project, and the collections still to be
found, must be analyzed for pertinent material.
The Hamlin diaries, recently
released from a ten-year seal, stand alone in terms of the preparation and
indexing lavished on them, but even the Hamlin diaries are new ground for the
student.
Someone must read those 26 volumes and evaluate them for the pur-
poses of any comprehensive history of the System.
-7The work to be done on other collections is still more elementary.
The National Records Management group stands ready to start a pilot study
of a similar group of papers in order to chart costs and work out efficient
methods of handling. Young Parker Willis would take time from his work at
the Federal Reserve Bank in Boston to survey his father's papers if this
were arranged. The Goldenweiser papers, the Adolph Miller papers are destined for this Committee's use. These and many more must be classified and
set in order.
But even while setting down these small examples of the large
amount of work which remains to be done in the first two processes we
recognize how inextricably linked with them is the third process. During
the pilot phase we became aware of writings under way and needing encouragement which would be valuable for our purposes and which would be finished
the sooner if they could profit from the work we were doing. Research into
the past is not well done in a vaccuum or without the added spur of a person
who wants to use its results. The historian who can work with researchers,
using their data, stimulating and broadening their search by his questions,
has a richer content to draw from than the one who starts after the research
process is finished and filed away.
We therefore propose to move forward with three groups of activities,
all of them vital to the comprehensive study which is the core of this
endeavor:
1. Archival
(l) To continue and complete the visits to Board and banks,
the search for records, the interviewing, the hunt for
papers and the recording of discovered material which
was started during the pilot phase.
-8(2) to continue and complete the biographic, bibliographic
and chronological master files which were started during
the pilot phase.
(3) to make available to qualified students that part of
the Committee's research material which is pertinent to
their inquiries,
(li) to work out problems of handling related collections of
papers and putting them in useable shape for students.
^s
This may include financial aid in certain instances. (For
example, the Carter Glass papers are at the University of
Virginia as described in the report on the pilot phase.
Their classification and study is essential, but funds would
have to be provided)•
2* Interview
To continue the interview process which has yielded such
good results under the pilot project, and to enter on a
series of further interviews with chosen individuals in
the older group who have already shown themselves to
have good memories and an interest in contributing all
they can to this project. Such men as Roy Young and
Walter Wyatt of the Board, George Harrison, J. Herbert
Case and Leslie Rounds of the New York Bank, John Sinclair
and Casimir Sienkeiwicz of Philadelphia, are of this type,
and there are many more* Just as the Harvard Business
Studies group finds a tape recorder valuable for catching
the living word in key interviews, so we might profitably
avail ourselves of this technique in selected instances*
-93. Writing
The writing and editing falls into three parts (l) The monographs - in a study as extensive and important as
this the monograph plays a key part. In some instances it
stands by itself, as a definitive study of one part a
related whole. In others it acts as an introductory study
and may later be incorporated into the whole. The pilot
phase uncovered certain monograph ideas, some of them
already started, others only in the planning stage. For
example, Carl Parry, now retired from the Board staff,
should be encouraged to complete his half-done monograph
on Selective Credit Controls, A subject in which he has
had active as well as theoretical interest, Gardner
Patterson of the International Finance Section at Princeton
University would like aid to write a study of Reserve
International Financial Operations in the 1920s; Lester
Chandler, also of Princeton, would like aid to write a
long monograph or a short book on "Ben Strong, Central
Banker" ; two able men, Dr. Karl Bopp of the Philadelphia
Federal Reserve Bank and Professor Edward Shaw of Stanford
University are each interested in a study which might be
called n The Art and Politics of Central Banking," No
commitments have been made in regard to such work. These
examples are, however, listed as showing the caliber of
work which this Committee would like to encourage, and
for which it would use funds.
-10(2) Major Works
Of these the definitive history is the core of the
project and the one toward which we continue to point
our endeavors • We believe that its writing will take a
good three years on the part of a distinguished scholar who
has already shown the skill and judgment which the
creation of such a history demands. However, we do not
believe ourselves justified in naming such a person at
the present moment. The task of exploration and recording
of materials will meantime be carried further and the
field of possible scholars will continue to be canvassed.
Considering the high cost of subsidies for major
works we would hesitate to name other volumes for which we are
ambitious were it not for hopes that at least some of these
might find publication through commercial channels and
would need from this Committee little more help than can be
provided through consultation, use of materials, perhaps
a small subsidy for stenographic aid. We have from the
beginning believed that the play of personalities would be
an important factor in any governmental operation and that
a volume of biographic essays on key figures could be
written so as to illumine various facets of the system.
We also think that a volume of essays on crises in the
banking world, following the volume by Oliver M. W,
Sprague on History of Crises Under the National Banking
System would be an important contribution which might find
publication through regular channels. There would be others
as the project develops.
\
(3) Editing and Publishing of Documents
The Committee's staff has noted with interest the
British example whereby documents basic to central banking in
England, including key speeches and memoranda as well as legislation, were edited and published under the title Gregory's
Select Statutes. Documents and fleports delating to British
Banking, 1832-38, No comparable work exists in American
banking practise* It has also been suggested that a
comprehensive annotated bibliography covering both published
and unpublished works bearing on the System would be a most
useful contribution to research activities. In addition it
is not improbable that selected papers from the various
collections under survey may prove so valuable as to deserve
publication. No decisions have been made in this field,
but we list this activity as one in which the Committee
may engage.
-11Use of Materials
When the pilot project was started it vas with the understanding
that the Board was much interested in helping along an independent and impartial history project, did not wish to impose restrictions on the Committee's research, but would prefer that no explorations be made into events
taking place after 1935*
Because the research director was during the pilot
project primarily eager to search out the papers and people of the older stages
of the System this cut-off date created no difficulties. It will, however, pose
problems as the work of history-writing takes shape. A forty-year life, whether
of man or of institution, can hardly be adequately recorded if biographers and
historians are allowed}to examine only its first half. On the other hand in
operations as pregnant ^with differences of opinion as those which take place
in the monetary world, certain material is highly confidential, certain reticences must obviously be respected.
Two ways of handling the problem have been proposed, one that the
question of a cut-off date be taken back to the Board in the hope of another
ruling when and if the question becomes acute, the other that perhaps it is
unfair to ask men now active in the Reserve System to stay on the Committee
and thus lend their tacit approval to explorations which in their official
roles they might feel unable to encourage. The Committee would hate to lose
them as members, but neither does any one want them to be subjected to unnecessary dilemmas. A third solution might be to postpone action on the problem in
view of the fact that the work thus far proposed is mostly concerned with matters prior to 1935 and that therefore the difficulties are all in the future.
VJhen they arise they can be dealt with individually.
As for the future commissioning of authors, and the problems which
this may create, the Committee would in this follow the rules laid down by
-12-
Brookings Institution after long experience and found satisfactory.
VI
Organization, Personnel and Budget
(a)
Organization
The grant for the pilot project was made to the Brookings
Institution; an informal working arrangement was established whereby the
President of Brookings became a member of the Committee, work was done under
Committee supervision, and Brookings acted as disbursing and bookkeeping agent.
That institution also furnished office space in Washington for the ResearchDirector, as did the Federal Reserve Board.
Because the Committee was composed of busy men, the supervisory function fell most frequently to its secretary, Donald Woodward,
formerly on the Board*s staff, now Chairman of the Finance Committee of
Vick Chemical.
The other members of the Committee have also shown steady
and vigorous interest in the pilot project and have been generous with time
and advice when called on for consultation.
The daily work was carried on by a small staff headed by
Mildred Adams as Research Director, assisted by Katherine McKinstry (who
shared her skill as research assistant and her time between the work of
this Committee and that of Dr. John Williams, consultant to the Federal
Reserve Bank of New York) and two young typists.
All these assistants
were assigned by the Bank from its own staff, their salaries paid by the
Committee.
The Bank also supplied working space and furniture.
This same plan of organization, with some modifications, is
the one we would recommend for the comprehensive study.
The association
between an ad hoc committee and Brookings Institution is unusual, it has
values for both groups and we recommend that it continue.
Certain problems
in that relationship will arise when the publishing stage is reached; it must
for example, be decided whether Brookings is to exert the same critical function
in regard to publications prepared under the terms of this Committee as is cus
-13tomary in regard to those it sponsors directly. These problems do not,
however, call for immediate solution and their resolving will not disturb
the vork of this Committee
The Committee's functioning, and its relation to the small staff, would
xontinue along establish lines• Thus far the Committee has been kept informed
of work accomplished through progress reports put out by the research director,
through personal consultation; and by discussion in meetings. It is assumed
that meetings will be held when needed but no oftener, that they will be
called by the Secretary with the consent of the Chairman, and that the
identification of interests between the Committee members and the work being
done will make for continuing oversight on the part of members•
(b) Personnel
It is proposed that the major study be put in charge of a scholar
of wide experience and attainments who will have general supervision over its
various parts and who wishes himself to undertake some one of the writing
assignments which the Committee contemplates. We take pleasure in suggesting
for this post the name of Mr. W. Randolph Bureess, presently under-Secretary
of the Treasury, with the Federal Reserve Bank of New York from 1920 to 1938
during which time he served six years as Deputy Governor and two as Vice
President, author of two books on phases of the Federal Reserve which are
classics* Mr. Burgess has shown himself deeply interested in the work of this
Committee has been an active participant in discussion, and he has every intention
of writing on Federal Reserve Subjects when his work at the Treasury is over.
Until Mr. Burgess is free the present arrangement by which matters
requiring Committee supervision are customarily referred to Mr. Donald Woodward
will continue. Mr. Woodward is worked on Reserve Board papers in earlier days,
is in close touch with all the members of the Committee, and has an informed
and enthusiastic interest in this project.
For research director we recommend that Mildred Adams who initated
and carried through the work of the pilot phase be continued in the work of
the main study. She will need an assistant able to give full time and capable
of accepting more responsibility for administrative detail than could be
delegated to Miss McKinstry under the part-time arrangement prevailing during
the pilot project. Her aim is to fin a young, well-equipped and able research
assistant with the proper academic training and some experience in administative
work of a related nature, who would after a year or so be capable to take
entire charge of the project and carrying it forward, leaving Miss Adams then
free to undertake the writing of one of its parts*
In addition we would need a secretary with research experience,
(Miss McKinstry is so exceptional that we would like to keep her, even with the
handicap of part-time service and a typist. It may be necessary to add
secretarial help in Washington, and provision for this contingency will be made
in the budget.
(c) Quarters
There is reason to believe that offices and equipment assigned
for the pilot project t»y the Federal Beserve Board in Washington, the Brookings
Institution and the Federal Reserve Bank in New York will continue to be
available. Work can be expected to center mostly in the latter because staff
is provided there and the research director will be resident in New York.
This provision of rent free quarters and equipment (the Federal
Reserve Bank imposes a very nominal fee for furniture rental which is more than
counter balanced by its many operating services) is a concrete instance of
the interest which the System is taking in the entire project. Board and Banks
are also making important contributions in the form of material and of research
assistance which cut down the cost of the entire project. Their continued
cooperation is of course a vital factor in-the'process.
- - -
(d) Budget
It is assumed that the general director of the study will
work without salary, but that secretarial help should be provided for him
as needed. The item of rent is also furnished without charge. This means
that the costs which can be estimated go for staff salaries, travel expenses
of the director and the research director, supplies (limited mostly to stationery and archival materials) and subventions to be used in three ways to be paid for the study and evaluation of collections of papers, to assist
the writers of monographs, to subsidize or assi\st in the writing of major
http://fraser.stlouisfed.org/
works.
Federal Reserve Bank
of St. Louis
Based on experience in the pilot project, ire have made estimates
in two groups, one for the first two years when research expenses and travel
costs will be relatively high, the other for the remaining three years when
the heavy costs will take the form of subventions and other aids to writing
and publishing which are the goals of this study. These budgets should be
taken as estimates only, and we would ask that a hight degree of flexibility be
allowed the Committee in allocating the funds it hopes may be granted.
Budget Estimates June 1, 195U to May 30, l£$9
YEARS I & II
YEARS III, IV, V
Salaries
Salaries
Research Director
$10,000
Research Director
Administrative Secretary
7>5OO
-
Research Secretary
6,000
Research Secretary
6,000
Secretary for Project Head3,5OO
Secretary for Project Head
3,500
Typist
Typist
3.000
3*000
- -
Salary Total • • . . $30,000
- -
Salary Total
#33*500
Travel costs
3,000 Travel costs
2,500
Other expenses
1,500 Other expenses
1,000
Subventions
15,000 Subventions
Annual Total
YEARS I & II
$ 1*9,500
Request
1*0,000
Annual Total $ 67,000
Total for 2 years
$ 99,000
YEARS M I , IV, V, Total for 3 years
211,000
Total for 5 years
VII
$10,000
$310,000
In view of these estimates the Committee respectfully requests that
for the purpose described in this proposal the Rockefeller Foundation grant
$310,000 to be expended in the five years between June 1st, 195h and May 30,
•fC-
The grant should go to the Brookinsrs Institution with the understanding that
its responsibilities and those of the Committee toward the project are mutual,
and that an informal relationship between the two bodies camparable to that
which proved so satisfactory during the pilot phase is to continue.
iMemo from MILDRED ADAMS
'To
V
u
Q
4
^^»
v
jt
k
rom MILDRED ADAMS
To
• = •vi
/
I
*Uf(
-J/
-
U
I
•
J
/ I s
,
V
N* ft((Vuv
^t-
if
.?
_ ^
Ljr3-tJLJ-t
r
UU*^,
/
'{>USUL^
hU^^f
f-u.
h
i
U
\i
•0
pp
j . -
1
i
u«^
V
L^'f^ru ***,
•
REPORT ON PILOT PROJECT
When the Committee t o Study the History of the Federal Reserve
System f i r s t proposed t o the Rockefeller Foundation a p i l o t project, i t s
objective was preparatory work leading t o a comprehensive study of the
System*
"Papers which form the source material should be located, c l a s -
s i f i e d and roughly analyzed" said the proposal•
"Important characters i n
the drama should be sorted out, t h e i r co-operation asked and t h e i r i n t e r e s t
enlisted*
The dimensions and proportions of t h i s comprehensive study should
be sketched and i t s p o s s i b i l i t i e s bulked out*
l e a s t hope t o answer the basic questions,
f
The exploratory study would at
what? ! 'where?1 and 'whom',"
Toward the end thus described, the Foundation generously granted
$10,000 t o the Brookings I n s t i t u t i o n and work started January 15, t o end
May 1*
Four weeks of t h a t period remain, but enough has been done so that
we can report on the r e s u l t of the mapping and survey of papers and people*
Thio hao-boon in tho boot oongo~e£~4h»^w^^^p£3^~prfrjeet.
The
exploratory process, superficial though it had to be, and incomplete, has
A
/""\,
yielded a gratifying havest* More collections of papers have been located
and surveyed than we thought-possible*
The characters in the drama are more numerous and possessed of
better memories than we dared to hope* Even from the earliest years a few
hardy operating men survive in each bank* To some of these men, work in the
Federal Reserve System has been a lifetime occupation* Their memories will,
of course, be checked with the records, but the sense of struggle and accomplishment which talks with them convey would be a valuable factor in any history of any institution* Their interest has been enlisted and their co-opera.tion i s generous.- As a method of recording people, papers and events pertinent
to this inquiry we have started four types of card f i l e s , one a who's Who f i l e
of persons; one a time file which co-ordinates persons, pertinent events,
legislation; one a bibliographic file of published and unpublished material
one a subject file* These master files are arranged so that they could be
photostated for the benefit of students working on a later phase of the project* They are by no means complex!, but their pattern is set*
A
Papers*
When we set forth the terms of the pilot project we said that "the
papers which would be needed as source material in writing an adequate history
are scattered among Government, banking and private files. It is not even known
what exists, nor where some of what exists could be found *" To remedy this situation has been a first endeavor. We have not yet located everything we set out
to find, but we can now answer the question "Where?11 in some detail. More remains
to be done, but at least we have made a fruitful start*
Thanks to the co-operation of librarians at the Library of Congress,
in the Board and in the banks, we have made progress in the search for pertinent
A
bibliographies of basic material which is printed, and in the more difficult hunt
for related material which is not printed* We know, for example, that material
covering the Liberty Loans of World War I was sent from the Treasury to the National Archives, and that the records of the Capital Issues Committee are deposited in the same place. We have a listing of the indispensable material which
must underlie any study of the Board's work—the legislation, thehearinga, the
minutes* the policy decisions* the reports and so on—and we have a similar list
for the New York Bank*
Of the other District Banks, the research director has visited Boston
and Philadelphia, and hopes to get to several of the other nine before this pilot
phase is finished* Meanwhile, we have been in correspondence with all of them*
and are receiving information as to their own stores of local historical material*
We have in preparation a master list of basic material which we hope to send for
-3their checking* If this device works, it will furnish the data for a bibliography of basic historical material for the entire System which will be of
primary use in the studies in prospect.
As for the papers of individuals concerned with the System's history,
we have located enough collections so that we are now facing problems of handling, indexing and permanent deposit* This search is by no means complete, but
it has already uncovered riches which will be of great use to scholars if they
can be made available and usable. The size of the collections makes it necessary
to postpone classification to a later date, but we have found an organization which
might handle such papers, and at our suggestion they propose to start a sample
study to determine time and costs of the necessary process* Problems of a place
of deposit, and of permission to use, still remain but the fact that these have
arisen and must be left for a second phase is, in an oblique way, an earnest of
the accomplishments of this operation*
The following list of papers uncovered during this pilot phase includes
those of Board members, high officials of the executive branch, Members of Congress,
Governors of Reserve Banks, men in academic life whose writings have been influential
^
in the development of the System:
The papers of Woodrow Wilson, in whose administration the Federal Reserve System was first organized, are in the Library of Congress* Permission to
consult them has been granted to this Committee*
The papers of William G» McAdoo, first Secretary of the Treasury to
sit on the Board, are in the Library of Congress* Permission to consult them
has been granted to this Committee*
The papers of Senator Carter Glass are in the University of Virginia
in 216 boxes (perhaps 10 x 15 x 3 inches in size)* They have been rough-sorted
as to date; letters from outstanding personalities were isolated by an early
biographer, A quick sampling shows that classifying and indexing will be need-
the late
The papers of/Professor James L. Laughlin of the University of Chicagoj
a widely recognized teacher of banking during the formative years of the
Reserve System, are contained in 15 boxes of material, covering the period 1910-32, are
now on deposit with the Library of Congress.
5
*l
*fc^#
-itare bound volumes of manuscript diaries covering the twenty-one years during
which Mr* Hamlin was a member of the Board, and almost as many are bound volumes
of newspaper clippings covering the years 1871 to 1938* Both sets of volumes
have been amply indexed and cross-indexed by Mr, Hamlin* The whole collection
constitutes a mine of information and comment which has neither been studied nor
evaluated* (See main project proposals*)
The papers of H* Parker Willis, member of the Organization Committee
and the Boardf s first Secretary, are in the home of his widow on Staten Island*
They were willed to his son, Parker Willis, now in the Federal Heserve Bank of
Boston* How much of value remains in them which was not used by Mr* Willis in
his own books is a question which can only be answered by sorting and classifying*
(See main project proposals*)
The papers of Paul M. Warburg were mostly destroyed after 1930 when he
wrote his own two volumes on the Federal Reserve System* The residue includes a
skeleton diary covering the years 1907 to 191k inclusive and dealing mostly with
events leading up to his taking of the oath of office as a first Board memberj
there is also a diary dated 1915 and covering "daily happenings bearing on the
work and policy of the Board" from October k to 2J4, 1915 • There are in all five
volumes of miscellaneous material dating 1912 to 1918, some of it highly interesting* This material is in the hands of Mr* James Warburg at North Greenwich,
Connecticut, and permission for its use must be sought from Him* The collection
is not so extensive as to need further work for its use*
building*
The papers of James Warburg, covering a later period, are in the same
These include a six-volume diary covering the months of 1933-3^ which
r. Warburg
« v 1 v , c °l l e c tion of the private papers of Mr. A. Barton Hepburn, a prominent
New York banker who served as Comptroller of the Currency (1892-93) and later (1918)
as a member of the Federal Advisory Council of the Federal Reserve Board is on
deposit with the School of Business Library, Columbia University.
Committee for sorting and evaluating*
(J*+* '***»• v*
The papers of Ben.jamin Strong^ first Governor of the Federal Reserve
Bank of New York and in that post until his death in 1928, are divided among the
Bank, the Firestone Library at Princeton University, and a New York storage warehouse* The Bank's collection occupies six file drawers and consists of addresses,
memos and correspondence with leading personalities in the United States and Europe*
In addition that portion of the filing system which was set up during his lifetime
is permeated with Strong material incorporated in the subject files* Permission
for study of this material must, of course, be sought from the Bank.
The Princeton material which forms the nucleus of what is there called
the Strong Collection includes I96 volumes of newspaper clippings of World War I from
July 27, 1911* to March 20, 1920, well-mounted and preserved* War posters,
war currency, and a folder of correspondence between Strong and Kemnerer are also
there* The material in the Lincoln Warehouse, under the control of Mr* Benjamin
Strong, is believed to consist mostly of personal papers and correspondence 5 it
should be made available to a qualified biographer*
-5The papers of George Harrison, second Governor of the Federal Reserve
Bank of New York, are also incorporated in the files of the New York Bank. In
addition, there are seven file drawers of reports, memoranda and correspondence
which Mr. Harrison took with him when he left the Bank to become President of
the New York Life Insurance Company. These, like the Strong Collection, have
the great merit of presenting material culled from the mass of daily work; they
are therefore easily handled as well as very valuable to the student. This Committee has permission to consult them.
The papers of Charles Dawes, of the Dawes Plan, are in the Deering
Library at Northwestern University. They include diaries, journals, scrapbooks
and memoranda, rough-sorted and put in chronological order; these include material
relating to the currency question from 1900 to 1902, and to the Aldrich-Vreeland
Act of 1908, as well as later material on the German debt question.
In addition to the papers of Woodrow Wilson, the Library of Congress
also has the papers of Calvin Coolidge, Charles Evans Hughes, Nairton D/Baker
who was Wilson's biographer, Senator George Morris, all of whom dealt in their
various ways with Federal Reserve matters. Permission to consult these has been
granted this Committee.
The papers of Dr. Edwin Kemmerer are mostly in the Firestone Library
at Princeton University. Some memoranda are believed to be in the hands of Mrs.
Kemmerer.
The papers of Ogden Mills, Secretary of the Treasury and Chairman of
the Federal Reserve Board in 1933> are in twenty-five boxes in a garage on Long
Island. A small attempt at sorting was made by Mrs. Mills, who got through some
five boxes and then decided the job called for expert advice; otherwise they are
intact, and just as they came from the Treasury. Word has just come that after
having consulted with this Committee as to the disposition of the papers Mrs.
Mills has decided to turn the boxes over to the Library of Congress. These
papers must be sorted, classified and indexed before they are useful for students.
The papers of Eugene Meyer are still in Mr. Meyer's hands. A biographer,
Sidney Hyman, is at work on them.
The papers of Norman H. Davis were given to the Council on Foreign
Relations, which recently sent them to the Library of Congress as a final place
of deposit. They include some five file drawers and a huge box of unsorted
material. The Library of Congress has promised to have it ready for students
in two years.
The papers of Dwight Morrow, who played an important part in the
international negotiations of the 1920 f s, are being prepared for deposit in
the library of Amherst College, where they are expected to be available for
use after June, 1954 •
A small collection of the papers of Leon Fraser has been handed to
this Committee, but little of value has been found in them.
The papers of Oliver W. M. Sprague, at various times consultant to
the Treasury and to the Board, are in the hands of his son in the Sprague
~
' T?rh u u^tt lUrMT W * *
**ft*)**j
residence. Stimulated by inquiries from this Committee, Mr. Sprague is
now sorting and classifying the material his father left.
The papers of Walter Liechtenstein., for two decades (1926-194S)
secretary of the Federal Advisory Council, Federal Reserve System, have
been given to Harvard University, where they are divided between the Baker
and the Widener Libraries.
The papers of Etnanuel Goldenweiser, research officer of the Board
from 1922 to 194-5 and author of various studies, are at present in a storage
warehouse in Princeton, New Jersey. Conversations with Mrs. Goldenweiser
indicate that they may be made available for study this summer. (See main
project proposals.)
Obviously this list of 26 pertinent collections which we have located is by no means exhaustive. It does, however, show what riches can be
uncovered by persistent search. All this, and much more, must be studied by
anyone now aiming to review the System1 s work and its place in the American
economy.
Meanwhile, men still active in the System are known to have been
accumulating papers which, if they can be preserved, will add greatly to the
desirable material. The student of Federal Reserve banking may with reason
long for the time when the speeches, correspondence and memoranda of modern
leaders in Federal Reserve theory and practise are made available. It is to
/ be hoped that this Committee may be active in persuading these men to leave
their papers to a responsible depository where future students may consult them.
Persons
The other chief object of inquiry in the pilot project was persons;
"The men who have acted as architects and builders of the present Federal
Reserve System are already beginning to disappear", we said in our first
presentation. "Those living, whose memories form a most valuable supplement to any papers which they may have, should be approached and asked to
contribute personal knowledge and access to papers before it is too late."
The process of interviewing has been throughout this pilot study
one of the major occupations of the research director. Starting from a list
-7on which Committee members indicated their own first choices, the interview
process has widened to include some sixty-odd persons, most of them officers
or staff members of the Board or banks* T k
U / 1 U*tM*dU* • • * >
A
'
In general these interviews served a purpose somewhat different
from that which was contemplated when they were started. In the first place,
they struck sparks of interest and good will which are very valuable for the
success of this project* Benefits continue to flow from them, and further
opportunities to interview the same individuals at later dates have been
promised*
These meetings were of great help in establishing the human atmosphere of whatever period was under discussion* In some instances they also
brought forth valuable memories of key moments, and information which was
unique in itself* But it quickly became clear that in order to evoke the
most vital detail in any disputed area it would be necessary to ask the carefully pointed question* This can be done well only in later interviews, with
full confidence established and much more study accomplished than has been
posible in three months1 time*
The interview technique has proved full of surprises* Far from
being less valuable than was anticipated it has been more so, but the values
have been of a different order. The most important of the memories, which is
to say those that lie at the deeper layers, are still to be gathered. But
certain inquiries have been set in motion which will yield results after this
;
report has
been
written*
Themain
continuing
which has been secured will
accrue
to the
benefit
of the
phase ofinterest
the proposal*
yt - The comment of a former Reserve itec'i& Governor was "you're asking
me to open doors long ago shut. They open hard". Any historian going
under the auspices of this Committee to discuss a vital point with such
a man will find his
\IZJJ
much easier because the preliminary door-opening
has been done.
Card Files
As visible evidence of work done during this pilot project and as
preparation for the larger project, we undertook to build "a biographic index
of personalitia?"^*" bibliography of basic materials11 and a" map of some papers"*
-7-
on which Committee members indicated their own first choice, the interview
P
process has widened to include some sixty-odd persons, most of them officers
or staff members of the Board or banks.
—'
The long list includes:
, Daniel V. Bell
Dr. Karl Boop
,
-.
J. Herbert Case. *-»<**
tt*«dc*.«*
Jay E. Crane
Robert W. Fleming
George pi\t Harrison
E. A. Kinkaid
R. C. Leffingwell
Walter S. Logan
Eugene Meyer
and many others.
Carl E. Parry
Leslie Rounds
J o h n Sinclair
Walter V. Stewart
Benjamin Strong, Jr.
Woodlief Thomas
John H. Williams
Walter Vyatt
Roy Young
In general these interviews served a purpose somewhat different
^
—
-8We now have in hand the early stages of what will be master card files,
prepared in such fashion that they could be photostated and made available
to students working on various phases of the main project* These include:
A bibliographic file of unpublished material, put together in a
form suggested by the Manuscript Division of the Library of Congress, where
collections are described roughly on cards, and more exactly on larger "registers" of the material in the collection.
A bibliography of printed materials basic to any study of the Federal
Reserve System.
A bibliography of the works of the earlier Board members, Senior
Bank Officers and Directors,
A biographic file of persons active in the System, with data as to
their careers both in and out of the Federal Reserve.
A chronological file keying together persons, legislation, hearings,
policy changes and events affecting the operation of the System*
A list of scholars whose records indicate the type of interest in
the subject which suggests that they might be enlisted in the main project*
0 - This work has been done under the Committee's research director,
Mildred Adaras, in three offices - one assigned in Washington by the
>
Federal Reserve Board, one provided by the Federal Reserve Bank of
New York with a staff of three assigned to this work by the Bank from
among its own personnel (their salary costs,, of aeurpa, paid by the
Committee), one in the Brookings Institution. The latter organization has been kind with expert advice, as well au with the technical
assistance needed for administering the Fund.
The cooperation of the Board has from the start been prompt
and generous. All doors have been open, including library and files,
and the research staff has made a large and valuable contribution to the
bibliography. Cooperation with the Banks was established when the
Chairman of this Committee, President Allan Sproul of the Federal
Reserve Bank of New York, sent to the Presidents of the other eleven
Banks a personal latter explaining the Committee project and invitin
their interest. Since then, material bearing on the local histories
http://fraser.stlouisfed.org/
Federal Reserve Bank ofof
St. Louis
the
individual Banks has been arriving in responses to specific
^^
-f
requests. Meanwhile while the New York Bank, like the Board, had opened
all doorc and created for the Conadttee• s staff an atmosphere of cooperation which has both facilitated the work process and constituted
an important financial contribution to the project. It is already
apparent that regional hUc aw etf.ienc and developments form a rich i
aw£,liicloih field for research in any comprehensive study of the System
Conclusions
All this work has been pointed toward the larger design which constitutes the reason for the pilot project and the grant making it possible. The
size and importance of that larger design has loomed larger and more complex
with every day's work.
We said in January that any attempt to draw the limits of thfr'
comprehensive design would have to be revised six months from then. At
this writing half that time has gone; the design still changes every time
a new corner is rounded and a new set of ideas uncovered. There are as
many ways to formulate +^Q ~T7ipri'-'hTairi-"F 'ia-ngn as there are people equipped
to think about it. This Committee has developed within itself a lively and
stimulating set of opinions on the subject, all different and all valuable.
Under these circumstances the mnin prnjnnt proposal as herein submitted represents a consensus of the ideas of six men learned in the theory
of central banking and experienced in the practices of the System. The members
of this Committee see the System from many different angles. The proposal as
submitted represents those aspects of the grand design on which the Committee
is agreed.
•
@FedFRASER