The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Hey U9 1956
Dear Mr» Sprouls
Here i s a draft egend* for the meeting
of thid Coisaittee on Mey 28th, Dr* Calkins, whom 1
am seeing tofiioxrov, roey have additions, but &o far
as I knoYf this i s the main body of topics for d i s cussion*
If you could look i t ov@r and make what
Sh&nges you think suitable, I will incorporate thea
vlth vo^teTer l e s t ainute ide&s Dr» Calkins may
have.
faithfully yourst
Mildred Adums
Mr« Allan
33 Liberty Street
»ew lork 45, H. ?.
Kay 16, X95&
Wmr Mr*
Br, C&lki&a phoned this morning bafor* starting on
trip t© aik tfeat I send you iBforafitioa about t a«w
tor t h i s project, 8r« R»d?«r» Opie, vho m i & senior mwfear of th»
Brooking® staff from 1947 to X953»'*iu! i e aov oa a 0* S. Govem»«at
Mission to fmrlEfty, h^Tiiig to do with private foreign
fir* Opt« i « 54 prefers old^ vss bo«i in SagX«nd«
a t tlie tfaiveraitgr o f siftjaa «ad »t Oxford, took hi* fh*$m «.t 8arv»rd|
in 1929 (stad lias
in
data i * »e fcilowai
l»»etur«r i s ©eoaoisies, Vntv* of Burh«a,
Uctur«r in economicz, Welleslej C o l l i e (U.S.A.), 192>2i 9
©I1
leav© of aba*nc6 for Ifttional 6#rvio# fi*os S«pt# 1939
lfeiv#r»i^r X#©ti«F*r i a ®©oiw»»ic ocienc«, X936-39 (X#ctur«<! oa th«
Federal Seserre Syst«a).
Counsellor end ©oonor:io fidvis#r to Britls^i Ikba^ay, Ve«hingtnn, D. C,
{
)
t
JDttl«f»tlont ZateituitloiiaX Food Conf«r«aett 1943•
U.K. I&l<»gfit#» International Konetsry and Fin^nciti C^nfer»ne«# 1944(Brettoa Woods}*
M^Rb#rf U# i« Qovt« Mission, on friT*t» Foreign InT^nias^nt, to furk«§r* X953*
S^aior st&ff s«^ber, Brookings Institution^ Wnshiugton D. C#f X947-53*
Direetori Bunin^ss Zst»rnatlon«X ( i e v York), ttiaet 1954s
Proper tin* 3»td» (London) since X954*
i
Inc» f H#v lork,
fh# British jjhpffe.Vfrft Xl»t« his pubXieations an
?robX«B« of 0. S. Foreign Foliey.* ( J o l a t ) , wonui»lly# 1947-52*
^©ric&n Economic HsXatlona*11 X95#«
•Current Zatuv in foreign looaonio Assifttanee*11 X951»
<%• Atar^i for Feaca SettX«a*nts»* X95X»
*i»arleftii Foreign Aasistanea*11 X953#
• 2 -
Op£©f s mm* hm torn® mentioned fe#fore hy Pr*
Spoke ¥©11 of k l i i Br* C&lkina aay» h* i« **hlef writes w#H f mad i©
e«aplet«ly f w i l i & r with the subject, &Xm he I s iat#r®st#<!# H©
b<»en l a ¥etshingtoii recently wtier« Hr* Calkins talked with hl^« H»
m s t go back to lartcey for tae sunwer, but could st*rt work on
l a October*
X ehecksd on Dr. Opl« with British friends i&o describs him
a« l i v e l y , n t i r e c i t Ye &n& lat@lilg«at # l i k e l y perhaps to aeatt«r h i s
•fforta tt&ong aangr Interests rather th&a plugging steadily i n one
Job, but sure to finish vt&&t he undertakes. His J?caddie record WSR
«xealX€Mttf luid S?M# of h i s frisatte ^#ould lilte to h«v# »e«n him stay
im th* ftcudfifiie world, ^ t r t h# se«8«d kt»de<l for r#&X dlstlnettoa^
but the war end th« aHanoe of go^«r?m««it service took him out of
that* His reputation &t Brookings v«w0 »a«& tlifit Pt* OaXklns i s rehi® to your i n t e r e s t , H# w i l l ^*.nt to b r i ^ Dr. Opief s
up e t th<* meeting on the 2*1 th*
yours,
Klldrtd
Mr« Ali&n Sprout
33 Idbert^ Street
- i)r. Walter
Mr« fioneld Woodward
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
ROBERT D. CALKINS
F. CYRIL JAMES
WILLIAM MCC. MARTIN, JR.
WALTER W. STEWART
JOSEPH H. WILLITS
DONALD B. WOODWARD, Secretary
MILDRED ADAMS, Executive Director
THE BROOKINGS INSTITUTION
722 JACKSON PLACE, N. W.
WASHINGTON 6, D. C.
'»*,
May 1 5 , 1 9 5 6 .
Miss Mildred Adams,
Executive Director,
Committee on the History
of the Federal Reserve System,
33 Liberty Street,
New York A5, N. Y.
Dear Miss Adams:
Answering your three letters of May 14. in one:
1.
I suspect that my suggestion about
separating the files from the archives
of the Federal Reserve Bank of New York
was imperfectly conceived and is, as you
say, an impractical dream.
2.
I agree that the Snyder papers which have
come into your possession should be placed
with the Strong papers, and I wish you would
take this up with Miss Dillistin.
3.
I am planning to take some of my papers with
me, hoping to make some use of them and ultimately to place them where they may be useful
to others.
Thank you for following up on these matters which tend
to be forgotten.
Yours faithfully,
Allan
Chai
Hay
Bear Mr* Sproui;
In tli© third of these letters I ais writing you on file8, may X
venture to express the earnest hope that you are folloving tradition &n&
taking a s i z a b l e collection of your own papers with you when you leave the
Bank. Having done scattered reading in both the Strong and the Harrison
paper3f and knowing something of t&e problems presented by the enoraous pool
of general Btnk f i l e s , I as convinced that the only practical way for & student to gein &ny adequate sense of the scope and direction of & Presidents
work i s by reading through the President's own papers*
Sou will* I hope* ffieke use of these papers in your own writing!**
Xou asy vant to edit some of thea for publication or to have them edited.
Their final disposition i s a a&tter you may not now be ready to decide* But
the important thing now i s that you decide to take out with you the black
books and the papers which you end generations of students after you will be
wanting to consult.
You will* I know, understand vny X am saying &11 this* Xou have
probably m&de the necessary decisions months ago* But I could not* in fair*
ness to the project in which we have worked so hard, forego making this
plea* Having hunted pertinent papers across the length end breadth of the
country, I feel myself under a real obligation to remind you of these aoat
important papers on this most vital doorstep*
Faithfully yours.
Mildred Adams
Hr* Allan Sproui
33 Liberty Street
Sew York A5» H* X*
May U #
1956
Dear Mr. Sprouli
This is the second of these letters which touoh on files* It concerns papers left by the late Mr. Carl Snyder.
Before Christmas, 1955* Miss Marguerite Burnett gaTe me, for the
use of the Committee, a carton of papers which was turned over to her per*
sonally by Mr. Snyder1 s secretary after Mr, Snyder1 s death« They had been
stored in the Library, but Miss Bogerdus had no use for them* At one time
there was talk of coordinating them with the Bank files, but as most of them
were carbons, of which the originals were presumably in piece, Miss Piliistin
decided against this.
We made the papers available to Dr. Chandler, who took his own notes
from them. I have skim&ed through them, and found them very interesting for
any study of the early process of policy formation in this Bank. Most of them
are carbon copies of memoranda written by Mr. Snyder for Mr. Strong, or
exchanged between the two men.
The question now is what to do with them. The piece they would aeem
to belong is the file cabinet of Benjamin Strong papers. Here they would form
an integral part of the Strong record, along wito other correspondence with
other people of the time. This disposition of them would call for no great
effort, and would be a distinct addition to the already rich Strong collection*
If this suggestion meets with your approval, I will take the matter
up with Miss Dilllstin. Otherwise, X would put the papers into manuscript
boxes and send them to Brookings with other Committee materials.
Faithfully yours.
Mildred Adams
Mr. Allan Sproul
33 Liberty Street
Hew lork 45, H. X«
1956
Deer Mr, Sproul;
Three matters which have to do with f i l e s should be reported
to you before June 1st* The f i r s t concerns a raciest you VU-.<\B when the
project v&s f i r s t started, the second concerns some files belonging to
Carl Snyder, tae third has to do with your own f i l e s . For your oon-»
veniene© I am. writing separate l e t t e r s about these*
First, when I Come to vorfc on this project you s&id you hoped
that among our achlsvrsents would be a suggested ciethod "by which the
f i l e s of the Federal Reserve B*nk of Rev fork could ba separated from
the a r r i v e 5 * I heve not forgotten that hope, Vat neither have I arrived at a suggestion tket seems to ise particularly helpful* there i s , •
ad I think X reported -when X found i t f an archives itom in the Bank
which contains cert&ia basic reports, bou&d, &nd a collection of copied
l e t t e r s which were prepared ?n& boxed in 1926 under the tsgis of a Committee of o?ficsr3 on vhieh Mr, Burgess served* I hevo seen the meno
from Mr. Strong; which Inspired it« T;io- tjeleatin^ was done "bj Mi8$ M&T?
Parker, then librarian* e.a a preliminary to wlmio^ng by the officers*
cosialttee, but apparently they never got around to the second step*
Aside from that effort, the protective Instincts and traditions of the file division are one's main hope in the preservation of
older Material* Thus far Miss Dilli&tin has a&n&ged to hold onto a
surprising amount of key material* If one knovs vhat one wants, can
describe i t in terms that make sense to the file division, i t will
probably be turned up, no matter what i t s age* The active and Inactive
f i l e s seem to be so linked functionally that age of material presents
no particular problem.
But this i s a l l bcs®d on & subject index* There la l i t t l e
or no chance of tracing the work of &xy individual through the files
unless you kmw specifically what subjects engaged his attention* The
Federal Reserve Bank of Richmond has, as I think I reported, a card
index of a r s o n s which acts as a key to the work of the various officers*
but Hew Xork has no such device* I t i s this lack which makes the
segregated files of Mr* Strong and Mr. Harrison so very important in
any attempt to assess their work* Mr* Harrison's f i l e s , which X have
only scanned, contain mostly copies of papers, reports, cables, memoranda ©f which other copies are Incorporated in the Bank's files* But
for the very reason that Mr* Harrison kept and took away his own copies,
- 2 ~
the work he did, as mirrored there, is far more easily visible than
though one had to search in the massive pool of Bank files*
Exactly what you meant by separating files from archives, or
turning files into archives, has not been defined in detail* If, for
example, you meant that files before 1935 might veil be separated fro©
the regular filing division and set up in such a way that they could
be consulted by students while at the same time being out from under
the daily responsibility of the active file department, this would be .
an operation calling for perhaps the creation of a cross-index system
more easily approached from the outside than is the Bank's filing system*
It could be so arranged that new material (newer than 1935) would be
fed into it at 5-year intervals. Such an undertaking would call for
expert archival aid, ample funds and plenty of time* It would be
highly valuable to students*
F
your«f
HiIdred Adams
Hr* Allan Sproul
33 Liberty Street
Mew Xork 45# M* I,
May 1 1 , 1956
Dear Mr* Sproul:
Your decision to attend the Coraaittee
meeting makes me feel very smch better about a
l o t of things. Somehow I couldn't bear to have
this project go out "not with a bang, but &
Simper, w and no^r I know i t won't,
I a© sending out invitations to
luncheon today, and will got fi draft agenda to
you next week*
Faithfully and gratefully*
Mildred Adams
Mr. Allan Sproul
33 liberty Street
Mev tork 45, N. If.
FEDERAL RESERVE B A N K OF NEW YORK
^ _ . __
RECEIVED
^ ^
NEW YORK 4 5 , N.Y.
RECTOR
2-57OO
MAY 1 1 1 9 5 6
tlOlfWTTEE ON THE HISTORY
^ ^
OF1H8
May 1 0 , 1 9 5 6 .
Miss Mildred Adams,
Executive Director,
Committee on the History
of the Federal Reserve System,
33 Liberty Street,
New York U5, New York.
Dear Miss Adams:
I was in Washington when your letter of May 8 was
received in my office. I am sure that it has taken prodigious
effort on your part to arrange a meeting of the Committee here
on May 28, and I feel that I can do no less than attend. Please
invite the members to lunch at one o'clock on that day. We can
then meet in the lounge adjoining my dining room following lunch.
Yours faithfully,
Allan S
May 8, 1956
Dear Mr. Sprouls
After even more than the usual difficulty, vita
the aid of Br» Calkins and at the special request of Mr»
Burgess, we have finally set the May meeting of this Committee for Monday afternoon, May 28th, here in Hew York.
¥e understand that you will attend if you possibly can,
and eveiyone is hoping most earnestly that that vill be
possible. Otherwise, th# only dubious ones are Mr* Riefler,
br* Jamas and Mr* Woodward *foo may be out of town*
The exact place of the meeting is still to be
set. We could get in extra chairs end have it in this
office, but not very comfortably* Would you want to name
another placet And do you plan to schedule luncheon her*
for them before the meeting?
We will Bend out a detailed notice as soon as
you ©an give us w r d on this.
Faithfully yours,
Mildred M a s s
Mr, Allan Sproul
33 LiMrly Street
Hew York 45, »• *•
This document is protected by copyright and has been removed.
Author(s): Leif H. Olsen
Article Title: Shift at the 'Fed' Surprises Banks
Journal Title: New York Times
Volume Number:
Date:
May 6, 1956
Page Numbers: 1, 8
Issue Number:
This document is protected by copyright and has been removed.
Author(s): Leif H. Olsen
Article Title: Sproul Will Quit at Reserve Bank; Hayes Successor
Journal Title: New York Times
Volume Number:
Date:
May 1, 1956
Page Numbers: 1, 51
Issue Number:
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
33 LIBERTY STREET, N E W YORK 45, N E W YORK
TELEPHONE: RECTOR 2-5700, EXTENSION 286
ALLAN SPROUL, Chairman
W. RANDOLPH BURGESS
ROBERT D. CALKINS
F. CYRIL JAMES
WILLIAM MCC. MARTIN, JR.
WALTER W. STEWART
JOSEPH H. WILLITS
DONALD B. WOODWARD, Secretary
MILDRED ADAMS, Executive Director
With cooperation of
RECEIVED
THE BROOKINGS INSTITUTION
722 JACKSON PLACE, N. W.
WASHINGTON 6, D. C.
MAY 31956
ON THE BI&TOftY
May 2, 1956
Dear Miss Adams:
I have been working at the puzzle presented in your
letter of April 30 and I haven't the answer. This month, which will
be my last month at the bank, is going to be a hectic one and I cannot
be sure when I could attend a meeting of either the executive committee
or the full committee, particularly if it is to be held away from New
York. On the other hand, if we are going to terminate the history
project, as I think we probably must, it would be most appropriate to
have it done by the full committee, and I should not like to avoid my
part of the responsibility for doing it. In this instance, however, I
shall have to leave it to you, Dr. Calkins and Don Woodward to
arrange things as best you can with the hope that I may be able to
fit in.
Yours sincerely,
Allan Sp*oul
Miss Mildred Adams,
33 Liberty Street,
New York 45, N.Y.
April 30, 1956
Mr* Spxoult
X -wms serry to hear that you were i l l l e s t week*
do hope you &re feeling batter* X h&te to &dd on* more itft* t©
the Xde4 jrca §r© carrying, but I aa pti&sl&d about Ibe MXt
in till* Ooofiittee*
been s^kiag pXUM vaereb/ the research st&t«vlaX
vould be ^oTr^d to Brooking a at ttl« «md of th* «ontii« A l e t t e r
fr<m ^r« OeJLkln& this mousing says tiitt in view of th« disappointing deeisi©a of Mssars. Btil and FoveJUf he
of the Ix©<mti¥@ Goffioittee And finds them feaJdng # that we
probably i t wthe #Bd. of the rop« «ad ^iouLd consider elo&iag out
project*
He i s s t i l l exploring cert&in
In niey of tais situatioa *&&£ the dacielons to be
o i i ¥he^a©r you troild Xik« a full CotJdttee
for SKSIS tins in sid«Kfey or Aether tiie decision for
if that i s what i t ceases to* &ua b# uu?.?Je b/ the
If you can giv© me e. ©ouple of d&tea in
will s t a r t to set up a full Co&sdttae meeting or fen Executive
O
0®etin§# fci you prefer*
faithfully yours*
Mildred
Hr# Allan Spr^ul
33 l i b e r t
^ Xork
Pr» Hobert G^lkins
Ss
FEDERAL RESERVE BANK OF NEW YORK
ROUTE SLIP
Of_
From.
J For your information
] Attend to
|] Note and return
] Prepare reply for my signature
[] Note and forward to Files [ ] For signature, rf you approve
~2 As requested
] See (phone) me re. attached
|] For your comments and
] Does attached meet with your
suggestions
Other remarks:
http://fraser.stlouisfed.org/
(MISC. 136.B-8OM-IO-SS)
Federal Reserve Bank of St. Louis
approval?
FEDERAL RESERVE BANK
OF NEW YORK
M I S C . 4A.3-S0M-I-B4
OFFICE CORRESPONDENCE
April 27, 1956
TO_
FROM.
Miss Adams
SUBJECT:
Mary C. Regan
As I told you, Mr. Sproul thinks he should charge to the
Committee on the History of the Federal Reserve System, in connection
with the meeting on April 16, one night at the hotel in Washington $11.00,
and one meal, breakfast Monday, April 16 - $2.17, totaling $13.17.
0 PI
"Copy sent to other members of Gam, on History of
FHS (except Mr. Martin) and to Miss Adams.*
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
33 Liberty Street, Hew York 15, 8ew Xork
April 27, 1956
Personal and Confidential
Mr# Donald B, Woodward,
122 E. 42nd Street,
Mew Xork 17, H. I ,
Dear Dons
I have forgotten Just how I caiae to be Ghe.i;raan of the
Cosradttee on the History of the Federal Reserve Bystm, but I think i t was
done by Randy Burgess and you* In any case I assume that you are the one
I should write to in order to relinquish that office. As will be announced
Monday afternoon, April 30, for release Tuesday morning, May 1, I em
resigning as President of the Federal Reserve Bank of Hew Tork effective
June 30, 1956 ead wiH be on leave beginning June 1, 1956,
Mrs* Sproul and I plan to return to California, which w i l l
take me out of the practical o r b i t of participation in the work of the
Committee, This i s ray resignation, therefore, -which can become effective
whenevar tue Committee determines to accept i t between now and June 1*
If we are soon to have another meeting, and particularly i f we ere going
to find i t necessary to wind up the affairs of the Committee, of course,
I shall be glad to go through the process with the other members*
Regardless of whether or not further work can be undertaken,
I think we have already accomplished some things that were worthwhile and
the association has been for me a most pleasant and stimulating one*
-
'
"'
-
'•'•
Sincerely,
•
•
,. •
Allan Sproul
F.S #
Pllease treat this as entirely confidential until Tuesday, May 1.
April 26, 1956
Doar Hiss Began*
I called Br* Calkins this iaoming to
ask about those tuo luncheon dates, Monday and
Tuesday, "which Mr« Sproul is holding for aext
week* Br* Calkins tells me tiiat both are out,
as tfo*?= two young sen \^io were expected have
other plane. He said he was going to call Mr*
Sproul himself, but I am sanding you this word
lest Mr* Sproul not be reachable today, and
you are left wondering about those r*oons«
Hurriedly,
Mildred Adsms
Miss Mary C #
33 Liberty Street
Sew fork 45, $• X*
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
33 LIBERTY STREET, N E W YORK 45, N E W YORK
c
TELEPHONE: RECTOR 2-5700, EXTENSION 286
ALLAN SPROUL, Chairman
With cooperation of
RECEIVED
W. RANDOLPH BURGESS
ROBERT D. CALKINS
F. CYRIL JAMES
WILLIAM MCC. MARTIN, JR.
WALTER W. STEWART
JOSEPH H. WILLITS
DONALD B. WOODWARD, Secretary
MILDRED ADAMS, Executive Director
THE BROOKINGS INSTITUTION
722 JACKSON PLACE, N . W.
WASHINGTON 6, D. C.
APR 2 31956
April 20, 1956
t
Dear Miss Adams:
I am answering your letter of April 17 and your memorandum
of April 13 in this one note,
1.
I think the letter of notification officially advising
Columbia University of our grant in connection with
the Vanderlip papers can best be signed by Mr.
Woodward.
2.
I have given Hugh Leach, President of the Federal
Reserve Bank of Richmond,the invitation which you
received to attend the Woodrow Wilson Centennial
celebration at Staunton, Virginia, and I understand
that he is going to respond saying that he has been
asked by the Committee on the History of the Federal
Reserve System to attend in its behalf. Since the
original invitation was addressed to you, will you please
write to the sponsoring organization to that effect.
3.
The list of repositories which you suggest for copies
of the inventory of the Carter Glass papers seems to me
to be appropriate. I would add the University of North *-*^
Carolina and the University of Washington.
Yours faithf
Allan S
P.S.
Thank you for the information on Philip Bell. The latest
word on him from Dr. Calkins is not too encouraging, but this is
the sort of thing we have come to expect.
April 17, 1956
Dear Hr» Sproul:
Key I have word from you on a few of the items "which w**re discussed
at the Comittee meeting in Washington on Monday*
First* the grant to Columbia will of course need a letter* I called
Br, Logsdon this morning informally to tell him the good news, and found him
greatly cheered. The official announcement should be me.de to the Trustees of
Colisabia University, with a covering note to Dr. I*ogsdoiu We seem to have no
precedent for this, and I'm not aura vrhether you wLtl vant to do it or would
prefer that the letters go fro® Hr* Woodward* If you vant drafts prepared for
either, 1*11 be glad to do it.
Second, I have found further career data on Philip Bell which answers
some of the questions raised by the Comiltte** I &m sending this on to Br*
C&litins, and enclosing ® copy for you*
Third, I think you took the invitation to the Voodrov Wilson
Centennial celebration, to be held at St&unton, Virginia on April 2££th, and
were going to suggest taat Mr* Hugh X»each# President of the Richmond Federal
.Reserve Bank, represent this Coismittee on that occasion* Will you be writing
the sponsoring organ!eation to that effect, or do you want me tot the latter
clause arises solely from the fact that the original envelope waa sent to me
as Executive Director.
Faithfully yours.
Mildred Adams
Mr« Allan Sproul
33 liberty Street
New York 45, 8, I.
ERG*
March 16, 1956
Sear Mr# Sprouls
We here had n death in the family, after
long i l l n e s s , which has drained away most of &f
rasexre energy > and I am being taken South tomorrow
night (Saturday) for a week's r e s t . I expect to be
b&ek in the office on Monday, the 26th•
Jf you want to re&ch me between the 17th
and the 26tb* Mies Burstein will have en address•
I hsv© told Hr* Oalkins of tfcis necessary leave*
Faithfully yours*
Mildred Ademe
P»S#
Reports froia Mrs. Woodward sound
though Bon was s t i l l pretty sick*
Mr, Allan Sproul
33 Liberty Str««t
Sew York A5$ H* X.
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
RECEIVED
ALLAN SPROUL, Chairman
W. RANDOLPH BURGESS
ROBERT D. CALKINS
F. CYRIL JAMES
WILLIAM MCC. MARTIN, JR.
WALTER W. STEWART
JOSEPH H. WILLITS
With cooperation of
THE BROOKINGS INSTITUTION
MAR 1 2 1956
DONALD B. WOODWARD, Secretary
722 JACKSON PLACE, N. W.
WASHINGTON 6, D. C.
CQMMimEOH
MILDRED ADAMS, Executive Director
March 9, 1956
Dear Miss Adams:
The agenda for our meeting March 17, which you sent
me under cover of your letter of March 8, looks all right to me. My
suggested changes are picayune.
Yours faithfully,
Allan/proul
Enc.
Miss Mildred Adams,
33 Liberty Street,
New York 45, N.Y.
DRAFT
3/8/56
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
AGENDA
Executive Committee Meeting
Washington, March 17. 1956
Convene at 2 p.m.
I.
Report on Columbia Library project,
(Mr. Woodward)
Pilot experience with Vanderlip papers
Welcome extended to Leffingwell and Willis papers if available
II. Resolution to appropriate #1,500 as a pilot grant for handling costs of
Vanderlip papers (out of $11,000 set aside for this purpose in 1955).
III. Transfer of projects, if approved in morning meetiiog - decisions involved
Chandler life of Strong - no problems
$f f*tt
&
Kincaid-Glass Inventory to be finished -em& - distributed?
List of papers located - to be distributed?
IV. Housekeeping details connected with transfer of executive responsibility
to Brookings, if approved in eeriier Committee
Date of transfer
What arrangements for
servicing Committee?
Staff terminations
Miss Adams
Miss Burstein
Miss McKinstry (part-time)
Moving of files and materials
Card files
Books
Correspondence files
Supplies and equipment
Minute books
V.
Any word to go to liaison officers in banks- about shift to Brookings?
A
Adjourn at 3
DRAFT
3/8A6
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
AGENDA
Committee Meeting
Washington, March 17t 1956
Convene at 10:30 a.m.
I.
Minutes of Committee meeting held February 4-> 1956, copies of vhich were
distributed to Committee members February 17, 1956, (Secretary has copy.)
II• Resolution to amend the Minutes in accordance with the revision of the
"clause of enactment11 which was proposed by Dr. Calkins after the
meeting, circulated to members and approved by them.
III. Report on conference held February 21st with Dr. Norman Buchanan of the
Rockefeller Foundation. (Dr. Calkins)
IV. Reply of the Brookings'Institution to the Proposal of this Committee
that the^r assume further administrative responsibilities for this
project. (Dr. Calkins)
_V,
Report on details A. Appointment of a full-time staff member to take charge of this
project
B. Plans f o r continuing p r o j e c t
1 . Monographs t o be commissioned
-
j
Historian toHm- ftfxanti j
VI
I
*J< Seminar program
\
"2. Employment of Dr. Howard E l l i s for a major assignment
Committee action on the Brookings reply,
VII Report of t h i s action to the Foundationfl
Vlljo-tiier husiness
Luncheon at 12:4-5
March 8, 1956
Bear Mr* Sproul:
Dr» Calkins just phoned that the Brooklngs governing
entity *&ich met yesterday (l*a not sure vhether i t was Board or
Executive Committee) has agreed that Dr» Cslkine nay take on the
added responsibility of administration for this Couasittee provided
that he finds the right man to handle it*
I have been holding agenda for the meeting of March 17th
until ve heard iroc him* You v i l l find enclosed two draft agenda,
one for the full Committee meeting and one for the Executive Coaaittee, both of them highly tentative. Dr« Calkins aay want changes
made &t the last aor^ent, so I m going down on Friday, the 16th#
to help with those, I vould, howeverf b© most grateful i f you would
look these over in their present state, question me-xka and all*
lour suggestions are always so constructive th&t i t vould help to
have thea at this point even though I may neve toraftkelast minute
shifts or additions r'roa the tfrookings point of view*
Faithfully yours,
Mildred Adams
Mr* Allan Sproul
33 Liberty Street
Uev Xorfe 4.5, «• !
Enc. 2
R AFT
3/6/56
Cottfcittee Keet&flf
Convene &
I»
Minutes of Ccmaittte meeting held February 4 f 1956, copies of vhlch vere
distributed to Consitt** jabber* Pe&rmry X7# 1956* (S#0Wtey ii«s copy,)
XI* Resolution to m®n& th^ Hinuiea la f.e^rtlnno* with the reTision of the
•olausfl of «nnotcdiit11 i4iich VB« propostd by DP* Oaikias
meeting, eirtaalcited to £e©ber$ &w$ftpproredfey
IIX» Btporl on ooafer«ao« held February 2iet -with Dr« Boston Iu#i»aaB #f the
(
}
If*
Ee^f of tht Brooking a la^titatioa to &« Fropoa&X of this Oossslttoo
tiiat t^agr aspusc furi^i«r ^dminlstratlre r»sponsiMlltl#9 for this
(
O&ikins)
oa
» Appointment of R full-Um« staff ja^b^r to t^k# diftx^« cf
project
for coatiauiag project pro$rm
X« Moaogr&phs t© be coralsadened
2« HiatoriaJi to be found
3« v"J#5)in&r program
U Ssployaent of I/r, Homrd Eilie for a lEaajor aaaignment
f * Coes&ittee action on the Brooking* reply
f i t Beport of t^ds action to the Foundation!
fII«Other busing8E
T-uncaoor. et 12U5
3/S/56
Ex*oativft Cotasittae Meeting
n. .March 17* 1956
Convene at 2
I*
Report on Coli&tbi& h£bv*xy project,
(Kr« WoodmrU)
Pilot experience vlth faMerllp p&psrs
Velcoae extended to i*effts5^v-©ll and Villis papers i f available
II* EeBalution to ap^roprlf t« fl # 500 aa & pdlot grant for handling coaU of
papers (out of |X1#OOO set &sid« for thi0 purpose in 1955)•
XXI• transfer of projsots, i f approved in morning meeting - decisions i
lif© of Strarig - no psfobXaaui
Inventor/ to b« finished out I*ist ©f paper* loont®d • to be diaivlbutad?
It #
Eous«ica«piag details coanact^d vita tran»f#r of
to Brookingaf i f approved in earlier Coassitte©
Data of transfer
What arrsng^sents for
servleing
Staff
Misa Borstein
Hiss Medina try
Moving of f i l e s *®& mtariala
Card f i l e s
Books
Ccrra3pondeao« files
Supplies &nd 0quip««nt
Minu-t«i book©
V*
Any word to go to lit!son officers in banks about shift to Brooking5?
Adjourn at 3 p«&*
8 # 1956
Mr,
IX 1 ree4 Mr* Willis eorreetly, what he says In
two p«g»9 i s wSo«* l a jour l e t t e r of February 23r&9 fit the
botto© of Page 1, you stated fery clearly whet we asked of
In reply, he follow* the line he took two years ago,
fro® which I had hoped that your good l e t t e r would
divert him*
fhere must be sose reason «hy Mr# Willis fiiKia i t
to Hftvd to comprehend that what w# really want for Columbia
i© the %iiol@ collection of V i l l i s papers as such, bad as
veil a© good, t r i v i a l as well as important! ^ie bo^y of th®
Mi&*9 voric« not a. carefully sorted section of i t #iich has
been approved by the fesilly* lo tvo scholars voulcl veiue
"ttie verionB itwus from exactly the sa»e point of iriew* Itoat
we need ie tmt some a r t i f i c i a l measure of vh&% might interest
itny one student a t any one tl&«# btit everything that ha»
been left*
the problem i@ how to gay a l l this to Mr*
in a w&y that v i l l p@rsxiade him to l e t the %foole m&m of
stiiff go* Do you think that a request fro® Colurabia i t s e l f
might disar® hijat I eaa't believes he really vaats to go
•Uiroiigh a l l those boxes that ha^e stayed in the basement for
80 long. Or i s this situation hopelessly bound in 6 web of
old fear, suspicion and resentment!
JNrhaps if we shifted ground, stopped talking ©bout
the Federal Reserve System and had the request put on the
ground that Columbia wanted the viiole collection of papers
©f one of i t s active 1and important economists, so as to show
the range of the man 8 work and interests, we might get action.
Hiss MdCinstry suggests that If one of Dr.
Willis1 old students, Margaret Myers of Vessar for instance,
i<ho is Mrs. Haggct Bsckhcrt, could be inspired to show an
interest in the papers, they Eight b© recovered through
good offices of that sort*
Or would Arthur Willis, vho has, I understand,
recently left this Bank, intercede with his brother for us?
fke situation puzzles me. I hete to give up
hope of getting the pepers out, but my experience has been
that collections sorted by a fstilly hrve little but what
one might call souvenir value, Columbia would hardly v&nt
such sterile vestiges, nor -would we vent to recommend them.
If any of the ebove suggestions sounds possibly
fruitful, I vlll b« gled to follow Xhmi up* % a t I
is your judgment eg to tectics*
Faithfully yo'irs,
Mildred Adsms
Mr. Allan Sproul
33 Liberty Street
lev Xork /V5, H. Y
Committee on the History of the
Federal Reserve System
\LiZiQi
REMARKS
k cj
T?
i
id
<WIU
DRAFT
COMMITTEE ON THE HISTORY OF THE FEDERAL RESERVE SYSTEM
March 1, 1956
TO: Messrs. Allan Sproul, Chairman
W. Randolph Burgess
Hobert D. Calkins
F. Cyril James
William McC. Martin, Jr.
Walter W. Stewart
Joseph H. Willits
Donald B. Woodward, Secretary
Winfield W. Riefler
Arrangements for the meeting of this Committee on March
17th have been made as follows:
^
The Committee will convene in the lounge at the Brookings
Institution at 10:30 a.m. on Saturday, the 17th.
Luncheon will be served at Brookings at 12:U5*
The Chairman hopes it will be possible to complete the
business of the full Committee by 2 p.m., and to hold a meeting of
the Executive Committee between 2 and 3.
Mildred Adams
February 24, 1956
Bear Mr* Sproulfi
thanks so much for sending us
copies of your l e t t e r s to Messrs* Lefflng*
veil *n& Willis, I do hope those tvo
gentlemen yinld, end tht.t ve cen ^^t the
pfipers safely to Columbia in the near
future.
Faithfully yours.
Mildred
Mr, AH«o Sproul
33 Ubertgr Street
Hemorandtm on lefflngwell Papers
TOi
- • •':
Mr# Allan Sproul
FROM? Mildred Adams
BATE* February 20, 1956
Kov that Columbia has assured us that the Leffingvell papers
are welco&e there (reported to you in ay l e t t e r of February 20th), you
may want "what information we have on those papers to serve as background for e l e t t e r to Mr* Leffingvell*
The situation i s e.s follows!
Me* I#effindwell was one of ih& f i r s t "elder statesmen* v i s i t e d .
X saw him in January 1954# found him very hospitable, was assured that
he %ever kept diaries or black books of memoranda and that the papers
with which he was concerned while he was in the Treasury have stayed
with the Treasury#•
He offered to have a volyae of speeches, article**
e t c , bound for us, and kindly did s o t
Two months l a t e r (March 22, 1954) I ^ent to the Treasury, and
l a talking with one of the o f f i c i a l s (Mr* William Heffelfinger), asked
where the Iieffingwell papers weret
Mr* Heffelfinger replied that Kr»
I»effingwell had taken with him 20 boxes (volumes?) of *press-eopy
when he l e f t the Treasury*
b
When I got back to Hew York I phoned Mr*
I»effing*ell to ask ^ e r e this material was, and after a considerable
silence Mr* LeffingweUL replied* *Qh - I had forgotten about that#
I guess they must b© in the basement of my house**
In 1955 Mr* Woodward wrote Mr* Leffingwell along with a
long l i s t of "elder statesmen11 asking ebout papers and got back a
reply which* after referring to ay e&rlier v i s i t and h i s f i f t of the
1 1
g
2/20/56
* 2 *
bound Troluae, went on to say, *I gave the beet account I could of vaat
happened and nhy in ssy published essays and addresses some of vhieh were
vrlttaa in the earlier days after the events and vhile ay memory WBB
fresh*
Hovever, if there i s anything 1 can do to help you or Miss
Adams fttrther I shall be glad to do so,"
Against that baokgrotmd, I mmld hope that a r#$ueat for
a search "which -would turn up the boxes of •pr@s»~copy books* brought
from the Treasury, and the deposit of them in Coltsabia *here students
use them might be fruitful.
Mildred Adam*
on Parker Willis
TO:
Mr. Allen Sproul
fWMt Mildred Adams
MTB* February 20, 1956
As I think you kno¥# the papers of H# Parker Willis were l e f t by
will to his son, Parker 8, Willis, -who i s in the Federal Reserve Bank of Boston*
l a March of 1954 Mr, Parker B« Willis told me that his father1©
papers are in the Willis house in Staten Island, and are in tvo lots*
fhos«
papers concerning the period up to 1920 caae out of the Willis house in Washing*
ton, vere put into four or fire boxes, ^nd stored in the cellar of the Staten
Island house* TR}?®T® since 1920 (drafts, hearings, correspondence, etc*}
are in the attic*
Hr# Willis offered a t tft&t conference to go over the papers and
see if they included material o-f value to ua, provided that you nould ask for
a two veeks1 leave of absence for him on that ground*
!^y ovn preference, as you knov, would be for the pepers to go
intact to Columbia, to be sorted, classified &nd catalogued there by people
•who have no family stake in any of the old controversies in "which he va#
concerned*
The University i t s e l f h&s an interest in the papers, steaming from
Br* Willis 1 position as a member of the faculty, and I would hope that the
family was about ready to l e t go of thesw After »'U, Dr* Willis died i n
1937, tfhich i s nearly toaaty years ago*
Mildred Adams
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
wuh
W. RANDOLPH BURGESS
ROBERT D. CALKINS
F. CYRIL JAMES
WILLIAM MCC. MARTIN, JR.
WALTER W. STEWART
JOSEPH H. WILLITS
DONALD B. WOODWARD, Secretary
MILDRED ADAMS, Executive Director
\
i
\
Dear Miss Adams:
The Calkins1 alternate to the enactment clause of the
decision taken at our meeting on February 4th, which you sent me
with your letter of today, enclosing a copy of the minutes of the
meeting, is satisfactory to me.
As of now, Saturday, March 17th, at Washington
looks all right to me as the date for the next meeting of the Committee.
Yours faithfully,
Allan Sbroul
of
THE BROOKINGS INSTITUTION
722 JACKSON PLACE, N. W.
WASHINGTON 6, D. C.
February 17, 1956
Miss Mildred Adams,
33 Liberty Street,
New York 45, N. Y.
cooperation
February 17, 1956
Dear Mr, Sprouli
Two details need your attention, e change -which Dr*
Calkins would like to make in the ^clause of enactment," ®nd a
confirmation of the suggested date for the next meeting*
Y.ou will find enclosed the Minutes of the meeting of
this Committee at Princeton on February 4-th (my thenks for your
©ditiag), end also 8 revised version of the "clause of enactment*
-which was passed at that »eeting.
this revision was undertaken in conference with Dr*
Calkins and at his request. In substance it does not differ fro©
the version adopted at Princeton, but Br* Calkins would prefer to
present the Committee's proposal to the Brookings Board of Trustees
in this new -wording if the Committee approves* It can then be
added to the Minutes as an amended text*
Would you let me know if yourapprove of the revision and
of the procedure?
As for the date of %h& next meeting, Saturday, March
&t Brookinge In Washington was the on© most discussed in Princeton*
Members were asked at that time to put this date down tentatively*
If this is not possible for you, may we have your suggestions*
Jfery sincerely yours*.- -; "
Mildred Adams
Hr* Allan Sproul
33 Liberty Street
Sew York 45. H. X*
£ne* 2
February 16, 1956
D«ar Mr. Sprouli
Voodverd, r4iQ talked with Mrs*
t e l l s me that Br» Joseph V i l l l t e i s In
the Harkaesss Pevillion at the Pregbjterian. Hospit&X, He anderwnet &n operation yesterday
i s said to htva been slight, but he v i l l b«
there so&e d&ys longer* Thie n«vs aisy
have raadiad you# but i f m%$ I eia sure you
wuld -tftat to know i t *
Faithfully
Mildred
Mr. Allan Sproul
33 Liberty Street
Sev lork ^5# 8, !•
9, 1956
Deer Mr» Sproula
¥e promised to send you details of th©
schedule for the meeting of this Com!ttee at Princeton on Saturday* February 4th* yhm arraiigeaenta vert '
completed* Those arrangements are now fixed ae foilowsi
Place - I n s t i t u t e for Advanced Study*
Princeton, lev Jersey
- 10 a*m. to 4. p.uu# February #* 1956
JLunoheon - at the Institute
Members &r® asked to meet a t 10 a#m. fa th#
of the aaln building, \?here Dr» Stewart
act as guide to the conference space which i»
kindly beiog provided for us*
ROOM
M&saor&nda bearing on certain of the problems
to b® discussed should reach you about a week la
advance of the meeting* We hope to a a i l them on
January 26th.
Sincerely yours*
Mildred
Mr. Allan Sproul
33 Uberty Street
Stew Xork 45# *. *
January 6, 1956
Bear Miss Regans
Here i s VD.B complete l i s t of people vho, from 8r«
point of vi«v, should receive & copy of Mr. Sproul'g
speech.
¥• Randolph Burg*.**, Treasury
Eobert !)• Cslkiaa» Brooking8
Williem McC* HftrUn^ J r . , BOrrd
Donald B» Voodward^ Tick Che&io&l Goiapai^
?, Cyril Jaaes* Princip&l end Vice Chi»ncellor#
MeGill University, Kontpeal 2, Caaada
H» VillltB, Ibiversity of Peasngylranift,
e Eduoatlonftl Survey, Phllftdelphit 4
Walter W# Stewart, c/o Ooimnil of Eoonomio Advisere,
E
Office Building, Washington 25
Winfield W\ Hiefler, Board
IidDter V. (Taandl#3P, Eoonomicg BepfrtaieBt, FrinoetoB
Karl Bopp, Philadelphia Feder&l Reserve Bank
Wood, School of Business AdB*inistrktionf
Xfalv* of Missouri, Colurabi«i, Missouri
Thinks ever so
Mildred
Hiss Mar/ C. Regen
33 Liberty Street
Sew Xork 45 t »• X.
January 6, 1956
Dear Mr« Sproul*
From time to time someone has mumured about
the excellence of certain 3ritlsh writing on central
banking, end the ntae of E« £# S&yera, economic historian,
has been mm\tinned specifically*
Dr* Chandler thinks
highly of his small book, H£he American Banking System,11
(Oxford Press, 1943)$ from the point of view of style
and interest of writing, i t certainly has marked advantages over anything 1 have seen by Professor E l l i s .
X suppose there i s no point in carrying a
torch for an off-shore author, but I keep remembering
that the best book on the American Constitution was don©
by a Britisher, and hoping that someone like Seyere
lalght follow in Lord Bryce*s foot step 3 BO far as
American central banking i s concerned* Unless you feel
we must settle on Ellis or lose the Rockefeller grant,
I f d like to suggest him seriously,
Sayers i s a lean, sendy-heired nan with a
quick mind e,nd a quick wit, J$ yeafcs old, Cassel Profesfor of Economics a t the University of London, a member
of the Council of the Royal Economic Society and with a
good background. He wd educated a t Cambridge, has
taught at Oxford snd the London School of Economics•
He has four books to his credit* Bank of England
Operations> 189O-191A» Modem Banking (which went into
a&ncthird edition in 1951)J American Banking System;
* jfepero in English Monetary History of v*hich he was
co-editor. He klso has written papers on "The Developaent of Central Banking after Bagehot* (Economic History
- 2-
Review 1951) &n<3 "Central Banking in the tight of
Kecent British and American Experience* (Quarterly
Journal of Economics. 1949) • He seeiss Qualified to
do the definitive history or at least a monograph*
In the xecond place, I think that Chandler
himself has a wistful feeling about the history which
might be turned to account if it eould visit until
after the Strong book is finished* There has been a
feeling that it would be a mistake to put all eggs in
one basket* and I'm sure nobody vents to wait until
1957 to start the history* On the other hand,
Chandlers reputation grows with the months, he is
deeply interested, well informed* It might be possible to set up a Joint authorship with Philip Bell
of Heverford, & former pupil of whom he thinks highly*
If you think either of these worth exploring*
I will gladly do scouting behind the scenes*
Faithfully yours*
Mildred Adams
Hr# Allan Sproul
33 Uberty Street
Hew York 45, N* !
This document is protected by copyright and has been removed.
Author(s): Edward H. Collins
Article Title: Allan Sproul: He Speaks His Mind
Journal Title: New York Times
Volume Number:
Date:
January 9, 1956
Page Numbers: 32, 34
Issue Number:
Not to "be released "before 12:00 o'clock noon, December 29, 1955
REMARKS OF ALLAN SPROUL, PRESIDENT,
FEDERAL RESERVE BAFK OF NEW YORK,
BEFORE THE JOINT LUNCHEON OF THE AMERICAN ECONOMIC
ASSOCIATION AND THE AMERICAN FINANCE ASSOCIATION,
COMMODORE HOTEL, NEW YORK CITY,
DECEMBER 29, 1955
REFLECTIONS OF A CENTRAL BANKER
When you invite someone who is not a professional economist to speak on
an occasion of this sort, there is always the danger that he will try to talk like
a professional economist, and thus make a fool of himself while failing to fool
his audience. I am not a professional economist. I hate to make a fool of myself.
And I know I could not fool you.
I may have to skate pretty close to what is, for me, the thin ice of
theoretical economics, however, because although I am not a professional economist
I am a practitioner of an art which must draw inspiration from the work of professional economists. Central banking is largely practical economics, a sort of
laggard son of theoretical economics, and I have been practicing central banking
for the past thirty-five years. My long apprenticeBhip in the field is the excuse
for the title which has been given to my talk, "Reflections of a Central Banker".
Maybe that sounds as if I were going to give you some rocking chair stories of my
experience, but that is not my intention. I think it would be pretty dull. What
I would like to do is to discuss a few of the things I have observed and thought
about, while I have been an officer of the Federal Reserve System, and which I
think might merit a larger measure of interest and attention from you.
Monetary policy was in the doldrums for a number of years prior to and
during World War II. It had been running fast before a brisk breeze for quite a
while prior to that time, and then the wind died down and its sails went slack.
Big claims had been made for it as a solvent of our economic ills, and when it
couldn't support these claims there was a tendency to discard it in favor of more
direct and what might seem to be more powerful economic controls. I suspect that
somewhat the same pattern could be traced in the interest of economists, and particularly the younger economists, in the problems of central banking. For a time,
preceding and following the passage of the Federal Reserve Act in 1913> such
problems attracted a lot of men. Then it began to appear that more important work
could be done, or more hay could be made, in other branches of economics, while
interest in central banking suffered a relative decline. Now there has been something of a renaissance in the use of monetary policy as one of the means of
achieving greater economic stability, without sacrificing too much economic freedom. If we are careful not to claim too much for it, it may hold its place. And
I am hoping that central banking problems will similarly recapture the interest of
a new generation of economists.
Let me speak first and most particularly about the Federal Reserve System,
its organization, its policies, and its techniques. You all know the general organization of the System, but you may not all be aware of the evolutionary changes which
have been taking place within the general organization. The main outlines of the
System are much as they were when the System was established forty-one years ago;
a regional system, federal in character, with a national coordinating and supervisory "body at Washington and twelve regional Federal Reserve Banks which are the
operating arms of the System in their respective districts.
Within this framework, however, there has been a definite tendency for
power and influence to gravitate toward the center, a corollary of developments in
other areas of social, political, and economic organization, as well as a result
of growing familiarity at the center with the means of accomplishing things at the
periphery. Fortunately, I think, for the development of the System and the good
of the country, this tendency has not gone so far as to destroy either the federal
character of the System in terms of policy formation, or its regional character in
terms of policy execution.
That this is so, is largely due to the development of the Federal Open
Market Committee, and its evolution as a "body in which the various parts of the
System are represented not by blocs, not by opposing groups of members of the
Board of Governors on one side and Presidents of Federal Reserve Banks on the
other, but by individuals having equal statutory authority and equal statutory
responsibilities with respect to one of the most important functions of the
System, namely, open market operations.
It is true that the means of credit control, other than open market
operations, are scattered about the System in what seems to be an illogical manner.
Discount rates are fixed by the Boards of Directors of the individual Federal
Reserve Banks, but are reviewed and determined by the Board of Governors, and the
setting of reserve and margin requirements is wholly a charge of the Board of
Governors. But all of these measures of credit control must be integrated and used
as a common kit of tools. The Federal Open Market Committee provides the forum
where discussion of their coordinated use can take place without unnecessarily infringing upon the rights and duties of other parts of the System. The illogical
in terms of organization charts and precisely drawn lines of authority, becomes
logical in terms of the evolution of a body which appropriately and effectively
represents all parts of the System.
It may be useful to recall how this unique arm of the System developed,
not from some sudden inspirational attack on the problem of bringing national
unity to a regional central banking system, but by trial and error during a shakedown cruise of about twenty years duration. In the beginning, adjustments of the
reserve positions of member banks were made entirely through the discount window.
Early open market operations emerged in the form of an attempt by individual
Federal Reserve Banks to supplement their earnings. It soon became apparent that
the effect of these purchases and sales of Government securities (and bankers
bills) was to put reserves into the banking system or to take them out without
regard for what might be credit policy at the time. The first informal attempt
to correct the situation was the adoption by the Conference of Governors
(Presidents now) of Federal Reserve Banks, in 1922, of a policy of buying and
selling Government obligations in an orderly and systematic manner, and the
appointment of a committee of five Governors to see that this was done. This
loose arrangement was tightened up somewhat by the Federal Reserve Board in 1923,
and the rule was adopted, which has since become a statutory principle of open
market operations, that the time, character and volume of such operations must be
governed with primary regard to the accommodation of commerce and business and to
their effect on the general credit situation. In 1930 an open market policy
conference was created which included a representative of each of the twelve Federal
Reserve Banks. Statutory recognition of and restraint upon this particular method
of conducting open market operations was legislated in 1933 .> when the "banking act
of that year created a Federal Open Market Committee and prohibited open market
operations of Federal Reserve Banks except in accordance with the regulations of
the Federal Reserve Board. The Federal Open Market Committee in its present form
came into being with the passage of the Banking Act of 1935, which also made it
mandatory for Federal Reserve Banks to engage in open market operations in accordance with the directions and regulations of the Committee.
So far so good. Evolution has proceeded by a process of natural selection toward a higher form of organism, which retains some of the desirable characteristics of regional organization within a federal system, while acquiring the
powers necessary to a coordination of national policy under present day conditions.
This organism has survived for twenty years and given evidence of being able to
adapt itself to environmental change.
There are those, however, who see in the persistence of present regional
representation on the Federal Open Market Committee, a serious flaw in our credit
control machinery. They appear to believe that this has enabled the poachers to
remain on the Committee along with the game wardens, in the person of the five
Presidents of Federal Reserve Banks who are members of the Committee along with
the seven members of the Board of Governors. The Presidents of the Federal Reserve
Banks, they say, are selected by the directors of the Banks--to be sure, with the
approval of the Board of Governors. The nine men who serve as directors of Federal
Reserve Banks include six men elected by the member banks of their district, and
three of these men are bankers, Ergo, the Presidents of Federal Reserve Banks are
the representatives of the member banks and, in political terms, must be responsive to the wishes of their constituents or they won't be Presidents very long.
And so, it is claimed, the group which is supposed to be regulated and controlled
has at least one hand on the controls, or at least five fingers in the pie.
This line of chain reasoning has its appeal if you believe that the
Presidents of Federal Reserve Banks are so beholden to commercial bankers for their
jobs, and so lacking in awareness of their statutory responsibilities, that they
cannot honestly serve the public interest as members of the Federal Open Market
Committee. The fact is, however, that the relation between a President of a
Federal Reserve Bank and the bankers of his district is not that of an elected
representative and his constituents or an employee and his employer. The present
somewhat complicated arrangements for the election and appointment of directors
of Federal Reserve Banks, and for the appointment of Presidents of Federal Reserve
Banks by these directors, have instead a double virtue. First, they inject into
the System's conduct of its every-day affairs the standards of efficiency and
practical judgment that well-chosen business executives can provide from their
own experience—and that includes everything from judging the fitness of a man
to administer the complex operations of a Federal Reserve Bank to the maintenance
of its plant and equipment. This has contributed to an operating performance
which has protected Federal Reserve Banks from much of the criticism which is
levelled against other institutions not prodded toward efficiency by the profit
motive. Second, these electoral arrangements keep the Presidents of Federal
Reserve Banks directly in touch with men who are aware of banking and credit
conditions and economic developments in their districts, and who can help to
interpret credit policy to the banking, business, and agricultural community, without making the Presidents subservient to whatever may be the selfish interests of
any group in the community.
On the even more important level of policy formation, the problem is not
comparable to that faced by a Government regulatory body fixing rates and conditions of service under monopoly or semi-monopoly conditions, nor to the problem of
an administrative tribunal watching over observance of the law. The: main problem
of the central banking system is the appraisal of major developments affecting the
whole economy and the formulation of a policy which will influence the money and
credit sector of that economy so as to contribute to the stability of the economy
as a whole. This is a" public service which requires of its practitioners continuous contact with economic processes, and with people in the market places of
the country as well as with the representatives of Government at its political
center. It requires practitioners with an awareness of the problems of an economy
which is neither wholly private nor wholly public in character. It requires practitioners who are insulated against narrow partisan political influence on the one
hand, and against narrow selfish private influence on the other, but who are responsive both to broad Government policies and to the importance of private initiative and private enterprise in giving support to those policies. In my view there
has been developed in the Federal Reserve System in general, and in the Federal
Open Market Committee in particular, a unique contribution to the democratic
administration of such a task. There is no conflict of interest in this administration.
I have spoken of this matter of organization at some length because I
think it is vital to the preservation of a Federal Reserve System which retains
regional vigor in a national setting, and because attempts to destroy the Federal
Open Market Committee, as presently constituted, have been made from time to time.
In fact, a bill has been resting in a Congressional committee for the past year,
which would abolish the Federal Open Market Committee and transfer its functions
to an enlarged Board of Governors of the Federal Reserve System. That way lies
a revolution in the organization of our credit control machinery. I believe that
this is a question which goes well beyond the mere mechanics of organization, and
which needs and deserves your closest scrutiny as citizens, as well as economists
and men of finance.
So much for organization. Now for a reference to policies. The preamble
to the Federal Reserve Act says that the Federal Reserve System is to be concerned
with the provision of an elastic currency, affording a means of rediscounting commercial paper, and establishing a more effective supervision of banking in the United
States, and for other purposes. Well, the "other purposes" have long since stolen
the show, as must be the case when the manifold objects of an economic experiment
are compressed into a few words, no matter how well chosen. We are all now engaged
in an attempt to prevent the occurrence of wide and deep economic fluctuations and
to mitigate the hardships of the smaller cyclical fluctuations and the necessary
internal adjustments of a dynamic, growing, relatively free-choice economy.
The role of the central banking system in this attempt to achieve better
balance in our economy has never been spelled out specifically, and probably cannot
be. We were not specifically mentioned in the Employment Act of 1946, which gave
expression to the present general concept of the economic role of Government, but
our share of the general responsibility derives largely from that expression of
national policy. I have always felt, however, that if we are to be true to the
explicit requirements of our own charter, we must emphasize the implicit requirements of this broader charter, by combining stability of the purchasing power of
the dollar with the promotion of the most effective possible utilization of our
resources. We must be alert to oppose both inflationary and deflationary pressures, either one of which can upset the precarious balance of a high employment,
high production, high income economy.
We are pretty much all of one mind, I take it, when it comes to opposing
deflationary forces which threaten a waste of human and material resources. But
there is no such unanimity when inflation--usually trotted out as mild inflation-is in prospect or in being. Here is a central banking problem with respect to
which we should, perhaps, have had more help from you than you have so far given
us. Are we right in the belief that stability of the dollar and a growing high
level economy are compatible? Or, at least, are we right in our belief that there
are so many forces in the economy which now exert inflationary pressures, as to
make it likely that our role will generally be to resist those pressures in the
interest of sustained economic growth? The siren song of gradual modest inflation, if it be that and not the music of the spheres, appeals to many groups,
political and economic. There is a tendency to relax and enjoy the sound of more
money in the cash register, and the appearance of more dollars in the balance
sheet and in the pay envelope. The problem has become a fundamental one in the
administration of monetary policy, and your advice and counsel and, indeed, your
leadership are needed.
There are those,of course, who think the answer has already been given, and
that our powers have been reduced to exerting a gentle tug on the reins from time
to time, which is really administered by the horse. With that I cannot agree; I
cannot bear witness to the impotence of our central banking system. It still has
considerable power, even though we recognize, as I think we must, that general
monetary controls can no longer be used so drastically as to bring about a severe
restriction of the money supply with restriction of income, production, and employment in its wake. In this we would only find support if we were faced with
a runaway inflation due solely or primarily to monetary causes. That is an
emergency we have not had to face, and certainly do not have any desire to face,
even though the actual experience of such a catastrophe might subsequently make
for broader public understanding of the anti-inflationary steps we must take from
time to time. In developed countries which have experienced hyper-inflation the
central bank has only to mention the word inflation to bring a large measure of
public support to a restrictive credit policy. When we mention inflation as a
reason for trying to restrain a boom, which shows signs of temporarily exhausting
physical capacity to increase the supply of goods and services, and in circumstances when further injections of bank credit are likely to show up largely if
not entirely in increased prices, we are apt to be charged with crying wolf when
there is no wolf, to be denounced as apostles of deflation. And if actual inflation does not develop, perhaps because we have done our job of helping to curb
its development, the accusation against us seems to gain increased validity. You
can see why I would like to have aid and comfort in resolving doubts about our
ability to combine a stable dollar with a growing, expanding, high level, peacetime economy.
Another aspect of policy formation "which concerns me is whether or not
undue reliance is now being placed upon the judgments of men, and whether we should
seek some automatic or mechanical guides to policy action. I do not think that we
have been led too far astray by reading our press clippings. When it is said of
the Federal Open Market Committee that "these twelve men have more financial power
than any other official body in United States history", we may think it will impress our children and grandchildren, but we are also humble enough to recognize
that the power we wield is a circumscribed one which cannot be wielded arbitrarily
or capriciously. In the first place, it is a power exercised by a group of individuals of differing backgrounds and talents, and with differing approaches to
the policy actions upon which they must finally agree. There are checks and balances such as are characteristic of our whole concept of Government, which give
assurance that decisions will be reached by a deliberative process, and that power
will not be wielded by an individual who might acquire the habits of a despot. In
the second place, it is power exercised in the white light of full disclosure:
weekly, monthly, and annually our actions are publicly reported for all to examine
and to judge. Finally, it is power exercised within the limits of national objectives and public tolerance, which would not permit the Committee to indulge a sense
of power or to experiment rashly with it, even if it were so inclined.
But to recognize the limitations of our powers is not to deny their importance. We must and do take them very seriously. We realize that we are trying
to measure and adjust the flow of credit in a money economy, and we are steeped in
the belief that whether the economy works well or poorly depends in part on our
success or failure in discharging our responsibilities. And therein, I think,lies
a danger. The oppressive character of such a heavy responsibility leads men to
seek some automatic or mechanical device as a guide to policy action, in order to
remove the risk of exercising fallible human judgment. The gold standard, as it
existed during the latter part of the nineteenth century and the early years of
the present century, largely performed this role in those countries which had
central banks and which looked first and almost entirely to the state of their
balance of payments and the size of their gold reserves in formulating central
bank policy. Those "good old days" began to pass into history, however, when
central bankers began consciously to interfere with the effects of inflows and
outflows of gold upon the domestic credit situation and, through it, upon the
domestic economy. They receded further into limbo as national policy became more
and more oriented toward the maintenance of high levels of production and employment at home, and tried to fit together the international and the domestic situation without subordinating one to the other.
And yet there have been and no doubt are serious students of central
banking who believe that it cannot function properly without a "norm" of behavior,
or a mathematical equation, which will tell its human guides what to do and when
to do it. In the present state of our knowledge of the functioning of the economic
world, and despite the flood of available statistics which- never seems to be out
of spate, I do not believe that we can now devise a "norm" or an equation, which
will relieve us in any substantial and consistent way of the necessity of exercising human judgment in discharging our responsibilities. What we need is not just
a catalogue and synthesis of symptoms, but an appraisal of a whole situation, including the complex reactions of human beings--businessmen, labor leaders, consumers, politicians. Early in my career in the Federal Reserve System I read a
statement by Allyn Young which impressed me then and impresses me now:
7
"In fact, we can be certain that reliance upon any simple rule
or set of rules would be dangerous. Economic situations are never
twice alike. They are compounded of different elements--foreign and
domestic, agricultural and industrial, monetary and non-monetary,
psychological and physical—and these various elements are combined
in constantly shifting proportions.
"'Scientific' analysis, unaided, can never carry the inquirer to
the heart of an economic situation. Judgment and wisdom--the power
to take a complex set of considerations into account and come to a
balanced view of them--are quite as much needed as facts and theories.
The Federal Reserve System needs to operate in the light of all the
information it can get, and it needs to have this information organized and analyzed in such a way as to give the maximum amount of
illumination. But it also needs the guidance of that practical wisdom
which is born only of experience."
If in our time, however, with increasing knowledge of how credit policy
works, we can discover a "norm" of action, or a mathematical guide to policy, our
task would be greatly simplified. To do that, we shall have to know more than we
yet know about how monetary and credit policy actually affect the economy, as a
whole, and in its various parts, and with what leads and lags. This will mean
deep probing into the operations of our money and banking system as it is now
constituted, and into the effects of changes of monetary and credit policy upon
the whole economy working through the banking system. Until this job is further
along, a good motto for central banks may continue to be the lines of the poet
"Our stability is but balance
And wisdom lies in masterful
administration of the unforeseen."
I am now going to turn to one of the techniques of execution of central
bank policy, partly because it has importance from a general economic standpoint
which, transcends its purely technical trappings, and partly because it has been
the subject of some public comment and discussion during the past year or two. I
refer to the range of open market operations; whether such operations should be
rigidly confined to short term Government securities, except under the most unusual circumstances, or whether a willingness at times to operate over the whole
range of maturities of Government obligations would provide a better means of
making credit policy effective. I am not going to reiterate all of my own views,
which are already in the record and which are distinctly minority views within
the Federal Open Market Committee. There are as yet no absolutes in this business,
however. Those who advocate, and I who oppose, the present techniques of the
Federal Open Market Committee are merely climbing the hill on opposite sides,
trying to reach the same summit of knowledge and effectiveness.
But I do think that the question is one worthy of the attention of at
least some of you who are here today, not merely as a matter of casual comment in
panel discussions, or writings on other subjects, but as something which has real
economic significance and deserves serious study. And I am encouraged in this
opinion by the articles which have appeared in the journals during the past year.
If the present technique derives from a too rigid application of supposed classical
economics to problems of money and credit, we need enlightenment from you.
8
I had supposed that the classical economists, the men of private property
and free markets, didn't think that free markets could provide everything necessary
to the public good, and that if they were our contemporaries they might have
thought of the market for money and credit as something separate and apart from
other markets, and as an appropriate area of intervention by Government or agencies
of Government--intervention at that cross-section of the economy where the public
need for some overall economic guidance toward stability could be provided with a
minimum of direct intrusion into the details of production and distribution. And
I had supposed that this would mean central bank action to help the market in
determining the significant characteristics of the maturity structure of interest
rates implied by the kind of credit policy being pursued--not to try to set decimal
points on daily quotations, nor to peg a curve, but to nudge the market in the
direction sought by credit policy. And finally I had supposed that the effects of
increases or decreases in capital values, arising from changes in long term rates
of interest, were becoming more and more important in an economy in which public
as well as private debts have become so large a part of our so-called assets, and
that some direct intervention in this area might at times be appropriate. Whether
or not these or contrary suppositions are true, it seems to me that this matter of
open market techniques involves problems of economic significance beyond its
immediate technical application, and that it deserves your study and your published findings.
There is another area of credit administration which can be brought under
the loose heading of techniques. That is the problem of selective credit controls,
and particularly the control of consumer instalment credit. I suppose that all of
us who have a bias against detailed planning "from above" would prefer that credit
policy accomplish its major aims by general quantitative controls which work impersonally but pervasively, and without interfering directly with individual transactions. But if there has grown up a form of credit extension which, no matter how
prodigious its contribution to mass production and mass consumption, is also introducing a dangerous element of instability in our economy, and if it is difficult
to reach this credit area by general credit measures without adversely affecting
all of the less avid users of credit, is there not a case for a selective credit
control? Thackeray says in Vanity Fair:
"Everybody must have observed how well those live who are comfortably and thoroughly in debt; how they deny themselves nothing; howjolly and easy they are in their minds."
Well, I am not jolly and easy in my mind. I am disturbed by the present
situation in consumer instalment credit, just as I was concerned, under different
conditions and for different reasons, about stock market credit until the Board of
Governors was given power to establish, and to vary, margin requirements. I am
disturbed not by the total amount of consumer credit, but by the fact or the
indication that successive relaxation of terms has been largely responsible for
keeping the ball in the air. This is a process which cannot go on indefinitely,
and when it ceases there will come a time when repayment of old debt will catch
up with new extensions of credit. The special stimulus of a rapidly increasing
net supply of consumer credit, which has contributed so much to the record production and distribution of consumer durable goods during the past year will then
be gone, at least temporarily. Will it then become clear that we drove our productive capacity to unsustainable limits—for the present-- by borrowing consumer
demand from the future?
This is a subject on which many voices have expressed many views, but
usually they have not been views which seemed objective enough to help resolve the
question in the best interests of society as a whole. I know that there are those
who believe that selective credit controls are a dangerous step on the road to
general overall planning, and I have no desire to become a fellow traveler on that
road. But I do believe that there is a temptation to abuse consumer credit in
boom times, that it can thus become a serious source of instability in our economy,
and that we would not jeopardize our general freedom from direct controls by giving
the Federal Reserve System permanent authority to regulate consumer credit. I
freely admit, however, that this view would be better held if it were based more
firmly on objective study and research into the place of consumer credit in our
economy and less on observation and opinion. That is the sort of basis for consideration and action which you could provide.
The same or something similar might be said of mortgage financing, but
I shall not try to go into that. Economics and social objectives become intermingled so fiercely when housing is discussed as to make calmness and objectivity
a handicap, if not a badge of moral delinquency.
The basic question involved in both cases is whether an attempt should be
made through regulation of these specific types of credit to exert a stabilizing
influence on areas of the economy which, in the past, appear to have been major
sources of instability of employment and production, or whether we should be content with efforts to regulate the overall availability and cost of credit, hoping
that fluctuations in the major areas of the economy will balance out. Our experience, thus far, suggests to me that general credit controls can exert an effective
influence on these particular types of credit only with a considerable lag, and
that we cannot rely upon countervailing forces in the economy to maintain overall
stability.
Perhaps you can see where I have been heading in these somewhat random
remarks, which have touched on a few aspects of central banking organization, policies, and techniques, while not mentioning others of equal or, perhaps, even greater
importance. In general my purpose has been to frame a plea for help. A plea that
theoretical economics come more steadily and effectively to the aid of practical
economics in such fields as central banking.
I recognize that theoretical economics is the basis of practical economics. And I recognize that theoretical economists, in our time, seem mostly to
have preferred to work on general principles, or on building models of economic
performance, rather than on economic policies and their effects. I have not the
competence to challenge the value of their work, but I question whether it is
enough. I question whether economists individually and as a group can fulfill
their obligations as citizens, as well as students and scholars, if they do not
try to bring these interests together. I would say we need a revival of political
economy, and I would invite you to look on central banking as a good place to
start. The economists of an earlier day did not hesitate to jump into the thick
of battle over current issues, and it did not seem to lower their academic standing then nor should it now. They were pamphleteers, they organized and participated in public meetings and discussion groups, they brought their influence to
bear in any way they could on public officials and private citizens. They were
pungent and provocative in debate. Macaulay said of James Mill and his followers,
10
on one occasion, "These smatterers whose attainments just suffice to elevate them
from the insignificance of dunces to the dignity of bores." Perhaps that sort of
thing is a little too violent for our present mood and condition. But it might be
better than withdrawing completely into a realm of esoteric jargon, or indulging in
an excess of politeness in dealing with your peers and your public, so that issues
are seldom drawn clearly enough to attract public attention and promote public
understanding. By your studies and your research and your application to the problems of economic theory, you have earned the right to be heard, and to give some
sense of continuing direction to official action and to public opinion. I would
like to see that right more vigorously exercised.
I feel that it could be exercised more vigorously and to advantage in the
field of central banking. We have excellent research staffs in the Federal Reserve
System; able economists and statisticians and devoted students of money and banking
problems. But their work needs more cross fertilization and critical analysis by
thoughtful and disciplined minds outside the System, who can apply their talents to
this special field without the bias of an organizational viewpoint. Not enough
work has been done, I would say, on the monetary problems of a mixed Governmentprivate economy, on the functioning and form of a fractional reserve banking system
in such an economy, on the growing importance of other financial institutions, which
criss-cross both the fields of commercial banking and investment banking, and on the
performance and characteristics of our money and capital markets. These are subjects which are becoming critical in the development of central banking.
You have tended, I venture to say, to occupy yourselves too much with the
refinement of old ideas which are no longer wholly relevant, with the cataloguing
of new economic processes, with the application of mathematical equations to situations too dependent on human behavior to be amenable to such treatment, or with
building Utopian models of the dream world of the future, while neglecting the hard
but rewarding task of studying the present in a way which would contribute effectively to public policy and private well-being. If you will not use it against me,
I would say that you have left the latter task to the improvised judgments of practitioners who have lacked the time or the equipment needed to work out a coherent
and consistent basis for the actions which they must take.
It is said that there has been a renaissance of monetary and credit policy
in recent years. In fact, some extravagant claims are again beginning to appear
concerning the power and influence of monetary measures in curing or ameliorating
our economic ills. Governments may be tempted to commit or condone economic errors,
in the hope that monetary policy can redress the balance, and in the hope that the
central banking system will stand as a buffer between the Government and an electorate which chafes at restraint. We shall have to guard against asking too much
of monetary policy. But it is a fact that monetary measures have re-established
themselves, and rightly so, as one of the principal means used by governments to
try to keep national economies in order without the stifling restrictions of more
direct physical controls.
What I would now like to see is a renaissance in the study of money and
banking in general and of central banking in particular. I would like to see a
fresh and thorough examination of our existing banking and credit machinery and our
money and capital markets. I would hope that out of such study and examination
would come new ideas and new proposals which would give shape and direction to
future public policies and private actions. It would be a task worthy of the best
talent you can bring to bear on it.
@FedFRASER