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The Legacy of Former Chairman Martin. June 13, 1989 Alan Greenspan June 13, 1989 Mr. & Mrs. Martin: Thought you might like to have a copy of this. Catherine Mallardi Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 2 The Legacy of Former Chairman Martin Chairman William McChesney Martin's into one of the most respected and power­ a crusader eager to do battle on issues in rise in the financial community was mete­ ful forces in the government. or out of his province. He does not invite oric. After graduating from Yale in 1928 he Throughout his chairmanship, Bill Mar­ controversy—even on monetary mat­ took a job at the Federal Reserve Bank of tin was known as a consensus builder who ters . .," according to Business Week ("A St. Louis in the bank examination depart- was flexible toward the economy and the Five-Year Balancing Act," February 18, ment. Two years later, he went to work for Board's many constituents. "Martin is not 1956). "This does not mean that he is un­ A.G. Edwards & Sons of St. willing to take a position, but Louis, heading their statistical that he prefers workable com­ department. He so impressed his At the Federal Reserve System's promises to deadlocks." bosses that they made him a 75th anniversary However, he often disagreed it seems appropriate to honor partner after two years. Seven the tenure of former Chairman with Congress on issues of years later, he was elected Presi­ William McChesney Martin, Jr.; policy independence. His adver­ dent of the New York Stock the longest tenure served sary was Wright Patman (D- Exchange. by any chairman of the Fed. Tex.). Patman believed, as did His distinguished record But the start of the Second of public service will long be many other Congressmen, that World War interrupted his ca­ remembered for integrity, the Federal Reserve Board reer. Martin entered the army as independence, and strength. should maintain the proper sup­ a private, and emerged from the ply of money to foster economic war a colonel. He received the growth. In other words, keep Legion of Merit in 1945. interest rates down. In March His Washington experience 1952, Patman led a Joint Eco­ started with his appointment to nomic Committee investigation the Board of Directors of the to determine the meaning of Export-Import Bank in 1945. He Federal Reserve independence. held the chairmanship and He questioned the Fed's policy served as president until 1949. moves at every turn. He was Assistant Secretary of Chairman Martin, however, the Treasury from 1949 to 1951. championed the full indepen­ In this role, he helped negotiate dence of his organization. A an accord between the Depart­ master of ambiguity, he said that ment of the Treasury and the the Fed's purpose was to insure Board over a long-standing dis­ that the money supply was "nei­ Fed Phrases Attributed pute over the "pegging" of interest rates on to Chairman Martin ther so large as to induce destructive infla­ Treasury securities. "Our purpose is tionary forces nor so small as to stifle our President Truman and members of his to lean against the winds great and growing economy." Indeed, Mar­ administration were trying to finance the of deflation or infaltion tin was so adept at turning a phrase that whichever way Korean War by issuing long-term bonds they are blowing." many classic statements about the nature sold by the Treasury Department at low in­ "The Fed is always the one of the Fed come from "Martinisms" (see terest rates. The Fed was supporting the who takes away the punch sidebar). bond market at lower rates than thought when the party's getting good." During his 19-year tenure (he served un­ normal. Without such support, the bond "Credit is like a rubber band. der Presidents Truman, Eisenhower, sale would create inflationary pressure. Re­ A rubber band is there to be stretched. Kennedy, Johnson and Nixon), the Federal spect for the dollar and American prestige But if you stretch it too far, it snaps." Reserve weathered many storms, both eco­ would falter. nomic and political. Perhaps his toughest The Fed's job was to correct any im­ times were dealing with the monetary balance in the economy, but the job was responses to Johnson's Great Society and tougher because of this "peg" on interest the ensuing buildup of the Vietnam War. rates. Finally, the Treasury and the Fed His term ended in 1970, and President came to agreement with a renewed commit­ Nixon appointed Arthur Burns to be ment to the independence of the Fed. Chairman of the Board. Martin was subsequently appointed Upon leaving the Board, Martin chairman of the Federal Reserve Board of launched a successful consulting business Governors. He was 44 years old. He spent in Washington, D.C. Now 82, he still lives the next 19 years transforming the agency in the area with his wife Cynthia. • A Lifetime of Flexibility and Consensus-Building Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis.
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