A President at War With His Fed Chief, 5 Decades Before Trump



Johnson: Bill, I just want to thank you for your most thoughtful and generous letter and I appreciate it so much, and I feel quite comfortable and get strength from the knowledge that you’re at that desk.

Martin: Well, that’s very nice of you, Mr. President. I’m just delighted to do anything I can to be of help. You can count on me completely.

Johnson: Well, you just assume that you’re starting out with someone who doesn’t know much about your shop and then you start to tell me what I ought to know about it.

Martin: Well, I certainly will help in every way that I can, Mr. President. I’m sure you know a great deal already, but I’ll help in every way I can.



Johnson: Hi, Bill.

Martin: Hello, Mr. President.

Johnson: How’re ya.

Martin: Fine. I thought that, I had a little press conference …

Johnson: Yup.

Martin: … this afternoon on this action we took.

Martin: What  I said to the press was this, that I wanted to make it clear that we would not have raised the discount rate at this time if it had not been for the British action, that we had been for some time watching the possibility of inflationary pressures developing or some problems with the balance of payments developing, but that you had indicated that you wanted us to stimulate the economy in every way that we could. … We have not — the Federal Reserve — given them any advice or had they asked any advice. We had informed them of what we were doing, but we had taken our action entirely independently, and as an insurance premium on behalf of the American dollar.

Johnson: That’s good.

Martin: I just wanted you to know.  You know, you never can tell what the press will do with these things.

Johnson. Yup.

Johnson: You don’t see in this any lack of availability of funds?

Martin: I don’t see any at all. We’re watching it very carefully in the exchange market, and the market behaved pretty well today — of course, this was before our announcement this afternoon. But my guess is that we can handle it and we’re going to try to increase, actually increase over the next 10 days, the availability of money through the reserve mechanism.

Johnson: That’s wonderful, Bill. I hope you’ll watch that and do everything you can. I’d hate for this to turn the other way on us.



Fowler: We ought to really try to hold him back now. One, because it’s not the right way to operate — it’s just not right for him to go ahead without knowing what the cards are. Number two, it makes the country feel that we’re divided, and it makes the country feel there are two quarterbacks down here — one fellow’s playing one game and one fellow’s playing another. And as I told him the other day, the country is entitled to have the assurance that its economic and financial policies are being determined by a sensible group of reasonable men sitting around together.

Johnson: I would hope that he wouldn’t call his board together and have a Biddle-Jackson fight — I’m prepared to be Jackson if he wants to be Biddle — have a fight like that. Right now I don’t want that in public.

Johnson: It’s going to hurt my pride, and it’s going to hurt my leadership, and it’s going to hurt the best champion business has got in this country.

Johnson: Then, Henry, you all got to think of — around the clock, too, before you get sick — as to where we can get a real articulate, able, tough guy that can take this Federal Reserve place.


Sources: “Chairman of the Fed: William McChesney Martin Jr. and the Creation of the American Financial System,” by Robert P. Bremner; and “The Power and Independence of the Federal Reserve,” by Peter Conti-Brown

Audio recordings from the LBJ Presidential Library, Austin, Tex.

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