Regional President Speech

LECTURE NOTES of KARL R. BOPP Graduate School of Banking Rutgers University, New Brunswick, N.J. June 27, 1950 - 10:30 am to 12:20 pin Pleasure and honor of being here. Hope I don't duplicatel Shall put things in way to provoke thought and questions. Slightly extreme form. I. Investment Management A. Objectives 1. Safety 2. Increase in capital value 3. Income B. Full investment 1. Minimum of cash Exceptions: 1932-1933 and some smaller banks Only source of new funds is savings and for single bank as part of system expansion 2. Equities 3. Debts (a) Long-term bonds (b) Mortgages (c) Short-term C. You appropriately follow what other investment managers are doing II. There is one enormous institution that does not follow a full investment policy A. The F.R.S. Gold » $23 billion @ 25% * 69 billion earning assets Now holds 17 billion $52 billion additional authority to purchase Power is enormous. Whether you agree with what it does or not, you cannot afford not to understand its policy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis III. Instruments of policy A. General 1. Rate 2. Open Market 3. Reserve requirements B. Selective IV* Limits to F. R. power Control volume of credit or cost of credit, not both Compare with speed of car on hilly highway with accelerator and brake V. Interpreting F. R. policy War to June 28, 1949 Statement of June 28, 1949 Douglas questions following portfolio and rates to determine strengths and weaknesses in market Really net effect of market as a whole may want parts too, but don't get bogged down Social responsibility of yourselves over and beyond earning a living. VI. Why not junk the whole thing and return to a natl&Afl. market? A. Has meaning only with respect to objective - which is a matter of choicel No inherent nature with man Use of powers of nature to our ends (What is "natural" speed of a car?) e.g. 6/2V 50 holdings Bills H billion C/I 5 " Notes 2.4 billion in 4 months .7 " in 4-5 years Digitized for FRASER Bonds 5*6 " http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 3 - VII* We have tried no central bank Didn't work VIII. We nov have central banking We must make it work IX. Commercial banking elsewhere X. ¿'he basic issue Fiscal policy The rate of interest - not high or low but flexible vs. fixed low Not panacea especially if Government supports and props up every weak spot Barrier to use of general instruments danger of unemployment XI. Organisation of System and its improvement Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Karl R. Bopp (1950, June 26). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19500627_karl_r_bopp

@misc{wtfs_regional_speeche_19500627_karl_r_bopp,
  author = {Karl R. Bopp},
  title = {Regional President Speech},
  year = {1950},
  month = {Jun},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19500627_karl_r_bopp},
  note = {Retrieved via When the Fed Speaks corpus}
}