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For release at 11:00 a.m.
Central Standard Time
May U, 1961


Remarks of G. H. King, Jr.
Member of the Board of Governors
of the
Federal Reserve System
before the
Fourth Annual Southern Trust Conference
Jackson, Mississippi
May U, 1961


I am happy to be with you today.

As a member of the Board

of Governors of the Federal Reserve System, I am kept quite busy with
many administrative duties, but I believe it is an equally important
part of my job to keep old contacts alive and make new ones.

Many de­

cisions are made in Washington, but the thinking that produces such
decisions is going on all over America before it reaches Washington.
As a consequence, I always feel it is a privilege to have an oppor­
tunity to leave the city on the Potomac for a visit to grass-roots

Many who inhabit the beautiful city of Washington believe

that it is the fount of true wisdom, but in this I do not agree.


great wisdom of America is scattered across the entire United States
and no section has a monopoly on wisdom.
Having indicated that I came here hoping to learn, I am now
in the awkward position of being expected to talk when I would prefer
to listen.

I remember the adage that one of Washington's political

sages uses to help orient young Congressmen.
talking, you ain't learnin'."

He says, "When you're

Even though I believe there is a good

deal of truth in this statement, I will now proceed to talk, but I
do promise you that it will not be lengthy in the hope that my return
to silence will afford me an opportunity to learn from you.
I do not believe it would be wise for me to try to give you

trust officers a lot of advice as to how you should do your job. As
you possibly know, I come fropr^^\x§%ry and my experience has been
mostly in that field.


h sye -not had an opportunity to

observe the deeper workings of trust machinery.

But I believe the

Federal Reserve and you, as trust officers, have a common ground of

That interest is the integrity of the dollar.

While our

job could be described as joint trustee (with Congress) of the MintegrityM
of the dollar, your job is as trustee of dollars.
Funds you administer are the result of saving by someone who
had confidence in the future purchasing power of the dollar.

If we

should foresee a time when this type of individual doubts the future
of the dollar, the incentive to save is diminished and we could normally
expect a decline in flow of funds to trusts.

Such a decrease in flow

of savings would impair the ability of the economy to create enough new
job opportunities.

As you perhaps know, the number of youngsters reach­

ing age 18 will jump about 50 per cent by the middle of this decade.
Your expectations of the future stability of the dollar ob­
viously affect your investing decisions as between equity and fixed in­
come securities.

Your decisions as to the use of trust funds affect

economic growth and also employment opportunities which we know are
needed in increasing numbers.

Thus, the way you administer trust funds

has an effect on long-range problems, as do our actions in the field of
monetary policy; but, just as monetary policy alone cannot solve these
problems, neither can your work alone solve these problems.

Our efforts —

yours and mine —

Others with

can make a contribution, but that is all.

a responsibility to make a contribution must face these same problems
if they are to be solved or minimized.
From what I have said, I believe it is apparent that you and
I have a common interest —

the integrity of the dollar.




Now I would like to turn to a related question that keeps
coming back to me again and again:
its new position in the world?

How will our country respond to

I say new position because in recent

years our nation has developed the habit of sending more of our funds
abroad than we take in from the rest of the world.

Of course, this is

partly a result of our assistance to foreign nations in the development
of their economies subsequent to World War II. We have helped them be­
come productive and prosperous because we know that weak allies are al­
most as bad as none.

But now that our allies in the cause of freedom

and competitive enterprise are strong, our competitive position in
world trade is challenged by these same allies.. Statements are made
that we have "priced ourselves out of the market." While this is true
in regard to some items, we should not overlook the fact that we still
run a substantial trade surplus in our international balances.

But de­

spite this surplus from trade, other commitments which Congress has be­
lieved necessary as part of our role in world leadership produce the
Speculators have been challenging our position as reserve
banker to the free world.
abated at the present time.

This threat to our power and prestige has
Perhaps a wiser appraisal would be to say

that this threat has merely been postponed.
gone away forever.

We all hope that it has

But, do we dare take unnecessary chances?

not, because the stakes are high.

I hope

Fate, the sculptor, is working hard

now to create a new and great profile in courage. We should hope the
appointment for the sitting will be kept; indeed, the fate of the great
American vision of freedom might hinge on the courage of one man.




There are only two courscs of action, as I see the matter.
Either we assume the burden that goes with responsibility or we decide
that responsibility just isn't for us and, accordingly, we abdicate our
position of leadership in the world.

The latter is an unpleasant thought,

but it is one that we must contemplate.
I heard a distinguished historian speak a few days ago, and
he said that what is different about our position in the world today is
that we are closer to both of these possibilities than we ever have been

Time will eventually require a decision from us.

The world will

probably allow us adequate time to make a decision, but I doubt that it
will permit us to avoid one.

Another way to express our position might

be to say that the world is waiting to see if we Americans, who live in
relative plenty, can curb our apparently insatiable desire for more money
and less work.
Ky father has demonstrated to me many times the advantages of
bein£ deliberate and slow in decision-making.

And I have seen the pas­

sage of time solve many problems much better than man could have done
in a sense of urgency.

But the nature of some problems is such that

they become more aggravated by timidity and hesitation.

Of course, the

problem to which I refer is the perennial deficit in our balance of pay­

Perhaps it will just go away if we do no more in attacking it

than we are doing today.

I do not believe it will.

Until we take more

positive steps than we are at present, it is difficult to see how we can
launch into a period of rapid growth.

As long as our future course is

i \ d o t t the economic wheels will probably have difficulty in reaching
full speed.




As I have said earlier, the Federal Reserve System cannot
solve this pressing problem.

While we can be helpful, the problem is

one which all our people must solve together.

Reverting to my earlier

affirmation of faith in the good common sense of our people as a whole,
I see a basis for optimism.
mitted to those in authority.

But this grass-roots thinking must be trans­
Here, then, is a responsibility and a

challenge to all private citizens — a responsibility to be informed
and to inform others — and a challenge to find ways to make one’
thoughts understood.

These are the minimum obligations of citizenship

under our humanistic form of government.
A logical question we might ask is this one:
contribution can the Federal Reserve make at this time?

What additional
I believe that

our present position in international economics will require us to work
toward a greater liaison with our foreign friends in international finance
than we have achieved in the past.

Our future and theirs are intertwined.

More frequent contact and better liaison require confidence on both sides
of the Atlantic.

The apparent need for close cooperation is brought into

focus by the recent organizational meeting of the Organization for Eco­
nomic Cooperation and Development in Paris.

I do not suggest that we

allow anyone else to make our decisions for us because I am convinced
that our best interests would not be served by any loss of sovereignty.
The problem of international money flows has become a bigger
one in recent years and has prompted much thought.

Some have suggested

One suggestion has been that some sort of World Federal Re­

serve be organized, but I can hardly believe that the American people
would consent to our participation because an inherent part of any such




plan is a loss of sovereignty to the participants.

The effect of such a

plan would be to subrogate our own ability to manage our affairs in favor
of a group in which we would be but one voice of several.

I would grant

that the ultimate hope of peace in the world lies in the willingness of
men to treat each other justly and submit to justice; but, could all nations
agree on a definition of justice?

Since it is unlikely that we could de­

fine ’
'justice" in such a way as to satisfy even those of us present here,
it is naive to hope that a much broader mixture of human beings with even
more varied ideological backgrounds would more likely find agreement.
Possibly there will be a day when we might think citizenship in the
world more desirable than citizenship in the United States; however, cur­
rent unrest and revolution in the world do not suggest that mankind has
reached the advanced stage of brotherhood for which we all hope.
Perhaps my southern heritage influences me to place more im­
portance on the role of the States in our Union than do others, but I
believe that we are all united in our determination to protect our sover­
eignty, which I view as the taproot of our most cherished possession —