Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession Read Online Free PDF

individual stockholder’s permanent assets and his standard of living ideas change, with consumption rising accordingly.
    — “ Economists Sift Jobs and Stocks,” New York Times, December 28, 1959
    When Alan Greenspan, joined William Townsend’s firm, Wall Street was the last place a bright and promising college graduate would launch his career. The Dow Jones Industrial Average would not reach its 1929 peak again until 1954. The relative attraction of launching a career at General Motors was not only obvious but necessary—only eight people were hired to work on the floor of the New York Stock Exchange between 1930 and 1951. 1 A study commissioned by Wall Street after World War II reported that, when respondents were asked their opinion of the stock market, “most people believed Wall Street was home to some of the
    1 John Brooks, The Go-Go Years : (New York: Weybright and Talley, 1973), p.113.
     
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    nation’s slickest, most accomplished crooks, while a substantial segment thought the stock market was a place where cattle was sold.” 2 Predictably, the best decade in the twentieth century for stock market returns was the 1950s. The period was one in which the American economy boomed.
    The Federal Reserve at Mid-Century
    During these early years of Greenspan’s financial awareness, the Federal Reserve was fighting a battle royal with the Treasury Department. The Fed had responded to the patriotic calling of World War II by playing a subservient role to the needs of the U.S. Treasury. It held the 90-day Treasury bill rate at 3 / 8 percent and the longterm Treasury at 2½ percent. 3 After the war the Fed pressed for greater autonomy.
    By early 1951, yields on Treasury securities began to rise. President Truman tried to coerce the Fed by issuing a statement on February 1, 1951: “The Federal Reserve Board has pledged its support to President Truman to maintain the stability of Government securities.” 4 The Fed had done no such thing. Previously, Truman had decided not to reappoint Marriner Eccles, who had been chairman of the Fed from 1935 to 1948. The former chairman, who was still a Federal Reserve Board member, released his own statement that Truman’s press release was a fabrication. 5 The administration stood down, but no Fed victory is long-lived. Treasury yields would rise for the next three decades, the market’s response to ever-expanding government.
    William McChesney Martin Jr. was an assistant secretary of the treasury at the time of the truce. He served as Fed chairman from 1951 to 1970. Alan Greenspan observed this Federal Reserve chairman from afar. The lunchtime conversations with Nathaniel Branden about the errant Fed were during Martin’s term.
    2 Robert Sobel, The Pursuit of Wealth : The Incredible Story of Money throughout the Ages (New York: McGraw-Hill, 2000), pp. 277, 293, 300.
3 Robert P. Bremner, Chairman of the Fed: William McChesney Martin, Jr., and the Creation of the Modern American Financial System (New Haven, Conn.: Yale University Press, 2004), p. 73.
4 Martin Mayer, The Fed: The Inside Story of How the World’s Most Powerful Financial Institution Drives the Markets (New York: Free Press, 2001), p. 89.
5 Ibid., p. 89. The Federal Reserve chairman between 1948 and 1951 was Thomas B. McCabe.
    Martin Mayer, author of several books about money and the Federal Reserve, sums up William McChesney Martin’s character: “an unusually nice man, a good listener who actually heard what other people were saying, friends with just about everybody in all the financial communities where he lived or visited.” 6 The economist Milton Friedman, no slouch when it came to publicity, attended the swearing-in ceremony for Arthur Burns’s first term as Fed chairman. He watched the lollygagging senators mixing with Martin and pouted, “I still think Bill Martin is the best politician in the room.” 7 Alan Greenspan, also in attendance, would have been equally observant.
    Martin was a foe of both