Regional President Speech

WELCOME AND INTRODUCTORY SPEECH by Karl R. Bopp Vice President, Federal Reserve Bank of Philadelphia FRENCH PRODUCTIVITY LOAN FUND BANKING TEAM (Arrangements by International Cooperation Administration) at Federal Reserve Bank of Philadelphia October 31, 1955 I . Welcome II* I have long had an interest in French banking, especially the Bank of France A. Plan of 1939 Athenia B. Reprints 1. The Government and the Bank of France, 1941 (35 pages) 2. Nationalization of the Bank of France and the Bank of England, 194-6 3. Encyclopedia Brittanica 4* Bank of France Policy, 1800-1914 - 1952 C. Ask about 1, Reprints of Annual Reports 1800 to date (Hirigoyen) 2* Snile Moreau auto biography III. Plan of this Meeting A. Introductory comments on productive credit B. Credit analysis by George Lavin 1. Mention Proceedings of Federal Reserve Relations Committee C. Discussion (also answer questions on F.R. policy) D. Luncheon E. Tour of the Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 2 - IV. Productive Credits Meaning A. To lender If loan and interest are repaid without trouble and on time B. To borrower If he ends with more profit than he would have had had he not borrowed (If borrower increases his output - rather than builds up inventories; but what if all resources are alreacty’ in use? C. To society 1. The question of amount (Particularly that extended by banks) a. The commercial loan or real bills theory (every central bank has used at one time or another) (elastic currency) - gives no control over amount Self-liquidating? b. The flow of spending - flow of goods and (Technical aspects) services at current prices (doesn*t distinguish between rise in output because of P. & Q) 2. Distribution a. Real Bills Doctrine too conservative? - Based on collateral rather than income b. Imaginative extension of credit to develop new ideas (look to future rather than the past) (1) Dangers or risks - the genius in everything except finance (2) Opportunities (Correspondence and material to Bank Relations Department - 11 A/5 5) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 2 - Some questions The expected level of performance I. From Great Depression until Second World War (1941) 5 at no time did we have less than million unemployed II . Since the War at no time have we had as many as 5 million unemployed early A. War and/frost War Inflation B. But now for several years with stable prices III. The result A. In part from behavior of the public 1954 e.g. in depression of banks expanded loans and investments in 1955 banks and loans = investments that the non-financial public bought B. In part from management C. In part from luck IV. We have set our standards higher Not over 2J-3 million unemployed 40 at hours a week and stable prices V. I have indicated it to be my judgment we shall 6-9 achieve this during the next months. VI. let, in longer run we should not rule out deviations *49 54 greater than and ' A. People have and can change psychologically - in a hurry B. Fiscal policy in fact not as flexible as would be necessary C. Monetary policy Flexible as to what is done But do not confuse with what should be done Delay in knowledge Delay in effects Complexities of the money and capital markets now! Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 3 - A basic issue is Highest level of sustainable employment with stable price level Prices related to costs - including labor costs Too high wage rates and full employment spell inflation YET, in a dynamic economy, pressure on management to cut costs - plant and equipment expenditures - produces amazing results - including stomach ulcersI Who vould have thought we could take a cut in Government $15 purchases of billion $10 and add a turnaround in inventories of billion and yet enough with unemployment never reaching U million 3 3rd Q rd Q 1254. 1-955 G.N.P. 359 +33 (936) 392 Personal services 91.5 +A&-5 a year State & local Gcw*t 30.1 +2 Fed. Gov»t 45.4 (41 for Nat.Def.) Non durables 127.5 Construction & equipment Housing 16.2 down in starts =in cost Other construction Equipment Durables 37.5 Inventories + 3 recent rise in purchased + in process, not finished good Foreign 7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Karl R. Bopp (1955, October 30). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19551031_karl_r_bopp

@misc{wtfs_regional_speeche_19551031_karl_r_bopp,
  author = {Karl R. Bopp},
  title = {Regional President Speech},
  year = {1955},
  month = {Oct},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19551031_karl_r_bopp},
  note = {Retrieved via When the Fed Speaks corpus}
}