Essential history--Marriner Eccles

John Kenneth Galbraith writing about his Depression-era experiences once noted (and I cannot remember where) that Eccles was the most important Keynesian of them all.  Makes sense--if the Fed hadn't cooperated with the New Deal and WW II expansion, none of it would have worked.

So the Fed named its headquarters in Washington after Eccles and then promptly forgot what he was all about.  BTW, the link I provide links to a larger article.  If you don't know much about the Great Depression, this is a fine place to start.

Marriner S. Eccles: Keynesian Evangelist Before Keynes

Thursday, 07/22/2010 - 1:39 pm by Henry Liu 

Learning lessons from Eccles’ economic conversion.

Central bankers around the world nowadays may not know about Marriner S Eccles. The second phase of the Great Depression can be blamed on the early policies of the Federal Reserve under Eccles (November 15, 1934-January 31, 1948). Eccles, the president of tiny First National Bank of Ogden, Utah, became nationally famous through his successful effort to save his bank from collapse in the late summer of 1931.

Eccles defused depositors’ panic outside of his bank by announcing that his bank would stay open until all depositors were paid. He also instructed his tellers to count every small bill and check every signature to slow the prospect of his bank running out of cash. A mostly empty armored car carrying all First National’s puny reserves from the Federal Reserve Bank in Salt Lake City arrived conspicuously while Eccles announced that there was plenty of money left (which was true except for the fact that none of it belonged to First National). The crowd’s confidence in First National was re-established and Eccles’ bank survived on a misleading statement that would have been considered criminally fraudulent in a vigorous investigation.

Eccles was a quintessential frontier entrepreneur of the US West and politically a Western Republican. Beginning with timber and sawmill operations, his family’s initial capital came in the form of labor and raw material. He learned from his father, an illiterate who immigrated from Scotland in 1860, that the way to remain free was to avoid becoming indebted to the Northeastern banks, which were in turn much indebted to British capital. Among Eccles’ assets of railroads, mines, construction companies and farm businesses was a chain of local banks in the West. more