William McChesney Martin, Jr.

(b. North Attleboro, Massachusetts, 3 Nov. 1884; d. 6 Mar. 1968) US; member of the US House of Representatives 1925 – 67 The son of a blacksmith, Martin worked as a journalist after attending high school. In 1908 he bought the North Attleboro Evening Chronicle and in 1912 was elected to the Massachusetts House of Representatives, where he served until 1914, when he was elected to the state Senate. In 1917 he became chairman of the Massachusetts Legislative Campaign Committee and was from 1922 to 1925 executive secretary of the Republican State Committee. Elected to the US House of Representatives in 1925, Martin became minority leader in 1939, a position he held until 1959. From 1940 to 1942 Martin combined the role of minority leader of the House with the chairmanship of the Republican National Committee. With the Republican congressional victory of 1946, he served as Speaker in the "do-nothing Eightieth Congress" (1947 – 49), a role he occupied again when Republicans enjoyed a majority in the House from 1953 to 1955.

Martin played a key part in the "conservative coalition". He was able to unite Republicans and conservative southern Democrats to curb the expansion of federal government and to limit the impact of liberal legislative initiatives. In 1946 he helped to pass the *Taft-Hartley Act, limiting the power of organized labour, over President Truman's veto. For many on his own side his leadership style was too autocratic and there were suspicions that his friendly relationship with Democratic Speaker Sam Rayburn limited Republican effectiveness in Congress. Discontent with the Republican electoral and legislative performance combined with concern about the neglect of the party's Policy Committee to remove him from the leadership in 1959. In 1966 Martin failed to be renominated and he died two years later.

American business executive and federal government official William McChesney Martin, Jr. (born 1906) directed major financial institutions and had a prominent role in shaping national economic policy in the 1950s and 1960s.

William McChesney Martin Jr., the elder of two sons of Rebecca Woods Martin and William McChesney Martin, was born December 17, 1906, in St. Louis, Missouri. His father, a lawyer and banker, was chief executive officer of the St. Louis Federal Reserve Bank, one of 12 regional banks in the Federal Reserve System, from 1914 to 1941.

Bill Martin was influenced by his father and by his family's strict Presbyterian tenets. Discipline, study, and athletics were stressed. He was interested in economics and finance, but his father advised him to study liberal arts in college. After graduating from private and public schools in St. Louis, he attended Yale University and received a B.A. in English in 1928.

Martin first worked in the bank examination department of the St. Louis Federal Reserve Bank. In 1929 he joined A. G. Edwards & Sons, a brokerage and investment banking firm. In 1931 he became head of their statistical department while a part-time student at Benton College of Law. That year he became a partner and moved to New York City to operate the firm's membership on the floor of the New York Stock Exchange.

The Great Depression, however, had severely damaged the stock exchange's reputation. The Securities and Exchange Commission (SEC), established by Congress in 1934, was investigating its activities when Martin was elected by fellow brokers to the stock exchange's governing board in 1935. He served on several committees and worked for internal reforms.

Martin also studied economics at Columbia University and belonged to an association that met at the New School for Social Research. From 1932 to 1934 he was treasurer of The Economic Forum and associate editor of its quarterly publication of the same name.

The aims of this "civic organization" give insight to Martin's career. Members believed in "promoting sound improvements in our economic life," and agreed "the times demand the realization of economic theory in action, and the burden of this application rests on practical economists, the Men of the Marketplace."

In December 1937 Martin became secretary of the "Conway Committee," created by the stock exchange's governing board to advise on reorganization. Its report, written by Martin and issued in January 1938, contained recommendations designed to satisfy SEC Chairman William O. Douglas and to reassure the public. After the Whitney scandal surfaced in March 1938, the reform group assumed power and Martin was elected chairman of the new board of governors. In May he was elected president pro tem, and on July 1, 1938, he became the first salaried president of the New York Stock Exchange.

Only 31, Martin was called the "Boy Wonder of Wall Street." His reputation as a teetotaler, non-smoker, nongambler, and studious bachelor helped the stock exchange regain its prestige. Martin worked to end its private club atmosphere and to improve efficiency. He saw the stock exchange as a "national institution that exists to serve the needs of the American public."

He resigned in April 1941 after being drafted as a private into the U.S. Army. Martin served on the Munitions Assignments Board and the President's Soviet Protocol Committee. In October 1945 he was discharged as a full colonel and received the Legion of Merit.

President Truman appointed him chairman of the board of directors of the Export-Import Bank in November 1945, and from February 1946 to February 1949 Martin was its president and chairman. He next became assistant secretary of the treasury in charge of international finance, and in December 1949 he was also named United States executive director of the World Bank.

In early 1951 he mediated a serious policy dispute between the Federal Reserve System and the Treasury over "pegging" or supporting of prices of government securities sold by the Treasury. The "accord" of March 1951 freed the Federal Reserve from this policy and clearly established the agency as coequal with the Treasury in the area of their overlapping responsibilities. Martin's successful role provided his next opportunity.

In mid-March Truman appointed, and the U.S. Senate approved, Martin to complete the term of resigning Federal Reserve Board Chairman Thomas B. McCabe. He also became chairman, a four-year position. On April 2, 1951, Martin entered this position, which made him what many have called "the second most powerful man in America." Decisions by the seven-member board of governors and 12-member Federal Open Market Committee, both headed by the chairman, have a powerful impact on the economy and can cause heated controversy.

The Federal Reserve System, the central bank, controls the nation's supply of money and credit. The independent agency, created by Congress in December 1913, is responsible to but not funded by Congress. The Federal Reserve's objective, Martin stated in 1955, is "to contribute to sustainable economic growth and to maintenance of a stable value for the dollar."

Speeches delivered over almost 19 years and an unprecedented five presidential administrations reveal Martin's basic principles. In 1951 he said, "Our economic strength is founded on preserving the integrity of the dollar, symbolizing as it does the good faith and credit of our country." In 1968 he warned against the "wage-cost-price push" and about avoiding responsibilities to tax ourselves and cut expenditures. He said he would fight to keep the dollar from being devalued.

Martin, a Democrat, was not considered a doctrinaire economist, however. Overall, he pursued flexible, non-partisan policies and believed in a degree of accommodation while maintaining the Federal Reserve's independent status within government. His cooperation at congressional hearings, skill in conciliation and negotiation, thorough knowledge of central banking, and total integrity won him respect, even from such critics as Representative Wright Patman (Democrat) of Texas, a constant foe of "tight money."

Martin earned the confidence of presidents and financiers. Eisenhower, with Senate approval, renamed him chairman in 1955 and to a full four year term in 1956. He was again named chairman in 1959, 1963, and 1967. In December 1965, concerned over inflation from the booming economy and domestic and Vietnam War expenditures, Martin increased the discount (interest) rate and tightened the money supply against President Johnson's wishes. Despite their differences, Johnson reappointed him chairman because Martin was a symbol of sound public finance. His leadership reassured the financial community here and abroad.

Martin liked to use analogies to explain complex monetary policy. He often said, "Our purpose is to lean against the winds of deflation or inflation, whichever way they are blowing, but we do not make those winds," and "We are the people who take away the punch bowl just when the party is getting good."

When his term ended in January 1970, Martin left government service but continued working for improvements in economic life and reentered private business. "The Martin Report," a study commissioned by the New York Stock Exchange and issued in August 1971, recommended internal reforms and modernization.

On April 3, 1942, Martin married Cynthia Davis, the daughter of General Dwight F. Davis, who donated the Davis Cup in tennis. They had three children. Martin, who served on several corporate boards, received 23 honorary Doctor of Laws degrees and the new Federal Reserve Board building in Washington, D.C. is named for him.

Further Reading

Numerous primary and secondary sources document Martin's career, but his biography has yet to be written. He has been in Who's Who in America since 1938-1939; Noteworthy articles include Richard A. Smith, "Bill Martin: A Talent for Timing," Fortune (October 1955); "The Banker's Banker," TIME (September 10, 1956); and "Reserve Board Raises Bank Rate," New York Times (December 6, 1965); "Replacing a Monetary Legend," The Economist (October 25, 1969) gives an international viewpoint; Significant references to Martin are in Robert Sobel, N.Y.S.E. A History of The New York Stock Exchange 1935-1975 (1975); Herbert Stein, The Fiscal Revolution in America (1969); Martin Mayer, The Bankers (1974); Milton Friedman and Anna J. Schwartz, A Monetary History of the United States 1867-1960 (1963); and James L. Knipe, The Federal Reserve and the American Dollar. Problems and Policies 1946-1964 (1965).

Martin, [William] David, see David MacCart-Martin.

William McChesney Martin, Jr.
9th Chairman of the Board of Governors of the Federal Reserve
In office April 2, 1951 – February 1, 1970
President	Harry Truman Dwight Eisenhower John F. Kennedy Lyndon B. Johnson Richard Nixon
Preceded by	Thomas B. McCabe
Succeeded by	Arthur F. Burns
Born	December 17, 1906(1906-12-17) St. Louis
Died	July 28, 1998 (aged 91) Washington, D.C.
Nationality	American
Profession	Economist

William McChesney Martin, Jr. (December 17, 1906, St. Louis, Missouri – July 28, 1998, Washington, D.C.) was the ninth and longest-serving Chairman of the United States Federal Reserve, serving from April 2, 1951 to January 31, 1970 under five Presidents.

Contents 1 Early life 2 Head of the Export-Import Bank 3 Chairman of the Federal Reserve 4 References

Early life

William McChesney Martin, Jr. was born to William McChesney Martin and Rebecca Woods. Martin's connection to the Federal Reserve was forged through his family heritage. In 1913, Martin's father was summoned by President Woodrow Wilson and Senator Carter Glass to help design the Federal Reserve Act that would establish the Federal Reserve System on December 23 that same year. His father later served as governor and then president of the Federal Reserve Bank of St. Louis.

Martin was a graduate of Yale University, where his formal education was in English and Latin rather than economics. However, he still maintained an intense interest in the subject through his father. His first job after graduation was at the St. Louis brokerage firm of A. G. Edwards & Sons, where he became a full partner after only two years. From there Martin's rapid rise in the financial world landed him a seat on the New York Stock Exchange in 1931, just two years after the stock market crash at the start of the Great Depression. During the early part of that decade, Martin's work towards increasing regulation of the stock market led to his election to the exchange's board of governors in 1935. There he worked with the U.S. Securities and Exchange Commission (SEC) to attempt to reestablish confidence in the stock market and prevent future crashes. He eventually became president of the New York Stock Exchange at age 31, leading newspapers to label him the "boy wonder of Wall Street." Like his tenure as governor on the exchange, Martin's presidency focused on cooperating with the SEC to increase regulation of the stock exchange.

During World War II, Martin was drafted from the exchange into the U.S. Army. There he supervised the disposal of raw materials on the Munitions Allocation Board. He was also a liaison between the Army and Congress and the supervisor of the lend-lease program with the Soviet Union.

Head of the Export-Import Bank

Martin's return to civilian life was also a return to the financial world, but this time it was on the side of the federal government. Harry S. Truman, a fellow Democrat, appointed Martin as head of the Export-Import Bank, which he operated for three years. It was at this institution that he was publicly viewed as a "hard banker." He insisted that loans be sound, secure investments; on that principle he opposed the State Department on multiple occasions for making loans that he saw as being motivated purely by politics. On those grounds he would not permit the Export-Import bank to be used as a fund for international relief.

Martin finished his career with the Export-Import bank when he was called to the Treasury to be the assistant secretary for monetary affairs. Martin had been with the Treasury for about two years when its conflict with the Federal Reserve reached its climax. During the period immediately preceding the final negotiations with the Fed, Secretary of the Treasury John W. Snyder went into the hospital. Under these circumstances, Martin became the head negotiator for the Treasury. From the Treasury's perspective, Martin was a valuable representative. He had a thorough understanding of the Federal Reserve System and of financial markets; furthermore, he was viewed as an ally of Truman, who strongly opposed Fed independence. During negotiations, Martin reestablished contact between the Treasury and Fed, which had been forbidden under Snyder.

Chairman of the Federal Reserve

With Robert Rouse, Woodlief Thomas, and Winfield Riefler of the Fed, Martin negotiated the 1951 Accord. The Federal Open Market Committee (FOMC) and Secretary Snyder accepted the Accord and its compromises, and it was approved by both institutions. The Chairman of the Board of Governors at the time of ratification was Thomas B. McCabe, who would officially resign from his position just six days after the statement of the Accord was released. The Truman Administration saw the resignation of McCabe as the perfect opportunity to recapture the Fed almost immediately after it had supposedly broken away. Truman selected Martin to be the next Chairman of the Board of Governors, and the Senate approved his appointment on March 21, 1951.

Contrary to Truman's expectations, however, Martin guarded the Fed's independence, not just through Truman's administration but also through the four administrations that would follow. To the present day, his term as Chairman is the longest term the Board of Governors has seen. Over nearly two decades, Martin would achieve global recognition as a central banker. He was able to pursue independent monetary policies while still paying heed to the desires of various administrations. Although the objectives of Martin's monetary policy were low inflation and economic stability, he rejected the idea that the Fed could pursue its policies through the targeting of a single indicator and instead made policy decisions by examining a wide array of economic information. As Chairman, he institutionalized this approach within the proceedings of the FOMC, gathering the opinions of all governors and presidents within the System before making decisions. As a result, his decisions were often supported by unanimous votes on the FOMC. His most famous quote about his central banking philosophy was that the job of the Federal Reserve is "to take away the punch bowl just as the party gets going,"^[1] referring to the need to raise interest rates when the economy is at its most active.

He was selected as the administrator-designate of the Emergency Stabilization Agency; part of a secret group created by President Dwight D. Eisenhower in 1958 that would serve in the event of a national emergency that became known as the Eisenhower Ten.^[2]

After the presidential election of 1960, Republican Party candidate Richard Nixon blamed his defeat on Martin's tight-money policies (NYTimes Magazine, 01/20/2008.)

Externally, Martin was perceived as being the dominant decision maker at the Fed. Throughout his tenure, he defended the right of the Fed to take actions that would sometimes conflict with what the President wanted. He regularly asserted that the Fed was responsible to Congress and not to the White House.

William McChesney Martin, Jr., ended his term as Chairman of the Board of Governors on January 30, 1970. On that day, his career in public service ended, but he continued to work, holding a variety of directorships for a group of nearly 24 firms and nonprofit institutions for almost 30 more years, such as serving as a trustee on the board of the Rockefeller Brothers Fund.

On July 28, 1998, at the age of 91, he died at his home in Washington, D.C..

References

1. ^ How to Avoid Recession? Let the Fed Work - New York Times
2. ^ "The Eisenhower Ten: William McChesney Martin, Jr.". CONELRAD.COM. http://www.conelrad.com/atomicsecrets/secrets.php?secrets=e05. Retrieved 2008-01-30. 

• For archival material from the William McChesney Martin Jr. collection of papers at the Missouri Historical Society, see the digital collection of his papers on the Federal Reserve Bank of St. Louis' FRASER site [1].
• Portions of this article are based on public domain text from the Federal Reserve Bank of Richmond.
• The trivia article is collected from the footnotes of Tom Wicker's biography of Dwight D. Eisenhower.

Government offices
Preceded by Thomas B. McCabe	Chairman of the Federal Reserve 1951–1970	Succeeded by Arthur F. Burns

v • d • e Chairmen of the Federal Reserve Hamlin • Harding • Crissinger • Young • Meyer • Black • Eccles • McCabe • Martin • Burns • Miller • Volcker • Greenspan • Bernanke

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