FRASER just added the papers of G. William Miller to its research collections of archival materials covering the Federal Reserve System and the U.S. economy. Although hardly a household name, Miller is notable for being the only person to serve as both Chairman of the Federal Reserve (1978-1979) and Secretary of the Treasury (1979-1981).[1] His papers, held at the Jimmy Carter Presidential Library and Museum, offer a fascinating glimpse of the economic policy world of the late 1970s.
Although Miller came from the corporate world, not from banking or economics, he was interested in public policy and was a staunch supporter of equal employment opportunity and jobs programs. Miller served as Chairman of the Industry Advisory Council for President Kennedy’s Committee on Equal Employment Opportunity in the early 1960s. He was also a member of the National Alliance of Businessmen, formed in 1968 to foster cooperation between American businesses and the government to meet the challenges of unemployment.[2]
Miller began his Fed career in 1970, when as CEO of Textron, Inc. he was chosen as a Class B director[3] of the Federal Reserve Bank of Boston. In 1978, President Carter nominated Miller to replace Arthur F. Burns as Chairman of the Board of Governors of the Federal Reserve System. He was the first member of the Board of Governors to face a Senate confirmation vote, following the changes in the Federal Reserve Reform Act of 1977. His record on jobs and his membership in business coordinating groups, as well as his view that inflation and unemployment should be “tackled simultaneously,” made him an attractive candidate for the position.[4] The formal Senate review of his nomination spanned three days of hearings in early 1978 and a four-part staff investigation of his background and the operations of his company. Miller was confirmed by a unanimous vote.
While Miller’s nomination was under review, events throughout the United States and world were increasing stress on the economy. Stepping into his new role as Fed Chairman in March 1978, Miller was faced with a burgeoning economic crisis: high oil prices, a weak bond market, high unemployment, and a falling dollar. He did not support aggressive interest rate action against inflation, preferring instead to continue to follow the Federal Open Market Committee’s (FOMC’s) policy of modest increases within a target range.[5] This strategy created a combination of stagnant growth and rising inflation that soon became known as “stagflation.” Members of the Carter administration advocated for increasing the interest rate prior to an April 1979 meeting of the FOMC, during which Miller argued against the rate increase and was outvoted by the Board of Governors.[6] Nevertheless, Miller continued to insist that an aggressive interest rate increase would hurt the growth of the economy and do nothing to fight inflation, a position he explained in a speech. The dollar’s value dropped sharply during his tenure, and inflation exceeded 12%.[7]
In August 1979, after less than 18 months on the job, Miller was appointed Secretary of the Treasury by President Carter, who named Paul Volcker, then president of the Federal Reserve Bank of New York, to replace Miller as Chairman in a “reshuffling” of the president’s cabinet.[8] During his tenure at the Treasury, Miller faced as many crises as he had as Fed Chairman. He played a role in the Chrysler Loan Guarantee Board, which oversaw the management of a loan to rescue Chrysler from bankruptcy, and managed the freezing and partial unfreezing of Iranian funds held in the United States during the Iran hostage crisis. Miller also managed to achieve an accord with labor unions, particularly the AFL-CIO, on wage-price guidelines. According to documents related to the creation of the guidelines, the accord was intended to “guide the [Carter] Administration’s economic policy on inflation, countercyclical programs, pay-price policies, international matters, and energy.”
Finally, after just three years of economic policy leadership, during one of the most turbulent periods in U.S. economic history, Miller resigned at the end of President Carter’s term in January 1981 and founded G. William Miller & Co., a Washington private investment company. Steep inflation continued to plague his successor, Paul Volcker, whose aggressive policy moves finally reduced the inflation rate to 4% by the end of 1982.[9] G. William Miller never returned to public office.
To learn more about G. William Miller, see his Federal Reserve History biography, his statements and speeches, or dig into his papers on FRASER.
[1]Robert D. McFadden. “G. William Miller, Former Chairman of Federal Reserve and Treasury Secretary, Dies at 81.” The New York Times, March 19, 2006.
[2]“G. William Miller: A Guide to His Papers at the Jimmy Carter Library.”
[3]Pursuant to the Federal Reserve Act, each of the 12 Reserve Banks is subject to the supervision of a nine-member board of directors. Directors are divided into three classes—Class C, Class B, and Class A—of three directors each. Class B directors are elected by the member banks in their respective Federal Reserve District to represent the public.
[4]Clyde H. Farnsworth. “Burns Is Out as Chief of Fed.” The New York Times, December 29, 1977.
[5]Laurel Graefe. “Oil Shock of 1978-79.” Federal Reserve History.
[6]Miller’s tenure as Chairman has the highest rate of dissents per FOMC meeting as of 2015. See the following paper, which includes an infographic: Daniel L. Thornton and David C. Wheelock. “Making Sense of Dissents: A History of FOMC Dissents.” Federal Reserve Bank of St. Louis Review, Third Quarter 2014, pp. 213-227.
[7]David E. Lindsey, Athanasios Orphanides, and Robert H. Rasche. “The Reform of October 1979: How It Happened and Why.” Federal Reserve Bank of St. Louis Review, March/April 2005 (Part 2), pp. 187-236.
[8]Art Pine, John M. Berry, and Washington Post Staff Writers. “Fed Chairman, Carter Adviser Named.” Washington Post, July 26, 1979.
[9]Graefe.
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