Arthur F. Burns? William McChesney Martin? G. William Miller? Paul A. Volcker?
Dear Quote Investigator: The U.S. economy has experienced two large bubbles in recent years in technology stocks and in real estate. These gyrations in the market reminded me of an old comment from a previous director of the Federal Reserve.
He said his job was to shut down any wild and irresponsible “party” involving money before it could start. He was going to take the punch bowl away before people started profligately spending money and negligently loaning money. I know this was said before the terms of Alan Greenspan and Paul Volcker, but I am not sure who said it. Could you figure out who originated this quote?
Quote Investigator: Yes, QI will attempt to trace this quote for you. This guiding motto was enunciated in 1970 by William McChesney Martin who was chairman of the Federal Reserve Board during a lengthy 19-year tenure from 1951 to 1970.
The seven most recent Chairmen and their years of appointment are listed on the Federal Reserve website as follows [FRB]:
1948-1951 Thomas B. McCabe
1951-1970 William McChesney Martin, Jr.
1970-1978 Arthur F. Burns
1978-1979 G. William Miller
1979-1987 Paul A. Volcker
1987-2006 Alan Greenspan
2006-Present Ben S. Bernanke
William McChesney Martin, Jr. served his term under Presidents of both major parties. In 1970, shortly after Martin’s retirement from the position of Chairman, Time magazine published a piece reviewing the “Martin era”. Time said that Martin was a non-drinker, and it attributed the saying under investigation to him [TTP]:
A stubborn, honest and puritanically forthright man, Martin liked to explain that the Reserve Board’s unpopular actions arose out of its necessary role of “leaning against the wind.” He said: “I’m the fellow who takes away the punch bowl just when the party is getting good.” (Martin is a teetotaler.) Above all, he defended the integrity of the U.S. dollar at home and abroad, though he and the board lacked the power to do the job effectively alone.
Here are three additional selected citations in chronological order. In 1972 the New York Times analyzed the housing market in an article titled “Housing Roller Coaster”. The saying of the previous chairman of the Federal Reserve was mentioned [NYP]:
The Federal Reserve Board could be correct in its argument that the best way to cure the ills of the housing industry would be in effect, to manage the economy better—or at least differently—so that the central bank would not be placed, repeatedly, in the words of its former chairman, William McC. Martin Jr., in need of taking away the punch bowl just when the party is getting good.
In 1978 a Texas paper reprinted an article from the Economist in London discussing the new Federal Reserve head William Miller. McChesney’s famous dictum was included [DMP]:
Strains are inevitable. McChesney Martin once said that a Federal Reserve chairman often has the unpopular job of removing the punch bowl just as the party starts to get merry.
In 1979 the Wall Street Journal discussed efforts by the Federal Reserve to reduce the rate of inflation. Martin and the phrase he is identified with were invoked [WSJP]:
William McChesney Martin, one of Mr. Miller’s predecessors as chairman, once remarked that a Fed function was to take the punch bowl away just as the party was getting good.
In conclusion, the punch bowl aphorism is credited to William McChesney Martin in 1970 in Time magazine. This is at the end of Martin’s tenure at the Federal Reserve, so it is possible that an earlier instance of the quote exists. The magazine places the remark between quotation marks in a profile article about Martin and that implies that it is providing exact phrasing. QI thanks you for your question and wishes you good fortune whether economic bubbles are inflating, deflating, or stabilizing.
(This question was inspired by a question from Yoram Bauman in the comments section at the weblog of Freakonomics: Quotes Uncovered. Bauman was aware that the quote was commonly attributed to Martin.)
[FRB] Federal Reserve Board website at federalreserve.gov, “Membership of the Board of Governors of the Federal Reserve System, 1914-Present”. (Accessed October 21, 2010) link
[TTP] 1970 February 2, Time magazine, Section: Business, The Martin Era, Time Inc., New York. (Online Time magazine archive) link
[NYP] 1972 August 30, New York Times, Housing Roller Coaster by H. Erich Heinemann, Page 47 (article start), New York. (ProQuest)
[DMP] 1978 January 15, Dallas Morning News, View from Britain: Miller Dollar’s Still in Trouble, [Reprinted from The Economist, London], Business Section: Page H1 (GB Page 123), Column 5, Dallas Texas. (GenealogyBank)
[WSJP] 1979 February 20, Wall Street Journal, Speaking of Business by Lindley H. Clark Jr., Page 16, Column 3, New York. (ProQuest)