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(Approximately 9:30 a,m, EDT,
Tuesday, June 2, 1959.)


By Karl R. Bopp
President, Federal Reserve Bank of Philadelphia

57th Annual Convention of the
Educational Conference
Morning Session, Tuesday, June 2, 1959
BeHevue-Stratford Hotel, Philadelphia, Pa.


By Karl R. Bopp

Since Leroy Lewis asked me to talk about "Professional Standards in
Banking," I should like to begin by giving you my conception of the professional.
The basic characteristic that distinguishes the professional is in the realm of

It is character that is emphasized in the qualities that some pro­

fessions have specified as distinguishing their members.

Thus the Hippocratic

oath embodies the duties and obligations of physicians.

Character is emphasized

also in the legal code of ethics.

The motive of the professional is service to

His real reward is at the level of his motive —


not external but

Specifically his reward for a service well done is the ability to

render even better service*
Dr. Robert J. McCracken, Minister of the Riverside Church in
New York City, gave the gist of what I have to say in a sermon entitled "The
Acquisitive Instinct in Religion" over the National Radio Pulpit on April 27, 1958.
He reported this story:
A visitor to New York was impressed by the courtesy of a
bus driver towards the passengers on his bus. After the crowd
had thinned out he spoke to him about it* "Well," the driver
explained, "about five years ago I read in the newspaper about
a man who was included in a will just because he was polite.
'What in the world?' I thought. 'It might happen to me.' So
I started treating passengers like people* And it makes me
feel so good that now I don't care if I ever get a million
Reverend McCracken interpreted this experience in these words:


"There you have an illustration of motives at two levels, of a man raising his
sights, of virtue for its own sake yielding its own reward,"
We can all agree that the bus driver of the story had become a pro­

The professional reveals himself in his conduct*

He does not look

upon work as punishment, but as the invigorating ingredient that imparts meaning
to life*

He does not desire an elevator to the top of the mountain because he

knows that the thrill of the climb and seeing the views from the vistas on the
way up are important in themselves and enlarge the meaning of the horizon seen
from the top*
Professionals in all fields discipline themselves through hard work on
the fundamentals of their calling*
on the job, as in medicine*

In some callings this is done continuously

If need be, however, it is done "off the job.”

Witness the professional in music who practices hour after hour to improve a
single passage or the professional in sports who works on fundamentals year after
year before the regular season opens.
The professional expects more and more of himself.

Even though his

achievement forever falls short of his plans, actual achievement is related to
expectations and tends to grow with them*

All of us seem to have within ourselves

inert tinder, as it were, that needs only to be lighted to develop into an allconsuming fire.
to achieve more*

Within wide limits we achieve more when we confidently expect
let the professional is never satisfied with his achievement*

He strives always for improvement*
He seeks help wherever he can find it:
vicariously from the experience of others.

directly from experience and

His early interest typically centers

on the technical aspects of the particular activity, on getting the job done*
Gradually his curiosity will be aroused and he will become dissatisfied with
mere knowledge, mere achievement; and he will search for understanding of the

-3 relationships between his particular activity and other activities*


he will find himself on that endless search for comprehension of the universe of
which he is a part.
The American Institute of Banking has itself gone through a similar

In the early days courses and textbooks were confined largely to

technical information relating to the detailed operations of banks*

Since the

students were putting in time voluntarily after working hours it was commonly
felt that the courses and particularly the grading should not be "too tough."
Each class had its quota of "perfect" students —
number who received 100 per cent.

or so it would seem from the

On occasion not too much was expected of the

teachers, who also were working after hours for a modest honorarium.
disparaging this early experience in recalling its history.
ment, we should recall the environment in which it occurred.

I am not

In making an assess­
The fact is that

the A*I*B* was a pioneer in an area of education in which other professions were
doing nothing at all*
In fact, knowledge of the type that was contained in those early courses
is necessary and important*
part of the curriculum.

It is appropriate that it has remained an integral

Technical competence is a necessary qualification for a

successful bank officer or employee.

It is not, however, sufficient.

In recognition of its inadequacy, newer courses and later editions of
textbooks have gone far beyond factual information*
role of banking*

They emphasize the broader

The detailed knowledge is introduced not merely for its own

sake, as an end in itself, but as information needed to acquire a deeper under­
standing of banking*

As a result the standing of A.I.B. texts with professional

educators as well as professional bankers has been greatly enhanced in recent
In this connection I think that Leroy Lewis deserves the thanks of


the whole banking Industry foa? the inspiration that has prompted him to revise
the curricula, introducing new courses with nev; texts and supervising revisions
of older texts to make the A.I.B. a more significant influence in promoting
professional standards in banking,

I can attest to his dedication and skill in

this undertaking because my colleague, Bob Hilkert, and I have had opportunities
through service on his committees to observe the work at first hand.
of his work, the A.I.B. is, once more, a pioneer.

As a result

I urge all of you to capture

for transmission to your own chapters some of the zeal of Leroy Lewis and his
staff —

each of Whom possesses the professional standards that we are discussing

Since I have divided my mature life between teaching and practicing,
Leroy has asked me to distill some general principles from my experience.


some of what I have to say sounds personal and dogmatic, you will understand
that this is a result of responding to a specific request.
First, I remember that when I devoted all my time to teaching and
research, I knew precisely what the Federal Reserve officials should do and
wondered why they had not done it.

I appreciate now that I was usually

kibitzing or replaying the hand after all the cards had been played and their
distribution was known.

Now that I am a Federal Reserve official, I must confess

that I become impatient at times when some of my academic friends assure me
verbally and in writing that proper monetary policy is really quite simple and

As I reflect on my combined experience, however, I am convinced that

contemporary practice is improved by the criticism of informed observers.
My conclusion is that both education and experience, theory and practice,
are important.
between the two.

I do not accept the notion that there is an inherent conflict
Whenever we hear someone say:

"That is all right in theoiy,

but it doesn't work in practice," we should remember that the person who expresses

that notion is himself advancing a theory I His theory is that all theory is bad.
Now, I concede that that particular theory is bad.

But we should not be deceived

■ y bad theory any more than we should perpetuate bad practice.
is good theory and good practice.
buttresses the other#

What we desire

Between these two there is no conflict.


We may appreciate this mutual relationship by asking our­

selves how we can distinguish good experience from bad unless we have a criterion
or standard —

in short, without a theory of what is good and what is bad.


the story of the instructor who supported his request for a promotion with the
statement that he had twelve years of experience.
"You have not had twelve years of experience*

The response of the dean was:

You have had one year1s experience

that you have repeated eleven times*"
Second, I believe that no person or institution can educate anyone else.
The plain truth is that each person must educate himself*

The number of questions

to which answers can be given is not the measure of a man's education*
the yardstick, an encyclopedia would be more educated than any man*
George H* Palmer's cook, Bridget, once summed it up like this:
education means —

If that were


"That's what

to be able to do what you've never done before*"

The real measure of a man's education depends on such things as his zest
for life, his sense of humor, his empathy with his fellowman, the largeness and
humility of his spirit, the quality of his mind as reflected in the character of
questions he asks as well as the way in which he reaches conclusions*
The question:
n one asks«

What is it? is only the starting point.

Why 1» it?

Wh*t of it?

Education begins

Baftjat .W. & 9 iS B , fo.te. » ¡¡ t 3 t Then,
¡ TO L ?

like Jacob of old, one begins his night of wrestling.

The breaking day will find

him victorious only if, like Jaoob, he is impelled to sayi

"I will not let thee go,

except thou bless me*"
My third thought concerns the teacher rather than the student.

My view

of the teacher grows out of my conception of the educational process.

If it is

true that the student must educate himself, an important function of a teacher is
to inspire each student to realize his full potentialities.

Once a student really

has begun to think, he will not wish to stop; or should he wish it, he will find
himself unable to do so.

Hence, the teacher will strive to light the inert tinder

that lies deep in every prospective student.

This is the tinder I mentioned

Once the teacher has fired his students with enthusiasm to comprehend,

he will not worry that he may not have offered them the very latest facts and

He will assume that the inspired student will continue to study after

he has received his grade in the course.
The teacher would concentrate on having the student develop orderly
habits of thought, in part by letting the student convince himself that disorderly
habits produce absurd results.
of thought.

This is not to say that there is one right habit

The wind of change that is blowing everywhere has reached even this

area of experience.

As you know, nuclear energy became possible only after

chemistry and physics broke through the chains of accustomed thought by which
they had been bound.

Here again, however, comprehension of change is more

important than acceptance of the momentary position at the time of the last class.
The teacher has yet another function.

He should conscientiously attempt

to free the student's mind of the prejudices with which he, the teacher, begins.
This is a most difficult undertaking, impossible of complete accomplishment;
because the teacher, being human, Is unaware of his own blind spots.
mind contains a gyroscope that compensates for its own prejudices.

No human
Yet, though a

teacher cannot know all of his own prejudices, he can, if he is aware that he is
prejudiced, do much to free the minds of his students.

He can do this by making

the student aware that he, the student, not the teacher is responsible for the
student's conclusions*

The teacher should not feel that he has failed or that

his student is disloyal merely because their trained minds honestly arrive at
different answers to the same question; and he should convince the student that
this is the way he feels.

Freedom of thought, not uniformity, is the basic

principle, worthy of the loyalty of both.
My fourth point comes back to the professional, be he teacher or

The professional plays a dual role.

On the one hand, he acquires

and imparts to others accumulated knowledge; he practices and teaches others to
apply that knowledge.

On the other hand, he is forever in the quest of new truth

which makes the best method of today obsolete by tomorrow.
Though he may seem to be working against himself, the professional is
not schizophrenic.
but developing.

Rather, he lives in harmony with a society that is not static

Mankind is forever reaching beyond itself, and professionals are

the chief instruments through which it does so.
The professional1? job is never complete and yet he is prepared at any
moment to be snatched from life because he comprehends that it is the process of
achieving, not any particular achievement, that is life.
The individual 1 have called a "professional” has been called a
"craftsman" by John Herron, author of the Monthly Letter of the Royal Bank of

Of such individuals he has this to say:
It is essential to our nature as human beings that there
should be no "end*" The craftsman is not averse to invention.
By combining curiosity with experience and knowledge with
experiment he attains the only solid satisfaction given to
Human beings — the happiness of endless attaining.
I move now to the application of professional standards to banks.

with individuals, banks reveal their character in their conduct.


A professional

bank provides ever better services to its community at a profit and simultaneously
provides opportunities for the members of its staff to achieve personal fulfillment.


I mean to imply much more in that definition than the words convey
at first glance*

Not identified, for example, is the kind of services to be

The commercial banker is a great distributor of credit*


determination of who is credit worthy and who is not has important influences on
the development of his community.

But beyond this, commercial banks, as you

know, play a unique role in our economic system.
comprise the largest element of our money supply.

Deposits at commercial banks
The lending and investing

activities of commercial banks influence the country's supply of money.
the expenditure of money, in turn, that directs our economic activity*

It is
A really

professional commercial banker understands this role and how it can be performed
in the interest of the country as well as the banks.
I am impressed to see professional bankers joining their colleagues in
all lines of business to extend their horizons.

Contemporary society is looking

to its leaders to develop a new philosophy of the role and purpose of the business
One facet of this new role is contained in the definition of the
professional bank that I have given.

It is the importance of recognizing the

ambitions of the members who comprise the staff*
Of course there are individuals whose aspirations are beyond their

We should not, however, use this as an excuse to lower our sights

with respect to the critical importance of human relations.

In the final analysis,

institutions exist to serve individuals, not the other way around.

A bank whose

management takes the professional approach is marked by its attitude toward the
problems of human relationships*

Among the goals are:


To have each individual be and feel himself a necessary and
therefore important part of the institution.


To have each individual derive satisfaction from contributing
his share to a joint product that is strictly first class.


To reward each individual in proportion to his contribution to
the joint product.


To have supervisors at all levels who want their subordinates to
make good, who help them make good, and who rejoice when they do
make good.


To prepare for the perpetuity of the institution despite the
mortality of all the individuals in it.
By this time you will appreciate that the main burden of my discussion

is an appeal to permeate our lives and the lives of our institutions with the
professional approach.

This approach is not something to be taught in a single

course or to be added for decoration.

If it is real, it will reflect itself in

all that we do.
A sensitive observer will detect the spirit that motivates an institution.
As soon as he enters a professional bank, he will notice that it is a clean shop.
The "housekeeping" is good.

Dirt and trash do not accumulate everywhere.

If it is

large enough to have a guard force, the guards will be pleasant, accommodating, and
courteous; but they will also convey the feeling that all valuables lodged there
are safe.

The operators of the m o d e m equipment will exhibit the muscular coordination

of genuine craftsmen.
The lending officers will think of themselves as promoters of the sound
growth of their communities.

They will use their technical competence in analyzing

financial statements, cash flows, end so on not merely to assure repayment of the
loan but to help the customer and the community grow and prosper.

And if an appli­

cant does not meet these prospects, the officer will do his best to indicate why
it is in the long-run interest of the prospective borrower himself that the loan
be declined.

The tellers will think of their function not merely as receiving

deposits, making change, and cashing checks but as rendering services to the
customers of the bank.
All members of the staff will be cooperative and helpful.

VJhen they


express a judgment they will reach it in ways that carry conviction.
will pretend to knowledge or advice beyond his competence.

No member

Each will, however,

be aware of the areas of competence of his fellows and will be proud to give
his appropriate colleague an opportunity to demonstrate his mastery of the
particular matter at issue.

Collectively, the members of the staff will convey

an indelible impression that they are all on the same team —

and proud of it.

They will be not merely happy but happy because they are doing a first-class job.
You may say that I am being impossibly naive or idealistic in appealing
for professional standards.

X do not think so.

It may be that the professional

approach is one of those feelings that must be experienced and not merely observed
to be understood.

If so, my appeal is that you strive for the experience.


repeat, it encompasses a sense of duty to serve others as part payment for the
thrill of sharing society’s great adventure, a sense of humility before the
mysteries of the universe, coupled with a burning desire to unravel them, a sense
of pride in the achievements of institutions whose destiny one has helped to
shape, a sense of contentment in having helped others to self-fulfillment.
Once these feelings are acquired you will find that you have a mind that
never grows old.

You will find also that your life, your bank, your profession,

and indeed the whole society of which you are a part will be enriched and made
more significant.

To paraphrase the great German poet, Goethe:

You will find

that the rich inheritance received from your forebears will be your own because
you have earned it*

Finally, you will comprehend with Goethe that
NOnly he earns life as well as freedom
Who daily must conquer them anew."